Manual of Rules and Regulations for Cooperatives with Savings and Credit Services in the Philippines

TABLE OF CONTENTS
MANUAL OF RULES AND REGULATIONS FOR COOPERATIVES 8 WITH SAVINGS AND CREDIT SERVICES 8 IN THE PHILIPPINES 8 INTRODUCTION 8 SCOPE AND LIMITATIONS 9 SECTION 1.1. COVERAGE 9 SECTION 1.2. DEFINITION OF TERMS 9 FOR PURPOSES OF THIS MANUAL, THE TERMS DEFINED IN THE GENERAL GUIDELINES FOR THE REGISTRATION AND OPERATION OF COOPERATIVES (ANNEX A) AND THOSE ENUMERATED BELOW SHALL APPLY. 9 ORGANI ATION OF SCCS 1! SECTION 1.". DEFINITION OF SAVINGS AND CREDIT COOPERATIVE (SCC). SCCS ARE DULY REGISTERED
COOPERATIVES LICENSED TO OPERATE AS A FINANCIAL ENTITY WITH SAVINGS AND CREDIT OPERATIONS THAT ARE OWNED AND OPERATED BY ITS MEMBERS WITH THE FOLLOWING OB#ECTIVES$ 1! SECTION 1.%. MINIMUM RE&UIREMENTS. COOPERATIVES RE&UIRED TO APPLY FOR A LICENSE TO OPERATE AS A SCC SHALL SUBMIT TO THE CDA A DULY ACCOMPLISHED APPLICATION FORM AND A RESOLUTION OF THE BOARD OF DIRECTORS INDICATING THE FOLLOWING$ 1! SECTION 1.'. PROVISIONAL LICENSE TO OPERATE 11 SECTION 1.(. RE&UIREMENTS FOR REGULAR LICENSE. WITHIN ONE (1) YEAR FROM RECEIPT OF THE PROVISIONAL LICENSE TO OPERATE, THE APPLICANT COOPERATIVE SHALL$ 11

12 SECTION 1.). LICENSE FEE. COOPERATIVES SHALL PAY THE AMOUNT OF TWO THOUSAND PESOS (P2,!!!.!!) FOR THE PROVISIONAL LICENSE AND FIVE THOUSAND PESOS (P',!!!) FOR THE REGULAR LICENSE. THE CDA SHALL REVIEW THE AMOUNT OF FEES EVERY TWO (2) YEARS AND SHALL AD#UST SUCH FEES AS NECESSARY. 12 SECTION 1.8. ISSUANCE OF LICENSE TO OPERATE. WITHIN SIXTY ((!) DAYS FROM FULL COMPLIANCE OF THE MANDATORY RE&UIREMENTS SPECIFIED UNDER SECTION 2.%, AND UPON PAYMENT OF ALL APPLICABLE FEES, THE CDA SHALL ISSUE TO THE APPLICANT COOPERATIVE THE LICENSE TO OPERATE AS A SCC. 1" SECTION 1.9. VALIDITY OF CONTRACTS. CONTRACTS EXECUTED BETWEEN PRIVATE PERSONS AND THE COOPERATIVE PRIOR TO THE ISSUANCE BY THE CDA OF THE LICENSE TO OPERATE SHALL REMAIN VALID AND BINDING BETWEEN THE CONCERNED PARTIES. A FORMAL WRITTEN CONTRACT SHALL BE ENTERED INTO BY THE CONTRACTING PARTIES AND BE MADE IN THE COOPERATIVE*S NAME OR ON ITS BEHALF. 1" SECTION 1.1!. BUSINESS NAME. DULY REGISTERED COOPERATIVES ORGANI ED AND OPERATING UNDER R.A. (9"8 AND GRANTED LICENSE BY THE CDA SHALL INCLUDE IN THEIR NAMES THE TERM +SAVINGS AND CREDIT COOPERATIVE (SCC),. SUCH COOPERATIVE SHALL DISPLAY AT THEIR BUSINESS OFFICES A LICENSE PLATE TO BE ISSUED BY THE CDA. 1" SECTION 1.11. PROHIBITIONS. 1" SECTION 1.12. SUSPENSION, CANCELLATION OR REVOCATION OF LICENSE. THE CDA MAY SUSPEND, CANCEL, OR REVO-E, AFTER DUE NOTICE AND HEARING, THE LICENSE TO OPERATE AS SCC ON ANY VIOLATION OR NON.COMPLIANCE OF THE PROVISIONS OF THIS MANUAL, THE CODE, CIRCULARS AND ISSUANCES OF THE CDA. 1" MANAGEMENT 1" SECTION 1.1". OFFICERS OF THE SCC. THE OFFICERS OF THE SCC SHALL BE COMPRISED OF THE MEMBERS OF THE BOARD OF DIRECTORS, THE SECRETARY, COMMITTEE MEMBERS AND -EY MANAGEMENT OFFICERS. 1" SECTION 1.1%. APPOINTMENT/HIRING OF OFFICERS. THE POSITION OF SECRETARY, TREASURER AND OTHER OFFICERS MAY BE APPOINTED/HIRED BY THE BOARD OF DIRECTORS FROM AMONG THE MEMBERS OF THE COOPERATIVE. THE TENURE OF THE APPOINTED SECRETARY AND TREASURER SHALL BE CLEARLY DEFINED IN THE SCC0S BY.LAWS. ALL OFFICERS SHALL SERVE DURING GOOD BEHAVIOR AND SHALL NOT BE REMOVED EXCEPT FOR CAUSE AFTER DUE HEARING. LOSS OF CONFIDENCE

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SHALL NOT BE A VALID GROUND FOR THE REMOVAL UNLESS EVIDENCED BY ACTS OR OMISSION CAUSING LOSS OF CONFIDENCE IN THE HONESTY AND INTEGRITY OF SUCH OFFICER. 1" SECTION 1.1'. BOARD OF DIRECTORS. IN ADDITION TO THE PROVISION OF SECTION (.2 OF THE GENERAL GUIDELINES ON THE REGISTRATION AND OPERATIONS OF COOPERATIVES PROVIDED FOR IN APPENDIX A, AT LEAST ONE (1) OF THE MEMBERS OF THE BOARD OF DIRECTORS MUST HAVE, IN ADDITION TO THE MINIMUM &UALIFICATIONS PRESCRIBED IN THIS MANUAL, AT LEAST ONE (1) YEAR WOR-ING EXPERIENCE IN CREDIT AND LENDING OPERATIONS. 1% SECTION 1.1(. -EY MANAGEMENT OFFICERS. THE -EY MANAGEMENT OFFICERS SHALL BE APPOINTED BY THE BOARD AND SHALL INCLUDE BUT NOT BE LIMITED TO THE FOLLOWING OR THEIR E&UIVALENT RAN-$ 1( SECTION 1.1). COMMITTEES. THE SCC BY.LAWS SHALL PROVIDE FOR THE CREATION AND ESTABLISHMENT OF THE FOLLOWING COMMITTEES$ 1( SECTION 1.18. TRAINING OF DIRECTORS AND OFFICERS. DIRECTORS AND OFFICERS OF THE SCC SHALL BE RE&UIRED TO UNDERGO CONTINUOUS TRAINING AT AN ACCREDITED ORGANI ATION OF THE BSP AND/OR CDA. 1) SECTION 1.19. FUNCTIONS AND RESPONSIBILITIES. THE FUNCTIONS AND RESPONSIBILITIES OF THE OFFICERS AND MEMBERS OF VARIOUS COMMITTEES SHALL BE THOSE AS PRESCRIBED IN THE SCC0S BY.LAWS. (THESE FUNCTIONS ARE SHOWN IN APPENDIX E.) 1)

GOVERNANCE 1) SECTION 1.2!. COMPENSATION OF DIRECTORS, OFFICERS AND COMMITTEE MEMBERS. DURING THE FIRST YEAR OF EXISTENCE OF THE SCC, REC-ONED FROM THE DATE OF ITS REGISTRATION AS A COOPERATIVE, THE BOARD OF DIRECTORS/COMMITTEE MEMBERS SHALL NOT RECEIVE ANY FORM OF COMPENSATION OTHER THAN REASONABLE PER DIEM AS SET BY THE GENERAL ASSEMBLY$ PROVIDED, THAT PAYMENT OF PER DIEM SHALL NOT EXCEED TWO (2) MEETINGS IN A MONTH. IN SUCCEEDING YEARS, ADDITIONAL COMPENSATION MAY BE GRANTED TO DIRECTORS/COMMITTEE MEMBERS$ PROVIDED, THAT SUCH ADDITIONAL COMPENSATION SHALL BE APPROVED BY A
MA#ORITY OF THE MEMBERS WITH VOTING RIGHTS AT A REGULAR OR SPECIAL GENERAL ASSEMBLY MEETING. 1) SECTION 1.21. DEALINGS OF DIRECTORS, OFFICERS AND COMMITTEE MEMBERS 1) SECTION 1.22. LIABILITY OF DIRECTORS, OFFICERS AND COMMITTEE MEMBERS 18 SECTION 1.2". BONDS OF ACCOUNTABLE OFFICERS AND EMPLOYEES. 18

REPORTORIAL RE&UIREMENTS 19 SECTION 1.2%. RE&UIRED REPORTS. SCCS SHALL REGULARLY SUBMIT TO THE CDA AND THE SUPERVISING DEPUTI ED COOPERATIVE FEDERATION THE RE&UIRED REPORTS LISTED IN APPENDIX F OF THIS MANUAL. 19 SECTION 1.2'. AUTHORI ED SIGNATORIES 19 SECTION 1.2(. MANNER OF FILING. REPORTS SHALL BE SUBMITTED TO THE AUTHORITY EITHER PERSONALLY, OR VIA REGISTERED MAIL, OR SPECIAL DELIVERY THROUGH COURIERS, OR THROUGH ELECTRONIC MEANS. 19 SECTION 1.2). REPORT ON CRIME/LOSSES. SCCS SHALL REPORT TO THE AUTHORITY THE FOLLOWING$19 SECTION 1.28. SANCTIONS FOR WILLFUL DELAY IN SUBMISSION OF REPORTS. 2! CAPITALI ATION 21 SECTION 1.29. DEFINITION OF NET WORTH. THE TERM NET WORTH SHALL REFER TO E&UITY INCLUSIVE OF MEMBERS0 E&UITY, DONATIONS/GRANTS, AND RESERVE FUNDS LESS UNBOO-ED ALLOWANCE FOR PROBABLE LOSSES ON LOANS, INVESTMENTS AND OTHER ASSETS, AND OTHER CAPITAL AD#USTMENTS AS MAY BE RE&UIRED BY THE CDA. 21 SECTION 1."!. CAPITAL ADE&UACY (NET WORTH.TO.RIS- ASSETS RATIO). THE NET WORTH OF A SCC SHALL, AT ALL TIMES, NOT BE LESS THAN AN AMOUNT E&UAL TO EIGHT PERCENT (81) OF ITS RISASSETS WHICH IS DEFINED AS ITS TOTAL ASSETS MINUS THE FOLLOWING ASSETS$ 21 SECTION 1."1. PROMPT CORRECTIVE ACTION. THE SCC0S NET WORTH POSITION SHOULD BE SUFFICIENT TO MEET COMPETITIVE PRESSURE AND ADVERSE ECONOMIC CONDITIONS AS THEY ARISE. IT SHOULD ENHANCE THE SAFETY OF THE MEMBERS0 SHARES AND -EEP PACE WITH GROWTH IN SCC ASSETS. NET WORTH CATEGORIES FOR PURPOSES OF PROMPT CORRECTIVE ACTION ARE$ 22 SECTION 1."2. REHABILITATION PLAN. A SCC THAT IS CATEGORI ED AS UNDERCAPITALI ED OR SIGNIFICANTLY UNDERCAPITALI ED SHALL SUBMIT FOR APPROVAL, WITHIN THE DEADLINE SET BY THE AUTHORITY, A REHABILITATION PLAN PRIOR TO ITS IMPLEMENTATION. 22

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22 SECTION 1. 2( SECTION 1. MATURED TIME DEPOSITS. THROUGH THE BOARD OF DIRECTORS AS AUTHORI ED BY THE GENERAL ASSEMBLY. SUBSE&UENT TO THE RELEASE OF THE LOAN PROCEEDS.A. THAT WITHDRAWALS FROM SUCH DEPOSITS SHALL NOT BE MADE UNTIL THE CHEC. 2' SECTION 1. THAT THIS Manual of Rules and Regulations for SCCs % . WHILE LOAN COLLECTIONS MAYBE DELEGATED TO A COMMITTEE OR STAFF MEMBER(S). WHERE. 22 ARTICLE (. THE FOLLOWING SHALL GOVERN THE OPENING AND OPERATION OF DEPOSIT ACCOUNTS OF SCC$ 2% SECTION 1.%'.%(. LENDING POLICIES SHOULD CLEARLY REFLECT$ 2( SECTION 1. MEET THE MINIMUM RE&UIREMENT FOR NET WORTH TO RIS.%%."%. AND SHALL MA-E THE TRUE AND EFFECTIVE COST OF BORROWING AN INTEGRAL PART OF EVERY LOAN CONTRACT. LOAN MONITORING. SAVINGS DEPOSITS SHALL BE CLASSIFIED AS DORMANT IF NO DEPOSIT OR WITHDRAWAL HAS BEEN MADE FOR THE LAST TWO (2) YEARS. NOT LATER THAN NINETY (9!) DAYS AFTER THE DATE ON WHICH A SCC BECOMES CRITICALLY UNDERCAPITALI ED SHALL$ 22 SECTION 1. NO PART OF SUCH NEW DEPOSITS SHALL BE COVERED BY A STIPULATION PROHIBITING OR LIMITING WITHDRAWAL WHILE A PORTION OF THEIR LOANS ARE OUTSTANDING$ PROVIDED. FINANCIAL SERVICE.SECTION 1. DISCLOSURE RE&UIREMENTS. +TRUTH IN LENDING ACT. MEMBER. CIRCUMSTANCES. 2) SECTION 1.'2."(.%!. SCCS MAY RE&UIRE MEMBER. SCCS SHALL COMPLY WITH THE PROVISIONS OF R. MINIMUM DEPOSIT." ABOVE. 2) SECTION 1.%2. PERIOD TO CORRECT CAPITAL DEFICIENCY. AND COLLATERAL. OPENING AND OPERATION OF DEPOSIT ACCOUNTS. WHETHER IN THE FORM OF SAVINGS OR TIME DEPOSITS. . A SCC MAY CHARGE A SERVICE FEE FOR THE MAINTENANCE OF DORMANT SAVINGS DEPOSITS."'. MAY BORROW FROM ANY SOURCE AT THE BEST TERMS OR CONDITIONS AVAILABLE AND IN SUCH AMOUNT THAT MAY BE NEEDED. BASIS IN THE GRANT OF LOANS.TRUTH IN LENDING ACT.%".BORROWERS OPEN DEPOSIT ACCOUNTS OR MA-E ADDITIONAL DEPOSITS TO THEIR EXISTING ACCOUNTS. WITHDRAWAL FROM$ 2' SECTION 1. RESTRICTIONS FOR UNDERCAPITALI ED SCCS$ FROM THE TIME THE AUTHORITY HAS DECLARED THE SCC AS UNDERCAPITALI ED AND UNTIL SUCH TIME THAT THE SCC IS ADE&UATELY CAPITALI ED . PAYMENT OF INTEREST ON TIME DEPOSITS. ACTION RE&UIRED FOR CRITICALLY UNDERCAPITALI ED SCCS. THAT INTEREST PAID IN ADVANCE SHALL NOT EXCEED THE INTEREST FOR ONE (1) YEAR."8."9. 2( LOANS AND INVESTMENT 2( SECTION 1. ")('. LOAN RETENTION SAVING SCHEME. CHEC-S AND OTHER CASH ITEMS MAY BE ACCEPTED FOR DEPOSIT BY THE SCC$ PROVIDED. LOANS REPRESENT AN SCC0S PRIMARY EARNING ASSET.'!. RESERVE RE&UIREMENTS AGAINST DEPOSIT LIABILITIES 2( SECTION 1.%8."). INTEREST ON TIME DEPOSITS MAY BE PAID AT MATURITY OR UPON WITHDRAWAL OR IN ADVANCE$ PROVIDED. OTHERWISE -NOWN AS THE .BORROWERS TO DEPOSIT A PORTION OF THE LOAN PROCEEDS. THE CDA.%9. THE SCC. BORROWINGS. 2' SECTION 1."". DEPOSITS OF CHEC-S AND OTHER CASH ITEMS. INSOLVENCY OF SCCS. IT SHALL NOT BE PERMITTED TO$ 22 SECTION 1. SAVINGS AND TIME DEPOSITS WITH SSC MAY BE OPENED WITH A MINIMUM AMOUNT TO BE DETERMINED BY THE BOARD OF DIRECTORS. A TIME DEPOSIT NOT WITHDRAWN OR RENEWED ON ITS DUE DATE SHALL BE TREATED AS A SAVINGS DEPOSIT AND SHALL EARN INTEREST FROM MATURITY TO THE DATE OF ACTUAL WITHDRAWAL OR RENEWAL AT A RATE APPLICABLE TO SAVINGS DEPOSITS.%). PROVISION OF LOANS IS AN ESSENTIAL FINANCIAL SERVICE PROVIDED BY THE SCC TO ITS MEMBERS.OR OTHER CASH ITEMS IS COLLECTED. CAPACITY TO PAY. 2% SECTION 1. A SCC WILL BE DETERMINED TO BE INSOLVENT WHEN THE CASH VALUE OF ITS ASSETS IS LESS THAN ITS TOTAL LIABILITIES. THE BOARD HAS THE RESPONSIBILITY OF EXERCISING CLOSE CONTROL AND MONITORING OVER THE SCC LENDING PROGRAM. WITHIN A TWO (2) YEAR PERIOD.2( SECTION 1. LENDING PROCEDURES 2) SECTION 1. 28 SECTION 1. THE BOARD OF DIRECTORS SHALL BE RESPONSIBLE FOR SETTING WRITTEN LOAN POLICIES. WHENEVER THE NET WORTH OF SCCS IS DEFICIENT WITH RESPECT TO THE RE&UIREMENTS OF SECTION (. (APPENDIX H). WITHDRAWAL OF DEPOSITS. DORMANT SAVINGS DEPOSIT. THE GRANTING OF LOANS BY THE CREDIT COMMITTEE AND LOAN OFFICERS SHALL BE BASED ON THE FOUR 2C0S2 OF CREDIT$ CHARACTER.'1. THE SCC SHALL.%1. 2( SECTION 1.DEPOSIT AND BORROWING OPERATIONS 2% SECTION 1..ASSET RATIO. LENDING POLICIES.

THE AMOUNT OF ALLOWANCE FOR PROBABLE LOSSES ON LOANS ALREADY BOO-ED FOR ONE ACCOUNT MAY BE USED TO COVER RE&UIRED APLL FOR OTHER NON. DEPOSITS IN BAN-S/FEDERATIONS. RESTRICTION ON DIRECTORS. IT MUST PROPERLY BE Manual of Rules and Regulations for SCCs ' . "2 SECTION 1. THE MANAGEMENT SHALL$ "2 SECTION 1. "1 SECTION 1. LOAN LIMITS/MATURITY OF LOANS.('. "" SECTION 1. SECURED LOANS 28 SECTION 1. SUBMISSION OF CREDIT INFORMATION TO A CREDIT BUREAU. THE SCC SHALL MAINTAIN DEPOSITS IN AT LEAST TWO (2) BAN-S/FEDERATIONS. OR CAN HE/SHE BECOME A CO.HALF (1/2) OF THE PERIOD OF THE FIRST EXTENSION. "" SECTION 1.DAY GRACE PERIOD. NO FURTHER EXTENSION SHALL BE GRANTED AFTER THE SECOND EXTENSION. INFORMATION FROM THE CREDIT BUREAU MAY BE OBTAINED AND USED BY THE SCCS IN DETERMINING THE CREDIT WORTHINESS OF A BORROWER.PROHIBITION SHALL NOT APPLY IN CASES OF LOANS SECURED BY A HOLD. OFFICERS. "2 SECTION 1. BY CONSANGUINITY OR BY AFFINITY TO THE SECOND DEGREE. LOANS/CREDIT ACCOMMODATIONS TO DIRECTORS. SURETY OR ENDORSER ON ANY LOAN CONTRACTED BY A MEMBER WITH THE SCC.(8. OFFICERS AND COMMITTEE MEMBERS.'). APPRAISAL OF PROPERTIES TO BE FORECLOSED OR AC&UIRED. EXTENSION OF THE PERIOD OF PAYMENT OF LOANS SHALL NOT EXCEED ONE.'9.ASSETS. EXTENSION/RENEWAL OF LOANS. THE APPLICATION FOR A LOAN BY A MEMBER OF THE CREDIT COMMITTEE SHALL BE SUB#ECT TO THE APPROVAL OF THE BOARD OF DIRECTORS.MA-ERS. "2 SECTION 1.ASSETS REVIEW SYSTEM. WRITE. LOAN PORTFOLIO AND OTHER RIS.''. "1 SECTION 1.'". THE WRITING OFF OF LOANS/OTHER CREDIT ACCOMMODATIONS BY SCCS SHALL BE GOVERNED BY THE FOLLOWING REGULATIONS$ "" SECTION 1. SCCS MUST EXERCISE PROPER CAUTION BY ASCERTAINING THAT THE BORROWERS. THE FOLLOWING SHALL GOVERN THE RATES OF INTEREST AND OTHER CHARGES ON LOANS GRANTED BY SCC$ 28 SECTION 1. PAST DUE ACCOUNTS. SANCTIONS.'(. SURETIES AND/OR GUARANTORS POSSESS GOOD CREDIT STANDING AND ARE FINANCIALLY CAPABLE OF FULFILLING THEIR COMMITMENT TO THE SCC.(". THE ALLOWANCE FOR PROBABLE LOSSES ON LOANS (APLL) SHALL BE BOO-ED BASED ON THE PORTFOLIO AT RIS.11 AND/OR THE PROVISIONS OF SECTION 8. TENTH OF ONE PERCENT (1/1! OF 11) OF THE EXCESS OVER THE LOAN CEILING OR THE AMOUNT OF THE DOSRI ACCOUNT PER DAY BUT NOT TO EXCEED P'!! PER DAY ON EACH OF THE DIRECTORS AND OFFICERS VOTING FOR THE APPROVAL OF THE LOAN OR CREDIT ACCOMMODATION. EXCEPT FOR HOME BUILDING AND HOME DEVELOPMENT LOANS.'8.(PAR) WITH A "!. 28 SECTION 1. TO ENSURE THIS.OUT ON DEPOSITS TO THE EXTENT OF THE UNENCUMBERED AMOUNT OF THE DEPOSIT EXISTING AT THE TIME OF THE ABOVE. BEFORE GRANTING UNSECURED LOANS.((.MA-ER. THE PENALTY FOR EXCEEDING THE CEILING SHALL BE COMPUTED ON THE AVERAGE AMOUNT OF LOANS IN EXCESS OF SAID CEILING DURING THE SAME WEE-.(2. LOAN LOSS PROVISIONING.'%.(1. ANY AMORTI ATION/INSTALLMENT NOT COLLECTED ON DUE DATE SHALL BE BOO-ED AS PAST DUE AND SHALL REMAIN IN THIS ACCOUNT UNTIL PAID. ENDORSERS.12 ABOVE SHALL BE SUB#ECT TO THE IMPOSITION OF A FINE OF ONE. THAT THIRTY PERCENT ("!1) OF THE LOAN SHALL HAVE BEEN PAID.(!. INTEREST AND OTHER CHARGES. "1 SECTION 1. ANY VIOLATION OF THE LOAN CEILINGS PRESCRIBED IN SECTION 8. MENTIONED LOAN APPLICATION. A SECOND EXTENSION MAY BE FURTHER GRANTED BUT NOT TO EXCEED ONE. PAR IS THE AMOUNT OF THE LOAN PORTFOLIO WITH ONE DAY MISSED PAYMENT.OFF OF LOANS/OTHER CREDIT ACCOMODATIONS.(). STAFF AND THEIR RELATED INTERESTS (DOSRI) "1 SECTION 1. CO.BORROWER TO A CREDIT BUREAU RECOGNI ED BY THE CDA. SCCS SHALL RE&UIRE$ "! SECTION 1. UNSECURED LOANS. BEFORE FORECLOSING OR AC&UIRING ANY PROPERTY IN SETTLEMENT OF LOANS AND OTHER ADVANCES. BUT IN NO CASE SHALL DEPOSITS IN ONE BAN-/FEDERATION EXCEED FIFTY PERCENT ('!1) OF THE SCC0S NET WORTH.(%. THE SCC SHALL TA-E TIMELY AND ADE&UATE MANAGEMENT ACTION TO MAINTAIN THE &UALITY OF LOAN PORTFOLIO AND OTHER RIS. TREATMENT OF ASSETS AC&UIRED IN SETTLEMENT OF LOANS "" SECTION 1.HALF (1/2) OF THE ORIGINAL PERIOD$ PROVIDED.PERFORMING ACCOUNTS. SCCS SHALL REGULARLY SUBMIT INFORMATION ON THE CREDIT TRANSACTIONS OF A MEMBER. NO DIRECTOR OR COMMITTEE MEMBER SHALL VOTE ON A LOAN RE&UESTED BY A MEMBER OF HIS/HER FAMILY. THE APLL SHALL BE COMPUTED IN ACCORDANCE WITH THE PRESCRIBED FORMULA AND ALLOCATION PERCENTAGE PROVIDED FOR IN APPENDIX # HEREIN.

WILL USE THE FORMULA AND INDICATORS SHOWN IN APPENDIX #. "' SECTION 1. THE RESULTING RATING FOR EACH OF THE COMPONENT IS GIVEN THE APPROPRIATE WEIGHT TO ARRIVE AT THE OVERALL RATING. COMPUTATION OF COOP. ANY VIOLATION OF THE PROVISIONS OF THIS MANUAL SHALL BE SUB#ECT TO THE APPLICABLE SANCTIONS AS PROVIDED FOR BELOW AND ARTICLE 12% OF RA (9"8. INTERNAL CONTROL COMPRISES THE PLAN OF ORGANI ATION AND ALL OF THE COORDINATE METHODS AND MEASURES ADOPTED TO SAFEGUARD THE SCC0S ASSETS.)'.8(. INVESTMENT PROGRAM. AT TIMES. %8 SECTION 1.)). THE FOLLOWING RATING SCALE IS USED$ %8 MISCELLANEOUS %9 SECTION 1. THAT IMMEDIATE RE. THE SCOPE OF THE PROGRAM WILL DEPEND LARGELY ON THE SCC SI E AND THE EXTENT OF ITS SURPLUS FUNDS.)2.)1.89. THE OVERALL RATING WILL BE COMPUTED USING A 2! PERCENT WEIGHT FOR THE COOP RATING AND 8! PERCENT WEIGHT FOR THE PESOS RATING. INTERNAL CONTROL STANDARDS. CONFIDENTIAL INFORMATION. %9 SECTION 1. A SOUND INVESTMENT PROGRAM SHALL BE THE SOLE RESPONSIBILITY AND ACCOUNTABILITY OF THE BOARD OF DIRECTORS. THE FOLLOWING PROVISIONS ARE THE MINIMUM INTERNAL CONTROL STANDARDS FOR SCCS TO ATTAIN EFFICIENCY AND PROVIDE CHEC-S AND BALANCES$ "( SECTION 1. %' PERFORMANCE STANDARDS FOR SCCS (COOP. PERFORMANCE STANDARDS %) SECTION 1. A SCC MAY BE DEEMED TO BE ENGAGED IN AN UNSAFE OR UNSOUND PRACTICE IF SUCH PRACTICE OR PRACTICES RESULT IN DEFICIENCIES OR Manual of Rules and Regulations for SCCs ( . CHEC. THE EVALUATOR.8!. COMPONENTS OF INTERNAL CONTROL "' SECTION 1. IN ASSESSING THE PERFORMANCE OF THE SCC. INVESTMENT POLICIES SHOULD BE IN WRITING AND SHOULD ADDRESS THE FOLLOWING$ "% SECTION 1.PESOS. HAVE FUNDS IN EXCESS OF ITS NEEDS FOR LOANS TO MEMBERS THAT MAY BE INVESTED IN SAFE AND SOUND BUSINESS ACTIVITIES TO MAXIMI E RETURNS.THE ACCURACY AND RELIABILITY OF ITS ACCOUNTING DATA.)!. "% SECTION 1.8". SANCTIONS. THE E&UIVALENT RAW SCORE FOR BOTH THE COOP AND PESOS INDICATORS ARE GIVEN THE APPROPRIATE RATING.8'.)%. AN INDEPENDENT LICENSED APPRAISER MUST CONDUCT THE APPRAISAL. AND ENCOURAGE ADHERENCE TO PRESCRIBED MANAGERIAL POLICIES. IF THE TOTAL AMOUNT TO BE BOO-ED AS ROPOA EXCEEDS P' MILLION. DISCLOSURE OF EXTERNAL AUDITOR0S ADVERSE FINDINGS %% SECTION 1.)(. THE SCC SHALL NOT INVEST IN ANY ONE ENTITY OF MORE THAN 2!1 OF ITS NET WORTH. "' INTERNAL CONTROL "' SECTION 1. DEFINITION OF INTERNAL CONTROL.)". '" SECTION 1. SCCS SHALL BE ANNUALLY SUB#ECTED TO A FINANCIAL AUDIT BY AN EXTERNAL AND INDEPENDENT AUDITOR DULY ACCREDITED AND RECOGNI ED BY THE AUTHORITY. AS MANDATED UNDER ARTICLE 81 OF RA (9"8. BRANCHING FOR SCCS '! SECTION 1. "% SECTION 1.)9.APPRAISED TO DETERMINE ITS TRUE ECONOMIC VALUE. THE FOLLOWING RULES SHALL GOVERN THE PREMISES AND OTHER FIXED ASSETS OF SCCS$ %9 SECTION 1.82. WHENEVER APPLICABLE.81.8%. DEFINITION OF UNSAFE OR UNSOUND PRACTICE. PROMOTE OPERATIONAL EFFICIENCY. HIRING OF EXTERNAL AUDITOR %" SECTION 1. FINANCIAL TRANSPARENCY %( SECTION 1. OVERALL RATING. AN IN. THE RAW SCORE FOR EACH OF THE COMPONENTS IS GIVEN AN E&UIVALENT RATING.(9. STANDARD AUDIT SYSTEM FOR COOPERATIVES (SASC). COOPERATIVE PREMISES AND PROPERTY AND E&UIPMENT. A SCC MAY INVEST IN THE FOLLOWING$ "% SECTION 1.9!.)8. MISCELLANEOUS PROVISIONS ON INTERNAL CONTROL %' SECTION 1. INVESTMENTS. ALLOWABLE INVESTMENTS. INDEPENDENCE OF THE INTERNAL AUDITOR %" SECTION 1.8). SUPERVISION AND EXAMINATION OF SCCS '1 GENERAL PROVISIONS ON SANCTIONS '" SECTION 1. A SCC MAY.88.APPRAISAL SHALL BE CONDUCTED ON ROPOAS WHICH MATERIALLY DECLINE IN VALUE. CEILING ON SCC INVESTMENTS.PESOS) %( SECTION 1.HOUSE APPRAISAL OF SUCH PROPERTY SHALL BE MADE AT LEAST EVERY OTHER YEAR$ PROVIDED. DISPOSAL OF THE FORECLOSED PROPERTY SHALL BE THE RESPONSIBILITY OF THE BOARD OF DIRECTORS.

CEASE AND DESIST ORDER '( TRANSITORY PROVISIONS '8 SECTION 1. MAY MATERIALLY OR ADVERSELY AFFECT THE FINANCIAL HEALTH OF THE SCC.. '9 Manual of Rules and Regulations for SCCs ) .LESS. FROM THE EFFECTIVE DATE OF THIS MANUAL. MONETARY PENALTY. CIRCULAR OR ORDER ISSUED BY THE CDA PURSUANT THERETO.9%. THE RULES AND PROCEDURES OF THIS SECTION SHALL APPLY TO PROCEEDINGS TO ASSESS PENALTIES AGAINST ANY PERSON OR SCC FOR VIOLATION OF THE PROVISIONS OF THIS MANUAL OR ANY REGULATION.91. PROHIBITED OR SUSPENDED.THAN. '" SECTION 1. '9 EFFECTIVITY'9 THIS MANUAL OF RULES AND REGULATIONS SHALL TA-E EFFECT UPON APPROVAL BY THE PRESIDENT OF THE PHILIPPINES OR HIS DULY DESIGNATED REPRESENTATIVE AND FIFTEEN (1') DAYS AFTER PUBLICATION IN THE OFFICIAL GA ETTE OR IN TWO (2) NEWSPAPERS OF GENERAL CIRCULATION. CONFORM TO THE PROVISIONS OF THIS MANUAL OF RULES AND REGULATIONS IN ACCORDANCE WITH THE FOLLOWING SCHEDULE$ '8 '9 '9 SEPARABILITY CLAUSE '9 ALL CDA ISSUANCES.PESOS THAT. PRIMARY CONSIDERATION SHALL BE MADE BY THE CDA AS TO WHETHER THE SCC. IN DETERMINING WHETHER AN OFFICER OR DIRECTOR SHOULD BE REMOVED.92. OR DIRECTOR TOO. OFFICER. TRANSITORY PROVISIONS.APPROPRIATE ACTION TO STOP OR TO PREVENT THE RECURRENCE OF A VIOLATION DESCRIBED HEREIN$ '% SECTION 1. SANCTIONS AGAINST ERRING DIRECTORS AND OFFICERS. IN CONNECTION WITH THE CONDUCT OF THE AFFAIRS OF THE SCC.9". IF NOT CORRECTED. '" SECTION 1. RULES AND REGULATIONS APPLICABLE TO SCCS THAT ARE INCONSISTENT WITH THE PROVISIONS OF THIS MANUAL ARE HEREBY REPEALED OR MODIFIED ACCORDINGLY.SATISFACTORY (POOR) RATING IN THE COOP. ALL PRIMARY CREDIT AND OTHER TYPES OF COOPERATIVES WITH SAVINGS AND CREDIT SERVICES SHALL.

!.in! these realities) the Cooperative -evelop#ent Authority (C-A has put in place #easures to develop and stren!then cooperatives.hese include) a#on! others) the esta'lish#ent of an effective re!ulatory and supervisory environ#ent for credit and savin!s cooperatives. .he 4anual is divided into #a%or types of headin!s "hich introduce the correspondin! sections and su'sections that "ill #a1e up the provisions !overnin! the operations and activities of SCCs su'%ect to the related re!ulations. Cooperatives "ith savin!s and credit services (hereinafter referred to as Savin!s and Credit Cooperatives & SCCs have esta'lished the#selves to 'e effective vehicles in the i#prove#ent of the social and econo#ic conditions of their #e#'ers.he perfor#ance indicators and standards esta'lished herein shall ensure that the SCCs have the financial discipline for the safety and soundness of the institution. 0ollo"in! the esta'lish#ent of the Standard Chart of Accounts (SCA and the perfor#ance standards for credit cooperatives (COOP$P2SOS ) as "ell as the adoption of the fra#e"or1 for effective re!ulation and supervision of credit and other types of cooperatives "ith credit services3 this 4anual of Rules and Re!ulations "as developed. 6938 (An Act to Ordain A Cooperative Code of the Philippines to foster the creation and !ro"th of cooperatives as a practical vehicle for pro#otin! self$reliance and harnessin! people po"er to"ards the attain#ent of econo#ic develop#ent and social %ustice. *ith stron! credit cooperatives operatin! in a via'le and efficient #anner) creative and innovative loan products and financial services suited to the needs of the poor "ill continuously 'e offered and enhanced. Reco!ni. . Any chan!e or a#end#ent to the la"s) circulars or issuances shall su'se+uently 'e inte!rated and for# part of the affected sections or su'sections of this 4anual) "hile repealed rules shall henceforth 'e deleted so that the user of this 4anual shall no lon!er refer to a separate issuance (e.he C-A) in colla'oration "ith the /ational Credit Council (/CC $-epart#ent of 0inance (-O0 ) the (an!1o Sentral /! Pilipinas ((SP ) other relevant !overn#ent a!encies and the #a%or federations of cooperatives) have initiated "or1 to"ards this end. . Safe and sound operations of cooperatives "ill have to 'e ensured in order to protect the invest#ents and savin!s of their #e#'ers. (y providin! their #e#'ers access to financial services includin! savin!s) cooperatives have encoura!ed thrift and opened opportunities to the poor) "hich other for#al financial institutions #ay not 'e "illin! to provide.MANUAL OF RULES AND REGULATIONS FOR COOPERATIVES WITH SAVINGS AND CREDIT SERVICES IN THE PHILIPPINES INTRODUCTION It is the declared policy of the State under R. Manual of Rules and Regulations for SCCs 8 . . . (y providin! !reater access to +uality financial products and services) cooperatives "ith savin!s and credit activities can !reatly contri'ute to the i#prove#ent of the lives and "elfare of their constituents. As !overn#ent veers a"ay fro# direct intervention in the provision of financial services) the need to further develop and stren!then cooperatives into via'le and sustaina'le financial institutions 'eco#es #ore apparent.he rules and re!ulations set forth in this 4anual and the attached Appendices are in accordance "ith the rule #a1in! authority of the C-A (Section 13 of RA 6939).A.his 4anual is useful for 'oth the supervisory and re!ulatory authorities and the 4ana!e#ent of SCCs the#selves. .) circular) #e#orandu# 'ut shall instead cite the particular section or su'sections of the 4anual) includin! its appendices. In the end) this "ill result in stron!er) via'le and sustaina'le SCCs "ith hi!her de!ree of pu'lic trust and confidence. .hese "ill provide SCCs "ith specific rules for the safe and sound conduct of their operations.

7. Cooperatives With %ess &han the Minimum Paid. Section 1.82R) that as soon as the #ini#u# paid$in capitali..1.8R22 4I55IO/ P2SOS (P8P3)999)999 A/A(O:2 & 0ive (= years fro# date of effectivity. 7.hat cooperatives previously allo"ed to en!a!e in credit operations 'ut did not apply or "as denied the 5icense shall i##ediately a#end their Articles of Cooperation and (y$la"s to reflect such chan!es) to 'e su'#itted to and su'se+uently approved 'y the C-A.1.3. 1. That. 7.ation as indicated in the Schedule provided for in Section 7. 7. 1.) further.n Capita!i"ation$ Cooperatives that have not yet reached the #ini#u# paid$in capitali.ation #ay) at all ti#es) voluntarily apply for a license if so desired.ARTICLE 1.hree (3 years fro# date of effectivity3 *ith 4ini#u# Paid$in Capital of 0I:2 4I55IO/ P2SOS (P8P=)999)999 A/A(O:2 & 0our (> years fro# date of effectivity3 and *ith 4ini#u# Paid$in Capital of .2/ 4I55IO/ P2SOS (P8P79)999)999 A/A(O:2 & I##ediately upon date of effectivity of this 4anual3 *ith 4ini#u# Paid$in Capital of S2:2/ 4I55IO/ P2SOS (P8P<)999)999 A/A(O:2 & . SCOPE AND LIMITATIONS Section 1.7.7. Cooperatives Without a License.hat) all other e?istin! applica'le la"s) circulars) and issuances) particularly A995:.n Capita!i"ation Re#uirement$ All prospective and duly re!istered cooperatives that intend to or "ill continue to en!a!e in savin!s and credit activities are re+uired to apply for a 5icense to Operate as a Savin!s and Credit Cooperative (hereinafter referred to as SCC ) in accordance "ith the follo"in! schedule6 *ith 4ini#u# Paid$in Capital of . .7. cooperatives "ithout a license to operate as a SCC #ay continue to en!a!e in their savin!s activity in support of other 'usiness activities as approved 'y the C-A) and6 Provided.7.3.ation has 'een reached) the rules and re!ulations provided herein shall apply. -uly re!istered cooperatives that do not apply or have 'een denied the 5icense to Operate as a SCC shall i##ediately ter#inate and cease fro# en!a!in! in any credit activity "ithin one (7 year fro# the date such cooperative is re+uired to secure a license6 Provided.1.7.2.5><:5@ A36 BC5 R58<@B67B<3: 7:.. 7.7 a'ove shall not 'e covered 'y these rules and re!ulations6 Provided) however. 1.7.7. Manual of Rules and Regulations for SCCs 9 .1.) .2.1.>. Cooperatives "ithout the re+uired #ini#u# capitali.<= A (G5:567> G?<. D5A<:<B<3: 3A T56D@ 0or purposes of this 4anual) the ter#s defined in the General Guidelines for the Registration and Operation of Cooperatives (Anne A! and those enu#erated 'elo" shall apply. O9567B<3: 3A C339567B<45@) of this 4anual shall apply) and PRO:I-2-) 0@R.7.7. C3456785 Cooperatives Within the Minimum Paid.

2. Since they are not secured 'y the corporationAs propertyBies) they are not 'onds under Section 38 of the Corporation Code.1. M<:<D?D R5E?<65D5:B@.9.2. Past due accounts shall refer to loan accounts "here one a#orti.2. 1. C65.2. Credit acco""odation includes 'orro"in!s of #e#'ers and advances #ade 'y officers and e#ployees.2. SCCs are duly re!istered cooperatives licensed to operate as a financial entity "ith savin!s and credit operations that are o"ned and operated 'y its #e#'ers "ith the follo"in! o'%ectives6 • • • 2ncoura!e thrift and savin!s a#on! its #e#'ers3 Create a pool of such savin!s for "hich loans for productive or provident purposes #ay'e !ranted to its #e#'ers3 and Provide related financial services to ena'le its #e#'ers to #a?i#i. 1. Authorit' refers to either the Cooperative -evelop#ent Authority (C-A as the pri#ary re!ulatory authority or the cooperative federation or union deputi.3.2. 1. #e$entures are serial o'li!ations or notes issued on the 'asis of the !eneral credit of the corporation.ationBinstall#ent has not 'een paid on the due date. Loans restructured are past due loans "hose ter#s and conditions have 'een #odified) e?tended or rene"ed after full pay#ent of interestBsurchar!es due thereon. %avings deposits are deposits #ade 'y #e#'ers evidenced 'y a pass'oo1 or any other e+uivalent financial docu#ent consistin! of funds deposited to the credit of one (7 or #ore #e#'ers that can 'e "ithdra"n anyti#e at the option of the #e#'er$depositor.1. Loans in Litigation are total collecti'les fro# past due loans under le!al action.ed 'y C-A follo"in! an approved accreditation criteria to supervise and e?a#ine pri#ary SCCs. 1.e the 'enefit fro# such services. 1.8.4. 1.2.5.6.2. 1. Ti"e deposits are deposits #ade 'y the #e#'ers over a specified period of ti#e as evidenced 'y a ti#e deposit certificate or any other e+uivalent financial instru#ent that provides on its face that the a#ount of such deposit is "ithdra"a'le at a predeter#ined date. ARTICLE 1. ORGANI ATION OF SCC@ Section 1.2. Manual of Rules and Regulations for SCCs 1! .<B C339567B<45 (SCC). Loans shall include all types of credit acco##odations !ranted to the 'orro"er. 1. Cooperatives re+uired to apply for a 5icense to Operate as a SCC shall su'#it to the C-A a duly acco#plished application for# and a resolution of the (oard of -irectors indicatin! the follo"in!6 Section 1.2.3. Ite#s in liti!ation and loans su'%ect of %udicially approved co#pro#ise) as "ell as those covered 'y petitions for suspension or a ne" plan of pay#ent approved 'y the court shall not 'e classified as restructured loans. D5A<:<B<3: 3A S74<:8@ 7:.7.4.

6.>.5. P634<@<3:7> L<F5:@5 B3 O9567B5 @pon pay#ent of the provisional license fee and su'#ission to and approval 'y the C-A of the #ini#u# re+uire#ents in Section .hat such a#ount shall not 'e lo"er than .4..2. 7.>..6. a'ove has 'een confir#ed 'y the Ceneral Asse#'ly3 2sta'lish the 'usiness site "hich shall 'e e+uipped "ith facilities) furnitures) for#s and stationeries) and vault3 2ffect and co#plete the trainin!Bse#inar of directors and officers of the cooperative as here'y re+uired3 At least thirty (39 days prior to the start of operations) the cooperative shall su'#it the follo"in! re+uire#ents6 A#ended Articles of Cooperation and (y$la"s (See #odel docu#ents in A995:.he provisional license shall 'e valid for a #a?i#u# of one (7 year fro# the date of issuance unless e?tended 'y the C-A.3 Section 1.2.6.<F5@ B 7:. Savin!s and credit operations shall 'e a function of the Cooperative3 and . 1..4.) the applicant cooperative shall 'e !ranted a provisional license to operate as SCC.2.ed .6. 1.. 7. . 1. 7.. 7.>.reasurerAs Affidavit indicatin! that the paid$in capital has 'een allocated.>.3...he a#ount of paid$in capitali.>. 1.3.4.6..>. 0or this purpose) the follo"in! additional docu#ents shall 'e su'#itted to the C-A6 In the case of a ne" cooperative) a -epository (an1 Certificate of deposits of the cooperativeAs paid$in capital allotted for this purpose3 In the case of e?istin! cooperative) the duly audited financial state#ent of the i##ediate precedin! year3 and -uly notari.3.5.6.1. 7... 7. 1.6. C respectively 3 5etter$re+uest for ocular inspection of the pre#ises to deter#ine co#pliance "ith the #ini#u# technical specification re+uired 'y the C-A3 Certificates of trainin!Bse#inar of officers and e#ployees on cooperative #ana!e#ent 'y accredited cooperative federationBunion3 1. 1.. .ation that shall 'e allocated for savin!s and credit operations6 Provided) ..8R22 4I55IO/ P2SOS (P3)999)999 . Manual of Rules and Regulations for SCCs 11 .1.. *ithin one (7 year fro# receipt of the provisional license to operate) the applicant cooperative shall6 Su'#it a (oard Certification that the Resolution of the (oard of -irectors as re+uired under Section .5. R5E?<65D5:B@ A36 R58?>76 L<F5:@5.7.1.. Separate 'oo1s of accounts shall 'e #aintained for the savin!s and credit operations in the case of #ulti$purpose cooperatives.1. Section 1.7.6....

6.6.6.)999.>.>. 7.<.>.6.79.<= D ) /ational (ureau of Investi!ation (/(I or Police Clearance) (ureau of Internal Revenue ((IR clearances or Inco#e . setsE of accountin! and other for#s in confor#ity "ith the Standard Chart of Accounts (SCA and the Accountin! 4anual3 Copy of Contract for the use of the cooperativeAs pre#ises3 Copy of the insurance covera!e of the cooperativeAs office and pre#ises3 Copy of the (onds of accounta'le officersBe#ployees. 7. Section 1. 7.76.7.>.. Manual of Rules and Regulations for SCCs 12 . L<F5:@5 F55.6.6. 7.>.9.7>.he chart shall sho" the na#es of depart#entsBunitsBoffices "ith their respective functions and responsi'ilities) and the desi!nations of positions in each depart#entBunitBoffice "ith their respective duties and responsi'ilities3 4anual of Operations e#'odyin! the cooperativeAs policies and operatin! procedures3 Pro$for#a Dt"o (.his #ay 'e e?ecuted in the for# of an insurance 'ond (such as fidelity) surety) or !uarantee 'ond ) cash 'ond or real estate 'ond.>.>. 7.6.he C-A shall revie" the a#ount of fees every t"o (. 2?cerpts of the #inutes of #eetin!s confir#in! all transactions relative to activities underta1en to prepare the cooperative to operate as SCC (e.7. .>.>.6. .=. 7. 7.<= E 3 5ist of #ana!e#ent officers and their respective desi!nations and salaries3 Chart of Or!ani.>.6. 7.99 for the provisional license and 0I:2 .6. 7. 7. .*O .7 includin! the Chief Cashier or any position of e+uivalent ran1 has 'een appointed to said positions in the cooperative3 Appoint#ent of officer of the re!istered cooperative "ho shall have under!one orientation on the reportorial re+uire#ents "ith the C-A) and a certification 'y the 4ana!er that he is fully a"are of said reportorial re+uire#ents and the respective deadlines for su'#ission to the C-A3 and Other docu#entsBpapers "hich #ay 'e re+uired 'y the C-A. appoint#ent of officers) contract of lease) etc 3 Certification 'y the Secretary of the (oard that no person "ho is the spouse or a relative "ithin the .nd de!ree of consan!uinity or affinity of any officer of the cooperative as defined in Section 3.8.7. years and shall ad%ust such fees as necessary.7=.77.!.ation.6.a? Returns (I.6. Cooperatives shall pay the a#ount of . 7.8O@SA/. 7.>.>.8O@SA/. (iodata sheets (A995:.6.P2SOS (P=)999 for the re!ular license.6.>.73.R ) and State#ent of Assets and 5ia'ilities (SA5 for the i##ediate past year of directorsBofficers3 Certificates of attendance of the special se#inar on financial inter#ediation and !ood !overnance for 4e#'ers of the (oard of -irectors conducted 'y (an!1o Sentral n! Pilipinas ((SP ) the C-A or 'y its accredited institutions (Su!!ested !ood !overnance policies are attached as A995:.>.P2SOS (P.

13. Contracts e?ecuted 'et"een private persons and the cooperative prior to the issuance 'y the C-A of the 5icense to Operate shall re#ain valid and 'indin! 'et"een the concerned parties. -uly re!istered cooperatives or!ani. 1. All officers shall serve durin! !ood 'ehavior and shall not 'e re#oved e?cept for cause after due hearin!.ation 'y the C-A. MANAGEMENT Section 1. ARTICLE 2. SCCs shall not advertise nor represent itself to its #e#'ers or to the !eneral pu'lic as a 'an1 or a +uasi$'an1.12.11.he position of secretary) treasurer and other officers #ay 'e appointedBhired 'y the (oard of -irectors fro# a#on! the #e#'ers of the cooperative. Section 1. *ithin si?ty (69 days fro# full co#pliance of the #andatory re+uire#ents specified under Section . 5oss of confidence shall not 'e a valid !round for the re#oval unless evidenced 'y acts or o#ission causin! loss of confidence in the honesty and inte!rity of such officer.he use of savin!s and credit cooperative (SCC or any other na#e or title or co#'ination of na#es and titles or any other deviation fro# the re+uire#ents of this section shall not 'e #ade) e?cept upon prior authori. Section 1. .3. I@@?7:F5 3A L<F5:@5 B3 O9567B5. . OAA<F56@ 3A BC5 SCC. 1. /o person) %uridical or natural) shall do 'usiness or hold itself out as doin! 'usiness as a savings and credit cooperative.. .11.10.14. A for#al "ritten contract shall 'e entered into 'y the contractin! parties and 'e #ade in the cooperativeFs na#e or on its 'ehalf.11. 1. C7:F5>>7B<3: 36 R543F7B<3: 3A L<F5:@5. 6938 and !ranted license 'y the C-A shall include in their na#es the ter# G %avings and Credit Cooperative (%CC!& . P63C<H<B<3:@.8. Such cooperative shall display at their 'usiness offices a license plate to 'e issued 'y the C-A.11. S?@95:@<3:. Manual of Rules and Regulations for SCCs 1" .he C-A #ay suspend) cancel) or revo1e) after due notice and hearin!) the 5icense to Operate as SCC on any violation or non$ co#pliance of the provisions of this 4anual) the Code) circulars and issuances of the C-A. Section 1.ed and operatin! under R.he Officers of the SCC shall 'e co#prised of the #e#'ers of the (oard of -irectors) the Secretary) Co##ittee #e#'ers and 1ey #ana!e#ent officers.1. or shall use the ter# '%avings and Credit Cooperative (%CC!H or any other title or na#e tendin! to !ive the pu'lic i#pression that it is en!a!ed in the savin!s and credit operations and activities unless licensed 'y the C-A.he tenure of the appointed secretary and treasurer shall 'e clearly defined in the SCCAs 'y$ la"s.<BG 3A C3:B67FB@. V7><. Section 1. . B?@<:5@@ N7D5.Section 1.2. A993<:BD5:B/H<6<:8 3A OAA<F56@. .9.A. Section 1.>) and upon pay#ent of all applica'le fees) the C-A shall issue to the applicant cooperative the 5icense to Operate as a SCC.

7=. 1.. 7..7. .7. 7. Minimum (ua!ifications of a SCC *oard of )irector 1.3.15.3.7=. of the Ceneral Cuidelines on the Re!istration and Operations of Cooperatives provided for in A995:. 1.7=..15.le#ent) e?tortion) for!ery) #alversation) s"indlin!) and theft3 Persons "ho have 'een convicted 'y final %ud!#ent of the court for violation of 'an1in! and cooperative la"s3 or Persons "ho have 'een %udicially declared insolvent) spendthrift) insane) or incapacitated to contract.. 7. ..rounds for )is#ua!ification of a SCC *oard of )irector .3. At least t"enty$one (.7.7=.<= A) at least one (7 of the #e#'ers of the (oard of -irectors #ust have) in addition to the #ini#u# +ualifications prescri'ed in this 4anual) at least one (7 year "or1in! e?perience in credit and lendin! operations.. 7.. consecutive years prior to election or appoint#ent) e?cept in the case of ne"ly re!istered SCC...3. (ua!ifications and )is#ua!ifications of *+) .7.7..7 years of a!e at the ti#e of hisBher election or appoint#ent3 At least colle!e level or has at least three (3 years e?perience in 'usiness3 4ust 'e a #e#'er in !ood standin! for at least t"o (.3.3.7=.7=.7... 7.. 7. #onth period) 'oth re!ular and special) unless "ith valid e?cuse as approved 'y the (oard of -irectors.7=.. 7. 3A D<65FB36@. .15. 7.3....15..3.3.7.. Manual of Rules and Regulations for SCCs 1% .Section 1. 7.7=.. B376..7=.7=. . In addition to the provision of Section 6.3.3. *ithout pre%udice to specific provisions of la" prescri'in! dis+ualifications for (oard of -irectors) the follo"in! #e#'ers are dis+ualified fro# 'eco#in! directors6 Per#anently dis+ualified6 Persons "ho have 'een convicted 'y final %ud!#ent of the court for offenses involvin! dishonesty or 'reach of trust) such as estafa) e#'e.7=.his dis+ualification shall 'e applied i##ediately and for the succeedin! election3 7.1.3.2.his dis+ualification shall 'e in effect as lon! as the refusal persists3 Persons "ho have 'usiness directly co#petin! "ith the cooperativeAs savin!s and credit operations until such ti#e that such persons have divested their interests in andBor have disen!a!ed fro# said 'usiness3 -irectors "ho have 'een a'sent or "ho have not participated durin! their incu#'ency in three (3 consecutive #eetin!s or in #ore than fifty percent (=9I of all #eetin!s "ithin a t"elve (7. 7.e#porarily dis+ualified6 Persons "ho refuse to fully disclose the e?tent of their 'usiness interest to the Authority "hen re+uired.. Persons elected or appointed as officers of SCCs "ithout the +ualifications or possessin! any of the dis+ualifications as enu#erated hereunder or in their respective 'y$la"s shall vacate their respective positions i##ediately.

..3.7=.>.. Persons "ho are delin+uent in the pay#ent of their o'li!ations as defined hereunder6 7..>.>..7.3.3.7=. 7.3. .7=. .... A partnership of "hich a director or officer) or hisBher spouse is the #ana!in! partner or a !eneral partner o"nin! a controllin! interest in the partnership3 and 7.3. Persons convicted for offenses involvin! dishonesty) 'reach of trust) or violation of cooperativeB'an1in! la"s 'ut "hose conviction has not yet 'eco#e final and e?ecutory3 -irectors and officers of closed cooperativesB'an1sB+uasi$'an1sBtrust entities pendin! their clearance 'y the C-A or 4onetary (oard3 -irectors dis+ualified for failure to o'serveBdischar!e their duties and responsi'ilities prescri'ed under e?istin! re!ulations3 -irectors "ho failed to attend the special se#inar re+uired for (oard of -irectors...7=.<...>. ...3.he spouse or child under the parental authority of the director or officer3 7. 7..7=. ii!..3.7=.3..8.3..=.9.3.. O'li!ations fro# a SCCB'an1B+uasi$'an1 or another cooperative o'tained 'y6 7.hose under preventive suspension3 or Manual of Rules and Regulations for SCCs 1' . 7. iv!.7=.... Any person "hose 'orro"in!s or loan proceeds "ere credited to the account of) or used for the 'enefit of a director or officer3 7.3.3.>.. ...3...his dis+ualification shall 'e in effect until they have cleared the#selves of involve#ent in the alle!ed irre!ularity3 7. .>..his dis+ualification applies until the director concerned had attended such se#inar3 Persons dis#issedBter#inated fro# e#ploy#ent for cause...>.3.7=... 7..7=.7=.>.79.. A corporation) association) or fir# "holly$o"ned or #a%ority of the capital of "hich is o"ned 'y any or a !roup of persons #entioned in the fore!oin! ite#s (!.7=..7=.7=.=.his dis+ualification shall 'e in effect as lon! as the delin+uency persists....6..3. A director or officer for his o"n account or as the representative or a!ent of others or "here heBshe acts as a !uarantor) co$#a1er) endorser) or surety for loans fro# such financial institutions3 7..7=. 7.>... O'li!ations "ith the cooperative "here heBshe is a director or officer or "ith other cooperativesBfinancial institutions. 7.7.7.

3..he follo"in! !rounds for dis+ualification shall apply to officers in addition to those already re+uired or prescri'ed under e?istin! la"s) (y$ la"s and the !rounds for dis+ualification of directors) e?cept those stated in Section 3..3.7.7.. 7.. Section 1.he fore!oin! +ualifications for officers shall 'e in addition to those already re+uired or prescri'ed under e?istin! la"s and the SCCAs (y$la"s.3. 7..16. Section 1..76..76.>. Persons "ith dero!atory records "ith the /ational (ureau of Investi!ation (/(I ) court) police) Interpol) and #onetary authority (central 'an1 of other countries involvin! violation of any la") rule) or re!ulation of the Covern#ent or any of its instru#entalities adversely affectin! the inte!rity andBor a'ility to dischar!e the duties of a cooperativeB'an1B+uasi$'an1Btrust entity directorB officer.ement +fficers$ At least t"enty$one (.he spouse or relative "ithin the second de!ree of consan!uinity or affinity of any person holdin! the position of 4ana!er) Cashier) or Accountant of a 'ranch or office of a SCC is dis+ualified fro# holdin! or 'ein! appointed to any of said positions in the sa#e 'ranch or office3 and Any officer or e#ployee of the C-A or any appointed or elected pu'lic official) e?cept a 'aran!ay official.76..76. (ua!ifications of -e' Mana. 7.he spouse or a relative "ithin the second de!ree of consan!uinity or affinity of any person holdin! the position of (oard of -irectors and #ana!e#ent officers3 . .76.7.he SCC 'y$la"s shall provide for the creation and esta'lish#ent of the follo"in! co##ittees6 Audit3 Credit3 2lection3 Manual of Rules and Regulations for SCCs 1( .7. 7. .2.. )is#ua!ification of Mana.. 1..he 1ey #ana!e#ent officers shall 'e appointed 'y the (oard and shall include 'ut not 'e li#ited to the follo"in! or their e+uivalent ran16 • • • Ceneral 4ana!erBChief 2?ecutive Officer3 . .7.1.=. -5G M7:785D5:B OAA<F56@.. 7.7.16.3.reasurer3 and Accountant 1.76.. 7...7 years of a!e3 At least a colle!e !raduate3 8ave at least three (3 years of e?perience in operations or related activities or in a field related to hisBher position and responsi'ilities3 8ave under!one trainin! in SCCB'an1in! operations accepta'le to the (SPBC-A or "ill under!o said trainin! "ithin si? (6 #onths upon assu#ption of office3 and .76.. 7..77.ement +fficers .3.7. .8 herein6 . • • • C3DD<BB55@..17.3.3 and 3.16.his dis+ualification applies until they have cleared the#selves of involve#ent in the alle!ed irre!ularity. 7.7.7=.76.

• • •

2ducationB.rainin! and 4e#'ership3 4ediation and Conciliation3 and Other co##ittees necessary for the proper conduct of the affairs of the SCC. Appointment/0!ection of Committee Mem1ers 4e#'ers of the 4ediation and Conciliation Co##ittee) 2lection Co##ittee) and Audit Co##ittee shall 'e elected durin! the holdin! of a Ceneral Asse#'ly) "hile #e#'ers of the other Co##ittees shall 'e appointed 'y the (oard of -irectors. .he (oard shall appoint fro# a#on! the#selves) other than the Chair#an) the Chairpersons of the 2ducationB.rainin! and the 4e#'ership Co##ittees. @nless other"ise provided in the 'y$la"s) the (oard) in case of vacancy in said co##ittees) #ay cause an election to fill the vacancy or appoint a person to fill the sa#e su'%ect to the provision that the person elected or appointed shall serve only for the une?pired portion of the vacated ter#.

1.17.1.

7.7<.7.7.

7.7<.7.;. 7.7<.7.3.

Section 1.18. Section 1.19.

T67<:<:8 3A D<65FB36@ 7:; OAA<F56@$ -irectors and officers of the SCC shall 'e re+uired to under!o continuous trainin! at an accredited or!ani,ation of the (SP andBor C-A. F?:FB<3:@ 7:; R5@93:@<H<><B<5@. .he functions and responsi'ilities of the officers and #e#'ers of various co##ittees shall 'e those as prescri'ed in the SCCAs (y$la"s. (.hese functions are sho"n in Appendi2 0.)

ARTICLE ".
Section 1.20.
GOVERNANCE C3D95:@7B<3: 3A D<65FB36@, OAA<F56@ 7:; C3DD<BB55 M5DH56@. -urin! the first year of e?istence of the SCC) rec1oned fro# the date of its re!istration as a cooperative) the (oard of -irectorsBco##ittee #e#'ers shall not receive any for# of co#pensation other than reasona'le per die# as set 'y the Ceneral Asse#'ly6 Provided) .hat pay#ent of per die# shall not e?ceed t"o (; #eetin!s in a #onth. In succeedin! years) additional co#pensation #ay 'e !ranted to directorsBco##ittee #e#'ers6 Provided, .hat such additional co#pensation shall 'e approved 'y a #a%ority of the #e#'ers "ith votin! ri!hts at a re!ular or special !eneral asse#'ly #eetin!. D57><:8@ 3A D<65FB36@, OAA<F56@ 7:; C3DD<BB55 M5DH56@ At the option of the SCC) a contract of the SCC "ith one (7 or #ore of its directors) officers or co##ittee #e#'ers #ay 'e dee#ed valid and 'indin! should all the follo"in! conditions are present6 .hat the presence of such director in the 'oard #eetin! in "hich the contract "as approved "as not necessary to constitute a +uoru# for such #eetin!3 .hat the vote of such director "as not necessary for the approval of the contract3 .hat the contract is fair and reasona'le under the circu#stances3 and

Section 1.21. 1.21.1.

7.;7.7.7. 7.;7.7.;. 7.;7.7.3.

Manual of Rules and Regulations for SCCs

1)

7.;7.7.>.

.hat in the case of an officer or co##ittee #e#'er) the contract "ith the officer or co##ittee #e#'er has 'een previously authori,ed 'y the Ceneral Asse#'ly or 'y the (oard.

1.21.2.

*here any of the first t"o conditions set forth in the precedin! para!raph is a'sent in the case of a contract "ith a director) such contract #ay 'e ratified 'y t"o$thirds (;B3 vote of all the #e#'ers "ith votin! ri!hts in a #eetin! called for the purpose6 Provided) .hat full disclosure of the adverse interest of the director involved is #ade at such #eetin!) and that the contract is fair and reasona'le under the circu#stances. L<7H<><BG 3A D<65FB36@, OAA<F56@ 7:; C3DD<BB55 M5DH56@ -irectors) officers) and co##ittee #e#'ers "ho "illfully and 1no"in!ly vote for or consent to patently unla"ful acts) or "ho are !uilty of !ross ne!li!ence or 'ad faith in directin! the affairs of the SCC or ac+uire any personal or pecuniary interest in conflict "ith their duties as such) directors) officers or co##ittee #e#'ers) shall 'e lia'le %ointly and severally to the SCC for the full a#ount of da#a!es or personal !ain resultin! therefro#. -irectors) officers) or co##ittee #e#'ers "ho) 'y virtue of their office) ac+uire for the#selves an opportunity "hich should 'elon! to the SCC) shall 'e lia'le for da#a!es and #ust account for dou'le the profits that other"ise "ould have accrued to the SCC 'y refundin! the sa#e) unless their acts have 'een ratified 'y a t"o$thirds (;B3 vote of all the #e#'ers "ith votin! ri!hts. .his provision shall 'e applica'le) not"ithstandin! the fact that they use their o"n funds in the venture. -irectors) officers) or co##ittee #e#'ers "ho ac+uire or atte#pt to ac+uire) in violation of their duties) any interest or e+uity adverse to the cooperative "ith respect to any #atter "hich has 'een reposed in the# in confidence shall) as trustees for the SCC) 'e personally lia'le for da#a!es t"ice the profits "hich other"ise "ould have accrued to the SCC. -irectors) officers) or co##ittee #e#'ers or their associates 7 "ho #a1e use of or disclose confidential infor#ation on the operation of a SCC that includes) a#on! other thin!s) transactions relatin! to shares or a de't o'li!ation for their 'enefits or advanta!es or that of an associate) that) if !enerally 1no"n) #i!ht reasona'ly 'e e?pected to adversely and #aterially affect the condition of the SCC) shall 'e held6 5ia'le to co#pensate any person for a direct loss suffered 'y that person) unless such infor#ation "as 1no"n or reasona'ly should have 'een 1no"n to the person at the ti#e of the transaction3 and Accounta'le to the SCC for any direct 'enefit or advanta!e received or yet to 'e received 'y hi# or his associate) as a result of the transaction.

Section 1.22. 1.22.1.

1.22.2.

1.22.3.

1.22.4.

7.;;.>.7.

7.;;.>.;. 1.22.5. Section 1.23.

.he SCC shall ta1e all the necessary steps and #easures to enforce the lia'ilities descri'ed in this section. B3:;@ 3A AFF3?:B7H>5 OAA<F56@ 7:; ED9>3G55@.

7

Associate as referred in this %ection shall refer to an) person connected or has *oined such directors and officers in a co""on purpose or to parta+e or share in a co""on design of "a+ing use of confidential infor"ation pre*udicial to the condition of the cooperative.

Manual of Rules and Regulations for SCCs

18

1.23.1.

2very officer or e#ployee handlin! funds) securities) or property on 'ehalf of a SCC shall) 'efore perfor#in! such duties) e?ecute and deliver ade+uate and appropriate 'onds for the faithful perfor#ance of hisBher duties and o'li!ations3 and provide inde#nity to the SCC a!ainst the loss of #oney or securities 'y reason of their dishonesty or !ross ne!li!ence. .he (oard of -irectors shall deter#ine the ade+uacy of such 'onds. .he 'ond of the cashier) assistant cashier) treasurer and other e#ployees havin! #oney accounta'ility shall not 'e less than their avera!e daily accounta'ility for i##ediately precedin! a three (3 #onth period. .he 'ond #ust 'e issued 'y a reputa'le 'ondin! co#pany duly licensed 'y the Insurance Co##ission. Capital contri'ution or a cash 'ond deposited "ith the SCC or "ith a 'an1 #ay also 'e allo"ed.

1.23.2.

ARTICLE %.
REPORTORIAL RE&UIREMENTS

Section 1.24. Section 1.25. 1.25.1. 1.25.2.

R5E?<65; R5936B@. SCCs shall re!ularly su'#it to the C-A and the supervisin! deputi,ed cooperative federation the re+uired reports listed in A995:;<= F of this 4anual. A?BC36<I5; S<8:7B36<5@ .he SCC shall) as part of its operations #anual) indicate the responsi'le persons approvin! and si!nin! the re+uired reports to 'e su'#itted. A995:;<= G provides the !uidelines on the prescri'ed report si!natories and the re+uire#ents on si!natory authori,ation. Reports su'#itted electronically shall 'e su'%ect to the sa#e re+uire#ents. A report su'#itted under the si!nature of an officer "ho is not authori,ed in accordance "ith the SCCAs !uidelines on the prescri'ed report si!natories and si!natory authori,ation shall 'e considered as not havin! 'een su'#itted. M7::56 3A A<><:8. Reports shall 'e su'#itted to the Authority either personally) or via re!istered #ail) or special delivery throu!h couriers) or throu!h electronic #eans . Proof of su'#ission of the report "ithin the deadline shall 'e deter#ined as follo"s6

1.25.3.

Section 1.26.

1.26.1. 1.26.2. 1.26.3. Section 1.27. 1.27.1.

(y the date of post#ar1) if the report "as sent 'y #ail3 (y the date it "as received) if the report "as sent 'y electronic #eans3 or (y the date of receipt) if hand$delivered to the Authority. R5936B 3: F6<D5/>3@@5@. SCCs shall report to the Authority the follo"in!6 Cri#es "hether consu##ated) frustrated) or atte#pted a!ainst propertyBfacilities (such as ro''ery) theft) s"indlin! or estafa) for!ery and other deceits and other cri#es involvin! lossBdestruction of the SCC property "hen the a#ount involved in each cri#e is P;9)999.99 or #ore. Cri#es involvin! officers and e#ployees) re!ardless of "hether or not such cri#es involve the lossBdestruction of SCC property) even if the a#ount involved is less than P;9)999.99 shall li1e"ise 'e reported to the Authority.

1.27.2.

Manual of Rules and Regulations for SCCs

19

7.28. SCCs shall) "ithin thirty (39 calendar days fro# receipt of the state#ent of account fro# Authority) pay the fines i#posed.<.he follo"in! !uidelines shall 'e o'served in the preparation and su'#ission of the report on cri#eBloss6 .4.. 0or purposes of this su'section) the follo"in! definitions shall apply6 7. -elayed schedules or attach#ents and a#end#ents shall 'e considered late reportin! su'%ect to the a'ove penalties.1. Section 1.27. 7.3.... 7.. #ela) in the su$"ission of reports shall refer to the failure of SCCs to su'#it a report on ti#e.. 7.>.7.28..8.7..3.. )efinition of terms.he report shall 'e prepared in t"o (. -elay or default shall start to run on the day follo"in! the last day re+uired for the su'#ission of reports.. copies and shall 'e su'#itted to the Authority "ithin five (= days fro# the 1no"led!e of the cri#e or incident3 *here a thorou!h investi!ation and evaluation of facts is necessary to co#plete the report) an initial report su'#itted "ithin the deadline #ay 'e accepted6 Provided) .8.<.>. 1..28.. 7. 0or the purpose of esta'lishin! delay or default) the date of ac1no"led!e#ent 'y the Authority appearin! on the copies of such reports filed or su'#itted or the date of #ailin! post#ar1ed on the envelopeBthe date of re!istry or special delivery receipt) as the case #ay 'e) shall 'e considered as the date of filin!.8.3.3.. 3ines for de!a' in su1mission of reports. Manual of Rules and Regulations for SCCs 2! .8. Reports shall refer to any report or state#ent re+uired of SCCs to 'e su'#itted to the Authority periodically or "ithin a specified period.7.8.8. 1.. 7.99 per report per 'usiness day of default..7. 7..28..hat a co#plete report is su'#itted not later than fifteen (7= 'usiness days fro# ter#ination of investi!ation.99 or #ore.. 7.. Sanctions for "illful delay in su'#ission of reports. 8o"ever) should the last day of filin! fall on a non$"or1in! day in the locality "here the reportin! SCC is situated) delay or default shall start to run on the day follo"in! the ne?t "or1in! day. 1..8.7.>. 0ailure to su'#it a report on ti#e due to fortuitous events such as fire and other natural cala#ities) syste# 'rea1do"n and pu'lic disorders) includin! stri1e or loc1out affectin! the SCCs as defined in the 5a'or Code or a national e#er!ency affectin! the operations of SCCs shall not 'e considered as delay.. . shall pay a fine of P799. 1. SCCs incurrin! delay in the su'#ission of re+uired reports (A7 and A. Incidents involvin! #aterial loss) destruction or da#a!e to the SCC propertiesBfacilities) other than arisin! fro# a cri#e) "hen the a#ount involved per incident is P799)999.1. Manner of pa'ment or co!!ection of fines.27.7...2.

T3. C79<B7> A. +ther pena!ties$ . 1..7. 1.30.6. 1.1. 1.8. 0ailure to settle the full a#ount of the fines "ithin the period or on the day prescri'ed herein shall 'e su'%ect to additional penalties) fines and surchar!es. .28.3.3. D5A<:<B<3: 3A N5B W36BC.7.30.4.30.4. 1. ARTICLE '.R<@J A@@5B@ R7B<3) .30.. .5. 1.he ter# net "orth shall refer to e+uity inclusive of #e#'ersA e+uity) donationsB!rants) and reserve funds less un'oo1ed allo"ance for pro'a'le losses on loans) invest#ents and other assets) and other capital ad%ust#ents as #ay 'e re+uired 'y the C-A. .5.8.29.30. 1.30.2. 1.he net "orth of a SCC shall) at all ti#es) not 'e less than an a#ount e+ual to ei!ht percent (8I of its ris1 assets "hich is defined as its total assets #inus the follo"in! assets6 Section 1.5E?7FG (N5B W36BC.he decision of the (oard of Ad#inistrators of theC-A shall 'e final and e?ecutory.. 1.30. . Cash on hand3 2vidences of inde'tedness of the Repu'lic of the Philippines and of the (SP and other evidences of inde'tedness or o'li!ations the servicin! and repay#ent of "hich are fully !uaranteed 'y the Repu'lic of the Philippines3 5oans to the e?tent covered 'y hold$outs o) or assi!n#ents of deposits #aintained in the SCC and held in the Philippines3 5and o"ned 'y the SCC 'ein! used for operations3 (uildin! and land i#prove#ents) net of depreciation3 0urnitures and fi?tures and e+uip#ent) net of depreciation3 Real estate #ort!a!e loans insured 'y the 8o#e Insurance Cuarantee Corporation (8ICC ) to the e?tent of the a#ount of the insurances3 and Other non$ris1 ite#s as the C-A #ay) fro# ti#e to ti#e) authori. Manual of Rules and Regulations for SCCs 21 .30. Appea! to the A4&5+R &6.e to 'e deducted fro# total assets.28.30.he (oard of Ad#inistrators of the C-A shall) upon receipt of the re+uest for reconsideration) act "ithin si?ty (69 calendar days) other"ise the i#position of sanctions shall 'e dee#ed lifted. 1. CAPITALI ATION Section 1.he i#position of the penalties shall 'e "ithout pre%udice to the i#position of other ad#inistrative sanctions and to the filin! of a cri#inal case as provided for in other provisions of la". SCCs #ay re+uest for a reconsideration of the i#position of sanctions to the C-A "ithin thirty (39 calendar days upon receipt of notice.

1. 1.nificant!' undercapita!i"ed & net "orth to ris1$asset ratio is e+ual to t"o percent (.31.3 a'ove) the SCC shall) "ithin a t"o (. R5@B6<FB<3:@ A36 ?:. Section 1. P56<3. P63D9B C3665FB<45 AFB<3:.1.ed and until such ti#e that the SCC is ade+uately capitali.31. It should enhance the safety of the #e#'ersA shares and 1eep pace "ith !ro"th in SCC assets.31. A36 F6<B<F7>>G ?:.ed or si!nificantly undercapitali.1.ed as undercapitali.36. A SCC "ill 'e deter#ined to 'e insolvent "hen the cash value of its assets is less than its total lia'ilities. 1.35. SCC@$ 0ro# the ti#e the Authority has declared the SCC as undercapitali.35. 1.ed shall su'#it for approval) "ithin the deadline set 'y the Authority) a reha'ilitation plan prior to its i#ple#entation.33. AFB<3: 65E?<65. R5C7H<><B7B<3: P>7:. 1. 79=6) as a#ended . B3 C3665FB C79<B7> D5A<F<5:FG.Section 1.36. /et "orth cate!ories for purposes of pro#pt corrective action are6 We!!-capita!i"ed & the SCCAs net "orth to ris1$asset ratio is at least ten percent (79I 3 Ade#uate!' capita!i"ed $ net "orth to ris1$asset ratio is e+ual to ei!ht percent (8I 'ut less than ten percent (79I 3 4ndercapita!i"ed $ net "orth to ris1$asset ratio is e+ual to si? percent (6I 'ut less than ei!ht percent (8I 3 Si. *henever the net "orth of SCCs is deficient "ith respect to the re+uire#ents of Section 6. 1. 1.2. A SCC that is cate!ori. Proceedin.4.he C-A) not later than ninety (99 days after the date on "hich a SCC 'eco#es critically undercapitali. . 1.56F79<B7><I5.31.2.56F79<B7><I5. Manual of Rules and Regulations for SCCs 22 . /othin! in this section) ho"ever) precludes creditors fro# see1in! protection fro# said insolvency la".3.1.34. In case a SCC is una'le to fulfill its o'li!ations to creditors due to insolvency) such SCC #ay apply for such re#edies as it #ay dee# fit under the provisions of the Insolvency 5a" (Act /o.32.a1e such other actions as it deter#ines to 'etter achieve the purpose in lieu of appointin! a li+uidator.35. SCC@ $ .3. 1.s 4pon nso!venc'.he SCCAs net "orth position should 'e sufficient to #eet co#petitive pressure and adverse econo#ic conditions as they arise.1. Section 1. Section 1.ed) it shall not 'e per#itted to6 -istri'ute interest on share capital and patrona!e refund) unless added to share capital3 Increase its ris1 assets3 and 2?pand operations) unless it is part of the reha'ilitation plan. Section 1.34.ed shall6 Appoint a conservator) receiver or li+uidator) as the case #ay 'e3 or . 1.34. 1. year period) #eet the #ini#u# re+uire#ent for net "orth to ris1 asset ratio.I 'ut less than si? percent (6I 3 Critica!!' undercapita!i"ed & net "orth$to$ris1 asset ratio is less than t"o percent (. I:@3>45:FG 3A SCC@. Section 1.2.31.5.34.31.I .

7.he conservatorship shall not e?ceed one (7 year.36.he C-A shall) on the 'asis of its findin!s or the report of the conservator andBor the report of the e?a#iner) ter#inate the conservatorship "hen6 It is satisfied that the SCC can continue to operate on its o"n3 or . e+ual #onthly install#ents6 Provided) ..7. Appointment of Conservator *henever on the 'asis of a report su'#itted 'y the appropriate supervisin! or e?a#inin! depart#ent of the C-A or upon the re+uest of the dele!ated supervisin! and e?a#inin! federation or union in accordance "ith S5FB<3: (. 7.....B3 of the salary of the #ana!er of the pri#ary cooperative or its e+uivalent in one (7 year) paya'le in t"elve (7.6.36.=.7.he conservator shall receive re#uneration to 'e fi?ed 'y the C-A in an a#ount not to e?ceed t"o$thirds (. Proceedin.36.36.36..3... 7..he C-A shall not appoint a conservator fro# the unit or depart#ent of the Authority reco##endin! conservatorship.e the #ana!e#ent) collect all #onies and de'ts due said SCC3 and e?ercise all po"ers necessary to restore its via'ility.3.6.36. 7.36. Manual of Rules and Regulations for SCCs 2" . ...7.36.hat) at any ti#e "ithin the one (7 year period) the conservatorship is ter#inated on the !round that the institution can operate on its o"n) the conservator shall receive the 'alance of the re#uneration "hich heBshe "ould have received up to the end of the year) 'ut if the conservatorship is ter#inated on other !rounds) the conservator shall not 'e entitled to such re#ainin! 'alance.36.36.. 7. ..2.hat this shall not include ina'ility to pay caused 'y e?traordinary de#ands induced 'y financial panic3 7.>.3.he continuance in 'usiness of the SCC "ould result in additional loss to its #e#'ers or creditors) in "hich case) the process of receivership and li+uidation shall apply.he conservator should 'e co#petent and 1no"led!ea'le in cooperative operations and #ana!e#ent. ..6.he conservator shall report and 'e responsi'le to the C-A and shall have the po"er to overrule or revo1e the actions of the previous #ana!e#ent and (oard of -irectors of the pri#ary cooperative.he C-A #ay su##arily) and "ithout need for prior hearin!) for'id the SCC fro# doin! 'usiness in the Philippines and desi!nate a receiver of the SCC concerned) "henever the C-A finds that a SCC6 Is una'le to pay its lia'ilities as they 'eco#e due in the ordinary course of 'usiness6 Provided) .1.) 7H345 (Action Re#uired for Critica!!' 4ndercapita!i"ed)7 or if the Authority finds that the pri#ary cooperative is in a state of continuin! illi+uidity or un"illin!ness to #aintain a condition of li+uidity "hich is dee#ed ade+uate to protect the interest of #e#'ers and creditors) the C-A #ay appoint a conservator) "ith such po"ers as the C-A shall dee# necessary) to ta1e char!e of the assets) lia'ilities) and the #ana!e#ent thereof3 reor!ani..3..36.. 7.s in Receivership and %i#uidation . .. 7. 7.7. 7. . .7.36. 1...

. If the receiver deter#ines that the SCC cannot 'e reha'ilitated or per#itted to resu#e 'usiness in accordance "ith the precedin! para!raph) the C-A shall notify in "ritin! the SCCAs (oard of -irectors of its findin!s and direct the receiver to proceed "ith the li+uidation of the SCC.36.=.3.7.i#e -eposits "ith SSC #ay 'e opened "ith a #ini#u# a#ount to 'e deter#ined 'y the (oard of -irectors.3. 7.he receiver shall deter#ine) as soon as possi'le 'ut not later than ninety (99 days fro# ta1eover) "hether the SCC #ay 'e reha'ilitated or other"ise placed in such a condition so that it #ay 'e per#itted to resu#e 'usiness "ith safety to its #e#'ers and creditors) and the !eneral pu'lic6 Provided) .7B<3:.7. Any person of reco!ni.36.he receiver shall pay the cost of the proceedin!s fro# the assets of the SCC.36. D<@B6<H?B<3: 7:. Cannot continue in 'usiness "ithout resultin! in pro'a'le losses to its #e#'ers or creditors3 or 8as "illfully violated a cease and desist order that has 'eco#e final) involvin! acts or transactions "hich a#ount to fraud or the dissipation of the assets of the SCC. Section 1.7. L<E?<.3. 0urther#ore) the desi!nation of a conservator is not a precondition to the desi!nation of a receiver.36.@.he desi!nation of a conservator under the precedin! Section or the appoint#ent of a receiver under this Section shall 'e vested e?clusively "ith the C-A.=) 73.36. ARTICLE (. 1. .he receiver shall i##ediately !ather and ta1e char!e of all the assets and lia'ilities of the SCC) ad#inister the sa#e for the 'enefit of its #e#'ers and creditors) and e?ercise the !eneral po"ers of a receiver under the Revised Rules of Court 'ut shall not) "ith the e?ception of ad#inistrative e?penditures) pay or co##it any act that "ill involve the transfer or disposition of any asset of the SCC6 Provided) .he receiver shall6 0ile e .3.hat the receiver #ay deposit or place the funds of the SCC in non$speculative invest#ents..=. Savin!s and . O9567B<3: 3A D593@<B AFF3?:B@ . 7.. ..3.7B<3: P63F55.he follo"in! shall !overn the openin! and operation of deposit accounts of SCC6 Manual of Rules and Regulations for SCCs 2% . .he process for li+uidation) and the distri'ution and disposition of the SCCAs assets after li+uidation shall 'e !overned 'y the provisions of Sections 73.7.< of the Ceneral Cuidelines) Rules and Re!ulations on the Re!istration and Operation of Cooperatives. DEPOSIT AND BORROWING OPERATIONS M<:<D?D D593@<B.3. 7.36. .parte "ith the proper Re!ional . 7.6 and 73. .3. 7. O95:<:8 7:.3.36..36.4.. D<@93@<B<3: 3A L<E?<.3.hat any deter#ination for the resu#ption of 'usiness of the SCC shall 'e su'%ect to prior approval of the C-A. 7.37..ed co#petence in finance and cooperativis# #ay 'e desi!nated as receiver.>.38.=. .36.3. 7.rial Court) and "ithout re+uire#ent of prior notice or any other action) a petition for assistance in the li+uidation of the SCC pursuant to a li+uidation plan adopted 'y the C-A. Section 1.

1.41.7.eller shall i##ediately sta#p the "ithdra"n certificate of ti#e deposit or its e+uivalent docu#ent as GCancelledH or GPaidH and shall re+uire the #e#'er$depositor to ac1no"led!e receipt of the proceeds of the said deposits.ed officer) shall 'e issued to a #e#'er$depositor sho"in!) a#on! other thin!s) hisBher na#e and address) account nu#'er) date) a#ount of depositB"ithdra"al) interest credits and 'alance. W<BC.41. 3BC56 F7@C <B5D@. 1.2.1.. .40.eller 4achines (A. Only #e#'ers of the SCC and its affiliate la'oratory cooperative #ay open savin!s andBor ti#e deposit accounts. A SCC shall 'e responsi'le for the proper identification of its #e#'er$depositors.3.2. Si.3.=. dentification of mem1er-depositors.5. 1. Who ma' open deposit accounts.nature card$ A si!nature card 'earin! at least three (3 speci#en si!natures of each #e#'er$depositor shall 'e re+uired upon openin! of a deposit account.s Pass1oo9 and certificate of time deposits$ A savin!s deposit pass'oo1) si!ned 'y the receivin! teller and an authori. 7. A #e#'er$depositor #ay open and #aintain several deposit accounts in hisBher o"n na#e. 7. Chec1s and other cash ite#s #ay 'e accepted for deposit 'y the SCC6 Provided) .he cashier) 'oo11eeper and their assistants) and other e#ployees and officers of the SCC "hose duties entail the handlin! of cash or chec1s) can deposit and "ithdra"6 Provided.ed officers shall 'e issued to the #e#'er$depositor containin!) a#on! other thin!s) hisBher na#e) a#ount of deposit) date "hen the deposit "as #ade) its due date) and interest rate. Interest on ti#e deposits #ay 'e paid at #aturity or upon "ithdra"al or in advance6 Provided) . Savin!s deposit pass'oo1s and certificates of ti#e deposit shall 'e pre$nu#'ered. 1.=.39. Savin. 1. In the case of a ti#e deposit) a certificate of ti#e deposit or its e+uivalent instru#ent si!ned 'y at least t"o (. 7. 8eBshe #ay also open an account in other capacities as !uardian) a!ent) or trustee for hisBher i##ediate fa#ily #e#'ers "ho are #inors andBor incapacitated and cannot 'e +ualified as a #e#'er.38.hat interest paid in advance shall not e?ceed the interest for one (7 year.38.38.hat another officer processes such transactions.1.38. Manual of Rules and Regulations for SCCs 2' . Section 1.38.4. . 1.. D593@<B@ 3A FC5FJ@ 7:. .67K7> 3A D593@<B@$ *ithdra"al fro#6 Savin!s deposits can 'e #ade 'y presentin! to the SCC a duly acco#plished "ithdra"al slip to!ether "ith the depositorAs pass'oo1 or throu!h Auto#atic . P7GD5:B 3A I:B565@B 3: T<D5 D593@<B@. Any "ithdra"al fro# SCCAs accounts has to 'e approved 'y the Ceneral 4ana!er or hisBher desi!nated officer.38. 8um1er of deposit accounts. In the case of savin!s deposits) the accountsopened and #aintained shall 'e on a per savin!s product 'asis) "hile ti#e deposit accounts shall 'e opened and #aintained on the 'asis of its ter#s and conditions. Section 1. authori.he Payin!B-is'ursin! .38.41.4s .38.i#e deposits can 'e #ade upon presentation 'y the #e#'er$depositor of the certificate of ti#e deposit or e+uivalent docu#ent that the SCC issued to evidence its receipt of ti#e deposit place#ent. Section 1.1. .hat "ithdra"als fro# such deposits shall not 'e #ade until the chec1 or other cash ite#s is collected.=.

<BG R5@5645 F?:.47.3. R5@5645 R5E?<65D5:B@ 787<:@B D593@<B L<7H<><B<5@ %i#uidit' Reserve 3und.>>.ed 'y the !eneral asse#'ly) #ay 'orro" fro# any source at the 'est ter#s or conditions availa'le and in such a#ount that #ay 'e needed. 5endin! policies should clearly reflect6 5i#its on loan a#ounts) loan #aturities and repay#ent ter#s) accepta'le collateral) and interest rates that are reasona'ly desi!ned to #eet the SCCAs o'%ectives3 and Manual of Rules and Regulations for SCCs 2( . F<:7:F<7> S564<F5.44.2. 1. ...>>.. Section 1.46. D36D7:B S74<:8@ D593@<B.Section 1. L5:.. ARTICLE ). 5oans represent an SCCAs pri#ary earnin! asset. 1.47. A ti#e deposit not "ithdra"n or rene"ed on its due date shall 'e treated as a savin!s deposit and shall earn interest fro# #aturity to the date of actual "ithdra"al or rene"al at a rate applica'le to savin!s deposits.<:8 P3><F<5@..he SCC) throu!h the (oard of -irectors as authori.he (oard of -irectors shall 'e responsi'le for settin! "ritten loan policies. .1. A SCC #ay char!e a service fee for the #aintenance of dor#ant savin!s deposits. .. Section 1.44.he re#ainin! a#ount in the for# of evidences of inde'tedness or o'li!ations of the !overn#ent) its political su'divisions or instru#entalities.he co#position of the reserve fund shall 'e6 At least ten percent (79I in the for# of cash on hand andBor cash in 'an1s) and .>>. . M7B?65. SCCs shall #aintain a li+uidity reserve fund that "ill 'e restricted in nature e+uivalent to at least t"o percent (.I of their savin!s and ti#e deposit lia'ilities. LOANS AND INVESTMENT Section 1. T<D5 D593@<B@.45. years.he li+uidity reserve fund shall 'e co#puted 'ased on the precedin! end$of$#onth level.44.42.43.. 7. 1.he SCC #ay 1eep physical possession of such !overn#ent securities 'ut shall supply the Authority "ith the follo"in! infor#ation6 • • • • • /a#e of issuer Serial nu#'erB.ransaction code -eno#inations Cost of ac+uisition 4aturity -ates Section 1. .. C3D93@<B<3: 3A L<E?<. 7. Savin!s deposits shall 'e classified as dor#ant if no deposit or "ithdra"al has 'een #ade for the last t"o (. Section 1. F36D 7:. 0or the purpose of co#putin! the reserve fund) the value of !overn#ent securities shall 'e the cost of ac+uisition.7. Provision of loans is an essential financial service provided 'y the SCC to its #e#'ers. 7.. B3663K<:8@.1.

>..he !rantin! of loans 'y the credit co##ittee and loan officers shall 'e 'ased on the four JCAsJ of credit6 Character. .i#ely and consistent follo"$up actions3 @tili..><. L5:.2. SCCs shall co#ply "ith the provisions of R..<:8 P63F5.50. Other types of secured loans are ho#e e+uity loans and real estate loans. @nsecured loans are consu#er$ type loans) usually relatively s#all) traditionally offered for various purposes incidental to the #e#'ersA needs. 1. Character$ A deter#ination of character involves the develop#ent of infor#ation relatin! to the applicantAs credit history..50.hese refer to the type of activity to 'e financed) the #ar1et for such activity) and the via'ility of the pro%ect to 'e financed a#on! other thin!s..2.49. 1. 1. Co$#a1er loans) deposit hold$outs) and auto#o'ile loans are co##on types of secured loans. Manual of Rules and Regulations for SCCs 2) . 7. .><.49. Co!!atera!$ A SCC #ay !rant unsecured and secured loans.3.50. 1. In deter#inin! an applicantAs capacit) to pa)) the credit co##ittee or loan officer should carefully e?a#ine the applicantAs inco#e) de'ts) de't pay#ents) and livin! e?penses.><.his #ay 'e o'tained fro# the co##unity) other financial institutions) and credit 'ureaus. 1.4. Section 1.3.he loan application and other re+uired docu#ents should for# part of the credit infor#ation file of the #e#'er$'orro"er.7.3. 1.. Circu"stances.A.1. A #e#'er$'orro"er applyin! for a loan #ust su'#it an application statin! the purpose of the loan and such other infor#ation as #ay 'e re+uired 'y the SCC. B7@<@ <: BC5 G67:B 3A L37:@. 1.. /o loan shall 'e approved unless prior investi!ation has 'een #ade to deter#ine the credit standin! of the applicant andBor the fair #ar1et value of the property offered as security and the report thereon shall 'e #ade part of the loan application.<:8 AFB. Circumstances$ . . 7.47.49. Section 1.48... Section 1. 7.1.50. Credit information fi!e/co!!atera! fi!e$ SCC shall #aintain a credit infor#ation file) "hich shall contain) a#on! other thin!s) the #e#'er$'orro"erAs application) financial record) the collateral) and other infor#ation relative to the #e#'er$'orro"er. 3<6=) other"ise 1no"n as the H.ation of outside collection sources "hen internal efforts fail to produce results3 and 4aintenance of collection records.ruth in 5endin! ActH (A995:. Capacit' to Pa'.<= H)7 and shall #a1e the true and effective cost of 'orro"in! an inte!ral part of every loan contract.ation.. . and Collateral. +T6?BC <: L5:. Capacit) to pa).2.?65@ App!ication. After de't pay#ents and livin! e?penses are ta1en into account) the applicantAs inco#e should 'e ade+uate to repay the loan in accordance "ith the a!reed upon ter#s. Credit investi.he security #ay also 'e an endorse#ent 'y another person "ho a!rees to repay if the 'orro"er fails to do so.><.49.1. 7.49. 2ffective loan collection policies desi!ned "ith the follo"in! characteristics6 Pro#pt and accurate delin+uent loan reportin! to the 'oard3 . D<@F>3@?65 R5E?<65D5:B@. Secured loans are e?tended credit "ith a security interest in personal or real property of tan!i'le value.

Pa'ment of !oan 1efore maturit'$ Should a #e#'er$'orro"er opt to pay the outstandin! 'alance of his loan 'efore #aturity) the SCC #ay char!e a pre#iu# on the portion of the loan to 'e prepaid) su'%ect to prior a!ree#ent 'et"een the SCC and its #e#'er$'orro"ers6 Provided) . *here) su'se+uent to the release of the loan proceeds) #e#'er$'orro"ers open deposit accounts or #a1e additional deposits to their e?istin! accounts) no part of such ne" deposits shall 'e covered 'y a stipulation prohi'itin! or li#itin! "ithdra"al "hile a portion of their loans are outstandin!6 Provided.54. Section 1.3. L37: R5B5:B<3: S74<:8 SFC5D5.reements$ 0or each loan !ranted 'y a SCC) a pro#issory note shall 'e e?ecuted 'y the #e#'er$'orro"er in favor of the SCC statin! the a#ount of the loan) date !ranted) due date) interest rate) and other infor#ation.<= G) as approved 'y the Ceneral Asse#'ly.51.53. %oan Approva!s.50.he rate of interest for the loan or for'earance of any #oney) !oods or credit) and the rate allo"ed in %ud!#ents) in the a'sence of e?press contract as to such rate of interest) shall 'e t"elve percent (7. Interest on past due loans or loan install#ents in arrears shall 'e ta1en up as inco#e only "hen actual pay#ents thereon are received. *hile loan collections #ay'e dele!ated to a co##ittee or staff #e#'er(s ) the 'oard has the responsi'ility of e?ercisin! close control and #onitorin! over the SCC lendin! pro!ra#. OBC56 CC7685@.I per annu#. Accrua! of interest earned on !oans$ SCCs shall not accrue interest inco#e on loans that are already past due or on loan install#ents that are in arrears) re!ardless of "hether the loans are secured or unsecured.hat this prohi'ition shall not apply in cases of loans secured 'y a hold$out on deposits to the e?tent of the unencu#'ered a#ount of the deposit e?istin! at the ti#e of the a'ove$#entioned loan application.4.he rate of interest includin! co##issions) pre#iu#s) fees and other char!es on loans) and for'earance of #oney) re!ardless of #aturity and "hether secured or unsecured) shall 'e reasona'ly set to at least fully cover the operational and financial costs of the SCC. S5F?65.2. nterest in the a1sence of contract$ . SCCs #ay re+uire #e#'er$'orro"ers to deposit a portion of the loan proceeds) "hether in the for# of savin!s or ti#e deposits.50. 5oans shall 'e approved in accordance "ith the Codified Approvin! and Si!nin! Authority (CASA (A995:. 1.50.hat in case of interest paid in advance) the a#ount of interest for the un#atured portion of the loan shall 'e refunded to the #e#'er$'orro"er. %oan A.52. .6. .a.53.he follo"in! shall !overn the rates of interest and other char!es on loans !ranted 'y SCC6 nterest Rate$ . 1. Section 1.1.1. Manual of Rules and Regulations for SCCs 28 . L37: M3:<B36<:8. nscription of %ien$ In case of #ort!a!e loans) no release a!ainst an approved loan shall 'e #ade 'efore the inscription of the #ort!a!e.1.53. L37:@ %oans Secured 1' Rea! 0state Mort.es$ 5oans a!ainst real estate security shall not e?ceed seventy percent (<9I of the appraised value of the real estate security includin! insured i#prove#ents) if any) and such loans shall not 'e #ade unless title to the real estate is in the na#e of the #ort!a!or and properly annotated "ith the appropriate re!ulatory 'ody. 1. 1.4. Section 1.53. I:B565@B 7:. Section 1. 1.54.53.5. 1. 1.

.. 7.4.3... Rea! 0state Securit' Without &orrens &it!e .>. 1..2.>.itle "here6 .=>.=>. 7.>.he applicant for ho#estead or free patent has already #ade i#prove#ents on the land) and the loan applied for is to 'e used for further develop#ent of the sa#e or for other productive econo#ic activities3 and . 7..=>.ones shall 'e for the sole account of the SCC. Such 'onds and securities #ay 'e accepted at their face value3 Kuedans or "arehouse receipts issued 'y 'onded "arehouses coverin! stoc1 deposited in said "arehouses up to ei!hty percent (89I of the calculated #ar1et value of the stoc13 and 1..>..7.7.=>. 7.>.1. 5oans #ay also 'e !ranted on the security of lands "ithout .>.hat6 *hen the correspondin! titles are issued) the sa#e shall 'e delivered to the Re!ister of -eeds of the province "here such lands are situated for the annotation of the encu#'rance3 Copies of notices for the presentation of the final proof shall also 'e furnished to the SCC) and if the 'orro"er applicants fail to present the final proof "ithin thirty (39 days fro# date of notice) the SCC #ay do so for the# at their e?pense3 ..>. 7... 7.=>.54.=>.=>.=>..>.3...7.3.he appraisal and verification of the status of a land is a full responsi'ility of the SCC) and any loan !ranted on any land "hich shall 'e found later to 'e "ithin the forest . 7....he o"ner of the private property can sho" = years or #ore of peaceful) continuous) and uninterrupted possession in the concept of an o"ner3 Portions of friar land estates or other lands ad#inistered 'y the (ureau of 5ands are covered 'y sales contracts) and the purchasers have paid at least five (= years install#ent thereon) "ithout the necessity of prior approval and consent 'y the -irector of the (ureau of 5ands3 Portions of other estates under the ad#inistration of the -epart#ent of A!rarian Refor# (-AR or other !overn#ental a!ency are li1e"ise covered 'y sales contracts) and the purchaser has paid at least five (= years install#ents thereon) "ithout the necessity of prior approval and consent of the -AR or correspondin! !overn#ental a!ency3 8o#esteads or free patent lands have approved titles that are yet to 'e issued) the provisions of any la" or re!ulations to the contrary not"ithstandin!6 Provided) .=>.. 5oans #ay 'e secured 'y unencu#'ered personal property "hich #ay consist of6 (onds and securities issued 'y the Covern#ent. 7.54.=>.54.. 7. Manual of Rules and Regulations for SCCs 29 . %oans Secured 1' Chatte!s$ 5oans secured 'y chattels shall not e?ceed fifty percent (=9I of the appraised value of the security) and such loans shall not 'e #ade unless title to the chattels shall 'e in the na#e of the #ort!a!or.... %oans Secured 1' Persona! Properties.orrens . 7.

=>. 1.54. . .7.=>. nsurance on Rea! 0state mprovements .he loan docu#ents shall include a "aiver on the part of the depositor of hisBher ri!hts under e?istin! la" to the confidentiality of hisBher deposits.1.=>.==. %oans Secured 1' Certificates of &ime )eposits (C&)s)$ .-s su'%ect to hold$out or assi!n#ent is shorter than the ter# of the loan) there shall 'e an a!ree#ent in "ritin! that rene"al of the ti#e deposit upon #aturity shall 'e #ade at least co$ter#inus "ith the ter# of the loan3 .-s issued 'y the lendin! cooperative or any other financial institution6 . 1. If the property is ne"ly purchased and the purchase price thereof appears in a 'ill of sale) then the a'ove percenta!e shall 'e 'ased on the price of the said 'ill of sale. 7. 1.7.=>.3.he depository 'an1) other than the lendin! 'an1) shall 'e furnished a copy of the -eed of Assi!n#ent or hold$out a!ree#ent on the deposit used as collateral3 . -oreclosure and Rede"ption of . Manual of Rules and Regulations for SCCs "! .=.6.=>.here shall 'e no pre$ter#ination of the ti#e deposit "ithout the consent of the lendin! cooperative and unless an accepta'le su'stitute collateral for the loan has 'een #ade3 .-s su'%ect to hold$out or assi!n#ent shall 'e surrendered to the lendin! cooperative3 If the ter#s of the C. SCCs shall re+uire6 Proof of 3inancia! Capacit' of *orro:er$ In addition to the usual personal infor#ation sheet a'out the 'orro"er) SCCs shall re+uire that an application for a credit acco##odation a!ainst personal security 'e acco#panied 'y6 A copy of the latest inco#e ta? returns of the 'orro"er and his co$#a1er duly sta#ped as received 'y the (IR) if applica'le) or a state#ent sho"in! the household inco#e and e?penses of the 'orro"er as verified 'y the SCC3 or 1.55.=.6.he re+uired insurance on i#prove#ents used as collateral for loan should 'e such as shall 'e sufficient to secure seventy percent (<9I of the appraised value of such i#prove#ents or if inade+uately insured) the loan value shall correspond to the e?tent of insurance ta1en on such i#prove#ents. 7.5.=.=.3. 7..54.he ori!inal copy of the C.=.ortgages.=>.7.he SCC shall 1eep a co#plete record of all pertinent loan docu#ents) such as) 'ut not li#ited to) the ori!inal copy of the C.>. U:@5F?65.=. 7. 7.he foreclosure and rede#ption of #ort!a!es shall 'e in accordance "ith e?istin! la"s. 7. (efore !rantin! unsecured loans) SCCs #ust e?ercise proper caution 'y ascertainin! that the 'orro"ers) co$#a1ers) endorsers) sureties andBor !uarantors possess !ood credit standin! and are financially capa'le of fulfillin! their co##it#ent to the SCC. Section 1.he follo"in! rules shall !overn the !rant of loans secured 'y hold$out on andBor assi!n#ent of C.>.=.7. 7.54.9.. L37:@. Any other personal property up to fifty percent (=9I of the fair #ar1et value.-s su'%ect to assi!n#ent or hold$out a!ree#ent3 deed of assi!n#ent or hold$out a!ree#ent3 and "ritten "aiver of the depositor re+uired in section 8.55.=.7.=>.6 'elo") "hich shall 'e #ade availa'le for inspection andBor e?a#ination 'y the Authority3 and .

/o director or co##ittee #e#'er shall vote on a loan re+uested 'y a #e#'er of hisBher fa#ily) 'y consan!uinity or 'y affinity to the second de!ree) or can heBshe 'eco#e a co$#a1er) surety or endorser on any loan contracted 'y a #e#'er "ith the SCC. . 7.567B<3:@.==. 5oans !ranted to #e#'er$'orro"ers shall at no ti#e e?ceed the follo"in! percenta!es of the net "orth of the SCC6 .55.7. 7. 1.59.. 1. L37: L<D<B@/M7B?6<BG 3A L37:@. In all cases of acco##odation !ranted to directors and officers) the "ritten approval of the #a%ority of the directors of the SCC) e?cludin! the director concerned) shall 'e entered upon the records of the SCC. 'an1sBfederations) 'ut in no case shall deposits in one 'an1Bfederation e?ceed fifty percent (=9I of the SCCAs net "orth. If the 'orro"er is en!a!ed in 'usiness) a copy of the 'orro"erAs financial state#ents) if applica'le) and if the 'orro"er "ill en!a!e in 'usiness) afeasi'ility study of the pro%ect to 'e financed.1.59.59. BC5<6 R5>7B5.he co$#a1er shall) at all ti#es) 'e a #e#'er of the SCC.57.9.hese reports and records shall 'e #ade availa'le for inspection to the Authority.7B<3:@ B3 D<65FB36@. A #onthly a!in! report of -OSRI accounts (individual and a!!re!ate shall 'e re!ularly reported to the (oard of -irectors.7. 5oans !ranted 'y a SCC shall have a #a?i#u# ter# of not #ore than five (= years e?cept loans ade+uately secured 'y unencu#'ered real estate for the purpose of ho#e 'uildin! and ho#e develop#ent "hich #ay 'e !ranted "ith #aturity dates not e?ceedin! fifteen (7= years6 Provided.2. . Section 1.58. .. SCCs shall not indirectly #a1e any loan to any director or officer of such SCC) either for hi#self or as a!ent or as partner of another person or entity. OAA<F56@.he application for a loan 'y a #e#'er of the Credit Co##ittee shall 'e su'%ect to the approval of the (oard of -irectors. 1. SB7AA 7:.56. 1.57..7. L37:@/C65.natories.57. D593@<B@ <: H7:J@/A5. OAA<F56@ 7:.59. . .hat e?tensions or rene"als of loan shall 'e in accordance "ith the provisions of Section 8. C3DD<BB55 M5DH56@ . 1.7.=<. Section 1.. Section 1.7. Section 1. 5oan docu#ents of credit acco##odations shall 'e si!ned 'y the principal 'orro"er and at least one (7 co$#a1er e?cept the spouse of the 'orro"er.2. %oan Si.en percent (79I for individual #e#'er$'orro"er3 and 0ifteen percent (7=I for #e#'er$'orro"er and hisBher i##ediate fa#ily #e#'er up to the first de!ree of consan!uinity or affinity.2.<B AFF3DD3.. R5@B6<FB<3: 3: D<65FB36@. Manual of Rules and Regulations for SCCs "1 .1.3. %oan Maturit'.!e 1orro:er . %oan !imit to a sin. 1. I:B565@B@ (DOSRI) -ealin!s of SCCs "ith any of its directors) officers) staff) and their related interests shall 'e in re!ular course of 'usiness) and upon ter#s and conditions not #ore favora'le than those offered to other #e#'er$'orro"ers.=<.he SCC shall #aintain deposits in at least t"o (.

7.7.. 5oans can 'e restructured only once. 1.he approvalBdisapproval of restructured loans #ay 'e dele!ated 'y the (oard of -irectors to a co##ittee or officers under e?istin! restructurin! !uidelines set 'y the (oard of -irectors... S7:FB<3:@.he 'asis for the approval3 -eter#ination of the 'orro"erAs capacity to pay) such as via'ility of the 'usiness3 and /ature and e?tent of protection of the SCCAs e?posure.<B B?657?. a'ove shall 'e su'%ect to the i#position of a fine of one$tenth of one percent (7B79 of 7I of the e?cess over the loan ceilin! or the a#ount of the -OSRI account per day 'ut not to e?ceed P=99 per day on each of the directors and officers votin! for the approval of the loan or credit acco##odation.ationBinstall#ent not collected on due date shall 'e 'oo1ed as past due and shall re#ain in this account until paid.61. A loan shall re#ain in this account until fully collected or until arran!e#ents are for#ali. %oans Receiva1!e-Past )ue$ . L37: P36BA3><3 7:. Section 1.he restructurin! of loans #ay 'e allo"ed only upon full pay#ent of interest due or under e?ceptional conditions as #ay 'e defined in the SCCAs loan policies. Any violation of the loan ceilin!s prescri'ed in Section 8. Approval Re/uire"ents.Section 1.7.he (oard of -irectors shall confir# any action ta1en 'y the co##ittee or officers.62.. OBC56 R<@J A@@5B@ R54<5K SG@B5D.3.. A!in! of loans receiva'les should 'e prepared to deter#ine status and ris1 of non$ collection of the past due loans.. 7.6.6.. .he correspondin! #e#orandu# entries shall 'e #ade on the individual led!er account for rei#'urse#ent 'y the 'orro"er durin! rede#ption of foreclosed properties. 1. Infor#ation fro# the credit 'ureau #ay 'e o'tained and used 'y the SCCs in deter#inin! the credit "orthiness of a 'orro"er..he restructurin! of loans to directors or officers should 'e upon ter#s not #ore favora'le than those offered to other #e#'er$ 'orro"ers..ed 'y the C-A. Procedural Re/uire"ents..62. 7.. All e?penses incurred in liti!ation shall 'e char!ed to operations and lod!ed under 5iti!ation 2?pense.7. %oans Receiva1!e .60.hese are total collecti'les fro# past due loans of #e#'er$ 'orro"ers.1. S?HD<@@<3: 3A C65.he SCC shall ta1e ti#ely and ade+uate #ana!e#ent action to #aintain the +uality of loan portfolio and other ris1 assets.77 andBor the provisions of Section 8.62... Any a#orti.ation$ 5oans in 5iti!ation shall re#ain in this account durin! the pendency of the le!al proceedin!s until fully paidBrestructuredBforeclosed. Manual of Rules and Regulations for SCCs "2 ..62.6..6.<B I:A36D7B<3: B3 7 C65.o ensure this) the #ana!e#ent shall6 Section 1... 7.. P7@B D?5 AFF3?:B@.2.ed for its rene"alBe?tension Brestructurin! or foreclosure of collateral.6. . 7.7. .7. Section 1. . 1. .3. Restructured$ .he penalty for e?ceedin! the ceilin! shall 'e co#puted on the avera!e a#ount of loans in e?cess of said ceilin! durin! the sa#e "ee1. Su'%ect to the restructurin! !uidelines approved 'y the (oard of -irectors) a loan #ay 'e restructured) the condition of "hich shall 'e contained in a resolution statin!) a#on! others) the follo"in!6 . SCCs shall re!ularly su'#it infor#ation on the credit transactions of a #e#'er$'orro"er to a credit 'ureau reco!ni. . %oans Receiva1!e ..63.7. . %oans in %iti.

2?cept for ho#e 'uildin! and ho#e develop#ent loans) e?tension of the period of pay#ent of loans shall not e?ceed one$half (7B. Other docu#entary re+uire#ents #ay vary dependin! on the nature) purpose and recipient of the loans.7B<3:@. 1. In the case of uncollecti'le advances) "rite$offs "ill 'e char!ed as ad#inistrative e?pense3 /o loans shall 'e "ritten off unless the sa#e can 'e %ustified 'y the SCC as uncollecti'le. . of the period of the first e?tension. .66. 1.1.he "ritin! off of loansBother credit acco##odations 'y SCCs shall 'e !overned 'y the follo"in! re!ulations6 *ritin! off of loans 'y the SCC shall 'e #ade in accordance "ith the "rite$off policy approved 'y the (oard of -irectors and shall 'e char!ed a!ainst the Allo"ance for Pro'a'le 5osses on 5oans (AP55 .63. A loan #ay 'e declared uncollecti'le under any of the follo"in! conditions6 (a the death of a 'orro"er3 or (' incapacity to pay or insolvency of the 'orro"er3 or (c un1no"n "herea'outs of the 'orro"er despite e?tra$dili!ent efforts to find the sa#e6 Provided.he AP55 shall 'e co#puted in accordance "ith the prescri'ed for#ula and allocation percenta!e provided for in A995:. 1. of the ori!inal period6 Provided) .3.63. Section 1. T657BD5:B 3A A@@5B@ AFE?<65.66. Manual of Rules and Regulations for SCCs "" . Section 1.65.hat all ad#inistrative and le!al re#edies have 'een e?hausted to collect the receiva'le. 1.67.3. 1. W6<B5.4.hat thirty percent (39I of the loan shall have 'een paid.<= # herein. 1.2. 1.he allo"ance for pro'a'le losses on loans (AP55 shall 'e 'oo1ed 'ased on the Portfolio At Ris1 (PAR "ith a 39$day !race period. Section 1. /o further e?tension shall 'e !ranted after the second e?tension. /otice for "rite$off of loans shall 'e su'#itted) in the prescri'ed for#) to the Authority at least thirty (39 days prior to the intended date of "rite$off.1. E=B5:@<3:/R5:5K7> 3A L37:@.he a#ount of allo"ance for pro'a'le losses on loans already 'oo1ed for one account #ay 'e used to cover re+uired AP55 for other non$perfor#in! accounts. .63.66. <: S5BB>5D5:B 3A L37:@ .<B 7FF3D3.3AA 3A >37:@/3BC56 F65. .1. Set up and #aintain ade+uate loan reserves at a level sufficient to a'sor' the loss inherent in the loan portfolio3 2sta'lish a syste# of identifyin! and #onitorin! e?istin! or potential pro'le# loans and other ris1 assets3 and 2valuate credit policies vis$L$vis prevailin! circu#stances and e#er!in! portfolio trends. 1. .2.2. In the case of loans to incu#'ent directors and officers of the SCC) prior approval of the Authority is re+uired.67.67. A second e?tension #ay 'e further !ranted 'ut not to e?ceed one$half (7B.he property ac+uired in settle#ent of loans throu!h foreclosure or dacion en pago (Gpay#ent in 1indH shall 'e 'oo1ed or recorded in the a#ount e+uivalent to the 'alance of the loan (principal for ti#e loans) or principal less interest pay#ent deducted in advance or 'id (in the case of foreclosure Ba!reed purchase price (in the case of dacion en pago ) "hichever is lo"er.64.66.66. L37: >3@@ P634<@<3:<:8. PAR is the a#ount of the loan portfolio "ith one day #issed pay#ent.1. *hen the 'oo1ed a#ount of the asset ac+uired in settle#ent of loans e?ceeds the appraised value of the ac+uired property) an allo"ance for pro'a'le losses e+uivalent to the e?cess of the a#ount 'oo1ed over the appraised value shall 'e set$up. Section 1.

Section 1. Other"ise) such a#ount shall 'e char!ed to 4iscellaneous 2?pense Account. A9967<@7> 3A P63956B<5@ B3 H5 A365F>3@5.70. (efore foreclosin! or ac+uirin! any property in settle#ent of loans and other advances) it #ust properly 'e appraised to deter#ine its true econo#ic value. 1. An in$house appraisal of such property shall 'e #ade at least every other year6 Provided) .3.e and the e?tent of its surplus funds. I:45@BD5:B P63867D.2.hat if the a#ount to 'e 'oo1ed as ROPOA e?ceeds P= #illion) the appraisal of the foreclosedBpurchased asset shall 'e conducted 'y an independent licensed appraiser.ed 'y la"3 Any reputa'le 'an13 (onds) securities) and other o'li!ations issued 'y the Covern#ent of the Philippines) or any of its political su'divisions) instru#entalities or corporations includin! !overn#ent o"ned or controlled corporations) su'%ect to such rules and re!ulations as the Authority #ay provide) in an a!!re!ate a#ount not e?ceedin! at any one ti#e ten percent (79I of the total assets of such SCC3 Real estate and i#prove#ents) includin! e+uip#ent) "hich shall not e?ceed fifty percent (=9I of the SCCAs net "orth as re+uired in Section 77. 1. 1. I:45@BD5:B@. .5. Any e?cess in loan 'alance over the a#ount 'oo1ed shall 'e char!ed to GAllo"ance for Pro'a'le 5osses on 5oans) if previously provided.. of this 4anual3 or In any other #anner as #ay 'e authori.6.. . 1. 1..70. If the total a#ount to 'e 'oo1ed as ROPOA e?ceeds P= #illion) an independent licensed appraiser #ust conduct the appraisal.70.1.5.hat i##ediate re$appraisal shall 'e conducted on ROPOAs "hich #aterially decline in value . 1. Clai#s arisin! fro# deficiency %ud!#ents rendered in connection "ith the foreclosure of #ort!a!ed properties shall 'e 'oo1ed "hen collected as 4iscellaneous Inco#e. . Section 1.70.68.71.he scope of the pro!ra# "ill depend lar!ely on the SCC si.3. Manual of Rules and Regulations for SCCs "% . 1.ed 'y the C-A.69. /on$refunda'le capital !ains ta? and docu#entary sta#p ta? paid in connection "ith foreclosureBpurchase of the ac+uired real estate property #ay 'e included in the 'oo1 value of the ac+uired real estate6 Provided.67.70.e returns. A sound invest#ent pro!ra# shall 'e the sole responsi'ility and accounta'ility of the (oard of -irectors. -isposal of the foreclosed property shall 'e the responsi'ility of the (oard of -irectors.4. 36 7FE?<65.1.4.. Invest#ent policies should 'e in "ritin! and should address the follo"in!6 1. A SCC #ay) at ti#es) have funds in e?cess of its needs for loans to #e#'ers that #ay 'e invested in safe and sound 'usiness activities to #a?i#i. A SCC #ay invest in the follo"in!6 Shares or de'entures of the federation or union of "hich it is a #e#'er3 Securities issued 'y SCC as #ay 'e authori.67.hat the total 'oo1 value does not e?ceed the appraised value of the ac+uired real estate6 Provided -urther. Section 1.70.67. A>>3K7H>5 I:45@BD5:B@.70. Section 1.

1. Contro!$ . Safet'7 %i#uidit' and 6ie!d$ Sound invest#ent policies assu#e a conservative approach in 'alancin! safety) li+uidity) and yield. Safety and yield should 'e carefully "ei!hed prior to underta1in! any invest#ent that could result in a loss to the SCC. 7. )e!e.his includes a plan of or!ani. Section 1. 7. 7.ation3 . . #onthly) +uarterly) se#iannually) or annually .7. .3. C3D93:5:B@ 3A I:B56:7> C3:B63> Accountin.<>.1.ransactions are "ithin the approved plan and 'ud!et3 .!.he 'oardAs policies should clearly address diversification and specially note any li#itations it #ay place on the types of invest#ents) +uantities and #aturities to 'e purchased.ation and all of the coordinate #ethods and #easures adopted to safe!uard the SCCAs assets) chec1 the accuracy and relia'ility of its accountin! data) pro#ote operational efficiency) and encoura!e adherence to prescri'ed #ana!erial policies.3.74.7.7.72.3. 1.1.71. In this connection) li+uidity #eans the a'ility to respond +uic1ly to anticipated and unanticipated shifts in the SCCAs flo" of funds.71.<>.e ris1s.1.he SCC shall not invest in any one entity of #ore than . )iversification$ A policy of diversification shall 'e e#ployed to #a?i#i.ation) procedures) and records that are concerned "ith the safe!uardin! of assets and the relia'ility of financial records. 0or purposes of fund #ana!e#ent) the #ar1et value of securities #ust 'e assessed re!ularly (e. 1.<>.7.73. 1.<>.7.71.3.9I of its net "orth. Internal control co#prises the plan of or!ani. .. 7. Manual of Rules and Regulations for SCCs "' .<>. Accountin! controls are desi!ned to provide reasona'le assurance that6 .7.7. C5<><:8 3: SCC I:45@BD5:B@. 7.3.<>..>.3.71..ation3 and Record accounta'ility for assets to co#pare "ith e?istin! assets at reasona'le intervals and ta1e appropriate action "henever there are differences.e returns on invest#ents and #ini#i. Section 1.4. If a 'ro1era!e fir# is used) the (oard of -irectors should satisfy itself as to the relia'ility and financial soundness of the fir#. 7.74.7. D5A<:<B<3: 3A I:B56:7> C3:B63>. INTERNAL CONTROL Section 1.ransactions are recorded as necessary to6 Per#it preparation of financial state#ents in confor#ity "ith CAAP3 4aintain accounta'ility of assets3 Access to assets is per#itted "ith #ana!e#entAs authori.3. 7.he 'oard #ay dele!ate specific invest#ent authority to an e?ecutive co##ittee) an invest#ent co##ittee) or a #ana!e#ent official..<>.7. <a!uation/Assessment of Securities .2.ation of Authorit'. Such policy is particularly useful for SCC that invests in #ar1eta'le securities.ransactions are e?ecuted "ith authori. ARTICLE 8.

75.he follo"in! provisions are the #ini#u# internal control standards for SCCs to attain efficiency and provide chec1s and 'alances6 Si.) se!re!ation of various functions) cross chec1in!) dual control of assets and dou'le si!natures. 1.1.hese si!nin! authorities shall include) 'ut need not 'e li#ited to) the follo"in!6 • • • • • • • 5endin!3 Invest#ent3 -is'urse#ents3 :arious supervisory reports3 Chec1s3 Certificate of . Authorities$ .7. I:B56:7> C3:B63> SB7:.nin.3. State#ents of actual duties of persons assi!ned to handle cash and securities. Records for Compi!ation$ .74. If supple#ented 'y internal control) it provides #ana!e#ent "ith reasona'le assurance that assets are safe!uarded fro# unauthori.hese records should indicate the accounts and the periodic 'alancin! procedures perfor#ed.ation of transactions. 7.ement Structure$ .he essential purpose of an accountin! syste# is to provide #ana!e#ent "ith the co#plete and accurate financial infor#ation it needs to conduct sound and effective operations.>. . .76. 7.3.1.e.. .he (oard of -irectors shall approve si!nin! authorities for the different levels of officers to si!n for and in 'ehalf of the SCCs and the e?tent of each level of authority shall 'e clearly defined.<=. Mana.ation should provide for a #ana!e#ent structure "ith clear accounta'ility) a 'oard of directors "ith a'ility to provide independent chec1 on #ana!e#ent and independent audit and co#pliance functions) and should follo" the Gfour eyesH principle i.74. 7. Accountin! syste# pertains to the series of tas1s in an entity 'y "hich transactions are processed as a #eans of #aintainin! financial records.75.he internal or!ani. Accountin. 7.he follo"in! recordsBdata shall 'e co#piled and #ade availa'le for the inspection of duly authori. Section 1.2. 1.@.his includes) 'ut is not li#ited to) the plan of or!ani.ed e?a#iner6 Records sho"in! co#pliance "ith independent 'alancin! procedures.3.2.3.75.3. 1.<=. Infor#ationBdata on the direct andBor indirect e+uity shareholdin!s in connection "ith any fir#) partnership) corporation) or other cooperatives of all the directors) officers) as defined) should 'e #aintained..ation and the procedures and records that are concerned "ith the decision processes leadin! to #ana!e#entAs authori. Manual of Rules and Regulations for SCCs "( . .<=.<=.ed use or disposition. In this re!ard) #ana!e#ent shall have a re!ular revie" of the internal control procedures.75. Administrative contro!$ . 1.i#e -eposits3 and Contracts or A!ree#ents.he financial state#ents produced 'y the syste# are used 'y #ana!e#ent to account to the #e#'ers) creditors) the Authority) and the !eneral pu'lic the financial condition of the SCC.3.3. . All internal control audit reports or their e+uivalent. S'stem.

5and!in.3. Si!nature cards and deposit led!er sheets shall 'e accessi'le to authori. *hen it 'eco#es apparent that an account is inactive) a short letter should 'e sent to the depositor encoura!in! hi# to use his account. 1. -or#antBinactive accounts shall 'e se!re!ated fro# active files.<=. 7.<=. As a #atter of policy6 SCCs shall revie" and se!re!ate dor#antBinactive account as herein defined at least once in every se#ester.=.=.>. 7..<=. Reports on closed accounts of #e#'ers shall 'e prepared on a #onthly 'asis.<=.3. A syste# to identify #e#'er$depositors shall 'e esta'lished.5. 7..<=.>.75. 7.75. responsi'le officersBe#ployees.6.>.3.. Su'se+uent chan!es shall also 'e validated. 7.>.<=.6.<=.<=. Se!re!ated dor#antBinactive accounts) includin! si!nature cards and deposit led!er sheet) shall 'e placed under %oint custody of t"o (.ed 'y the desi!nated officer. 1.6.<=. 7.7. 5and!in. Si!nature cards and deposit led!er sheets shall 'e authenticated 'y a responsi'le officer.7. 5and!in.=... 7.>.ation) input controls) processin! controls) output controls) soft"are controls) pro!ra# and docu#entation standards) lo!s on the operation of #ainfra#es and peripherals) hard"are controls) and such other 2-P internal control standards prescri'ed in e?istin! separate rules and re!ulations. -eposit tic1ets shall 'e occasionally e?a#ined at irre!ular intervals to deter#ine that postin!s are #ade on the actual date deposits are received.3.=.ed 'y the (oard of -irectors3 Chec1s issued 'y the SCC on cancelled transactions shall i##ediately 'e sta#ped cancelled or perforated3 and Reports on closed accounts and returned chec1s shall 'e prepared daily. 7.=.6.<=.7. 7. of SCC )eposit Accounts Openin! and closin! of deposit accounts shall 'e approved or authori. Infor#ationBdata pertainin! to the electronic data processin! (2-P depart#ent of the SCC particularly on or!ani. Manual of Rules and Regulations for SCCs ") . 7.<=. 1.6.=.7.. A su'sidiary led!er control for individual dor#antBinactive accounts shall 'e #aintained. of Mem1er )eposit Accounts All ne" deposit accounts shall 'e approved or authori.75.<=.ed persons only.6.<=.=.=. of )ormant/ nactive Accounts$ -or#ant or inactive accounts are accounts sho"in! no activity (deposit or "ithdra"als for a period of t"o (. 7. 7. It shall e?ert all efforts to prevent savin!s accounts fro# 'ein! dor#ant.4. 7.<=. years.

<=.79. 1.$9>) A995:.75.<=. Prior to approval) all vouchers shall 'ear the initials of 'oth the person authori.3.7.75.9. 7. Records .6. Reactivation of dor#ant accounts shall 'e in accordance "ith the policies and procedures as defined in the SCCAs 4anual of Operations.6. All in+uiries on dor#antBinactive accounts shall 'e coursed to one officer "ho should o'tain sufficient identification fro# the in+uirer to assure that he is entitled to the infor#ation.77.<=.he follo"in! #ini#u# independent 'alancin! procedures shall 'e adopted6 4onthly reconciliation of !eneral led!er 'alances a!ainst respective su'sidiary and supportin! records and docu#entation 'y so#eone other than the 'oo11eeper or the person handlin! the records3 7.ypes of Cooperative "ith Savin!s and Credit Services and the acco#panyin! Accountin! 4anual (C-A 4e#o Circular 9. ndependent *a!ancin.$ Independent 'alancin! shall #ean that records posted 'y a person or cash held 'y a teller or cashier shall 'e 'alanced or counted 'y another person.ed to chec1.hat after five (= years rec1oned fro# the date the account "as declared dor#antBinactive) the re#ainin! 'alance) if any) shall 'e credited to the reserve fund6 Provided.<=.o assure co#pliance "ith the attri'utes of an effective and transparent cooperative accountin! and financial infor#ation syste#) all SCCs shall follo" the !enerally accepted accountin! principles and standards as spelled out in the Standard Chart of Accounts for Credit and Other .6.<=.<.7. 7. SCCs shall #aintain up$to$date and ade+uate accountin! records.6.8.6..>. .<. 7. All transactions affectin! dor#antBinactive accounts shall 'e su'%ect to audit 'y the internal auditor.<.8.<=. A se#estral report on deposit accounts transferred to dor#ant shall 'e rendered to #ana!e#ent and to the (oard.hat such transfer shall 'e e?plicitly covered in the ter#s and conditions of the deposit a!ree#ent.7.<=. 7.7.<.=. .6. A schedule of dor#antBinactive account shall 'e prepared periodically 'y an e#ployee other than the 'oo11eeper and shall tally the sa#e "ith the !eneral control account. 7. It shall contain sufficient detail so that an audit trail is esta'lished. 7..8.6.ed to prepare and another person authori. 7. . 7.<.<=. Manual of Rules and Regulations for SCCs "8 . 1.<=.6.<=. 7.<= I) SCCs shall adopt the Cuidelines for the Operationalisation of the CooperativeAs (oo11eepin!BAccountin! Syste# under 4e#o Circular 9>$998. A SCC #ay i#pose service char!es on and deduct the sa#e fro# dor#antBinactive accounts6 Provided.<=. Proper Accountin. 7. Any entry to dor#antBinactive account led!ers shall 'e verified and initialed 'y a desi!nated officer.<=.

8...9.<=.9.8..8. 7.<=.9.9.>.he functions of issuin!) recordin! and si!nin! of draftsBchec1s shall 'e separated3 Chec1s and other cash ite#s shall 'e in the custody of an e#ployee not handlin! cash and that ade+uate controls are properly #aintained as to the custody and disposition of funds3 .he physical handlin! of a transaction shall 'e separated fro# its recordin! and supervision as follo"s6 A person handlin! cash shall not 'e per#itted to have access to the four (> 'oo1s of accounts (cash receipt 'oo1) cash dis'urse#ent 'oo1) !eneral %ournal and !eneral led!er and su'sidiary led!ers3 .<=. /o individual shall have co#plete authority and responsi'ility for handlin! all phases of any transaction fro# 'e!innin! to end) "ithout chec1s and 'alances fro# other parts of the or!ani.. 7.9. 7.<=.<=.>.6.ation3 .<=.9.ed person or durin! e?a#ination 'y the Authority3 4onthly reconciliation of due fro" $an+s) cash in $an+ accounts and due fro"0to head office0$ranches 'y so#eone other than the person handlin! the records or postin! the !eneral led!er entries3 At least +uarterly verification of securities and collaterals 'y a person other than their custodian3 and Periodic verification of the accuracy of the interest credits to deposit lia'ilities accounts.<=.....<=.8. 7..9. 7..<=.3. 7. 1.=.9. 7.he person postin! to the su'sidiary led!er should not 'e allo"ed to record to the 'oo1s of accounts3 A loan officerBaccount officer shall not 'e allo"ed to receive and dis'urse loan proceeds) for and in 'ehalf of the 'orro"ers) and accept loan pay#ents nor post to the su'sidiary loan led!ers3 A loan officerBaccount officerBcollector shall not 'e allo"ed to use the collections of any type in acco##odatin! savin!s "ithdra"al3 .. 7.. Irre!ular and unannounced count of tellerAs cash and chec1s and other cash ite#s at least t"ice a #onth 'y the auditorBcontrol officer or 'y an officer not connected "ith cash depart#ent unit3 Presence of incu#'ent tellersBcashiers durin! actual cash count 'y any authori.<=. 7.7. 7.<. 7.<=. 7.<=.8. )ivision of )uties and Responsi1i!ities .=..he receipt of state#ents fro# depository 'an1s shall 'e assi!ned to an e#ployee other than the one connected "ith the preparation) recordin! and si!nin! of 'an1 drafts3 7.7.6...he duties of all the officers and e#ployees shall 'e se!re!ated) clearly defined) understood) and docu#ented in the 4anual of Operations.3.<=.<=. Manual of Rules and Regulations for SCCs "9 .7.9......75.9.

.77.<=. 1.7.<=.. 7.<=.9.77.79.79.11.7.77.3 1... Custodians of securities shall not 'e allo"ed to handle security transactions3 Appraisal of collateral shall 'e done 'y an e#ployeeBofficer "ho does not approve loans3 7.. .9.79. .<=..3. ..hat the personnel handlin! treasury functions shall not 'e rotated to positions handlin! accountin! functions and vice versa3 Rotation shall 'e at rando#) unannounced and lon! enou!h to per#it disclosure of any irre!ularities of #anipulations3 Prior to rotation proper) turn$over of cash accounta'ilities and records shall have 'een #ade. Moint custody shall 'e re+uired on the follo"in!6 7.9. Inco#in! chec1s and other cash ite#s shall 'e recorded chronolo!ically in a re!ister 'y an e#ployee other than the 'oo11eeper 'efore they are for"arded for postin! purposes3 7.he use of at least t"o (.<=.75.<=. =oint Custod'.he full$ti#e personnel handlin! cash) securities) loan accounts and 'oo11eepin! records shall 'e rotated6 Provided.10.. Operation of the :ault Co#part#ent 7.7.. Persons "ho have access to the vault co#part#ent shall not have access to the 1ey to the entrance leadin! to the vault co#part#ent.7.. or #ore persons shall 'e assi!ned to each half of the control so that operatin! efficiency is not i#paired if one (7 person is not i##ediately availa'le. Moint custody shall #ean the re+uire#ent of the presence of and direct o'servation of a second person in the perfor#ance of i#portant tas1s and functions.<=. 7. 8andlin! of Cash and :ital -ocu#ents Manual of Rules and Regulations for SCCs %! .7..<=. Rotation of )uties 7. Persons "ho are related to each other "ithin the third de!ree of consan!uinity or affinity shall not 'e #ade %oint custodians.7. 4ailin! of custo#ersA state#ents and delin+uent notices shall 'e done 'y an e#ployee other than the one "ho !ranted the loan or the one handlin! the records.. Credit reports shall 'e o'tained 'y a personnel other than loan officers3 and 7.77.<=.7.3. 7.<=."o (.9.<=.9. (oth persons shall 'e e+ually accounta'le for the physical protection of the ite#s and records involved...8. 7.<=.<=.9.75..77.7. 7.77.79.. loc1s or co#'ination on a vault co#part#ent shall 'e re+uired.. . 7.

..<=..<=. 7.. 2?cept as herein provided) the follo"in! accountsBtransactions shall 'e under dual control6 7.<=.s$ .. duly authori...73...9.77.<=. :ault door and safe co#'inations3 7. Access loc1s and 1eys to 4IS #ainfra#es and peripherals.7.7..77..7.77.7.<=. 8um1er Contro! 7. @nissued and captured A.for#s3 7.. Manual of Rules and Regulations for SCCs %1 . authori....77. 7. Cash in vault and in A...7.<=..<=.ed) recorded and settled.. Recordin! of C. )ue to and )ue from Accounts$ All instru#ents of re#ittances arisin! fro# )ue to or #ue fro" accounts shall 'e approved 'y t"o (.....<=. 7.>. .<...ed officers should 'e re+uired.<=.<=.he si!nature of at least t"o (..7.8.77...<=..ed officers..ed individuals..<=. officers should 'e re+uired in the issuance of chec1s..7....transactions 7.he 'oard of directors of a SCC is !iven the discretion to deter#ine the nu#'er of si!natories for the issuance of certificates of ti#e deposits (C...77. 0or this purpose) all SCCs shall define in the 4anual of Operations their respective internal control #easures for the issuance of the C..3.7.he si!nature of at least t"o (.79.77..3.4 cash dispensers3 All accounta'le for#s3 Collaterals3 Securities3 -ocu#ents of title andBor o"nership of properties or fi?ed assets -or#ant or inactive deposit led!ersB4IS print$outs and correspondin! si!nature cards includin! on$line postin! of dor#antBinactive accounts3 7.<=. 7.....<=...<=.. 7. Accountin! for all unissuedBcancelled C.77.-s a!ainst the tellerAs proofsheetsBvalidated slips3 and 7.77....7.<=... @nissued speci#en si!nature 'oo1s3 7..7.7. 1.7. Collection ite#s3 7..7.7.=.75.>.75.77. Counterchec1in! of issued C. 1. Certificates of &ime )eposit 7.=.<=.7.>..6..77. . .... Access loc1s and 1eys to on$line 4IS ter#inals and si#ilar devices3 and 7.13.. Moint custody of unissued C.7.7.-s 3 7.77. Se+uence nu#'er controls shall 'e incorporated in the accountin! syste# and shall 'e used in re!isterin! pro#issory notes) in issuin! official chec1s and in other si#ilar situations.-s3 7.<=...7.. )ua! Contro!. *orro:in.12..<=. Si!nature re+uire#ent for the issuance of C.4 cards and si#ilar devices3 7..<=.<=...3.<=.<=.he routine and co#pletion of each transaction shall involve at least t"o (.-s) the #ini#u# of "hich shall include the follo"in! activities6 7. authori... Chec9s .77. 7.-s3 7. -ual control shall #ean the "or1 of one (7 person is to 'e verified 'y a second person to ensure that the transaction is properly authori.<=... 7.

15. 1..7.73.<=.7.<=.7=.7.3. Confirmation/<erification of Accounts.his infor#ation #ay 'e #ar1ed Gper#anentH and 'e updated only "hen chan!es are #ade.7=.7=. .<=. 4ultiple loan accounts of one 'orro"er "ill 'e listed separately3 7. 7. At least once a year) the internal auditin! staff shall confir# 'y direct verification "ith SCC #e#'ersBclients the follo"in!6 7.he follo"in!) a#on! others) are the for#s) instru#ents and accounts that shall 'e nu#'er$controlled6 • • • • • • • • • Pro#issory notes3 Savin!s deposit accounts and pass'oo13 C. .<=.3.7>.<=.-s3 Si!nature Cards3 Official and provisional receipts3 Share Certificates3 5oan accounts3 2?pense and chec1 vouchers3 and 4IS 'atch trans#ittal slips of docu#ents. A financial report "hich lists all of the SCCAs assets and lia'ility accounts3 and 7..75.<=.75.7.7.he vital records center is defined as any location to avoid the si#ultaneous loss of 'oth sets of records in the event of disaster..7. (alances of loans and credit acco##odations of 'orro"ers3 -eposit account 'alances particularly ne" deposit accounts) inactive or dor#ant accounts and closed accounts3 Outstandin! 'alances of 'orro"in!s and other lia'ilities3 and Outstandin! 'alances of receiva'lesBpaya'les.<=.<=. Records #ust 'e updated every three (3 #onths) and #ust 'e stored "ithin thirty (39 days after the end of the 3$#onth period.. 7. Manual of Rules and Regulations for SCCs %2 .=. A list of share andBor deposit and loan 'alances for each #e#'ersA accounts3 7.7=.<=.7=.14.7=.7>.3.<=. 7. . 7.he Audit Co##ittee shall 'e responsi'le for and #onitor the se+uence nu#'er controls as assisted 'y the internal audit staff.7..7>.7>.>. A list of the SCCAs 'an1s) insurance policies and invest#ents..>. A SCC shall 'e re+uired to esta'lish a records preservation syste# for the off$site stora!e of duplicate vital records) "hich can 'e used for reconstruction purposes in the event of a catastrophe.<=. Infor#ation sufficient to ena'le the SCC to locate each #e#'er) such as address and telephone nu#'er) shall also 'e included) unless the 'oard of directors deter#ines that such infor#ation is readily availa'le fro# another source3 7.<=.7.7. 7.7=.. .73.. 1. At least the follo"in! records) as of the #ost recent #onth end) #ust 'e stored6 7. Previously stored records #ay 'e destroyed "hen the current records are stored. Records Preservation S'stem. 7.<=.

1..75.76. 1. .2.76.he internal auditor shall not 'e a #e#'er of the audit co##ittee.=. Chan. 1.to audit their 'oo1s of accounts at least once a year.e in nterna! Contro! Measures$ Any chan!e in the internal control #easures shall 'e su'#itted to the Authority not later than thirty (39 days prior to the i#ple#entation.75. 1. 1.76.<= . .<=.1.595:. . 0or ne"ly esta'lished SCCs) the re+uire#ent shall 'e su'#itted not later than a #onth fro# the start of operations. 7.he position of internal auditor shall 'e created and provided for in the (y$la"s of the SCCs indicatin! the duties and responsi'ilities thereto.>.3. .17.77. SCCs that have so#e or all of their records #aintained 'y an off$site data processor are considered to 'e in co#pliance for the stora!e of those records.76.he internal auditor shall not 'e related to any officer and e#ployee of the SCCs up to the fourth de!ree of consan!uinity or affinity. Securit' Pro. A records preservation lo! "ill 'e #aintained sho"in! "hat records "ere stored) "here the records "ere stored) "hen the records "ere stored) and "ho authori.77.16.7=.76.1.2.76. Manual of Rules and Regulations for SCCs %" .he internal auditor shall 'e desi!nated as the SCCAs co#pliance officer.3.ram$ 2ach SCC shall 'e re+uired to institute a "ritten security pro!ra# to protect the cooperative office fro# ro''eries) 'ur!laries) larcenies and e#'e.7=.<=. .he internal auditor shall not install nor develop procedures) prepare records or en!a!e in other activities "hich he nor#ally revie"s or appraises.<B36 SCCs shall en!a!e the services of an independent certified pu'lic accountant duly reco!ni. Section 1. H<6<:8 3A E=B56:7> A?.7=.6. 1. I:. . 1.7.5:F5 3A BC5 I:B56:7> A?.he sa#e individual e?ternal auditor) "hether on hisBher individual capacity or as partner of a fir#) shall not underta1e the e?ternal audit of the concerned SCC for three (3 consecutive years.<=.he scope and o'%ectives of internal audit shall li1e"ise 'e defined.<B36 . Section 1. 1.le#ents3 to prevent destruction of vital records as defined herein and to assist in the identification of persons "ho co##it such cri#es.77.he internal auditor shall serve on a full$ti#e 'asis and shall report directly to the audit co##ittee.4. 1. Stored records #ay 'e in any for#at that can 'e used to reconstruct the SCCAs records "hether electronic or other"ise. 7. . 1.ed the records for stora!e.edBaccredited 'y the C-A (accreditation criteria are sho"n in A995:.76. .5.

SCCs "hich have en!a!ed their respective e?ternal auditors for a consecutive period of three (3 years or #ore as of date of the effectivity of this 4anual shall have a one$year period fro# said date "ithin "hich to either chan!e their e?ternal auditors or rotate the lead andBor concurrin! partner. 7.78.<8.456@5 A<:..<8.77.77..<8.77.3. Section 1.3.. 7.3.he report shall 'e su'#itted to the Authority and to the audited SCC si#ultaneously "ithin thirty (39 calendar days after the conclusion of the revie". 7.. .77.1.<:8@ .7. 1..1... 1.he e?ternal auditor shall report directly to the Authority "ithin fifteen (7= calendar days the occurrence of the follo"in!6 .2.78.<B360@ 7. 1. 7.6. 1.he e?ternal auditor shall not 'e related to any officer and e#ployee of the SCCs up to the fourth de!ree of consan!uinity or affinity *hen "arranted) the Authority #ay) at the e?pense of the SCC) re+uire the e?ternal auditor to underta1e a specific revie" of a particular aspect of the operations of the SCC.o ena'le ti#ely and appropriate re#edial action) the e?ternal auditor #ust report to the Authority "ithin thirty (39 calendar days after discovery) the follo"in! cases6 Any #aterial findin!s involvin! fraud or dishonesty (includin! cases that "ere resolved durin! the period of audit 3 Any potential losses the a!!re!ate of "hich a#ounts to at least one percent (7I of the paid$up share capital3 and 1.. 7..7.5.<8. 7. 7.7.er#ination or resi!nation as e?ternal auditor) prior to the e?piration of the contract) and statin! the reason thereof3 -iscovery of a #aterial 'reach of cooperative la"s or these rules and re!ulations such as) 'ut not li#ited to6 /et "orth to ris1 assets ratio3 5oans and other ris1 assets revie" and classification usin! portfolio at ris13 and 0indin!s on #atters of cooperative !overnance that #ay re+uire ur!ent action 'y the Authority.<8.4... A SCC shall not en!a!e the services of an e?ternal auditor "hose partner or auditor$in$char!e of audit en!a!e#ent durin! the precedin! year has 'een hired or e#ployed 'y the SCC as Chief 2?ecutive Officer) Chief 0inancial Officer) Controller) Chief Accountin! Officer or any position of e+uivalent ran1.7. D<@F>3@?65 3A 5=B56:7> 7?. 7..7... It shall not also en!a!e the services of an e?ternal auditor "ho is a #e#'erBofficer of the SCC to "hich heBshe 'elon!s to or of any federationBunion to "hich the SCC is affiliated. Ina'ility of the auditor to confir# that the clai#s of the creditors can still 'e covered 'y the SCCAs assets.. ..7.77. .78.7..<8.. 1. Manual of Rules and Regulations for SCCs %% .<8.....<8.

5. . 7. .he #ana!e#ent of the SCC shall 'e !iven the opportunity to 'e present in the discussions 'et"een the Authority and the e?ternal auditor re!ardin! the audit findin!s) e?cept in circu#stances "here the e?ternal auditor 'elieves that the SCCAs #ana!e#ent is involved in fraudulent conduct.79.4.he #ana!e#ent of the SCC shall 'e infor#ed of the adverse findin!s.2. 1. As #andated under Article 87 of RA 6938) SCCs shall 'e annually su'%ected to a financial audit 'y an e?ternal and independent auditor duly accredited and reco!ni.hereafter) the (oard of -irectors shall present the co#plete audit report to the !eneral asse#'ly in its ne?t #eetin!.78.ed 'y the Authority. 1.3. 1. .79.79.76. Such chec1s shall 'e 1ept under the %oint custody of (oard$desi!nated officers "ho shall see to it that the sa#e are pro#ptly deposited on the follo"in! 'usiness day3 All SCCs shall have a sound personnel policy3 and All accounta'le officers and e#ployees shall 'e 'onded.2.1. . All cash in e?cess of this #a?i#u# a#ount shall 'e turned over to the cashier as the #a?i#u# li#it is 'reached3 All chec1s received 'y the tellers shall 'e i##ediately sta#ped G0or -epositH to a specific deposit account of the SCC.79.hese chec1s shall 'e deposited on the sa#e day) e?cept those that "ere received after the close of 'an1in! hours of the SCCAs depository 'an1Bs and the depository 'an1 is not readily availa'le. 1. M<@F5>>7:53?@ P634<@<3:@ 3: I:B56:7> C3:B63> 5oan applications and related docu#ents shall 'e verified to ensure their authenticity particularly the na#e) residence) e#ploy#ent and current reputation of the 'orro"er and co$ #a1er) if any3 /o e#ployee shall 'e per#itted to process transaction affectin! his o"n account3 .1.79.89.1.4.80.3.79. Audit Report$ . A?. SB7:. . 1. 1.he audited financial state#ents su'#itted shall #eet the follo"in! re+uire#ents6 Standard for#at in the presentation of the audited financial state#ents "ith co#parative fi!ures of the i##ediately precedin! year3 Section 1.7.80. 1. 1.9 days after the closin! of the calendar year. Audited financia! statement #ay either 'e su'#itted to!ether "ith the SCCAs Annual Report as re+uired under Article => of RA 6938 or su'#itted separately "ithin one hundred t"enty (7.<B SG@B5D A36 C339567B<45@ (SASC).he audit co##ittee shall forth"ith furnish the (oard of -irectors a copy of the audit report. Manual of Rules and Regulations for SCCs %' .78.79. .6.he auditor shall su'#it to the audit co##ittee a report of the audit "hich shall contain a state#ent of the assets and lia'ilities of the SCC) includin! earnin!s and e?penses) a#ount of net surplus as "ell as losses and 'ad de'ts) if any.he e?ternal auditorAs report to the Authority shall include the e?planation andBor reco##ended corrective action. 1.. .80. 1.7.. Section 1.ellers and other e#ployees shall 'e prohi'ited fro# preparin! deposit slip) "ithdra"al slip or other for#s for the custo#ers3 At any !iven ti#e) tellers shall 'e allo"ed to have under their custody only up to a specific #a?i#u# a#ount of accounta'ility as #ay 'e deter#ined 'y the (oard of -irectors of the SCC.79.

..3.80.ed or re+uired to do or pursuant to the Code.1.i#ely infor#ation shall 'e availa'le on a re!ular 'asis to 'oth the #ana!e#ent and the #e#'ers of the (oard of -irectors on a re!ular 'asis (e..89... 1.ypes of Cooperatives "ith Credit Services issued 'y the Authority.3.he Accountin! 4anual "hich defines and prescri'es the accountin! syste#s and procedures to 'e adopted) "ill ena'le SCCs to co#e up "ith a coherent and relia'le set of infor#ation to 'e used in acco#plishin! the Chart of Accounts. 7.2. 8on-!ia1i!it' of )efamation. 7..81.89..!.>. Accessi'le to the concerned user and usa'le to the #ana!e#ent andBor the (oard of -irectors. 1. 7.... Manual of Rules and Regulations for SCCs %( .87.81.89.87. PERFORMANCE STANDARDS FOR SCC@ (COOP. .87.=. F<:7:F<7> T67:@9765:FG &ransparent nformation.89. 3inancia! nformation S'stem$ Attri'utes of an effective and transparent cooperative accountin! and financial infor#ation syste#6 Clear and understanda'le for sound decisions and ti#ely actions3 0airly stated "here accountin! policies shall 'e properly defined and accountin! rules shall 'e consistently applied.=. .81. Strict o'servance of the /otes to 0inancial State#ents and other disclosures3 Indirect #ethod presentation of the State#ent of Cash 0lo"s and State#ent of Chan!es in Statutory 0unds "ith co#parative fi!ures of the i##ediately precedin! year3 Su##ary of auditorAs findin!s) to include financial ratios and reco##endations3 and State#ent of representation of the e?ternal auditor to the Auhority..PESOS) Section 1...he use of the co##on account title in their financial state#ents "ill facilitate co#parison of their financial perfor#ance over ti#e and across peers. 7..3. . A policy of transparency and openness #ust al"ays 'e #aintained "here'y 'oo1s of accounts) !eneral asse#'ly) 'oard resolutions and co##ittee reports are properly 1ept and #ade accessi'le to #e#'ers) and re!ular financial state#ents are periodically prepared and #ade 1no"n to #e#'ers) the Authority and other parties interested in the SCCAs operations...87..>. 1. Co#para'le infor#ation that "ill allo" the cooperative to co#pare results over ti#e and a#on! peer institutions. Standard Chart of Accounts$ All SCCs shall adopt the Standard Chart of Accounts and its acco#panyin! Accountin! 4anual for Credit and Other . 7... 1. An auditor is not lia'le to any person for defa#ation 'ased on any act done) or any state#ent #ade 'y hi#Bher in !ood faith in connection "ith any #atter heBshe is authori.. 7. ARTICLE 9.3.. 7.87. #onthly .81. 7.7.7..

%ufficienc) Rate of Return on . 1.82.. 2fficiency is i#portant 'ecause it affects the profita'ility of the SCCAs portfolio and the return on #e#'ersA shares.7...he status of the health of the portfolio of the SCC "ill either propel the SCC to !ro" or i#peril the "hole sustaina'ility pro!ra# of the SCC.ani"ationa! Structure and %in9a. P56A36D7:F5 SB7:.3. C-A) (IR) 5ocal Covern#ent @nit and -O52.8.<= E) and #e#'ership structure) on affiliations and lin1a!es "ith cooperative federations and other or!ani. 1. +peration and Mana.7.7.Section 1.his provides the #ana!ers and (oard of -irectors of SCCs appropriate tools in #onitorin! the +uality and the level of ris1s of the loan portfolio of the SCCs. ndicators on 3inancia! Performance Portfo!io (ua!it'$ .hese indicators co#prise a set of +uestions that shall !ive infor#ation on the SCCco#pliance "ith the le!al and ad#inistrative re+uire#ents.e$ .his should 'e closely #onitored inas#uch as the loan portfolio constitutes the 'ul1 of the SCCAs assets..his includes indicators that deter#ine presence or a'sence of the necessary syste#) policies and procedures for efficient and effective #ana!e#ent of the SCCs includin! +uestions related to the (oard of -irectors and the SCC #ana!e#ent. .8..82.7. . 7.8.e"$ers2 %hare Loan Portfolio Profita$ilit) Cost per peso loan Ad"inistrative 3fficienc) Manual of Rules and Regulations for SCCs %) .. 7. In vie" of this) it is also i#portant that the ris1 of default is ade+uately protected.8.a! re#uirements$ .ations involved in the pro#otion and develop#ent of SCCs."o indicators are included in this !roup.his includes a set of +uestions that loo1s at "hether the SCC co#plies "ith the various le!al re+uire#ents i#posed 'y various institutions) i.. Comp!iance :ith Administrative and %e.8. Indicators under this cate!ory deter#ine the a'ility of the SCC to !enerate sufficient inco#e to cover e?penses on operations.7. Protection is #easured 'y co#parin! the ade+uacy of the allo"ance provided for loan losses a!ainst the a#ount of delin+uent loans.his includes the para#eters that deter#ine "hether the SCC has a develop#ent plan and an approved annual plans and 'ud!et. 7.7.his focuses on the operational and ad#inistrative efficiency of the delivery of financial services) i.>. Si? (6 ratiosBindicators are included in this !roup6 • • • • • • Asset 1ield Operational %elf.) loans and savin!s products to its #e#'ers. . 7. ..ement comp!iance to administrative re#uirements$ . P!ans and Pro.@ ndicators on mana.ement$ ..his also loo1s at "hether the SCC revie"s its perfor#ance vis$L$vis the pro%ections in its 'usiness plan.his includes +uestions on the SCCAs !overnance policies (A995:. .82.hese are6 • • Portfolio at Ris+ Allowance for Pro$a$le Losses on Loans 7..2.. 7. +r.76... 0fficienc'$ .rams$ .1..e.8.e.

8.in! dependence on e?ternal 'orro"in!s and !reater e#phasis on #o'ili.1.hese indicators and standards deter#ine the e?tent of the share of the SCCAs various assets to its total assets and assess the effective use of these assets to !enerate revenues. . . Section 1...he overall ratin! "ill 'e co#puted usin! a . . Sta1i!it'$ . .. Section 1.his helps ascertain the +uality and the structure of the assets of the SCC. .9 percent "ei!ht for the COOP ratin! and 89 percent "ei!ht for the P2SOS ratin!.84.his hi!hli!hts the ne" thrust for Philippine SCCs. . 1.he SCC has stron! perfor#ance that consistently provides safe and sound operations. . 7. . .his "ill result in the SCCAs less dependence on e?ternal 'orro"in!s and lo"er financial costs. 5isted 'elo" are three (3 ratiosBindicators under this cate!ory6 • • • %olvenc)4 Li/uidit)4 and 5et (nstitutional Capital.=. +perations$ .hey are also a'le to "ithstand une?pected adverse chan!es in 'usiness environ#ent. 0?C0%%08& .3. One "ay to do this is to increase the institutional capital of the SCC instead of purely relyin! on the #e#'erAs share capital.he indicators and standards in this !roup call for #ini#i.hese institutions do not need supervisory concern. Manual of Rules and Regulations for SCCs %8 .his "ill allo" the SCC to #aintain sufficient li+uidity to #eet the financial needs of its #e#'ers in a ti#ely #anner. .. ... .in! voluntary savin!s fro# its #e#'ers.he follo"in! ratin! scale is used6 Ratin.84. *here the SCCleadership co##its itself to ascertain the sustaina'ility in the SCC structure) the #e#'ership of the SCC "ill also 'e serious in stron!ly supportin! their o"n SCCs.he e+uivalent ra" score for 'oth the COOP and P2SOS indicators are !iven the appropriate ratin!.his deter#ines "hether financial services can 'e delivered to its #e#'ers in a sustained #anner. C3D9?B7B<3: 3A COOP. Structure of Assets$ .he follo"in! four (> indicators are6 • • • • 5on.7.PESOS. . .8..<= #.. Stron! e#phasis on #o'ili.he ra" score for each of the co#ponents is !iven an e+uivalent ratin!.in! voluntary savin!s "ill ena'le SCCs to have continuous and cheaper sources of funds for its operations and) at the sa#e ti#e) provide its #e#'ers an alternative invest#ent #echanis# for their e?cess funds.. .>.he evaluator) in assessin! the perfor#ance of the SCC) "ill use the for#ula and indicators sho"n in A995:.he indicators are6 • • Perfor"ance of .earning Assets 0 Total Assets4 Total #eposits 0 Total Assets4 5et Loans Receiva$les 0 Total Assets Total4 and . 1 (9> to 1>>) .e"$ership Growth4 and Trend in 3 ternal 6orrowings 7.he resultin! ratin! for each of the co#ponent is !iven the appropriate "ei!ht to arrive at the overall ratin!.83.e"$ers2 %hare Capital 0 Total Assets. O4567>> R7B<:8.8. SCCs in this !roup co#ply "ith cooperative rules and re!ulations and are resistant to e?ternal shoc1s and financial distur'ances.

2. 1. P63956BG 7:. .1. C (6> to !ess thanB>) . Ratin.84. A hi!h potential for failure is present 'ut is not yet i##inent.he SCC sho"s satisfactory perfor#ance that consistently provides safe and sound operations.84.he SCCAs perfor#ance if left unchec1ed "ould lead to conditions that could threaten its via'ility. In deter#inin! co#pliance "ith such ceilin!) the follo"in! are considered eli!i'le invest#ents6 1. Results of 1ey perfor#ance #easures indicate that safe and sound operations #ay 'e adversely affected. 8o"ever) there are so#e areas of concern that re+uire i#portant attention "hich if unchec1ed) can potentially develop into conditions of !reater concern. .86.he invest#ent shall include all real estate and e+uip#ent necessary for the SCCAs i##ediate use in the transaction of its 'usiness.5.he SCC is of serious supervisory concern.2. P++R.1. 3A R. 1.4. . Section 1. C339567B<45 P65D<@5@ 7:. SCCs in this !roup have a very hi!h pro'a'ility of failure and "ill li1ely re+uire li+uidation.84.85.he total invest#ent of a SCC in real estate and i#prove#ents thereof) includin! e+uip#ent shall not e?ceed fifty percent (=9I of the SCCAs net "orth. ARTICLE 1!. 3 (B> to !ess than A>) .5:B<7> I:A36D7B<3:.++) .84. Ratin. Manual of Rules and Regulations for SCCs %9 . 1.s. C3:A<. . D (1e!o: 6>) . MISCELLANEOUS Section 1.++) .1. Ratin. . SCCs in this !roup are a'le to "ithstand 'usiness fluctuations "ell. SCCs in this !roup re+uire very close supervisory attention. @ (A> to !ess than 9>) . SCCs in this !roup are only no#inally resistant to adverse 'usiness conditions and #ay deteriorate if identifia'le areas of "ea1ness are not corrected i##ediately. .he SCC has unsatisfactory perfor#ance and is in need of i##ediate re#edial attention. .85.3. <0R6 . All deposits of "hatever nature or shares "ith a SCC are considered a'solutely confidential in nature) and #ay not 'e e?a#ined) in+uired or loo1ed into 'y any person or !overn#ent official) 'ureau or office) e?cept upon "ritten per#ission of the #e#'er) or "hen the e?a#ination is conducted 'y the Authority) or in cases of i#peach#ent) or upon order of a co#petent court. 1. -irectors) officers) e#ployees or #e#'ers of SCCs or of the Authority shall not disclose any infor#ation relatin! to #e#'er$'orro"ers and the operations of the SCC that are confidential in nature unless the disclosure of infor#ation is in accordance "ith the perfor#ance of hisBher official duties and functions. Appreciation or increase in 'oo1 value of SCC pre#ises and other fi?ed assets is !enerally not allo"ed unless specifically provided for in the S0AS.2. Supervisory response is li#ited to #inor ad%ust#ents to ensure that operations continue to 'e satisfactory and sustaina'le. 1. Ratin. . EE?<9D5:B. 1. Cei!in.86.he follo"in! rules shall !overn the pre#ises and other fi?ed assets of SCCs$ Appreciation or increase in 1oo9 va!ue.86. .he SCCAs perfor#ance is fla"ed to so#e de!ree and is a supervisory concern.85.

3.8<. Rec!assification of rea! and other properties o:ned or ac#uired as SCC premises . B67:FC<:8 A36 SCC@ O95:<:8 3A SCC B67:FC A "ell and ade+uately capitali..hat only such ac+uired asset or a portion thereof that "ill 'e i##ediately used or ear#ar1ed for future use #ay 'e reclassified and 'oo1ed as SCC pre#ises. R5E?<65D5:B@ A36 B67:FC<:8 A SCC #ay esta'lish a 'ranch upon pay#ent of the 'ranch$processin! fee and upon its su'#ission and evaluation 'y the C-A of the follo"in!6 Manual of Rules and Regulations for SCCs '! .86.. Cooperative Pre#ises & 5and) (uildin!s) 0urnitures) 0i?tures and 2+uip#ent includin! i#prove#ents and depreciation thereof) o"ned and used 'y the SCC in the conduct of its 'usiness includin! staff houses) recreational facilities and landscapin! costs) net of accu#ulated depreciation. 7.86. 7.ed and has co#plied "ith all the re+uire#ents for 'ranchin! 99 days prior to its openin!. 7. 1.87.8<. 7.1.. 7.86.. 1.86.7.87.7.. e+uip#ent or other chattels purchased 'y the SCC in its na#e for the 'enefit of its officers and e#ployees) net of depreciation and in the case of land or other non$deprecia'le property) net of pay#ents already #ade to the SCC 'y the officers and e#ployees for "hose 'enefits the property "as 'ou!ht) "here such property has not yet 'een fully paid and o"nership has not yet 'een transferred to the#.7.3.7. Outside its principal office 'ut "ithin its area of operation as provided for in the current Articles of Cooperation andBor3 Outside its area of operation) provided the Articles of Cooperation are accordin!ly a#ended and re!istered. Real properties.. ... Prior to the reclassification of the ROPOA accounts to SCC pre#ises) prior approval of the Authority shall 'e secured 'efore effectin! the reclassification and the SCC shall su'#it) in case of future use) %ustification and plans for its e?pansionBuse.ed SCC #ay open a 'ranch either6 7.3.2. Real and other properties o"ned or ac+uired (ROPOA reclassified as SCC pre#ises shall 'e 'oo1ed at cost6 Provided.. .he SCC) shall su'#it a certification to the Authority that the SCC is currently "ell and ade+uately capitali. .86.86.he cost of real estate leased in "hole or in part 'y the SCC fro# a corporation) other than a corporation pri#arily en!a!ed in real estate in "hich the SCC has e+uity) e+uivalent to the a#ount o'tained 'y applyin! the percenta!e of the e+uity of the SCC in the lessor to the cost of that portion of the property 'ein! leased) or the a#ount of e+uity in the lessor) "hichever is lo"er. 1.3..87..7. Section 1..7.

7.7. Section 1. 7.3.8<. 1. 3re#uenc' of 02amination. .7. 7. . 0or purposes of this section) satellite offices shall not 'e considered as 'ranches. It shall involve an assess#ent of the +uality of the SCCAs ris1 #ana!e#ent process) !overnance) internal and appropriate controls and accounta'ility) and adherence to prudential rules and re!ulations.88.87. 7...ed s"orn state#ent of the #e#'ers of the (oard and the Ceneral 4ana!er that the SCC has no e?istin! or continuin! #a%or violations "ith re!ard to the provisions of this 4anual.88. 1. All collections and records of daily transactions shall 'e turned over at the end of the 'usiness day to the head office or 'ranch to "hich the satellite office is attached..>.8O@SA/P2SOS (P=)999.7.3.=.. Included are the reproduction of the SCCAs records) as "ell as the ta1in! possession of the 'oo1s and records and 1eepin! the# under the C-A andBor deputi.authori. S7B5>><B5 OAA<F5@...P63F5@@<:8 F55.3..ed to conduct the e?a#ination of their #e#'er pri#aries. 1.88.87. 7.<.8<.8<.he SCC shall pay the C-A an a#ount of 0I:2 .88.he Authority shall conduct) at least once a year and at such other ti#es as it #ay dee# necessary and e?pedient) an e?a#ination) inspection or investi!ation of the 'oo1s and records) 'usiness affairs) ad#inistration) and financial condition of any SCC to deter#ine co#pliance "ith e?istin! la"s) circulars) rules and re!ulations) and other issuances..ed 'an1 account..ed supervisor custody after !ivin! proper receipt therefore. 7.. As such) they shall only 'e considered as loan collection and dis'urse#ent points and shall not 'e allo"ed to retain cash and other records in their pre#ises. 02amination of Primar' SCC Mem1ers 1' )eputi"ed 3ederation/4nion @pon approval 'y the C-A in accordance "ith the approved accreditation criteria) cooperative federations andBor unions shall 'e deputi.4. In cases "here the collections cannot 'e physically turned over "ithin the 'usiness day) such collections #ay 'e deposited to an authori. 7.8<.ation set$up sho"in! the staffin! pattern of the proposed 'ranch3 Installation of the necessary security devices3 and -uly notari.8<.8<. 1. It shall also include the intervie" of the directors and personnel of the SCC includin! its 2lectronic -ata Processin! (2-P service provider.3.in! the esta'lish#ent of the proposed 'ranch indicatin! the proposed site3 0acilities and services to 'e offeredA Or!ani..88. E=7D<:7B<3: 3A SCC@ 02amination shall include) 'ut need not 'e li#ited to) the verification) revie") investi!ation) and inspection of the 'oo1s and records) 'usiness affairs) ad#inistration) and financial condition of any SCC...2.8. 7.8<.. 1. (oo1s and records shall include) 'ut not li#ited to) data and infor#ation stored in #a!netic tapes) dis1s) printouts) lo!'oo1s) and #anual 1ept and #aintained 'y the SCC or the 2-P service provider) necessary and incidental to the use of 2-P syste#s 'y the SCCs. S?9564<@<3: 7:.1.. Manual of Rules and Regulations for SCCs '1 ..6.99 per ne" 'ranch esta'lished.8<. A#end#ent of Article of Cooperation if the proposed 'ranch is outside the area of operations3 2sta'lish#ent of appropriate internal control #easures for the 'ranch3 Approval of the CA) as certified 'y the Chair#an and the Secretary3 Certified true copy of the resolution of the (O.. B67:FC..

7. 1...3. Refusa! to permit e2amination shall #ean any act or o#ission "hich i#pedes) delays) or o'structs the duly authori. If the SCC continues to refuse said e?a#ination "ithout any satisfactory e?planation thereof) the duly authori.e Assessa1!e Assets (AAAs)$ SCCs that "ill 'e supervised and e?a#ined 'y the C-A shall pay a supervision and e?a#ination fee e+uivalent to 7B9 th of 7I of the SCCAs AAAs. .88.ed cooperative federation andBor union. 7.7. Any SCC "hich shall "illfully refuse to per#it e?a#ination shall pay a fine of P3)999. In cases "here a SCC is a #e#'er of t"o or #ore deputi.ed e?a#iner fro# conductin! an e?a#ination) includin! the act of refusin! to accept or honor a letter of authority to e?a#ine presented 'y the Authority.ed federation andBor union "here it "ill 'e su'%ect to supervision and e?a#ination.ed federationsBunions) as it #ay dee# reasona'le.7.he ter# F&ota! Assessa1!e AssetsG shall refer to total assets (end$of$#onth total assets per 'alance sheet ) after deductin! cash on hand and cash in 'an1. .88.ed e?a#iner concerned re!ardin! the continued refusal of the SCC to per#it the desired e?a#ination. years and #ay 'e ad%usted 'y the C-A) in consultation "ith the deputi.<.3.<.7.=.88.he fine shall 'e i#posed startin! on the day follo"in! the receipt 'y the said Authority of the "ritten report su'#itted 'y the duly authori.he Authority shall 'ill the SCC for the full a#ount of the supervision and e?a#ination fees.ed e?a#iner shall report to the Authority "ho shall forth"ith #a1e a "ritten de#and upon the SCC concerned for such e?a#ination. Supervision and 02amination 3ees$ SCC shall pay to the deputi.he C-A shall re!ularly #onitor and validate the perfor#ance of deputi.88.6.88.99 daily fro# the day of refusal and for as lon! as such refusal lasts. 7.ed cooperative federation andBor union a supervision and e?a#ination fee e+uivalent to 1/1>th of 1E of the SCCAs Avera.he ter# GAAAsH shall 'e the su# of the end$of$#onth total assessa'le assets divided 'y the nu#'er of #onths in operation durin! the particular assess#ent period. 1. /on$pay#ent of the fees "ithin the prescri'ed period shall su'%ect the concerned SCC to the sanctions prescri'ed in Article 7.88..88. .ed federations andBor unions "ith re!ards to its supervision and e?a#ination of its pri#ary SCC #e#'ers.3.<. .88. 7.3. 02amination of 8on-mem1ers of )eputi"ed 3ederation/4nion$ SCCs that are not #e#'ers of a deputi.7. 1. 7.he fees shall 'e revie"ed every t"o (.5.=.. A copy of the said report shall 'e provided to the SCC..4.88. Manual of Rules and Regulations for SCCs '2 . 1.he duly authori.ed cooperative federation andBor union "ill 'e supervised and e?a#ined 'y the C-A until such ti#e that the SCC 'eco#es a #e#'er of a deputi.ed federations andBor unions) such SCC shall choose only one (7 deputi. .ed e?a#iner shall su'#it a report to the Authority.88. . 7.88.. *ithin thirty (39 days fro# receipt of the 'ill) the SCC shall #a1e the correspondin! re#ittance to the Authority. of this 4anual and fines and penalties) thereon) shall 'e paya'le to the C-A. 3ines for refusa! to permit e2amination$ .

Manual of Rules and Regulations for SCCs '" .rave offense. %ess .. S7:FB<3:@.97.he rules and procedures of this Section shall apply to proceedin!s to assess penalties a!ainst any person or SCC for violation of the provisions of this 4anual or any re!ulation) circular or order issued 'y the C-A pursuant thereto) in connection "ith the conduct of the affairs of the SCC.7..enera! Provision.97. 7...97. Any person "ho rec1lessly violates any provision of the 4anual or any rule) re!ulation) or order issued 'y the C-A pursuant thereto3 and en!a!es in any unsafe or unsound practice in conductin! the affairs of a SCC3 or 'reaches any fiduciary duty3 "hich violation) practice or 'reach is part of a pattern of #isconduct3 or causes or is li1ely to cause #ore than a #ini#al loss to such institution3 or results in pecuniary !ain or other 'enefit to such person3 shall pay a penalty of not less than P799 'ut not #ore than P=99 for each calendar day of such violation) practice or 'reach continues..97.3. In the case of a person other than a SCC) O/2 .99 for each day the violation) practice or 'reach continues.. 7. M3:5B76G P5:7>BG. 1. In the case of a SCC) an a#ount e+ual to . 7. Any violation of the provisions of this 4anual shall 'e su'%ect to the applica'le sanctions as provided for 'elo" and Article 7.97.8O@SA/.7.99 per day for each day the violation) practice or 'reach continues3 or 7.> of RA 6938) "henever applica'le.7. GENERAL PROVISIONS ON SANCTIONS Section 1.)999..91.. P67FB<F5 $ A SCC #ay 'e dee#ed to 'e en!a!ed in an unsafe or unsound practice if such practice or practices result in deficiencies or less$than$ satisfactory (POOR ratin! in the COOP$P2SOS that) if not corrected) #ay #aterially or adversely affect the financial health of the SCC. 7. 7. @nless specifically provided for in this 4anual) any violation of the provisions of this 4anual or any re!ulation) circular or order issued 'y the C-A pursuant thereto) in connection "ith the conduct of the affairs of the SCC) shall 'e su'%ected to the follo"in! penalties6 Amount of Pena!t' Minor offense..90.97.ARTICLE 11.8O@SA/.P2SOS (P.3.. Section 1.89. Any person "ho violates any provision of the 4anual or any rule) re!ulation) or order issued 'y the C-A pursuant thereto) shall pay a penalty of not #ore than P799 for each calendar day the violation continues.7.7.7.7.rave offense.7..P2SOS (P7)999.7.. Assessment of fines ..91. . 7.7.1. D5A<:<B<3: 3A U:@7A5 36 U:@3?:.. .*O .. Any person "ho 1no"in!ly and "illfully violates any provision of the 4anual or any rule) re!ulation) or order issued 'y the C-A pursuant thereto3 or en!a!es in any unsafe or unsound practice in conductin! the affairs of a depository institution3 or 'reaches any fiduciary duty3 and 1no"in!ly or rec1lessly causes a su'stantial loss to such institution or a su'stantial pecuniary !ain or other 'enefit to such person 'y reason of such violation) practice or 'reach3 shall pay a civil penalty not to e?ceed6 Section 1.3..97.

1.7.9.7.3. 0ffective date of7 and pa'ment under7 an order to pa'$ Penalties assessed pursuant hereto are due and paya'le "ithin 69 days after an order to pay) issued after the hearin! or upon default) is served upon the personBs or SCC) unless the order provides for a different schedule of pay#ent.1..7.. 2n!a!ed or participated in any unsafe or unsound practice3 or 7.3.9.he C-A #ay collect any penalty assessed pursuant to this Section 'y a!ree#ent "ith the respondent) or the C-A #ay 'rin! an action a!ainst the personBs or SCC to recover the penalty a#ount in the appropriate courts. 1. 1. 3i!in.. Miti.7..7.9. 3actors$ In assessin! the a#ount of the penalty) the C-A shall consider the !ravity of the violation) the history of previous violations) the respondentFs financial resources) !ood faith) and any other #atters as fairness and %ustice #ay re+uire. Co##itted or en!a!ed in any act) o#ission) or practice "hich constitutes a 'reach of the directorAs or officerAs fiduciary duty3 and 7. that such director or officer has..91.7. 7.91.7.. after due notice and hearing.91..92. :iolated any la") rules and re!ulation) circular or any order issued 'y the C-A or any "ritten a!ree#ent 'et"een the SCC and the C-A3 or 7.9.ravatin.atin.>.9.. S7:FB<3:@ A87<:@B E66<:8 D<65FB36@ 7:.5.he follo"in! !rounds shall 'e present 'efore an officer or director can 'e re#oved fro# office6 Whenever the C#A deter"ines.97.9.7. and A. .3. 7.. practice.7.91.92.7.he a#ount of penalty to 'e i#posed shall 'e assessed upon the receipt 'y the personBs or SCC of a /otice of Assess#ent sent 'y the C-A) "hich shall 'eco#e final and e?ecutory unless the person or persons involved re+uests for reconsideration or su'#its a "ritten appeal to the C-A "ithin thirty (39 days fro# receipt of the /otice.7. 7.. directl) or indirectl)7 1. 1.4. Co!!ection of pena!ties$ .7.@ A36 R5D347> A63D OAA<F5. or $reach7 Manual of Rules and Regulations for SCCs '% .7..7.7.7. 3ai!ure to fi!e an Appea! for Reconsideration$ 0ailure of a person or SCC to file an appeal for consideration re+uired 'y this section "ithin the ti#e provided constitutes a "aiver of his or her ri!ht to appeal and contest the alle!ations in the notice of disapproval. 6) reason of the violation. of Appea!$ .7.7.9. A final order issued 'y the C-A (oard of Ad#inistrators 'ased upon a respondentFs failure to ans"er is dee#ed to 'e an order issued upon consent. Section 1. In deter#inin! "hether an officer or director should 'e re#oved) prohi'ited or suspended) pri#ary consideration shall 'e #ade 'y the C-A as to "hether the SCC) officer) or director too1 appropriate action to stop or to prevent the recurrence of a violation descri'ed herein6 Remova! from +ffice G63?:.7.7. 7.7. A surchar!e of five percent (=I shall 'e i#posed on the assessed a#ount of penalty that "as not paid on the prescri'ed deadline.2. Nno"led!e that another director or officer is co##ittin! or has co##itted any of the acts enu#erated a'ove. OAA<F56@..7.

1.9..he director or officer has received financial !ain or other 'enefit 'y reason of such violation) practice) or 'reach3 and 7..9.7.9. <o!untar' Consent$ @nless the director or officer shall appear at the hearin! in person or throu!h a duly authori..7...... 7.ed representative) the director or officer shall 'e dee#ed to have consented to the issuance of an order of such re#oval.7.>.7. or $reach7 7. .. Conduct of 5earin.. 7. S?@95:@<3: ..7. %uch violation. /otice of intention to re#ove fro# office shall i##ediately 'e served to the director or officer concerned..7..7.7.7.7.3..3.=. . Manual of Rules and Regulations for SCCs '' .. -e#onstrates "illful or continuin! disre!ard for the safety or soundness of the SCC..3..92. 7.2..6....$ .9. 7.9.9.9.7.rounds for Prohi1ition and Suspension$ In addition to the issuance of a "ritten notice of intention to re#ove fro# office) the C-A shall issue an order to suspend andBor prohi'it the director or officer concerned fro# further participatin!) in any #anner) in the conduct of the SCCAs affairs under the follo"in! conditions6 If such action is dee#ed necessary for the protection of the SCC and the interests of its #e#'ers3 or 7.9.7. 7.9.3. 8otice of ntention.3.. Involves personal dishonesty on the part of the director or officer3 or 7. 0ffectivit' of +rder of Remova! from +ffice$ After due notice and hearin!) the order of re#oval fro# office shall 'eco#e effective and e?ecutory thirty (39 days after service upon the SCC and the director or officer concerned (e?cept in the case of an order issued upon consent) "hich shall 'eco#e effective at the ti#e specified therein .he interests of the SCCAs #e#'ers have 'een or could 'e pre%udiced3 or 7. practice. 7.7.7.7.he SCC has suffered or "ill pro'a'ly suffer financial loss or other da#a!e3 or 7.he order shall re#ain effective and enforcea'le e?cept to such e?tent as it is #odified) ter#inated) or lifted 'y the C-A. Such notice shall contain a state#ent of the facts constitutin! !rounds for re#oval) and shall fi? a ti#e and place at "hich a hearin! "ill 'e held thereon.7..7.7.7.9.7.9.9. .7.9... .. P63C<H<B<3: 7:. ssuance of +rder$ If durin! the hearin!) the C-A shall find that any of the !rounds specified in such notice have 'een esta'lished) the C-A #ay issue the orders of suspension or re#oval fro# office) or prohi'ition fro# participation in the conduct of the affairs of the SCC) as it #ay dee# appropriate.7.he hearin! shall 'e fi?ed for a date not earlier than thirty days nor later than si?ty days after the date of service of such notice) unless an earlier or a later date is set 'y the C-A at the re+uest of the concerned director or officer) and for !ood cause sho"n...7..

93. 7..9..9...>.>. @pon receipt of any such re+uest) the C-A shall fi? a ti#e (not #ore than thirty days after receipt of such re+uest) unless e?tended at the re+uest of such party and place at "hich the director or officer #ay appear) personally or throu!h counsel) 'efore a duly$desi!nated officer of the C-A to su'#it "ritten #aterials (or) at the discretion of the C-A) oral testi#ony and oral ar!u#ent..7.... If) in the opinion of the C-A) a SCC is6 Manual of Rules and Regulations for SCCs '( . 0or as lon! as the prohi'ition or suspension or re#oval fro# office order re#ains in effect) any person or persons su'%ect to such order issued 'y the C-A) shall not6 Continue or co##ence to hold any office in nor participate) in any #anner) in the conduct of the affairs of the SCC3 and 2?ercise any votin! ri!hts and privile!es in the SCC..7....3. *henever a director or officer is char!ed in a court of la" "ith the co##ission of or participation in a6 7....9.93... Such order shall 'e !iven to all parties concerned and contain a state#ent of the 'asis for the C-AAs decision....es.9. Prohi1ited Acts. 7.....7.9. 1. 7....9.7..7.56 8otice of Char. Cri#inal violation of any provision of the Cooperative Code or any other e?istin! la" that #ay pose a threat to the interests of the SCCAs depositors and or #ay threaten to i#pair pu'lic confidence in the SCC.....9....>.. *ithin thirty days fro# service of any notice of prohi'ition) suspension) or order of re#oval) the director or person concerned #ay re+uest in "ritin! an opportunity to appear 'efore the C-A to sho" that the continued service to or participation in the conduct of the affairs of the SCC 'y such director or officer does not) or is not li1ely to) pose a threat to the interests of the #e#'er$depositors or threaten to i#pair pu'lic confidence in the depository institution.. 7...9.>.... 7... D5@<@B O6.9.9.>.1... 0ffectivit' of Prohi1ition or Suspension +rder$ Any prohi'ition and suspension order issued shall 'eco#e effective upon receipt and shall re#ain in effect and enforcea'le until such ti#e that the C-A dis#isses the char!es contained in the notice) unless specifically provided for in the order.7.9..7.. Section 1..>.. C57@5 7:.9. Cri#e involvin! dishonesty or 'reach of trust "hich is punisha'le 'y i#prison#ent3 or 7.. 7. 7.3... *ithin si?ty days fro# such hearin!) the C-A shall notify the parties concerned "hether the suspension or prohi'ition fro# participation in any #anner in the conduct of the affairs of the SCC "ill 'e continued) ter#inated) or other"ise #odified) or "hether the order re#ovin! the director or officer fro# office has 'een rescinded or other"ise #odified. 7. A9957>@.. 7.

93. Such depository institution or any other party "as un%ustly enriched in connection "ith such violation or practice3 or 7.... 7. ssuance of Cease and )esist +rder 4pon 5earin.93..7.3.>..he notice shall contain a state#ent of the facts constitutin! the alle!ed violation or violations or the unsafe or unsound practice or practices... 7.93.=..7..he C-A #ay issue and serve upon the SCC an order to cease and desist fro# any violation or practice and to ta1e affir#ative action to correct the conditions resultin! fro# any such violation or practice under any of the follo"in! situation6 -urin! the hearin!) the party or parties so served consent to the issuance of a cease$and$desist order or the C-A finds that the violation or unsafe or unsound practice specified in the notice of char!es has 'een esta'lished3 or .7.. Schedu!e of 5earin...7..93..7.6.... 7. Manual of Rules and Regulations for SCCs ') . 7..93.he violation or practice involved a rec1less disre!ard for the la" or any applica'le re!ulations or prior order of the C-A......7.. 7..93..93..<.93.2. 7.93.7.93...93. . Restrict the !ro"th of the institution3 Place li#itations on the activities or functions3 -ispose of any loan or asset3 Rescind a!ree#ents or contracts3 2#ploy +ualified officers or e#ployees ("ho #ay 'e su'%ect to approval 'y the C-A 3 and ...93. 7...93.93. Such hearin! shall 'e fi?ed for a date not earlier than thirty days nor later than si?ty days after service of such notice) unless an earlier or a later date is set 'y the C-A at the re+uest of any party so served.he SCC) throu!h its duly desi!nated representative) failed to appear at the scheduled hearin!....7..93.. 7...7..a1e such other actions as the C-A deter#ines to 'e appropriate.7.... 7. ..7.$ . 7.. 7...he C-A #ay re+uire the SCC to ta1e affir#ative action to correct or re#edy any condition resultin! fro# any violation or practice "ith respect to "hich such order is issued includin! an order for the SCC or any other person to6 4a1e restitution or provide rei#'urse#ent) inde#nification) or provide provisions a!ainst loss if6 7.. 1.. Affirmative Action$ . 7. 2n!a!in! or has en!a!ed or is a'out to en!a!e) in an unsafe or unsound practice in conductin! its 'usiness3 or :iolatin! or has violated) or is a'out to violate) a la") rule) or re!ulation) or any condition i#posed in "ritin! 'y the C-A in connection "ith the !rantin! of the 5icense to Operate as a Savin!s and Credit Cooperative) the C-A #ay issue and serve upon the SCC a notice of char!es in respect thereof.he C-A shall fi? a ti#e and place at "hich a hearin! "ill 'e held to deter#ine "hether an order to cease and desist should 'e issued a!ainst the SCC.7..s$ ....93.

..3.. 7.>. 3ai!ure to Comp!'$ Should the SCC fail to co#ply "ith the cease$and$desist order) the C-A #ay revo1e the license to operate as SCC or cancel the cooperativeAs re!istration.3 of this 4anual is in force and in effect6 @nless set aside) li#ited) or suspended 'y a court of la"3 or @ntil the earlier occurrence of any of the follo"in! circu#stances6 ..3.7. T67:@<B36G P634<@<3:@. 7. 7.93.93.. 7.93.$ Pendin! the holdin! and co#pletion of a hearin! as provided for a'ove) the C-A #ay issue a cease and desist order that shall 'eco#e effective upon receipt of such order 'y the SCC) should it deter#ine that6 .94. .> a'ove in connection "ith the notice of char!es3 or .3. 1.he SCCAs 'oo1s and records are inco#plete or inaccurate that6 . 7.93..4..7.. TRANSITORY PROVISIONS Section 1.93. 0ffectivit' of &emporar' +rder :ithout 5earin.7..7.3.>. ARTICLE 12.3.93.=.3.93.. &emporar' ssuance of +rder :ithout 5earin. All pri#ary credit and other types of cooperatives "ith savin!s and credit services shall) fro# the effective date of this 4anual) confor# to the provisions of this 4anual of Rules and Re!ulations in accordance "ith the follo"in! schedule6 Manual of Rules and Regulations for SCCs '8 . 7.he violation or threatened violation or the unsafe or unsound practice or practices) as specified in the notice of char!es served upon the SCC) or the continuation thereof) is li1ely to6 Cause insolvency or si!nificant dissipation of assets or earnin!s of the SCC) or *ea1en the condition of the SCC or other"ise pre%udice the interests of its #e#'er$depositors.93.. 1.93. 7.. 7.7...7.93. 1.. 0ffectivit'$ A cease$and$desist order shall 'eco#e effective thirty (39 days upon receipt of such order (e?cept in the case of a cease$and$desist order issued upon consent) "hich shall 'eco#e effective at the ti#e specified therein and shall re#ain effective and enforcea'le as provided therein) e?cept to such e?tent as it is stayed) #odified) ter#inated) or set aside 'y action of the C-A. 7.3.7..he details or the purpose of any transaction or transactions #ay have an adverse #aterial effect on the financial condition of the SCC.$ Any te#porary cease and desist order issued under Section 7.93..>.93. 7...3..93.5..>.93.he date the C-A deter#ines that the circu#stances or violations for "hich the Order has 'een issued) no lon!er e?ist.he Authority is una'le) throu!h the nor#al supervisory process) to deter#ine the financial condition of that SCC3 or .>.he co#pletion of the proceedin!s initiated in Section =.7.

ARTICLE 1".ette or in t"o (. >..9I of the unfunded reserves until fully funded. Manual of Rules and Regulations for SCCs '9 . 3. S95F<A<F P634<@<3:@ 0undin! of Statutory Reserves T<D5B7H>5 A36 C3D9><7:F5 On top of the current provision) set aside cash to cover the unfunded reserves. ARTICLE 1%. years fro# the effectivity of this 4anual. . ne"spapers of !eneral circulation. years Oear 76 at least 39I of the total re+uire#ent3 Oear .his 4anual of Rules and Re!ulations shall ta1e effect upon approval 'y the President of the Philippines or his duly desi!nated representative and fifteen (7= days after pu'lication in the Official Ca. REPEALING CLAUSE All C-A issuances) rules and re!ulations applica'le to SCCs that are inconsistent "ith the provisions of this 4anual are here'y repealed or #odified accordin!ly. .6 at least <9I3 and Oear 36 799I *ithin one (7 year fro# the issuance of the provisional license to operate *ithin t"o (. EFFECTIVITY . ARTICLE 1'. A#end#ents of (y$5a"s and Articles of Cooperation to confor# "ith the pertinent provisions of the 4anual.7. SEPARABILITY CLAUSE *henever part of this 4anual is declared unconstitutional or inconsistent "ith e?istin! la"s 'y a co#petent court) the re#ainin! provisions of this 4anual not affected there'y shall re#ain in full force and effect) unless dee#ed other"ise. =.I and Co#pliance to Re+uired Co#position of 5i+uidity Reserve 0und Provisionin! of Allo"ance for Pro'a'le 5osses on 5oans Co#pliance on G5icense to OperateH as per Article . -eposit Cash Reserve 5evel (.he yearly a#ount to 'e set aside should at least 'e . *ithin t"o (.

Ad"inistrator MANUEL C. MANGCA Ad"inistrator FULGENCIO A. #R. BUAGAS Ad"inistrator ROSALINDA E. VIGARE. Approva!$ MARGARITO B. #UARE Chair"an SALAMAN D. LAPELA Ad"inistrator SEGFREDO O. VILLASECA Ad"inistrator BEN#AMIN T. YU Ad"inistrator Recommendin. TEVES %ecretar) of -inance ApprovedH GLORIA MACAPAGAL ARROYO President of the Philippines Manual of Rules and Regulations for SCCs (! .Approved per C)A *oard Reso!ution 8o$ 3@7 S-@>>B$ LECIRA V.