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Republic of the Philippines

Congress of the Philippines
Metro Mana
ourteenth Congress
Second Regular Session
Begun and hed n Metro Mana, on Monday, the twenty-eghth day of |uy, two
thousand eght.
Republic Act No. 9520
February J7, Z009
AN ACT AMENDlNG THE COOPERATlVE CODE O THE PHlLlPPlNES TO BE
KNOWN AS THE "PHlLlPPlNE COOPERATlVE CODE O 2008"
8e it enacted by the 5enate and House of Representatives of the Philippines in
Congress assembled:.raaw
Section 1. Art.es 1, 2, 3, 4 and 5 of Chapter 1 on Genera Con.epts and Prn.pes of
Repub. A.t No. 6938, otherwse known as the "445erative 4/e 41 the
Phili55ines," are hereby amended to read as foows:.hanrobesvrtuaawbrary
CHAPTER l
GENERAL CONCEPTS AND PRlNClPLES.raaw
"ARTICLE 1. %itle. - Ths A.t sha be known as the "Phili55ine 445erative 4/e 41
Z008"..raaw
"ART. 2. eclaration of Policy.- It s the de.ared po.y of the State to foster the
.reaton and growth of .ooperatves as a pra.t.a veh.e for promotng sef-rean.e
and harnessng peope power towards the attanment of e.onom. deveopment and
so.a |ust.e. The State sha en.ourage the prvate se.tor to undertake the a.tua
formaton and organzaton of .ooperatves and sha .reate an atmosphere that s
.ondu.ve to the growth and deveopment of these .ooperatves..raaw
"Toward ths end, the Government and a ts bran.hes, subdvsons, nstrumentates
and agen.es sha ensure the provson of te.hn.a gudan.e, fnan.a assstan.e and
other serv.es to enabe sad .ooperatves to deveop nto vabe and responsve
e.onom. enterprses and thereby brng about a strong .ooperatve movement that s
free from any .ondtons that mght nfrnge upon the autonomy or organzatona
ntegrty of .ooperatves..raaw
"Further, the State re.ognzes the prn.pe of subsdarty under wh.h the .ooperatve
se.tor w ntate and reguate wthn ts own ranks the promoton and organzaton,
tranng and resera.h, audt and support serv.es reatve to .ooperatves wth
government assstan.e where ne.essary..raaw

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"ART. 3. eneral Concepts. - A .ooperatve s an autonomous and duy regstered
asso.aton of persons, wth a .ommon bond of nterest, who have vountary |oned
together to a.heve ther so.a, e.onom., and .utura needs and aspratons by
makng equtabe .ontrbutons to the .apta requred, patronzng ther produ.ts and
serv.es and a..eptng a far share of the rsks and benefts of the undertakng n
a..ordan.e wth unversay a..epted .ooperatve prn.pes..raaw
"ART. 4. Cooperative Principles. - Every .ooperatve sha .ondu.t ts affars n
a..ordan.e wth Fpno .uture, good vaues and experen.e and the unversay
a..epted prn.pes of .ooperaton wh.h n.ude, but are not mted to, the
foowng:.hanrobesvrtuaawbrary
"(1) Voluntary and Open Membership - Cooperatves are vountary organzatons,
open to a persons abe to use ther serv.es and wng to a..ept the
responsbtes of membershp, wthout gender, so.a, ra.a, .utura, pot.a or
regous ds.rmnaton..raaw
"(2) emocrative Member Control - Cooperatves are demo.rat. organzatons
that are .ontroed by ther members who a.tvey part.pate n settng ther
po.es and makng de.sons. Men and women servng as ee.ted
representatves, dre.tors or off.ers are a..ountabe to the membershp. In
prmary .ooperatves, members have equa votng rghts of one-member, one-
vote. Cooperatves at other eves are organzed n the same demo.rat.
manner..raaw
"(3) Member Economic Participation - Members .ontrbute equtaby to, and
demo.rat.ay .ontro, the .apta of ther .ooperatves. At east part of that
.apta s the .ommon property of the .ooperatve. They sha re.eve mted
.ompensaton or mted nterest, f any, on .apta subs.rbed and pad as a
.ondton of membershp. Members ao.ate surpuses for any or a of the
foowng purposes: deveopng the .ooperatve by settng up reserves, part of
wh.h shoud at east be ndvsbe; benefttng members n proporton to ther
partonage of the .ooperatve's bubsness; and, supportng other a.tvtes
approved by the membershp..raaw
"(4) Autonomy and lndependence - Cooperatves are autonomous, sef-hep
organzatons .ontroed by ther members. If they enter nto aggreements wth
other organzatons, n.udng government, or rase .apta from externa
sour.es, they sha do so on terms that ensure demo.rat. .ontro of ther
members and mantan ther .ooperatve autonomy. .raaw
"(5) Education, %raining and lnformation - Cooperatves sha provde edu.aton
and tranng for ther members, ee.ted and apponted representatves,
managers, and empoyees, so that they .an .ontrbute effe.tvey and eff.enty
to the deveopment of ther .ooperatves..raaw
"(6) Cooperation Among Cooperatives - Cooperatves serve ther members most
effe.tvey and strengthen the .ooperatve movement by workng together
through o.a, natona, regona and nternatona stru.tures..raaw

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(7) Concern for Community - Cooperatves work for the sustanabe deveopment
of ther .ommuntes through po.es approved by ther
members. .hanrobesvrtuaawbrary
"ART. 5. efinition of %erms. - The foowng terms sha
mean:.hanrobesvrtuaawbrary
"(1) Member n.udes a person ether natura or |urd.a who adherng to the
prn.pes set forth n ths Code and n the Art.es of Cooperatve, has been
admtted by the .ooperatve as member;.raaw
"(2) eneral Assembly sha mean the fu membershp of the .ooperatve duy
assembed for the purpose of exer.sng a the rghts and performng a the
obgatons pertanng to .ooperatves, as provded by ths Code, ts art.es of
.ooperaton and byaws: Provded, That for .ooperatves wth numerous and
dspersed membershp, the genera assemby may be .omposed of deegates
ee.ted by ea.h se.tor, .hapter or dstr.t of the .ooperatve n a..ordan.e wth
the rues and reguatons of the Cooperatve Deveopment Authorty;.raaw
"(3) 8oard of irectors sha mean that body entrusted wth the management of
the affars of the .ooperatve under ts art.es of .ooperaton and byaws;.raaw
"(4) Committee sha refer to any body entrusted wth spe.f. fun.tons and
responsbtes under the byaws or resouton of the genera assemby or the
board of dre.tors;.raaw
"(5) Articles of Cooperation means the art.es of .ooperaton regstered under
ths Code and n.udes a regstered amendment thereof;.raaw
"(6) 8ylaws means the byaws regstered under ths Code and n.udes any
regstered amendment thereof;.raaw
"(7) Registration means the operatve a.t grantng |urd.a personaty to a
proposed .ooperatve and s evden.ed by a .ertf.ate of regstraton;.raaw
"(8) Cooperative evelopment Authority refers to the government agen.y n
.harge of the regstraton and reguaton of .ooperatves as su.h herenafter
referred to s the Authorty;.raaw
"(9) Universally Accepted Principles means that body of .ooperatve prn.pes
adhered to wordwde by .ooperatves;.raaw
"(10) Representative Assembly means the fu membershp of a body of
representatves ee.ted by ea.h of the se.tors, .hapter or dstr.t o the
.ooperatve duy assembed for the purpose of exer.sng su.h powers awfuy
deegated unto them by the genera assemby n a..ordan.e wth ts
byaws;.raaw

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"(11) Officers of the Cooperative sha n.ude the members of the board of
dre.tors, members of the dfferent .ommttee .reated by the genera assemby,
genera manager or .hef exe.utve off.er, se.retary, treasurer and members
hodng other postons as may be provded for n ther byaws;.raaw
"(12) 5ocial Audit s a pro.edure wheren the .ooperatve assesses ts so.a
mpa.t and eth.a performan.e vs--vs ts stated msson, vson, goas and
.ode of so.a responsbty for .ooperatves to be estabshed by the Authorty
n .onsutaton wth the .ooperatve se.tor. It enabes the .ooperatve to deveop
a pro.ess whereby t .an a..ount for ts so.a performan.e and evauate ts
mpa.t n the .ommunty and be a..ountabe for ts de.sons and a.tons to ts
reguar members;.raaw
"(13) Performance Audt sha refer to an audt on the eff.en.y and
effe.tveness of the .ooperatve as a whoe; ts management and off.ers; and ts
varous responsbty .enters as bass for mprovng ndvdua team or overa
performan.e and for ob|e.tvey nformng the genera membershp on su.h
performan.e;.raaw
"(14) A 5ingle-Line or 5ingle-Purpose Cooperative sha n.ude .ooperatve
undertakng a.tvtes wh.h are reated to ts man ne of busness or
purpose;.raaw
"(15) 5ervice Cooperatives are those wh.h provde any type of serv.e to ts
members, n.udng but not mted to, transport, nformaton and
.ommun.aton, nsuran.e, housng, ee.tr., heath serv.es, edu.aton,
bankng, and savngs and .redt;.raaw
"(16) 5ubsidiary Cooperative refers to three or more prmary .ooperatves, dong
the same ne of busness, organzed at the mun.pa, provn.a, .ty, spe.a
metropotan pot.a subdvson, or e.onom. zones .reated by aw, regstered
wth the Authorty to undertake busness a.tvtes n support of ts member-
.ooperatves."
Sec. 2. Art.es 6, 7, 9, 10, 11, 12, 13, 14, 16, 17, 18, 20, 21, 23, 24 and 25 of Chapter
II on Organzaton and Regstraton of the same Code are hereby amended to read as
foows:.hanrobesvrtuaawbrary
CHAPTER ll
ORGANlZATlON AND REGlSTRATlON.raaw
"ART. 6. Purposes of Cooperatives. - A .ooperatve may be organzed and regstered
for any or a of the foowng purposes: .hanrobesvrtuaawbrary
"(1) To en.ourage thrft and savngs mobzaton among the members;.raaw
"(2) To generate funds and extend .redt to the members for produ.tve and
provdent purposes;.raaw

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"(3) To en.ourage among members systemat. produ.ton and marketng;.raaw
"(4) To provde goods and serv.es and other requrements to the
members;.raaw
"(5) To deveop expertse and sks among ts members;.raaw
"(6) To a.qure ands and provde housng benefts for the members;.raaw
"(7) To nsure aganst osses of the members;.raaw
"(8) To promote and advan.e the e.onom., so.a and edu.atona status of the
members;.raaw
"(9) To estabsh, own, ease or operate .ooperatve banks, .ooperatve
whoesae and reta .ompexes, nsuran.e and agr.utura/ndustra pro.essng
enterprses, and pub. markets;.raaw
"(10) To .oordnate and fa.tate the a.tvtes of .ooperatves;.raaw
"(11) To advo.ate for the .ause of the .ooperatve movements;.raaw
"(12) To ensure the vabty of .ooperatves through the utzaton of new
te.hnooges;.raaw
"(13) To en.ourage and promote sef-hep or sef-empoyment as an engne for
e.onom. growth and poverty aevaton; and.raaw
"(14) To undertake any and a other a.tvtes for the effe.tve and eff.ent
mpementaton of the provsons of ths Code..hanrobesvrtuaawbrary
"ART. 7. Objectives and oals of a Cooperative. - The prmary ob|e.tve of every
.ooperatve s to hep mprove the quaty of fe of ts members. Towards ths end, the
.ooperatve sha am to:.hanrobesvrtuaawbrary
"(a) Provde goods and serv.es to ts members to enabe them to attan
n.reased n.ome, savngs, nvestments, produ.tvty, and pur.hasng power,
and promote among themseves equtabe dstrbuton of net surpus through
maxmum utzaton of e.onomes of s.ae, .ost-sharng and rsk-
sharng;.raaw
"(b) Provde optmum so.a and e.onom. benefts to ts members;.raaw
"(.) Tea.h them eff.ent ways of dong thngs n a .ooperatve
manner;.raaw
"(d) Propagate .ooperatve pra.t.es and new deas n busness and
management;.raaw

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"(e) Aow the ower n.ome and ess prveged groups to n.rease ther
ownershp n the weath of the naton; and.raaw
"(f) Cooperate wth the government, other .ooperatves and peope-orented
organzatons to further the attanment of any of the foregong
ob|e.tves..hanrobesvrtuaawbrary
"ART. 8. Cooperatives Not in Restraint of %rade. - No .ooperatve or method or a.t
thereof wh.h .ompes wth ths Code sha be deemed a .onspra.y or .ombnaton n
restrant of trade or an ega monopoy, or an attempt to essen .ompetton or fx
pr.es arbtrary n voaton of any aws of the Phppnes..raaw
"ART. 9. Cooperatve Powers and Capa.tes. - A .ooperatve regstered under ths
Code sha have the foowng powers, rghts and .apa.tes:.hanrobesvrtuaawbrary
"(1) To the ex.usve use of ts regstered name, to sue and be sued;.raaw
"(2) Of su..esson;.raaw
"(3) To amend ts art.es of .ooperaton n a..ordan.e wth the provsons of ths
Code;.raaw
"(4) To adopt byaws not .ontrary to aw, moras or pub. po.y, and to amend
and repea the same n a..ordan.e wth ths Code;.raaw
"(5) To pur.hase, re.eve, take or grant, hod, .onvey, se, ease, pedge,
mortgage, and otherwse dea wth su.h rea and persona property as the
transa.ton of the awfu affars of the .ooperatve may reasonaby and
ne.essary requre, sub|e.t to the mtatons pres.rbed by aw and the
Consttuton;.raaw
"(6) To enter nto dvson, merger or .onsodaton, as provded n ths
Code;.raaw
"(7) To form subsdary .ooperatves and |on federatons or unons, as provded
n ths Code;.raaw
"(8) To ava of oans, be entted to .redt and to a..ept and re.eve grants,
donatons and assstan.e from foregn and domest. sour.es, sub|e.t to the
.ondtons of sad oans, .redts, grants, donatons or assstan.e that w not
undermne the autonomy of the .ooperatve. The Authorty, upon wrtten
request, sha provde ne.essary assstan.e n the do.umentary requrements for
the oans, .redt, grants, donatons and other fnan.a support;.raaw
"(9) To ava of preferenta rghts granted to .ooperatves under Repub. A.t No.
7160, otherwse known as the Lo.a Government Code, and other aws,
part.uary those n the grant of fran.hses to estabsh, .onstru.t, operate and
mantan ferres, wharves, markets or saughterhouses and to ease pub.

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uttes, n.udng a..ess to extenson and on-ste resear.h serv.es and fa.tes
reated to agr.uture and fshery a.tvtes;.raaw
"(10) To organze and operate s.hoos n a..ordan.e wth Repub. A.t No. 9155,
Governan.e of Bas. Edu.aton A.t of 2001 and other pertnent aws; and.raaw
"(11) To exer.se su.h other powers granted by ths Code or ne.essary to .arry
out ts purpose or purposes as stated n ts Art.es of
.ooperaton..hanrobesvrtuaawbrary
"ART. 10. Organizing a Primary Cooperative. - Ffteen (15) or more natura persons
who are Fpno .tzens, of ega age, havng a .ommon bond of nterest and are
a.tuay resdng or workng n the ntended area of operaton, may organze a prmary
.ooperatve under ths Code: Provided, That a prospe.tve member of a prmary
.ooperatve must have .ompeted a Pre-Membershp Edu.aton Semnar
(PMES)..raaw
"Any newy organzed prmary .ooperatve may be regstered as mutpurpose
.ooperatve ony after .ompan.e wth the mnmum requrements for mutpurpose
.ooperatves to be set by the Authorty. A snge-purpose .ooperatve may transform
nto a mutpurpose or may .reate subsdares ony after at east two (2) years of
operatons..raaw
"ART. 11. Economic 5urvey. - Every group of ndvduas or .ooperatves ntendng to
form a .ooperatve under ths Code sha submt to the Authorty a genera statement
des.rbng, among others the stru.ture and purposes of the proposed
.ooperatve: Provided, That the stru.ture and a.tua staffng pattern of the
.ooperatve sha n.ude a bookkeeper; Provided, further, That they sha not be
aowed to operate wthout the ne.essary personne and sha aso submt an e.onom.
survey, nd.atng theren the area of operaton, the sze of membershp, and other
pertnent data n a format provded by the Authorty..raaw
"ART. 12. Liability. - A .ooperatve duy regstered under ths Code sha have mted
abty..raaw
"ART. 13. %erm. - A .ooperatve sha exst for a perod not ex.eedng ffty (50) years
from the date of regstraton uness sooner dssove or uness sad perod s extended.
The .ooperatve term, as orgnay stated n the art.es of .ooperaton, may be
extended for perods not ex.eedng ffty (50) years n any snge nstan.e by an
amendment of the art.es of .ooperaton, n a..ordan.e wth ths Code: Provided,
That no extenson .an be made earer than fve (5) years pror to the orgna or
subsequent expry date/dates uness there are |ustfabe reasons for an earer
extenson as may be determned by the Authorty..raaw
"ART. 14. Articles of Cooperation. - (1) A .ooperatves appyng for regstraton sha
fe wth the Authorty the art.es of .ooperaton wh.h sha be sgned by ea.h of the
organzers and a.knowedged by them f natura persons, and by the .harpersons or
se.retares, f |urd.a persons, before a notary pub...raaw

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"(2) The art.es of .ooperaton sha set forth:.hanrobesvrtuaawbrary
"(a) The name of the .ooperatve wh.h sha n.ude the word
.ooperatve;.raaw
"(b) The purpose or purposes and s.ope of busness for wh.h the .ooperatve
s to be regstered;.raaw
"(.) The term of exsten.e of the .ooperatve;.raaw
"(d) The area of operaton and the posta addresses of ts prn.pa
off.e;.raaw
"(e) The names, natonaty, and the posta addresses of the
regstrants;.raaw
"(f) The .ommon bond of membershp;.raaw
"(g) The st of names of the dre.tors who sha manage the .ooperatve;
and.raaw
"(h) The amount of ts share .apta, the names and resden.es of ts
.ontrbutors and a statement of whether the .ooperatve s prmary,
se.ondary or tertary n a..ordan.e wth Art.e 23
hereof..hanrobesvrtuaawbrary
"(3) The art.es of .ooperaton may aso .ontan any other provsons not
n.onsstent wth ths Code or any reated aw..raaw
"(4) Four (4) .opes ea.h of the proposed art.es of .ooperaton, byaws, and the
genera statement requred under Art.e 11 of ths Code sha be submtted to
the Authorty..raaw
"(5) No .ooperatve, other than a .ooperatve unon as des.rbed under Art.e
25 hereof, sha be regstered uness the art.es of .ooperaton s a..ompaned
wth the bonds of the a..ountabe off.ers and a sworn statements of the
treasurer ee.ted by the subs.rbers showng that at east twenty-fve per
centum (25%) of the authorzed share .apta has been subs.rbed and at east
twenty-fve per centum(25%) of the tota subs.rpton has been pad: Provided,
That n no .ase sha the pad-up share .apta be ess than Ffteen thousand
pesos (P15,000.00)..raaw
"The Authorty sha perod.ay assess the requred pad-up share .apta and
may n.rease t every fve (5) years when ne.essary upon .onsutaton wth the
.ooperatve se.tor and the Natona E.onom. and Deveopment Authorty
(NEDA)..raaw

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"ART. 15. 8ylaws. - (1) Ea.h .ooperatve to be regstered under ths Code sha adopt
byaws not n.onsstent wth the provsons of ths Code. The byaws sha be fed at
the same tme as the art.es of .ooperaton..raaw
"(2) The byaws of ea.h .ooperatve sha provde:.hanrobesvrtuaawbrary
"(a) The quaf.atons for admsson to membershp and the payment to be
made or nterest to be a.qured as a .ondtons for the exer.se of the rght of
membershp;.raaw
"(b) The rghts and abtes of membershp;.raaw
"(.) The .r.umstan.es under wh.h membershp s a.qured, mantaned and
ost;.raaw
"(d) The pro.edure to be foowed n .ases of termnaton of
membershp;.raaw
"(e) The .ondtons under wh.h the transfer of a share or nterest of the
members sha be permtted;.raaw
"(f) The rues and pro.edures on the agenda, tme, pa.e and manner of
.ang, .onvenng, .ondu.tng meetngs, quorum requrements, votng
systems, and other matters reatve to the busness affars of the genera
assemby, board of dre.tors, and .ommttees;.raaw
"(g) The genera .ondu.t of the affars of the .ooperatve, n.udng the
powers and dutes of the genera assemby, the board of dre.tors,
.ommttees and the off.ers, and ther quaf.atons and
dsquaf.atons;.raaw
"(h) The manner n wh.h the .apta, may be rased and the purposes for
wh.h t .an be utzed;.raaw
"() The mode of .ustody and of nvestment of net surpus;.raaw
"(|) The a..ountng and audtng systems;.raaw
"(k) The manner of oanng and borrowng n.udng the mtatons
thereof;.raaw
"() The method of dstrbuton of net surpus;.raaw
"(m) The manner of adoptng, amendng, repeang, and abrogatng
byaws;.raaw
"(n) A .on.aton or medaton me.hansm for the am.abe settement of
dsputes among members, dre.tors, off.ers and .ommttee members of the
.ooperatve; and.raaw

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"(o) Other matters n.dent to the purposes and a.tvtes of the
.ooperatve..hanrobesvrtuaawbrary
"ART. 16. Registration. - A .ooperatve formed and organzed under ths Code a.qures
|urd.a personaty from the date the Authorty ssues a .ertf.ate of regstraton
under ts off.a sea. A app.atons for regstraton sha be fnay dsposed of by the
Authorty wthn a perod of sxty (60) days from the fng thereof, otherwse the
app.aton s deemed approved, uness the .ause of the deay s attrbutabe to the
app.ant: Provided, That n .ase of a dena of the app.aton for regstraton, an
appea sha e wth the Off.e of the Presdent wthn nnety (90) days from re.ept of
not.e of su.h dena: Provided, further, That faure of the Off.e of the Presdent to
a.t on the appea wthn nnety (90) days from the fng thereof sha mean approva
of sad app.aton..raaw
"ART. 17. Certificate of Registration. - A .ertf.ate of regstraton ssued by the
Authorty under ts off.a sea sha be .on.usve evden.e that the .ooperatve
theren mentoned s duy regstered uness t s proved that the regstraton thereof
has been .an.eed..raaw
"ART. 18. Amendment of Articles of Cooperation and 8ylaws. - Uness otherwse
pres.rbed by ths Code and for egtmate purposes, any provson or matter stated n
the art.es of .ooperaton and by aws may be amended by two-thrds (2/3) vote of a
the members wth votng rghts, wthout pre|ud.e to the rght of the dssentng
members to exer.se ther rght to wthdraw ther membershp under Art.e 30..raaw
Both the orgna and amended art.es and/or byaws sha .ontan a provsons
requred by aw to be set out n the art.es of .ooperaton and by aws. Amendments
sha be nd.ated by unders.orng or otherwse appropratey nd.atng the .hange or
.hanges made and a .opy of the amended art.es or amended byaws duy .ertfed
under oath by the .ooperatve se.retary and a ma|orty of the dre.tors statng the
fa.t that sad amendment or amendments to the art.es of .ooperaton and/or byaws
have been duy approved by the requred vote of the members. A amendments to the
art.e of .ooperaton and/or byaws sha be submtted to the Authorty. The
amendments sha take effe.t upon ts approva by the authorty or wthn thrty (30)
days from the date of fng thereof f not a.ted upon by the Authorty for a .ause not
attrbutabe to the .ooperatve..raaw
"ART. 19. Contracts Executed Prior to Registration and Effects %hereof. - Contra.ts
exe.uted between prvate persons and .ooperatves pror to the regstraton of the
.ooperatve sha reman vad and bndng between the partes and upon regstraton
of the .ooperatve. A forma wrtten .ontra.t sha be adopted and made n the
.ooperatves name or on ts behaf pror to ts regstraton..raaw
"ART. 20. ivision of Cooperatives. - Any regstered .ooperatve may, by a resouton
approved by a vote of three-fourths (3/4) of a the members wth votng rghts,
present and .onsttutng a quorum, resove to dvde tsef nto the two (2) or more
.ooperatves. The pro.edure for su.h dvson sha be pres.rbed n the reguatons of
the Authorty: Provided, That a the requrements set forth n ths Code have been
.omped wth by the new .ooperatves: Provided, further, That no dvson of a
.ooperatve n fraud of .redtors sha be vad..raaw

11

"ART. 21. Merger and Consolidation of Cooperatives. -
(1) Two (2) or more .ooperatves may merge nto a snge .ooperatve wh.h
sha ether be one of the .onsttuent .ooperatves or the .onsodated
.ooperatve..raaw
"(2) No merger or .onsodaton sha be vad uness approved by a three-fourths
(3/4) vote of a the members wth votng rghts, present and .onsttutng a
quorum of ea.h of the .onsttuent .ooperatves at separate genera assemby
meetngs. The dssentng members sha have the rght to exer.se ther rght to
wthdraw ther membershp pursuant to Art.e 30..raaw
"(3) The Authorty sha ssue the gudenes governng the pro.edure of merger
or .onsodaton of .ooperatves. In any .ase, the merger or .onsodaton of
.ooperatves. In any .ase, the merger or .onsodaton sha be effe.tve upon
the ssuan.e of the .ertf.ate of merger or .onsodaton by the Authorty..raaw
"ART. 22. Effects of Merger and Consolidation. - The merger or .onsodaton of
.ooperatves sha have the foowng effe.ts:.hanrobesvrtuaawbrary
"(1) The .onsttuent .ooperatves sha be.ome a snge .ooperatve wh.h, n
.ase of merger, sha be the survvng .ooperatve, and, n .ase of
.onsodaton, sha be the .onsodated .ooperatve;.raaw
"(2) The separate exsten.e of the .onsttuent .ooperatves sha .ease,
ex.ept that of the survvng or the .onsodated .ooperatve;.raaw
"(3) The survvng or the .onsodated .ooperatve sha possess a the assets,
rghts, prveges, mmuntes and fran.hses of ea.h of the .onsttuent
.ooperatves; .raaw
"(4) The survvng or the .onsodated .ooperatve sha possess a the
assets, rghts, prveges, mmuntes and fran.hses of ea.h of the .onsttuent
.ooperatves; and.raaw
"(5) The survvng or the .onsodated .ooperatve sha be responsbe for a
the abtes and obgaton of ea.h of the .onsttuent .ooperatves n the
same manner as f su.h survvng or .onsodated .ooperatve had tsef
n.urred su.h abtes or obgatons. Any .am, a.ton or pro.eedng
pendng by or aganst any su.h .onsttuent .ooperatves may be prose.uted
by or aganst the survvng or .onsodated .ooperatve, as the .ase may be.
Nether the rghts of .redtors nor any en upon the property of any su.h
.onsttuent .ooperatves sha be mpared by su.h merger or
.onsodaton..hanrobesvrtuaawbrary
"ART. 23. %ype and Categories of Cooperatives. - (1) Types of Cooperatves -
Cooperatves may fa under any of the foowng types:.hanrobesvrtuaawbrary

12

"(a) Credit Cooperative s one that promotes and undertakes savngs and
endng serv.es among ts members. It generates a .ommon poo of funds n
order to provde fnan.a assstan.e to ts members for produ.tve and
provdent purposes;.raaw
"(b) Consumers Cooperative s one of the prmary purpose of wh.h s to
pro.ure and dstrbute .ommodtes to members and non-members;.raaw
"(.) Producers Cooperative s one that undertakes |ont produ.ton whether
agr.utura or ndustra. It s formed and operated by ts members to
undertake the produ.ton and pro.essng of raw materas or goods produ.ed
by ts members nto fnshed or pro.essed produ.ts for sae by the
.ooperatve to ts members and non-members. Any end produ.t or ts
dervatve arsng from the raw materas produ.ed by ts members, sod n
the name and for the a..ount of the .ooperatve, sha be deemed a produ.t
of the .ooperatve and ts members;.raaw
"(d) Marketing Cooperative s one wh.h engages n the suppy of produ.ton
nputs to members and markets ther produ.ts;.raaw
"(e) 5ervice Cooperative s one wh.h engages n med.a and denta .are,
hosptazaton, transportaton, nsuran.e, housng, abor, ee.tr. ght and
power, .ommun.aton, professona and other serv.es;.raaw
"(f) Multipurpose Cooperative s one wh.h .ombnes two (2) or more of the
busness a.tvtes of these dfferent types of .ooperatves;.raaw
"(g) Advocacy Cooperative s a prmary .ooperatve wh.h promotes and
advo.ates .ooperatvsm among ts members and the pub. through so.ay-
orented pro|e.ts, edu.aton and tranng, resear.h and .ommun.aton, and
other smar a.tvtes to rea.h out to ts ntended benef.ares;.raaw
"(h) Agrarian Reform Cooperative s one organzed by margna farmers
ma|orty of wh.h are agraran reform benef.ares for the purpose of
deveopng an approprate system of and tenure, and deveopment, and
.onsodaton or and management n areas .overed by agraran
reform;.raaw
"() Cooperative 8ank s one organzed for the prmary purpose of provdng a
wde range of fnan.a serv.es to .ooperatves and ther members;.raaw
"(|) airy Cooperative s one whose members are engaged n the produ.ton
of fresh mk wh.h may be pro.essed and/or marketed as dary
produ.ts;.raaw
"(k) Education Cooperative s one organzed for the prmary purpose of
ownng and operatng .ensed edu.atona nsttutons notwthstandng the
provsons of Repub. A.t No. 9155, otherwse known as the Governan.e of
Bas. Edu.aton A.t of 2001;.raaw

13

"() Electric Cooperative s one organzed for the prmary purposed of
undertakng power generatons, utzng renewabe energy sour.es, n.udng
hybrd systems, a.quston and operaton of subtransmsson or dstrbuton
to ts househod members;.raaw
"(m) Financial 5ervice Cooperative s one organzed for the prmary purpose
of engagng n savngs and .redt serv.es and other fnan.a serv.es;.raaw
"(n) Fishermen Cooperative s one organzed by margnazed fshermen n
o.ates whose produ.ts are marketed ether as fresh or pro.essed
produ.ts;.raaw
"(o) Health 5ervices Cooperative s one organzed for the prmary purpose of
provdng med.a, denta and other heath serv.es;.raaw
"(p) Housing Cooperative s one organzed to assst or provde a..ess to
housng for the beneft of ts reguar members who a.tvey part.pate n the
savngs program for housng. It s .o-owned and .ontroed by ts
members;.raaw
"(q) lnsurance Cooperative s one engaged n the busness of nsurng fe and
poverty of .ooperatves and ther members;.raaw
"(r) %ransport Cooperative s one wh.h n.udes and and sea transportaton,
mted to sma vesses, as defned or .assfed under the Phppne martme
aws, organzed under the provsons of ths Code;.raaw
"(s) Water 5ervice Cooperative s one organzed to own, operate and manage
waters systems for the provson and dstrbuton of potabe water for ts
members and ther househods;.raaw
"(t) Workers Cooperative s one organzed by workers, n.udng the sef-
empoyed, who are at same tme the members and owners of the enterprse.
Its prn.pa purpose s to provde empoyment and busness opportuntes to
ts members and manage t n a..ordan.e wth .ooperatve prn.pes;
and.raaw
"(u) Other types of .ooperatve as may be determned by the
Authorty..hanrobesvrtuaawbrary
"(2) Categories of Cooperative - Cooperatves sha be .ategorzed a..ordng to
membershp and terrtora .onsderatons as foows:.hanrobesvrtuaawbrary
"(a) In terms of membershp, .ooperatve sha be .ategorzed
nto:.hanrobesvrtuaawbrary
"() Primary - The members of wh.h are natura persons;.raaw
"() 5econdary - The members of wh.h are prmares; and.raaw

14

"() %ertiary - The members of wh.h are se.ondary .ooperatves;
and.hanrobesvrtuaawbrary
"(b) In terms of terrtory, .ooperatves sha be .ategorzed a..ordng to areas
of operatons wh.h may or may not .on.de wth the pot.a subdvsons of
the .ountry..hanrobesvrtuaawbrary
"ART. 24. Functions of a Federation of Cooperatives. - A federaton of .ooperatves
sha undertake the foowng fun.tons:.hanrobesvrtuaawbrary
"(a) To .arry on any .ooperatve enterprse authorzed under Art.e 6 that
.ompements augments, or suppements but does not .onf.t, .ompete wth,
nor suppant the busness or e.onom. a.tvtes of ts members;.raaw
"(b) To .arry on, en.ourage, and assst edu.atona and advsory work
reatng to ts member .ooperatves;.raaw
"(.) To render serv.es desgned to en.ourage smp.ty, eff.en.y, and
e.onomy n the .ondu.t of the busness of ts member .ooperatves and to
fa.tate the mpementaton of ther bookkeepng, a..ountng, and other
systems and pro.edures;.raaw
"(d) To prnt, pubsh, and .r.uate any newspaper or other pub.aton n the
nterest of ts member .ooperatves and enterprses;.raaw
"(e) To .oordnate and fa.tate the a.tvtes of ts member
.ooperatves;.raaw
"(f) To enter nto |ont ventures wth natona or nternatona .ooperatves of
other .ountres n the manufa.ture and sae of produ.ts and/or serv.es n the
Phppnes and abroad; and.raaw
"(g) To perform su.h other fun.tons as may be ne.essary to attan ts
ob|e.tves..hanrobesvrtuaawbrary
"A federaton of .ooperatves may be regstered by .arryng out the formates for
regstraton of a .ooperatve..raaw
"Regstered .ooperatves may organze a federaton a..ordng to the type of busness
a.tvty engaged n by the .ooperatves..raaw
"ART. 25. Cooperative Unions. - Regstered .ooperatves and federatons at the
approprate eves may organze or |on .ooperatve unons to represent the nterest
and wefare of a types of .ooperatves at the provn.a, .ty, regona, and natona
eves. Cooperatve unons may have the foowng
purposes:.hanrobesvrtuaawbrary
"(a) To represent ts member organzatons;.raaw

13

"(b) To a.qure, anayze, and dssemnate, e.onom., statst.a, and other
nformaton reatng to ts members and to a types of .ooperatves wthn ts
area of operaton;.raaw
"(.) To sponsor studes n the e.onom., ega, fnan.a, so.a and other
phases of .ooperaton, and pubsh the resuts thereof;.raaw
"(d) To promote the knowedge of .ooperatve prn.pes and pra.t.es;.raaw
"(e) To deveop the .ooperatve movement n ther respe.tve
|ursd.tons;.raaw
"(f) To advse the approprate authortes on a questons reatng to
.ooperatves;.raaw
"(g) To rase funds through membershp fees, dues and .ontrbutons,
donatons, and subsdes from o.a and foregn sour.es whether prvate or
government; and.raaw
"(h) To do and perform su.h other non-busness a.tvtes as may be
ne.essary to attan the foregong ob|e.tves..raaw
"Cooperatve unons may assst the natona and o.a governments n the
atters deveopment a.tvtes n ther respe.tve |ursd.tons."
Sec. 3. Art.es 26, 27, 28, 29, 30, 31 and 32 of Chapter III on Membershp of the same
Code are hereby renumbered and amended to read, as
foows:.hanrobesvrtuaawbrary
CHAPTER lll
MEMBERSHlP.raaw
"ART. 26. inds of Membership. - A .ooperatve may have two (2) knds of members,
to wt: (1) reguar members and (2) asso.ate members..raaw
"A reguar member s one who has .omped wth a the membershp requrements
and entted to a the rghts and prveges of membershp. An asso.ate member s
one who has no rght to vote nor be voted upon and sha be entted ony to su.h
rghts and prveges as the byaws may provde: Provided, That an asso.ate who
meets the mnmum requrements of reguar membershp, .ontnues to patronze the
.ooperatve for two (2) years, and sgnfes hs/her ntenton to reman a member sha
be .onsdered a reguar member..raaw
"A .ooperatve organzed by mnors sha be .onsdered a aboratory .ooperatve and
must be affated wth a regstered .ooperatve. A aboratory .ooperatve sha be
governed by spe.a gudenes to be promugated by the Authorty..raaw
"ART. 27. overnment Officers and Employees. - (1) Any off.er or empoyee of the
Authorty sha be dsquafed to be ee.ted or apponted to any poston n a

16

.ooperatve: Provided, That the dsquaf.aton does not extend to a .ooperatve
organzed by the off.ers or empoyees of the Authorty..raaw
"(2) A ee.tve off.as of the Government sha be negbe to be.ome off.ers
and dre.tors of .ooperatves: Provided, That the dsquaf.aton does not extend
to a party st representatve beng an off.er of a .ooperatve he or she
represents; and.raaw
"(3) Any government empoyee or off.a may, n the ds.harge of s dutes as a
member n the .ooperatve, be aowed by the end of off.e .on.erned to use
off.a tme for attendan.e at the genera assemby, board and .ommttee
meetngs of .ooperatves as we as .ooperatve semnars, .onferen.es,
workshops, te.hn.a meetngs, and tranng .ourses o.ay or abroad: Provded,
That the operatons of the off.e .on.erned are not adversey affe.ted. .raaw
"ART. 28. Application. - An app.ant for membershp sha be deemed a member after
approva of hs membershp by the board of dre.tors and sha exer.se the rghts of
member after havng made su.h payments to the .ooperatve n respe.t to
membershp or a.qured nterest n the .ooperatve as may be pres.rbed n the
byaws. In .ase membershp s refused or dened by the board of dre.tors, an appea
may be made to the genera assemby and the atters de.son sha be fna. For ths
purpose, the genera assemby may opt to .reate an appea and grevan.e .ommttee,
the members of wh.h sha serve for a perod of one (1) year and sha de.de appeas
on membershp app.aton wthn thrty (30) days upon re.ept thereof. If the
.ommttee fas to de.de wthn the pres.rbed perod, the appea s deemed approved
n favor of the app.ant..raaw
"ART. 29. Liability of Members. - A member sha be abe for the debts of the
.ooperatve to the extent of hs .ontrbuton to the share .apta of the
.ooperatve..raaw
"ART. 30. %ermination of Membership.
(1) A member of a .ooperatve may, for any vad reason, wthdraw hs
membershp from the .ooperatve by gvng a sxty (60) day not.e to the board
of dre.tors. Sub|e.t to the byaws of the .ooperatve, the wthdrawng member
sha be entted to a refund of hs share .apta .ontrbuton and a other
nterests n the .ooperatve: Provided, That su.h fund sha not be made f upon
su.h payment the vaue of the assets of the .ooperatve woud be ess than the
aggregate amount of ts debts and abtes ex.usve of hs share .apta
.ontrbuton..raaw
"(2) The death or nsanty of a member n a prmary .ooperatve, and the
nsoven.y or dssouton of a member n a se.ondary or tertary .ooperatve may
be .onsdered vad grounds for termnaton of membershp: Provded, That n
.ase of death or nsanty of an agraran reform benef.ary-member of a
.ooperatve, the next-of-kn may assume the dutes and responsbtes of the
orgna member.raaw

17

"(3) Membershp n the .ooperatve may be termnated by a vote of the ma|orty
of a the members of the board of dre.tors for any of the foowng
.auses:.hanrobesvrtuaawbrary
"(a) When a member has not patronzed any of the serv.es of the
.ooperatve for an unreasonabe perod of tme as may be prevousy
determned by the board of dre.tors;.raaw
"(b) When a member has .ontnuousy faed to .ompy wth hs
obgatons; .raaw
"(.) When a member has a.ted n voaton of the byaws and the rues of the
.ooperatve; and .raaw
"(d) For any a.t or omsson n|urous or pre|ud.a to the nterest or the
wefare of the .ooperatve..hanrobesvrtuaawbrary
"A member whose membershp the board of dre.tors may wsh to termnate sha be
nformed of su.h ntended a.ton n wrtng and sha be gven an opportunty to be
heard before the sad board makes ts de.son. The de.son of the board sha be n
wrtng and sha be .ommun.ated n person or by regstered ma to sad member
and sha be appeaabe wthn thrty (30) days from re.ept thereof to the genera
assemby whose de.son sha be fna. The genera assemby may .reate an appea
and grevan.e .ommttee whose members sha serve for a perod of one (1) year and
sha de.de appeas on membershp termnaton. The .ommttee s gven thrty (30)
days from re.ept thereof to de.de on the appea. Faure to de.de wthn the
pres.rbed perod, the appea s deemed approved n favor of the member. Pendng a
de.son by the genera assemby, the membershp remans n for.e..raaw
"ART. 31. Refund of lnterests. - A sums .omputed n a..ordan.e wth the byaws to
be due from a .ooperatve to a former member sha be pad to hm ether by the
.ooperatve or by the approved transferee, as the .ase may be, n a..ordan.e wth
ths Code.".hanrobesvrtuaawbrary
Sec. 4. Art.es 33, 34, 35, 36, 37, 38, 39, 40, 42, 42, 43, 44, 45, 46, 47, 48, 49, 50 and
51 of Chapter IV on Admnstraton of the same Code are hereby renumbered and
amended to read, as foows:.hanrobesvrtuaawbrary
CHAPTER lV
ADMlNlSTRATlON.raaw
"ART. 32. Composition of the eneral Assembly. - The genera assemby sha be
.omposed of su.h members who are entted to vote under the art.es of .ooperaton
and byaws of the .ooperatve..raaw
"ART. 32. Powers of the eneral Assembly. - The genera assemby sha be .omposed
of su.h members who are entted to vote under the art.es of .ooperaton and byaws
of the .ooperatve..raaw

18

"ART. 33. Powers of the eneral Assembly. - The genera assemby sha be the
hghest po.y-makng body of the .ooperatve and sha exer.se su.h powers as are
stated n ths Code, n the art.es of .ooperaton and n the byaws of the .ooperatve.
The genera assemby sha have the foowng ex.usve powers wh.h .annot be
deegate:.hanrobesvrtuaawbrary
"(1) To determne and approve amendments to the art.es of .ooperaton and
byaws;.raaw
"(2) To ee.t or appont the members of the board of dre.tors, and to remove
them for .ause. However, n the .ase of the ee.tr. .ooperatves regstered
under ths Code, ee.ton of the members of the board sha be hed n
a..ordan.e wth ts byaws or ee.ton gudene of su.h ee.tr. .ooperatve;
and.raaw
"(3) To approve deveopmenta pans of the
.ooperatve..hanrobesvrtuaawbrary
"Sub|e.t to su.h other provsons of ths Code and ony for purposes of prompt and
ntegent de.son-makng, the genera assemby may be a three-fourths (3/4) vote of
a ts members wth votng rghts, present and .onsttutng a quorum, deegate some
of ts powers to a smaer body of the .ooperatve. These powers sha be enumerated
under the byaws of the .ooperatve..raaw
"ART. 34. Meetings.
(1) A reguar meetng sha be hed annuay by the genera assemby on a date
fxed n the byaws, or f not so fxed, on any dated wthn nnety (90) days after
the .ose of ea.h fs.a year:Provided, That not.e of reguar meetngs sha be
sent n wrtng, by postng or pub.aton, or through other ee.tron. means to a
members of re.ord..raaw
"(2) Whenever ne.essary, a spe.a meetng of the genera assemby may be
.aed at any tme by a ma|orty vote of the board of dre.tors or as provded for
n the byaws: Provided, That a not.e n wrtng sha be sent one (1) week pror
to the meetng to a members who are entted to vote. However, a spe.a
meetng sha be .aed by the board of dre.tors after .ompan.e wth the
requred not.e wthn from at east ten per centum (10%) of the tota members
who re entted to vote to transa.t spe.f. busness .overed by the .a..raaw
"If the board fas to .a a reguar or a spe.a meetng wthn the gven perod,
the Authorty, upon petton of ten per centum (10%) of a the members of the
.ooperatve who are entted to vote, and for good .ause shown, sha ssue an
order to the pettoners dre.tng them to .a a meetng of the genera assemby
by gvng proper not.e as requred n ths Code or n the byaws;.raaw
"(3) In the .ase of a newy approved .ooperatve, a spe.a genera assemby
sha be .aed, as far as pra.t.abe, wthn nnety (90) days from su.h
approva;.raaw

19

"(4) The Authorty may .a a spe.a meetng of the .ooperatve for the purpose
of reportng to the members the resut of any examnaton or other nvestgaton
of the .ooperatve affars; and.raaw
"(5) Not.e of any meetng may be waved, expressy or mpedy, by any
member..raaw
"ART. 35. "uorum. - A quorum sha .onsst of at east twenty-fve per .entum (25%)
of a the members entted to vote. In the .ase of .ooperatve banks, the quorum sha
be as provded n Art.e 99 of ths Code. In the .ase of ee.tr. .ooperatves regstered
under ths Code, a quorum, uness otherwse provded n the byaws, sha .onsst of
fve per centum (5%) of a the members entted to vote..raaw
"ART. 36. Voting 5ystem. - Ea.h member of a prmary .ooperatve sha have ony one
(1) vote. In the .ase of members of se.ondary or tertary .ooperatves, they sha have
one (1) bas. vote and as many n.entve votes as provded for n the byaws but not
ex.eed fve (5) votes. The votes .ast by the deegates sha be deemed as votes .ast
by the members thereof..raaw
"However, the byaws of a .ooperatve other than a prmary may provde for votng by
proxy. Votng by proxy means aowng a deegate of a .ooperatve to represent or
vote n behaf of another deegate of the same .ooperatve..raaw
"ART. 37. Composition and %erm of the 8oard of irectors. - Uness otherwse provded
n the byaws, the dre.ton and management of the affars of a .ooperatve sha be
vested n a board of dre.tors wh.h sha be .omposed of not ess that fve (5) nor
more than ffteen (15) members ee.ted by the genera assemby for a term of two (2)
years and sha hod off.e unt ther su..essors are duy ee.ted an quafed, or unt
duy removed for .aused..raaw
"ART. 38. Powers of the 8oard of irectors. - The board of dre.tors sha be
responsbe for the strateg. pannng, dre.ton-settng and po.y-formuaton
a.tvtes of the .ooperatves..raaw
"ART. 39. irectors.
(1) Any member of a .ooperatve who under the byaws of the .ooperatve, has
the rght to vote and who possesses a the quaf.atons and none of the
dsquaf.atons provded n the aws or byaws sha be egbe for ee.ton as
dre.tor..raaw
"(2) The .ooperatve may, by resouton of ts board of dre.tors, admt as
dre.tors, or .ommttee member one apponted by any fnan.ng nsttuton from
wh.h the .ooperatve re.eved fnan.a assstan.e soey to provde te.hn.a
knowedge not avaabe wthn ts membershp. Su.h dre.tor or .ommttee
member not be a member of the .ooperatve and sha have no powers, rghts,
nor responsbtes ex.ept to provded te.hn.a assstan.e as requred by the
.ooperatve..raaw

20

"(3) The members of the board of dre.tors sha not hod any other poston
dre.ty nvoved n the day to day operaton and management of the
.ooperatve..raaw
"(4) Any person engaged n a busness smar to that of the .ooperatve or who
n any way has a .onf.t of nterest wth t, s dsquafed from ee.ton as a
dre.tor of sad .ooperatve..raaw
"ART. 40. Meeting of the 8oard and "uorum Requirement.
(1) In the .ase of prmary .ooperatves, reguar meetngs of the board of
dre.tors sha be hed at east on.e a month..raaw
"(2) Spe.a meetngs of the board of dre.tors may be hed at any tme upon the
.a of the .harperson or a ma|orty of the members of the board: Provided, That
wrtten not.es of the meetng spe.fyng the agenda of the spe.a meetng sha
be gven to a members of the board at east one (1) week before the sad
meetng..raaw
"(3) A ma|orty of the members of the Board sha .onsttute a quorum or the
.ondu.t of busness, uness the byaws proved otherwse..raaw
"(4) Dre.tors .annot attend or vote by proxy at board meetngs..raaw
"ART. 41. Vacancy in the 8oard of irectors. - Any va.an.y n the board of dre.tors,
other than by expraton of term, may be fed by the vote of at east a ma|orty of the
remanng dre.tors, f st .onsttutng a quorum; otherwse, the va.an.y must be
fed by the genera assemby n a reguar or spe.a meetng .aed for the purpose. A
dre.tor so ee.ted to f a va.an.y sha serve ony the unexpred term of hs
prede.essor n off.e..raaw
"ART. 42. Officers of the Cooperative. - The board of dre.tors sha ee.t from among
themseves the .harperson and v.e-.harperson, and ee.t or appont other off.ers
of the .ooperatve from outsde of the board n a..ordan.e wth ther byaws. A
off.ers sha serve durng good behavor and sha not be removed ex.ept for .ause
after due hearng. Loss of .onfden.e sha not be a vad ground for remova uness
evden.ed by a.ts or omsson .ausng oss of .onfden.e n the honesty and ntegrty
of su.h off.er. No two (2) or more persons wth reatonshps up to the thrd .v
degree of .onsangunty or affnty nor sha any person engaged n a busness smar
to that of the .ooperatve nor who n any other manner has nterests n .onf.t wth
the .ooperatve sha serve as an appontve off.er..raaw
"ART. 43. Committees of Cooperatives.
(1) The byaws may .reate an exe.utve .ommttee to be apponted by the
board of dre.tors wth su.h powers and dutes as may be deegated to t n the
byaws or by a ma|orty vote of a the members of the board of dre.tors..raaw

21

"(2) The byaws sha provde for the .reaton of an audt, ee.ton, medaton and
.on.aton, eth.s, and su.h other .ommttees as may be ne.essary for the
.ondu.t of the affars of the .ooperatve. The members of both the audt and
ee.ton .ommttee sha be ee.ted by the genera assemby and the rest sha
be apponted by the board. The audt .ommttee sha be dre.ty a..ountabe
and responsbe to the genera assemby. It sha have the power and duty to
.ontnuousy montor the adequa.y and effe.tveness of the .ooperatves
management .ontro system and audt the performan.e of the .ooperatve and
ts varous responsbty .enters..raaw
"Uness otherwse provded n the byaws, the board, n .ase of a va.an.y n the
.ommttees, may .a an ee.ton to f the va.an.y or appont a person to f the
same sub|e.t to the provson that the person ee.ted or apponted sha serve
ony for the unexpred porton of the term..raaw
"ART. 44. Functions, Responsibilities and %raining Requirements of irectors, Officers
and Committee Members. - the fun.tons and responsbtes of dre.tors, off.ers and
.ommttee members, as we as ther tranng requrements, sha be n a..ordan.e
wth the rues and reguatons ssued by the Authorty..raaw
"ART. 45. Liability of irectors, Officers and Committee Members. - Dre.tors, off.ers
and .ommttee members, who are wfuy and knowngy vote for or assent to
patenty unawfu a.ts or who are guty of gross neggen.e or bad fath n dre.tng
the affars of the .ooperatve or a.qure any persona or pe.unary nterest n .onf.t
wth ther duty as su.h dre.tors, off.ers or .ommttee members sha be abe |onty
and severay for a damages or profts resutng therefrom to the .ooperatve,
members, and other persons..raaw
"When a dre.tor, off.er or .ommttee member attempts to a.qure or a.qures, n
voaton of hs duty, any nterest or equty adverse to the .ooperatve n respe.t to
any matter wh.h has been reposed n hm n .onfden.e, he sha, as a trustee for the
.ooperatve, be abe for damages and sha be a..ountabe for doube the profts
wh.h otherwse woud have a..rued to the .ooperatve..raaw
"ART. 46. Compensation.
(1) In the absen.e of any provsons n the byaws fxng ther .ompensaton, the
dre.tors sha not re.eve any .ompensaton ex.ept for reasonabe per
diems: Provided however, That the dre.tors and off.ers sha not be entted to
any per diem when, n the pre.edng .aendar year, the .ooperatve reported a
net oss or had a dvdend rate ess than the off.a nfaton rate for the same
year. Any .ompensaton other than per diems may be granted to dre.tors by a
ma|orty vote of the members wth votng rghts at a reguar or spe.a genera
assemby meetng spe.f.ay .aed for the purpose:Provided, That no addtona
.ompensaton other than per diems sha be pad durng the frst year of
exsten.e of any .ooperatve..raaw

22

"(2) The .ompensaton of off.ers of the .ooperatve as we as the members of
the .ommttee as we as the members of the .ommttees .reated pursuant to
ths Code or ts byaws may be fxed n the byaws..raaw
"(3) Uness aready fxed n the byaws, the .ompensaton of a other empoyee
sha be determned by the board of dre.tors..raaw
"ART. 47. ealings of irectors, Officers, or Committee Members. - A .ontra.t entered
nto by the .ooperatve wth one (1) or more of ts dre.tors, off.ers, and .ommttee
members s vodabe, at the opton of the .ooperatve, uness a the foowng
.ondtons are present..raaw
"(1) That the presen.e of su.h dre.tor n the board meetng wheren .ontra.t
was approved was not ne.essary to .onsttute a quorum for su.h meetng;.raaw
"(2) That the vote of su.h dre.tor was not ne.essary for the approva of the
.ontra.t;.raaw
"(3) That the .ontra.t s far and reasonabe under the .r.umstan.es; and.raaw
"(4) That n the .ase of an off.er or .ommttee member, the .ontra.t wth the
off.er or .ommttee member has been prevousy authorzed by the genera
assemby or by the board of dre.tors..raaw
"Where any of the frst two .ondtons set forth n the pre.edng paragraph s absent,
n the .ase of a .ontra.t wth a dre.tor, su.h .ontra.t may be ratfed by a three-
fourths (3/4) vote of a the members wth votng rghts, present and .onsttutng a
quorum n a meetng .aed for the purpose: Provided, That fu ds.osure of the
adverse nterest of the dre.tors nvoved s made at su.h meetng, and that the
.ontra.t s far and reasonabe under the .r.umstan.es..raaw
"ART. 48. isloyalty of a irector. - A dre.tor who, by vrtue of hs off.e, a.qures for
hmsef an opportunty wh.h shoud beong to the .ooperatve sha be abe for
damages and must a..ount for doube the profts that otherwse woud have a..rued
to the .ooperatve by refundng the same, uness hs a.t has been ratfed by a three-
fourths (3/4) vote of a the members wth votng rghts, present and .onsttutng a
quorum. Ths provson sha be app.abe, notwthstandng the fa.t that the dre.tor
used hs own funds n the venture..raaw
"ART. 49. lllegal Use of Confidential lnformation.
(1) A dre.tor or off.er, or an asso.ate of a dre.tor or off.er, who, for hs
beneft or advantage or that of an asso.ate, makes use of .onfdenta
nformaton that, f generay known, mght reasonaby be expe.ted to adversey
affe.t the operaton and vabty of the .ooperatve, sha be
hed:.hanrobesvrtuaawbrary
"(a) Labe to .ompensate the .ooperatve for the dre.t osses suffered by
the .ooperatve as a resut of the ega use of nformaton; and.raaw

23

"(b) A..ountabe to the .ooperatve for any dre.t beneft or advantage
re.eved or yet to be re.eved by hm or hs asso.ate, as a resut of the
transa.ton..hanrobesvrtuaawbrary
"(2) The .ooperatve sha take the ne.essary steps to enfor.e the abtes
des.rbed n subse.ton (a).raaw
"ART. 50. Removal. - A .ompants for the remova of any ee.ted off.er sha be fed
wth the board of dre.tors. Su.h off.er sha be gven the opportunty to be heard.
Ma|orty of the board of dre.tors may pa.e the off.er .on.erned under preventve
suspenson pendng the resouton of the nvestgaton. Upon fndng of a prma fa.e
evden.e of gut, the board sha present ts re.ommendaton for remova to the
genera assemby..raaw
"An ee.tve off.er may be removed by three fourths (3/4) votes of the reguar
members present and .onsttutng a quorum, n a reguar or spe.a genera assemby
meetng .aed for the purpose. The off.er .on.erned sha be gven an opportunty to
be heard at sad assemby..hanrobesvrtuaawbrary
Sec. 5. Art.es 52, 53, 54, 55, 56, 57, 58, 59, 60, 61, 62 and 63 of Chapter V on
Responsbtes, Rghts and Prveges of Cooperatves of the same Code are hereby
renumbered and amended to read, as foows:.hanrobesvrtuaawbrary
CHAPTER V
RESPONSlBlLlTlES, RlGHTS AND PRlVlLEGES O COOPERATlVE.raaw
"ART. 51. Address. - Every .ooperatve sha have an off.a posta address to wh.h
a not.es and .ommun.atons sha be sent. Su.h address and every .hange thereof
sha be regstered wth the Authorty..raaw
"ART. 52. 8ooks to be ept Open.
(1) Every .ooperatve sha have the foowng do.uments ready and a..essbe
to ts members and representatves of the Authorty for nspe.ton durng
reasonabe off.e hours at ts off.a address:.hanrobesvrtuaawbrary
"(a) A .opy of ths Code and a other aws pertanng to .ooperatves;.raaw
"(b) A .opy of the reguatons of the Authorty;.raaw
"(.) A .opy of the art.es of .ooperaton and byaws of the
.ooperatve;.raaw
"(d) A regster of members;.raaw
"(e) The books of the mnutes of the meetngs of the genera assemby, board
of dre.tors and .ommttee;.raaw
"(f) Share books, where app.abe;.raaw

24

"(g) Fnan.a statement; and.raaw
"(h) Su.h other do.uments as may be pres.rbed by aws or the
byaws..hanrobesvrtuaawbrary
"(2) The a..ountant or the bookkeeper of the .ooperatve sha be responsbe
for the mantenan.e of the .ooperatve n a..ordan.e wth generay a..epted
a..ountng pra.t.es. He sha aso be responsbe for the produ.ton of the same
at the tme of audt or nspe.ton..raaw
"The audt .ommttee sha be responsbe for the .ontnuous and perod. revew
of the books and re.ords of a..ount to ensure that these are n a..ordan.e wth
generay a..epted a..ountng pra.t.es. He sha aso be responsbe for the
produ.ton of the same at the tme of audt or nspe.ton..raaw
"(3) Ea.h .ooperatve sha mantan re.ords of a..ounts su.h that the true and
.orre.t .ondton and the resuts of the operaton of the .ooperatve may be
as.ertaned therefrom at any tme. The fnan.a statements, audted a..ordng
to generay a..epted audtng standards, prn.pes and pra.t.es, sha be
pubshed annuay and sha be kept posted n a .onsp.uous pa.e n the
prn.pa off.e of the .ooperatve..raaw
"(4) Sub|e.t to the pertnent provsons of the Natona Interna Revenue Code
and other aws, a .ooperatve may dspose by way of burnng or other method of
.ompete destru.ton any do.ument, re.ord or book pertanng to ts fnan.a
and nonfnan.a operatons wh.h are aready more than fve (5) years od
ex.ept those reatng to transa.tons wh.h are the sub|e.t of .v, .rmna and
admnstratve pro.eedngs. An nventory of the audted do.uments, re.ords and
books to be dsposed of sha be drawn up and .ertfed to by the board se.retary
and the .harman of the audt .ommttee and presented to the board of dre.tors
wh.h may thereupon approve the dsposton of sad re.ords..raaw
"ART. 53. Reports.
(1) Every .ooperatve sha draw up reguar reports of ts program of a.tvtes,
n.udng those n pursuan.e of ther so.o-.v. undertakngs, showng ther
progress and a.hevements at the end of every fs.a year. The reports sha be
made a..essbe to ts members, and .opes thereof sha be furnshed to a ts
members or re.ord. These reports sha be fed wth the Authorty wthn one
hundred twenty (120) days from the end of the .aendar year. The form and
.ontents of the reports sha be as pres.rbed by the rues of the Authorty.
Faure to fe the requred reports sha sub|e.t the a..ountabe off.er/s to fnes
and penates as may be pres.rbed by the Authorty, and sha be a ground for
the revo.aton of authorty of the .ooperatve to operate as su.h. The fs.a year
of every .ooperatve sha be the .aendar year ex.ept as may be otherwse
provded n the byaws..raaw
"(2) If a .ooperatve fas to make, pubsh and fe the reports requred heren, or
fas to n.ude theren any matter requred by the Code, the Authorty sha,

23

wthn ffteen (15) days from the expraton of the pres.rbed perod, send su.h
.ooperatve a wrtten not.e, statng ts non-.ompan.e and the .ommensurate
fnes and penates that w be mposed unt su.h tme that the .ooperatve has
.omped wth the requrements..raaw
"ART. 54. Register of Members as Prima Facie Evidence. - Any regster or st of
members shares kept by any regstered .ooperatve sha be prma fa.e evden.e of
the foowng part.uars entered theren:.hanrobesvrtuaawbrary
"(1) The date on wh.h the name of any person was entered n su.h regster or
st of member; and .raaw
"(2) The date on wh.h any su.h person .eased to be a
member..hanrobesvrtuaawbrary
"ART. 55. Probative Value of Certified Copies of Entries.
(1) A .opy of any entry n any book, regster or st reguary kept n the .ourse of
busness n the possesson of a .ooperatve sha, f duy .ertfed n a..ordan.e
wth the rues of evden.e, be admssbe as evden.e of the exsten.e of entry
and prma fa.e evden.e of the matters and transa.tons theren
re.orded..raaw
"(2) No person or a .ooperatve s possesson of the books of su.h .ooperatve
sha, n any ega pro.eedngs to wh.h the .ooperatve s not a party, be
.ompeed to produ.e any of the books of the .ooperatve, the .ontents of wh.h
.an be proved and the matters, transa.tons and a..ounts theren re.orded,
uness by order of a .ompetent .ourt..raaw
"ART. 56. 8onding of Accountable Officers. - Every dre.tor, off.er, and empoyee
handng funds, se.urtes or property on behaf of any .ooperatve sha be .overed by
a surety bond to be ssued for a duy regstered nsuran.e or bondng .ompany for the
fathfu performan.e of ther respe.tve dutes and obgatons. The board of dre.tors
sha determne the adequa.y of su.h bonds..raaw
"Upon the fng of the app.aton for regstraton of a .ooperatve, the bonds of the
a..ountabe off.ers sha be requred by the Authorty. Su.h bonds sha be renewed
manuay and the Authorty sha a..ordngy be nformed of su.h renewa..raaw

"ART. 57. Preference of Claims.
(1) Notwthstandng the provsons of exstng aws, rues and reguatons to the
.ontrary, but sub|e.t to the pror .am of the Authorty, any debt due to the
.ooperatve from the member sha .onsttute a frst en upon any raw materas,
produ.ton, nputs, and produ.ts produ.ed; or any and, budng, fa.tes,
equpment, goods or serv.es a.qured and hed, by su.h member through the

26

pro.eeds of the oan or .redt granted by the .ooperatve to hm for as ong as
the same s not fuy pad..raaw
"(2) No property or nterest on property wh.h s sub|e.t to a en under
paragraph (1) sha be sod nor .onveyed to thrd partes wthout the pror
permsson of the .ooperatve. The en upon the property or nterest sha
.ontnue to ext even after the sae or .onveyan.e thereof unt su.h en has
been duy extngushed..raaw
"(3) Notwthstandng the provsons of any aw to the .ontrary, any sae or
.onveyan.e made n .ontraventon of paragraph (2) hereof sha be vod..raaw
"ART. 58. lnstrument for 5alary or Wage eduction.
(1) A member of a .ooperatve may, notwthstandng the provsons of exstng
aws to the .ontrary, exe.ute an nstrument n favor of the .ooperatve
authorzng hs empoyer to dedu.t from hs/her saary or wages, .ommutaton of
eave .redts and any other monetary benefts payabe to hm by the empoyer
and remt su.h amount as maybe spe.fed n satsfa.ton of a debt or other
demand due from the member to the .ooperatve..raaw
"(2) Upon the exe.uton of su.h nstrument and as may be requred by the
.ooperatve .ontaned n a wrtten request, the empoyer sha make the
dedu.ton n a..ordan.e wth the agreement and dedu.ton n a..ordan.e wth
the agreement and remt forthwth the amount so dedu.ted wthn ten (10) days
after the end of the payro month to the .ooperatve. The empoyer sha make
the dedu.ton for as ong as su.h debt or other demand remans unpad by the
empoyee..raaw
"(3) The term "empoyer" as used n ths art.e sha n.ude a prvate frms and
the natona and o.a governments and government-owned or .ontroed
.orporatons who have under ther empoyer a member of a .ooperatve and
have agreed to .arry out the terms of the nstrument mentoned n paragraphs
(1) and (2) of ths art.e..raaw
"(4) The provsons of ths art.e sha appy to a smar agreements referred to
n paragraph (1) and were enfor.ed pror to the approva of ths Code..raaw
"(5) Notwthstandng the provsons of exstng aws to the .ontrary, the
responsbtes of the empoyer as stated n paragraphs (1) and (2) of ths
art.es sha be mandatory: Provded, That n the .ase of prvate empoyer, the
a.tua and reasonabe .ost dedu.tng and remttng maybe .oe.ted..raaw
"ART. 59. Primary Lien. - Notwthstandng the provson of any aw wth the .ontrary, a
.ooperatve sha have prmary en upon the .apta, deposts or nterest of a member
for any debt due to the .ooperatve from su.h a member..raaw
"ART. 60. %ax %reatment of Cooperative. - Duy regstered .ooperatves under ths
Code wh.h do not transa.t any busness wth non-members or the genera pub. sha

27

not be sub|e.t to any taxes and fees mposed under the nterna revenue aws and
other tax aws. Cooperatves not fang under ths art.e sha be governed by the
su..eedng se.ton..raaw
"ART.61. %ax and Other Exemptions. Cooperatves transa.tng busness wth both
members and non-members sha not be sub|e.ted to tax on ther transa.tons wth
members. In reaton to ths, the transa.tons of members wth the .ooperatve sha
not be sub|e.t to any taxes and fees, n.udng not mted to fna taxes on members
deposts and do.umentary tax. Notwthstandng the provsons of any aw or reguaton
to the .ontrary, su.h .ooperatves deang wth nonmembers sha en|oy the foowng
tax exemptons:.raaw
"(1) Cooperatves wth a..umuated reserves and undvded net savngs of not
more than Ten mon pesos (P10,000,000.00) sha be exempt from a natona,
.ty, provn.a, mun.pa or barangay taxes of whatever name and nature. Su.h
.ooperatves sha be exempt from .ustoms dutes, advan.e saes or
.ompensatng taxes on ther mportaton of ma.hneres, equpment and spare
parts used by them and wh.h are not avaabe o.ay a .ertfed by the
department of trade and ndustry (DTI). A tax free mportatons sha not be sod
nor the benef.a ownershp thereof be transferred to any person unt after fve
(5) years, otherwse, the .ooperatve and the transferee or assgnee sha be
sodary abe to pay tw.e the amount of the mposed tax and / or
dutes..raaw
"(2) Cooperatves wth a..umuated reserves and dvded net savngs of more
than Ten mon pesos (P10,000,000.00) sha fee the foowng taxes at the fu
rate: .hanrobesvrtuaawbrary
"(a) In.ome Tax - On the amount ao.ated for nterest on .aptas:
Provded, That the same tax s not .onsequenty mposed on nterest
ndvduay re.eved by members: Provded, further, That .ooperatves
regardess of .assf.aton, are exempt n.ome tax from the date of
regstraton wth the Authorty;.raaw
"(b) Vaue-Added Tax - On transa.tons wth non-
members: Provided, however, That .ooperatves duy regstered wth the
Authorty; are exempt from the payment of vaue-added tax; sub|e.t to
Se.. 109, sub-se.tons L, M and N of Repub. A.t No. 9337, the Natona
Interna Revenue Code, as amended: Provided, That the exempt
transa.ton under Se.. 109 (L) sha n.ude saes made by .ooperatves
duy regstered wth the Authorty organzed and operated by ts member
to undertake the produ.ton and pro.essng of raw materas or of goods
produ.ed by ts members nto fnshed or pro.ess produ.ts for sae by the
.ooperatve to ts members and non-members: Provided, further, That any
pro.essed produ.t or ts dervatve arsng from the raw materas
produ.ed by ts members, sod n then name and for the a..ount of the
.ooperatve: Provided , finally, That at east twenty-fveper centum (25%)
of the net n.ome of the .ooperatves s returned to the members n the
form of nterest and/or patronage refunds;.raaw

28

"(.) A other taxes uness otherwse provded heren; and.raaw
"(d) Donatons to .hartabe, resear.h and edu.atona nsttutons and
renvestment to so.oe.onom. pro|e.ts wthn the area of operaton of the
.ooperatve may be tax dedu.tbe..hanrobesvrtuaawbrary
"(3) A .ooperatves, regardess of the amount of a..umuated reserves and
undvded net savngs sha be exempt from payment of o.a taxes and taxes on
transa.tons wth banks and nsuran.e .ompanes:Provided, That a saes or
serv.es rendered for non-members sha be sub|e.t to the app.abe per.entage
taxes saes made by produ.ers, marketng or serv.e
.ooperatves: Provided further, That nothng n ths art.e sha pre.ude the
examnaton of the books of a..ounts or other a..ountng re.ords of the
.ooperatve by duy authorzed nterna revenue off.ers for nterna revenue tax
purposes ony, after prevous authorzaton by the Authorty..raaw
"(4) In areas where there are no avaabe notares pub., the |udge, exer.sng
hs ex officio .apa.ty as notary pub., sha render serv.e, free of .harge, to
any person or group of persons requrng the admnstraton of oath or the
a.knowedgment of art.es of .ooperaton and nstruments of oan from
.ooperatves not ex.eedng Fve Hundred Thousand Pesos (P500,000.00)..raaw
"(5) Any regster of deeds sha a..ept for regstraton, free of .harge, any
nstrument reatve to a oan made under ths Code wh.h does not ex.eed Two
Hundred Ffty Thousand Pesos (P250,000.00) or the deeds of tte of any property
a.qured by the .ooperatve or any paper or do.ument drawn n .onne.ton wth
any a.ton brought by the .ooperatve or wth any .ourt |udgment rendered n ts
favor or any nstrument reatve to a bond of any a..ountabe off.er of a
.ooperatve for the fathfu performan.e of hs dutes and obgatons..raaw
"(6) Cooperatves sha be exempt from the payment of a .ourt and sherffs
fees payabe to the Phppne Government for and n .onne.ton wth a a.tons
brought under ths Code, or where su.h a.tons s brought by the Authorty
before the .ourt, to enfor.e the payment of obgatons .ontra.ted n favor of the
.ooperatve..raaw
"(7) A .ooperatves sha be exempt from puttng up a bond for brngng an
appea aganst the de.son of an nferor .ourt or for seekng to set asde any
thrd party .am: Provided, That a .ertf.aton of the Authorty showng that the
net assets of the .ooperatve are n ex.ess of the amount of the bond requred
by the .ourt n smar .ases sha be a..epted by the .ourt as a suff.ent
bond..raaw
"(8) Any se.urty ssued by .ooperatves sha be exempt from the provsons of
the Se.urtes A.t provded su.h se.urty sha not be spe.uatve..raaw
"ART. 62. Privileges of Cooperatives. - Cooperatves regstered under ths Code,
notwthstandng the provsons of any aw to the .ontrary, be aso a..orded the
foowng prveges:.hanrobesvrtuaawbrary

29

"(1) Cooperatves sha en|oy the prvege of depostng ther seaed .ash boxes
or .ontaners, do.uments or any vauabe papers n the safes of the mun.pa or
.ty treasurers and other government off.es free of .harge, and the .ustodan of
su.h art.es sha ssue a re.ept a.knowedgng the art.es re.eved duy
wtnessed by another person;.raaw
"(2) Cooperatves organzed among government empoyees, notwthstandng
any aw or reguaton to the .ontrary, sha en|oy the free use of any avaabe
spa.e n ther agen.y, whether owned or rented by the Government;.raaw
"(3) Cooperatves renderng spe.a types of serv.es and fa.tes su.h as .od
storage, .e pant, ee.tr.ty, transportaton, and smar serv.es and fa.tes
sha se.ure a fran.hse therefore, and su.h .ooperatves sha open ther
membershp to a persons quafed n ther areas of operaton;.raaw
"(4) In areas where approprate .ooperatves exst, the preferenta rght to
suppy government nsttutons and agen.es r.e, .orn and other grans, fsh and
other marne produ.ts, meat, eggs, mk, vegetabes, toba..o and other
agr.utura .ommodtes produ.ed by ther members sha be granted to the
.ooperatves .on.erned;.raaw
"(5) Preferenta treatment n the ao.aton of fertzers, n.udng seeds and
other agr.utura nputs and mpements, and n r.e dstrbuton sha be
granted to .ooperatves by the approprate government agen.es;.raaw
"(6) Preferenta and equtabe treatment n the ao.aton or .ontro of
bottomres of .ommer.a shppng vesses n .onne.ton wth the shpment of
goods and produ.ts of .ooperatves;.raaw
"(7) Cooperatves and ther federatons, su.h as farm and fshery produ.ers and
suppers, market vendors and su.h other .ooperatves, wh.h have for ther
prmary purpose the produ.ton and/or the marketng of produ.ts from
agr.uture, fsheres and sma entrepreneura ndustres and federatons
thereof, sha have preferenta rghts n the management of pub. markets
and/or ease of pub. market fa.tes, stas or spa.es: Provided, That these
rghts sha ony be utzed ex.usvey by .ooperatves: Provided, further, That
no .ooperatve formng a |ont venture, partnershp or any other smar
arrangement wth a non-.ooperatve entty .an utze these rghts;.raaw
"(8) Cooperatves engaged n .redt serv.es and/or federatons sha be entted
to oans .redt nes, reds.ountng of ther oan notes, and other egbe papers
wth the Deveopment Bank of the Phppnes, the Land Bank of the Phppnes
and other fnan.a nsttutons ex.ept the Bangko Sentra ng Ppnas
(BSP);.raaw
"The Phppne Depost Insuran.e Corporaton (PDIC) and other government
agen.es, government-owned and .ontroed .orporatons and government
fnan.a nsttutons sha provde te.hn.a assstan.e to regstered natona
federatons and unons of .ooperatves wh.h have sgnf.ant engagement n

30

savngs and .redt operatons n order for these federatons and unons to
estabsh and/or strengthen ther own autonomous .ooperatve depost nsuran.e
systems;.raaw
"(9) A pub. transport serv.e .ooperatve may be entted to fnan.ng support
for the a.quston and/or mantenan.e of and and sea transport equpment,
fa.tes and parts through the program of the government fnan.a nsttutons.
It sha have the preferenta rght to the management and operaton of pub.
termnas and ports whether and or sea transport where the .ooperatve
operates and on se.urng a fran.hse for a.tve or potenta routes for the pub.
transport;.raaw
"(10) Cooperatves transa.tng busness wth the Government of the Phppnes
or any of ts pot.a subdvsons or any of ts agen.es or nstrumentates,
n.udng government-owned and .ontroed .orporatons sha be exempt from
prequaf.aton bddng requrements notwthstandng the provsons of Repub.
A.t No.9184, otherwse known as, the Government Pro.urement A.t;.raaw
"(11) Cooperatve sha en|oy the prvege of beng represented by the provn.a
or .ty fs.a or the Off.e of the So.tor Genera, free of .harge, ex.ept when
the adverse party s the Repub. of the Phppnes;.raaw
"(12) Cooperatves organzed by fa.uty members and empoyees of edu.atona
nsttutons sha have the preferenta rght n the management of the .anteen
and other serv.es reated to the operaton of the edu.atona nsttuton where
they are empoyed: Provded, That su.h serv.es are operated wthn the
premses of the sad edu.atona nsttuton; and.raaw
"(13) The approprate housng agen.es and government fnan.a nsttutons
sha .reate a spe.a wndow for fnan.ng housng pro|e.ts undertaken by
.ooperatves, wth nterest rates and terms equa to, or better than those gven
for so.azed housng pro|e.ts. Ths fnan.ng sha be n the form of banket
oans or ong-term whoesae oans to quafed .ooperatves, wthout need for
ndvdua pro.essng..raaw
"The Authorty, n .onsutaton wth the approprate government agen.es and
.on.erned .ooperatve se.tor, sha ssue rues and reguatons on a matters
.on.ernng housng .ooperatves."
Sec. 6. Art.e 64 of Chapter VI on Insoven.y of Cooperatves of the same Code s
hereby renumbered and amended to read, as foows:.hanrobesvrtuaawbrary
CHAPTER Vl
lNSOLVENCY O COOPERATlVES.raaw
"ART. 63. Proceeding Upon lnsolvency.- In .ase a .ooperatve s unabe to fuf ts
obgatons to .redtors due to nsoven.y, su.h .ooperatve may appy for su.h
remedes as t may deem ft under the provsons of A.t No. 1956, as amended,
otherwse known as the Insoven.y Law..raaw

31

"Nothng n ths Art.e, however, pre.udes .redtors from seekng prote.ton from
sad nsoven.y aw.".hanrobesvrtuaawbrary




Sec. 7. Art.es 65, 66. 67, 68, 69, 70 and 71 of Chapter VII on Dssouton of
Cooperatves of the same Code are hereby renumbered and amended to read, as
foows:.hanrobesvrtuaawbrary
CHAPTER Vll
DlSSOLUTlON O COOPERATlVES.raaw
"ART. 64. Voluntary issolution Where no Creditors are Affected. - If the dssouton of
a .ooperatve does not pre|ud.e the rghts of any .redtor havng a .am aganst t,
the dssouton may be affe.ted by a ma|orty vote of the board of dre.tors, and by a
resouton duy adopted by the affrmatve vote of at east three-fourths (3/4) of a the
members wth votng rghts, present and .onsttutng a quorum at a meetng to be
hed upon .a of the dre.tors: Provided, That the not.e of tme, pa.e and ob|e.t of
the meetng sha be pubshed for three (3) .onse.utve weeks n a newspaper
pubshed n the pa.e where the prn.pa off.e of sad .ooperatve s o.ated, or f no
newspaper s pubshed n su.h pa.e, n a newspaper of genera .r.uaton n the
Phppnes: Provided, further, That the not.e of su.h meetng s sent to ea.h member
of re.ord ether by regstered ma or by persona devery at east thrty (30) days
pror to sad meetng. A .opy of the resouton authorzng the dssouton sha be
.ertfed to by a ma|orty of the board of dre.tors and .ountersgned by the board
se.retary. The Authorty sha thereupon ssue the .ertf.ate of dssouton..raaw
"ART. 65. Voluntary issolution Where Creditors Are Affected. - Where the dssouton
of a .ooperatve may pre|ud.e the rghts of any .redtor, the petton for dssouton
sha be fed wth the Authorty. The petton sha be sgned by a ma|orty of ts board
or dre.tors or other off.ers managng ts affars, verfed by ts .harperson or board
se.retary or one of ts dre.tors and sha set forth a .ams and demands aganst t
and that ts dssouton was resoved upon by the affrmatve vote of at east three-
fourths (3/4) of a the members wth votng rghts, present and .onsttutng a quorum
at a meetng .aed for that purpose..raaw
"If the petton s suff.ent n form and substan.e, the Authorty sha ssue an order
re.tng the purpose of the petton and sha fx a date wh.h sha not be ess than
thrty (30) nor more than sxty (60) days after the entry of the order. Before su.h date,
a .opy of the order sha be pubshed at east on.e a week for three (3) .onse.utve
weeks n a newspaper of genera .r.uaton pubshed n the mun.paty or .ty
where the prn.pa off.e of the .ooperatve s stuated or n the absen.e of su.h o.a
newspaper, n a newspaper of genera .r.uaton n the Phppnes, and a .opy sha

32

kewse be posted for three (3) .onse.utve weeks n three (3) pub. pa.es n the
mun.paty or .ty where the .ooperatves off.e s o.ated. .raaw
"Upon expry of the fve (5) day not.e to fe ob|e.tons, the Authorty sha pro.eed to
hear the petton and try any ssue rased n the ob|e.ton fed; and f the ob|e.ton s
suff.ent and the matera aegatons of the petton are proven, t sha ssue an order
to dssove the .ooperatve and dre.t the dsposton of ts assets n a..ordan.e wth
exstng rues and reguatons. The order of dssouton sha set forth
theren:.hanrobesvrtuaawbrary
"(1) The assets and abtes of the .ooperatve;.raaw
"(2) The .am of any .redtor;.raaw
"(3) The number of members; and .raaw
"(4) The nature and extend of the nterests of the members of the
.ooperatve..hanrobesvrtuaawbrary
"ART. 66. lnvoluntary issolution. - A .ooperatve may be dssoved by order of a
.ompetent .ourt after due hearng on the grounds of:.hanrobesvrtuaawbrary
"(1) Voaton of any aw, reguaton or provsons of ts byaws; or.raaw
"(2) Insoven.y..hanrobesvrtuaawbrary
"ART. 67. issolution by Order of the Authority. - The Authorty may suspend or
revoke, after due not.e and hearng, the .ertf.ate of regstraton of a .ooperatve on
any of the foowng grounds:.hanrobesvrtuaawbrary
"(1) Havng obtaned ts regstraton by fraud;.raaw
"(2) Exstng for an ega purpose;.raaw
"(3) Wfu voaton, despte not.e by the Authorty, of the provsons of ths
Code or ts byaws;.raaw
"(4) Wfu faure to operate on a .ooperatve bass; and.raaw
"(5) Faure to meet the requred mnmum number of members n the
.ooperatve..hanrobesvrtuaawbrary
"ART. 68. issolution by Failure to Organize and Operate.- If a .ooperatve has not
.ommen.ed busness and ts operaton wthn two (2) years after the ssuan.e of ts
.ertf.ate of regstraton or has not .arred on ts busness for two (2) .onse.utve
years, the Authorty sha send a forma not.e to the sad .ooperatve to show .ause
as to ts faure to operate. Faure of the .ooperatve to prompty provde |ustfabe
.ause for ts faure to operate sha warrant the Authorty to deete ts name from the
roster of regstered .ooperatves and sha be deemed dssoved..raaw

33

"ART. 69. Liquidation of a Cooperative. - Every .ooperatve whose .harter expres by
ts own mtaton or whose exsten.e s termnated by vountary dssouton or through
an approprate |ud.a pro.eedng sha nevertheess .ontnue to exst for three (3)
years after the tme t s dssoved; not to .ontnue the busness for wh.h t was
estabshed but for the purpose of prose.utng and defendng suts by or aganst t;
settement and .osure of ts affars; dsposton, .onveyan.e and dstrbuton of ts
propertes and assets..raaw
"At any tme durng the sad three (3) years, the .ooperatve s authorzed and
empowered to .onvey a of ts propertes to trustees for the beneft of ts members,
.redtors and other persons n nterest. From and after any su.h .onveyan.e, a
nterests wh.h the .ooperatve had n the propertes are termnated..raaw
"Upon the wndng up of the .ooperatve affars, any asset dstrbutabe to any
.redtor, sharehoder or member who s unknown or .annot be found sha be gven to
the federaton or unon to wh.h the .ooperatve s affated wth..raaw
"A .ooperatve sha ony dstrbute ts assets or propertes upon awfu dssouton and
after payment of a ts debts and abtes, ex.ept n the .ase of de.rease of share
.apta of the .ooperatve and as otherwse aowed by ths Code..raaw
"ART. 70. Rules and Regulations on Liquidation. - The Authorty sha ssue the
approprate mpementng gudenes for the qudaton of
.ooperatves.".hanrobesvrtuaawbrary
Sec. 8. Art.es 72, 73, 74, 75, 76, 77, 78, 79 and 80 of Chapter VIII on Capta,
Property, and Funds of the same Code are hereby renumbered and amended to read,
as foows:.hanrobesvrtuaawbrary
CHAPTER Vlll
CAPlTAL, PROPERTY, AND UNDS.raaw
"ART. 71. Capital. - The .aptazaton of .ooperatves and the a..ountng pro.edures
sha be governed by the provsons of ths Code and the reguatons wh.h sha be
ssued..raaw
"ART. 72. Capital 5ources.- Cooperatves regstered under ths Code may derve ther
.apta from any or a of the foowng sour.es:.hanrobesvrtuaawbrary
"(1) Members share .apta;.raaw
"(2) Loans and barrowngs n.udng deposts;.raaw
"(3) Revovng .apta wh.h .onssts of the deferred payment of patronage
refunds, or nterest on share .apta; and.raaw
"(4) Subsdes, donatons, ega.es, grants, ads and su.h other assstan.e from
any o.a or foregn nsttuton whether pub. or prvate: Provided, That .apta
.omng from su.h subsdes, donatons, ega.es, grants, ads and other

34

assstan.e sha not be dvded nto ndvdua share .apta hodngs at any tme
but sha nstead form part of the donated .apta or fund of the
.ooperatve..hanrobesvrtuaawbrary
"Upon dssouton, su.h donated .apta sha be sub|e.t to es.heat..raaw
"ART. 73. Limitation on 5hare Capital Holdings.- No member of prmary .ooperatve
other than .ooperatve tsef sha own or hod more than ten per centum (10%) of the
share .apta of the .ooperatve..raaw
"Where a member of .ooperatve des, hs her sha be entted to the shares of the
de.edent: Provided, That the tota share hodng of the her does not ex.eed ten per
centum (10%) of the share .apta of the .ooperatve; Provided, further, That the her
quafy and s admtted as members of the .ooperatve: Providedfinally , That where
the her fas to quafy as a member or where hs tota share hodng ex.eeds ten per
centum (10%) of the share .apta , the share or shares ex.ess w revert to the
.ooperatve upon payment to the her of the vaue of su.h shares..raaw
"ART. 74. Assignment of 5hare Capital Contribution or lnterest.- Sub|e.t to the
provsons of ths Code, no member sha transfer hs shares or nterest n the
.ooperatve or any part thereof uness..hanrobesvrtuaawbrary
"(1) He has hed su.h share .apta .ontrbuton or nterest for not ess than one
(1) year..raaw
"(2) The assgnment s made to the .ooperatve or to a member of the
.ooperatve or to a person who fas wthn the fed of the membershp of the
.ooperatve; and.raaw
"(3) The board of dre.tors has approved su.h
assgnment..hanrobesvrtuaawbrary
"ART.75. Capital 8uild-Up.- Te byaws of every .ooperatve sha be provded for a
reasonabe and reast. member .apta bud-up program to aow the .ontnung
growth of the members nvestment n ther .ooperatve as ther e.onom. .ondtons
.ontnue to mprove..raaw
"ART.76. 5hares.- The term "share" refers to a unt of .apta n a prmary .ooperatve
the par vaue of wh.h may be fxed to any fgure not more than One thousand pesos
(P1,000.00). The share of .apta of a .ooperatve s the money pad or requred to be
pad for the operatons of the .ooperatve. The method for the ssuan.e of share
.ertf.ates sha pres.rbed n ts byaws..raaw
"ART.77. Fines. - The byaws of a .ooperatve may pres.rbe a fne on unpad
subs.rbed share .apta. Provded, that su.h fne s far and reasonabe under the
.r.umstan.es..raaw
"ART.78. lnvestment of Capital. - A .ooperatve may nvest ts .apta n any of the
foowng:.hanrobesvrtuaawbrary

33

"(a) In shares or debentures or se.urtes of any other .ooperatve;.raaw
"(b) In any reputabe bank n the o.aty, or any .ooperatve;.raaw
"(.) In se.urtes ssued or guaranteed by the Government;.raaw
"(d) In rea state prmary for the use of the .ooperatve or ts members;
or.raaw
"(e) In any other manner authorzed n the byaws. .hanrobesvrtuaawbrary
"ART. 79. Revolving Capital. - The genera assemby of any .ooperatve may authorze
the board of dre.tors to rase a revovng .apta to strengthen ts .apta stru.ture by
deferrng the payment of patronage refunds and nterest on share .apta or by the
authorzed dedu.ton of a per.entage from the pro.eeds of produ.ts sod or serv.es
rendered, or per unt of produ.t or serv.es handed. The board of dre.tors sha ssue
revovng .apta .ertf.ates wth sera number, name, amount, and rate of nterest to
be pad and sha dstn.ty set forth the tme of retrement of su.h .ertf.ates and the
amounts to be returned.".hanrobesvrtuaawbrary
Sec. 9. Art.es 81, 82, 83, 84 and 85 of Chapter IX on Audt, Inqury and Members
Rght to Examne of the same Code are hereby renumbered and amended to read, as
foows:.hanrobesvrtuaawbrary
"ART. 80. Annual Audit. - Cooperatves regstered under ths Code sha be sub|e.t to
an annua fnan.a, performan.e and so.a audt. The fnan.a audt sha be
.ondu.ted by an externa audtor who satsfes a the foowng
quaf.atons:.hanrobesvrtuaawbrary
"(1) He s ndependent of the .ooperatve or any of ts subsdary that he s
audtng; and.raaw
"(2) He s a member n good standng of the Phppne Insttute of Certfed
Pub. A..ountants (PICPA) and s a..redted by both the Board and A..ountan.y
and the Authorty..hanrobesvrtuaawbrary
"The so.a audt sha be .ondu.ted by an ndependent so.a audtor a..redted by
the Authorty..raaw
"Performan.e and so.a audt reports wh.h .ontan the fndngs and
re.ommendatons of the audtor sha be submtted to the board of dre.tors..raaw
"The Authorty, n .onsutaton wth the .ooperatve se.tor, sha promugate the rues
and standards for the so.a audt of .ooperatves..raaw
"ART. 81. Audit Report. - The audtor sha submt to the board of dre.tors and to the
audt .ommttee the fnan.a audt report wh.h sha be n a..ordan.e wth the
generay a..epted audtng standards for .ooperatves as |onty promugated by the
Phppne Insttute of Certfed Pub. A..ountants (PICPA) and the Authorty..raaw

36

"Thereafter, the board of dre.tors sha present the .ompete audt report to the
genera assemby n ts next meetng..raaw
"ART. 82. Nonliability for efamations. - The audtor s not abe to any person n an
a.ton for defamaton based on any a.t, done, or any statement made by hm n good
fath n .onne.ton wth any matter he s authorzed or requred to do pursuant to ths
Code..raaw
"ART. 83. Right to Examine. - A member sha have the rght to examne the re.ords
requred to be kept by the .ooperatve under Art.e 52 of ths Code durng reasonabe
hours on busness days and he may demand, n wrtng, for a .opy of ex.erpts from
sad re.ords wthout .harge ex.ept the .ost of produ.ton..raaw
"Any off.er of the .ooperatve who sha refuse to aow any member of the
.ooperatve to examne and .opy ex.erpts from ts re.ords sha be abe to su.h
member for damages and sha be guty of an offense wh.h sha be punshabe under
Art.e 140 of ths Code: Provided, That f su.h refusa s pursuant to a resouton or
order of the board of dre.tors, the abty under ths art.e sha be mposed upon
the dre.tors who voted for su.h refusa: Provided, further, That t sha be a defense
to any a.ton under ths art.e that the member demandng to examne and .opy
ex.erpts from the .ooperatve re.ords has mpropery used any nformaton se.ured
through any pror examnaton of the re.ords of su.h .ooperatve or was not a.tng n
good fath or for a egtmate purpose n makng hs demand..raaw
"ART. 84. 5afety of Records. - Every .ooperatve sha, at ts prn.pa off.e, keep and
.arefuy preserve the re.ords requred by ths Code to be prepared and mantaned. It
sha take a ne.essary pre.auton to prevent ts oss, destru.ton or
fasf.aton.".hanrobesvrtuaawbrary
Sec. 10. Art.es 86 and 87 of Chapter X on Ao.aton and Dstrbuton of Net Surpus
of the same Code are hereby renumbered and amended to read, as
foows:.hanrobesvrtuaawbrary
CHAPTER X
ALLOCATlON AND DlSTRlBUTlON O NET SURPLUS.raaw
"ART. 85. Net 5urplus. - Notwthstandng the provsons of exstng aws, the net
surpus of .ooperatves sha be determned n a..ordan.e wth ts byaws. Every
.ooperatve sha determne ts net surpus at the .ose of every fs.a year and at su.h
other tmes as may be pres.rbed by the byaws..raaw
"Any provson of aw to the .ontrary notwthstandng, the net surpus sha not be
.onstrued as proft but as an ex.ess of payments made by the members for the oans
borrowed, or the goods and serv.es avaed by them from the .ooperatve or the
dfferen.e of the rghtfu amount due to the members for ther produ.ts sod or
serv.es rendered to the .ooperatve n.udng other nfows of assets resutng from
ts other operatng a.tvtes and wh.h sha be deemed to have been returned to
them f the same s dstrbuted as pres.rbed heren..raaw

37

"ART. 86. Order of istribution. - The net surpus of every .ooperatve sha be
dstrbuted as foows:.hanrobesvrtuaawbrary
"(1) An amount for the reserve fund wh.h sha be at east ten per centum (10%)
of net surpus:Provided, That, n the frst fve (5) years of operaton after
regstraton, ths amount sha not be ess than ffty per centum (50%) of the net
surpus:.hanrobesvrtuaawbrary
"(a) The reserve fund sha be used for the stabty of the .ooperatve and to
meet net osses n ts operatons. The genera assemby may de.rease the
amount ao.ated to the reserve fund when the reserve fund aready ex.eeds
the share .apta..raaw
"Any sum re.overed on tems prevousy .harged to the reserve fund sha be
.redted to su.h fund..raaw
"(b) The reserve fund sha not be utzed for nvestment, other than those
aowed n ths Code. Su.h sum of the reserve fund n ex.ess of the share
.apta may be used at anytme for any pro|e.t that woud expand the
operatons of the .ooperatve upon the resouton of the genera
assemby..raaw
"(.) Upon the dssouton of the .ooperatve, the reserve fund sha not be
dstrbuted among the members. The genera assemby may
resoves:.hanrobesvrtuaawbrary
"() To estabsh a usufru.tuary trust fund for the beneft of any federaton
or unon to wh.h the .ooperatve s affated; and.raaw
"() To donate, .ontrbute, or otherwse dspose of the amount for the
beneft of the .ommunty where the .ooperatve operates. If the members
.annot de.de upon the dsposa of the reserve fund, the same sha go to
the federaton or unon to wh.h the .ooperatve s affated.
"(2) An amount for the edu.aton and tranng fund, sha not be more than
ten per centum (10%) of the net surpus. The byaws may provde that .ertan
fees or a porton thereof be .redted to su.h fund. The fund sha provde for the
tranng, deveopment and smar other .ooperatve a.tvtes geared towards
the growth of the .ooperatve movement:.hanrobesvrtuaawbrary
"(a) Haf of the amounts transferred to the edu.aton and tranng fund
annuay under ths subse.ton sha be spent by the .ooperatve for
edu.aton and tranng purposes; whe the other haf may be remtted to a
unon or federaton .hosen by the .ooperatve or of wh.h t s a member. The
sad unon or federaton sha submt to the Authorty and to ts .ontrbutng
.ooperatves the foowng s.hedues:.hanrobesvrtuaawbrary
"() Lst of .ooperatves wh.h have remtted ther respe.tve Cooperatve
Edu.aton and Tranng Funds (CETF);.raaw

38

"() Busness .onsutan.y assstan.e to n.ude the nature and .ost;
and.raaw
"() Other tranng a.tvtes undertaken spe.fyng theren the nature,
part.pants and .ost of ea.h a.tvty..hanrobesvrtuaawbrary
"(b) Upon the dssouton of the .ooperatve, the unexpended baan.e of the
edu.aton and tranng fund appertanng to the .ooperatve sha be .redted
to the .ooperatve edu.aton and tranng fund of the .hosen unon or
federaton..hanrobesvrtuaawbrary
"(3) An amount for the .ommunty deveopment fund, wh.h sha not be ess
than three per centum(3%) of the net surpus. The .ommunty deveopment fund
sha be used for pro|e.ts or a.tvtes that w beneft the .ommunty where the
.ooperatve operates..raaw
"(4) An optona fund, a and and budng, and any other ne.essary fund the tota
of wh.h sha not ex.eed seven per centum (7%)..raaw
"(5) The remanng net surpus sha be made avaabe to the members n the
form of nterest on share .apta not to ex.eed the norma rate of return our
nvestments and patronage refunds:Provided, That any amount remanng after
the aowabe nterest and the patronage refund have been dedu.ted sha be
.redted to the reserve fund..hanrobesvrtuaawbrary
"The sum ao.ated for patronage refunds sha be made avaabe at the same
rate to a patrons of the .ooperatve n proporton to ther ndvdua
patronage: Provided, That:.hanrobesvrtuaawbrary
"(a) In the .ase of a member patron wth pad-up share .apta .ontrbuton,
hs proportonate amount of patronage refund sha be pad to hm uness he
agrees to .redt the amount to hs a..ount as addtona share .apta
.ontrbuton;.raaw
"(b) In the .ase of a member patron wth unpad share .apta .ontrbuton,
hs proportonate amount of patronage refund sha be .redted to hs a..ount
unt hs a..ount unt hs share .apta .ontrbuton has been fuy pad;.raaw
"(.) In the .ase of a non-member patron, hs proportonate amount of
patronage refund sha be set asde n a genera fund for su.h patrons and
sha be ao.ated to ndvdua non-member patrons ony upon request and
presentaton of evden.e of the amount of hs patronage. The amount so
ao.ated sha be .redted to su.h patron toward payment of the mnmum
.apta .ontrbuton for membershp. When a sum equa to ths amount has
a..umuated at any tme wthn a perod spe.fed n the byaws, su.h patron
sha be deemed and be.ome a member of the .ooperatve f he so agrees or
requests and .ompes wth the provsons of the byaws for admsson to
membershp; and .raaw

39

"(d) If wthn any perod of tme spe.fed n the byaws, any subs.rber who
has not fuy pad hs subs.rbed share .apta or any non-member patron who
has a..umuated the sum ne.essary for membershp but who does not
request nor agree to be.ome a member or fas to .ompy wth the provsons
of the byaws for admsson to membershp, the amount so a..umuated or
.redted to ther a..ount together wth any part of the genera fund for
nonmember patrons sha be .redted to the reserve fund or to the edu.aton
and tranng fund of the .ooperatve, at the opton of the .ooperatve."


Sec. 11. Art.es 88, 89, 90, 91, 92, 93, 94 and 95 of Chapter XI on the Spe.a
Provsons Reatng to Agraran Reform Cooperatves of the same Code are hereby
renumbered retted and amended to read, as foows:.hanrobesvrtuaawbrary
CHAPTER Xl
AGRARlAN REORM COOPERATlVES.raaw
"ART. 87. Coverage. - The provsons of ths Chapter sha prmary govern agraran
reform .ooperatves:Provided, That the provsons of the other .hapters of ths Code
sha appy suppetory ex.ept nsofar as ths Chapter otherwse provdes..raaw
"ART. 88. efinition and Purpose. - An agraran reform .ooperatve s one organzed by
margna farmers, ma|orty of wh.h are agraran reform benef.ares, for the purpose
of deveopng an approprate system of and tenure, and deveopment, and
.onsodaton or and management n areas .overed by agraran reform..raaw
"An agraran reform .ooperatve as defned sha be organzed for any or a of the
foowng purposes:.hanrobesvrtuaawbrary
"(1) To deveop an approprate system of and tenure, and deveopment, and
.onsodaton or and management n areas .overed by agraran reform;.raaw
"(2) To .oordnate and fa.tate the dssemnaton of s.entf. methods of
produ.ton, and provde assstan.e n the storage, transport, and marketng of
farm produ.ts for agraran reform benef.ares and ther mmedate famy,
herenafter referred to as "benef.ares";.raaw
"(3) To provde fnan.a fa.tes to benef.ares for provdent or produ.tve
purposes at reasonabe .osts;.raaw
"(4) To arrange and fa.tate the expedtous transfer of approprate and sutabe
te.hnoogy to benef.ares and margna farmers at the owest possbe
.ost;.raaw

40

"(5) To provde so.a se.urty benefts, heath, med.a and so.a nsuran.e
benefts and other so.a and e.onom. benefts that promote the genera
wefare of the agraran reform benef.ares and margna farmers;.raaw
"(6) To provde non-forma edu.aton, vo.atona/te.hn.a tranng, and
vehood programs to benef.ares and margna farmers;.raaw
"(7) To a.t as .onduts for externa assstan.e and serv.es to the benef.ares
and margna farmers;.raaw
"(8) To undertake a .omprehensve and ntegrated deveopment program n
agraran reform and resettement areas wth spe.a .on.ern for the
deveopment of agro-based, marne-based, and .ottage-based ndustres;.raaw
"(9) To represent the benef.ares on any or a matters that affe.t ther nterest;
and.raaw
"(10) To undertake su.h other e.onom. or so.a a.tvtes as may be ne.essary
or n.denta n the pursut of the foregong purposes..hanrobesvrtuaawbrary
"ART. 89. Cooperative Estate. - Landhodngs ke pantatons, estates or ha.endas
a.qured by the State for the beneft of the workers n a..ordan.e wth the
Comprehensve Agraran Reform Program wh.h sha be .oe.tvey owned by the
worker-benef.ares under a .ooperatve set-up..raaw
"ART. 90. lnfrastructure. - In agraran reform and resettement areas, the Government
sha grant to agraran reform .ooperatves preferenta treatment n the .onstru.ton,
mantenan.e and management of roads, brdges, .anas, wharves, ports, reservors,
rrgaton systems, waterworks systems, and other nfrastru.tures wth government
fundng. For ths purpose, the Government sha provde te.hn.a assstan.e, fa.tes
and equpment to su.h agraran reform .ooperatves..raaw
"ART. 91. Lease of Public Lands. - The Government may ease pub. ands to any
agraran reform .ooperatve for a perod not ex.eedng twenty-fve (25%) years,
sub|e.t to renewa for another twenty-fve (25) years ony: Provided, That the
app.aton for renewa sha be made one (1) year before the expraton of the
ease: Provided, further, That su.h ease sha be for the ex.usve use and beneft of
the benef.ares and margna farmers sub|e.t to the provsons of the Comprehensve
Agraran Reform Program..raaw
"ART. 92. Preferential Right. - In agraran reform areas, an agraran reform
.ooperatve sha have the preferenta rght n the grant of fran.hse and .ertf.ate of
pub. .onvenen.e and ne.essty for the operaton of pub. uttes and
serv.es: Provided, That t meets the requrements and .ondtons mposed by the
approprate government agen.y grantng the fran.hse or .ertf.ate of pub.
.onvenen.e and ne.essty. If there s an ee.tr. serv.e provder n the area, t sha
upon the request of an agraran reform .ooperatve, mmedatey provde ee.tr.
serv.es to the agraran reform areas. If the ee.tr. serv.e provder fas to provde
the serv.es requested wthn a perod of one (1) year, the agraran reform .ooperatve

41

.on.erned may undertake to provde the ee.tr. serv.es n the area through ts own
resour.es. A nvestments made by the sad agraran reform .ooperatve for the
ee.trf.aton of the agraran reform resettement areas sha be the sub|e.t of sae to
the ee.tr. serv.e provder on.e t takes on the serv.e..raaw
"ART. 93. Privileges. - Sub|e.t to su.h reasonabe terms and .ondtons as the
Department of Agraran Reform (DAR) and the Authorty may mpose, agraran reform
.ooperatves may be gven the ex.usve rght to do any or a of the foowng
e.onom. a.tvtes n agraran reform and resettement
areas;.hanrobesvrtuaawbrary
"(1) Suppy and dstrbuton of .onsumer, agr.utura, aqua-.utura, and
ndustra goods, produ.ton nputs, and raw materas and suppes,
ma.hnery, equpment, fa.tes and other serv.es and requrements of the
benef.ares and margna farmers at reasonabe pr.es;.raaw
"(2) Marketng of the produ.ts and serv.es of the benef.ares n o.a and
foregn markets;.raaw
"(3) Pro.essng of the members produ.ts nto fnshed .onsumer or ndustra
goods for domest. .onsumpton or for export;.raaw
"(4) Provson of essenta pub. serv.es at .ost su.h as power, rrgaton,
potabe water, passenger and/or .argo transportaton by and or sea,
.ommun.aton serv.es, and pub. heath and med.a .are serv.es;.raaw
"(5) Management, .onservaton, and .ommer.a deveopment of marne,
forestry, mnera, water, and other natura resour.es sub|e.t to .ompan.e wth
the aws and reguatons on envronmenta and e.oog.a .ontros; and.raaw
"(6) Provson of fnan.a, te.hnoog.a, and other serv.es and fa.tes
requred by the benef.ares n ther day ves and
vehood..hanrobesvrtuaawbrary
"The Government sha provde the ne.essary fnan.a and te.hn.a assstan.e to
agraran reform .ooperatves to enabe them to ds.harge effe.tvey ther purposes
under ths art.e. The DAR, the Authorty and the BSP sha draw up a |ont program for
the organzaton and fnan.ng of the agraran reform .ooperatves sub|e.t of ths
Chapter. The |ont program sha be geared towards the benef.ares gradua
assumpton of fu ownershp and management .ontro of the agraran reform
.ooperatves..raaw
"ART. 94. Organization and Registration. - Agraran reform .ooperatves may be
organzed and regstered under ths Code ony upon pror wrtten verf.aton by the
DAR to the effe.t that the same s needed and desred by the benef.ares; resuts of a
study that has been .ondu.ted fary nd.ate the e.onom. feasbty of organzng the
same and that t w be e.onom.ay vabe n ts operatons; and that the same may
now be organzed and regstered n a..ordan.e wth requrements of ths Code. .raaw

42

"The Authorty, n .onsutaton wth the .on.erned government agen.es and
.ooperatve se.tor, sha ssue approprate rues and reguatons pertanng to the
provsons of ths Chapter.".hanrobesvrtuaawbrary
Sec. 12. Art.es 96, 97 and 98 of Chapter XII on the Spe.a Provsons on Pub.
Serv.es Cooperatves of the same Code are hereby transferred to another .hapter.
Chapter XII as amended sha now read, as foows:.hanrobesvrtuaawbrary
CHAPTER Xll
COOPERATlVE BANKS.raaw
"ART. 95. overning Law. - The provsons of ths Chapter sha prmary govern
.ooperatve banks regstered under ths Code and the other provsons of ths Code
sha appy to them ony nsofar as they are not n.onsstent wth the provsons
.ontaned n ths Chapter..raaw
"ART. 96. 5upervision. - The .ooperatve banks regstered under ths Code sha be
under the supervson of the BSP. The BSP, upon .onsutaton wth the Authorty and
the .on.erned .ooperatve se.tor, sha formuate gudenes regardng the operatons
and the governan.e of .ooperatve banks. These gudenes sha gve due re.ognton
to the unque nature and .hara.ter of .ooperatve banks. To ths end, .ooperatve
banks sha provde fnan.a and bankng serv.es to ts members..raaw
"ART. 97. Organization, Membership and Establishment of a Cooperative 8ank.
(1) Cooperatve organzatons duy estabshed and regstered under ths Code
may organze a .ooperatve bank, wh.h sha kewse be .onsdered a
.ooperatve regstrabe under provsons of ths Code sub|e.t to the requrements
and requste authorzaton from the BSP. Ony one .ooperatve bank may be
estabshed n ea.h provn.e:Provided, That an addtona .ooperatve bank may
be estabshed n the same provn.e to .ater to the needs n the same provn.e
to .ater to the needs of the o.aty dependng on the e.onom. .ondtons of the
provn.e as may be determned by the BSP: Provided, further, That the
addtona .ooperatve bank sha be o.ated n the Cty or mun.paty other that
the .ty or mun.paty where the frst .ooperatve bank s o.ated..raaw
"(2) Membershp n a .ooperatve bank sha ether be reguar or asso.ate.
Reguar membershp sha be mted to .ooperatve organzatons wh.h are
hoders of .ommon shares of the bank. Asso.ate members are those subs.rbng
and hodng preferred shares of the bank, wh.h may n.ude but are not mted
to the foowng:.hanrobesvrtuaawbrary
"(a) Indvdua members of the banks member-prmary .ooperatves; and.raaw
"(b) Samahang Nayon and Mun.pa Katpunan ng mga Samahang Nayon
(MKSN) wh.h hed .ommon shares of .ooperatve banks pror to the effe.tvty
of ths A.t sha appy for .onverson to fu-pedged .ooperatves n order to
mantan ther status as reguar members of .ooperatve banks:Provided, That
they sha notfy the .ooperatve bank .on.erned ther ntenton to .onvert wthn

43

a perod of nnety (90) days from the effe.tvty of ths A.t. Samahang Nayon
and MKSN are hereby gven a perod of one (1) year from the effe.tvty of ths
A.t to .ompete ther .onverson as .ooperatves. Cooperatve bank sha exert
reasonabe efforts to nform ther member Samahang Nayon and MKSN to fnay
.onvert or to gve the not.e of .onverson wthn the pres.rbed perod. Upon
the faure of the Samahang Nayon and MKSN to fnay .onvert to a fu-pedged
.ooperatve wthn the maxmum perod of one (1) year, the .ooperatve bank
.on.erned may .onvert the .ommon shares hed by su.h asso.atons to
preferred shares..hanrobesvrtuaawbrary
"(3) The art.es of .ooperatve and byaws of a .ooperatve bank, or any
amendment thereto, sha be regstered wth the Authorty ony when
a..ompaned by a .ertf.ate of authorty ssued by the BSP, under ts off.a
sea..raaw
"ART. 98. Administration of Cooperative 8anks. - To mantan the quaty of bank
management and a..ord approprate prote.ton to depostors and the pub. n
genera, the BSP sha pres.rbed the ft and proper quaf.atons of bank dre.tors and
off.ers for the purposes of ths art.e, gvng due re.ognton to the unque nature
and .hara.ter of .ooperatve banks..raaw
"Notwthstandng the provsons of ths Code, the number, .omputaton and term of
the board of dre.tors sha be defned n the art.es of .ooperaton and byaws of the
.ooperatve bank..raaw
"ART. 99. "uorum and Voting Rights. - The quorum requrement for genera assemby
meetngs, whether spe.a or reguar, sha be one haf pus one of the number of
votng shares of a the members n good standng. In the meetngs of the board of
dre.tors, whether spe.a or reguar, the quorum requrement sha be one-haf pus
one of a the members of the board of dre.tors. Ea.h dre.tor sha ony have one
vote..raaw
"Notwthstandng the provsons of ths Code to the .ontrary, the quorum requrement
for amendments of art.es of .ooperaton and byaws sha be three-fourths (3/4) vote
of a the members wth votng rghts, present and .onsttutng a quorum. A other
votng requrements sha be as pres.rbed by the BSP..raaw
"The votng rghts of the members sha be proportonate to the number of ther pad-
up shares..raaw
"ART. 100. Powers, Functions and Allied Undertakings of Cooperative 8anks. - A
.ooperatve bank sha prmary provde fnan.a, bankng and .redt serv.es to
.ooperatve organzatons and ther members. However, the BSP may pres.rbe
approprate gudenes, .engs and .ondtons on borrowng of a .ooperatve
organzaton from a .ooperatve bank..raaw
"The powers and fun.tons of a .ooperatve bank sha be sub|e.t to su.h rues and
reguatons as may be promugated by the BSP..raaw

44

"In addton to the powers granted by ths Code and other exstng aws, any
.ooperatve bank may perform any or a of the bankng serv.es offered by other
types of banks sub|e.t to the pror approva of the BSP..raaw
"ART. 101. Capital Requirements of Cooperative 8anks.
(1) A .ooperatve bank sha have a mnmum pad-up .apta n su.h amount as
may be requred by the BSP..raaw
"The BSP may pres.rbe rues and reguatons on the types of shares a
.ooperatve bank may ssue, n.udng the terms thereof and rghts appurtenant
thereto to determne .ompan.e wth aws and reguatons governng .apta and
equty stru.ture of banks: Provded, That .ooperatve banks sha ssue par vaue
shares ony..raaw
"(2) The Barro Savngs Fund (BSF) and Barro Guarantee Fund (BGF)
.oe.ted/dedu.ted by varous banks throughout the .ountry from the oan
pro.eeds of farmer-borrowers who were members of .ooperatves and
Samahang Nayon n .ompan.e wth Presdenta De.ree No. 175 and
a..ompanyng etters of nstru.ton, wh.h are st foatng and outstandng
ether as a.tve or dormant depost a..ounts n the books of those banks, sha
be deposted to the .ooperatve bank o.ated n the provn.e where the
depostory banks of BSF and BGF are o.ated, or f there s no .ooperatve bank
n the provn.e. The BSP, n .oordnaton wth the Authorty, sha .ome up wth
the mpementng gudenes on how to .redt the owners of the funds..raaw
"Those funds whose owners .oud not be o.ated or dentfed sha be sub|e.t to
es.heat..raaw
"ART. 102. Privileges and lncentives of Cooperative 8anks. - The .ooperatve banks
regstered under ths Code sha be gven the same prveges and n.entves granted
to the rura banks, prvate deveopment bank, .ommer.a banks, and a other banks
to reds.ount notes wth the BSP, the Land Bank of the Phppnes, and other
government banks wthout affe.tng n any way the provsons of ths Code..raaw
"(1) Sub|e.t to the approva of the BSP, a .ooperatve bank sha pubsh a
statement of ts fnan.a statement of ts fnan.a .ondton, n.udng those of
ts subsdares and affates n su.h terms understandabe to the ayman and n
su.h frequen.y as may be pres.rbed by the BSP, n Engsh or Fpno, at east
on.e every quarter n a newspaper of o.a .r.uaton n the .ty or provn.e
where the prn.pa off.e s o.ated or, f no newspaper s pubshed n the same
provn.es, then n a newspaper pubshed n the nearest .ty or provn.e or n a
newspaper of genera .r.uaton. The BSP, however, may aow the postng of
the fnan.a statements of the .ooperatve bank n .onsp.uous pa.es t may
determne n eu of the pub.aton requred n the pre.edng senten.e when
warranted by the .r.umstan.es..raaw
"However, n .ases of fore.osure of mortgages .overng oans granted by a
.ooperatve bank, and the exe.uton of |udgments thereon nvovng rea

43

propertes and eved upon by a sherff, t sha be exempt from pub.aton
requrement where the tota amount of the oan, ex.udng nterest and other
.harges due and unpad, does not ex.eed Two hundred ffty thousand
(P250,000.00) or su.h amount as the BSP may pres.rbe, as may be warranted
by the prevang e.onom. .ondtons and by the nature and .hara.ter of the
.ooperatve banks. It sha be suff.ent pub.aton n su.h .ases f the not.e of
fore.osure and exe.uton of |udgment are posted n .onsp.uous areas n the
.ooperatve banks premses, the mun.pa ha, the mun.pa pub. market,
the barangay ha, or the barangay pub. market, f there be any where the
property mortgaged s stuated, wthn a perod of sxty (60) days mmedatey
pre.edng the pub. au.ton or the exe.uton of |udgment. Proof of pub.aton
as requred heren sha be a..ompshed by an affdavt of the sherff or off.er
.ondu.tng the fore.osure sae or exe.uton of |udgment, and sha be atta.hed
to the re.ord of the .ase..raaw
"(2) A .ooperatve bank sha be aowed to fore.osure ands mortgaged to ts
sub|e.t to the provsons of Repub. A.t No. 6657, otherwse known as
Comprehensve Agraran Reform Law of 1988..raaw
"ART. 103. Assistance to Cooperative 8anks. - In a..ordan.e wth exstng po.es,
government agen.es, government-owned or .ontroed .orporatons and fnan.a
nsttutons sha provde assstan.e, te.hn.a or otherwse, to .ooperatve banks to
permt them to grow, deveop and perform ther roe n .ountrysde deveopment
towards a sustanabe natona e.onom. deveopment. Whenever a .ooperatve bank
organzed under ths Code s n a state of .ontnung nabty or unwngness to
mantan a perod of qudty, the BSP may desgnate one of ts off.as or a person of
re.ognzed .ompeten.e, preferaby wth experen.e n .ooperatve bankng and
fnan.e, as .onservator of the sad bank pursuant to the approprate provsons of
exstng bankng aws..raaw
"ART. 104. Applicability of 8anking Laws and Regulations. - Wth respe.t to the
provsons and governan.e of the .ooperatve banks, the provsons of the bankng
aws, rues and reguatons sha preva, notwthstandng Se.. 71 of Repub. A.t No.
8791, otherwse known as the Genera Bankng A.t of 2000..hanrobesvrtuaawbrary
"The BSP and the Authorty, n .onsutaton wth the .on.erned .ooperatve se.tor,
sha ssue approprate rues and reguatons pertanng to the provsons of ths
Chapter."
Sec. 13. Art.es 99, 100, 101, 102, 103, 104, 105, 106, 107, 108 and 109 of Chapter
XIII on Spe.a Provsons Reatng to Cooperatve Banks of the same Code are hereby
transferred to another .hapter. Chapter XIII as amended sha now read, as
foows.hanrobesvrtuaawbrary
CHAPTER Xlll
lNSURANCE COOPERATlVE.raaw

46

"ART. 105. Cooperative lnsurance 5ocieties. - Exstng .ooperatves may organze
themseves nto a .ooperatve nsuran.e entty for the purpose of engagng n the
busness of nsurng fe and property of .ooperatves and ther members..raaw
"ART. 106. %ypes of lnsurance Provided. - Under the .ooperatve nsuran.e program
estabshed and formed by the vrtue of the provsons of ths Code, the .ooperatve
nsuran.e so.etes sha provde ts .onsttutng members dfferent types of nsuran.e
.overage .onsstng of, but not mted to, fe nsuran.e wth spe.a group .overage,
oan prote.ton, retrement pans, endowment, motor veh.e .overage, bondng, .rop
and vesto.k prote.ton and equpment nsuran.e..raaw
"ART. 107. Applicability of lnsurance Laws. - The provsons of the Insuran.e Code and
a other aws and reguatons reatve to the organzaton and operaton of an
nsuran.e .ompany sha appy to .ooperatve nsuran.e enttes organzed under ths
Code. The requrements on .aptazaton, nvestments and reserves of nsuran.e frms
may be beray modfed upon .onsutaton wth the Authorty and the .ooperatve
se.tor, but n no .ase may be requrement to be redu.ed to ess than haf of those
provded for under the Insuran.e Code and other reated aws..raaw
"ART. 108. lmplementing Rules. - The Insuran.e Commsson and the Authorty, n
.onsutaton wth the .on.erned .ooperatve se.tor, sha ssue the approprate rues
and reguatons mpementng the provsons of ths
Chapter.".hanrobesvrtuaawbrary



Sec. 14. Art.es 110, 111, 112, 113 and 114 of Chapter XIV on Spe.a Provsons
reatng to Credt Cooperatve of ths Code are hereby transferred to another .hapter.
Chapter XIV as amended sha now read, as foows:.hanrobesvrtuaawbrary
CHAPTER XlV
PUBLlC SERVlCE COOPERATlVES.raaw
"ART. 109. efinition and Coverage. - A pub. serv.e .ooperatve, wthn the meanng
of ths Code, s one organzed to render pub. serv.es as authorzed under a
fran.hse or .ertf.ate of pub. .onvenen.e and ne.essty duy ssued by the
approprate government agen.y. Su.h serv.es may n.ude the
foowng:.hanrobesvrtuaawbrary
"(1) Power generaton, transmsson, and/or dstrbuton;.raaw
"(2) I.e pants and .od storage serv.es;.raaw
"(3) Commun.aton serv.es n.udng teephone, teegraph, and
.ommun.atons:.raaw

47

"(4) Land and sea transportaton .ooperatves for passenger and/or .argo.
Transport .ooperatves organzed under the provsons of Exe.utve Order No.
898, Seres of 1983, sha be governed by ths Chapter..raaw
"(5) Pub. markets, saughterhouses and other smar serv.es; and .raaw
"(6) Su.h other types of pub. serv.es as may be engaged n by any
.ooperatve. Su.h .ooperatve sha be prmary governed by ths Chapter and
the genera provsons of ths Code nsofar as they may be app.abe uness they
are n.onsstent herewth..hanrobesvrtuaawbrary
"ART. 110. Registration Requirements. - Uness otherwse provded n ths Code, no
pub. serv.e .ooperatve sha be regstered uness t satsfes the foowng
requrements..hanrobesvrtuaawbrary
"(1) Its art.es of .ooperaton and byaws provde for the membershp of the
users and/or produ.ers of the serv.e of su.h .ooperatves; and.raaw
"(2) Su.h other requrements as may be mposed by the other pertnent
government agen.es .on.erned. In .ase there are two (2) or more app.ants for
the same pub. serv.e fran.hse or .ertf.ate of pub. .onvenen.e and
ne.essty, a thngs beng equa, preferen.e sha be gven to a pub. serv.e
.ooperatve..hanrobesvrtuaawbrary
"ART. 111. Regulation of Public 5ervice Cooperatives. -
(1) The nterna affars of pub. serv.e .ooperatves su.h as the rghts and
prveges of members, the rues and pro.edures for meetngs of the genera
assemby, board of dre.tors and .ommttees; for the ee.ton and quaf.atons
of off.ers, dre.tors, and .ommttee members; ao.aton and dstrbuton of
surpuses; and a other matters reatng to ther nterna affars sha be
governed by ths Code..raaw
"(2) A matters reatng to the fran.hse or .ertf.ate of pub. .onvenen.e and
ne.essty of pub. serv.e .ooperatves su.h as .aptazaton and nvestment
requrements, equpment and fa.tes, frequen.es, rate-fxng and su.h other
matters affe.tng ther pub. serv.e operatons sha be governed by the proper
government agen.y .on.erned..raaw
"(3) The Authorty and the proper government agen.y .on.erned sha |onty
ssue the ne.essary rues and reguatons to mpement ths Chapter..raaw
"(4) The Authorty sha estabsh a .ommttee for the montorng of
transportaton serv.e .ooperatves .omposed of representatves from the
Authorty, the Land Transportaton Fran.hsng and Reguatory Board (LTFRB),
the Land Transportaton Off.e (LTO), Off.e of Transport Cooperatves (OTC),
other .on.erned government agen.es, as may be ne.essary, and the Natona
Federaton of Transportaton Cooperatves. A o.a montorng .ommttee sha

48

kewse be estabshed at the extenson off.es of the Authorty to fa.tate the
montorng of transportaton .ooperatves..raaw
"ART. 112. Engagement in Allied 8usiness by %ransportation 5ervice Cooperatives. -
Sub|e.t to pertnent natona aws and o.a ordnan.es, prmary transportaton serv.e
.ooperatves n.udng se.ondary and tertary federaton of .ooperatves may engage
n a busness reated to transportaton serv.e, n.udng but not mted
to:.hanrobesvrtuaawbrary
"(1) Importaton, dstrbuton and, marketng of petroeum produ.ts n
a..ordan.e wth exstng aws;.raaw
"(2) Operaton of gasone statons and transportaton serv.e .enters;.raaw
"(3) Importaton, dstrbuton and marketng of spare parts and suppes;
and.raaw
"(4) Marketng of veh.e/drvers nsuran.e po.es..hanrobesvrtuaawbrary
"ART. 113. Renewal of Franchise and Vehicle Registration. - Renewas of fran.hse and
veh.e regstraton sha be granted to transportaton serv.e .ooperatves: Provided,
That su.h .ooperatve presents a .ertf.ate of good standng ssued by the Authorty,
OTC, and the o.a government unt .on.erned as proof that t has .ontnuousy
provded the requred pub. transportaton serv.es..raaw
"The Authorty, n .onsutaton wth the .on.erned government agen.es and
.ooperatve se.tor, sha ssue approprate rues and reguatons pertanng to the
provsons of ths Chapter.".hanrobesvrtuaawbrary
Sec. 15. Art.es 115, 116, 117 and 118 of Chapter XV on Spe.a Provsons reatng to
Cooperatve Insuran.e So.etes of the same Code are hereby transferred to another
.hapter. Chapter XV as amended sha now read, as foows:.hanrobesvrtuaawbrary
CHAPTER XV
CREDlT COOPERATlVES.raaw
"ART. 114. Coverage. - Ths Chapter sha appy to .redt .ooperatves and other
.ooperatves, n.udng mutpurpose .ooperatves, that provde savngs and .redt to
ther members ony. The rest of the provsons of ths Code sha appy to them nsofar
as the same are not n.onsstent wth the provsons of ths Chapter..raaw
"ART. 115. efinition and Objectives. - A .redt .ooperatve s a fnan.a organzaton
owned and operated by ts members wth the foowng
ob|e.tves:.hanrobesvrtuaawbrary
"(1) To en.ourage savngs among ts members;.raaw
"(2) To .reate a poo of su.h savngs for wh.h oans for produ.tve or provdent
purpose may be granted to ts members; and.raaw

49

"(3) To provde reated serv.es to enabe ts members to maxmze the beneft
from su.h oans..hanrobesvrtuaawbrary
"ART. 116. Organization and Registration.- Credt .ooperatves sha be organzed and
regstered n a..ordan.e wth the genera provsons of ths Code..raaw
"ART. 117. Organizational Linkage. - Credt .ooperatves may organze .hapters or
subsdares, or |on eagues and federatons for the purpose of provdng .ommony
needed essenta serv.es n.udng but not mted to the foowng:.raaw
"(1) Interendng of surpus fund;"(2) Mutua benefts;"(3) Depost guarantee;"(4)
Bondng;"(5) Edu.aton and tranng;"(6) Professona and te.hn.a
assstan.e;"(7) Resear.h and deveopment;"(8) Representaton; and "(9) Other
serv.es needed to mprove ther performan.e..raaw
"Exstng support organzatons su.h as federatons of .redt .ooperatves, .redt
.ooperatves at the provn.a, regona and natona eves may .ontnue as su.h
under ths Code.".hanrobesvrtuaawbrary
Sec. 16. A new Art.e s nserted n Chapter XV on Credt Cooperatves and sha now
read, as foows:.hanrobesvrtuaawbrary
"ART. 118. Conversion of Credit Cooperatives to Financial 5ervice Cooperatives. -
Exstng .redt and mutpurpose .ooperatves wth savngs and .redt fa.tes sha
formay nform the Authorty of ts ntenton to .ontnue performng ts present
fun.tons. Shoud the sad .ooperatves de.de to exer.se enhan.ed fun.tons, t sha
notfy the Authorty and satsfy the requrements for .onverson to fnan.a serv.e
.ooperatve.".hanrobesvrtuaawbrary
Sec. 17. A new Chapter on Fnan.a Serv.e Cooperatves sha be nserted n ths
Chapter and sha read, as foows:.hanrobesvrtuaawbrary
CHAPTER XVl
lNANClAL SERVlCE COOPERATlVES.raaw
"ART. 119. efinition and Functions of Financial 5ervices Cooperatives. - A fnan.a
serv.e .ooperatve s a fnan.a organzaton owned and operated by ts members
and authorzed to provde the foowng serv.e, ex.usvey to ts members:.raaw
"(a) The fun.tons of .redt .ooperatves and other .ooperatves, n.udng
mutpurpose .ooperatves, that provde savngs and .redt to ther members,
and"(b) Other fnan.a serv.es sub|e.t to reguaton by the BSP..raaw
"The art.es of .ooperaton and byaws of any fnan.a serv.e .ooperatve, or
any amendment thereto, sha be regstered wth the Authorty ony f
a..ompaned by a .ertf.ate of authorty ssued by the BSP, under ts off.a
sea..raaw

30

"The authorty granted ths provson may be revoked by the BSP f any of the
grounds for re.evershp mentoned under Se.. 53 and 56 of Repub. A.t No.
8791 s present or f the fnan.a serv.e .ooperatve has wfuy voated ths
Code of any of the reated rues and reguatons..raaw
"The BSP sha ssue a .ease and desst order to .ooperatves exer.sng the
fun.ton of a fnan.a serv.e .ooperatve wthout authorty from the BSP..raaw
"The BSP may .harge equtabe rates or fees, as may be pres.rbed by the
Monetary Board for .ensng, examnaton and other serv.es wh.h t renders
under ths Code..raaw
"Upon the favorabe .ertf.aton of the BSP and the pror approva of the
Authorty, a .ooperatve, the man purpose of wh.h s to perform savngs and
.redt fun.tons, may .onvert to fnan.a serv.e .ooperatve sub|e.t to the
requred quaf.atons and pro.edures provded under ths Code and n the
mpementng rues and reguatons..raaw
"ART. 120. Membership and Affiliation. - A fnan.a serv.e .ooperatve sha have the
two (2) types of members:.raaw
"(1) Reguar members, who are natura persons; and.raaw
"(2) Asso.ate members, who are natura persons but who do not mmedatey
quafy under the requrements for membershp set out n the byaws of the
.ooperatve. A asso.ate members who are natura persons sha be gven two
(2) years to be.ome reguar members. Faure to .onvert wthn the sad perod
sha mean automat. wthdrawa of ther asso.ate membershp. They may,
however, re-appy as reguar members after two (2) years..raaw
"Mnors who are dependents of reguar members .an quafy as asso.ate members.
When they rea.h the age of ma|orty and wthn two (2) years from a..eptan.es of
ther asso.ate membershp, they have the opton to .onvert nto reguar members. As
asso.ate members, they may open a..ounts, depost funds and wthdraw from ther
a..ount, sub|e.t to the byaws and rues of the .ooperatve, and the rues and
reguatons of the Authorty, notwthstandng the provsons of exstng aws to the
.ontrary..raaw
"ART. 121. Regulation and 5upervision. - The Authorty sha exer.se ead reguatory
powers and supervson over the operatons of the fnan.a serv.e .ooperatves, to
wt:.hanrobesvrtuaawbrary
"(1) Issue rues and reguatons for the safe and sound .ondu.t of operatons of
fnan.a serv.e .ooperatves;.raaw
"(2) Estabsh standards of operaton for unform app.aton to a fnan.a
serv.e .ooperatves;.raaw

31

"(3) Pres.rbe ratos, .engs, mtatons, or other forms of reguaton on the
dfferent types of a..ounts and pra.t.es of fnan.a serv.e .ooperatves wh.h
sha, .onform to nternatonay a..epted standards;.raaw
"(4) Investgate to determne whether a fnan.a serv.e .ooperatve s
.ondu.tng ts busness n a safe and sound manner;.raaw
"(5) Condu.t reguar examnaton of the books of a..ounts, re.ords and other
do.uments of fnan.a serv.e .ooperatves;.raaw
"(6) Inqure nto the soven.y and qudty of a fnan.a serv.e
.ooperatves;.raaw
"(7) Pres.rbe approprate fees for supervson and examnaton of fnan.a
serv.e .ooperatves to among others, montor and oversee that exstng aws
and reguatons are .omped wth;.raaw
"(8) Pass upon and revew the quaf.atons and dsquaf.atons of ndvduas
ee.ted or apponted dre.tors or off.ers and dsquafy those found unft;.raaw
"(9) Dsquafy, suspend or remove any dre.tor or off.er who .ommts or omts
an a.t wh.h render hm unft for the poston;.raaw
"(10) See.t, desgnate and deputze federatons, through an approved
a..redtaton .rtera, that w supervse prmary fnan.a serv.e .ooperatves
and ssue bas. gudenes therefor;.raaw
"(11) Requre the submsson of reevant reports from the deputzed
supervsor;.raaw
"(12) Provde remeda measures n the operatons of fnan.a serv.e
.ooperatves that are n a state of .ontnung nabty or unwngness to
mantan a perod of qudty at the request of the deputzed supervsor or when
the deputzed supervsor fas to perform ts fun.tons;.raaw
"(13) A..redt externa audtors n a..ordan.e wth standards for audt and
fnan.a reportng n .ooperaton wth the PICPA; and.raaw
"(14) Appont a .onservator or a re.ever as may be ne.essary sub|e.t to the
rues and reguatons to be promugated by the Authorty n .oordnaton wth the
BSP, takng nto .onsderaton the grounds, powers and pro.edures under Se..s
29 and 30 of Repub. A.t No. 7653 as may be deemed approprate to fnan.a
serv.e .ooperatves..hanrobesvrtuaawbrary
"The Authorty sha n.ude n ts rues and reguatons, approprate san.tons and
penates, on the fnan.a serv.e .ooperatves, ts members, off.ers and responsbe
persons, for any a.ton that fas to adhere to sound and prudent management
pra.t.es or are n.onsstent wth the provsons of ths Code, other app.abe aws on
.ooperatves, rues, reguatons, .r.uars or orders ssued by the Authorty, and

32

requre the .ooperatve to undertake .orre.tve or remeda measures reatve
thereto..raaw
"The BSP s authorzed to .ondu.t rsk-based supervson and examnaton of fnan.a
serv.e .ooperatves as t may deem ne.essary..raaw
"ART. 122. Promulgation of Rules and Regulations. - The BSP, n .oordnaton wth the
Authorty, sha pres.rbe the approprate prudenta rues and reguatons app.abe
to the fnan.a serv.e .ooperatves..raaw
"Sub|e.t to the reguatons of the BSP, the bankng aws, rues and reguatons sha
have suppetory app.aton to fnan.a serv.es .ooperatves: Provided, however,
That the provsons on a..ess to borrowng or fnan.a assstan.e to be extended by
the BSP of the Phppne Depost Insuran.e Corporaton (PIDC) sha not appy to
fnan.a serv.e .ooperatves: Provided, further, That the depost abtes of the
fnan.a serv.e .ooperatves sha not be nsured by the PDIC..raaw
"ART. 123. Financial 5ervice Cooperative Federations. - Fnan.a serv.e .ooperatves
may organze themseves nto fnan.a serv.e .ooperatve may organze themseves
nto fnan.a serv.e .ooperatve federatons, and regster ther federaton wth the
Authorty. These fnan.a serv.e .ooperatve federatons may be deputzed by the
Authorty as the supervsor of ther members, and they sha have the foowng
fun.tons:.hanrobesvrtuaawbrary
"(a) Deveop standards and provde serv.es for the beneft of ts affates
and ther members n a..ordan.e wth the rues and reguatons of the
Authorty;.raaw
"(b) Defne .ommon ob|e.tves and .oordnate a.tvtes for the fnan.a
serv.e .ooperatve federaton;.raaw
"(.) Estabsh and admnster funds su.h as qudty fund, oan fund,
nvestment fund, stabzaton fund and su.h other funds;.raaw
"(d) Estabsh a savngs guarantee system for the prote.ton of ther affates'
member-depostors wthn three (3) years from the approva of ths
Code;.raaw
"(e) Exer.se on-ste and off-ste supervsory power over ts members;.raaw
"(f) Provde remeda assstan.e to ts members .on.ernng ther operatons
and management;.raaw
"(g) A.t as the qudator and when app.abe, sequester propertes to satsfy
an obgaton se.ured by a mortgage when authorzed by the Authorty;
and.raaw

33

"(h) Transmt reevant and requred nformaton regardng the operatons and
performan.e of member-.ooperatves to the
Authorty..hanrobesvrtuaawbrary
"The Authorty and other government agen.es, government-owned or .ontroed
.orporatons and government fnan.a nsttutons sha provde te.hn.a and su.h
other assstan.e that may be aowed by ther .harters to fnan.a serv.e .ooperatve
federatons for the estabshment and/or strengthenng of ther respe.tve .ooperatve
savngs guarantee system. The te.hn.a assstan.e to be provded sha n.ude,
among others, tranng supervson and examnaton..raaw
"ART. 124. esignation of Existing Unit at the Cooperative evelopment Authority to
Perform Regulatory and 5upervisory Functions. - Wthn sx (6) months from the
approva of ths Code, the Authorty sha desgnate the unt to formuate and
mpement the ne.essary reguatons, rues, po.es, gudenes and standards
app.abe soey to fnan.a serv.e .ooperatves and deputzed federatons n the
performan.e of ther savngs, .redt and su.h other reated enhan.ed fnan.a serv.e
operatons..raaw
"The Department of Fnan.e, the BSP and other .on.erned government agen.es sha
provde te.hn.a and tranng support for the effe.tve and eff.ent mpementaton of
the reguatory and supervsory fun.tons and responsbtes of the Authorty..raaw
"ART. 125. Prohibition. - The terms .redt .ooperatve, fnan.a serv.e .ooperatve
and fnan.a serv.e .ooperatve federaton sha be used ex.usvey by those who
are duy regstered under ths Code, and no person, group of persons, or organzatons
sha use the sad terms uness duy regstered wth the Authorty. Voatons of ths
prohbton sha be punshabe n a..ordan.e wth Art.e 140 of ths
Code.".hanrobesvrtuaawbrary
Sec. 18. A new Chapter on Ee.tr. Cooperatves sha be nserted and sha read, as
foows:.hanrobesvrtuaawbrary
CHAPTER XVll
ELECTRlC COOPERATlVE.raaw
"ART. 126. Coverage. - The provsons of ths Code sha appy to a ee.tr.
.ooperatves regstered wth the Authorty. Ths sha aso .over new dstrbuton
uttes that w regster wth the Authorty..raaw
"Ee.tr. .ooperatves may undertake power generaton utzng renewabe energy
sour.es, n.udng hybrd systems, a.quston and operaton of subtransmsson or
dstrbuton as ts prmary purposes..raaw
"ART. 127. Registration of Electric Cooperatives. - The regstraton of an ee.tr.
.ooperatve wth the Authorty under ths Code sha be submtted for approva to the
members through a referendum, .aed for the purpose as provded for under Art.es
183 and 129 of ths Code..raaw

34

"ART. 128. Voting Requirement for Registration. - In .ompan.e wth the referendum
as a votng pro.edure, the requred number of votes for regstraton wth the Authorty
sha be twenty per.ent (20%) of a members n good standng..raaw
"ART. 129. ocuments to be 5ubmitted for Registration with the Authority. - For
purposes of regstraton, ee.tr. .ooperatves sha submt the foowng
do.uments:.hanrobesvrtuaawbrary
"(a) Copy of the board resouton .ertfyng to the resut of the vote approved
through a referendum approvng the regstraton of the .ooperatve wth the
Authorty n .ompan.e wth Art.e 128;.raaw
"(b) Certfed .opy of the art.es of n.orporaton/.ooperaton and byaws as
requred by the Authorty;.raaw
"(.) Duy audted fnan.a statements for the past two (2) years;.raaw
"(d) Lst of names of n.umbent board of dre.tors and ther addresses
.ertfed by the board se.retary and attested by the .harperson;.raaw
"(e) Wthn sx (6) months from the regstraton, the treasurer sha submt a
sworn statement of the authorzed share .apta, the subs.rbed share .apta
of members and the amount of pad-up share .apta re.eved by the
treasurer; and.raaw
"(f) Bonds of a..ountabe off.ers..hanrobesvrtuaawbrary
"ART. 130. Registration Options of Electric Cooperatives. - Ee.tr. Cooperatves
regstered wth the Natona Ee.trf.aton Admnstraton (NEA) under Presdenta
De.ree No. 269, as amended wh.h opt not to regster wth the Authorty are aowed
to retan the word .ooperatve n ther regstered names: Provided, That they sha
not be entted to the benefts and prveges under ths Code..raaw
"ART. 131. Role of the Energy Regulatory Commission. - A rates and tarffs of ee.tr.
.ooperatves regstered under the Authorty sha be sub|e.t to the rues on app.aton
and approva of and by the Energy Reguatory Commsson for dstrbuton
uttes..raaw
"ART. 132. Effects of Registration with the Authority.
(1) Upon the effe.tvty of ths Code, ee.tr. .ooperatves that are duy
regstered wth the Authorty, and ssued a .ertf.ate of regstraton, sha no
onger be .overed by Presdenta De.ree No. 269, as amended by Presdenta
De.ree No. 1645: Provided, That ee.tr. .ooperatves regstered wth the
Authorty sha now be .overed by the provsons of ths Code as we as future
rues and ssuan.es of the Authorty: Provided, however, That the se.urty of
tenure and the .oe.tve barganng agreement between the .ooperatve
management and the empoyees sha be respe.ted, wth no dmnuton of ther
exstng saares, emouments, ranks and other benefts;.raaw

33

"(2) The ee.tr. .ooperatves regstered wth the Authorty wth exstng oans
obtaned from NEA after |une 26, 2001 sha .ontnue to observe the terms of
su.h oans unt fu payment or settement thereof;.raaw
"(3) Ex.ept as provded n the mmedatey pre.edng paragraph, the NEA sha
no onger exer.se reguatory or supervsory powers on ee.tr. .ooperatves
duy regstered wth the Authorty;.raaw
"(4) Ee.tr. .ooperatves regstered wth the Authorty are entted to
.ongressona ao.atons, grants, subsdares and other fnan.a assstan.e for
rura ee.trf.aton wh.h .an be .oursed through the Department of Energy, the
Authorty and/or o.a government unts. The ee.tr. .ooperatves regstered
under ths Code .an ava of the fnan.a serv.es and te.hn.a assstan.e
provded by the government fnan.a nsttutons and te.hn.a deveopment
agen.es on terms respe.tng ther ndependen.e as autonomous
.ooperatves;.raaw
"(5) A .ondoned oans, subsdes, grants and other assstan.e sha form part of
the donated .apta and funds of the ee.tr. .ooperatves and as su.h, t sha
not be sod, traded nor be dvded nto sharehodngs at any tme; these donated
.apta/fund sha be vauated for the soe purpose of determnng the equty
part.paton of the members: Provided, That n the .ase of dssouton of the
.ooperatve, sad donated .apta sha be sub|e.t to es.heat; and.raaw
"(6) Ee.tr. .ooperatves regstered and .onfrmed wth the Authorty under
Repub. A.t No. 6938 and Repub. A.t No. 6939 are hereby deemed regstered
under ths Code..raaw
"ART. 133. 5hare Capital in the Electric Cooperatives. - The ee.tr. .ooperatve sha
ssue and dstrbute share .ertf.ates under the name of ther members, takng nto
.onsderaton ther prevous equty .ontrbutons, the amortzaton .omponent through
the payments made, .apta bud-up and other .apta .ontrbutons..raaw
"ART. 134. Cancellation of Registration with the Authority. - The .an.eaton of the
regstraton of an ee.tr. .ooperatve sha be granted by the Authorty as provded
under Art.es 64 to 70 of ths Code..raaw
"The Authorty, n .onsutaton wth the .on.erned .ooperatve se.tor, sha ssue
approprate rues and reguatons pertanng to the provsons of ths
Chapter.".hanrobesvrtuaawbrary
Sec.19. Art.es 119, 120 and 121 of Chapter XVI on Ms.eaneous Provsons of the
same Code are hereby amended and sha now read, as
foows:.hanrobesvrtuaawbrary
CHAPTER XVlll
MlSCELLANEOUS PROVlSlONS.raaw

36

"ART. 135. Compliance With Other Laws. - The Labor Code and a other abor aws,
the So.a Se.urty A.t, the Med.a Care A.t, and a other so.a egsatons, and a
other aws and exe.utve orders sha appy to .ooperatves duy regstered under ths
Code..raaw
"ART. 136. Register of Cooperatives. - The Authorty sha estabsh a regster wh.h
sha .ontan a .hronoog.a entry of the name of every .ooperatve regstered or
dssoved under ths Code together wth the bas. nformaton requred for regstraton
or dssouton and any other nformaton .onsdered usefu. The Authorty sha pubsh
annuay a st of exstng .ooperatves, .ooperatves under dssouton and those
whose regstraton are .an.eed durng the year together wth su.h nformaton on
ea.h of them as may be pres.rbed n the rues and reguatons..raaw
"ART. 137. 5ettlement of isputes, Conciliation, and Mediation Proceedings. - Dsputes
among members, off.ers, dre.tors, and .ommttee members, and ntra-.ooperatve,
nter-.ooperatve, ntra-federaton or nter-federaton dsputes sha, as far as
pra.t.abe, be setted am.aby n a..ordan.e wth the .on.aton or medaton
me.hansms emboded n the byaws of .ooperatves and n su.h other app.abe
aws..raaw
"The .on.aton and medaton .ommttee of the .ooperatve sha fa.tate the
am.abe settement of ntra-.ooperatve dsputes and dsputes among members,
off.ers, dre.tors, and .ommttee members..raaw
"Shoud su.h .on.aton or medaton pro.eedng fa, the matter sha be setted
through vountary arbtraton: Provided, however, That before any party .an vady fe
a .ompant wth the Authorty for vountary arbtraton, t must frst se.ure a
.ertf.aton from ts .on.aton and medaton .ommttee and from ts .on.aton
and medaton .ommttee and from the .ooperatve unon or federaton to wh.h t
beongs that despte a efforts to sette the ssues, the same have faed..raaw
"The |ursd.ton of the vountary arbtrators sha be ex.usve and orgna and ther
de.sons sha be appeaabe to the Off.e of the Presdent. The Authorty sha ssue
and adopt the proper rues of pro.edure governng arbtraton as the prmary and
ex.usve mode for dspute resouton n a..ordan.e wth the Aternatve Dspute
Resouton A.t of 2004..raaw
"For ths purpose, the Authorty sha .onsttute a st of quafed vountary
arbtrators.".hanrobesvrtuaawbrary
Sec. 20. A new art.e s nserted n Chapter XVIII on the Ms.eaneous Provsons of
the same Code and sha read, as foows:.hanrobesvrtuaawbrary
"ART. 138. oint Congressional Oversight Committee on Cooperative (COCC). - There
s hereby .reated a |ont Congressona Oversght Commttee .omposed of the
Charman of the Senate Commttee on Cooperatves and the Charman of the House
Commttee on Cooperatves Deveopment, wth four (4) members ea.h from both
Houses. The sad members sha be duy apponted by the Senate Presdent and the
Speaker of the House of Representatves from the members of the respe.tve

37

.ommttee based on the proportona representaton of the partes or .oaton
theren..raaw
"The |ont Oversght Commttee sha revew and approve the mpementng rues and
reguatons of ths Code and montor ts proper mpementaton..raaw
"The annua approprate for the oversght .ommttee sha be .harged to the budget of
both Houses of Congress n the Genera Appropratons A.t
(GAA).".hanrobesvrtuaawbrary
Sec. 21. Art.e 122 s hereby deeted. Art.es 123, 124, 125, 126, 127, 128, 129 and
130 of Chapter XVII on Fna Provsons of ths Code are amended to read, as
foows:.hanrobesvrtuaawbrary
CHAPTER XlX
lNAL PROVlSlONS.raaw
"ART. 139. lmplementing Rules and Regulations. - The Authorty sha ssue rues and
reguatons to mpement those provsons of ths Code wh.h expressy .a for the
ssuan.e thereof. Ths paragraph sha not appy to those .ases wheren a spe.f.
provson of ths Code expressy desgnates part.uar government agen.es wh.h
sha ssue the reguatons .aed for by any provson of ths Code..raaw
"ART. 140. Penal Provisions. - The foowng a.ts or omssons affe.tng .ooperatves
are hereby prohbted:.hanrobesvrtuaawbrary
"(1) The use of the word .ooperatve by any person or of persons or
organzatons, uness duy regstered as a .ooperatve under ths Code ex.ept as
provded for under Art.e 130 hereof. In .ase of voaton, the ndvdua or
ndvduas .on.erned, or n the .ase of an organzaton, ts off.ers and dre.tors
sha, upon .onv.ton, ea.h suffer the penaty of mprsonment of not ess than
two (2) years nor more than fve (5) years and a fne not ex.eedng Twenty
thousand pesos (P20,000.00) or both at the ds.reton of the .ourt;.raaw
"The Authorty may motu propro, ntate .ompants for voatons of ths
provson..raaw
"(2) Any person who wfuy attempts n any manner to evade or defeat tax n
voaton of the provsons of Art.es 60 and 61 of ths Code sha n addton
thereof, be punshed by a fne of not ess than Thrty thousand pesos
(P30,000.00) but not more than One hundred thousand pesos (P100,000.00) and
suffer mprsonment of not ess than two (2) years but not more than four (4)
years: Provded, That the .onv.ton or a.qutta obtaned under ths Art.e sha
not be a bar to the fng of a .v sut for the .oe.ton of taxes;.raaw
"(3) Dre.t or ndre.t voaton or .r.umventon of the provsons of Art.es 60
and 61 of ths Code .ommttee by any pub. off.a or empoyee of any bureau,
off.e or agen.y of the government that deprves, dmnshes or n any manner
hnders or restr.ts any duy regstered .ooperatve from the fu en|oyment of

38

the exempton from the payment of the taxes, fees and .harges enumerated
theren, sha upon .onv.ton, suffer a penaty of not ess that one (1) year but
not more than fve (5) years mprsonment or a fne n the amount of not ess
than Fve thousand pesos (P5,000.00) or both at the ds.reton of the .ourt and
sha further be dsquafed to hod any other off.e;.raaw
"(4) Dre.t or ndre.t nterferen.e or nterventon by any pub. off.a or
empoyee nto the nterna affars of a .ooperatve of wh.h he s not a member,
su.h as, but not mted to, the foowng:.hanrobesvrtuaawbrary
"(a) Infuen.ng the ee.ton or appontment of off.ers, dre.tors, .ommttee
members and empoyees through pub. or prvate endorsement or .ampagn
for or aganst any person or group of persons;.raaw
"(b) Requrng pror .earan.es for any po.y or de.son wthn the
.ooperatve;.raaw
"(.) Requestng or demandng for the .reaton of postons or organzatona
unts, or re.ommendng any person for appontment, transfer, or remova
from hs poston; or.raaw
"(d) Any other a.ts nm.a or adverse to the autonomy and ndependen.e of
.ooperatves..hanrobesvrtuaawbrary
"(5) A dre.tor, off.er or .ommttee member who voated the provsons of
Art.e 45 on the Labty of Dre.tors, Off.ers and Commttee Members, Art.e
48 on the Dsoyaty of a Dre.tor, and Art.e 49 on the Iega Use of Confdenta
Informaton sha upon .onv.ton suffer a fne of not ess than Fve hundred
thousand pesos (P500,000.00) nor more than Fve hundred thousand pesos
(P500,000.00) or mprsonment of not ess than fve (5) years but not more than
ten (10) years or both at the .ourts ds.reton;.raaw
"(6) The foowng are .onsdered offenses punshabe by a penaty of
mprsonment of not ess than one (1) year nor more than fve (5) years or a fne
of not more than Ffty thousand pesos (P50,000.00) or both at the ds.reton of
the .ourt:.hanrobesvrtuaawbrary
"(a) Omsson or refusa to furnsh any nformaton, report or other do.ument
that s requred under ths Code;.raaw
"(b) Provdng nformaton, reports or other do.uments to the Authorty that
are requred under ths Code wh.h the person knows to be fase or
mseadng;.raaw
"(.) Omsson or refusa to keep a book or regster under ths Code or to make
the requred entry theren;.raaw
"(d) Makng an entry requred under ths Code n a book or regster, wh.h the
person knows to be fase or mseadng;.raaw

39

"(e) Hnderng an authorzed person from makng an nspe.ton, audt,
examnaton or nvestgaton requred under ths Code;.raaw
"(f) Faure to .ompy wth an order or wrtten nstru.tons ssued or gven by
the Authorty;.raaw
"(g) Voaton of the provsons regardng transa.tons wth a restr.ted party;
and.raaw
"(h) Abettng, .ounseng, aowng, authorzng or .ommandng another
person to .ommt an offense punshabe by ths Code: Provided, That n .ase
the voator s a .ooperatve or |urd.a person, the penaty sha be mposed
on ts dre.tors and off.ers..hanrobesvrtuaawbrary
"(7) Any voaton of any provson of ths Code for wh.h no penaty s mposed
sha be punshed by mprsonment of not ess than sx (6) months nor more than
one (1) year and a fne of not ess than One thousand pesos (P1,000.00), or both
at the ds.reton of the .ourt..hanrobesvrtuaawbrary
"In .ase of voaton of any provson of ths Code, the ndvdua or ndvduas, and n
the .ase of organzatons or government agen.es, ts off.ers, and dre.tors sha,
upon .onv.ton by a Court, ea.h suffer a penaty of not ess than two (2) years but not
more than fve (5) years mprsonment or a fne n the amount of not ess than Twenty
thousand pesos (P20,000.00), or both at the ds.reton of the .ourt. In the .ase of a
pub. off.a or empoyee, the offender sha upon .onv.ton, suffer the a..essory
penaty of temporary absoute dsquaf.aton..raaw
"ART. 141. Printing and istribution.
(1) The Natona Prntng Off.e sha pubsh ths Code n the Official azette n
fu wthn sxty (60) days from the date of approva thereof. Copes of ths Code
sha be gven to every department, agen.y and nstrumentaty of the Natona
Government, n.udng regona, provn.a off.es and o.a governments
n.udng government-owned and .ontroed .orporatons..raaw
"(2) A duy regstered .ooperatves and ther federatons, unons and
asso.atons, and .ooperatve .orporatons sha be gven one (1) .opy ea.h at
.ost. Thereafter, every newy regstered .ooperatve sha be ssued at .ost a
.opy of ths Code and the reguatons promugated thereon together wth ts
.ertf.ate of regstraton..raaw
"ART. 142. lnterpretation and Construction. - In .ase of doubt as to the meanng of
any provson of hs Code or the reguatons ssued n pursuan.e thereof, the same
sha be resoved beray n favor of the .ooperatves and ther members..raaw
"ART. 143. Repealing Clause. - Ex.ept as expressy provded by ths Code, Presdenta
De.ree No. 175 and a other aws, or parts thereof, n.onsstent wth any provson of
ths Code sha be deemed repeaed:Provided, That the provsons of Se..s 3, 5, and 7
of Presdenta De.ree No. 1645, Exe.utve Order No. 623, seres of 2007. Revenue

60

Reguaton No. 20-2001, and a aws, de.rees, exe.utve orders, mpementng rues
and reguatons, BIR .r.uars, memorandum orders, etters of nstru.ton, o.a
government ordnan.es, or parts thereof n.onsstent wth any of the provsons of ths
A.t are hereby repeaed, amended or modfed a..ordngy..raaw
"ART.144. %ransitory Provisions.
(1) A .ooperatves regstered and .onfrmed wth the Authorty under Repub.
A.t No. 6938 and Repub. A.t No. 6939, are hereby deemed regstered under
ths .ode, and a new .ertf.ate of regstraton sha be ssued by the
authorty: Provided, That su.h .ooperatve sha submt to the nearest off.e of
the authorty a .opy of ther .ertf.ate of regstraton or .ertf.ate of
.onfrmaton, the art.es of .ooperaton, ther byaws, and ther atest audted
fnan.a statement wthn one (1) year from the effe.tvty of ths .ode,
otherwse the sha be deemed .an.eed motu proprio..raaw
"(2) Foowng the ssuan.e of the new .ertf.ate of regstraton, the regstered
.ooperatves sha se.ured ther .ertf.ate of tax exempton from the nearest
off.e of the Bureau of Interna Revenue (BIR): Provided, That su.h exemptons
sha be vad of fve (5) years from the date of ssue: Provided, further, That a
unpad assessments of prevousy regstered .ooperatve sha be the sub|e.t of
.ompromse settement on terms favorabe to su.h .ooperatve;
and: Provided, finally, That the BIR and the authorty sha be |onty ssue the
ne.essary reguatons on ths exempton and .ompromse wthn nnety (90)
days from the effe.tvty from ths Code..raaw
"(3) Regstraton of ee.tr. .ooperatves wth the Authorty sha not be
.onsdered as a transferred of ownershp of ts assets and abtes nor sha t
.onsttute a .hange n the nature, stru.ture, and status of the .ooperatve. Sad
regstraton sha not resut n the revo.aton of the .ondoned oans under
Repub. A.t No. 9136, otherwse known as the Ee.tr. Power Industry Reform
A.t: Provided, That ee.tr. .ooperatves wth exstng oans sha not be sub|e.t
to the .ontro and supervsons of ts .redtors and sha ony be mted to the
fufment of ea.h .v obgatons..raaw
"ART.145. 5eparabilty Clause. - Shoud any part of ths .ode be de.ared
un.onsttutona, the vadty of remanng provson hereof sha reman n fu and
effe.t..raaw
"ART.146. Effectivity Clause. - Ths .ode sha take effe.t ffteen (15) days from ts
pub.aton n a newspaper of genera .r.uaton..hanrob
esvrtuaawbrary
Approved:.raaw
(Sgd.) PROSPERO C. NOGRALES
Speaker of the House of Representatves
(Sgd.) |UAN PONCE ENRILE
Presdent of the Senate

61

Ths A.t wh.h s a .onsodaton of Senate B No. 2264 and House B No. 4312 was fnay passed by the
Senate and the House of Representatves on De.ember 16, 2008..raaw
(Sgd.) MARILYN B. BARUA-YAP
Se.retary Genera
House of Represenatves
(Sgd.) EMMA LIRIO-REYES
Se.retary of Senate
55r4ve/ February J7, Z009
(Sgd.) GLORlA MACAPAGAL-ARROYO
President of the Philippines