Cooperative law of the Philippines is the enabling law for the Cooperatives in the Philippines

1. REPUBLIC ACT 9520
Republicof the Philippines
Congressof the Philippines
Metro Manila
FourteenthCongress
SecondRegularSession
Begunand heldinMetroManila,on Monday, the twenty-eighthdayof July,twothousandeight.
RepublicActNo.9520
February17, 2009
AN ACT AMENDING THE COOPERATIVECODEOF THE PHILIPPINESTOBE KNOWN AS THE "PHILIPPINE
COOPERATIVECODEOF 2008"
Be itenactedbythe Senate andHouse of Representativesof the PhilippinesinCongressassembled:
Section1. Articles1,2, 3, 4 and5 of Chapter1 on General ConceptsandPrinciplesof RepublicActNo.
6938, otherwise knownasthe "Cooperative Codeof the Philippines,"are herebyamendedtoreadas
follows:
CHAPTER I
GENERAL CONCEPTSANDPRINCIPLES
"ARTICLE 1. Title. - ThisAct shall be knownas the "PhilippineCooperativeCode of 2008".
"ART. 2. Declarationof Policy.- Itisthe declaredpolicyof the State tofosterthe creationandgrowth of
cooperativesasa practical vehicle forpromotingself-reliance andharnessingpeople powertowardsthe
attainmentof economicdevelopmentandsocial justice.The State shall encouragethe private sectorto
undertake the actual formationandorganizationof cooperativesandshall create anatmosphere thatis
conducive tothe growthand developmentof these cooperatives.
"Towardthisend,the Governmentandall itsbranches,subdivisions,instrumentalitiesandagencies
shall ensure the provisionof technical guidance,financial assistance andotherservicestoenable said
cooperativestodevelopintoviable andresponsiveeconomicenterprisesandtherebybringabouta
strongcooperative movementthatisfree fromanyconditionsthatmightinfringe uponthe autonomy
or organizational integrityof cooperatives.
"Further,the State recognizes the principle of subsidiarityunderwhichthe cooperativesectorwill
initiate andregulate withinitsownranksthe promotionandorganization,trainingandreserach,audit
and supportservicesrelative tocooperativeswithgovernmentassistance wherenecessary.
"ART. 3. General Concepts. - A cooperative isanautonomousanddulyregisteredassociationof persons,
witha commonbondof interest,whohave voluntarilyjoinedtogethertoachieve theirsocial,economic,
and cultural needsandaspirationsby makingequitablecontributionstothe capital required,patronizing
theirproductsand servicesandacceptingafairshare of the risksand benefitsof the undertakingin
accordance withuniversallyacceptedcooperative principles.

2. "ART. 4. Cooperative Principles. - Everycooperative shallconductitsaffairsinaccordance withFilipino
culture,goodvaluesandexperience andthe universallyacceptedprinciplesof cooperationwhich
include,butare notlimitedto,the following:
"(1) VoluntaryandOpenMembership - Cooperativesare voluntaryorganizations,opentoall persons
able to use theirservicesandwillingtoacceptthe responsibilitiesof membership,withoutgender,
social,racial,cultural,political orreligiousdiscrimination.
"(2) Democrative MemberControl - Cooperativesare democraticorganizationsthatare controlledby
theirmemberswhoactivelyparticipate insettingtheirpoliciesandmakingdecisions.Menandwomen
servingaselectedrepresentatives,directorsorofficersare accountable tothe membership.Inprimary
cooperatives,membershave equal votingrightsof one-member,one-vote.Cooperativesatotherlevels
are organizedinthe same democraticmanner.
"(3) MemberEconomicParticipation - Memberscontribute equitablyto,anddemocraticallycontrol,the
capital of theircooperatives.Atleastpartof that capital isthe commonpropertyof the cooperative.
Theyshall receive limitedcompensationorlimitedinterest,if any,oncapital subscribedandpaidasa
conditionof membership.Membersallocate surplusesforanyor all of the followingpurposes:
developingthe cooperative bysettingupreserves,partof whichshouldatleastbe indivisible;
benefittingmembersinproportiontotheirpartonage of the cooperative'sbubsiness;and,supporting
otheractivitiesapprovedbythe membership.
"(4) AutonomyandIndependence - Cooperativesare autonomous,self-helporganizationscontrolledby
theirmembers.If theyenterintoaggreementswithotherorganizations,includinggovernment,or raise
capital fromexternal sources,theyshall dosoontermsthat ensure democraticcontrol of their
membersandmaintaintheircooperative autonomy.
"(5) Education,TrainingandInformation - Cooperativesshall provide educationandtrainingfortheir
members,electedandappointedrepresentatives,managers,andemployees,sothattheycan
contribute effectivelyandefficientlytothe developmentof theircooperatives.
"(6) CooperationAmongCooperatives - Cooperativesserve theirmembersmosteffectivelyand
strengthenthe cooperativemovementbyworkingtogetherthroughlocal,national,regionaland
international structures.
(7) ConcernforCommunity - Cooperativesworkforthe sustainable developmentof theircommunities
throughpoliciesapprovedbytheirmembers.
"ART. 5. Definitionof Terms.The followingtermsshallmean:
"(1) Memberincludesapersoneithernatural orjuridical whoadheringtothe principlessetforthinthis
Code and inthe Articlesof Cooperative,hasbeenadmittedbythe cooperative asmember;
"(2) General Assemblyshallmeanthe full membershipof the cooperative dulyassembledforthe
purpose of exercisingall the rightsandperformingall the obligationspertainingtocooperatives,as
providedbythisCode,itsarticles of cooperationandbylaws:Provided,Thatforcooperativeswith
numerousanddispersedmembership,the general assemblymaybe composedof delegateselectedby
each sector,chapteror districtof the cooperative inaccordance withthe rulesandregulations of the
Cooperative DevelopmentAuthority;
"(3) Boardof Directorsshall meanthatbodyentrustedwiththe managementof the affairsof the

3. cooperative underitsarticlesof cooperationandbylaws;
"(4) Committee shallrefertoanybody entrustedwithspecificfunctionsandresponsibilitiesunderthe
bylawsorresolutionof the general assemblyorthe boardof directors;
"(5) Articlesof Cooperationmeansthe articlesof cooperationregisteredunderthisCode andincludesa
registeredamendmentthereof;
"(6) Bylawsmeansthe bylawsregisteredunderthisCode andincludesanyregisteredamendment
thereof;
"(7) Registrationmeansthe operativeactgrantingjuridical personalitytoaproposedcooperativeandis
evidencedbyacertificate of registration;
"(8) Cooperative DevelopmentAuthorityreferstothe governmentagencyincharge of the registration
and regulationof cooperativesassuchhereinafterreferredtosthe Authority;
"(9) UniversallyAcceptedPrinciplesmeansthatbodyof cooperative principlesadheredtoworldwide by
cooperatives;
"(10) Representative Assemblymeansthe full membershipof abodyof representativeselectedbyeach
of the sectors,chapteror districto the cooperative dulyassembledforthe purpose of exercisingsuch
powerslawfullydelegateduntothembythe general assemblyinaccordance withitsbylaws;
"(11) Officersof the Cooperativeshall include the membersof the boardof directors,membersof the
differentcommitteecreatedbythe general assembly,general manager orchief executiveofficer,
secretary,treasurerandmembersholdingotherpositionsasmaybe providedforintheirbylaws;
"(12) Social Auditisa procedure whereinthe cooperativeassessesitssocial impactandethical
performance vis-a-visitsstated mission,vision,goalsandcode of social responsibilityforcooperatives
to be establishedbythe Authorityinconsultationwiththe cooperative sector.Itenablesthe
cooperative todevelopaprocesswherebyitcanaccount for itssocial performance and evaluate its
impactin the communityandbe accountable foritsdecisionsandactionstoits regularmembers;
"(13) Performance Auditshall refertoanauditon the efficiencyandeffectivenessof the cooperativeas
a whole;itsmanagementandofficers;anditsvariousresponsibilitycentersasbasisforimproving
individualteamoroverall performanceandforobjectivelyinformingthe generalmembershiponsuch
performance;
"(14) A Single-Line orSingle-Purpose Cooperative shallinclude cooperativeundertakingactivitieswhich
are relatedtoitsmainline of businessorpurpose;
"(15) Service Cooperativesare those whichprovide anytype of service toitsmembers,includingbutnot
limitedto,transport,informationandcommunication,insurance,housing, electric,healthservices,
education,banking,andsavingsandcredit;
"(16) SubsidiaryCooperativereferstoanyorganizationall ormajorityof whose membershipor
shareholderscome fromacooperative,organizedforanyotherpurpose differentfromthatof,and
receivestechnical,managerial andfinancialassistancefrom, acooperative,inaccordance withthe rules
and regulationsof the Authority;"and

4. "(17) Federationof Cooperativesreferstothree ormore primarycooperatives,doingthe same line of
business,organizedatthe municipal,provincial,city,special metropolitanpolitical subdivision,or
economiczonescreatedbylaw,registeredwiththe Authoritytoundertake businessactivitiesinsupport
of itsmember-cooperatives."
Sec.2. Articles 6,7, 9, 10, 11, 12, 13, 14, 16, 17, 18, 20, 21, 23, 24 and 25 of ChapterIIon Organization
and Registrationof the same Code are herebyamendedtoreadasfollows:
CHAPTER II
ORGANIZATION ANDREGISTRATION
"ART. 6. Purposesof Cooperatives.A cooperative maybe organizedandregisteredforanyorall of the
followingpurposes:
"(1) To encourage thriftandsavingsmobilizationamongthe members;
"(2) To generate fundsandextendcredittothe membersforproductive andprovidentpurposes;
"(3) To encourage amongmemberssystematicproductionandmarketing;
"(4) To provide goodsandservicesandotherrequirementstothe members;
"(5) To developexpertiseandskillsamongitsmembers;
"(6) To acquire landsandprovide housingbenefitsforthe members;
"(7) To insure againstlossesof the members;
"(8) To promote andadvance the economic,social andeducational statusof the members;
"(9) To establish,own,lease oroperate cooperative banks,cooperative wholesale andretail complexes,
insurance and agricultural/industrial processingenterprises,andpublicmarkets;
"(10) To coordinate andfacilitate the activitiesof cooperatives;
"(11) To advocate for the cause of the cooperative movements;
"(12) To ensure the viabilityof cooperativesthroughthe utilizationof new technologies;
"(13) To encourage andpromote self-helporself-employmentasan engine foreconomicgrowthand
povertyalleviation;and
"(14) To undertake anyandall otheractivitiesforthe effective andefficientimplementationof the
provisionsof thisCode.
"ART. 7. ObjectivesandGoalsof a Cooperative.The primaryobjective of everycooperativeistohelp
improve the qualityof life of itsmembers.Towardsthisend,the cooperative shallaimto:
"(a) Provide goodsandservicestoitsmemberstoenable themtoattainincreasedincome,savings,
investments,productivity,andpurchasingpower,andpromote amongthemselvesequitable
distributionof netsurplusthroughmaximumutilizationof economiesof scale,cost-sharingandrisk-

5. sharing;
"(b) Provide optimumsocial andeconomicbenefitstoitsmembers;
"(c) Teach themefficientwaysof doingthingsinacooperative manner;
"(d) Propagate cooperative practicesandnew ideasinbusinessandmanagement;
"(e) Allowthe lowerincome andlessprivilegedgroupstoincrease theirownershipinthe wealthof the
nation;and
"(f) Cooperate withthe government,othercooperativesandpeople-orientedorganizationstofurther
the attainmentof anyof the foregoingobjectives.
"ART. 8. CooperativesNotinRestraintof Trade.Nocooperative ormethodoract thereof which
complieswiththisCode shall be deemedaconspiracyor combinationinrestraintof trade oran illegal
monopoly,oran attempttolessencompetitionorfix pricesarbitrarilyinviolationof anylawsof the
Philippines.
"ART. 9. Cooperative PowersandCapacities.A cooperative registeredunderthisCode shall have the
followingpowers,rightsandcapacities:
"(1) To the exclusiveuse of itsregisteredname,tosue andbe sued;
"(2) Of succession;
"(3) To amenditsarticlesof cooperationinaccordance withthe provisionsof thisCode;
"(4) To adoptbylawsnotcontrary to law,moralsor publicpolicy,andtoamendand repeal the same in
accordance withthisCode;
"(5) To purchase,receive,take orgrant,hold,convey,sell,lease,pledge,mortgage,andotherwisedeal
withsuchreal andpersonal propertyasthe transactionof the lawful affairsof the cooperativemay
reasonablyandnecessarilyrequire,subjecttothe limitationsprescribedbylaw andthe Constitution;
"(6) To enterintodivision,mergerorconsolidation,asprovidedinthisCode;
"(7) To formsubsidiarycooperativesandjoinfederationsorunions,asprovidedinthisCode;
"(8) To avail of loans,be entitledtocreditandtoaccept and receive grants,donationsandassistance
fromforeignanddomesticsources,subjecttothe conditionsof saidloans,credits,grants,donationsor
assistance thatwill notundermine the autonomyof the cooperative.The Authority,uponwritten
request,shall providenecessaryassistanceinthe documentaryrequirementsforthe loans,credit,
grants,donationsandotherfinancial support;
"(9) To avail of preferential rightsgrantedtocooperativesunderRepublicActNo.7160, otherwise
knownas the Local GovernmentCode,andotherlaws,particularlythose inthe grantof franchisesto
establish,construct,operate andmaintainferries,wharves,marketsorslaughterhousesandtolease
publicutilities,includingaccesstoextensionandon-site researchservicesandfacilitiesrelatedto
agriculture andfisheryactivities;

6. "(10) To organize andoperate schoolsinaccordance withRepublicActNo.9155, Governance of Basic
EducationAct of 2001 and otherpertinentlaws;and
"(11) To exercise suchotherpowersgrantedbythisCode ornecessarytocarry outits purpose or
purposesasstatedinits Articlesof cooperation.
"ART. 10. Organizinga PrimaryCooperative.Fifteen(15) or more natural personswhoare Filipino
citizens,of legal age,havingacommonbondof interestandare actuallyresidingorworkinginthe
intendedareaof operation,mayorganize aprimarycooperative underthisCode:Provided,Thata
prospective memberof aprimarycooperative musthave completedaPre-MembershipEducation
Seminar(PMES).
"Anynewlyorganizedprimarycooperativemaybe registeredasmultipurpose cooperativeonlyafter
compliance withthe minimumrequirementsformultipurpose cooperativestobe setbythe Authority.A
single-purposecooperative maytransformintoamultipurpose ormaycreate subsidiariesonlyafterat
leasttwo(2) yearsof operations.
"ART. 11. Economic Survey. - Everygroupof individualsorcooperativesintendingtoforma cooperative
underthisCode shall submittothe Authorityageneral statementdescribing,amongothersthe
structure and purposesof the proposedcooperative:Provided,Thatthe structure andactual staffing
patternof the cooperative shall includeabookkeeper;Provided,further,Thattheyshall not be allowed
to operate withoutthe necessarypersonnel andshall alsosubmitaneconomicsurvey,indicatingtherein
the area of operation,the size of membership,andotherpertinentdataina formatprovidedbythe
Authority.
"ART. 12. Liability.A cooperative dulyregisteredunderthisCode shall have limitedliability.
"ART. 13. Term. A cooperative shallexistforaperiodnotexceedingfifty(50) yearsfromthe date of
registrationunlesssoonerdissolve orunlesssaidperiodisextended.The cooperative term, asoriginally
statedinthe articlesof cooperation,maybe extendedforperiodsnotexceedingfifty(50) yearsinany
single instance byanamendmentof the articlesof cooperation,inaccordance withthisCode:Provided,
That no extensioncanbe made earlierthanfive (5) yearspriorto the original orsubsequentexpiry
date/datesunlessthere are justifiable reasonsforanearlierextensionasmaybe determinedbythe
Authority.
"ART. 14. Articlesof Cooperation.(1) All cooperativesapplying forregistrationshall file withthe
Authoritythe articlesof cooperationwhichshallbe signedbyeachof the organizersandacknowledged
by themif natural persons,andbythe chairpersonsorsecretaries,if juridical persons,before anotary
public.
"(2) The articlesof cooperationshall setforth:
"(a) The name of the cooperative whichshall include the wordcooperative;
"(b) The purpose or purposesandscope of businessforwhichthe cooperative istobe registered;
"(c) The termof existence of the cooperative;
"(d) The area of operationandthe postal addressesof itsprincipal office;
"(e) The names,nationality,andthe postal addressesof the registrants;

7. "(f) The commonbondof membership;
"(g) The listof namesof the directorswhoshall manage the cooperative;and
"(h) The amountof itsshare capital,the namesandresidencesof itscontributorsandastatementof
whetherthe cooperativeisprimary,secondaryortertiaryinaccordance withArticle 23 hereof.
"(3) The articlesof cooperationmayalsocontainanyotherprovisionsnotinconsistentwiththisCode or
any relatedlaw.
"(4) Four(4) copieseachof the proposedarticlesof cooperation,bylaws,andthe general statement
requiredunderArticle 11of thisCode shall be submitted tothe Authority.
"(5) Nocooperative,otherthanacooperative unionasdescribedunderArticle 25hereof,shall be
registeredunlessthe articlesof cooperationisaccompaniedwiththe bondsof the accountable officers
and a swornstatementsof the treasurerelectedbythe subscribersshowingthatatleasttwenty-five per
centum(25%) of the authorizedshare capital hasbeensubscribedandatleasttwenty-five percentum
(25%) of the total subscriptionhasbeenpaid:Provided,Thatinno case shall the paid-upshare capital be
lessthanFifteenthousandpesos(P15,000.00).
"The Authorityshall periodicallyassessthe requiredpaid-upshare capital andmayincrease iteveryfive
(5) yearswhennecessaryuponconsultationwiththe cooperativesectorandthe National Economicand
DevelopmentAuthority(NEDA).
"ART. 15. Bylaws.(1) Each cooperative tobe registeredunderthisCode shall adoptbylawsnot
inconsistentwiththe provisionsof thisCode.The bylawsshallbe filedatthe same time as the articles of
cooperation.
"(2) The bylawsof eachcooperative shall provide:
"(a) The qualificationsforadmissiontomembershipandthe paymenttobe made or interesttobe
acquiredas a conditionsforthe exerciseof the rightof membership;
"(b) The rightsand liabilitiesof membership;
"(c) The circumstancesunderwhichmembershipisacquired,maintainedandlost;
"(d) The procedure tobe followedincasesof terminationof membership;
"(e) The conditionsunderwhichthe transferof ashare or interestof the membersshall be permitted;
"(f) The rulesandproceduresonthe agenda,time,place andmannerof calling,convening,conducting
meetings,quorumrequirements,votingsystems,andothermattersrelative tothe businessaffairsof
the general assembly, boardof directors,andcommittees;
"(g) The general conductof the affairsof the cooperative,includingthe powersanddutiesof the general
assembly,the boardof directors,committeesandthe officers,andtheirqualificationsand
disqualifications;
"(h) The mannerin whichthe capital,maybe raisedand the purposesforwhichitcan be utilized;

8. "(i) The mode of custodyand of investmentof netsurplus;
"(j) The accountingand auditingsystems;
"(k) The mannerof loaningandborrowingincludingthe limitationsthereof;
"(l) The methodof distributionof netsurplus;
"(m) The mannerof adopting,amending,repealing,andabrogatingbylaws;
"(n) A conciliationormediationmechanismforthe amicable settlementof disputesamongmembers,
directors, officersandcommitteemembersof the cooperative;and
"(o) Othermattersincidenttothe purposesandactivitiesof the cooperative.
"ART. 16. Registration.A cooperative formedandorganizedunderthisCode acquiresjuridical
personalityfromthe date the Authorityissuesacertificate of registrationunderitsofficialseal.All
applicationsforregistrationshall be finallydisposedof bythe Authoritywithinaperiodof sixty(60) days
fromthe filingthereof,otherwise the applicationisdeemedapproved,unlessthe cause of the delayis
attributable tothe applicant:Provided,Thatincase of a denial of the applicationforregistration,an
appeal shall lie withthe Office of the Presidentwithinninety(90) daysfromreceiptof notice of such
denial:Provided,further,Thatfailure of the Office of the Presidenttoact on the appeal withinninety
(90) days fromthe filingthereof shall meanapproval of saidapplication.
"ART. 17. Certificate of Registration.A certificateof registrationissuedby the Authorityunderitsofficial
seal shall be conclusive evidence thatthe cooperativethereinmentionedisdulyregisteredunlessitis
provedthatthe registrationthereof hasbeencancelled.
"ART. 18. Amendmentof Articlesof CooperationandBylaws.UnlessotherwiseprescribedbythisCode
and forlegitimate purposes,anyprovisionormatterstatedinthe articlesof cooperationandbylaws
may be amendedbytwo-thirds(2/3) vote of all the memberswithvotingrights,withoutprejudice to
the right of the dissentingmemberstoexercise theirrighttowithdraw theirmembershipunderArticle
30.
Both the original andamendedarticlesand/orbylawsshall containall provisionsrequiredbylaw tobe
setout inthe articlesof cooperationandbylaws.Amendmentsshall be indicatedbyunderscoringor
otherwise appropriatelyindicatingthe change orchangesmade and a copy of the amendedarticlesor
amendedbylawsdulycertifiedunderoathbythe cooperative secretaryanda majorityof the directors
statingthe fact that saidamendmentoramendmentstothe articlesof cooperationand/orbylawshave
beendulyapprovedbythe requiredvote of the members.All amendmentstothe article of cooperation
and/orbylawsshall be submittedtothe Authority.The amendmentsshall take effectuponitsapproval
by the authorityor withinthirty(30) daysfromthe date of filingthereof if notacteduponbythe
Authorityfora cause not attributable tothe cooperative.
"ART. 19. Contracts ExecutedPriortoRegistrationandEffectsThereof.Contractsexecutedbetween
private personsandcooperativespriortothe registrationof the cooperative shallremainvalidand
bindingbetweenthe partiesanduponregistrationof the cooperative.A formal writtencontractshall be
adoptedandmade in the cooperative'sname oronits behalf priortoitsregistration.
"ART. 20. Divisionof Cooperatives.Anyregisteredcooperativemay,bya resolutionapprovedbyavote

9. of three-fourths(3/4) of all the memberswithvotingrights,presentand constitutingaquorum, resolve
to divide itself intothe two(2) ormore cooperatives.The procedure forsuchdivisionshall be prescribed
inthe regulationsof the Authority:Provided,Thatall the requirementssetforthinthisCode have been
compliedwithbythe newcooperatives:Provided,further,Thatnodivisionof acooperative infraudof
creditorsshall be valid.
"ART. 21. Merger and Consolidationof Cooperatives.(1) Two(2) or more cooperativesmaymerge intoa
single cooperative whichshalleitherbe one of the constituentcooperativesorthe consolidated
cooperative.
"(2) Nomergeror consolidationshallbe validunlessapprovedbyathree-fourths(3/4) vote of all the
memberswithvotingrights,presentandconstitutingaquorumof each of the constituentcooperatives
at separate general assemblymeetings.The dissentingmembersshall have the righttoexercise their
rightto withdrawtheirmembershippursuanttoArticle 30.
"(3) The Authorityshall issue the guidelinesgoverningthe procedure of mergerorconsolidationof
cooperatives.Inanycase,the mergeror consolidationof cooperatives.Inanycase,the mergeror
consolidationshall be effective uponthe issuanceof the certificate of mergerorconsolidationbythe
Authority.
"ART. 22. Effectsof Mergerand Consolidation.The mergerorconsolidationof cooperativesshall have
the followingeffects:
"(1) The constituentcooperativesshallbecomeasingle cooperative which,incase of merger,shall be
the survivingcooperative,and,in case of consolidation,shall be the consolidatedcooperative;
"(2) The separate existence of the constituentcooperativesshall cease,exceptthatof the survivingor
the consolidatedcooperative;
"(3) The survivingorthe consolidatedcooperativeshall possessal the assets,rights,privileges,
immunitiesandfranchisesof eachof the constituentcooperatives;
"(4) The survivingorthe consolidatedcooperativeshall possessall the assets,rights,privileges,
immunitiesandfranchisesof eachof the constituentcooperatives;and
"(5) The survivingorthe consolidatedcooperativeshall be responsible forall the liabilitiesand
obligationof eachof the constituentcooperativesinthe same mannerasif suchsurvivingor
consolidatedcooperativehaditselfincurredsuchliabilitiesorobligations.Anyclaim, actionor
proceedingpendingbyoragainstany suchconstituentcooperativesmaybe prosecutedbyoragainst
the survivingorconsolidatedcooperative,asthe case maybe.Neitherthe rightsof creditorsnorany
lienuponthe propertyof anysuch constituentcooperativesshall be impairedbysuchmergeror
consolidation.
"ART. 23. Type andCategoriesof Cooperatives.(1) Typesof CooperativesCooperativesmayfall under
any of the followingtypes:
"(a) CreditCooperative isone thatpromotesandundertakessavingsandlendingservicesamongits
members.Itgeneratesacommonpool of fundsinorderto provide financial assistance toitsmembers
for productive andprovidentpurposes;
"(b) ConsumersCooperative isone of the primarypurpose of whichistoprocure and distribute

10. commoditiestomembersandnon-members;
"(c) ProducersCooperative isone thatundertakesjointproductionwhetheragricultural orindustrial.It
isformedand operatedbyitsmemberstoundertake the productionandprocessingof raw materialsor
goodsproducedbyits membersintofinishedorprocessedproductsforsale bythe cooperative toits
membersandnon-members.Anyendproductoritsderivative arisingfromthe raw materialsproduced
by itsmembers,soldinthe name andfor the account of the cooperative,shall be deemedaproductof
the cooperative anditsmembers;
"(d) MarketingCooperative isone whichengagesinthe supplyof productioninputstomembersand
marketstheirproducts;
"(e) Service Cooperativeisone whichengagesinmedical anddental care,hospitalization,
transportation,insurance,housing,labor,electriclightandpower,communication,professional and
otherservices;
"(f) Multipurpose Cooperative is one whichcombinestwo(2) ormore of the businessactivitiesof these
differenttypesof cooperatives;
"(g) AdvocacyCooperative isaprimarycooperative whichpromotesandadvocatescooperativism
amongits membersandthe publicthroughsocially-orientedprojects,educationandtraining,research
and communication,andothersimilaractivitiestoreachoutto its intendedbeneficiaries;
"(h) AgrarianReformCooperative isone organizedbymarginal farmersmajorityof whichare agrarian
reformbeneficiariesforthe purpose of developinganappropriate systemof landtenure,land
development,landconsolidationorlandmanagementinareascoveredbyagrarianreform;
"(i) CooperativeBankisone organizedforthe primarypurpose of providingawide range of financial
servicestocooperativesandtheirmembers;
"(j) DairyCooperative isone whose membersare engagedinthe productionof freshmilkwhichmaybe
processedand/ormarketedasdairyproducts;
"(k) EducationCooperative isone organizedforthe primarypurpose of owningandoperatinglicensed
educational institutionsnotwithstandingthe provisionsof RepublicActNo.9155, otherwise knownas
the Governance of Basic EducationAct of 2001;
"(l) ElectricCooperativeisone organizedforthe primarypurposedof undertakingpowergenerations,
utilizingrenewableenergysources,includinghybridsystems,acquisitionandoperationof
subtransmissionordistributiontoitshouseholdmembers;
"(m) Financial Service Cooperative isone organizedforthe primarypurpose of engaginginsavingsand
creditservicesandotherfinancial services;
"(n) FishermenCooperative isone organizedbymarginalizedfishermeninlocalitieswhose productsare
marketedeitherasfreshorprocessedproducts;
"(o) HealthServicesCooperativeisone organizedforthe primarypurpose of providingmedical,dental
and otherhealthservices;
"(p) HousingCooperativeisone organizedtoassistorprovide accesstohousingforthe benefitof its

11. regularmemberswhoactivelyparticipate inthe savingsprogramforhousing.Itisco-ownedand
controlledbyitsmembers;
"(q) Insurance Cooperativeisone engagedinthe businessof insuringlifeandpovertyof cooperatives
and theirmembers;
"(r) Transport Cooperative isone whichincludeslandandseatransportation,limitedtosmall vessels,as
definedorclassifiedunderthe Philippinemaritimelaws,organizedunderthe provisionsof thisCode;
"(s) Water Service Cooperative isone organizedtoown,operate andmanage waterssystems forthe
provisionanddistributionof potablewaterforitsmembersandtheirhouseholds;
"(t) WorkersCooperative isone organizedbyworkers,includingthe self-employed,whoare atsame
time the membersandownersof the enterprise.Itsprincipal purposeistoprovide employmentand
businessopportunitiestoitsmembersandmanage itinaccordance withcooperative principles;and
"(u) Othertypesof cooperative asmaybe determinedbythe Authority.
"(2) Categoriesof Cooperative Cooperativesshall be categorizedaccordingtomembershipand
territorial considerationsasfollows:
"(a) In termsof membership,cooperativeshall be categorizedinto:
"(i) PrimaryThe membersof whichare natural persons;
"(ii) SecondaryThe membersof whichare primaries;and
"(iii) TertiaryThe membersof whichare secondarycooperatives;and
"(b) In termsof territory,cooperativesshall be categorizedaccordingtoareasof operationswhichmay
or may not coincide withthe political subdivisionsof the country.
"ART. 24. Functionsof a Federationof Cooperatives.A federationof cooperativesshall undertakethe
followingfunctions:
"(a) To carry on anycooperative enterpriseauthorizedunderArticle6that complementsaugments,or
supplementsbutdoesnotconflict,complete with,norsupplantthe businessoreconomicactivitiesof its
members;
"(b) To carry on, encourage,andassisteducational andadvisoryworkrelatingtoitsmember
cooperatives;
"(c) To renderservicesdesignedtoencourage simplicity,efficiency,andeconomyinthe conductof the
businessof itsmembercooperativesandtofacilitate the implementationof theirbookkeeping,
accounting,andothersystemsandprocedures;
"(d) To print,publish,andcirculate anynewspaperorotherpublicationinthe interestof itsmember
cooperativesandenterprises;
"(e) To coordinate andfacilitate the activitiesof itsmembercooperatives;

12. "(f) To enterintojointventureswithnational orinternational cooperativesof othercountriesinthe
manufacture andsale of productsand/or servicesinthe Philippinesandabroad;and
"(g) To performsuchotherfunctionsasmay be necessaryto attainitsobjectives.
"A federationof cooperativesmaybe registeredbycarryingoutthe formalitiesforregistrationof a
cooperative.
"Registeredcooperativesmayorganize afederationaccordingtothe type of businessactivityengagedin
by the cooperatives.
"ART. 25. Cooperative Unions.Registeredcooperativesandfederationsatthe appropriate levelsmay
organize orjoincooperative unionstorepresentthe interestandwelfareof all typesof cooperativesat
the provincial,city,regional,andnational levels.Cooperative unionsmayhave the followingpurposes:
"(a) To representitsmemberorganizations;
"(b) To acquire, analyze,anddisseminate,economic,statistical,andotherinformationrelatingtoits
membersandto all typesof cooperativeswithinitsareaof operation;
"(c) To sponsorstudiesinthe economic,legal,financial,social andotherphasesof cooperation,and
publishthe resultsthereof;
"(d) To promote the knowledgeof cooperativeprinciplesandpractices;
"(e) To developthe cooperativemovementintheirrespective jurisdictions;
"(f) To advise the appropriate authoritiesonall questionsrelatingto cooperatives;
"(g) To raise fundsthroughmembershipfees,duesandcontributions,donations,andsubsidiesfrom
local and foreignsourceswhetherprivate orgovernment;and
"(h) To do and performsuchothernon-businessactivitiesasmaybe necessarytoattainthe foregoing
objectives.
"Cooperative unionsmayassistthe national andlocal governmentsinthe latter'sdevelopmentactivities
intheirrespective jurisdictions."
Sec.3. Articles26,27, 28, 29, 30, 31 and 32 of ChapterIII on Membershipof the same Code are hereby
renumberedandamendedtoread,asfollows:
CHAPTER III
MEMBERSHIP
"ART. 26. Kindsof Membership.A cooperative mayhave two(2) kindsof members,towit:(1) regular
membersand(2) associate members.
"A regularmemberisone whohascompliedwithall the membershiprequirementsandentitledtoall
the rightsand privilegesof membership.Anassociate memberisone whohasno rightto vote nor be
voteduponand shall be entitledonlytosuchrightsand privilegesasthe bylaws mayprovide:Provided,
That an associate whomeetsthe minimumrequirementsof regularmembership,continuestopatronize

13. the cooperative fortwo(2) years,and signifieshis/herintentiontoremainamembershall be
consideredaregularmember.
"A cooperative organizedbyminorsshall be consideredalaboratorycooperative andmustbe affiliated
witha registeredcooperative.A laboratorycooperativeshall be governedbyspecialguidelinestobe
promulgatedbythe Authority.
"ART. 27. GovernmentOfficers andEmployees.(1) Anyofficeroremployee of the Authorityshall be
disqualifiedtobe electedorappointedtoanypositioninacooperative:Provided,Thatthe
disqualificationdoesnotextendtoa cooperative organizedbythe officersoremployeesof the
Authority.
"(2) All elective officialsof the Governmentshall be ineligibletobecome officersanddirectorsof
cooperatives:Provided,Thatthe disqualificationdoesnotextendtoaparty listrepresentativebeingan
officerof a cooperative he orshe represents;and
"(3) Anygovernmentemployeeorofficial may,inthe discharge of isdutiesasa memberinthe
cooperative,be allowedbythe endof office concernedtouse official timeforattendance atthe general
assembly,boardandcommittee meetingsof cooperativesaswell ascooperativeseminars,conferences,
workshops,technical meetings,andtrainingcourseslocallyorabroad:Provided,Thatthe operationsof
the office concernedare notadverselyaffected.
"ART. 28. Application.Anapplicantformembershipshall be deemedamemberafterapproval of his
membershipbythe boardof directorsandshall exercise the rightsof memberafterhavingmade such
paymentstothe cooperative inrespecttomembershiporacquiredinterestinthe cooperative as may
be prescribedinthe bylaws.Incase membershipisrefusedordeniedbythe boardof directors,an
appeal maybe made to the general assemblyandthe latter'sdecisionshallbe final.Forthispurpose,
the general assemblymayopttocreate an appeal and grievance committee,the membersof which
shall serve fora periodof one (1) year and shall decide appealsonmembershipapplicationwithinthirty
(30) days uponreceiptthereof.If the committee failstodecide withinthe prescribedperiod,the appeal
isdeemedapprovedinfavorof the applicant.
"ART. 29. Liabilityof Members.A membershall be liable forthe debtsof the cooperative tothe extent
of hiscontributiontothe share capital of the cooperative.
"ART. 30. Terminationof Membership.(1) A memberof acooperative may,foranyvalidreason,
withdrawhismembershipfromthe cooperative bygivingasixty(60) daynotice to the board of
directors.Subjecttothe bylawsof the cooperative,the withdrawingmembershall be entitledtoa
refundof hisshare capital contributionandall otherinterestsinthe cooperative:Provided,Thatsuch
fundshall notbe made if uponsuch paymentthe value of the assetsof the cooperative wouldbe less
than the aggregate amountof its debtsandliabilitiesexclusive of hisshare capital contribution.
"(2) The deathor insanityof a memberina primarycooperative,andthe insolvencyordissolutionof a
memberina secondaryor tertiarycooperative maybe consideredvalidgroundsforterminationof
membership:Provided,Thatincase of deathor insanityof anagrarian reformbeneficiary-memberof a
cooperative,the next-of-kinmayassume the dutiesandresponsibilitiesof the original member
"(3) Membershipinthe cooperative maybe terminatedbya vote of the majorityof all the membersof
the board of directorsfor anyof the followingcauses:
"(a) Whena memberhasnotpatronizedanyof the servicesof the cooperative foranunreasonable

14. periodof time as maybe previouslydeterminedbythe boardof directors;
"(b) Whena memberhascontinuouslyfailedtocomplywithhisobligations;
"(c) Whena memberhasactedin violationof the bylawsandthe rulesof the cooperative;and
"(d) For anyact or omissioninjuriousorprejudicial tothe interestorthe welfare of the cooperative.
"A memberwhose membershipthe boardof directorsmaywishtoterminate shall be informedof such
intendedactioninwritingandshall be givenanopportunitytobe heardbefore the saidboardmakesits
decision.The decisionof the boardshall be inwritingandshall be communicatedinpersonorby
registeredmail tosaidmemberandshall be appealable withinthirty(30) daysfromreceiptthereof to
the general assemblywhosedecisionshall be final.The general assemblymaycreate anappeal and
grievance committeewhose membersshall serve foraperiodof one (1) yearand shall decide appeals
on membershiptermination.The committeeisgiventhirty(30) daysfromreceiptthereof todecide on
the appeal.Failure todecide withinthe prescribedperiod,the appeal isdeemedapprovedinfavorof
the member.Pendingadecisionbythe generalassembly,the membershipremainsinforce.
"ART. 31. Refundof Interests.All sumscomputedinaccordance withthe bylawstobe due froma
cooperative toa formermembershall be paidtohimeitherbythe cooperative orbythe approved
transferee,asthe case may be,inaccordance withthisCode."
Sec.4. Articles33,34, 35, 36, 37, 38, 39, 40, 42, 42, 43, 44, 45, 46, 47, 48, 49, 50 and 51 of ChapterIV on
Administrationof the same Code are herebyrenumberedandamendedtoread,as follows:
CHAPTER IV
ADMINISTRATION
"ART. 32. Compositionof the General Assembly.The general assemblyshall be composedof such
memberswhoare entitledtovote under the articlesof cooperationandbylawsof the cooperative.
"ART. 32. Powersof the General Assembly.The general assemblyshallbe composedof suchmembers
whoare entitledtovote underthe articlesof cooperationandbylawsof the cooperative.
"ART. 33. Powersof the General Assembly.The general assemblyshallbe the highestpolicy-making
bodyof the cooperative andshall exercise suchpowersasare statedin thisCode,inthe articlesof
cooperationandinthe bylawsof the cooperative.The general assemblyshall have the following
exclusivepowerswhichcannotbe delegate:
"(1) To determine andapprove amendmentstothe articlesof cooperationandbylaws;
"(2) To electorappointthe membersof the boardof directors,andto remove themforcause.However,
inthe case of the electriccooperativesregisteredunderthisCode,electionof the membersof the board
shall be heldinaccordance withitsbylawsor electionguideline of suchelectriccooperative;and
"(3) To approve developmentalplansof the cooperative.
"Subjecttosuch otherprovisionsof thisCode andonlyforpurposesof promptandintelligentdecision-
making,the general assemblymaybe a three-fourths(3/4) vote of all itsmemberswithvotingrights,
presentandconstitutingaquorum, delegate someof itspowerstoa smallerbodyof the cooperative.
These powersshall be enumeratedunderthe bylawsof the cooperative.

15. "ART. 34. Meetings.(1) A regularmeetingshall be heldannuallybythe general assemblyonadate fixed
inthe bylaws,orif not sofixed,onanydatedwithinninety(90) daysafterthe close of each fiscal year:
Provided,Thatnotice of regularmeetingsshall be sentinwriting,bypostingorpublication,orthrough
otherelectronicmeanstoall membersof record.
"(2) Whenevernecessary,aspecial meetingof the general assemblymaybe calledatanytime by a
majorityvote of the board of directorsor as providedforinthe bylaws:Provided,Thata notice in
writingshall be sentone (1) weekpriortothe meetingtoall memberswhoare entitledtovote.
However,aspecial meetingshall be calledbythe boardof directorsaftercompliance withthe required
notice withinfromatleasttenpercentum(10%) of the total memberswhore entitledtovote to
transact specificbusinesscoveredbythe call.
"If the boardfailsto call a regularor a special meetingwithinthe givenperiod,the Authority,upon
petitionof tenpercentum(10%) of all the membersof the cooperative whoare entitledtovote,andfor
goodcause shown, shall issue anordertothe petitionersdirectingthemtocall ameetingof the general
assemblybygivingpropernotice asrequiredinthisCode orinthe bylaws;
"(3) Inthe case of a newlyapprovedcooperative,aspecial general assemblyshall be called,asfaras
practicable,withinninety(90) daysfromsuchapproval;
"(4) The Authoritymaycall a special meetingof the cooperative forthe purpose of reportingtothe
membersthe resultof anyexaminationorotherinvestigationof the cooperative affairs;and
"(5) Notice of anymeetingmaybe waived,expresslyorimpliedly,byanymember.
"ART. 35. Quorum.A quorumshall consistof at leasttwenty-fivepercentum(25%) of all the members
entitledtovote.Inthe case of cooperative banks,the quorum shall be asprovidedinArticle 99of this
Code.Inthe case of electriccooperativesregisteredunderthisCode,aquorum, unlessotherwise
providedinthe bylaws,shall consistof five percentum(5%) of all the membersentitledtovote.
"ART. 36. VotingSystem.Eachmemberof a primarycooperative shall have onlyone (1) vote.Inthe case
of membersof secondaryortertiarycooperatives,theyshall have one (1) basicvote andasmany
incentive votesasprovidedforinthe bylawsbutnotexceedfive (5) votes.The votescastbythe
delegatesshallbe deemedasvotescastby the membersthereof.
"However,the bylawsof acooperative otherthanaprimary mayprovide forvotingbyproxy.Votingby
proxymeansallowingadelegateof acooperative torepresentorvote inbehalf of anotherdelegateof
the same cooperative.
"ART. 37. CompositionandTermof the Board of Directors.Unlessotherwise providedinthe bylaws,the
directionandmanagementof the affairsof acooperative shall be vestedinaboard of directorswhich
shall be composedof notlessthat five (5) normore than fifteen(15) memberselectedbythe general
assemblyfora termof two (2) yearsandshall holdoffice until theirsuccessorsare dulyelectedan
qualified,oruntil dulyremovedforcaused.
"ART. 38. Powersof the Board of Directors.The board of directorsshall be responsible forthe strategic
planning,direction-settingandpolicy-formulationactivitiesof the cooperatives.
"ART. 39. Directors.(1) Anymemberof a cooperative whounderthe bylawsof the cooperative,hasthe
rightto vote and whopossessesall the qualificationsandnone of the disqualificationsprovidedinthe

16. lawsor bylawsshall be eligibleforelectionasdirector.
"(2) The cooperative may,byresolutionof itsboardof directors,admitas directors,orcommittee
memberone appointedbyanyfinancinginstitutionfromwhichthe cooperativereceivedfinancial
assistance solelytoprovidetechnical knowledge notavailable withinitsmembership.Suchdirectoror
committee membernotbe a memberof the cooperative andshall have nopowers,rights,nor
responsibilitiesexcepttoprovidedtechnical assistance asrequiredbythe cooperative.
"(3) The membersof the boardof directorsshall notholdanyotherposition directlyinvolvedinthe day
to day operationandmanagementof the cooperative.
"(4) Anypersonengagedinabusinesssimilartothatof the cooperative orwhoinany way hasa conflict
of interestwithit,isdisqualifiedfromelectionasa directorof saidcooperative.
"ART. 40. Meetingof the Boardand QuorumRequirement.(1) Inthe case of primarycooperatives,
regularmeetingsof the boardof directorsshall be heldatleastonce a month.
"(2) Special meetingsof the boardof directorsmaybe held at any time uponthe call of the chairperson
or a majorityof the membersof the board:Provided,Thatwrittennoticesof the meetingspecifyingthe
agendaof the special meetingshall be giventoall membersof the boardat leastone (1) weekbefore
the saidmeeting.
"(3) A majorityof the membersof the Board shall constitute aquorumor the conduct of business,
unlessthe bylawsprovedotherwise.
"(4) Directorscannotattendor vote by proxyat boardmeetings.
"ART. 41. Vacancy inthe Boardof Directors.Anyvacancyin the board of directors,otherthanby
expirationof term,maybe filledbythe vote of at leasta majorityof the remainingdirectors,if still
constitutingaquorum;otherwise,the vacancymustbe filledbythe general assemblyinaregularor
special meetingcalledforthe purpose.A directorsoelectedtofillavacancy shall serve onlythe
unexpiredtermof hispredecessorinoffice.
"ART. 42. Officersof the Cooperative.The boardof directorsshall electfromamongthemselvesthe
chairpersonandvice-chairperson,andelectorappointotherofficersof the cooperativefromoutside of
the board inaccordance withtheirbylaws.All officersshall serve duringgoodbehaviorandshall notbe
removedexceptforcause afterdue hearing.Lossof confidence shall notbe avalidgroundfor removal
unlessevidencedbyactsor omissioncausinglossof confidenceinthe honestyandintegrityof such
officer.Notwo(2) or more personswithrelationshipsuptothe thirdcivil degree of consanguinityor
affinitynorshall anypersonengagedinabusinesssimilartothatof the cooperative norwhoinany
othermannerhas interestsinconflictwiththe cooperativeshall serveasanappointive officer.
"ART. 43. Committeesof Cooperatives.(1) The bylawsmaycreate an executive committee tobe
appointedbythe boardof directorswithsuchpowersanddutiesasmay be delegatedtoitinthe bylaws
or by a majorityvote of all the membersof the board of directors.
"(2) The bylawsshall provide forthe creationof anaudit,election,mediationandconciliation,ethics,
and suchother committeesasmaybe necessaryforthe conductof the affairsof the cooperative.The
membersof boththe auditand electioncommittee shall be electedbythe general assemblyandthe
restshall be appointedbythe board.The audit committee shall be directlyaccountable andresponsible
to the general assembly.Itshall have the poweranddutyto continuouslymonitorthe adequacyand

17. effectivenessof the cooperative'smanagementcontrol systemandauditthe performance of the
cooperative anditsvariousresponsibilitycenters.
"Unlessotherwiseprovidedinthe bylaws,the board,incase of a vacancy inthe committees,maycall an
electiontofill the vacancyorappointa personto fill the same subjecttothe provisionthatthe person
electedorappointedshall serve onlyforthe unexpiredportionof the term.
"ART. 44. Functions,ResponsibilitiesandTrainingRequirementsof Directors,OfficersandCommittee
Members.the functionsandresponsibilitiesof directors,officersandcommittee members,aswellas
theirtrainingrequirements,shall be inaccordance withthe rulesandregulationsissuedbythe
Authority.
"ART. 45. Liabilityof Directors,OfficersandCommitteeMembers.Directors,officersandcommittee
members,whoare willfullyandknowinglyvote fororassenttopatentlyunlawfulactsor whoare guilty
of grossnegligenceorbadfaithin directingthe affairsof the cooperativeoracquire anypersonal or
pecuniaryinterestinconflictwiththeirdutyassuchdirectors,officersorcommittee membersshall be
liable jointlyandseverallyforall damagesorprofitsresultingtherefromtothe cooperative,members,
and otherpersons.
"Whena director,officerorcommittee memberattemptstoacquire oracquires,inviolationof hisduty,
any interestorequityadverse tothe cooperativeinrespecttoanymatterwhichhas beenreposedin
himin confidence,he shall,asatrustee forthe cooperative,be liablefordamagesandshall be
accountable fordouble the profitswhichotherwisewouldhave accruedtothe cooperative.
"ART. 46. Compensation.(1) Inthe absence of anyprovisionsinthe bylawsfixingtheircompensation,
the directorsshall notreceive anycompensationexceptforreasonable perdiems:Providedhowever,
That the directorsand officersshall notbe entitledtoanyperdiemwhen,inthe precedingcalendar
year,the cooperative reportedanetlossor hada dividendrate lessthanthe official inflationrate for
the same year.Any compensationotherthanperdiemsmaybe grantedto directorsbya majorityvote
of the memberswithvotingrightsata regularor special general assemblymeetingspecificallycalledfor
the purpose:Provided,Thatnoadditional compensationotherthanperdiemsshall be paidduringthe
firstyearof existenceof anycooperative.
"(2) The compensationof officersof the cooperative aswell asthe membersof the committee aswell as
the membersof the committeescreatedpursuanttothis Code oritsbylawsmaybe fixedinthe bylaws.
"(3) Unlessalreadyfixedinthe bylaws,the compensationof all otheremployeeshall be determinedby
the board of directors.
"ART. 47. Dealingsof Directors,Officers,orCommittee Members.A contractenteredintobythe
cooperative withone (1) ormore of itsdirectors,officers,andcommittee membersisvoidable,atthe
optionof the cooperative,unlessall the followingconditionsare present.
"(1) That the presence of suchdirectorinthe board meetingwhereincontractwasapprovedwasnot
necessarytoconstitute aquorumfor such meeting;
"(2) That the vote of such directorwasnot necessaryforthe approval of the contract;
"(3) That the contract isfair and reasonable underthe circumstances;and
"(4) That inthe case of an officeror committee member,the contractwiththe officerorcommittee

18. memberhasbeenpreviouslyauthorizedbythe general assemblyorbythe board of directors.
"Where anyof the firsttwo conditionssetforthinthe precedingparagraphisabsent,inthe case of a
contract witha director,suchcontract maybe ratifiedbyathree-fourths(3/4) vote of all the members
withvotingrights,presentandconstitutingaquorumina meetingcalledforthe purpose:Provided,
That full disclosure of the adverse interestof the directorsinvolvedismade atsuch meeting,andthat
the contract is fairand reasonable underthe circumstances.
"ART. 48. Disloyaltyof aDirector.A directorwho,byvirtue of hisoffice,acquiresforhimself an
opportunitywhichshouldbelongtothe cooperativeshall be liable fordamagesandmustaccountfor
double the profitsthatotherwisewouldhave accruedtothe cooperative byrefundingthe same,unless
hisact hasbeenratifiedbyathree-fourths(3/4) vote of all the memberswithvotingrights,presentand
constitutingaquorum.Thisprovisionshall be applicable,notwithstandingthe factthatthe directorused
hisownfundsinthe venture.
"ART. 49. Illegal Use of Confidential Information.(1) A directoror officer,oranassociate of a directoror
officer,who,forhisbenefitoradvantage orthat of an associate,makesuse of confidentialinformation
that, if generallyknown,mightreasonablybe expectedtoadverselyaffectthe operationandviabilityof
the cooperative,shall be held:
"(a) Liable tocompensate the cooperative forthe directlossessufferedbythe cooperative asaresultof
the illegal use of information;and
"(b) Accountable tothe cooperative foranydirectbenefitoradvantage receivedoryetto be receivedby
himor hisassociate,as a resultof the transaction.
"(2) The cooperative shall take the necessarystepstoenforce the liabilitiesdescribedinsubsection(a)
"ART. 50. Removal.All complaintsforthe removal of anyelectedofficershall be filedwiththe boardof
directors.Suchofficershall be giventhe opportunitytobe heard.Majorityof the board of directorsmay
place the officerconcernedunderpreventive suspensionpendingthe resolutionof the investigation.
Upon findingof aprima facie evidence of guilt,the boardshall presentitsrecommendationforremoval
to the general assembly.
"Anelective officermaybe removedbythree fourths(3/4) votesof the regularmemberspresentand
constitutingaquorum,ina regularor special general assemblymeetingcalledforthe purpose.The
officerconcernedshall be givenanopportunitytobe heardat saidassembly.
Sec.5. Articles52,53, 54, 55, 56, 57, 58, 59, 60, 61, 62 and 63 of ChapterV on Responsibilities,Rights
and Privilegesof Cooperativesof the same Code are herebyrenumberedandamendedtoread,as
follows:
CHAPTER V
RESPONSIBILITIES,RIGHTSANDPRIVILEGESOF COOPERATIVE
"ART. 51. Address.Everycooperative shallhave anofficial postal addresstowhich all noticesand
communicationsshall be sent.Suchaddressandeverychange thereof shall be registeredwiththe
Authority.
"ART. 52. Books to be KeptOpen.(1) Everycooperative shall have the followingdocumentsreadyand
accessible toitsmembersand representativesof the Authorityforinspectionduringreasonableoffice

19. hoursat itsofficial address:
"(a) A copy of thisCode and all otherlawspertainingtocooperatives;
"(b) A copyof the regulationsof the Authority;
"(c) A copy of the articles of cooperationandbylawsof the cooperative;
"(d) A registerof members;
"(e) The booksof the minutesof the meetingsof the general assembly,boardof directorsand
committee;
"(f) Share books,where applicable;
"(g) Financial statement;and
"(h) Suchother documentsasmaybe prescribedbylawsorthe bylaws.
"(2) The accountantor the bookkeeperof the cooperative shall be responsible forthe maintenance of
the cooperative inaccordance withgenerallyacceptedaccountingpractices.He shall also be responsible
for the productionof the same at the time of auditor inspection.
"The auditcommittee shall be responsible forthe continuousandperiodicreview of the booksand
recordsof account to ensure thatthese are inaccordance withgenerallyacceptedaccountingpractices.
He shall alsobe responsible forthe productionof the same atthe time of auditor inspection.
"(3) Each cooperative shall maintainrecordsof accountssuchthat the true andcorrect conditionand
the resultsof the operation of the cooperative maybe ascertainedtherefromatanytime.The financial
statements,auditedaccordingtogenerallyacceptedauditingstandards,principlesandpractices,shall
be publishedannuallyandshall be keptpostedinaconspicuousplace inthe principal office of the
cooperative.
"(4) Subjecttothe pertinentprovisionsof the NationalInternal Revenue Code andotherlaws,a
cooperative maydispose bywayof burningorothermethodof complete destructionanydocument,
record or bookpertainingtoitsfinancial andnonfinancial operationswhichare alreadymore thanfive
(5) yearsoldexceptthose relatingtotransactionswhichare the subjectof civil,criminal and
administrativeproceedings.Aninventoryof the auditeddocuments,recordsand bookstobe disposed
of shall be drawnupand certifiedtobythe board secretaryandthe chairmanof the auditcommittee
and presentedtothe boardof directorswhichmaythereuponapprove the dispositionof saidrecords.
"ART. 53. Reports.(1) Everycooperative shall draw upregularreportsof itsprogramof activities,
includingthose inpursuance of theirsocio-civicundertakings,showingtheirprogressandachievements
at the endof everyfiscal year.The reportsshall be made accessible toitsmembers,andcopiesthereof
shall be furnishedtoall itsmembersorrecord.These reportsshall be filedwiththe Authoritywithinone
hundredtwenty(120) days fromthe endof the calendaryear.The form andcontentsof the reports
shall be as prescribedbythe rulesof the Authority.Failuretofile the requiredreportsshall subjectthe
accountable officer/stofinesandpenaltiesasmaybe prescribedbythe Authority,andshall be aground
for the revocationof authorityof the cooperative tooperate assuch.The fiscal yearof every
cooperative shall be the calendaryearexceptasmaybe otherwise providedinthe bylaws.

20. "(2) If a cooperative failstomake,publishandfile the reportsrequiredherein,orfailstoinclude therein
any matterrequiredbythe Code,the Authorityshall,withinfifteen(15) daysfromthe expirationof the
prescribedperiod,sendsuchcooperativeawrittennotice,statingitsnon-compliance andthe
commensurate finesandpenaltiesthatwill be imposeduntil suchtime thatthe cooperative has
compliedwiththe requirements.
"ART. 54. Registerof Membersas PrimaFacie Evidence.Anyregisterorlistof membersshareskeptby
any registeredcooperativeshall be primafacie evidence of the followingparticularsenteredtherein:
"(1) The date on whichthe name of anypersonwas enteredinsuchregisterorlistof member;and
"(2) The date on whichany suchpersonceasedtobe a member.
"ART. 55. Probative Value of CertifiedCopiesof Entries.(1) A copyof any entryinany book,registeror
listregularlykeptinthe course of businessinthe possessionof acooperative shall,if dulycertifiedin
accordance withthe rulesof evidence,be admissible asevidence of the existence of entryandprima
facie evidence of the mattersandtransactionsthereinrecorded.
"(2) Nopersonor a cooperative ispossessionof the booksof suchcooperative shall,inanylegal
proceedingstowhichthe cooperativeisnota party,be compelledtoproduce anyof the booksof the
cooperative,the contentsof whichcanbe provedandthe matters,transactionsandaccounts therein
recorded,unlessbyorderof a competentcourt.
"ART. 56. Bondingof Accountable Officers.Everydirector,officer,andemployee handlingfunds,
securitiesorpropertyonbehalf of anycooperative shall be coveredbyasuretybondto be issuedfora
dulyregisteredinsurance orbondingcompanyforthe faithful performanceof theirrespective duties
and obligations.The boardof directorsshall determine the adequacyof suchbonds.
"Upon the filingof the applicationforregistrationof acooperative,the bondsof the accountable
officersshall be requiredbythe Authority.Suchbondsshall be renewedmanuallyandthe Authority
shall accordinglybe informedof suchrenewal.
"ART. 57. Preference of Claims.(1) Notwithstandingthe provisionsof existinglaws,rulesandregulations
to the contrary, butsubjectto the priorclaimof the Authority,anydebtdue tothe cooperative fromthe
membershall constitute afirstlienuponanyraw materials,production,inputs,andproductsproduced;
or any land,building,facilities,equipment,goodsorservicesacquiredandheld,bysuchmember
throughthe proceedsof the loanor creditgrantedbythe cooperative tohimfor as longas the same is
not fullypaid.
"(2) Nopropertyor interestonpropertywhichissubjecttoa lienunderparagraph(1) shall be soldnor
conveyedtothirdpartieswithoutthe priorpermissionof the cooperative.The lienuponthe propertyor
interestshall continuetoexit evenafterthe sale orconveyance thereof until suchlienhasbeenduly
extinguished.
"(3) Notwithstandingthe provisionsof anylaw tothe contrary,any sale or conveyance made in
contraventionof paragraph(2) hereof shall be void.
"ART. 58. InstrumentforSalaryor Wage Deduction.(1) A memberof a cooperative may,
notwithstandingthe provisionsof existinglawstothe contrary,execute aninstrumentinfavorof the
cooperative authorizinghisemployertodeductfromhis/hersalaryorwages,commutationof leave
creditsandany othermonetarybenefitspayable tohimbythe employerandremitsuchamountas

21. maybe specifiedinsatisfactionof adebtor otherdemanddue fromthe memberto the cooperative.
"(2) Uponthe executionof suchinstrumentandas may be requiredbythe cooperative containedina
writtenrequest,the employershall make the deductioninaccordance withthe agreementand
deductioninaccordance withthe agreementandremitforthwiththe amountsodeductedwithinten
(10) days afterthe endof the payroll monthtothe cooperative.The employershall make the deduction
for as longas such debtor otherdemandremainsunpaidbythe employee.
"(3) The term"employer"asusedinthisarticle shall include all private firmsandthe national andlocal
governmentsandgovernment-ownedorcontrolledcorporationswhohave undertheiremployera
memberof a cooperative andhave agreedtocarry out the termsof the instrumentmentionedin
paragraphs(1) and (2) of thisarticle.
"(4) The provisionsof thisarticle shall applytoall similaragreementsreferredtoinparagraph(1) and
were enforcedpriortothe approval of thisCode.
"(5) Notwithstandingthe provisionsof existinglawstothe contrary,the responsibilitiesof the employer
as statedinparagraphs (1) and (2) of thisarticlesshall be mandatory:Provided,Thatinthe case of
private employer,the actual andreasonable costdeductingandremittingmaybe collected.
"ART. 59. PrimaryLien. - Notwithstandingthe provisionof anylaw withthe contrary,a cooperative shall
have primarylienuponthe capital,depositsorinterestof amemberforany debtdue to the cooperative
fromsuch a member.
"ART. 60. Tax Treatmentof Cooperative. - DulyregisteredcooperativesunderthisCode which donot
transact any businesswithnon-membersorthe general publicshall notbe subjecttoanytaxesandfees
imposedunderthe internal revenue lawsandothertax laws.Cooperativesnotfallingunderthisarticle
shall be governedbythe succeedingsection.
"ART.61. Tax and OtherExemptions.Cooperativestransactingbusinesswithbothmembersandnon-
membersshall notbe subjectedtotax ontheirtransactionswithmembers.Inrelationtothis,the
transactionsof memberswiththe cooperativeshall notbe subjecttoanytaxesandfees,includingnot
limitedtofinal taxesonmembers'depositsanddocumentarytax.Notwithstandingthe provisionsof any
lawor regulationtothe contrary, suchcooperativesdealingwithnonmembersshallenjoythe following
tax exemptions:
"(1) Cooperativeswithaccumulatedreservesandundividednetsavingsof notmore thanTenmillion
pesos(P10,000,000.00) shall be exemptfromall national,city,provincial,municipalorbarangaytaxesof
whatevername andnature.Suchcooperativesshall be exemptfromcustomsduties,advance salesor
compensatingtaxesontheirimportationof machineries,equipmentandspare partsusedbythemand
whichare notavailable locallyacertifiedbythe departmentof trade andindustry(DTI).All tax free
importationsshall notbe soldnorthe beneficial ownershipthereof be transferredtoanypersonuntil
afterfive (5) years,otherwise,the cooperative andthe transfereeorassignee shallbe solidarilyliable to
pay twice the amountof the imposed tax and/ or duties.
"(2) Cooperativeswithaccumulatedreservesanddividednetsavingsof more thanTenmillionpesos
(P10,000,000.00) shall fee the followingtaxesatthe full rate:
"(a) Income Tax - On the amount allocatedforinterestoncapitals: Provided,Thatthe same tax isnot
consequentlyimposedoninterestindividuallyreceivedbymembers:Provided,further,That
cooperativesregardlessof classification,are exemptincometax fromthe date of registrationwiththe

22. Authority;
"(b) Value-AddedTax Ontransactionswithnon-members:Provided,however,Thatcooperativesduly
registeredwiththe Authority;are exemptfromthe paymentof value-addedtax;subjecttoSec.109,
sub-sectionsL,MandN of RepublicActNo.9337, the National Internal Revenue Code,asamended:
Provided,Thatthe exempttransactionunderSec.109 (L) shall include salesmade bycooperativesduly
registeredwiththe Authorityorganizedandoperatedbyitsmembertoundertake the productionand
processingof rawmaterialsorof goodsproducedbyits membersintofinishedorprocessproductsfor
sale bythe cooperative toitsmembersandnon-members:Provided,further,Thatanyprocessed
productor itsderivative arisingfromthe raw materialsproducedbyitsmembers,soldin thenname and
for the account of the cooperative:Provided,finally,Thatat leasttwenty-five percentum(25%) of the
netincome of the cooperativesisreturnedtothe membersinthe formof interestand/orpatronage
refunds;
"(c) All othertaxesunlessotherwiseprovidedherein;and
"(d) Donationstocharitable,researchandeducational institutionsandreinvestmenttosocioeconomic
projectswithinthe areaof operationof the cooperative maybe tax deductible.
"(3) All cooperatives,regardlessof the amountof accumulatedreservesandundividednetsavingsshall
be exemptfrompaymentof local taxesandtaxesontransactionswithbanksandinsurance companies:
Provided,Thatall salesorservicesrenderedfornon-membersshall be subjecttothe applicable
percentage taxessalesmade byproducers,marketingorservice cooperatives:Providedfurther,That
nothinginthisarticle shall preclude the examinationof the booksof accountsor other accounting
recordsof the cooperative bydulyauthorizedinternalrevenue officersforinternal revenuetax
purposesonly,afterpreviousauthorizationbythe Authority.
"(4) Inareas where there are noavailable notariespublic,the judge,exercisinghisex officiocapacityas
notarypublic,shall renderservice, free of charge,toanypersonor group of personsrequiringthe
administrationof oathorthe acknowledgmentof articlesof cooperationandinstrumentsof loanfrom
cooperativesnotexceedingFive HundredThousandPesos(P500,000.00).
"(5) Anyregisterof deedsshall acceptforregistration,free of charge,anyinstrumentrelativetoa loan
made underthisCode whichdoesnotexceedTwoHundredFiftyThousandPesos(P250,000.00) or the
deedsof title of anypropertyacquiredbythe cooperative oranypaper or documentdrawnin
connectionwithanyactionbroughtbythe cooperative orwithanycourt judgmentrenderedinitsfavor
or any instrumentrelative toabondof anyaccountable officerof a cooperative forthe faithful
performance of hisdutiesandobligations.
"(6) Cooperativesshall be exemptfromthe paymentof all courtand sheriff'sfeespayable tothe
Philippine Governmentforandinconnectionwithall actionsbroughtunderthisCode,orwhere such
actionsisbrought bythe Authoritybefore the court,toenforce the paymentof obligationscontractedin
favorof the cooperative.
"(7) All cooperativesshall be exemptfromputtingupa bondfor bringinganappeal againstthe decision
of an inferiorcourtorfor seekingtosetaside anythirdparty claim:Provided,Thatacertificationof the
Authorityshowingthatthe netassetsof the cooperative are inexcessof the amountof the bond
requiredbythe court insimilarcasesshall be acceptedbythe court as a sufficientbond.
"(8) Anysecurityissuedbycooperativesshallbe exemptfromthe provisionsof the SecuritiesAct
providedsuchsecurityshall notbe speculative.

23. "ART. 62. Privilegesof Cooperatives.CooperativesregisteredunderthisCode,notwithstandingthe
provisionsof anylawto the contrary,be alsoaccordedthe followingprivileges:
"(1) Cooperativesshall enjoythe privilege of depositingtheirsealedcashboxesorcontainers,
documentsorany valuable papersinthe safesof the municipal orcitytreasurersandothergovernment
officesfree of charge,andthe custodianof such articlesshall issue areceiptacknowledgingthe articles
receiveddulywitnessedbyanotherperson;
"(2) Cooperativesorganizedamonggovernmentemployees,notwithstandinganylaw orregulationto
the contrary, shall enjoythe free use of anyavailable space intheiragency,whetherownedorrentedby
the Government;
"(3) Cooperativesrenderingspecial typesof servicesandfacilitiessuchascoldstorage,ice plant,
electricity,transportation,andsimilar servicesandfacilitiesshall secureafranchise therefore,andsuch
cooperativesshall opentheirmembershiptoall personsqualifiedintheirareasof operation;
"(4) Inareas where appropriate cooperativesexist,the preferential righttosupplygovernment
institutionsandagenciesrice,cornandothergrains,fishandothermarine products,meat,eggs,milk,
vegetables,tobaccoandotheragricultural commoditiesproducedbytheirmembersshallbe grantedto
the cooperativesconcerned;
"(5) Preferentialtreatmentinthe allocationof fertilizers,includingseedsandotheragricultural inputs
and implements,andinrice distributionshallbe grantedtocooperativesbythe appropriate
governmentagencies;
"(6) Preferentialandequitable treatmentinthe allocationorcontrol of bottomriesof commercial
shippingvesselsinconnectionwiththe shipmentof goodsandproductsof cooperatives;
"(7) Cooperativesandtheirfederations,suchasfarm andfisheryproducersandsuppliers,market
vendorsandsuch othercooperatives,whichhave fortheirprimarypurpose the productionand/orthe
marketingof productsfromagriculture,fisheriesandsmall entrepreneurial industriesandfederations
thereof,shall have preferential rightsinthe managementof publicmarketsand/orlease of public
marketfacilities,stallsorspaces:Provided,Thatthese rightsshall onlybe utilizedexclusivelyby
cooperatives:Provided,further,Thatnocooperative formingajointventure,partnershiporanyother
similararrangementwithanon-cooperativeentitycanutilize theserights;
"(8) Cooperativesengagedincreditservicesand/orfederationsshall be entitledtoloanscreditlines,
rediscountingof theirloannotes,andothereligiblepaperswiththe DevelopmentBankof the
Philippines,the LandBankof the Philippinesandotherfinancialinstitutionsexceptthe BangkoSentral
ng Pilipinas(BSP);
"The Philippine DepositInsurance Corporation(PDIC) andothergovernmentagencies,government-
ownedandcontrolledcorporationsand governmentfinancial institutionsshall provide technical
assistance toregisterednationalfederationsandunionsof cooperativeswhichhave significant
engagementinsavingsandcreditoperationsinorderforthese federationsandunionstoestablish
and/orstrengthentheirownautonomouscooperativedepositinsurancesystems;
"(9) A publictransportservice cooperativemaybe entitledtofinancingsupportforthe acquisition
and/ormaintenance of landandseatransport equipment,facilitiesandpartsthroughthe programof
the governmentfinancial institutions.Itshall have the preferential righttothe managementand

24. operationof publicterminalsandportswhetherlandorseatransport where the cooperativeoperates
and on securingafranchise foractive or potential routesforthe publictransport;
"(10) Cooperativestransactingbusinesswiththe Governmentof the Philippinesoranyof its political
subdivisionsoranyof its agenciesorinstrumentalities,includinggovernment-ownedandcontrolled
corporationsshall be exemptfromprequalificationbiddingrequirementsnotwithstandingthe provisions
of RepublicActNo.9184, otherwise knownas,the GovernmentProcurementAct;
"(11) Cooperative shallenjoythe privilegeof beingrepresentedbythe provincial orcityfiscal orthe
Office of the SolicitorGeneral,free of charge,exceptwhenthe adverse partyisthe Republicof the
Philippines;
"(12) Cooperativesorganizedbyfacultymembersandemployeesof educational institutionsshall have
the preferentialrightinthe managementof the canteenandotherservicesrelatedtothe operationof
the educational institutionwhere theyare employed:Provided,Thatsuchservicesare operatedwithin
the premisesof the saideducational institution;and
"(13) The appropriate housingagenciesandgovernmentfinancialinstitutionsshallcreate aspecial
windowforfinancinghousingprojectsundertakenbycooperatives,withinterestratesandtermsequal
to, or betterthanthose givenforsocializedhousingprojects.Thisfinancingshall be inthe formof
blanketloansorlong-termwholesale loanstoqualifiedcooperatives,withoutneedforindividual
processing.
"The Authority,inconsultationwiththe appropriate governmentagenciesandconcernedcooperative
sector,shall issue rulesandregulationsonall mattersconcerninghousingcooperatives."
Sec.6. Article 64 of ChapterVIon Insolvencyof Cooperativesof the same Code isherebyrenumbered
and amendedtoread,as follows:
CHAPTER VI
INSOLVENCYOFCOOPERATIVES
"ART. 63. ProceedingUponInsolvency.- Incase acooperative isunable tofulfill itsobligationsto
creditorsdue to insolvency,suchcooperative mayapplyforsuchremediesasitmaydeemfitunderthe
provisionsof ActNo.1956, as amended,otherwiseknownasthe InsolvencyLaw.
"NothinginthisArticle,however,precludescreditorsfromseekingprotectionfromsaidinsolvencylaw."
Sec.7. Articles65,66. 67, 68, 69, 70 and 71 of ChapterVIIonDissolutionof Cooperativesof the same
Code are herebyrenumberedandamendedtoread,as follows:
CHAPTER VII
DISSOLUTION OF COOPERATIVES
"ART. 64. VoluntaryDissolutionWhere noCreditorsare Affected.If the dissolutionof acooperative does
not prejudice the rightsof anycreditorhavingaclaimagainstit, the dissolutionmaybe affectedbya
majorityvote of the board of directors,andby a resolutiondulyadoptedbythe affirmative vote of at
leastthree-fourths(3/4) of all the memberswithvotingrights,presentandconstitutingaquorumat a
meetingtobe helduponcall of the directors:Provided,Thatthe notice of time,place andobjectof the
meetingshall be publishedforthree (3) consecutiveweeksinanewspaperpublishedinthe place where
the principal office of saidcooperative islocated,orif nonewspaperispublishedinsuchplace,ina

25. newspaperof general circulationinthe Philippines:Provided,further,Thatthe notice of suchmeetingis
sentto each memberof recordeitherbyregisteredmail orbypersonal deliveryatleastthirty(30) days
priorto saidmeeting.A copyof the resolutionauthorizingthe dissolutionshall be certifiedtobya
majorityof the board of directorsand countersignedbythe boardsecretary.The Authorityshall
thereuponissue the certificateof dissolution.
"ART. 65. VoluntaryDissolutionWhere CreditorsAre Affected.Where the dissolutionof acooperative
may prejudice the rightsof anycreditor,the petitionfordissolutionshall be filedwiththe Authority.The
petitionshall be signedbyamajority of itsboard or directorsor otherofficersmanagingitsaffairs,
verifiedbyitschairpersonorboardsecretaryorone of itsdirectorsand shall setforthall claimsand
demandsagainstitand that itsdissolutionwasresolveduponbythe affirmative vote of atleastthree-
fourths(3/4) of all the memberswithvotingrights,presentandconstitutingaquorumata meeting
calledforthat purpose.
"If the petitionissufficientinformandsubstance,the Authorityshallissueanorderrecitingthe purpose
of the petitionandshall fix adate whichshall notbe lessthanthirty(30) nor more than sixty(60) days
afterthe entryof the order.Before suchdate,a copy of the ordershall be publishedatleastonce a
weekforthree (3) consecutive weeksinanewspaperof general circulationpublishedinthe municipality
or city where the principal office of the cooperative issituatedorinthe absence of such local
newspaper,inanewspaperof general circulationinthe Philippines,anda copyshall likewise be posted
for three (3) consecutive weeksinthree (3) publicplacesinthe municipalityorcitywhere the
cooperative'soffice islocated.
"Upon expiryof the five (5) daynotice tofile objections,the Authorityshall proceedtohearthe petition
and try anyissue raisedinthe objectionfiled;andif the objectionissufficientandthe material
allegationsof the petitionare proven,itshall issueanordertodissolve the cooperative anddirectthe
dispositionof itsassetsinaccordance withexistingrulesandregulations.The orderof dissolutionshall
setforth therein:
"(1) The assetsand liabilitiesof the cooperative;
"(2) The claimof anycreditor;
"(3) The numberof members;and
"(4) The nature and extendof the interestsof the membersof the cooperative.
"ART. 66. InvoluntaryDissolution.A cooperative maybe dissolvedbyorderof a competentcourtafter
due hearingonthe groundsof:
"(1) Violationof anylaw,regulationorprovisionsof itsbylaws;or
"(2) Insolvency.
"ART. 67. DissolutionbyOrderof the Authority.The Authoritymaysuspendorrevoke,afterdue notice
and hearing,the certificate of registrationof acooperative onanyof the followinggrounds:
"(1) Havingobtaineditsregistrationbyfraud;
"(2) Existingforanillegal purpose;

26. "(3) Willful violation,despite notice bythe Authority,of the provisionsof thisCode oritsbylaws;
"(4) Willful failuretooperate ona cooperative basis;and
"(5) Failure tomeetthe requiredminimumnumberof membersinthe cooperative.
"ART. 68. DissolutionbyFailure toOrganize andOperate.-If acooperative hasnotcommencedbusiness
and itsoperationwithintwo(2) yearsafterthe issuance of itscertificate of registrationorhasnot
carriedon itsbusinessfortwo(2) consecutive years,the Authorityshall sendaformal notice tothe said
cooperative toshowcause as to itsfailure tooperate.Failure of the cooperative topromptlyprovide
justifiable cause foritsfailure tooperate shall warrantthe Authoritytodelete itsname fromthe roster
of registeredcooperativesandshall be deemeddissolved.
"ART. 69. Liquidationof aCooperative.Everycooperative whose charterexpiresbyitsownlimitationor
whose existence isterminatedbyvoluntarydissolutionorthroughanappropriate judicial proceeding
shall neverthelesscontinue toexistforthree (3) yearsafterthe time itisdissolved;nottocontinue the
businessforwhichitwasestablishedbutforthe purpose of prosecutinganddefendingsuitsbyor
againstit; settlementandclosure of itsaffairs;disposition,conveyance anddistributionof itsproperties
and assets.
"At anytime duringthe saidthree (3) years,the cooperative isauthorizedandempoweredtoconveyall
of itspropertiestotrusteesforthe benefitof itsmembers,creditorsandotherpersonsininterest.From
and afterany suchconveyance,all interestswhichthe cooperative hadinthe propertiesare terminated.
"Upon the windingupof the cooperative affairs,anyassetdistributable toanycreditor,shareholderor
memberwhoisunknownorcannot be foundshall be giventothe federationoruniontowhichthe
cooperative isaffiliatedwith.
"A cooperative shall onlydistribute itsassetsorpropertiesuponlawful dissolutionandafterpaymentof
all itsdebtsand liabilities,exceptinthe case of decrease of share capital of the cooperative andas
otherwise allowedbythisCode.
"ART. 70. Rulesand RegulationsonLiquidation.The Authorityshall issuethe appropriate implementing
guidelinesforthe liquidationof cooperatives."
Sec.8. Articles72,73, 74, 75, 76, 77, 78, 79 and80 of ChapterVIIIon Capital,Property,andFundsof the
same Code are herebyrenumberedandamendedtoread,as follows:
CHAPTER VIII
CAPITAL,PROPERTY,ANDFUNDS
"ART. 71. Capital. - The capitalizationof cooperativesandthe accountingproceduresshall be governed
by the provisionsof thisCode andthe regulationswhichshall be issued.
"ART. 72. Capital Sources.- CooperativesregisteredunderthisCode mayderive theircapital fromanyor
all of the followingsources:
"(1) Member'sshare capital;
"(2) Loansand barrowingsincludingdeposits;

27. "(3) Revolvingcapital whichconsistsof the deferredpaymentof patronage refunds,orinterestonshare
capital;and
"(4) Subsidies,donations,legacies,grants,aidsandsuchotherassistance fromanylocal or foreign
institutionwhetherpublicorprivate:Provided,Thatcapital comingfromsuchsubsides,donations,
legacies,grants,aidsandotherassistance shall notbe divided intoindividual share capital holdingsat
any time butshall insteadformpartof the donatedcapital orfundof the cooperative.
"Upon dissolution,suchdonatedcapital shallbe subjecttoescheat.
"ART. 73. LimitationonShare Capital Holdings.- Nomemberof primarycooperativeotherthan
cooperative itself shallownorholdmore than tenpercentum(10%) of the share capital of the
cooperative.
"Where a memberof cooperative dies,hisheirshall be entitledtothe sharesof the decedent:Provided,
That the total share holdingof the heirdoesnotexceedtenpercentum(10%) of the share capital of the
cooperative;Provided,further,Thatthe heirqualifyandisadmittedasmembersof the cooperative:
Providedfinally,Thatwhere the heirfailstoqualifyasamemberor where histotal share holding
exceedstenpercentum(10%) of the share capital , the share or sharesexcesswill reverttothe
cooperative uponpaymenttothe heirof the value of suchshares.
"ART. 74. Assignmentof Share Capital ContributionorInterest.- Subjecttothe provisionsof thisCode,
no membershall transferhissharesorinterestinthe cooperativeoranypart thereof unless.
"(1) He has heldsuchshare capital contributionorinterestfornotlessthanone (1) year.
"(2) The assignmentismade tothe cooperative orto a memberof the cooperative orto a personwho
fallswithinthe fieldof the membershipof the cooperative;and
"(3) The board of directorshasapprovedsuchassignment.
"ART.75. Capital Build-Up.- Te bylawsof everycooperativeshall be providedforareasonable and
realisticmembercapital build-upprogramtoallow the continuinggrowthof the members'investment
intheircooperative astheireconomicconditionscontinue toimprove.
"ART.76. Shares.- The term"share"referstoa unitof capital in a primarycooperative the parvalue of
whichmay be fixedtoanyfigure notmore than One thousandpesos(P1,000.00).The share of capital of
a cooperative isthe moneypaidorrequiredtobe paidfor the operationsof the cooperative.The
methodforthe issuance of share certificatesshall prescribedinitsbylaws.
"ART.77. Fines. - The bylawsof a cooperative mayprescribe afine onunpaidsubscribedshare capital.
Provided,thatsuchfine isfairandreasonable underthe circumstances.
"ART.78. Investmentof Capital. - A cooperative mayinvestitscapital inanyof the following:
"(a) In sharesor debenturesorsecuritiesof anyothercooperative;
"(b) In anyreputable bankinthe locality,oranycooperative;
"(c) In securitiesissuedorguaranteedbythe Government;

28. "(d) In real state primarilyforthe use of the cooperative oritsmembers;or
"(e) Inany othermannerauthorizedinthe bylaws.
"ART. 79. RevolvingCapital.The general assemblyof anycooperativemayauthorize the boardof
directorstoraise a revolvingcapital tostrengthenitscapital structure bydeferringthe paymentof
patronage refundsandinterestonshare capital orby the authorizeddeductionof apercentage from
the proceedsof productssoldor servicesrendered,orperunitof product or serviceshandled.The
board of directorsshall issue revolvingcapital certificateswithserial number,name,amount,andrate of
interesttobe paidand shall distinctlysetforththe time of retirementof suchcertificatesandthe
amountsto be returned."
Sec.9. Articles81,82, 83, 84 and 85 of ChapterIXon Audit,InquiryandMembers'RighttoExamine of
the same Code are herebyrenumberedandamendedtoread,asfollows:
"ART. 80. Annual Audit.CooperativesregisteredunderthisCode shall be subjecttoan annual financial,
performance andsocial audit.The financial auditshall be conductedbyanexternal auditorwhosatisfies
all the followingqualifications:
"(1) He is independentof the cooperative oranyof itssubsidiarythathe isauditing;and
"(2) He is a memberingoodstandingof the Philippine Instituteof CertifiedPublicAccountants(PICPA)
and isaccreditedbyboththe Board andAccountancyand the Authority.
"The social auditshall be conductedbyan independentsocial auditoraccreditedbythe Authority.
"Performance andsocial auditreportswhichcontainthe findingsandrecommendationsof the auditor
shall be submittedtothe boardof directors.
"The Authority,inconsultationwiththe cooperativesector,shall promulgate the rulesandstandardsfor
the social auditof cooperatives.
"ART. 81. AuditReport.The auditorshall submittothe board of directorsand to the auditcommittee
the financial auditreportwhichshall be inaccordance withthe generallyacceptedauditingstandards
for cooperativesasjointlypromulgatedbythe PhilippineInstitute of CertifiedPublicAccountants
(PICPA) andthe Authority.
"Thereafter,the boardof directorsshall presentthe complete auditreporttothe general assemblyinits
nextmeeting.
"ART. 82. NonliabilityforDefamations.The auditorisnotliable toanypersoninan actionfor
defamationbasedonanyact, done,orany statementmade byhimingood faithinconnectionwith any
matterhe isauthorizedorrequiredtodopursuantto thisCode.
"ART. 83. Right to Examine.A membershall have the righttoexaminethe recordsrequiredtobe keptby
the cooperative underArticle 52of thisCode duringreasonable hoursonbusiness daysandhe may
demand,inwriting,foracopy of excerptsfromsaidrecordswithoutcharge exceptthe costof
production.
"Anyofficerof the cooperative whoshall refuse toallow anymemberof the cooperativetoexamineand
copy excerptsfromitsrecordsshall be liable tosuchmemberfordamagesandshall be guiltyof an

29. offense whichshallbe punishableunderArticle140 of this Code:Provided,Thatif suchrefusal is
pursuantto a resolutionororderof the boardof directors,the liabilityunderthisarticle shall be
imposeduponthe directorswhovotedforsuchrefusal:Provided,further,Thatitshall be a defense to
any actionunderthisarticle thatthe memberdemandingtoexamineandcopyexcerptsfromthe
cooperative recordshasimproperlyused anyinformationsecuredthroughanypriorexaminationof the
recordsof suchcooperative orwas notacting ingood faithorfor a legitimate purposeinmakinghis
demand.
"ART. 84. Safetyof Records.Everycooperative shall,atitsprincipal office,keep andcarefullypreserve
the recordsrequiredbythisCode to be preparedandmaintained.Itshall take all necessaryprecaution
to preventitsloss,destructionorfalsification."
Sec.10. Articles86 and 87 of ChapterX onAllocationandDistributionof NetSurplusof the same Code
are herebyrenumberedandamendedtoread,as follows:
CHAPTER X
ALLOCATION ANDDISTRIBUTION OFNET SURPLUS
"ART. 85. NetSurplus.Notwithstandingthe provisionsof existinglaws,the netsurplusof cooperatives
shall be determinedinaccordance withitsbylaws.Everycooperative shalldetermineitsnetsurplusat
the close of everyfiscal yearandat suchothertimesas may be prescribedbythe bylaws.
"Anyprovisionof lawtothe contrary notwithstanding,the netsurplusshall notbe construedasprofit
but as an excessof paymentsmade bythe membersforthe loansborrowed,orthe goodsandservices
availedbythemfromthe cooperative orthe difference of the rightful amountdue tothe membersfor
theirproductssoldor servicesrenderedtothe cooperative includingotherinflowsof assetsresulting
fromits otheroperatingactivitiesandwhichshall be deemedtohave beenreturnedtothemif the same
isdistributedasprescribedherein.
"ART. 86. Order of Distribution.The netsurplusof everycooperativeshall be distributedasfollows:
"(1) Anamountfor the reserve fundwhichshall be atleasttenpercentum(10%) of netsurplus:
Provided,That,inthe firstfive (5) yearsof operationafterregistration,thisamountshall notbe less
than fiftypercentum(50%) of the netsurplus:
"(a) The reserve fundshall be usedforthe stabilityof the cooperativeandtomeetnetlossesinits
operations.The general assemblymaydecrease the amountallocatedtothe reserve fund whenthe
reserve fundalreadyexceedsthe share capital.
"Anysum recoveredonitemspreviouslychargedtothe reserve fundshall be creditedtosuchfund.
"(b) The reserve fundshall notbe utilizedforinvestment,otherthanthose allowedinthisCode. Such
sumof the reserve fundinexcessof the share capital maybe usedat anytime forany projectthatwould
expandthe operationsof the cooperativeuponthe resolutionof the generalassembly.
"(c) Upon the dissolutionof the cooperative,the reserve fundshall notbe distributedamongthe
members.The general assemblymayresolves:
"(i) To establishausufructuarytrustfundforthe benefitof anyfederationoruniontowhichthe
cooperative isaffiliated;and

30. "(ii) Todonate,contribute,orotherwisedispose of the amountforthe benefitof the communitywhere
the cooperative operates.If the memberscannotdecide uponthe disposal of the reservefund,the
same shall go to the federationoruniontowhichthe cooperative isaffiliated.
"(2) Anamountfor the educationandtrainingfund,shall notbe more thanten percentum(10%) of the
netsurplus.The bylawsmayprovide thatcertainfeesora portionthereof be creditedtosuchfund.The
fundshall provide forthe training,developmentandsimilar othercooperativeactivitiesgearedtowards
the growthof the cooperative movement:
"(a) Half of the amountstransferredtothe educationandtrainingfundannuallyunderthissubsection
shall be spentbythe cooperative foreducationandtrainingpurposes;whilethe otherhalf maybe
remittedtoa unionor federationchosenbythe cooperative orof whichitisa member.The saidunion
or federationshall submittothe Authorityandtoitscontributingcooperativesthe followingschedules:
"(i) Listof cooperativeswhichhave remittedtheirrespective Cooperative EducationandTrainingFunds
(CETF);
"(ii) Businessconsultancyassistance toincludethe nature andcost;and
"(iii) Othertrainingactivitiesundertakenspecifyingthereinthe nature,participantsandcostof each
activity.
"(b) Upon the dissolutionof the cooperative,the unexpendedbalance of the educationandtraining
fundappertainingtothe cooperative shallbe creditedtothe cooperative educationandtrainingfundof
the chosenunionor federation.
"(3) Anamountfor the communitydevelopmentfund,whichshall notbe lessthanthree percentum
(3%) of the netsurplus.The communitydevelopmentfundshall be usedforprojectsoractivitiesthat
will benefitthe communitywhere the cooperativeoperates.
"(4) Anoptional fund,alandand building,andanyothernecessaryfundthe total of whichshall not
exceedsevenpercentum(7%).
"(5) The remainingnetsurplusshall be made availabletothe membersinthe formof interestonshare
capital not to exceedthe normal rate of returnour investmentsandpatronage refunds:Provided,That
any amountremainingafterthe allowableinterestandthe patronage refundhave beendeductedshall
be creditedtothe reserve fund.
"The sum allocatedforpatronage refundsshall be made availableatthe same rate to all patronsof the
cooperative inproportiontotheirindividual patronage:Provided,That:
"(a) In the case of a memberpatronwithpaid-upshare capital contribution,hisproportionate amount
of patronage refundshall be paidtohimunlesshe agreestocreditthe amountto hisaccount as
additional share capital contribution;
"(b) In the case of a memberpatronwithunpaidshare capital contribution,hisproportionateamountof
patronage refundshall be creditedtohisaccountuntil hisaccountuntil hisshare capital contribution
has beenfullypaid;
"(c) In the case of a non-memberpatron,hisproportionateamountof patronage refundshall be set
aside ina general fundforsuch patronsand shall be allocatedtoindividual non-memberpatronsonly

31. uponrequestandpresentationof evidence of the amountof hispatronage.The amountso allocated
shall be creditedtosuchpatron towardpaymentof the minimumcapital contributionformembership.
Whena sum equal tothisamount hasaccumulatedat anytime withinaperiodspecifiedinthe bylaws,
such patronshall be deemedandbecome amemberof the cooperative if he soagreesorrequestsand
complieswiththe provisionsof the bylawsforadmissiontomembership;and
"(d) If withinanyperiodof time specifiedinthe bylaws,anysubscriberwhohasnotfullypaidhis
subscribedshare capital orany non-memberpatronwhohasaccumulatedthe sumnecessaryfor
membershipbutwhodoesnotrequestnoragree tobecome a memberorfailstocomplywiththe
provisionsof the bylawsforadmissiontomembership,the amountsoaccumulatedorcreditedtotheir
account togetherwithanypart of the general fundfornonmemberpatronsshall be creditedtothe
reserve fundorto the educationandtrainingfundof the cooperative,atthe optionof the cooperative."
Sec.11. Articles88, 89, 90, 91, 92, 93, 94 and 95 of ChapterXIon the Special ProvisionsRelatingto
AgrarianReformCooperativesof the same Code are herebyrenumberedretitledandamendedtoread,
as follows:
CHAPTER XI
AGRARIAN REFORMCOOPERATIVES
"ART. 87. Coverage.The provisionsof thisChaptershall primarilygovernagrarianreformcooperatives:
Provided,Thatthe provisionsof the otherchaptersof thisCode shall applysuppletorilyexceptinsofaras
thisChapterotherwise provides.
"ART. 88. DefinitionandPurpose.Anagrarianreformcooperative isone organizedbymarginal farmers,
majorityof whichare agrarian reformbeneficiaries,forthe purpose of developinganappropriate
systemof landtenure,landdevelopment,landconsolidationorlandmanagementinareascoveredby
agrarian reform.
"Anagrarian reformcooperative asdefinedshall be organizedforanyor all of the followingpurposes:
"(1) To developanappropriate systemof landtenure,landdevelopment,landconsolidationorland
managementinareascoveredbyagrarianreform;
"(2) To coordinate andfacilitate the disseminationof scientificmethodsof production,andprovide
assistance inthe storage,transport,andmarketingof farmproducts foragrarian reformbeneficiaries
and theirimmediatefamily,hereinafterreferredtoas"beneficiaries";
"(3) To provide financial facilitiestobeneficiariesforprovidentorproductive purposesatreasonable
costs;
"(4) To arrange and facilitate the expeditioustransferof appropriate andsuitable technologyto
beneficiariesandmarginal farmersatthe lowestpossible cost;
"(5) To provide social securitybenefits,health,medical andsocial insurance benefitsandothersocial
and economicbenefitsthatpromote the general welfare of the agrarianreformbeneficiariesand
marginal farmers;
"(6) To provide non-formal education,vocational/technical training,andlivelihoodprogramsto
beneficiariesandmarginal farmers;

32. "(7) To act as conduitsforexternal assistance andservicestothe beneficiariesandmarginal farmers;
"(8) To undertake acomprehensive andintegrateddevelopmentprograminagrarianreformand
resettlementareaswithspecialconcernforthe developmentof agro-based,marine-based,andcottage-
basedindustries;
"(9) To representthe beneficiariesonanyorall mattersthataffecttheirinterest;and
"(10) To undertake suchothereconomicorsocial activitiesasmaybe necessaryor incidental inthe
pursuitof the foregoingpurposes.
"ART. 89. Cooperative Estate.Landholdingslike plantations,estatesorhaciendasacquiredbythe State
for the benefitof the workersinaccordance withthe Comprehensive AgrarianReformProgramwhich
shall be collectivelyownedbythe worker-beneficiariesunderacooperative set-up.
"ART. 90. Infrastructure.Inagrarian reformandresettlementareas,the Governmentshall grantto
agrarian reformcooperativespreferential treatmentinthe construction,maintenance andmanagement
of roads,bridges,canals,wharves,ports,reservoirs,irrigationsystems,waterworkssystems,andother
infrastructureswithgovernmentfunding.Forthispurpose,the Governmentshall provide technical
assistance,facilitiesandequipmenttosuchagrarianreformcooperatives.
"ART. 91. Lease of PublicLands.The Governmentmaylease publiclandstoanyagrarian reform
cooperative foraperiodnotexceedingtwenty-five(25%) years,subjecttorenewal foranothertwenty-
five (25) yearsonly:Provided,Thatthe applicationforrenewalshall be made one (1) yearbefore the
expirationof the lease:Provided,further,Thatsuchlease shall be forthe exclusive use andbenefitof
the beneficiariesandmarginal farmerssubjecttothe provisionsof the Comprehensive AgrarianReform
Program.
"ART. 92. PreferentialRight.Inagrarianreformareas,an agrarianreformcooperative shall have the
preferential rightinthe grantof franchise andcertificate of publicconvenience and necessityforthe
operationof publicutilitiesandservices:Provided,Thatitmeetsthe requirementsandconditions
imposedbythe appropriate governmentagencygrantingthe franchiseorcertificate of public
convenienceandnecessity.If there isanelectricservice providerinthe area,it shall uponthe requestof
an agrarian reformcooperative,immediatelyprovideelectricservicestothe agrarianreformareas.If
the electricservice providerfailstoprovidethe servicesrequestedwithinaperiodof one (1) year,the
agrarian reformcooperative concernedmayundertake toprovidethe electricservicesinthe area
throughitsown resources.All investmentsmade bythe saidagrarianreformcooperative forthe
electrificationof the agrarianreformresettlementareasshall be the subjectof sale tothe electric
service provideronce ittakesonthe service.
"ART. 93. Privileges.Subjecttosuchreasonable termsandconditionsasthe Departmentof Agrarian
Reform(DAR) andthe Authoritymayimpose,agrarianreformcooperativesmaybe giventhe exclusive
rightto do any or all of the followingeconomicactivitiesinagrarianreformandresettlementareas;
"(1) Supplyanddistributionof consumer,agricultural,aqua-cultural,andindustrialgoods,production
inputs,andraw materialsandsupplies,machinery,equipment,facilitiesandotherservicesand
requirementsof the beneficiariesandmarginal farmersatreasonable prices;
"(2) Marketingof the productsand servicesof the beneficiariesinlocal andforeignmarkets;
"(3) Processingof the members'productsintofinishedconsumerorindustrial goodsfordomestic

33. consumptionorforexport;
"(4) Provisionof essential publicservicesatcostsuch as power,irrigation,potablewater,passenger
and/orcargo transportationbylandor sea,communicationservices,andpublichealthandmedical care
services;
"(5) Management,conservation,andcommercial developmentof marine,forestry,mineral,water,and
othernatural resourcessubjecttocompliance withthe lawsandregulationsonenvironmentaland
ecological controls;and
"(6) Provisionof financial,technological,andotherservicesandfacilitiesrequiredbythe beneficiariesin
theirdailylivesandlivelihood.
"The Governmentshall providethe necessaryfinancialandtechnical assistancetoagrarianreform
cooperativestoenable themtodischarge effectivelytheirpurposesunderthisarticle.The DAR,the
Authorityandthe BSP shall drawupa jointprogramfor the organizationandfinancingof the agrarian
reformcooperativessubjectof thisChapter.The jointprogramshall be gearedtowardsthe beneficiaries
gradual assumptionof full ownershipandmanagementcontrol of the agrarianreformcooperatives.
"ART. 94. OrganizationandRegistration.Agrarianreformcooperativesmaybe organizedandregistered
underthisCode onlyuponpriorwrittenverificationbythe DARtothe effectthatthe same isneeded
and desiredbythe beneficiaries;resultsof astudythathas beenconductedfairlyindicatethe economic
feasibilityof organizingthe same andthatit will be economicallyviableinitsoperations;andthatthe
same may nowbe organizedandregisteredinaccordance withrequirementsof thisCode.
"The Authority,inconsultationwiththe concernedgovernmentagenciesandcooperative sector,shall
issue appropriate rulesandregulationspertainingtothe provisionsof thisChapter."
Sec.12. Articles96, 97 and 98 of ChapterXIIon the Special ProvisionsonPublicServicesCooperativesof
the same Code are herebytransferredtoanotherchapter.ChapterXIIasamendedshall now read,as
follows:
CHAPTER XII
COOPERATIVEBANKS
"ART. 95. GoverningLaw.The provisionsof thisChaptershall primarilygoverncooperative banks
registeredunderthisCode andthe otherprovisionsof thisCode shall applytothemonlyinsofarasthey
are notinconsistentwiththe provisionscontainedinthisChapter.
"ART. 96. Supervision.The cooperativebanksregisteredunderthisCode shall be underthe supervision
of the BSP.The BSP,uponconsultationwiththe Authorityandthe concernedcooperativesector,shall
formulate guidelinesregardingthe operationsandthe governance of cooperative banks.These
guidelinesshallgive due recognitiontothe unique nature andcharacterof cooperative banks.Tothis
end,cooperative banksshall provide financialandbankingservicestoitsmembers.
"ART. 97. Organization,MembershipandEstablishmentof aCooperative Bank.(1) Cooperative
organizationsdulyestablishedandregisteredunderthisCode mayorganize acooperative bank,which
shall likewisebe consideredacooperative registrable underprovisionsof thisCode subjecttothe
requirementsandrequisite authorizationfromthe BSP.Onlyone cooperative bankmaybe established
ineach province:Provided,Thatanadditional cooperative bankmaybe establishedinthe same
province tocater to the needsinthe same province tocater to the needsof the localitydependingon

34. the economicconditionsof the province asmaybe determined bythe BSP:Provided,further,Thatthe
additional cooperative bankshall be locatedinthe Cityormunicipalityotherthatthe cityor municipality
where the firstcooperative bankislocated.
"(2) Membershipinacooperative bankshall eitherbe regularorassociate.Regularmembershipshall be
limitedtocooperativeorganizationswhichare holdersof commonsharesof the bank.Associate
membersare those subscribingandholdingpreferredsharesof the bank,whichmayinclude butare not
limitedtothe following:
"(a) Individual membersof the bank'smember-primarycooperatives;and
"(b) SamahangNayonand Municipal KatipunanngmgaSamahangNayon(MKSN) whichheldcommon
sharesof cooperative bankspriortothe effectivityof thisActshall applyfor conversiontofull-pledged
cooperativesinordertomaintaintheirstatusasregularmembersof cooperative banks:Provided,That
theyshall notifythe cooperativebankconcernedtheirintentiontoconvertwithinaperiodof ninety(90)
daysfrom the effectivityof thisAct.SamahangNayonandMKSN are herebygivenaperiodof one (1)
yearfrom the effectivityof thisActtocomplete theirconversionascooperatives.Cooperativebankshall
exertreasonable effortstoinformtheirmemberSamahangNayonandMKSN to finallyconvertorto
give the notice of conversionwithinthe prescribedperiod.Uponthe failure of the SamahangNayonand
MKSN to finallyconverttoafull-pledgedcooperativewithinthe maximumperiodof one (1) year,the
cooperative bankconcernedmayconvertthe commonsharesheldbysuchassociationstopreferred
shares.
"(3) The articlesof cooperative andbylawsof acooperative bank,orany amendmentthereto,shallbe
registeredwiththe Authorityonlywhenaccompaniedbyacertificate of authorityissuedbythe BSP,
underitsofficial seal.
"ART. 98. Administrationof CooperativeBanks.Tomaintainthe qualityof bankmanagementandaccord
appropriate protectiontodepositorsandthe publicingeneral,the BSPshall prescribedthe fitand
properqualificationsof bankdirectorsandofficersforthe purposesof thisarticle,givingdue recognition
to the unique nature andcharacter of cooperative banks.
"Notwithstandingthe provisionsof thisCode,the number,computationandtermof the board of
directorsshall be definedinthe articlesof cooperationandbylawsof the cooperative bank.
"ART. 99. Quorum andVotingRights.The quorumrequirementforgeneral assemblymeetings,whether
special orregular,shall be one half plusone of the numberof votingsharesof all the membersingood
standing.Inthe meetingsof the boardof directors,whetherspecialorregular,the quorumrequirement
shall be one-half plusone of all the membersof the boardof directors.Eachdirectorshall onlyhave one
vote.
"Notwithstandingthe provisionsof thisCode tothe contrary,the quorumrequirementforamendments
of articlesof cooperationandbylawsshall be three-fourths(3/4) vote of all the memberswithvoting
rights,presentandconstitutingaquorum.All othervotingrequirementsshallbe asprescribedbythe
BSP.
"The votingrightsof the membersshall be proportionate tothe numberof theirpaid-upshares.
"ART. 100. Powers,FunctionsandAlliedUndertakingsof Cooperative Banks.A cooperativebankshall
primarilyprovide financial,bankingandcreditservicestocooperative organizationsandtheirmembers.
However,the BSPmayprescribe appropriate guidelines,ceilingsandconditionsonborrowingof a