epublica Bhjlippines Gaugress of the Philippines (Astros Manila Bosstoentl Congress Second RegulerSession Begun end held in Mateo Manis, on Monday, the owenty-cighth day of July, two thousend eight = [RerusuicActNo. 9520] AN ACT AMENDING THE COOPERATIVE CODE OF THE PHILIPPINES TO RE KNOWN AS THE “PHILIPPINE COOPERATIVE CODE OF 2008" Be ff enacted by the Senate and House of Representatives of the Piilippines in Congress aszenbled: SECTION 1. Aiticles 1, 2. 5, 4 and § of Chapter I on General Concepts and Principles of Repablic Act No. 6938, cothervise known as the "Cocporative Cote af the Philippines” are hereby amended to read as follows: CHAPTER T GENERAL ConcEprs «nm PrinerpLes “ARTICLE 1 Title — This Aat shall be iznown as the "Phillppine Cooperative Cole of 2008"“ARI. 2. Declaration of Policy. ~ It i8 the deslatod poligy of the Siate to fester the creation and ‘growth of cooperatives as a practical vehicle ior ‘promoting selitrelianee and harnessing people power towards the attainment of economic development and social justice. The State shall encourage the private sector to undertake the actual formation and organization of epoperatives and shall create an atmosphere that is conducive t the growth and development of these cioperatives. “Toward this end, the Government and all its branches, aubdivisions, instrumentalities and agencies shall ensure the provision of technical ‘guidance, financial assistance and other sorvicen to enable said cooperatives to develop into viable and rorponsive economic enterprises and thereby bring atout a strong cooperative movement that is free from any conditions that might infringe upon the autonomy or organizational integrity of eooperetives, "Purther, the State recognizes the principle of subsidiarity under which the cooperative sector wall ‘ate and regulate within its own ranks the promotion and organization, training and research, ‘sudit and aupport eorvicos relating to eaaperatives with government assistance where necassary. “ART. 3. General Concepts. — A cooperative is. an autonomons and duly registered association of persous, with a common bend of interest, who have voluntarily joined together ta achieve ther eaeial economic, and cultural needs and aspirations by making equitable contributions to the capital required, patronizing their producis and services and, accepting 2 fair share of the risks and benafits of the undertaking im accordance with universally accepted cooperative principles. "ART. 4. Cooperative Principles. — Every cooperative ehall conduct ite affairs in accordance ‘with Filipino culture, good values and experience ard the univermally acvepted prinaples of eaperation which include, but are not limited to, the fallowiny:“@) Voluntary and Open Membership — Cooperatives are voluntary organizations, open to alll persone able to use their sorviess and willing to accept the responsibilities of membership, without gender, oocial, racial, cultural, political or religious iscrimination “@) Democratic Member Control — Cosperstives are democratic organizations that are controlled by their members who actively participate in setting their policies and making decisions. Men and women serving as elecied representatives, directors or officers are accountable to the membership. Ia primary cooperatives, members have equal voting rights of one-member, one-vote. Coopecatives at other levels are organized in the same democratic manner. “@)_Member Economie Participation — Members contribute equitably to, and democratically control, the capital of their cooperative. At least part of that capital is the common property of the ‘Cooperative. They shall receive limited compensation limited interest, if any, on capital subscribed and. as a condition of membership. Membe: allocate surpluses for any or all of the following purpoces: developing the cooperative by eotting up reserves, part of which should at least be indivisible; benefitting mombera in proportion te their patronage of the cooperative's business; and, supporting other stivitice approved by the mombership. “() Autonomy ond Independenes — ‘Cooperatives are autcnamous, self-help organisations: controlled by their members. Tf they enier into agreements with other organizations, including ‘government, or raise eapital from external sources, they shall do so on terms that ensure democratic control of their members and maintain their cooperative autonoiny. “@) Education, Troining and Information — Cooperatives shall provide education and training tortheir members, clocted and appointed representatives, managers, end employees, so thet they can contmbute effectively and efficiently to the development of their cooperatives, “(8) Cooperation Among Cooperatives — Cooperatives serve their members most effectively. and strengthen the cooperative movement by working together through local, national, regional: and international structures. "GO Comearn for Cannmunity — Cooperatives work for the sustainable development of their communities through policies approved by their ‘members. “ART. §. Definition of Terms. ~The following terme shall meen: “C) Member includes 4 person either natural ‘or jusidical who, adhering lo the principles set forth ‘n this Code and m the articles af cooperation, has ‘been admitted by the cooperative as member; “(2) Geieral Assembly chall mean te full membership of the cooperative duly assembled for the purpose of oxercising all tho rights and performing all the obligations pertaining to toaperatives, as provided by this Coda, ite articles of cooperation and bylaws: Provided, That for cooperatives with numerous and. dispersed membership, the generel assembly may be composed of delegates elected by exch auctor, chapter or diateict of the cooperative in eccordanee with the rules and regulations of the Cooperative Development ‘Authority: (8) Boorel of Directors shall mean thet body entrust! with the management of the affairs of the fpgteratve winder ste atten of eroperation andshall refer to any body specific functions and responsibilities under the bylaws or resolution of the general acserably or the board of divactors; “(G) Articles of Cooperation moans the axtisles of cooperation registered under this Code and includes s registered amendment thereof, “"(@) Bylaws means the bylaws registered under this Code and includes any registered amendment “(7) Registration means tha epsrative act granting juridical personality to a proposed cooperative and is evidenced by x certificate of ‘registration; "@) Cooperative Develepmant Authority refese to the government agency in charge of the registration and regulstion ef cooperatives as such, hereinafter referred to as the Authority; "@) Universally Accepted Principles mean that body of cooperative principles adhered to worldwide by cooperatives; “(10) Represeniotive Assembly means the fall membership of a body of representatives elected by each of the sccters, chapter or district of the cooperative duly assembled for the purpose of exercising such powers lawhlly delegated unto them by the general aseembly in eocordance with ita sylaws; "(LD Officers of the Cooperatives shall include the members of the board of directors, members of the different commitiess created by the general assembly, general manager or chief executive officer, secretary. treasurer and members holding other positions os may be provided for in their bylaws;02) Sccial Audit is 2 procedure wherein the cooperative essesses its social impact and ethical ‘periormance vis-t-vs ita stated mission, vison, goals land code of eoeial roeponsibility for exepaxatives to be established by the Authority in consultation with the cocperative sector. It enables the cooperatives to iievelop a process whereby it can account for its social performance and avaluate its impact in the community and be sevountable for is decisions and actions to its regular members “€3) Performance Audit shall refer to an audit on the efficiency end effectiveness of the ‘conperative as a whole; 1ts management. and officers: and its various responsibility centers as besis for umpreving in¢ividual, teem or overell periarmence ond fer objectively informing the general membership on such performance, “(14) A Single-line or Single-purpose Cooperative shall inelude cooperative undertaking activities which are related to its main line of business or purpose; (15) Service Choperatines are those which provide any type of servior to its members, including but not limited to, transport, information and ‘communication, instirancs, housing, electric, health services, educstion, banking, and savings and credit; “(8) Subsidiory Cooperative relers to any organization all or majority of whose membership or shereholders come from @ cooperative, organized for any other purpose different fram that of, and reveives technical, managerial and financial ‘assistance? from, a cboperative, in accordance with the rules and regulations of she Authority; and “Q7) Pederotion. of Cooperatives refers to three of more primary cooperatives, doing the same line of business, organized at the municipsl, provincial, ity, special metropolitan political subllivision, o* ‘scoromic zones created by lav, registered with the‘Authority to undertake business activities in aupport of its member-cooperatives.” SHC, 2. Articles 6, 7) 9, 10, 11, 12, 13, 14, 16, 17, 28, 20, 21, 93, 24 and 25 of Chapter IT on Organization ‘and agin oO ns Gate ‘ae Srey, sone 9 sea as follows: CHAPTER IT ORGANTZATION AND REGISTRATION “ART. 6, Purposes of Cooperatives. ~ A cooperative may he organized and registered for any or all of the following purposes: “@) To encourage thrift and savings mobilization among tho mambers; *@) To generats funds and extend credit to the members for productive and provident parpores; °@) To encowwage among members systematic production and marketing; *(4) To provide goods and services and other requirements te the members; "(G) To develop expertise and skills among its members; “(6) To acquire lands and provide housing benefits for the members; “(1 To insure against losses of the members; *(8) To promote and advance the economic, social and educational status of the members; “(9) To establish, awn, lease or operate ‘cooperative banks, cooperative wholesale and retail complesas, insurance ané agricultural/ndustrial processing enterprises, and pubbe maricets;“(0) To coordinate and facilitate the activities of cooperatives; “(11) To advocate for the cause of the cooperative movement; (02) To ensure the visbility of cooperatives shrough the utilization of new technologies, *8) To encourage and promote selthely or self-employment as an engine for economic growth and poverty alleviation; and “(14) To undertake any and all other activities ‘for the effective and efficient implementation of the ‘provisions ef this Code. “ART. 7. Objectives and Goals of a Cooperative, ~ The primary objective of every cooperative is in help improve the quality of life of its members, Towards this exd, the cooperative shall aim to “a Provide goods and services to its members to enable the t allaia increased income, savings, investments, productivity, and purchasing power, and promets among themeclves equitable distribution of net strplus through maximum utilization of economics of saale, eost-charing and viskesharings “(b) Provide optimum social and economic onefits to its members; “(o) Teach them efficient ways of doing things jn e cooperative manner; "(@) Propagete cooperative practices and new ‘ideas in business and management; Jess prinieged“(®) Cooperate with the government, other cooperatives and people-onented organizations to further the attainment of any of the foregoing objectives. “ART. 8. Cooperatives Not in Restraint of ‘Trade. — No eoeporative or method or act thereat ‘which complies with this Code shell be deemed a conspiracy or combination in restraint of trade or an illegal monopoly, or am attempt to lessen competition or fix prices arbitrarily in violation of any of the laws of the Philippines. “ART. 9. Cooperctive Powers and Capecitios. = A conperative registered under this Code shall have the following powers, vights and capacitios: “(1) To the exclusive use of ite regictered name, to sue and be sued; “© OF succession “(g) To amend its articles of cooperation in accordance with the provisions of this Code; "(4) To adopt bylaws not contrary to law, morale or public policy, and to amend and repeal the same in accoréanes with this Code; “(To purchase, receive, take or grant, hold, convey, soll, late, pledge, mortgage, and otherwise deal with stich real and personal property as the vaneaction of the lawful affairs of the cooperative may reasonably and necessarily require, subject to the limitations prescribed by law and the Constitution; “46) To enter into division, merger or consolidation, ar provided m this Code; (7) To form subsitsary cooperatives and join federations or unions, os provided in this Code;(8) To avail of loans, bo entitled to credit and to accept and receive grants, donations end assistance from foreign and damestic sources, subject to the conditions of said loans, credits, grants, donations or assistance that will not undermine the autonomy of the cooperative, The Authority, upon ‘written request, shall provide necessary assistance in the documentary requirements for the loans, credit, grants, donations and other financial suppart: (9) To evail of preferential rights granted to cooperatives tmnder Rapublic Act No. 7160, otherwise Known as the Local Government Code, end other lows, particularly those in the grant of franchises to establish, construc:, operate and maintain ferries, wharves, markets or slaughterhouses and to leace public utilities, including access to extension and on-site research services and faci ‘agriculture and fishery activities, *(10) To organize and operate schools in secordance with Republic Act No. 9155, Governance of Basic Bducation Act of 2001 and other pertinent ews; and “CY To exercise such other powers granted by this Code or necessary to carry ont its purpose or purposes as stated in its articles of cooperation. “ART, 10. Organizing a Primary Cooperative. = Fiftzen (15) or more natural persons who are Filipino citizens, of legal age, iaving a common vond of interest and are actally’ residing or working in the intended area of operation, may organize a primary cooperative under this Code: Provided, ‘That a prospective member of a primary cooperative ‘must have completed a Pre-Membership Eduestion Seminar (PMES). ‘Any newly organized primary cooperative may be registered 2s multipurpose cooperstive only after compliance with the minumum requirements for mmulupurpose cooperatives to he eet by the Authority.Assingle-purpose scoperative may transform into a multipurpose or may create subsidiaries only after Shicnst to @) yeste of operations. “ARM, 11, Beonomic Survey, — Every group of individuals or cooperatives intending to form a ‘coperative under this Code shell submit to the Authority a generel statement describing, among othoxe the structure and purposes of the proposed. cooperative: Provided, Taat the structure and actual staffing paltern of the cooperative shall include a bookkeeper: Provided, further, That they ‘shall not be allowed to operate withous the nevessary personel aad shall alo submit an economic auzvey, indicating there the area of operation, the size of membership, and other pertinent data in a format, provided by the Authority. “ART. 12, Liability. — A cooperative duly vogittered under this Code shall have limited ability. “ART, 18. Term. — A cooperative shall exist for a period not exceeding fifty (60) years ftom the date of registration unless sooner dissolved or unless ‘seid period 13 extended. The cooperative term, 2s ‘originally atated in the articles of cooperation, may bbe extenvted for periods not exceeding fity (60) years in any single instanes by an amendment of the arteles of cooperation, in acsordanse with this Cede: Provided, That no extension can be made earlier than five (5) years prior to the original or subsoquent expiry dateldates unless there are justifiable reasons for an earlier extension as may bbe determined by the Authority. “ART. 14. Articles of Cooperation. ~ (1) All cooperatives applying far cegitration sal) Sle wit the Authority the articles of cooperation which shall: be signed by each of the organizers end acknowledged by them if natural persons, and by the chairpersons or eeeretaries, if juridical persons, before @ notary pubic.“@) The articles of cooperation shall set forth: fa) The name of the cooperative which shall include the word ‘cooperative! “(@) The purpose or purposes and soope of business for which the cooperative is to be registered; “(e) The term of existence of the cooperative; *@ The area of operation and the postal address of its principal cffice: “(@) The names, nationality, and the postal addresees of the registranto; “() The common bond of memberahip; *(g) The list of names of the directors who stall manege the cooperative, and “(h) The amount of its share capital, the names and residences of its contributcrs and a statement of whether the cuoperative is primary, secondary or tartiary in eceardance with Article 98 "(Q) The artictos of cooperation: may: cleo eontain any other provisions act inconeistent with this Code or any related law. "(4) Four (4) copies each of the proposed articles of cooperation, bylaws, and the general statement required under Article 11 of this Code. shall be subsitéed to the Authority *(9) Mo cooperative, other than a cooperative union a8 described under Article 25 hereof, shall he registered unless the articles of covperation is accompanied with the bonds of the acsountable officers and a sworn statement of the treaaurer elected by the subscribers showing that at leasttwenty-five per centum (25%) of the authotived share capital has been subscribed and at least twenty-five per centum (6%) of the total subseription hes been pad: Provided, That in no cage shall the peid-up share capital be less than, Vifteen thousand peso: (P15,000.00), “The Authority shall periodically assess the required peid-up share capital and may increase it every five (6) years whea necessary upon consultation with the cooperative sector and the National Economie and Development Authority EDA). “ART. 15, Bylaws. ~ (1) Rach cooperative to be registered under this Code shall adopt bylaws not inconsistent with the provisions of this Code. The bylaws shall be fled at the same time as the artides of cooperation. *(@) ‘The bylaws of each cooperative shall (a) The qualifications for admission to ‘membership and the payment t be made or interest ‘to be acquired as a condition for the exercise of the right of membership; “@) The rights and Hebilitioe of mombership; “(c) ‘The circumstances under whieh membership is acquired, maintained and Inst; “@)__ The procedure to be fatlowed in cases of tamination of membership; “@)_ The conditions under which the transfer of a share or interest of the members eball be permitted: "(The niles and procedures on the agenda, time, place and manner of calling, convening, conducting meetings, quorum requirements, votingsystems, and other matters relative tp the business aifsire of the general assembly, board of directors, and committees; “(@) The general conduct of the affairs of the ‘cooperative, including: the powers and duties ef the general assembly, the board of direviors, committees and the officers, and their qualifications and isqualifications, “(h) The manner in which the capital may be raised and the purposes for which it can be utilized: “G) The mode of custody and of investment of not Burplus; °G] The accounting and auditing eystomo; “(k) ‘The manor of loaning and borrowing, ‘including limitations thereof, "Q) The inethod of distaibution of net surplus; (a) The menner of adopting, amending, repealing, and abrogating hylaws; “(i) A conciliation or mediation mechanicm for the amicable settlomont of dicputes among members, direccors, officers and committee members of the cooperative; and “(o)_ Othor matters incident to the purposes aud activities of the cooperative. “ART. 18, Registration. ~ A cooperative formed or organized uncer this Code acquires juridical personality from the date the Authority issues a certificate of registration under its official seal. All applications for registration shall be finally disposed. of by the Authority within a panied of sixty (60) days from the fling thereef, ctherwise the application is ‘deemed approved, unless the cause of the delay is attributable to the spplieamt: Provided, That in easeof a denial of the application for registration, an appeal shell lie with the Office of the President within ninety (99) days from receipt of actice of such denial: Provided, further, That failure of the Office of the President to act on the appeal within ninsty (G0) days from the ling thereof shall mean: approval of said application. “ART. 17. Certificate of Registration. — A certificate of regisiration issued hy the Authority ‘under its official seal shall be conclusive evidence: thet the cooperative therein mentioned ie duly registered unlees it is proved that the registration thereaf has been cancelled. CART. 18. Amendment of Articles of Cooperation and Bylaws, — Unless otherwise prescribed by this Coda and for legitimate purposes, any provision or matier stated in the articles of cooperation and bylaws may he amended Ly two-thirds (2/3) vote of all the members with voting rights, without prejudice to the right of the dissenting members to exercise ‘their night to withdraw thelr membership under Article 30. “Both the original and mended articles andlor bylaws shall eontain all provisions required by law to be set out in the erticles of cooperation end bylaws. Amendments shall be indicated by ‘undertcoring or otherwise appropmataly indiesting the change or changes made and a copy of the amenéad articles or amended bylaws duly certified under oath by the couperetive scerstary and a majority of the directors stating the fact that said amendment or amendments to the articles of ‘cooperation andior bylaws have been duly approved by the required vote of the members. All amendments to the articles cf cooperation and/or bylaws shell be submitted to the Authority, ‘The amendments shall take effect. upon its approval by the Authority or within thirty (80) days from the date of filing thereof if not acted upon by theAuthority for a cause not attributable to the cooperative, “ART. 19. Controcts Executed Prior to Registration and Effects ‘Pherao/. ~ Contracts ‘executed between private persons and cooperatives prior to the registzation of the cooperative shall remain valid and binding between the parties and ‘upon registration of the cooperative. A formal written contract shall be adopted and made in the cooperatives name or on its behalf prior to its registration. “ART. 20, Division of Cooperatives. — Any registered cooperative may, by a resolution approved by a vote of thros-fourthe (8/4) ef all the members ‘with voting rights, present and constituting @ wortun, resolve to divide itself into two (2) or more ‘cooperatives, The procedure for such division shall be praceribed in the regulations of the Authority, ‘The new cooperatives shall become legally establishes upon registration with the Authority: Provided, ‘That all the requiremenis set forth in this Code have been complied with by the new cooperatives: Provided, furtier, Taat na division of a couperative in fraud of creditors shell be valid. “ART, 21, Merger and Consolidation of Cooperatives. — (1) Two (2) ox more cooperatives ‘may merge into a single cooperative which shall either be one af the constitient cooperatives ov the consolidated cooperative, “@) No.merger or consolidation shall be valid unless approved by a three-fourths @id) vote of all the membere with voting rights, present and constituting a quorum of each of the constituent cooperatives at separate general essembly meetings. ‘The dissenting members shall have the ment to exercine their right to withdraw their membecship pursuant to Article 30,*(9) The Authority shall isane the guidolines governing the procedure of merger or consolidation of cooperatives. In any case, the merger ot ‘consolidation shall be effective upon the issuance of the cortficate of merger or consolidation by the ‘Authority. “ART. 22. Effects of Merger Consolidation. ~The merger or consolidation of cooperatives shall have the following effects: “(Q) The constituent eoaperativos chall become fa single cooperative which, in case of merger, shall be the surviving cooperative, and, in case of ‘consolidation, shall be the consolidated cooperative; “(@) The separate existence of the constituent, ‘cooperatives shall cease, except that of the surviving or the consolidated cooperative; “(@) The, surviving or the consolidated ‘eooperativa shall possess sll the nights, privilezes immunities and powers and shall be subject to all ‘the duties and liabilities of a cooperative crganized under this Code; “(4) Tha eurviving or the consolidated cooperative shall possess all the asseis, nights, privileges, immunities and franchises of each of the constituent couperatives; and “(G) The surviving or the consolidated cooperative shall he responsible for all the uakilines ‘and obligations of each of the constitment cooperatives in the same manner ae if such surviving or consolidated cooperative had itsalf incurzed such abilities or obligations. Any claim, action or proceeding pending by or against any such ‘constituent cooperatives may be prosecuted. by or fagaiaet tho surviving or conselidated cooperative, a8 the case may be. Neither the rights of ereditors noc aby lien spon the property of ary of such constituent ‘cooperatives shall be impaired by such merger or consolidation,“ART. 28. Types and Categories of Cooperatives. ~ (1) Tapes of Cooperaiives ~ Cooperatives may fall under any of the following types "(@) Credit Cooperative is one that promotes and undertalee aevings and lending services among its members, It generates @ common pool of funds in order to provide financial essistance and other related financial services to iis members for ‘productive and provident purponss; “G) Consumers Cooperative is one the primary purpose of which is to procure and distribute commodities to members and non-members: “(@) Producers Cooperative is one that undertakes joint production whether agricultural or industrial. It 19 formed and operated by its ‘mombere to underiale the profuction and processing of raw materials or goods produced by its mambers into finished or precegsed predusts for male by the ‘cuoperative (o its members and nonmembers. Any and product or its derivative arising from the raw materials produced by its members, sold in the ‘name and for the account of the cooperative, shall bbe decmed a product of the cooperative and ite members: *(@)_ Marketing Cooperative is ont which engages in the supply of production inputs to members and markets their products; “G@) Service Cooperative is one which enzages in medical and dental care, hosp:talization, ransportation, insurance, housing, labor, electric light and power, communication, professional and other services; “€) Multipurpose Cooperative is one which combines two (2) or more of the business activitias of these different types of cuoperatives,“(g) Advocacy Cooperative is e primary cooperative which promotes and advocates cooperativiem among its members and the public ‘through cocially-criented projects, education and training, research and communication, and other similar activities to feach out to its mtended beneficiaries; "(a) Agrarian Reform Cooperative io one organized by marginal farmers majcrity of which are agrarian reform bencficieries for the purpose of developing an appropriate eystem of land tenure, laad development, lend consolidation or land management in areas covered by agrarian reform; "@) Cooperative Bank is one organized for the primary purpose of providing 2 wide renge of Gnandal servioes to cooperstives and their members; "@)_ Dairy Cooperative is one whose members fare engaged in the production of fresh milk which nay be processed and/or marketed as dairy products; “(k) Bdlucation Cooperative ie one oxganized. for the primary purpose of owning and operating: Loensed educational inatitationa, robwithstanding the provisions of Republic Act No. 9185, otherwise mown az the Governance of Basic Education Act of 2002; "q) Blectriz Cooperative is one organized for the primary purpose of undertaking power generation, uilizing renewable energy sources, ineduding hybrid systems, acquisition and operation of subtzanamision or cntetoution to He Douschold members: “(m) _ Financial Service Cooperative is one organized fer the primary purpose of engaging in savings and credit services and other financial sarviens;“(n) Fishermen Cooperative is one organized by marginalized fishermen in localities whose products are marketad cither as frosh or processed: products; “(o) Health Services Cooperative is one organized for the primary purpose of providing medical, dental and other health services; “(p) Housing Cooperative is one organized to ‘assist or provirle acress to housing for the benefit of its regular members who actively participate in ‘the savings program for housing. It is co-owned ani controlled by its members; "(@) Jnourance Gooperative is one engaged in the business of insuring life and property of ‘cooperatives and their members; “@) Transport Cooperative is one whieh includes land and sea transportation, Limived to small vessela, a8 defined oy classified umder tha Philippine maritime laws, organized under the provisions of thin Code: “(@) Water Service Cooperative ia one organized to own, operaic and manage water ‘sysems for the provision and cistnbution of potable water for its members and their household; 't) Workers Cooperative ie one organized by ‘workers, inelucing the self-employed, who are at the same time the members and owners of the ‘enterprise, [ts principal purpose is to provide employment and business opportunities ta ite members and menage it in accordance with cooperative prinaiples; and “(a) Other types of cooperative as may be determined by the Authority. *@) Categories of Ceoperatives ~ Cooperatives shall be categorized according to membership. and tervitorial considerations 2 followa:‘@)_In terms of membership, cooperative shall be categorized into: °@ Primary — The members of which axe natural persons; "Gi) Secondary ~The members of which are primanes; and “(ai) Tertiary ~The members of which are sveondary eooparatives; and °() In terms of torvtory, cooperatives shall be categorized aezording vo areas of operations which may or may not coincide with the political ‘subdivisions of the country. CART, 24, Functions of @ Federation of Cooperatives. — A federation of cooperatives shall undertake the following functione: “(@) To carry on any cooperative enterprise authorized under Article 6 that complements, ‘augments, or supplements but dcos not conflict, compete with, nor supplant the business or economic astivities of its members; '(b) To carry on, encourage, and assist educational and advisory work relating to i ‘member cooperatives: "(¢) To vender services designed to encourage simplicity, efficiency, and economy in the conduct af the business of its member cooperatives and to {facilitate the implementation of thair beolskeoping, secounting, and other eystems and procedures; “(@) To print, publish, and circulste any newepaper or other publication in the interest of iis member voaperatives and enterprises; “© To coordinate and facilitate the activities of its member cooperatives:°@ To enter into joint ventures with mation] onal cooperatives of other countzies in the manufachize and sale of producis and/or services in “(g) To perform such other functions as may be necessary to attain its objectives. “A jederatioa of cooperatives may be registered. by earying ove the ‘ormalitie for segieceation of cooperative, “Registered cooperatives may organize a federation according to the type of business ectivity ‘ongaged in by the cooperatives, "ART. 25. Cooperative Unions. — Registered. cooperatives and fecerations at the apsroprate levels may organize or join coonerative unione to represent the interest end welfare of all types of cooperatives at the provincial, city, regional, and nationel levala, (Cooperative unions may have the following purposes: “(@) To represent its member organizations; “@) To scquire, analyse, and disseminate economia, statistical, and other information relating to ite membars and to all types of cooperatives within its aree of operation: “(To sponsor studies in the economic, legal, financial, social and other phases of cooperation and publish the results therect; ‘{@ To promote the Imowledge of cooperative principles and practices; Ye) To develop the cooperative movement in their respective jurisdictions, “d) To advise the appropriate authorities on all questions relating to cooperatives:"@ To rise funds throagh membership fees, ues and contributions, danetions, and subsidies from local and foreign sources whether private or government; and "@) To do and perform such other non- business activities as may be necessaxy to attain the foregoing chjectives. “Cooperative unions may astist the nstional and local governments in the latier’s development ‘activities in their respective jurisdictions” SEC. 3. Articles 26, 27, 28, 29, 80, 31 and 52 of Chapter TIL on Membership of the same Code are hereby renumbered ‘and amended to read, as follows: CHAPTER I ‘Mmanensirp *ART. 26. Kinds of Membership. — A cooperative may have two (2) kinds of members, to ‘wit: () regular members and. (2) asdosiate members. "A sogular member is one who has complied ‘with all the membership requirements and entitled to all the rights and priviloges of membership. An associate member is one who has ao right to vote, nor be voted upon and shall be entitled only to suctt rights and privileges as the bylaws may provide: Provided, That an associate member who meets the woinimum requirements of reguler membership, continues to patronize the cooperative for two (2) ‘years, and significe hislher intention to remain a member shall be considered 2 regular member. “A cooperative organized by minors shall be considered a laboratory cooperative and must be affliated with a registered cooperative, A laboratory sooperative shall he gouerned by special guidelines to be promulgated by the Auihoriy.RT 27. Government Officers ond Bmployecs, ~ (1) Any officer or employee of the Authority shall be disqualifiad to be elected or appointed to any position in a cooperative. Provided, That the disqualification does not extend 0 @ cooperative organized by the officers or employees of the Authority. “(@) All elective officials of the Government ‘hall be ineligible to become officers and directors Gf cooperatives: Provided, Thet the disqualification oes not extend to a party list representative being ‘en officer of a cooperative he or she represenis, and “() Any government employee or official may, in the discharge of his duties os member in the cooperative, be ellowed by the head of office concerned to use official time for attendance at the general assembly, board and committee meetings of cooperatives. 28 well 28 cooperative sersinare, conferences, workshops, tachnical meetings, and ‘tweining courses locally or abroad: Provided, ‘That the operations of the office concerned are not adversely effected. “ART, 28. Application. — An applicant for membership shall be deemed a member after approval of his membership by the board of directons and shall exercise the rights of member after having made such payments to the cooperative in sespest ta membership or acqvired interest in the cooperative es may be prescribed in the bylaws, In case membership 1s refused or denied hy the board of directora, an oppeal may be made to the general ascembly and the latter's decision shall be final. For thie purpose, the general aosembly may opt w create an appeal and grievence commsties, the members of which, shall verve fer a period of one (2) year and shall decide appeals on membership application within thirty (0) daye upon receipt ‘thereof. If the committee fails to decade within the presenbed period, the appeal is deemed approved in favor of the applicanc,“ART, 29. Liability of Members. — A member shall be Liable for the debts of the cooperative to the extent of his contribution to the share capital of the cooperative, “ART. 80. Terminotion of Membership. — (1) ‘A member of 2 cooperative may. for any valid reason, withdrew hic membership from the ‘cooperative by giving 2 sixty (60) day notize to the board of directors. Subject to the bylawe of the cooperative, the withdrewing member shell be entitled to a'refund of his share capitel contribution ‘and all other interests in the cooperative: Provided, ‘That such refund chall not be made if upon such, peyment the value of she assets of the cooperative would be less than the aggregate amount of its debis and liabilities exdusive of his shere capital contribution, “() The death or insanity of a member in a primary cooperative, and the insolvency or dissolution of 2 member in a secondary or terliary cooperative may be considered valid grounds for termination of membership: Provided, however, That in case of death or insanity of an agra beneficiary-member of a cooperative, the nextofkin may assume the duties and responsibilities of the original member. "iQ) Membership in the cooperative may be terminated by a vote of the majority of all the maetabers of the bomd of directors for eny of the following eauses: “@) When a member has not patronized any services of the cooperative for an unreasonable period of time as may be previously determined by the board of directors; “(o) When a member has continuously failed to comply with his obligations, “(o) When @ member has ecied in violation of the bylaws and the rules of the cooperative; and“(d) For any act or omission injurious ot prejudicial to the interest or the welfare of the cooperative. A membar whose menibership the board of directors may wish to terminate shall be informed of sch intended action in writing and shall be given an opportunity to be heard before the said board makes its decision. The decision of the basrd shall be in writing and shall be communicated in ‘person or by registered mall to said member and hall ke appealeble within thirty (80) deys from receipt thereof to the general assembly whose desision shall be final. Tho goneral asccubly may create an appeal ang grievance commit whose members shall cerve for a period of one (3) year and shall decide appeals on membership terminetion. "The committee is given thirty (90) daye from receipt thereof to decide on the appeal. Pailure wo decide within the prescribed period, the appeal is deemed approved in favor of the member. Tending a decision by the general assembly, the membership yemains in force. "ART. 31. Refund of Interesia. — All suns computed in accordance with the bylaws to be due from a cooperative to 2 former member shall be paid tp him either by the cooperative or by the approved tranaferes, 28 the cose may be, in azcordanca with this Cole SEC. 4. Articles 83, 54, 36, 96, 37, 88, 39, 40, 42, 42, 43, 44, 45, 46, 47, 48,49. 50 and 1 of Chapter IV on Administration of te same Code are hereby renumbered and amended to read, as follows: CHAPTER IV ADMUNISTRATION “ART. 92, Composition of the General Assonbly. ~ The general assembly shall be composed of such members who are entitled to voteunder the articles of cooperation and bylaws of the cooperative. "ARM 99, Powers of the General Assembly. — ‘The general assembly shall be the highest policy maleng body of the cooperative and shall exercise such powers as are stated in this Code, in the articles of eoopsration and in the bylaws of the cooperative. The generel assembly shall have the following exelusive powers which cannot be delegated: “C1 To dotermino and approve amendments to the erticles of cooperation and bylaws; "@) To elect or appoint the members of the board af directors, and 9 remove them for cause However, in the case of the electric cooperatives registered under this Code, election of the members of the board shall be held in accordance with its bylaws or election guidelines of such electric cooperative; end “(@) To approve developmental plans of the vogperative. “Subject co such other provisions of this Code ‘and only for purposes of prompt anit intelligent. decision-making, the general assembly may, by a three-fourths (4/4) vote of all its members with ‘voting rights, present and constituting a quorum, delegate some of its powers to a smaller body of the cooperative. These powers shall be enumerated under the bylaws of the cooperative. “ART. 34. Meetings. ~ (1) A regular meeting shall be held snnually by the general assembly on a date fixed im the bylaws, or if not so fised, on any date within ninety (90) days after tha close of each fiscal year. Provided, Thal, notice of regular meetings shall be sent in uniting, by posting of publication, or through other electronic means to all members of record:“@) Whenever necessary, a special meeting of the general assembly may be called at any time by 8 majority vote of the board of directore or a3 provided for in the bylewe: Provided, That a notice in writing shell be sent one (1) week prior to the maceting to all members who are ontitied to vate. ‘However, a special meeting shall be called by the ‘oard of diresiore after compliance with tho required ‘notice within one (1) month after reeetpt of a request in writing from at least ten per centum (10%) of the iotal members who ate entitled to vote 10 ‘transact apenific business covered by the call. “If the board fails to call a regular or a special meeting within the given period, the Authority, upon petition of ten per cenium (10%) of all the members of the cooperative who are enlitled 9 vote, and for good cause shown, shall issue an order to the petitioners directing them to call meeting of the general ascembly by giving proner noties a8 required in this Code or in the bylaws; =@) Tn the case of a newly spproved cooperative, a special general assembly shall be called. as far as practioahie, within ninaty (90) days from such approval; “() The Authority may call a special meeting of the cooperative for tae purpose of reporting to the members the result of any examination, cr other investigation of the cooperative affairs; and “(@) Notice of any meeting may be waned, exprisaly or impliedly, by any member. “ARD. $5. Guorum, — A quorum shall eoncist of at Teast twenty-five per centum (25%) of all the members entitled to vote. Tn the case of cooperative banks, the quorum shall be as provided in Article 99 of this Code. In the case of electric cacperatives registered under this Cede, a quorum, unless otherwise provided in the bylaws, shall consist of five por centim (6%) of all the members entitled to vote.“ART. 96, Voting System, — Bach member of a primary cooperative shall have only one (1) vote, In the case of membere of scoondary or tertiary cooperatives, they shell have one (1) basic vote and a2 many incentive votes as provided for in the bylaws but not to exceed five (6) vates. The voies cast hy the delegates shall be deamed es votes cast by the members thereof “However, the bylaws of a cooperative other than a primary may provide for voting by proxy. Voting by proxy means allowing e delegate of a ‘couperative to represent o vote in behalf of anotker delegate of the same cooperative, “Ann. 37. Composition and Term of the Beard of Directors. ~ Unless otherwise provided in the ‘ylawe, the diroction and management of the affairs af a cooperative shall be yested in a board of directors which shall be composed of not less than five () nor more than fifteen (18) members elected thy the general assembly for @ term fixed in the bylaws bat not exceeding a terra of two (2) years and shail hold ofitce until their successors are duly lected and qualified, er until duly removed for ‘cause. “AN. 38, Powers of the Boord of Direcvors. ~The board of directors shall be responsible for the straiogic planning, direction-setting and policy: formulation aclivitios of the cooperatives. “ART. 39, Directors. — (1) Any member of ‘cooperative who, under the bylaws of the exoperative, hhas the right to vote and who possesses all the qualifications and none of the disqualifications provided in the laws or the bylaws shall be eligible fbr clection ag director. *@) The cooperative may, by resolution of its board of directors, admit as director, or comm: ‘member one appeintod by any finsnsing institution from which the cooperative received financialassistance solely to provide technical mowledge not available within ite membership. Such dizector or committee member need not be a member of the cooperative and ahell hove no powers, rights nor responsibilities except to provide technival assistance fas required by the cooperate. “@) The members of the board of director shall not hold any other posision directly involved in the day to day operation and mansgement of the cooperative. “(4) Any person engaged in a business similar ta that of the cooperative or who im any way has a conflict of interest with it, is disqualified from election as @ director of said cooperative. “ART. 40. Meeting of the Board and Quorum Requirement. — (1) In tho cave of primary, cooperatives, regular meetings of the board of directors shall be held at leset once a mouth, "@) Spatial meotings of the board of directors may be held at any time upon the call of the chairperson or a majority of the members of the Loard, Provided, That written notices of the meeting speciiving the acends of the special meeting shall ‘be given to all members of the board at least ons (1) weeks before the said meeting. “(@) A majority of the members of the board shail constitute a quorum for the conduct of ueinges, unless the bylaws provide otherwise. “@) Ditectors cannot attend or vote by proxy at board meatings “ART. 41. Vacancy in the Board of Directors. = Any vacangy in the board of directors, other than by expiration of term, may be filled by the vote of ft leseb a misiosity of the remaining direciors, if fill constituting «| quorum: otherwise the vacancy rust bs filled by the general assembly in ¢ regular ‘or special meeting called for the purpese. A dieotor0 elected to Gill 2 vacancy chall sows only the unexpired term of his predesessor in office. “ARE, 42, Officers of the Cooperative. — The ‘board of divectors shall elect from among themselves: the chairperson and vice-chainpercon, and elect or appoint other officers of the cooperative from outside of the board in accordance with their bylaws. All officers shall serve during good behavior and shall not be removed except for cause efter due hearing. Lass of confidence shall not be a valid ground for causing loss of confidence in the honesty and Integrity of euch officer. No two 2) or more persons with relationships up to the shird civil degree of consanguinity or affinity nor shall any person engaged in a business similar to that of the cooperative nor who in any other manner has interests in conflict. with the cooperative shall serve ‘as an appointive officer. “ART. 43. Committees of Cooperatives. ~ (1) ‘The bylaws may croate an executive committee to be appointed by the board of directors with such powara and duties a2 may be delegated to it in the bylaws or by @ majority vote of all the members of the hoard of directors “(2) The bylawa shall provide for the creation of an audit, election, mediation and conciliation, ethics, and auch other committees as may be necessary for the conduct of the affairs of the cooperative. The members of both the audit and election committees shall be elected by the general assembly and the rest shall be appointed by the board. The audit committee shall be directly ‘sccountable and respoasible to the general essembiy. Te shall have the power and duty to continuously monitor the sdequacy and effectiveness of the cooperatives manegoment control sysiom and audit the performance of the cooperative and its various sogponsibility contors,“Unless otherwise provided in the bylaws, the board, in case of a Vacancy in the committees, may all an election to fill tho vacsney or appoint person to fill the same subject to the provision that ‘the person elected or appointed shall serve only far ‘the unexpired portion of the tenn. “ART, 44, Functions, Responsibilisies ond Training Requirements of Directors, Officers and Commitiee Members. ~ The fanctions and responsibilities of the directors, officers and commistee members, as well as their training quirements, shall be in crordance with the rales and regulations issued by the Authority, “ART. 48. Liability of Directors, Officers and Committee Members. ~ Directors, officers and comaittce members, who willfully and lenowingly ‘vous for or assent to patently unlawful acts or who era guilty of gross negligence or bad faith in ‘Gecting the aflirs of the cooperative or aoquire any ‘personal or pecuniary interest in conflict with their uty as such directors, officers or committee members shall be liable joinily and severally for all damages or profits resulting therefrom to the cooperative, members and other persons. “When a director, officer or committee member settompie acquire of acquires, in violation of his duty, any interest or equity adverse to the ‘cooperative in reepact to any matter which hao been yeposed in hin in confidence, he shell as a trustee for ths cooperative, be Hable for damages and shall be accountable for double the profits which otherwise would have accrued to the cooperative “Ant. 46, Compensation, ~ (1) Tn, the: absence of any provision in the bylaws fixing their compensation, the directors shall not receive any compensation excep! for reasonable per diems: Provided, however, That the directors and officers shall not be entitled to any por diem when, in the receding calendar year, the cooperative reported ainet loss of had a dividend rate less than the oftiial inflation rate for the same year. Any compensation other than per diems may be grented to directore by a majority vote of the members with voting rights at o regular or epocial general assembly esting specifically called for the purpose: Provided, ‘That no additional compencation other than per dems shall be paid during the frst year of existence of any cooperative. "@) The compensation of officers of the cooperative as well as the members of the committees created pursuant to this Code or its bylaws may be fixed in the bylaws, "@) Unless already fixed in the bylaws, the compensation of all other employees shall be determined by the board of directors, "ART. 47. Dealings of Directors, Ojfizers oF Commitiee Members. — A contract entered into by the cooperative with one (1) oF moze of ite directors, officers, and committee members is voidable, at the option of the cooperative, unless all the following ‘conditions are present: *(1) That the presence of such dinector in the board meeting wherein the contract was approved wae act neceveary to constitute a quoram for exch meeting; (2) That the vote of such director was not ‘accsssaxy for the approval of the contcact; “(@) That the contract ig fair and reasonable under the ciroumstances; and “(4) That in the case of an officer or committee member, the contract with the officer or committee member has bera previously authorized by the general assembly or by the board of directors: