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                                                         Republic of the Philippines
                                                         Congress of the Philippines
                                                               Metro Manila

                                                           Fourteenth Congress
                                                          Second Regular Session




Begun and held in Metro Manila, on Monday, the twenty-eighth day of July, two thousand eight.

Republic Act No. 9520           February 17, 2009

 AN ACT AMENDING THE COOPERATIVE CODE OF THE PHILIPPINES TO BE KNOWN AS THE "PHILIPPINE COOPERATIVE CODE
                                                OF 2008"


                   Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled::

SECTION 1. Articles 1, 2, 3, 4 and 5 of Chapter 1 on General Concepts and Principles of Republic Act No. 6938, otherwise known as the
"Cooperative Code of the Philippines," are hereby amended to read as follows:

                                                                 CHAPTER I
                                                       GENERAL CONCEPTS AND PRINCIPLES

          "ARTICLE 1. Title. - This Act shall be known as the "Philippine Cooperative Code of 2008".


          "ART. 2. Declaration of Policy.- It is the declared policy of the State to foster the creation and growth of cooperatives as a practical
          vehicle for promoting self-reliance and harnessing people power towards the attainment of economic development and social
          justice. The State shall encourage the private sector to undertake the actual formation and organization of cooperatives and shall
          create an atmosphere that is conducive to the growth and development of these cooperatives.

          "Toward this end, the Government and all its branches, subdivisions, instrumentalities and agencies shall ensure the provision of
          technical guidance, financial assistance and other services to enable said cooperatives to develop into viable and responsive
          economic enterprises and thereby bring about a strong cooperative movement that is free from any conditions that might infringe
          upon the autonomy or organizational integrity of cooperatives.

          "Further, the State recognizes the principle of subsidiarity under which the cooperative sector will initiate and regulate within its
          own ranks the promotion and organization, training and reserach, audit and support services relative to cooperatives with
          government assistance where necessary.

          "ART. 3. General Concepts. - A cooperative is an autonomous and duly registered association of persons, with a common bond of
          interest, who have voluntarily joined together to achieve their social, economic, and cultural needs and aspirations by making
          equitable contributions to the capital required, patronizing their products and services and accepting a fair share of the risks and
          benefits of the undertaking in accordance with universally accepted cooperative principles.

          "ART. 4. Cooperative Principles. - Every cooperative shall conduct its affairs in accordance with Filipino culture, good values and
          experience and the universally accepted principles of cooperation which include, but are not limited to, the following:


                     "(1) Voluntary and Open Membership - Cooperatives are voluntary organizations, open to all persons able to use their
                     services and willing to accept the responsibilities of membership, without gender, social, racial, cultural, political or
                     religious discrimination.

                     "(2) Democrative Member Control - Cooperatives are democratic organizations that are controlled by their members
                     who actively participate in setting their policies and making decisions. Men and women serving as elected
                     representatives, directors or officers are accountable to the membership. In primary cooperatives, members have equal
                     voting rights of one-member, one-vote. Cooperatives at other levels are organized in the same democratic manner.

                     "(3) Member Economic Participation - Members contribute equitably to, and democratically control, the capital of their
                     cooperatives. At least part of that capital is the common property of the cooperative. They shall receive limited
                     compensation or limited interest, if any, on capital subscribed and paid as a condition of membership. Members
                     allocate surpluses for any or all of the following purposes: developing the cooperative by setting up reserves, part of
                     which should at least be indivisible; benefitting members in proportion to their partonage of the cooperative's
                     bubsiness; and, supporting other activities approved by the membership.

                     "(4) Autonomy and Independence - Cooperatives are autonomous, self-help organizations controlled by their members.
                     If they enter into aggreements with other organizations, including government, or raise capital from external sources,
                     they shall do so on terms that ensure democratic control of their members and maintain their cooperative autonomy.

                     "(5) Education, Training and Information - Cooperatives shall provide education and training for their members, elected
                     and appointed representatives, managers, and employees, so that they can contribute effectively and efficiently to the
                     development of their cooperatives.


                     "(6) Cooperation Among Cooperatives - Cooperatives serve their members most effectively and strengthen the
                     cooperative movement by working together through local, national, regional and international structures.

                     (7) Concern for Community - Cooperatives work for the sustainable development of their communities through policies
                     approved by their members.
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           "ART. 5. Definition of Terms. – The following terms shall mean:

                      "(1) Member includes a person either natural or juridical who adhering to the principles set forth in this Code and in the
                      Articles of Cooperative, has been admitted by the cooperative as member;

                      "(2) General Assembly shall mean the full membership of the cooperative duly assembled for the purpose of exercising
                      all the rights and performing all the obligations pertaining to cooperatives, as provided by this Code, its articles of
                      cooperation and bylaws: Provided, That for cooperatives with numerous and dispersed membership, the general
                      assembly may be composed of delegates elected by each sector, chapter or district of the cooperative in accordance
                      with the rules and regulations of the Cooperative Development Authority;

                      "(3) Board of Directors shall mean that body entrusted with the management of the affairs of the cooperative under its
                      articles of cooperation and bylaws;

                      "(4) Committee shall refer to any body entrusted with specific functions and responsibilities under the bylaws or
                      resolution of the general assembly or the board of directors;

                      "(5) Articles of Cooperation means the articles of cooperation registered under this Code and includes a registered
                      amendment thereof;

                      "(6) Bylaws means the bylaws registered under this Code and includes any registered amendment thereof;

                      "(7) Registration means the operative act granting juridical personality to a proposed cooperative and is evidenced by a
                      certificate of registration;

                      "(8) Cooperative Development Authority refers to the government agency in charge of the registration and regulation of
                      cooperatives as such hereinafter referred to s the Authority;

                      "(9) Universally Accepted Principles means that body of cooperative principles adhered to worldwide by cooperatives;

                      "(10) Representative Assembly means the full membership of a body of representatives elected by each of the sectors,
                      chapter or district o the cooperative duly assembled for the purpose of exercising such powers lawfully delegated unto
                      them by the general assembly in accordance with its bylaws;

                      "(11) Officers of the Cooperative shall include the members of the board of directors, members of the different
                      committee created by the general assembly, general manager or chief executive officer, secretary, treasurer and
                      members holding other positions as may be provided for in their bylaws;


                      "(12) Social Audit is a procedure wherein the cooperative assesses its social impact and ethical performance vis-à-vis
                      its stated mission, vision, goals and code of social responsibility for cooperatives to be established by the Authority in
                      consultation with the cooperative sector. It enables the cooperative to develop a process whereby it can account for its
                      social performance and evaluate its impact in the community and be accountable for its decisions and actions to its
                      regular members;

                      "(13) Performance Audit shall refer to an audit on the efficiency and effectiveness of the cooperative as a whole; its
                      management and officers; and its various responsibility centers as basis for improving individual team or overall
                      performance and for objectively informing the general membership on such performance;


                      "(14) A Single-Line or Single-Purpose Cooperative shall include cooperative undertaking activities which are related to
                      its main line of business or purpose;

                      "(15) Service Cooperatives are those which provide any type of service to its members, including but not limited to,
                      transport, information and communication, insurance, housing, electric, health services, education, banking, and
                      savings and credit;


                      "(16) Subsidiary Cooperative refers to three or more primary cooperatives, doing the same line of business, organized
                      at the municipal, provincial, city, special metropolitan political subdivision, or economic zones created by law,
                      registered with the Authority to undertake business activities in support of its member-cooperatives."

SEC. 2. Articles 6, 7, 9, 10, 11, 12, 13, 14, 16, 17, 18, 20, 21, 23, 24 and 25 of Chapter II on Organization and Registration of the same Code
are hereby amended to read as follows:

                                                                  CHAPTER II
                                                        ORGANIZATION AND REGISTRATION


           "ART. 6. Purposes of Cooperatives. – A cooperative may be organized and registered for any or all of the following purposes:

                      "(1) To encourage thrift and savings mobilization among the members;


                      "(2) To generate funds and extend credit to the members for productive and provident purposes;

                      "(3) To encourage among members systematic production and marketing;

                      "(4) To provide goods and services and other requirements to the members;

                      "(5) To develop expertise and skills among its members;
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           "(6) To acquire lands and provide housing benefits for the members;

           "(7) To insure against losses of the members;

           "(8) To promote and advance the economic, social and educational status of the members;

           "(9) To establish, own, lease or operate cooperative banks, cooperative wholesale and retail complexes, insurance and
           agricultural/industrial processing enterprises, and public markets;


           "(10) To coordinate and facilitate the activities of cooperatives;


           "(11) To advocate for the cause of the cooperative movements;

           "(12) To ensure the viability of cooperatives through the utilization of new technologies;

           "(13) To encourage and promote self-help or self-employment as an engine for economic growth and poverty
           alleviation; and


           "(14) To undertake any and all other activities for the effective and efficient implementation of the provisions of this
           Code.

"ART. 7. Objectives and Goals of a Cooperative. – The primary objective of every cooperative is to help improve the quality of life
of its members. Towards this end, the cooperative shall aim to:


           "(a) Provide goods and services to its members to enable them to attain increased income, savings, investments,
           productivity, and purchasing power, and promote among themselves equitable distribution of net surplus through
           maximum utilization of economies of scale, cost-sharing and risk-sharing;

           "(b) Provide optimum social and economic benefits to its members;


           "(c) Teach them efficient ways of doing things in a cooperative manner;

           "(d) Propagate cooperative practices and new ideas in business and management;

           "(e) Allow the lower income and less privileged groups to increase their ownership in the wealth of the nation; and

           "(f) Cooperate with the government, other cooperatives and people-oriented organizations to further the attainment of
           any of the foregoing objectives.

"ART. 8. Cooperatives Not in Restraint of Trade. – No cooperative or method or act thereof which complies with this Code shall be
deemed a conspiracy or combination in restraint of trade or an illegal monopoly, or an attempt to lessen competition or fix prices
arbitrarily in violation of any laws of the Philippines.


"ART. 9. Cooperative Powers and Capacities. – A cooperative registered under this Code shall have the following powers, rights
and capacities:

           "(1) To the exclusive use of its registered name, to sue and be sued;

           "(2) Of succession;

           "(3) To amend its articles of cooperation in accordance with the provisions of this Code;


           "(4) To adopt bylaws not contrary to law, morals or public policy, and to amend and repeal the same in accordance with
           this Code;

           "(5) To purchase, receive, take or grant, hold, convey, sell, lease, pledge, mortgage, and otherwise deal with such real
           and personal property as the transaction of the lawful affairs of the cooperative may reasonably and necessarily
           require, subject to the limitations prescribed by law and the Constitution;


           "(6) To enter into division, merger or consolidation, as provided in this Code;

           "(7) To form subsidiary cooperatives and join federations or unions, as provided in this Code;


           "(8) To avail of loans, be entitled to credit and to accept and receive grants, donations and assistance from foreign and
           domestic sources, subject to the conditions of said loans, credits, grants, donations or assistance that will not
           undermine the autonomy of the cooperative. The Authority, upon written request, shall provide necessary assistance in
           the documentary requirements for the loans, credit, grants, donations and other financial support;


           "(9) To avail of preferential rights granted to cooperatives under Republic Act No. 7160, otherwise known as the Local
           Government Code, and other laws, particularly those in the grant of franchises to establish, construct, operate and
           maintain ferries, wharves, markets or slaughterhouses and to lease public utilities, including access to extension and
           on-site research services and facilities related to agriculture and fishery activities;


           "(10) To organize and operate schools in accordance with Republic Act No. 9155, Governance of Basic Education Act
           of 2001 and other pertinent laws; and
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           "(11) To exercise such other powers granted by this Code or necessary to carry out its purpose or purposes as stated
           in its Articles of cooperation.

"ART. 10. Organizing a Primary Cooperative. – Fifteen (15) or more natural persons who are Filipino citizens, of legal age, having
a common bond of interest and are actually residing or working in the intended area of operation, may organize a primary
cooperative under this Code: Provided, That a prospective member of a primary cooperative must have completed a Pre-
Membership Education Seminar (PMES).


"Any newly organized primary cooperative may be registered as multipurpose cooperative only after compliance with the minimum
requirements for multipurpose cooperatives to be set by the Authority. A single-purpose cooperative may transform into a
multipurpose or may create subsidiaries only after at least two (2) years of operations.


"ART. 11. Economic Survey. - Every group of individuals or cooperatives intending to form a cooperative under this Code shall
submit to the Authority a general statement describing, among others the structure and purposes of the proposed
cooperative: Provided, That the structure and actual staffing pattern of the cooperative shall include a
bookkeeper; Provided, further, That they shall not be allowed to operate without the necessary personnel and shall also submit an
economic survey, indicating therein the area of operation, the size of membership, and other pertinent data in a format provided
by the Authority.

"ART. 12. Liability. – A cooperative duly registered under this Code shall have limited liability.

"ART. 13. Term. – A cooperative shall exist for a period not exceeding fifty (50) years from the date of registration unless sooner
dissolve or unless said period is extended. The cooperative term, as originally stated in the articles of cooperation, may be
extended for periods not exceeding fifty (50) years in any single instance by an amendment of the articles of cooperation, in
accordance with this Code: Provided, That no extension can be made earlier than five (5) years prior to the original or subsequent
expiry date/dates unless there are justifiable reasons for an earlier extension as may be determined by the Authority.

"ART. 14. Articles of Cooperation. – (1) All cooperatives applying for registration shall file with the Authority the articles of
cooperation which shall be signed by each of the organizers and acknowledged by them if natural persons, and by the
chairpersons or secretaries, if juridical persons, before a notary public.

"(2) The articles of cooperation shall set forth:

           "(a) The name of the cooperative which shall include the word cooperative;

           "(b) The purpose or purposes and scope of business for which the cooperative is to be registered;

           "(c) The term of existence of the cooperative;

           "(d) The area of operation and the postal addresses of its principal office;

           "(e) The names, nationality, and the postal addresses of the registrants;

           "(f) The common bond of membership;

           "(g) The list of names of the directors who shall manage the cooperative; and

           "(h) The amount of its share capital, the names and residences of its contributors and a statement of whether the
           cooperative is primary, secondary or tertiary in accordance with Article 23 hereof.

"(3) The articles of cooperation may also contain any other provisions not inconsistent with this Code or any related law.


"(4) Four (4) copies each of the proposed articles of cooperation, bylaws, and the general statement required under Article 11 of
this Code shall be submitted to the Authority.

"(5) No cooperative, other than a cooperative union as described under Article 25 hereof, shall be registered unless the articles of
cooperation is accompanied with the bonds of the accountable officers and a sworn statements of the treasurer elected by the
subscribers showing that at least twenty-five per centum (25%) of the authorized share capital has been subscribed and at least
twenty-five per centum (25%) of the total subscription has been paid: Provided, That in no case shall the paid-up share capital be
less than Fifteen thousand pesos (P15,000.00).

"The Authority shall periodically assess the required paid-up share capital and may increase it every five (5) years when
necessary upon consultation with the cooperative sector and the National Economic and Development Authority (NEDA).


"ART. 15. Bylaws. – (1) Each cooperative to be registered under this Code shall adopt bylaws not inconsistent with the provisions
of this Code. The bylaws shall be filed at the same time as the articles of cooperation.


"(2) The bylaws of each cooperative shall provide:

           "(a) The qualifications for admission to membership and the payment to be made or interest to be acquired as a
           conditions for the exercise of the right of membership;


           "(b) The rights and liabilities of membership;

           "(c) The circumstances under which membership is acquired, maintained and lost;
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           "(d) The procedure to be followed in cases of termination of membership;

           "(e) The conditions under which the transfer of a share or interest of the members shall be permitted;

           "(f) The rules and procedures on the agenda, time, place and manner of calling, convening, conducting meetings,
           quorum requirements, voting systems, and other matters relative to the business affairs of the general assembly, board
           of directors, and committees;

           "(g) The general conduct of the affairs of the cooperative, including the powers and duties of the general assembly, the
           board of directors, committees and the officers, and their qualifications and disqualifications;

           "(h) The manner in which the capital, may be raised and the purposes for which it can be utilized;

           "(i) The mode of custody and of investment of net surplus;


           "(j) The accounting and auditing systems;

           "(k) The manner of loaning and borrowing including the limitations thereof;

           "(l) The method of distribution of net surplus;

           "(m) The manner of adopting, amending, repealing, and abrogating bylaws;


           "(n) A conciliation or mediation mechanism for the amicable settlement of disputes among members, directors, officers
           and committee members of the cooperative; and

           "(o) Other matters incident to the purposes and activities of the cooperative.


"ART. 16. Registration. – A cooperative formed and organized under this Code acquires juridical personality from the date the
Authority issues a certificate of registration under its official seal. All applications for registration shall be finally disposed of by the
Authority within a period of sixty (60) days from the filing thereof, otherwise the application is deemed approved, unless the cause
of the delay is attributable to the applicant:Provided, That in case of a denial of the application for registration, an appeal shall lie
with the Office of the President within ninety (90) days from receipt of notice of such denial: Provided, further, That failure of the
Office of the President to act on the appeal within ninety (90) days from the filing thereof shall mean approval of said application.


"ART. 17. Certificate of Registration. – A certificate of registration issued by the Authority under its official seal shall be conclusive
evidence that the cooperative therein mentioned is duly registered unless it is proved that the registration thereof has been
cancelled.

"ART. 18. Amendment of Articles of Cooperation and Bylaws. – Unless otherwise prescribed by this Code and for legitimate
purposes, any provision or matter stated in the articles of cooperation and by laws may be amended by two-thirds (2/3) vote of all
the members with voting rights, without prejudice to the right of the dissenting members to exercise their right to withdraw their
membership under Article 30.

Both the original and amended articles and/or bylaws shall contain all provisions required by law to be set out in the articles of
cooperation and by laws. Amendments shall be indicated by underscoring or otherwise appropriately indicating the change or
changes made and a copy of the amended articles or amended bylaws duly certified under oath by the cooperative secretary and
a majority of the directors stating the fact that said amendment or amendments to the articles of cooperation and/or bylaws have
been duly approved by the required vote of the members. All amendments to the article of cooperation and/or bylaws shall be
submitted to the Authority. The amendments shall take effect upon its approval by the authority or within thirty (30) days from the
date of filing thereof if not acted upon by the Authority for a cause not attributable to the cooperative.


"ART. 19. Contracts Executed Prior to Registration and Effects Thereof. – Contracts executed between private persons and
cooperatives prior to the registration of the cooperative shall remain valid and binding between the parties and upon registration of
the cooperative. A formal written contract shall be adopted and made in the cooperative’s name or on its behalf prior to its
registration.

"ART. 20. Division of Cooperatives. – Any registered cooperative may, by a resolution approved by a vote of three-fourths (3/4) of
all the members with voting rights, present and constituting a quorum, resolve to divide itself into the two (2) or more cooperatives.
The procedure for such division shall be prescribed in the regulations of the Authority: Provided, That all the requirements set forth
in this Code have been complied with by the new cooperatives: Provided, further, That no division of a cooperative in fraud of
creditors shall be valid.

"ART. 21. Merger and Consolidation of Cooperatives. – (1) Two (2) or more cooperatives may merge into a single cooperative
which shall either be one of the constituent cooperatives or the consolidated cooperative.


"(2) No merger or consolidation shall be valid unless approved by a three-fourths (3/4) vote of all the members with voting rights,
present and constituting a quorum of each of the constituent cooperatives at separate general assembly meetings. The dissenting
members shall have the right to exercise their right to withdraw their membership pursuant to Article 30.


"(3) The Authority shall issue the guidelines governing the procedure of merger or consolidation of cooperatives. In any case, the
merger or consolidation of cooperatives. In any case, the merger or consolidation shall be effective upon the issuance of the
certificate of merger or consolidation by the Authority.

"ART. 22. Effects of Merger and Consolidation. – The merger or consolidation of cooperatives shall have the following effects:


           "(1) The constituent cooperatives shall become a single cooperative which, in case of merger, shall be the surviving
           cooperative, and, in case of consolidation, shall be the consolidated cooperative;
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          "(2) The separate existence of the constituent cooperatives shall cease, except that of the surviving or the consolidated
          cooperative;

          "(3) The surviving or the consolidated cooperative shall possess al the assets, rights, privileges, immunities and
          franchises of each of the constituent cooperatives;

          "(4) The surviving or the consolidated cooperative shall possess all the assets, rights, privileges, immunities and
          franchises of each of the constituent cooperatives; and

          "(5) The surviving or the consolidated cooperative shall be responsible for all the liabilities and obligation of each of the
          constituent cooperatives in the same manner as if such surviving or consolidated cooperative had itself incurred such
          liabilities or obligations. Any claim, action or proceeding pending by or against any such constituent cooperatives may
          be prosecuted by or against the surviving or consolidated cooperative, as the case may be. Neither the rights of
          creditors nor any lien upon the property of any such constituent cooperatives shall be impaired by such merger or
          consolidation.

"ART. 23. Type and Categories of Cooperatives. – (1) Types of Cooperatives – Cooperatives may fall under any of the following
types:

          "(a) Credit Cooperative is one that promotes and undertakes savings and lending services among its members. It
          generates a common pool of funds in order to provide financial assistance to its members for productive and provident
          purposes;


          "(b) Consumers Cooperative is one of the primary purpose of which is to procure and distribute commodities to
          members and non-members;

          "(c) Producers Cooperative is one that undertakes joint production whether agricultural or industrial. It is formed and
          operated by its members to undertake the production and processing of raw materials or goods produced by its
          members into finished or processed products for sale by the cooperative to its members and non-members. Any end
          product or its derivative arising from the raw materials produced by its members, sold in the name and for the account
          of the cooperative, shall be deemed a product of the cooperative and its members;

          "(d) Marketing Cooperative is one which engages in the supply of production inputs to members and markets their
          products;

          "(e) Service Cooperative is one which engages in medical and dental care, hospitalization, transportation, insurance,
          housing, labor, electric light and power, communication, professional and other services;

          "(f) Multipurpose Cooperative is one which combines two (2) or more of the business activities of these different types
          of cooperatives;

          "(g) Advocacy Cooperative is a primary cooperative which promotes and advocates cooperativism among its members
          and the public through socially-oriented projects, education and training, research and communication, and other
          similar activities to reach out to its intended beneficiaries;


          "(h) Agrarian Reform Cooperative is one organized by marginal farmers majority of which are agrarian reform
          beneficiaries for the purpose of developing an appropriate system of land tenure, land development, land consolidation
          or land management in areas covered by agrarian reform;


          "(i) Cooperative Bank is one organized for the primary purpose of providing a wide range of financial services to
          cooperatives and their members;

          "(j) Dairy Cooperative is one whose members are engaged in the production of fresh milk which may be processed
          and/or marketed as dairy products;


          "(k) Education Cooperative is one organized for the primary purpose of owning and operating licensed educational
          institutions notwithstanding the provisions of Republic Act No. 9155, otherwise known as the Governance of Basic
          Education Act of 2001;


          "(l) Electric Cooperative is one organized for the primary purposed of undertaking power generations, utilizing
          renewable energy sources, including hybrid systems, acquisition and operation of subtransmission or distribution to its
          household members;

          "(m) Financial Service Cooperative is one organized for the primary purpose of engaging in savings and credit services
          and other financial services;


          "(n) Fishermen Cooperative is one organized by marginalized fishermen in localities whose products are marketed
          either as fresh or processed products;

          "(o) Health Services Cooperative is one organized for the primary purpose of providing medical, dental and other health
          services;


          "(p) Housing Cooperative is one organized to assist or provide access to housing for the benefit of its regular members
          who actively participate in the savings program for housing. It is co-owned and controlled by its members;


          "(q) Insurance Cooperative is one engaged in the business of insuring life and poverty of cooperatives and their
          members;
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           "(r) Transport Cooperative is one which includes land and sea transportation, limited to small vessels, as defined or
           classified under the Philippine maritime laws, organized under the provisions of this Code;

           "(s) Water Service Cooperative is one organized to own, operate and manage waters systems for the provision and
           distribution of potable water for its members and their households;

           "(t) Workers Cooperative is one organized by workers, including the self-employed, who are at same time the members
           and owners of the enterprise. Its principal purpose is to provide employment and business opportunities to its members
           and manage it in accordance with cooperative principles; and

           "(u) Other types of cooperative as may be determined by the Authority.

"(2) Categories of Cooperative – Cooperatives shall be categorized according to membership and territorial considerations as
follows:


           "(a) In terms of membership, cooperative shall be categorized into:

                      "(i) Primary – The members of which are natural persons;

                      "(ii) Secondary – The members of which are primaries; and


                      "(iii) Tertiary – The members of which are secondary cooperatives; and

           "(b) In terms of territory, cooperatives shall be categorized according to areas of operations which may or may not
           coincide with the political subdivisions of the country.

"ART. 24. Functions of a Federation of Cooperatives. – A federation of cooperatives shall undertake the following functions:

           "(a) To carry on any cooperative enterprise authorized under Article 6 that complements augments, or supplements but
           does not conflict, complete with, nor supplant the business or economic activities of its members;

           "(b) To carry on, encourage, and assist educational and advisory work relating to its member cooperatives;

           "(c) To render services designed to encourage simplicity, efficiency, and economy in the conduct of the business of its
           member cooperatives and to facilitate the implementation of their bookkeeping, accounting, and other systems and
           procedures;

           "(d) To print, publish, and circulate any newspaper or other publication in the interest of its member cooperatives and
           enterprises;

           "(e) To coordinate and facilitate the activities of its member cooperatives;

           "(f) To enter into joint ventures with national or international cooperatives of other countries in the manufacture and sale
           of products and/or services in the Philippines and abroad; and


           "(g) To perform such other functions as may be necessary to attain its objectives.

"A federation of cooperatives may be registered by carrying out the formalities for registration of a cooperative.

"Registered cooperatives may organize a federation according to the type of business activity engaged in by the cooperatives.

"ART. 25. Cooperative Unions. – Registered cooperatives and federations at the appropriate levels may organize or join
cooperative unions to represent the interest and welfare of all types of cooperatives at the provincial, city, regional, and national
levels. Cooperative unions may have the following purposes:

           "(a) To represent its member organizations;

           "(b) To acquire, analyze, and disseminate, economic, statistical, and other information relating to its members and to all
           types of cooperatives within its area of operation;

           "(c) To sponsor studies in the economic, legal, financial, social and other phases of cooperation, and publish the results
           thereof;


           "(d) To promote the knowledge of cooperative principles and practices;

           "(e) To develop the cooperative movement in their respective jurisdictions;

           "(f) To advise the appropriate authorities on all questions relating to cooperatives;

           "(g) To raise funds through membership fees, dues and contributions, donations, and subsidies from local and foreign
           sources whether private or government; and


           "(h) To do and perform such other non-business activities as may be necessary to attain the foregoing objectives.
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                     "Cooperative unions may assist the national and local governments in the latter’s development activities in their
                     respective jurisdictions."

SEC. 3. Articles 26, 27, 28, 29, 30, 31 and 32 of Chapter III on Membership of the same Code are hereby renumbered and amended to read,
as follows:

                                                                      CHAPTER III
                                                                      MEMBERSHIP


          "ART. 26. Kinds of Membership. – A cooperative may have two (2) kinds of members, to wit: (1) regular members and (2)
          associate members.

          "A regular member is one who has complied with all the membership requirements and entitled to all the rights and privileges of
          membership. An associate member is one who has no right to vote nor be voted upon and shall be entitled only to such rights and
          privileges as the bylaws may provide: Provided, That an associate who meets the minimum requirements of regular membership,
          continues to patronize the cooperative for two (2) years, and signifies his/her intention to remain a member shall be considered a
          regular member.


          "A cooperative organized by minors shall be considered a laboratory cooperative and must be affiliated with a registered
          cooperative. A laboratory cooperative shall be governed by special guidelines to be promulgated by the Authority.


          "ART. 27. Government Officers and Employees. – (1) Any officer or employee of the Authority shall be disqualified to be elected or
          appointed to any position in a cooperative: Provided, That the disqualification does not extend to a cooperative organized by the
          officers or employees of the Authority.

          "(2) All elective officials of the Government shall be ineligible to become officers and directors of cooperatives:Provided, That the
          disqualification does not extend to a party list representative being an officer of a cooperative he or she represents; and

          "(3) Any government employee or official may, in the discharge of is duties as a member in the cooperative, be allowed by the end
          of office concerned to use official time for attendance at the general assembly, board and committee meetings of cooperatives as
          well as cooperative seminars, conferences, workshops, technical meetings, and training courses locally or abroad: Provided, That
          the operations of the office concerned are not adversely affected.

          "ART. 28. Application. – An applicant for membership shall be deemed a member after approval of his membership by the board
          of directors and shall exercise the rights of member after having made such payments to the cooperative in respect to
          membership or acquired interest in the cooperative as may be prescribed in the bylaws. In case membership is refused or denied
          by the board of directors, an appeal may be made to the general assembly and the latter’s decision shall be final. For this
          purpose, the general assembly may opt to create an appeal and grievance committee, the members of which shall serve for a
          period of one (1) year and shall decide appeals on membership application within thirty (30) days upon receipt thereof. If the
          committee fails to decide within the prescribed period, the appeal is deemed approved in favor of the applicant.

          "ART. 29. Liability of Members. – A member shall be liable for the debts of the cooperative to the extent of his contribution to the
          share capital of the cooperative.


          "ART. 30. Termination of Membership. – (1) A member of a cooperative may, for any valid reason, withdraw his membership from
          the cooperative by giving a sixty (60) day notice to the board of directors. Subject to the bylaws of the cooperative, the
          withdrawing member shall be entitled to a refund of his share capital contribution and all other interests in the
          cooperative: Provided, That such fund shall not be made if upon such payment the value of the assets of the cooperative would be
          less than the aggregate amount of its debts and liabilities exclusive of his share capital contribution.

          "(2) The death or insanity of a member in a primary cooperative, and the insolvency or dissolution of a member in a secondary or
          tertiary cooperative may be considered valid grounds for termination of membership: Provided, That in case of death or insanity of
          an agrarian reform beneficiary-member of a cooperative, the next-of-kin may assume the duties and responsibilities of the original
          member

          "(3) Membership in the cooperative may be terminated by a vote of the majority of all the members of the board of directors for
          any of the following causes:


                     "(a) When a member has not patronized any of the services of the cooperative for an unreasonable period of time as
                     may be previously determined by the board of directors;

                     "(b) When a member has continuously failed to comply with his obligations;

                     "(c) When a member has acted in violation of the bylaws and the rules of the cooperative; and

                     "(d) For any act or omission injurious or prejudicial to the interest or the welfare of the cooperative.

          "A member whose membership the board of directors may wish to terminate shall be informed of such intended action in writing
          and shall be given an opportunity to be heard before the said board makes its decision. The decision of the board shall be in
          writing and shall be communicated in person or by registered mail to said member and shall be appealable within thirty (30) days
          from receipt thereof to the general assembly whose decision shall be final. The general assembly may create an appeal and
          grievance committee whose members shall serve for a period of one (1) year and shall decide appeals on membership
          termination. The committee is given thirty (30) days from receipt thereof to decide on the appeal. Failure to decide within the
          prescribed period, the appeal is deemed approved in favor of the member. Pending a decision by the general assembly, the
          membership remains in force.

          "ART. 31. Refund of Interests. – All sums computed in accordance with the bylaws to be due from a cooperative to a former
          member shall be paid to him either by the cooperative or by the approved transferee, as the case may be, in accordance with this
          Code."
                                                                                                                                                 9

SEC. 4. Articles 33, 34, 35, 36, 37, 38, 39, 40, 42, 42, 43, 44, 45, 46, 47, 48, 49, 50 and 51 of Chapter IV on Administration of the same
Code are hereby renumbered and amended to read, as follows:

                                                                      CHAPTER IV
                                                                    ADMINISTRATION


           "ART. 32. Composition of the General Assembly. – The general assembly shall be composed of such members who are entitled
           to vote under the articles of cooperation and bylaws of the cooperative.

           "ART. 32. Powers of the General Assembly. – The general assembly shall be composed of such members who are entitled to vote
           under the articles of cooperation and bylaws of the cooperative.

           "ART. 33. Powers of the General Assembly. – The general assembly shall be the highest policy-making body of the cooperative
           and shall exercise such powers as are stated in this Code, in the articles of cooperation and in the bylaws of the cooperative. The
           general assembly shall have the following exclusive powers which cannot be delegate:

                      "(1) To determine and approve amendments to the articles of cooperation and bylaws;

                      "(2) To elect or appoint the members of the board of directors, and to remove them for cause. However, in the case of
                      the electric cooperatives registered under this Code, election of the members of the board shall be held in accordance
                      with its bylaws or election guideline of such electric cooperative; and

                      "(3) To approve developmental plans of the cooperative.

           "Subject to such other provisions of this Code and only for purposes of prompt and intelligent decision-making, the general
           assembly may be a three-fourths (3/4) vote of all its members with voting rights, present and constituting a quorum, delegate
           some of its powers to a smaller body of the cooperative. These powers shall be enumerated under the bylaws of the cooperative.

           "ART. 34. Meetings. – (1) A regular meeting shall be held annually by the general assembly on a date fixed in the bylaws, or if not
           so fixed, on any dated within ninety (90) days after the close of each fiscal year: Provided, That notice of regular meetings shall be
           sent in writing, by posting or publication, or through other electronic means to all members of record.


           "(2) Whenever necessary, a special meeting of the general assembly may be called at any time by a majority vote of the board of
           directors or as provided for in the bylaws: Provided, That a notice in writing shall be sent one (1) week prior to the meeting to all
           members who are entitled to vote. However, a special meeting shall be called by the board of directors after compliance with the
           required notice within from at least ten per centum(10%) of the total members who re entitled to vote to transact specific business
           covered by the call.

           "If the board fails to call a regular or a special meeting within the given period, the Authority, upon petition of tenper centum (10%)
           of all the members of the cooperative who are entitled to vote, and for good cause shown, shall issue an order to the petitioners
           directing them to call a meeting of the general assembly by giving proper notice as required in this Code or in the bylaws;

           "(3) In the case of a newly approved cooperative, a special general assembly shall be called, as far as practicable, within ninety
           (90) days from such approval;

           "(4) The Authority may call a special meeting of the cooperative for the purpose of reporting to the members the result of any
           examination or other investigation of the cooperative affairs; and


           "(5) Notice of any meeting may be waived, expressly or impliedly, by any member.

           "ART. 35. Quorum. – A quorum shall consist of at least twenty-five per centum (25%) of all the members entitled to vote. In the
           case of cooperative banks, the quorum shall be as provided in Article 99 of this Code. In the case of electric cooperatives
           registered under this Code, a quorum, unless otherwise provided in the bylaws, shall consist of five per centum (5%) of all the
           members entitled to vote.


           "ART. 36. Voting System. – Each member of a primary cooperative shall have only one (1) vote. In the case of members of
           secondary or tertiary cooperatives, they shall have one (1) basic vote and as many incentive votes as provided for in the bylaws
           but not exceed five (5) votes. The votes cast by the delegates shall be deemed as votes cast by the members thereof.


           "However, the bylaws of a cooperative other than a primary may provide for voting by proxy. Voting by proxy means allowing a
           delegate of a cooperative to represent or vote in behalf of another delegate of the same cooperative.

           "ART. 37. Composition and Term of the Board of Directors. – Unless otherwise provided in the bylaws, the direction and
           management of the affairs of a cooperative shall be vested in a board of directors which shall be composed of not less that five (5)
           nor more than fifteen (15) members elected by the general assembly for a term of two (2) years and shall hold office until their
           successors are duly elected an qualified, or until duly removed for caused.

           "ART. 38. Powers of the Board of Directors. – The board of directors shall be responsible for the strategic planning, direction-
           setting and policy-formulation activities of the cooperatives.


           "ART. 39. Directors. – (1) Any member of a cooperative who under the bylaws of the cooperative, has the right to vote and who
           possesses all the qualifications and none of the disqualifications provided in the laws or bylaws shall be eligible for election as
           director.

           "(2) The cooperative may, by resolution of its board of directors, admit as directors, or committee member one appointed by any
           financing institution from which the cooperative received financial assistance solely to provide technical knowledge not available
           within its membership. Such director or committee member not be a member of the cooperative and shall have no powers, rights,
           nor responsibilities except to provided technical assistance as required by the cooperative.
                                                                                                                                       10

"(3) The members of the board of directors shall not hold any other position directly involved in the day to day operation and
management of the cooperative.

"(4) Any person engaged in a business similar to that of the cooperative or who in any way has a conflict of interest with it, is
disqualified from election as a director of said cooperative.

"ART. 40. Meeting of the Board and Quorum Requirement. – (1) In the case of primary cooperatives, regular meetings of the
board of directors shall be held at least once a month.

"(2) Special meetings of the board of directors may be held at any time upon the call of the chairperson or a majority of the
members of the board: Provided, That written notices of the meeting specifying the agenda of the special meeting shall be given
to all members of the board at least one (1) week before the said meeting.

"(3) A majority of the members of the Board shall constitute a quorum or the conduct of business, unless the bylaws proved
otherwise.

"(4) Directors cannot attend or vote by proxy at board meetings.

"ART. 41. Vacancy in the Board of Directors. – Any vacancy in the board of directors, other than by expiration of term, may be
filled by the vote of at least a majority of the remaining directors, if still constituting a quorum; otherwise, the vacancy must be filled
by the general assembly in a regular or special meeting called for the purpose. A director so elected to fill a vacancy shall serve
only the unexpired term of his predecessor in office.

"ART. 42. Officers of the Cooperative. – The board of directors shall elect from among themselves the chairperson and vice-
chairperson, and elect or appoint other officers of the cooperative from outside of the board in accordance with their bylaws. All
officers shall serve during good behavior and shall not be removed except for cause after due hearing. Loss of confidence shall
not be a valid ground for removal unless evidenced by acts or omission causing loss of confidence in the honesty and integrity of
such officer. No two (2) or more persons with relationships up to the third civil degree of consanguinity or affinity nor shall any
person engaged in a business similar to that of the cooperative nor who in any other manner has interests in conflict with the
cooperative shall serve as an appointive officer.

"ART. 43. Committees of Cooperatives. – (1) The bylaws may create an executive committee to be appointed by the board of
directors with such powers and duties as may be delegated to it in the bylaws or by a majority vote of all the members of the board
of directors.

"(2) The bylaws shall provide for the creation of an audit, election, mediation and conciliation, ethics, and such other committees
as may be necessary for the conduct of the affairs of the cooperative. The members of both the audit and election committee shall
be elected by the general assembly and the rest shall be appointed by the board. The audit committee shall be directly
accountable and responsible to the general assembly. It shall have the power and duty to continuously monitor the adequacy and
effectiveness of the cooperative’s management control system and audit the performance of the cooperative and its various
responsibility centers.

"Unless otherwise provided in the bylaws, the board, in case of a vacancy in the committees, may call an election to fill the
vacancy or appoint a person to fill the same subject to the provision that the person elected or appointed shall serve only for the
unexpired portion of the term.


"ART. 44. Functions, Responsibilities and Training Requirements of Directors, Officers and Committee Members. – the functions
and responsibilities of directors, officers and committee members, as well as their training requirements, shall be in accordance
with the rules and regulations issued by the Authority.

"ART. 45. Liability of Directors, Officers and Committee Members. – Directors, officers and committee members, who are willfully
and knowingly vote for or assent to patently unlawful acts or who are guilty of gross negligence or bad faith in directing the affairs
of the cooperative or acquire any personal or pecuniary interest in conflict with their duty as such directors, officers or committee
members shall be liable jointly and severally for all damages or profits resulting therefrom to the cooperative, members, and other
persons.

"When a director, officer or committee member attempts to acquire or acquires, in violation of his duty, any interest or equity
adverse to the cooperative in respect to any matter which has been reposed in him in confidence, he shall, as a trustee for the
cooperative, be liable for damages and shall be accountable for double the profits which otherwise would have accrued to the
cooperative.

"ART. 46. Compensation. – (1) In the absence of any provisions in the bylaws fixing their compensation, the directors shall not
receive any compensation except for reasonable per diems: Provided however, That the directors and officers shall not be entitled
to any per diem when, in the preceding calendar year, the cooperative reported a net loss or had a dividend rate less than the
official inflation rate for the same year. Any compensation other than per diems may be granted to directors by a majority vote of
the members with voting rights at a regular or special general assembly meeting specifically called for the purpose: Provided, That
no additional compensation other than per diems shall be paid during the first year of existence of any cooperative.

"(2) The compensation of officers of the cooperative as well as the members of the committee as well as the members of the
committees created pursuant to this Code or its bylaws may be fixed in the bylaws.

"(3) Unless already fixed in the bylaws, the compensation of all other employee shall be determined by the board of directors.


"ART. 47. Dealings of Directors, Officers, or Committee Members. – A contract entered into by the cooperative with one (1) or
more of its directors, officers, and committee members is voidable, at the option of the cooperative, unless all the following
conditions are present.

"(1) That the presence of such director in the board meeting wherein contract was approved was not necessary to constitute a
quorum for such meeting;
                                                                                                                                                11

           "(2) That the vote of such director was not necessary for the approval of the contract;

           "(3) That the contract is fair and reasonable under the circumstances; and

           "(4) That in the case of an officer or committee member, the contract with the officer or committee member has been previously
           authorized by the general assembly or by the board of directors.

           "Where any of the first two conditions set forth in the preceding paragraph is absent, in the case of a contract with a director, such
           contract may be ratified by a three-fourths (3/4) vote of all the members with voting rights, present and constituting a quorum in a
           meeting called for the purpose: Provided, That full disclosure of the adverse interest of the directors involved is made at such
           meeting, and that the contract is fair and reasonable under the circumstances.

           "ART. 48. Disloyalty of a Director. – A director who, by virtue of his office, acquires for himself an opportunity which should belong
           to the cooperative shall be liable for damages and must account for double the profits that otherwise would have accrued to the
           cooperative by refunding the same, unless his act has been ratified by a three-fourths (3/4) vote of all the members with voting
           rights, present and constituting a quorum. This provision shall be applicable, notwithstanding the fact that the director used his
           own funds in the venture.


           "ART. 49. Illegal Use of Confidential Information. – (1) A director or officer, or an associate of a director or officer, who, for his
           benefit or advantage or that of an associate, makes use of confidential information that, if generally known, might reasonably be
           expected to adversely affect the operation and viability of the cooperative, shall be held:

                      "(a) Liable to compensate the cooperative for the direct losses suffered by the cooperative as a result of the illegal use
                      of information; and

                      "(b) Accountable to the cooperative for any direct benefit or advantage received or yet to be received by him or his
                      associate, as a result of the transaction.

           "(2) The cooperative shall take the necessary steps to enforce the liabilities described in subsection (a)

           "ART. 50. Removal. – All complaints for the removal of any elected officer shall be filed with the board of directors. Such officer
           shall be given the opportunity to be heard. Majority of the board of directors may place the officer concerned under preventive
           suspension pending the resolution of the investigation. Upon finding of a prima facie evidence of guilt, the board shall present its
           recommendation for removal to the general assembly.

           "An elective officer may be removed by three fourths (3/4) votes of the regular members present and constituting a quorum, in a
           regular or special general assembly meeting called for the purpose. The officer concerned shall be given an opportunity to be
           heard at said assembly.

SEC. 5. Articles 52, 53, 54, 55, 56, 57, 58, 59, 60, 61, 62 and 63 of Chapter V on Responsibilities, Rights and Privileges of Cooperatives of
the same Code are hereby renumbered and amended to read, as follows:

                                                                CHAPTER V
                                         RESPONSIBILITIES, RIGHTS AND PRIVILEGES OF COOPERATIVE

           "ART. 51. Address. – Every cooperative shall have an official postal address to which all notices and communications shall be
           sent. Such address and every change thereof shall be registered with the Authority.


           "ART. 52. Books to be Kept Open. – (1) Every cooperative shall have the following documents ready and accessible to its
           members and representatives of the Authority for inspection during reasonable office hours at its official address:

                      "(a) A copy of this Code and all other laws pertaining to cooperatives;

                      "(b) A copy of the regulations of the Authority;

                      "(c) A copy of the articles of cooperation and bylaws of the cooperative;

                      "(d) A register of members;

                      "(e) The books of the minutes of the meetings of the general assembly, board of directors and committee;


                      "(f) Share books, where applicable;

                      "(g) Financial statement; and

                      "(h) Such other documents as may be prescribed by laws or the bylaws.


           "(2) The accountant or the bookkeeper of the cooperative shall be responsible for the maintenance of the cooperative in
           accordance with generally accepted accounting practices. He shall also be responsible for the production of the same at the time
           of audit or inspection.


           "The audit committee shall be responsible for the continuous and periodic review of the books and records of account to ensure
           that these are in accordance with generally accepted accounting practices. He shall also be responsible for the production of the
           same at the time of audit or inspection.
                                                                                                                                      12

"(3) Each cooperative shall maintain records of accounts such that the true and correct condition and the results of the operation
of the cooperative may be ascertained therefrom at any time. The financial statements, audited according to generally accepted
auditing standards, principles and practices, shall be published annually and shall be kept posted in a conspicuous place in the
principal office of the cooperative.

"(4) Subject to the pertinent provisions of the National Internal Revenue Code and other laws, a cooperative may dispose by way
of burning or other method of complete destruction any document, record or book pertaining to its financial and nonfinancial
operations which are already more than five (5) years old except those relating to transactions which are the subject of civil,
criminal and administrative proceedings. An inventory of the audited documents, records and books to be disposed of shall be
drawn up and certified to by the board secretary and the chairman of the audit committee and presented to the board of directors
which may thereupon approve the disposition of said records.


"ART. 53. Reports. – (1) Every cooperative shall draw up regular reports of its program of activities, including those in pursuance
of their socio-civic undertakings, showing their progress and achievements at the end of every fiscal year. The reports shall be
made accessible to its members, and copies thereof shall be furnished to all its members or record. These reports shall be filed
with the Authority within one hundred twenty (120) days from the end of the calendar year. The form and contents of the reports
shall be as prescribed by the rules of the Authority. Failure to file the required reports shall subject the accountable officer/s to
fines and penalties as may be prescribed by the Authority, and shall be a ground for the revocation of authority of the cooperative
to operate as such. The fiscal year of every cooperative shall be the calendar year except as may be otherwise provided in the
bylaws.

"(2) If a cooperative fails to make, publish and file the reports required herein, or fails to include therein any matter required by the
Code, the Authority shall, within fifteen (15) days from the expiration of the prescribed period, send such cooperative a written
notice, stating its non-compliance and the commensurate fines and penalties that will be imposed until such time that the
cooperative has complied with the requirements.


"ART. 54. Register of Members as Prima Facie Evidence. – Any register or list of members shares kept by any registered
cooperative shall be prima facie evidence of the following particulars entered therein:

           "(1) The date on which the name of any person was entered in such register or list of member; and


           "(2) The date on which any such person ceased to be a member.

"ART. 55. Probative Value of Certified Copies of Entries. – (1) A copy of any entry in any book, register or list regularly kept in the
course of business in the possession of a cooperative shall, if duly certified in accordance with the rules of evidence, be
admissible as evidence of the existence of entry and prima facie evidence of the matters and transactions therein recorded.


"(2) No person or a cooperative is possession of the books of such cooperative shall, in any legal proceedings to which the
cooperative is not a party, be compelled to produce any of the books of the cooperative, the contents of which can be proved and
the matters, transactions and accounts therein recorded, unless by order of a competent court.

"ART. 56. Bonding of Accountable Officers. – Every director, officer, and employee handling funds, securities or property on
behalf of any cooperative shall be covered by a surety bond to be issued for a duly registered insurance or bonding company for
the faithful performance of their respective duties and obligations. The board of directors shall determine the adequacy of such
bonds.

"Upon the filing of the application for registration of a cooperative, the bonds of the accountable officers shall be required by the
Authority. Such bonds shall be renewed manually and the Authority shall accordingly be informed of such renewal.

"ART. 57. Preference of Claims. – (1) Notwithstanding the provisions of existing laws, rules and regulations to the contrary, but
subject to the prior claim of the Authority, any debt due to the cooperative from the member shall constitute a first lien upon any
raw materials, production, inputs, and products produced; or any land, building, facilities, equipment, goods or services acquired
and held, by such member through the proceeds of the loan or credit granted by the cooperative to him for as long as the same is
not fully paid.

"(2) No property or interest on property which is subject to a lien under paragraph (1) shall be sold nor conveyed to third parties
without the prior permission of the cooperative. The lien upon the property or interest shall continue to exit even after the sale or
conveyance thereof until such lien has been duly extinguished.


"(3) Notwithstanding the provisions of any law to the contrary, any sale or conveyance made in contravention of paragraph (2)
hereof shall be void.

"ART. 58. Instrument for Salary or Wage Deduction. – (1) A member of a cooperative may, notwithstanding the provisions of
existing laws to the contrary, execute an instrument in favor of the cooperative authorizing his employer to deduct from his/her
salary or wages, commutation of leave credits and any other monetary benefits payable to him by the employer and remit such
amount as maybe specified in satisfaction of a debt or other demand due from the member to the cooperative.

"(2) Upon the execution of such instrument and as may be required by the cooperative contained in a written request, the
employer shall make the deduction in accordance with the agreement and deduction in accordance with the agreement and remit
forthwith the amount so deducted within ten (10) days after the end of the payroll month to the cooperative. The employer shall
make the deduction for as long as such debt or other demand remains unpaid by the employee.

"(3) The term "employer" as used in this article shall include all private firms and the national and local governments and
government-owned or controlled corporations who have under their employer a member of a cooperative and have agreed to
carry out the terms of the instrument mentioned in paragraphs (1) and (2) of this article.

"(4) The provisions of this article shall apply to all similar agreements referred to in paragraph (1) and were enforced prior to the
approval of this Code.
                                                                                                                                   13

"(5) Notwithstanding the provisions of existing laws to the contrary, the responsibilities of the employer as stated in paragraphs (1)
and (2) of this articles shall be mandatory: Provided, That in the case of private employer, the actual and reasonable cost
deducting and remitting maybe collected.

"ART. 59. Primary Lien. - Notwithstanding the provision of any law with the contrary, a cooperative shall have primary lien upon
the capital, deposits or interest of a member for any debt due to the cooperative from such a member.


"ART. 60. Tax Treatment of Cooperative. - Duly registered cooperatives under this Code which do not transact any business with
non-members or the general public shall not be subject to any taxes and fees imposed under the internal revenue laws and other
tax laws. Cooperatives not falling under this article shall be governed by the succeeding section.

"ART.61. Tax and Other Exemptions. Cooperatives transacting business with both members and non-members shall not be
subjected to tax on their transactions with members. In relation to this, the transactions of members with the cooperative shall not
be subject to any taxes and fees, including not limited to final taxes on members’ deposits and documentary tax. Notwithstanding
the provisions of any law or regulation to the contrary, such cooperatives dealing with nonmembers shall enjoy the following tax
exemptions:


"(1) Cooperatives with accumulated reserves and undivided net savings of not more than Ten million pesos (P10,000,000.00)
shall be exempt from all national, city, provincial, municipal or barangay taxes of whatever name and nature. Such cooperatives
shall be exempt from customs duties, advance sales or compensating taxes on their importation of machineries, equipment and
spare parts used by them and which are not available locally a certified by the department of trade and industry (DTI). All tax free
importations shall not be sold nor the beneficial ownership thereof be transferred to any person until after five (5) years, otherwise,
the cooperative and the transferee or assignee shall be solidarily liable to pay twice the amount of the imposed tax and / or duties.

"(2) Cooperatives with accumulated reserves and divided net savings of more than Ten million pesos (P10,000,000.00) shall fee
the following taxes at the full rate:

           "(a) Income Tax - On the amount allocated for interest on capitals: Provided, That the same tax is not consequently
           imposed on interest individually received by members: Provided, further, That cooperatives regardless of classification,
           are exempt income tax from the date of registration with the Authority;

           "(b) Value-Added Tax – On transactions with non-members: Provided, however, That cooperatives duly registered with
           the Authority; are exempt from the payment of value-added tax; subject to Section 109, sub-sections L, M and N of
           Republic Act No. 9337, the National Internal Revenue Code, as amended:Provided, That the exempt transaction under
           Section 109 (L) shall include sales made by cooperatives duly registered with the Authority organized and operated by
           its member to undertake the production and processing of raw materials or of goods produced by its members into
           finished or process products for sale by the cooperative to its members and non-members: Provided, further, That any
           processed product or its derivative arising from the raw materials produced by its members, sold in then name and for
           the account of the cooperative: Provided , finally, That at least twenty-five per centum (25%) of the net income of the
           cooperatives is returned to the members in the form of interest and/or patronage refunds;

           "(c) All other taxes unless otherwise provided herein; and

           "(d) Donations to charitable, research and educational institutions and reinvestment to socioeconomic projects within
           the area of operation of the cooperative may be tax deductible.

"(3) All cooperatives, regardless of the amount of accumulated reserves and undivided net savings shall be exempt from payment
of local taxes and taxes on transactions with banks and insurance companies: Provided, That all sales or services rendered for
non-members shall be subject to the applicable percentage taxes sales made by producers, marketing or service
cooperatives: Provided further, That nothing in this article shall preclude the examination of the books of accounts or other
accounting records of the cooperative by duly authorized internal revenue officers for internal revenue tax purposes only, after
previous authorization by the Authority.


"(4) In areas where there are no available notaries public, the judge, exercising his ex officio capacity as notary public, shall
render service, free of charge, to any person or group of persons requiring the administration of oath or the acknowledgment of
articles of cooperation and instruments of loan from cooperatives not exceeding Five Hundred Thousand Pesos (P500,000.00).

"(5) Any register of deeds shall accept for registration, free of charge, any instrument relative to a loan made under this Code
which does not exceed Two Hundred Fifty Thousand Pesos (P250,000.00) or the deeds of title of any property acquired by the
cooperative or any paper or document drawn in connection with any action brought by the cooperative or with any court judgment
rendered in its favor or any instrument relative to a bond of any accountable officer of a cooperative for the faithful performance of
his duties and obligations.

"(6) Cooperatives shall be exempt from the payment of all court and sheriff’s fees payable to the Philippine Government for and in
connection with all actions brought under this Code, or where such actions is brought by the Authority before the court, to enforce
the payment of obligations contracted in favor of the cooperative.

"(7) All cooperatives shall be exempt from putting up a bond for bringing an appeal against the decision of an inferior court or for
seeking to set aside any third party claim: Provided, That a certification of the Authority showing that the net assets of the
cooperative are in excess of the amount of the bond required by the court in similar cases shall be accepted by the court as a
sufficient bond.

"(8) Any security issued by cooperatives shall be exempt from the provisions of the Securities Act provided such security shall not
be speculative.

"ART. 62. Privileges of Cooperatives. – Cooperatives registered under this Code, notwithstanding the provisions of any law to the
contrary, be also accorded the following privileges:

           "(1) Cooperatives shall enjoy the privilege of depositing their sealed cash boxes or containers, documents or any
           valuable papers in the safes of the municipal or city treasurers and other government offices free of charge, and the
           custodian of such articles shall issue a receipt acknowledging the articles received duly witnessed by another person;
                                                                                                                                              14

                     "(2) Cooperatives organized among government employees, notwithstanding any law or regulation to the contrary, shall
                     enjoy the free use of any available space in their agency, whether owned or rented by the Government;

                     "(3) Cooperatives rendering special types of services and facilities such as cold storage, ice plant, electricity,
                     transportation, and similar services and facilities shall secure a franchise therefore, and such cooperatives shall open
                     their membership to all persons qualified in their areas of operation;


                     "(4) In areas where appropriate cooperatives exist, the preferential right to supply government institutions and agencies
                     rice, corn and other grains, fish and other marine products, meat, eggs, milk, vegetables, tobacco and other agricultural
                     commodities produced by their members shall be granted to the cooperatives concerned;

                     "(5) Preferential treatment in the allocation of fertilizers, including seeds and other agricultural inputs and implements,
                     and in rice distribution shall be granted to cooperatives by the appropriate government agencies;

                     "(6) Preferential and equitable treatment in the allocation or control of bottomries of commercial shipping vessels in
                     connection with the shipment of goods and products of cooperatives;

                     "(7) Cooperatives and their federations, such as farm and fishery producers and suppliers, market vendors and such
                     other cooperatives, which have for their primary purpose the production and/or the marketing of products from
                     agriculture, fisheries and small entrepreneurial industries and federations thereof, shall have preferential rights in the
                     management of public markets and/or lease of public market facilities, stalls or spaces: Provided, That these rights
                     shall only be utilized exclusively by cooperatives:Provided, further, That no cooperative forming a joint venture,
                     partnership or any other similar arrangement with a non-cooperative entity can utilize these rights;

                     "(8) Cooperatives engaged in credit services and/or federations shall be entitled to loans credit lines, rediscounting of
                     their loan notes, and other eligible papers with the Development Bank of the Philippines, the Land Bank of the
                     Philippines and other financial institutions except the Bangko Sentral ng Pilipinas (BSP);


                     "The Philippine Deposit Insurance Corporation (PDIC) and other government agencies, government-owned and
                     controlled corporations and government financial institutions shall provide technical assistance to registered national
                     federations and unions of cooperatives which have significant engagement in savings and credit operations in order for
                     these federations and unions to establish and/or strengthen their own autonomous cooperative deposit insurance
                     systems;


                     "(9) A public transport service cooperative may be entitled to financing support for the acquisition and/or maintenance
                     of land and sea transport equipment, facilities and parts through the program of the government financial institutions. It
                     shall have the preferential right to the management and operation of public terminals and ports whether land or sea
                     transport where the cooperative operates and on securing a franchise for active or potential routes for the public
                     transport;

                     "(10) Cooperatives transacting business with the Government of the Philippines or any of its political subdivisions or
                     any of its agencies or instrumentalities, including government-owned and controlled corporations shall be exempt from
                     prequalification bidding requirements notwithstanding the provisions of Republic Act No.9184, otherwise known as, the
                     Government Procurement Act;

                     "(11) Cooperative shall enjoy the privilege of being represented by the provincial or city fiscal or the Office of the
                     Solicitor General, free of charge, except when the adverse party is the Republic of the Philippines;

                     "(12) Cooperatives organized by faculty members and employees of educational institutions shall have the preferential
                     right in the management of the canteen and other services related to the operation of the educational institution where
                     they are employed: Provided, That such services are operated within the premises of the said educational institution;
                     and


                     "(13) The appropriate housing agencies and government financial institutions shall create a special window for
                     financing housing projects undertaken by cooperatives, with interest rates and terms equal to, or better than those
                     given for socialized housing projects. This financing shall be in the form of blanket loans or long-term wholesale loans
                     to qualified cooperatives, without need for individual processing.


                     "The Authority, in consultation with the appropriate government agencies and concerned cooperative sector, shall issue
                     rules and regulations on all matters concerning housing cooperatives."

SEC. 6. Article 64 of Chapter VI on Insolvency of Cooperatives of the same Code is hereby renumbered and amended to read, as follows:


                                                                  CHAPTER VI
                                                          INSOLVENCY OF COOPERATIVES

          "ART. 63. Proceeding Upon Insolvency.- In case a cooperative is unable to fulfill its obligations to creditors due to insolvency,
          such cooperative may apply for such remedies as it may deem fit under the provisions of Act No. 1956, as amended, otherwise
          known as the Insolvency Law.

          "Nothing in this Article, however, precludes creditors from seeking protection from said insolvency law."

SEC. 7. Articles 65, 66. 67, 68, 69, 70 and 71 of Chapter VII on Dissolution of Cooperatives of the same Code are hereby renumbered and
amended to read, as follows:

                                                                   CHAPTER VII
                                                          DISSOLUTION OF COOPERATIVES
                                                                                                                                        15

"ART. 64. Voluntary Dissolution Where no Creditors are Affected. – If the dissolution of a cooperative does not prejudice the rights
of any creditor having a claim against it, the dissolution may be affected by a majority vote of the board of directors, and by a
resolution duly adopted by the affirmative vote of at least three-fourths (3/4) of all the members with voting rights, present and
constituting a quorum at a meeting to be held upon call of the directors: Provided, That the notice of time, place and object of the
meeting shall be published for three (3) consecutive weeks in a newspaper published in the place where the principal office of said
cooperative is located, or if no newspaper is published in such place, in a newspaper of general circulation in the
Philippines:Provided, further, That the notice of such meeting is sent to each member of record either by registered mail or by
personal delivery at least thirty (30) days prior to said meeting. A copy of the resolution authorizing the dissolution shall be
certified to by a majority of the board of directors and countersigned by the board secretary. The Authority shall thereupon issue
the certificate of dissolution.

"ART. 65. Voluntary Dissolution Where Creditors Are Affected. – Where the dissolution of a cooperative may prejudice the rights
of any creditor, the petition for dissolution shall be filed with the Authority. The petition shall be signed by a majority of its board or
directors or other officers managing its affairs, verified by its chairperson or board secretary or one of its directors and shall set
forth all claims and demands against it and that its dissolution was resolved upon by the affirmative vote of at least three-fourths
(3/4) of all the members with voting rights, present and constituting a quorum at a meeting called for that purpose.

"If the petition is sufficient in form and substance, the Authority shall issue an order reciting the purpose of the petition and shall fix
a date which shall not be less than thirty (30) nor more than sixty (60) days after the entry of the order. Before such date, a copy of
the order shall be published at least once a week for three (3) consecutive weeks in a newspaper of general circulation published
in the municipality or city where the principal office of the cooperative is situated or in the absence of such local newspaper, in a
newspaper of general circulation in the Philippines, and a copy shall likewise be posted for three (3) consecutive weeks in three
(3) public places in the municipality or city where the cooperative’s office is located.

"Upon expiry of the five (5) day notice to file objections, the Authority shall proceed to hear the petition and try any issue raised in
the objection filed; and if the objection is sufficient and the material allegations of the petition are proven, it shall issue an order to
dissolve the cooperative and direct the disposition of its assets in accordance with existing rules and regulations. The order of
dissolution shall set forth therein:

           "(1) The assets and liabilities of the cooperative;


           "(2) The claim of any creditor;

           "(3) The number of members; and

           "(4) The nature and extend of the interests of the members of the cooperative.


"ART. 66. Involuntary Dissolution. – A cooperative may be dissolved by order of a competent court after due hearing on the
grounds of:

           "(1) Violation of any law, regulation or provisions of its bylaws; or

           "(2) Insolvency.


"ART. 67. Dissolution by Order of the Authority. – The Authority may suspend or revoke, after due notice and hearing, the
certificate of registration of a cooperative on any of the following grounds:

           "(1) Having obtained its registration by fraud;


           "(2) Existing for an illegal purpose;

           "(3) Willful violation, despite notice by the Authority, of the provisions of this Code or its bylaws;


           "(4) Willful failure to operate on a cooperative basis; and


           "(5) Failure to meet the required minimum number of members in the cooperative.

"ART. 68. Dissolution by Failure to Organize and Operate.- If a cooperative has not commenced business and its operation within
two (2) years after the issuance of its certificate of registration or has not carried on its business for two (2) consecutive years, the
Authority shall send a formal notice to the said cooperative to show cause as to its failure to operate. Failure of the cooperative to
promptly provide justifiable cause for its failure to operate shall warrant the Authority to delete its name from the roster of
registered cooperatives and shall be deemed dissolved.

"ART. 69. Liquidation of a Cooperative. – Every cooperative whose charter expires by its own limitation or whose existence is
terminated by voluntary dissolution or through an appropriate judicial proceeding shall nevertheless continue to exist for three (3)
years after the time it is dissolved; not to continue the business for which it was established but for the purpose of prosecuting and
defending suits by or against it; settlement and closure of its affairs; disposition, conveyance and distribution of its properties and
assets.

"At any time during the said three (3) years, the cooperative is authorized and empowered to convey all of its properties to
trustees for the benefit of its members, creditors and other persons in interest. From and after any such conveyance, all interests
which the cooperative had in the properties are terminated.

"Upon the winding up of the cooperative affairs, any asset distributable to any creditor, shareholder or member who is unknown or
cannot be found shall be given to the federation or union to which the cooperative is affiliated with.


"A cooperative shall only distribute its assets or properties upon lawful dissolution and after payment of all its debts and liabilities,
except in the case of decrease of share capital of the cooperative and as otherwise allowed by this Code.
                                                                                                                                             16

          "ART. 70. Rules and Regulations on Liquidation. – The Authority shall issue the appropriate implementing guidelines for the
          liquidation of cooperatives."

SEC. 8. Articles 72, 73, 74, 75, 76, 77, 78, 79 and 80 of Chapter VIII on Capital, Property, and Funds of the same Code are hereby
renumbered and amended to read, as follows:

                                                                   CHAPTER VIII
                                                          CAPITAL, PROPERTY, AND FUNDS


          "ART. 71. Capital. - The capitalization of cooperatives and the accounting procedures shall be governed by the provisions of this
          Code and the regulations which shall be issued.

          "ART. 72. Capital Sources.- Cooperatives registered under this Code may derive their capital from any or all of the following
          sources:


                     "(1) Member’s share capital;

                     "(2) Loans and barrowings including deposits;

                     "(3) Revolving capital which consists of the deferred payment of patronage refunds, or interest on share capital; and


                     "(4) Subsidies, donations, legacies, grants, aids and such other assistance from any local or foreign institution whether
                     public or private: Provided, That capital coming from such subsides, donations, legacies, grants, aids and other
                     assistance shall not be divided into individual share capital holdings at any time but shall instead form part of the
                     donated capital or fund of the cooperative.


          "Upon dissolution, such donated capital shall be subject to escheat.

          "ART. 73. Limitation on Share Capital Holdings.- No member of primary cooperative other than cooperative itself shall own or hold
          more than ten per centum (10%) of the share capital of the cooperative.

          "Where a member of cooperative dies, his heir shall be entitled to the shares of the decedent: Provided, That the total share
          holding of the heir does not exceed ten per centum (10%) of the share capital of the cooperative;Provided, further, That the heir
          qualify and is admitted as members of the cooperative: Provided finally , That where the heir fails to qualify as a member or where
          his total share holding exceeds ten per centum (10%) of the share capital , the share or shares excess will revert to the
          cooperative upon payment to the heir of the value of such shares.

          "ART. 74. Assignment of Share Capital Contribution or Interest.- Subject to the provisions of this Code, no member shall transfer
          his shares or interest in the cooperative or any part thereof unless.

                     "(1) He has held such share capital contribution or interest for not less than one (1) year.

                     "(2) The assignment is made to the cooperative or to a member of the cooperative or to a person who falls within the
                     field of the membership of the cooperative; and

                     "(3) The board of directors has approved such assignment.

          "ART.75. Capital Build-Up.- Te bylaws of every cooperative shall be provided for a reasonable and realistic member capital build-
          up program to allow the continuing growth of the members’ investment in their cooperative as their economic conditions continue
          to improve.


          "ART.76. Shares.- The term "share" refers to a unit of capital in a primary cooperative the par value of which may be fixed to any
          figure not more than One thousand pesos (P1,000.00). The share of capital of a cooperative is the money paid or required to be
          paid for the operations of the cooperative. The method for the issuance of share certificates shall prescribed in its bylaws.

          "ART.77. Fines. - The bylaws of a cooperative may prescribe a fine on unpaid subscribed share capital. Provided, that such fine is
          fair and reasonable under the circumstances.

          "ART.78. Investment of Capital. - A cooperative may invest its capital in any of the following:

                     "(a) In shares or debentures or securities of any other cooperative;


                     "(b) In any reputable bank in the locality, or any cooperative;

                     "(c) In securities issued or guaranteed by the Government;

                     "(d) In real state primarily for the use of the cooperative or its members; or

                     "(e) In any other manner authorized in the bylaws.


          "ART. 79. Revolving Capital. – The general assembly of any cooperative may authorize the board of directors to raise a revolving
          capital to strengthen its capital structure by deferring the payment of patronage refunds and interest on share capital or by the
          authorized deduction of a percentage from the proceeds of products sold or services rendered, or per unit of product or services
          handled. The board of directors shall issue revolving capital certificates with serial number, name, amount, and rate of interest to
          be paid and shall distinctly set forth the time of retirement of such certificates and the amounts to be returned."
                                                                                                                                               17

SEC. 9. Articles 81, 82, 83, 84 and 85 of Chapter IX on Audit, Inquiry and Members’ Right to Examine of the same Code are hereby
renumbered and amended to read, as follows:

          "ART. 80. Annual Audit. – Cooperatives registered under this Code shall be subject to an annual financial, performance and social
          audit. The financial audit shall be conducted by an external auditor who satisfies all the following qualifications:

                     "(1) He is independent of the cooperative or any of its subsidiary that he is auditing; and

                     "(2) He is a member in good standing of the Philippine Institute of Certified Public Accountants (PICPA) and is
                     accredited by both the Board and Accountancy and the Authority.

          "The social audit shall be conducted by an independent social auditor accredited by the Authority.

          "Performance and social audit reports which contain the findings and recommendations of the auditor shall be submitted to the
          board of directors.

          "The Authority, in consultation with the cooperative sector, shall promulgate the rules and standards for the social audit of
          cooperatives.

          "ART. 81. Audit Report. – The auditor shall submit to the board of directors and to the audit committee the financial audit report
          which shall be in accordance with the generally accepted auditing standards for cooperatives as jointly promulgated by the
          Philippine Institute of Certified Public Accountants (PICPA) and the Authority.

          "Thereafter, the board of directors shall present the complete audit report to the general assembly in its next meeting.

          "ART. 82. Nonliability for Defamations. – The auditor is not liable to any person in an action for defamation based on any act,
          done, or any statement made by him in good faith in connection with any matter he is authorized or required to do pursuant to this
          Code.

          "ART. 83. Right to Examine. – A member shall have the right to examine the records required to be kept by the cooperative under
          Article 52 of this Code during reasonable hours on business days and he may demand, in writing, for a copy of excerpts from said
          records without charge except the cost of production.

          "Any officer of the cooperative who shall refuse to allow any member of the cooperative to examine and copy excerpts from its
          records shall be liable to such member for damages and shall be guilty of an offense which shall be punishable under Article 140
          of this Code: Provided, That if such refusal is pursuant to a resolution or order of the board of directors, the liability under this
          article shall be imposed upon the directors who voted for such refusal: Provided, further, That it shall be a defense to any action
          under this article that the member demanding to examine and copy excerpts from the cooperative records has improperly used
          any information secured through any prior examination of the records of such cooperative or was not acting in good faith or for a
          legitimate purpose in making his demand.

          "ART. 84. Safety of Records. – Every cooperative shall, at its principal office, keep and carefully preserve the records required by
          this Code to be prepared and maintained. It shall take all necessary precaution to prevent its loss, destruction or falsification."

SEC. 10. Articles 86 and 87 of Chapter X on Allocation and Distribution of Net Surplus of the same Code are hereby renumbered and
amended to read, as follows:

                                                               CHAPTER X
                                               ALLOCATION AND DISTRIBUTION OF NET SURPLUS

          "ART. 85. Net Surplus. – Notwithstanding the provisions of existing laws, the net surplus of cooperatives shall be determined in
          accordance with its bylaws. Every cooperative shall determine its net surplus at the close of every fiscal year and at such other
          times as may be prescribed by the bylaws.


          "Any provision of law to the contrary notwithstanding, the net surplus shall not be construed as profit but as an excess of
          payments made by the members for the loans borrowed, or the goods and services availed by them from the cooperative or the
          difference of the rightful amount due to the members for their products sold or services rendered to the cooperative including other
          inflows of assets resulting from its other operating activities and which shall be deemed to have been returned to them if the same
          is distributed as prescribed herein.


          "ART. 86. Order of Distribution. – The net surplus of every cooperative shall be distributed as follows:

                     "(1) An amount for the reserve fund which shall be at least ten per centum (10%) of net surplus:Provided, That, in the
                     first five (5) years of operation after registration, this amount shall not be less than fifty per centum (50%) of the net
                     surplus:


                                "(a) The reserve fund shall be used for the stability of the cooperative and to meet net losses in its
                                operations. The general assembly may decrease the amount allocated to the reserve fund when the reserve
                                fund already exceeds the share capital.


                                "Any sum recovered on items previously charged to the reserve fund shall be credited to such fund.

                                "(b) The reserve fund shall not be utilized for investment, other than those allowed in this Code. Such sum of
                                the reserve fund in excess of the share capital may be used at anytime for any project that would expand the
                                operations of the cooperative upon the resolution of the general assembly.


                                "(c) Upon the dissolution of the cooperative, the reserve fund shall not be distributed among the members.
                                The general assembly may resolves:
                                                                                                                                                 18

                                           "(i) To establish a usufructuary trust fund for the benefit of any federation or union to which the
                                           cooperative is affiliated; and

                                           "(ii) To donate, contribute, or otherwise dispose of the amount for the benefit of the community
                                           where the cooperative operates. If the members cannot decide upon the disposal of the reserve
                                           fund, the same shall go to the federation or union to which the cooperative is affiliated.


                     "(2) An amount for the education and training fund, shall not be more than ten per centum (10%) of the net surplus. The
                     bylaws may provide that certain fees or a portion thereof be credited to such fund. The fund shall provide for the
                     training, development and similar other cooperative activities geared towards the growth of the cooperative movement:

                                "(a) Half of the amounts transferred to the education and training fund annually under this subsection shall
                                be spent by the cooperative for education and training purposes; while the other half may be remitted to a
                                union or federation chosen by the cooperative or of which it is a member. The said union or federation shall
                                submit to the Authority and to its contributing cooperatives the following schedules:

                                           "(i) List of cooperatives which have remitted their respective Cooperative Education and Training
                                           Funds (CETF);

                                           "(ii) Business consultancy assistance to include the nature and cost; and


                                           "(iii) Other training activities undertaken specifying therein the nature, participants and cost of
                                           each activity.

                                "(b) Upon the dissolution of the cooperative, the unexpended balance of the education and training fund
                                appertaining to the cooperative shall be credited to the cooperative education and training fund of the
                                chosen union or federation.

                     "(3) An amount for the community development fund, which shall not be less than three per centum (3%) of the net
                     surplus. The community development fund shall be used for projects or activities that will benefit the community where
                     the cooperative operates.


                     "(4) An optional fund, a land and building, and any other necessary fund the total of which shall not exceed seven per
                     centum (7%).

                     "(5) The remaining net surplus shall be made available to the members in the form of interest on share capital not to
                     exceed the normal rate of return our investments and patronage refunds: Provided, That any amount remaining after
                     the allowable interest and the patronage refund have been deducted shall be credited to the reserve fund.

          "The sum allocated for patronage refunds shall be made available at the same rate to all patrons of the cooperative in proportion
          to their individual patronage: Provided, That:

                     "(a) In the case of a member patron with paid-up share capital contribution, his proportionate amount of patronage
                     refund shall be paid to him unless he agrees to credit the amount to his account as additional share capital contribution;

                     "(b) In the case of a member patron with unpaid share capital contribution, his proportionate amount of patronage
                     refund shall be credited to his account until his account until his share capital contribution has been fully paid;


                     "(c) In the case of a non-member patron, his proportionate amount of patronage refund shall be set aside in a general
                     fund for such patrons and shall be allocated to individual non-member patrons only upon request and presentation of
                     evidence of the amount of his patronage. The amount so allocated shall be credited to such patron toward payment of
                     the minimum capital contribution for membership. When a sum equal to this amount has accumulated at any time
                     within a period specified in the bylaws, such patron shall be deemed and become a member of the cooperative if he so
                     agrees or requests and complies with the provisions of the bylaws for admission to membership; and


                     "(d) If within any period of time specified in the bylaws, any subscriber who has not fully paid his subscribed share
                     capital or any non-member patron who has accumulated the sum necessary for membership but who does not request
                     nor agree to become a member or fails to comply with the provisions of the bylaws for admission to membership, the
                     amount so accumulated or credited to their account together with any part of the general fund for nonmember patrons
                     shall be credited to the reserve fund or to the education and training fund of the cooperative, at the option of the
                     cooperative."

SEC. 11. Articles 88, 89, 90, 91, 92, 93, 94 and 95 of Chapter XI on the Special Provisions Relating to Agrarian Reform Cooperatives of the
same Code are hereby renumbered retitled and amended to read, as follows:

                                                                 CHAPTER XI
                                                       AGRARIAN REFORM COOPERATIVES


          "ART. 87. Coverage. – The provisions of this Chapter shall primarily govern agrarian reform cooperatives:Provided, That the
          provisions of the other chapters of this Code shall apply suppletorily except insofar as this Chapter otherwise provides.

          "ART. 88. Definition and Purpose. – An agrarian reform cooperative is one organized by marginal farmers, majority of which are
          agrarian reform beneficiaries, for the purpose of developing an appropriate system of land tenure, land development, land
          consolidation or land management in areas covered by agrarian reform.

          "An agrarian reform cooperative as defined shall be organized for any or all of the following purposes:
                                                                                                                                       19

           "(1) To develop an appropriate system of land tenure, land development, land consolidation or land management in
           areas covered by agrarian reform;

           "(2) To coordinate and facilitate the dissemination of scientific methods of production, and provide assistance in the
           storage, transport, and marketing of farm products for agrarian reform beneficiaries and their immediate family,
           hereinafter referred to as "beneficiaries";


           "(3) To provide financial facilities to beneficiaries for provident or productive purposes at reasonable costs;

           "(4) To arrange and facilitate the expeditious transfer of appropriate and suitable technology to beneficiaries and
           marginal farmers at the lowest possible cost;

           "(5) To provide social security benefits, health, medical and social insurance benefits and other social and economic
           benefits that promote the general welfare of the agrarian reform beneficiaries and marginal farmers;


           "(6) To provide non-formal education, vocational/technical training, and livelihood programs to beneficiaries and
           marginal farmers;

           "(7) To act as conduits for external assistance and services to the beneficiaries and marginal farmers;


           "(8) To undertake a comprehensive and integrated development program in agrarian reform and resettlement areas
           with special concern for the development of agro-based, marine-based, and cottage-based industries;

           "(9) To represent the beneficiaries on any or all matters that affect their interest; and

           "(10) To undertake such other economic or social activities as may be necessary or incidental in the pursuit of the
           foregoing purposes.

"ART. 89. Cooperative Estate. – Landholdings like plantations, estates or haciendas acquired by the State for the benefit of the
workers in accordance with the Comprehensive Agrarian Reform Program which shall be collectively owned by the worker-
beneficiaries under a cooperative set-up.


"ART. 90. Infrastructure. – In agrarian reform and resettlement areas, the Government shall grant to agrarian reform cooperatives
preferential treatment in the construction, maintenance and management of roads, bridges, canals, wharves, ports, reservoirs,
irrigation systems, waterworks systems, and other infrastructures with government funding. For this purpose, the Government
shall provide technical assistance, facilities and equipment to such agrarian reform cooperatives.

"ART. 91. Lease of Public Lands. – The Government may lease public lands to any agrarian reform cooperative for a period not
exceeding twenty-five (25%) years, subject to renewal for another twenty-five (25) years only:Provided, That the application for
renewal shall be made one (1) year before the expiration of the lease:Provided, further, That such lease shall be for the exclusive
use and benefit of the beneficiaries and marginal farmers subject to the provisions of the Comprehensive Agrarian Reform
Program.

"ART. 92. Preferential Right. – In agrarian reform areas, an agrarian reform cooperative shall have the preferential right in the
grant of franchise and certificate of public convenience and necessity for the operation of public utilities and services: Provided,
That it meets the requirements and conditions imposed by the appropriate government agency granting the franchise or certificate
of public convenience and necessity. If there is an electric service provider in the area, it shall upon the request of an agrarian
reform cooperative, immediately provide electric services to the agrarian reform areas. If the electric service provider fails to
provide the services requested within a period of one (1) year, the agrarian reform cooperative concerned may undertake to
provide the electric services in the area through its own resources. All investments made by the said agrarian reform cooperative
for the electrification of the agrarian reform resettlement areas shall be the subject of sale to the electric service provider once it
takes on the service.

"ART. 93. Privileges. – Subject to such reasonable terms and conditions as the Department of Agrarian Reform (DAR) and the
Authority may impose, agrarian reform cooperatives may be given the exclusive right to do any or all of the following economic
activities in agrarian reform and resettlement areas;

           "(1) Supply and distribution of consumer, agricultural, aqua-cultural, and industrial goods, production inputs, and raw
           materials and supplies, machinery, equipment, facilities and other services and requirements of the beneficiaries and
           marginal farmers at reasonable prices;

           "(2) Marketing of the products and services of the beneficiaries in local and foreign markets;

           "(3) Processing of the members’ products into finished consumer or industrial goods for domestic consumption or for
           export;


           "(4) Provision of essential public services at cost such as power, irrigation, potable water, passenger and/or cargo
           transportation by land or sea, communication services, and public health and medical care services;

           "(5) Management, conservation, and commercial development of marine, forestry, mineral, water, and other natural
           resources subject to compliance with the laws and regulations on environmental and ecological controls; and


           "(6) Provision of financial, technological, and other services and facilities required by the beneficiaries in their daily lives
           and livelihood.


"The Government shall provide the necessary financial and technical assistance to agrarian reform cooperatives to enable them to
discharge effectively their purposes under this article. The DAR, the Authority and the BSP shall draw up a joint program for the
                                                                                                                                             20

          organization and financing of the agrarian reform cooperatives subject of this Chapter. The joint program shall be geared towards
          the beneficiaries gradual assumption of full ownership and management control of the agrarian reform cooperatives.

          "ART. 94. Organization and Registration. – Agrarian reform cooperatives may be organized and registered under this Code only
          upon prior written verification by the DAR to the effect that the same is needed and desired by the beneficiaries; results of a study
          that has been conducted fairly indicate the economic feasibility of organizing the same and that it will be economically viable in its
          operations; and that the same may now be organized and registered in accordance with requirements of this Code.


          "The Authority, in consultation with the concerned government agencies and cooperative sector, shall issue appropriate rules and
          regulations pertaining to the provisions of this Chapter."

SEC. 12. Articles 96, 97 and 98 of Chapter XII on the Special Provisions on Public Services Cooperatives of the same Code are hereby
transferred to another chapter. Chapter XII as amended shall now read, as follows:

                                                                   CHAPTER XII
                                                                COOPERATIVE BANKS


          "ART. 95. Governing Law. – The provisions of this Chapter shall primarily govern cooperative banks registered under this Code
          and the other provisions of this Code shall apply to them only insofar as they are not inconsistent with the provisions contained in
          this Chapter.


          "ART. 96. Supervision. – The cooperative banks registered under this Code shall be under the supervision of the BSP. The BSP,
          upon consultation with the Authority and the concerned cooperative sector, shall formulate guidelines regarding the operations
          and the governance of cooperative banks. These guidelines shall give due recognition to the unique nature and character of
          cooperative banks. To this end, cooperative banks shall provide financial and banking services to its members.

          "ART. 97. Organization, Membership and Establishment of a Cooperative Bank. – (1) Cooperative organizations duly established
          and registered under this Code may organize a cooperative bank, which shall likewise be considered a cooperative registrable
          under provisions of this Code subject to the requirements and requisite authorization from the BSP. Only one cooperative bank
          may be established in each province: Provided, That an additional cooperative bank may be established in the same province to
          cater to the needs in the same province to cater to the needs of the locality depending on the economic conditions of the province
          as may be determined by the BSP: Provided, further, That the additional cooperative bank shall be located in the City or
          municipality other that the city or municipality where the first cooperative bank is located.


          "(2) Membership in a cooperative bank shall either be regular or associate. Regular membership shall be limited to cooperative
          organizations which are holders of common shares of the bank. Associate members are those subscribing and holding preferred
          shares of the bank, which may include but are not limited to the following:

                     "(a) Individual members of the bank’s member-primary cooperatives; and

                     "(b) Samahang Nayon and Municipal Katipunan ng mga Samahang Nayon (MKSN) which held common shares of
                     cooperative banks prior to the effectivity of this Act shall apply for conversion to full-pledged cooperatives in order to
                     maintain their status as regular members of cooperative banks: Provided, That they shall notify the cooperative bank
                     concerned their intention to convert within a period of ninety (90) days from the effectivity of this Act. Samahang Nayon
                     and MKSN are hereby given a period of one (1) year from the effectivity of this Act to complete their conversion as
                     cooperatives. Cooperative bank shall exert reasonable efforts to inform their member Samahang Nayon and MKSN to
                     finally convert or to give the notice of conversion within the prescribed period. Upon the failure of the Samahang Nayon
                     and MKSN to finally convert to a full-pledged cooperative within the maximum period of one (1) year, the cooperative
                     bank concerned may convert the common shares held by such associations to preferred shares.

          "(3) The articles of cooperative and bylaws of a cooperative bank, or any amendment thereto, shall be registered with the
          Authority only when accompanied by a certificate of authority issued by the BSP, under its official seal.


          "ART. 98. Administration of Cooperative Banks. – To maintain the quality of bank management and accord appropriate protection
          to depositors and the public in general, the BSP shall prescribed the fit and proper qualifications of bank directors and officers for
          the purposes of this article, giving due recognition to the unique nature and character of cooperative banks.


          "Notwithstanding the provisions of this Code, the number, computation and term of the board of directors shall be defined in the
          articles of cooperation and bylaws of the cooperative bank.

          "ART. 99. Quorum and Voting Rights. – The quorum requirement for general assembly meetings, whether special or regular, shall
          be one half plus one of the number of voting shares of all the members in good standing. In the meetings of the board of directors,
          whether special or regular, the quorum requirement shall be one-half plus one of all the members of the board of directors. Each
          director shall only have one vote.

          "Notwithstanding the provisions of this Code to the contrary, the quorum requirement for amendments of articles of cooperation
          and bylaws shall be three-fourths (3/4) vote of all the members with voting rights, present and constituting a quorum. All other
          voting requirements shall be as prescribed by the BSP.


          "The voting rights of the members shall be proportionate to the number of their paid-up shares.

          "ART. 100. Powers, Functions and Allied Undertakings of Cooperative Banks. – A cooperative bank shall primarily provide
          financial, banking and credit services to cooperative organizations and their members. However, the BSP may prescribe
          appropriate guidelines, ceilings and conditions on borrowing of a cooperative organization from a cooperative bank.


          "The powers and functions of a cooperative bank shall be subject to such rules and regulations as may be promulgated by the
          BSP.
                                                                                                                                            21

          "In addition to the powers granted by this Code and other existing laws, any cooperative bank may perform any or all of the
          banking services offered by other types of banks subject to the prior approval of the BSP.

          "ART. 101. Capital Requirements of Cooperative Banks. – (1) A cooperative bank shall have a minimum paid-up capital in such
          amount as may be required by the BSP.

          "The BSP may prescribe rules and regulations on the types of shares a cooperative bank may issue, including the terms thereof
          and rights appurtenant thereto to determine compliance with laws and regulations governing capital and equity structure of banks:
          Provided, That cooperative banks shall issue par value shares only.

          "(2) The Barrio Savings Fund (BSF) and Barrio Guarantee Fund (BGF) collected/deducted by various banks throughout the
          country from the loan proceeds of farmer-borrowers who were members of cooperatives and Samahang Nayon in compliance with
          Presidential Decree No. 175 and accompanying letters of instruction, which are still floating and outstanding either as active or
          dormant deposit accounts in the books of those banks, shall be deposited to the cooperative bank located in the province where
          the depository banks of BSF and BGF are located, or if there is no cooperative bank in the province. The BSP, in coordination with
          the Authority, shall come up with the implementing guidelines on how to credit the owners of the funds.


          "Those funds whose owners could not be located or identified shall be subject to escheat.

          "ART. 102. Privileges and Incentives of Cooperative Banks. – The cooperative banks registered under this Code shall be given
          the same privileges and incentives granted to the rural banks, private development bank, commercial banks, and all other banks
          to rediscount notes with the BSP, the Land Bank of the Philippines, and other government banks without affecting in any way the
          provisions of this Code.

          "(1) Subject to the approval of the BSP, a cooperative bank shall publish a statement of its financial statement of its financial
          condition, including those of its subsidiaries and affiliates in such terms understandable to the layman and in such frequency as
          may be prescribed by the BSP, in English or Filipino, at least once every quarter in a newspaper of local circulation in the city or
          province where the principal office is located or, if no newspaper is published in the same provinces, then in a newspaper
          published in the nearest city or province or in a newspaper of general circulation. The BSP, however, may allow the posting of the
          financial statements of the cooperative bank in conspicuous places it may determine in lieu of the publication required in the
          preceding sentence when warranted by the circumstances.

          "However, in cases of foreclosure of mortgages covering loans granted by a cooperative bank, and the execution of judgments
          thereon involving real properties and levied upon by a sheriff, it shall be exempt from publication requirement where the total
          amount of the loan, excluding interest and other charges due and unpaid, does not exceed Two hundred fifty thousand
          (P250,000.00) or such amount as the BSP may prescribe, as may be warranted by the prevailing economic conditions and by the
          nature and character of the cooperative banks. It shall be sufficient publication in such cases if the notice of foreclosure and
          execution of judgment are posted in conspicuous areas in the cooperative bank’s premises, the municipal hall, the municipal
          public market, the barangay hall, or the barangay public market, if there be any where the property mortgaged is situated, within a
          period of sixty (60) days immediately preceding the public auction or the execution of judgment. Proof of publication as required
          herein shall be accomplished by an affidavit of the sheriff or officer conducting the foreclosure sale or execution of judgment, and
          shall be attached to the record of the case.

          "(2) A cooperative bank shall be allowed to foreclosure lands mortgaged to its subject to the provisions of Republic Act No. 6657,
          otherwise known as Comprehensive Agrarian Reform Law of 1988.

          "ART. 103. Assistance to Cooperative Banks. – In accordance with existing policies, government agencies, government-owned or
          controlled corporations and financial institutions shall provide assistance, technical or otherwise, to cooperative banks to permit
          them to grow, develop and perform their role in countryside development towards a sustainable national economic development.
          Whenever a cooperative bank organized under this Code is in a state of continuing inability or unwillingness to maintain a period
          of liquidity, the BSP may designate one of its officials or a person of recognized competence, preferably with experience in
          cooperative banking and finance, as conservator of the said bank pursuant to the appropriate provisions of existing banking laws.


          "ART. 104. Applicability of Banking Laws and Regulations. – With respect to the provisions and governance of the cooperative
          banks, the provisions of the banking laws, rules and regulations shall prevail, notwithstanding Section 71 of Republic Act No.
          8791, otherwise known as the General Banking Act of 2000.

                     "The BSP and the Authority, in consultation with the concerned cooperative sector, shall issue appropriate rules and
                     regulations pertaining to the provisions of this Chapter."

SEC. 13. Articles 99, 100, 101, 102, 103, 104, 105, 106, 107, 108 and 109 of Chapter XIII on Special Provisions Relating to Cooperative
Banks of the same Code are hereby transferred to another chapter. Chapter XIII as amended shall now read, as follows

                                                                 CHAPTER XIII
                                                            INSURANCE COOPERATIVE


          "ART. 105. Cooperative Insurance Societies. – Existing cooperatives may organize themselves into a cooperative insurance entity
          for the purpose of engaging in the business of insuring life and property of cooperatives and their members.


          "ART. 106. Types of Insurance Provided. – Under the cooperative insurance program established and formed by the virtue of the
          provisions of this Code, the cooperative insurance societies shall provide its constituting members different types of insurance
          coverage consisting of, but not limited to, life insurance with special group coverage, loan protection, retirement plans,
          endowment, motor vehicle coverage, bonding, crop and livestock protection and equipment insurance.

          "ART. 107. Applicability of Insurance Laws. – The provisions of the Insurance Code and all other laws and regulations relative to
          the organization and operation of an insurance company shall apply to cooperative insurance entities organized under this Code.
          The requirements on capitalization, investments and reserves of insurance firms may be liberally modified upon consultation with
          the Authority and the cooperative sector, but in no case may be requirement to be reduced to less than half of those provided for
          under the Insurance Code and other related laws.
                                                                                                                                            22

          "ART. 108. Implementing Rules. – The Insurance Commission and the Authority, in consultation with the concerned cooperative
          sector, shall issue the appropriate rules and regulations implementing the provisions of this Chapter."

SEC. 14. Articles 110, 111, 112, 113 and 114 of Chapter XIV on Special Provisions relating to Credit Cooperative of this Code are hereby
transferred to another chapter. Chapter XIV as amended shall now read, as follows:

                                                                 CHAPTER XIV
                                                         PUBLIC SERVICE COOPERATIVES


          "ART. 109. Definition and Coverage. – A public service cooperative, within the meaning of this Code, is one organized to render
          public services as authorized under a franchise or certificate of public convenience and necessity duly issued by the appropriate
          government agency. Such services may include the following:

                     "(1) Power generation, transmission, and/or distribution;


                     "(2) Ice plants and cold storage services;

                     "(3) Communication services including telephone, telegraph, and communications:

                     "(4) Land and sea transportation cooperatives for passenger and/or cargo. Transport cooperatives organized under the
                     provisions of Executive Order No. 898, Series of 1983, shall be governed by this Chapter.

                     "(5) Public markets, slaughterhouses and other similar services; and


                     "(6) Such other types of public services as may be engaged in by any cooperative. Such cooperative shall be primarily
                     governed by this Chapter and the general provisions of this Code insofar as they may be applicable unless they are
                     inconsistent herewith.

          "ART. 110. Registration Requirements. – Unless otherwise provided in this Code, no public service cooperative shall be registered
          unless it satisfies the following requirements.

                     "(1) Its articles of cooperation and bylaws provide for the membership of the users and/or producers of the service of
                     such cooperatives; and

                     "(2) Such other requirements as may be imposed by the other pertinent government agencies concerned. In case there
                     are two (2) or more applicants for the same public service franchise or certificate of public convenience and necessity,
                     all things being equal, preference shall be given to a public service cooperative.

          "ART. 111. Regulation of Public Service Cooperatives. – (1) The internal affairs of public service cooperatives such as the rights
          and privileges of members, the rules and procedures for meetings of the general assembly, board of directors and committees; for
          the election and qualifications of officers, directors, and committee members; allocation and distribution of surpluses; and all other
          matters relating to their internal affairs shall be governed by this Code.

          "(2) All matters relating to the franchise or certificate of public convenience and necessity of public service cooperatives such as
          capitalization and investment requirements, equipment and facilities, frequencies, rate-fixing and such other matters affecting their
          public service operations shall be governed by the proper government agency concerned.

          "(3) The Authority and the proper government agency concerned shall jointly issue the necessary rules and regulations to
          implement this Chapter.

          "(4) The Authority shall establish a committee for the monitoring of transportation service cooperatives composed of
          representatives from the Authority, the Land Transportation Franchising and Regulatory Board (LTFRB), the Land Transportation
          Office (LTO), Office of Transport Cooperatives (OTC), other concerned government agencies, as may be necessary, and the
          National Federation of Transportation Cooperatives. A local monitoring committee shall likewise be established at the extension
          offices of the Authority to facilitate the monitoring of transportation cooperatives.

          "ART. 112. Engagement in Allied Business by Transportation Service Cooperatives. – Subject to pertinent national laws and local
          ordinances, primary transportation service cooperatives including secondary and tertiary federation of cooperatives may engage in
          a business related to transportation service, including but not limited to:

                     "(1) Importation, distribution and, marketing of petroleum products in accordance with existing laws;

                     "(2) Operation of gasoline stations and transportation service centers;


                     "(3) Importation, distribution and marketing of spare parts and supplies; and

                     "(4) Marketing of vehicle/drivers insurance policies.

          "ART. 113. Renewal of Franchise and Vehicle Registration. – Renewals of franchise and vehicle registration shall be granted to
          transportation service cooperatives: Provided, That such cooperative presents a certificate of good standing issued by the
          Authority, OTC, and the local government unit concerned as proof that it has continuously provided the required public
          transportation services.

          "The Authority, in consultation with the concerned government agencies and cooperative sector, shall issue appropriate rules and
          regulations pertaining to the provisions of this Chapter."
                                                                                                                                             23

SEC. 15. Articles 115, 116, 117 and 118 of Chapter XV on Special Provisions relating to Cooperative Insurance Societies of the same Code
are hereby transferred to another chapter. Chapter XV as amended shall now read, as follows:

                                                                   CHAPTER XV
                                                               CREDIT COOPERATIVES


          "ART. 114. Coverage. – This Chapter shall apply to credit cooperatives and other cooperatives, including multipurpose
          cooperatives, that provide savings and credit to their members only. The rest of the provisions of this Code shall apply to them
          insofar as the same are not inconsistent with the provisions of this Chapter.

          "ART. 115. Definition and Objectives. – A credit cooperative is a financial organization owned and operated by its members with
          the following objectives:

                     "(1) To encourage savings among its members;


                     "(2) To create a pool of such savings for which loans for productive or provident purpose may be granted to its
                     members; and

                     "(3) To provide related services to enable its members to maximize the benefit from such loans.


          "ART. 116. Organization and Registration.- Credit cooperatives shall be organized and registered in accordance with the general
          provisions of this Code.

          "ART. 117. Organizational Linkage. – Credit cooperatives may organize chapters or subsidiaries, or join leagues and federations
          for the purpose of providing commonly needed essential services including but not limited to the following:


          "(1) Interlending of surplus fund;"(2) Mutual benefits;"(3) Deposit guarantee;"(4) Bonding;"(5) Education and training;"(6)
          Professional and technical assistance;"(7) Research and development;"(8) Representation; and "(9) Other services needed to
          improve their performance.

          "Existing support organizations such as federations of credit cooperatives, credit cooperatives at the provincial, regional and
          national levels may continue as such under this Code."

SEC. 16. A new Article is inserted in Chapter XV on Credit Cooperatives and shall now read, as follows:


          "ART. 118. Conversion of Credit Cooperatives to Financial Service Cooperatives. – Existing credit and multipurpose cooperatives
          with savings and credit facilities shall formally inform the Authority of its intention to continue performing its present functions.
          Should the said cooperatives decide to exercise enhanced functions, it shall notify the Authority and satisfy the requirements for
          conversion to financial service cooperative."

SEC. 17. A new Chapter on Financial Service Cooperatives shall be inserted in this Chapter and shall read, as follows:

                                                                 CHAPTER XVI
                                                       FINANCIAL SERVICE COOPERATIVES


          "ART. 119. Definition and Functions of Financial Services Cooperatives. – A financial service cooperative is a financial
          organization owned and operated by its members and authorized to provide the following service, exclusively to its members:

          "(a) The functions of credit cooperatives and other cooperatives, including multipurpose cooperatives, that provide savings and
          credit to their members, and"(b) Other financial services subject to regulation by the BSP.


          "The articles of cooperation and bylaws of any financial service cooperative, or any amendment thereto, shall be registered with
          the Authority only if accompanied by a certificate of authority issued by the BSP, under its official seal.

          "The authority granted this provision may be revoked by the BSP if any of the grounds for receivership mentioned under Section
          53 and 56 of Republic Act No. 8791 is present or if the financial service cooperative has willfully violated this Code of any of the
          related rules and regulations.

          "The BSP shall issue a cease and desist order to cooperatives exercising the function of a financial service cooperative without
          authority from the BSP.


          "The BSP may charge equitable rates or fees, as may be prescribed by the Monetary Board for licensing, examination and other
          services which it renders under this Code.

          "Upon the favorable certification of the BSP and the prior approval of the Authority, a cooperative, the main purpose of which is to
          perform savings and credit functions, may convert to financial service cooperative subject to the required qualifications and
          procedures provided under this Code and in the implementing rules and regulations.

          "ART. 120. Membership and Affiliation. – A financial service cooperative shall have the two (2) types of members:

          "(1) Regular members, who are natural persons; and


          "(2) Associate members, who are natural persons but who do not immediately qualify under the requirements for membership set
          out in the bylaws of the cooperative. All associate members who are natural persons shall be given two (2) years to become
          regular members. Failure to convert within the said period shall mean automatic withdrawal of their associate membership. They
          may, however, re-apply as regular members after two (2) years.
                                                                                                                                     24

"Minors who are dependents of regular members can qualify as associate members. When they reach the age of majority and
within two (2) years from acceptances of their associate membership, they have the option to convert into regular members. As
associate members, they may open accounts, deposit funds and withdraw from their account, subject to the bylaws and rules of
the cooperative, and the rules and regulations of the Authority, notwithstanding the provisions of existing laws to the contrary.

"ART. 121. Regulation and Supervision. – The Authority shall exercise lead regulatory powers and supervision over the operations
of the financial service cooperatives, to wit:


           "(1) Issue rules and regulations for the safe and sound conduct of operations of financial service cooperatives;

           "(2) Establish standards of operation for uniform application to all financial service cooperatives;

           "(3) Prescribe ratios, ceilings, limitations, or other forms of regulation on the different types of accounts and practices of
           financial service cooperatives which shall, conform to internationally accepted standards;


           "(4) Investigate to determine whether a financial service cooperative is conducting its business in a safe and sound
           manner;

           "(5) Conduct regular examination of the books of accounts, records and other documents of financial service
           cooperatives;


           "(6) Inquire into the solvency and liquidity of a financial service cooperatives;

           "(7) Prescribe appropriate fees for supervision and examination of financial service cooperatives to among others,
           monitor and oversee that existing laws and regulations are complied with;


           "(8) Pass upon and review the qualifications and disqualifications of individuals elected or appointed directors or
           officers and disqualify those found unfit;

           "(9) Disqualify, suspend or remove any director or officer who commits or omits an act which render him unfit for the
           position;


           "(10) Select, designate and deputize federations, through an approved accreditation criteria, that will supervise primary
           financial service cooperatives and issue basic guidelines therefor;

           "(11) Require the submission of relevant reports from the deputized supervisor;


           "(12) Provide remedial measures in the operations of financial service cooperatives that are in a state of continuing
           inability or unwillingness to maintain a period of liquidity at the request of the deputized supervisor or when the
           deputized supervisor fails to perform its functions;

           "(13) Accredit external auditors in accordance with standards for audit and financial reporting in cooperation with the
           PICPA; and

           "(14) Appoint a conservator or a receiver as may be necessary subject to the rules and regulations to be promulgated
           by the Authority in coordination with the BSP, taking into consideration the grounds, powers and procedures under
           Sections 29 and 30 of Republic Act No. 7653 as may be deemed appropriate to financial service cooperatives.

"The Authority shall include in its rules and regulations, appropriate sanctions and penalties, on the financial service cooperatives,
its members, officers and responsible persons, for any action that fails to adhere to sound and prudent management practices or
are inconsistent with the provisions of this Code, other applicable laws on cooperatives, rules, regulations, circulars or orders
issued by the Authority, and require the cooperative to undertake corrective or remedial measures relative thereto.

"The BSP is authorized to conduct risk-based supervision and examination of financial service cooperatives as it may deem
necessary.


"ART. 122. Promulgation of Rules and Regulations. – The BSP, in coordination with the Authority, shall prescribe the appropriate
prudential rules and regulations applicable to the financial service cooperatives.

"Subject to the regulations of the BSP, the banking laws, rules and regulations shall have suppletory application to financial
services cooperatives: Provided, however, That the provisions on access to borrowing or financial assistance to be extended by
the BSP of the Philippine Deposit Insurance Corporation (PIDC) shall not apply to financial service cooperatives: Provided, further,
That the deposit liabilities of the financial service cooperatives shall not be insured by the PDIC.


"ART. 123. Financial Service Cooperative Federations. – Financial service cooperatives may organize themselves into financial
service cooperative may organize themselves into financial service cooperative federations, and register their federation with the
Authority. These financial service cooperative federations may be deputized by the Authority as the supervisor of their members,
and they shall have the following functions:


           "(a) Develop standards and provide services for the benefit of its affiliates and their members in accordance with the
           rules and regulations of the Authority;

           "(b) Define common objectives and coordinate activities for the financial service cooperative federation;


           "(c) Establish and administer funds such as liquidity fund, loan fund, investment fund, stabilization fund and such other
           funds;
                                                                                                                                              25

                     "(d) Establish a savings guarantee system for the protection of their affiliates' member-depositors within three (3) years
                     from the approval of this Code;

                     "(e) Exercise on-site and off-site supervisory power over its members;

                     "(f) Provide remedial assistance to its members concerning their operations and management;

                     "(g) Act as the liquidator and when applicable, sequester properties to satisfy an obligation secured by a mortgage
                     when authorized by the Authority; and


                     "(h) Transmit relevant and required information regarding the operations and performance of member-cooperatives to
                     the Authority.

          "The Authority and other government agencies, government-owned or controlled corporations and government financial
          institutions shall provide technical and such other assistance that may be allowed by their charters to financial service cooperative
          federations for the establishment and/or strengthening of their respective cooperative savings guarantee system. The technical
          assistance to be provided shall include, among others, training supervision and examination.

          "ART. 124. Designation of Existing Unit at the Cooperative Development Authority to Perform Regulatory and Supervisory
          Functions. – Within six (6) months from the approval of this Code, the Authority shall designate the unit to formulate and
          implement the necessary regulations, rules, policies, guidelines and standards applicable solely to financial service cooperatives
          and deputized federations in the performance of their savings, credit and such other related enhanced financial service
          operations.

          "The Department of Finance, the BSP and other concerned government agencies shall provide technical and training support for
          the effective and efficient implementation of the regulatory and supervisory functions and responsibilities of the Authority.

          "ART. 125. Prohibition. – The terms credit cooperative, financial service cooperative and financial service cooperative federation
          shall be used exclusively by those who are duly registered under this Code, and no person, group of persons, or organizations
          shall use the said terms unless duly registered with the Authority. Violations of this prohibition shall be punishable in accordance
          with Article 140 of this Code."

SEC. 18. A new Chapter on Electric Cooperatives shall be inserted and shall read, as follows:

                                                                  CHAPTER XVII
                                                              ELECTRIC COOPERATIVE


          "ART. 126. Coverage. – The provisions of this Code shall apply to all electric cooperatives registered with the Authority. This shall
          also cover new distribution utilities that will register with the Authority.

          "Electric cooperatives may undertake power generation utilizing renewable energy sources, including hybrid systems, acquisition
          and operation of subtransmission or distribution as its primary purposes.

          "ART. 127. Registration of Electric Cooperatives. – The registration of an electric cooperative with the Authority under this Code
          shall be submitted for approval to the members through a referendum, called for the purpose as provided for under Articles 183
          and 129 of this Code.

          "ART. 128. Voting Requirement for Registration. – In compliance with the referendum as a voting procedure, the required number
          of votes for registration with the Authority shall be twenty percent (20%) of all members in good standing.

          "ART. 129. Documents to be Submitted for Registration with the Authority. – For purposes of registration, electric cooperatives
          shall submit the following documents:

                     "(a) Copy of the board resolution certifying to the result of the vote approved through a referendum approving the
                     registration of the cooperative with the Authority in compliance with Article 128;

                     "(b) Certified copy of the articles of incorporation/cooperation and bylaws as required by the Authority;

                     "(c) Duly audited financial statements for the past two (2) years;

                     "(d) List of names of incumbent board of directors and their addresses certified by the board secretary and attested by
                     the chairperson;

                     "(e) Within six (6) months from the registration, the treasurer shall submit a sworn statement of the authorized share
                     capital, the subscribed share capital of members and the amount of paid-up share capital received by the treasurer;
                     and


                     "(f) Bonds of accountable officers.

          "ART. 130. Registration Options of Electric Cooperatives. – Electric Cooperatives registered with the National Electrification
          Administration (NEA) under Presidential Decree No. 269, as amended which opt not to register with the Authority are allowed to
          retain the word ‘cooperative’ in their registered names: Provided, That they shall not be entitled to the benefits and privileges
          under this Code.


          "ART. 131. Role of the Energy Regulatory Commission. – All rates and tariffs of electric cooperatives registered under the
          Authority shall be subject to the rules on application and approval of and by the Energy Regulatory Commission for distribution
          utilities.
                                                                                                                                                 26

          "ART. 132. Effects of Registration with the Authority. – (1) Upon the effectivity of this Code, electric cooperatives that are duly
          registered with the Authority, and issued a certificate of registration, shall no longer be covered by Presidential Decree No. 269, as
          amended by Presidential Decree No. 1645: Provided, That electric cooperatives registered with the Authority shall now be
          covered by the provisions of this Code as well as future rules and issuances of the Authority: Provided, however, That the security
          of tenure and the collective bargaining agreement between the cooperative management and the employees shall be respected,
          with no diminution of their existing salaries, emoluments, ranks and other benefits;


          "(2) The electric cooperatives registered with the Authority with existing loans obtained from NEA after June 26, 2001 shall
          continue to observe the terms of such loans until full payment or settlement thereof;

          "(3) Except as provided in the immediately preceding paragraph, the NEA shall no longer exercise regulatory or supervisory
          powers on electric cooperatives duly registered with the Authority;

          "(4) Electric cooperatives registered with the Authority are entitled to congressional allocations, grants, subsidiaries and other
          financial assistance for rural electrification which can be coursed through the Department of Energy, the Authority and/or local
          government units. The electric cooperatives registered under this Code can avail of the financial services and technical assistance
          provided by the government financial institutions and technical development agencies on terms respecting their independence as
          autonomous cooperatives;

          "(5) All condoned loans, subsidies, grants and other assistance shall form part of the donated capital and funds of the electric
          cooperatives and as such, it shall not be sold, traded nor be divided into shareholdings at any time; these donated capital/fund
          shall be valuated for the sole purpose of determining the equity participation of the members: Provided, That in the case of
          dissolution of the cooperative, said donated capital shall be subject to escheat; and

          "(6) Electric cooperatives registered and confirmed with the Authority under Republic Act No. 6938 and Republic Act No. 6939 are
          hereby deemed registered under this Code.

          "ART. 133. Share Capital in the Electric Cooperatives. – The electric cooperative shall issue and distribute share certificates under
          the name of their members, taking into consideration their previous equity contributions, the amortization component through the
          payments made, capital build-up and other capital contributions.

          "ART. 134. Cancellation of Registration with the Authority. – The cancellation of the registration of an electric cooperative shall be
          granted by the Authority as provided under Articles 64 to 70 of this Code.


          "The Authority, in consultation with the concerned cooperative sector, shall issue appropriate rules and regulations pertaining to
          the provisions of this Chapter."

SEC.19. Articles 119, 120 and 121 of Chapter XVI on Miscellaneous Provisions of the same Code are hereby amended and shall now read,
as follows:

                                                                    CHAPTER XVIII
                                                              MISCELLANEOUS PROVISIONS


          "ART. 135. Compliance With Other Laws. – The Labor Code and all other labor laws, the Social Security Act, the Medical Care
          Act, and all other social legislations, and all other laws and executive orders shall apply to cooperatives duly registered under this
          Code.

          "ART. 136. Register of Cooperatives. – The Authority shall establish a register which shall contain a chronological entry of the
          name of every cooperative registered or dissolved under this Code together with the basic information required for registration or
          dissolution and any other information considered useful. The Authority shall publish annually a list of existing cooperatives,
          cooperatives under dissolution and those whose registration are cancelled during the year together with such information on each
          of them as may be prescribed in the rules and regulations.

          "ART. 137. Settlement of Disputes, Conciliation, and Mediation Proceedings. – Disputes among members, officers, directors, and
          committee members, and intra-cooperative, inter-cooperative, intra-federation or inter-federation disputes shall, as far as
          practicable, be settled amicably in accordance with the conciliation or mediation mechanisms embodied in the bylaws of
          cooperatives and in such other applicable laws.


          "The conciliation and mediation committee of the cooperative shall facilitate the amicable settlement of intra-cooperative disputes
          and disputes among members, officers, directors, and committee members.

          "Should such conciliation or mediation proceeding fail, the matter shall be settled through voluntary arbitration:Provided, however,
          That before any party can validly file a complaint with the Authority for voluntary arbitration, it must first secure a certification from
          its conciliation and mediation committee and from its conciliation and mediation committee and from the cooperative union or
          federation to which it belongs that despite all efforts to settle the issues, the same have failed.

          "The jurisdiction of the voluntary arbitrators shall be exclusive and original and their decisions shall be appealable to the Office of
          the President. The Authority shall issue and adopt the proper rules of procedure governing arbitration as the primary and exclusive
          mode for dispute resolution in accordance with the Alternative Dispute Resolution Act of 2004.

          "For this purpose, the Authority shall constitute a list of qualified voluntary arbitrators."

SEC. 20. A new article is inserted in Chapter XVIII on the Miscellaneous Provisions of the same Code and shall read, as follows:


          "ART. 138. Joint Congressional Oversight Committee on Cooperative (JCOCC). – There is hereby created a Joint Congressional
          Oversight Committee composed of the Chairman of the Senate Committee on Cooperatives and the Chairman of the House
          Committee on Cooperatives Development, with four (4) members each from both Houses. The said members shall be duly
          appointed by the Senate President and the Speaker of the House of Representatives from the members of the respective
          committee based on the proportional representation of the parties or coalition therein.
                                                                                                                                              27

          "The Joint Oversight Committee shall review and approve the implementing rules and regulations of this Code and monitor its
          proper implementation.

          "The annual appropriate for the oversight committee shall be charged to the budget of both Houses of Congress in the General
          Appropriations Act (GAA)."

SEC. 21. Article 122 is hereby deleted. Articles 123, 124, 125, 126, 127, 128, 129 and 130 of Chapter XVII on Final Provisions of this Code
are amended to read, as follows:

                                                                       CHAPTER XIX
                                                                    FINAL PROVISIONS


          "ART. 139. Implementing Rules and Regulations. – The Authority shall issue rules and regulations to implement those provisions
          of this Code which expressly call for the issuance thereof. This paragraph shall not apply to those cases wherein a specific
          provision of this Code expressly designates particular government agencies which shall issue the regulations called for by any
          provision of this Code.

          "ART. 140. Penal Provisions. – The following acts or omissions affecting cooperatives are hereby prohibited:

                     "(1) The use of the word ‘cooperative’ by any person or of persons or organizations, unless duly registered as a
                     cooperative under this Code except as provided for under Article 130 hereof. In case of violation, the individual or
                     individuals concerned, or in the case of an organization, its officers and directors shall, upon conviction, each suffer the
                     penalty of imprisonment of not less than two (2) years nor more than five (5) years and a fine not exceeding Twenty
                     thousand pesos (P20,000.00) or both at the discretion of the court;

                     "The Authority may motu proprio, initiate complaints for violations of this provision.

                     "(2) Any person who willfully attempts in any manner to evade or defeat tax in violation of the provisions of Articles 60
                     and 61 of this Code shall in addition thereof, be punished by a fine of not less than Thirty thousand pesos (P30,000.00)
                     but not more than One hundred thousand pesos (P100,000.00) and suffer imprisonment of not less than two (2) years
                     but not more than four (4) years: Provided, That the conviction or acquittal obtained under this Article shall not be a bar
                     to the filing of a civil suit for the collection of taxes;

                     "(3) Direct or indirect violation or circumvention of the provisions of Articles 60 and 61 of this Code committee by any
                     public official or employee of any bureau, office or agency of the government that deprives, diminishes or in any
                     manner hinders or restricts any duly registered cooperative from the full enjoyment of the exemption from the payment
                     of the taxes, fees and charges enumerated therein, shall upon conviction, suffer a penalty of not less that one (1) year
                     but not more than five (5) years imprisonment or a fine in the amount of not less than Five thousand pesos (P5,000.00)
                     or both at the discretion of the court and shall further be disqualified to hold any other office;

                     "(4) Direct or indirect interference or intervention by any public official or employee into the internal affairs of a
                     cooperative of which he is not a member, such as, but not limited to, the following:

                                "(a) Influencing the election or appointment of officers, directors, committee members and employees
                                through public or private endorsement or campaign for or against any person or group of persons;

                                "(b) Requiring prior clearances for any policy or decision within the cooperative;

                                "(c) Requesting or demanding for the creation of positions or organizational units, or recommending any
                                person for appointment, transfer, or removal from his position; or

                                "(d) Any other acts inimical or adverse to the autonomy and independence of cooperatives.


                     "(5) A director, officer or committee member who violated the provisions of Article 45 on the Liability of Directors,
                     Officers and Committee Members, Article 48 on the Disloyalty of a Director, and Article 49 on the Illegal Use of
                     Confidential Information shall upon conviction suffer a fine of not less than Five hundred thousand pesos (P500,000.00)
                     nor more than Five hundred thousand pesos (P500,000.00) or imprisonment of not less than five (5) years but not more
                     than ten (10) years or both at the court’s discretion;


                     "(6) The following are considered offenses punishable by a penalty of imprisonment of not less than one (1) year nor
                     more than five (5) years or a fine of not more than Fifty thousand pesos (P50,000.00) or both at the discretion of the
                     court:

                                "(a) Omission or refusal to furnish any information, report or other document that is required under this
                                Code;


                                "(b) Providing information, reports or other documents to the Authority that are required under this Code
                                which the person knows to be false or misleading;

                                "(c) Omission or refusal to keep a book or register under this Code or to make the required entry therein;


                                "(d) Making an entry required under this Code in a book or register, which the person knows to be false or
                                misleading;

                                "(e) Hindering an authorized person from making an inspection, audit, examination or investigation required
                                under this Code;

                                "(f) Failure to comply with an order or written instructions issued or given by the Authority;
                                                                                                                                                   28

                                   "(g) Violation of the provisions regarding transactions with a restricted party; and

                                   "(h) Abetting, counseling, allowing, authorizing or commanding another person to commit an offense
                                   punishable by this Code: Provided, That in case the violator is a cooperative or juridical person, the penalty
                                   shall be imposed on its directors and officers.

                       "(7) Any violation of any provision of this Code for which no penalty is imposed shall be punished by imprisonment of
                       not less than six (6) months nor more than one (1) year and a fine of not less than One thousand pesos (P1,000.00), or
                       both at the discretion of the court.

            "In case of violation of any provision of this Code, the individual or individuals, and in the case of organizations or government
            agencies, its officers, and directors shall, upon conviction by a Court, each suffer a penalty of not less than two (2) years but not
            more than five (5) years imprisonment or a fine in the amount of not less than Twenty thousand pesos (P20,000.00), or both at the
            discretion of the court. In the case of a public official or employee, the offender shall upon conviction, suffer the accessory penalty
            of temporary absolute disqualification.

            "ART. 141. Printing and Distribution. – (1) The National Printing Office shall publish this Code in the Official Gazette in full within
            sixty (60) days from the date of approval thereof. Copies of this Code shall be given to every department, agency and
            instrumentality of the National Government, including regional, provincial offices and local governments including government-
            owned and controlled corporations.

            "(2) All duly registered cooperatives and their federations, unions and associations, and cooperative corporations shall be given
            one (1) copy each at cost. Thereafter, every newly registered cooperative shall be issued at cost a copy of this Code and the
            regulations promulgated thereon together with its certificate of registration.


            "ART. 142. Interpretation and Construction. – In case of doubt as to the meaning of any provision of his Code or the regulations
            issued in pursuance thereof, the same shall be resolved liberally in favor of the cooperatives and their members.


            "ART. 143. Repealing Clause. – Except as expressly provided by this Code, Presidential Decree No. 175 and all other laws, or
            parts thereof, inconsistent with any provision of this Code shall be deemed repealed:Provided, That the provisions of Sections 3,
            5, and 7 of Presidential Decree No. 1645, Executive Order No. 623, series of 2007. Revenue Regulation No. 20-2001, and all
            laws, decrees, executive orders, implementing rules and regulations, BIR circulars, memorandum orders, letters of instruction,
            local government ordinances, or parts thereof inconsistent with any of the provisions of this Act are hereby repealed, amended or
            modified accordingly.

            "ART.144. Transitory Provisions.- (1) All cooperatives registered and confirmed with the Authority under Republic Act No. 6938
            and Republic Act No. 6939, are hereby deemed registered under this code, and a new certificate of registration shall be issued by
            the authority: Provided, That such cooperative shall submit to the nearest office of the authority a copy of their certificate of
            registration or certificate of confirmation, the articles of cooperation, their bylaws, and their latest audited financial statement within
            one (1) year from the effectivity of this code, otherwise the shall be deemed cancelled motu proprio.

            "(2) Following the issuance of the new certificate of registration, the registered cooperatives shall secured their certificate of tax
            exemption from the nearest office of the Bureau of Internal Revenue (BIR): Provided, That such exemptions shall be valid of five
            (5) years from the date of issue: Provided, further, That all unpaid assessments of previously registered cooperative shall be the
            subject of compromise settlement on terms favorable to such cooperative; and: Provided, finally, That the BIR and the authority
            shall be jointly issue the necessary regulations on this exemption and compromise within ninety (90) days from the effectivity from
            this Code.


            "(3) Registration of electric cooperatives with the Authority shall not be considered as a transferred of ownership of its assets and
            liabilities nor shall it constitute a change in the nature, structure, and status of the cooperative. Said registration shall not result in
            the revocation of the condoned loans under Republic Act No. 9136, otherwise known as the Electric Power Industry Reform
            Act: Provided, That electric cooperatives with existing loans shall not be subject to the control and supervisions of its creditors and
            shall only be limited to the fulfillment of each civil obligations.


            "ART.145. Separabilty Clause. - Should any part of this code be declared unconstitutional, the validity of remaining provision
            hereof shall remain in full and effect.

            "ART.146. Effectivity Clause. - This code shall take effect fifteen (15) days from its publication in a newspaper of general
            circulation.

Approved,


                           (Sgd.) PROSPERO C. NOGRALES                                 (Sgd.) JUAN PONCE ENRILE
                         Speaker of the House of Representatives                          President of the Senate


This Act which is a consolidation of Senate Bill No. 2264 and House Bill No. 4312 was finally passed by the Senate and the House of
Representatives on December 16, 2008.


                             (Sgd.) MARILYN B. BARUA-YAP                                (Sgd.) EMMA LIRIO-REYES
                                     Secretary General                                      Secretary of Senate
                                 House of Represenatives


Approved: FEB 17, 2009


                                                     (Sgd.) GLORIA MACAPAGAL-ARROYO
                                                            President of the Philippines
                                                                                                                                                29


The Lawphil Project - Arellano Law Foundation




                                  RULES AND REGULATION IMPLEMENTING CERTAIN PROVISIONS
                                        OF THE PHILIPPINE COOPERATIVE CODE OF 2008
                                                  (REPUBLIC ACT NO. 9520)


Pursuant to the provision of Art. 139 of Republic Act No. 952 otherwise known as the Philippine Cooperative Code of 2008, the Cooperative
Development Authority hereby issues the following rules and regulations implementing certain provisions of the said Code.

                                                         TITLES AND DEFINITIONS

Section 1. Title. These Rules shall be known as the "Rules and Regulations Implementing Certain Provisions of the Philippine
Cooperative Code of 2008."

Section 2. Definition of Terms. For the purpose of these Rules and regulations, the following terms are defined as follows:

          (1) Alternative Dispute Resolution - shall refer to any process or procedure used to resolve a dispute or controversy, other than
          by adjudication of a presiding Judge of Court or an officer of a government agency, in which a neutral third party participates to
          assist in the resolution of issue, which includes arbitration, mediation, conciliation, early neutral evaluation, mini trial, or any
          combination thereof.

          (2) Arbitrator - shall refer to the person appointed to render an Award/Decision, alone or with others, in a dispute that is the
          subject of an Arbitration Agreement.

          (3) Area of Business Operation - shall refer to the principal place of business of a cooperative where the cooperative conducts
          its business as provided for in their Articles of Cooperative and By-laws.

          (4) Area of Operation - shall refer to the area where the cooperative members come from as provided for in their Articles of
          Cooperation and By-laws.

          (5) Articles of Cooperation - shall refer to the Articles of Cooperation registered under the Code, with includes a registered
          amendment thereto, if applicable.

          (6) Associate Member - shall refer to member of a cooperative who has no right to vote or be voted upon and shall be entitled
          only to such rights and privileges as the By-laws may provide.

          (7) Authority - shall refer to the Cooperative Development Authority (CDA).

          (8) Authorized Share Capital - shall refer to the capitalization of the cooperative as prescribed in the Articles of Cooperation

          (9) Award/Decision - shall refer to any partial or final decision by an Arbitrator in resolving the issue in a controversy.

          (10) Board of Liquidators/Trustees - shall refer to the body appointed by the Board of Directors or elected by the General
          Assembly that shall cause the liquidation of the cooperative in case of voluntary dissolution or appointed by the Authority/Court in
          case of involuntary dissolution of a cooperative.

          (11) Bond of Membership - shall refer to the conditions where members associate themselves to attain their common goals and
          objectives which may either be residential, occupational, associational, and institutional.

          (12) By-Laws - shall refer to the By-laws registered under the Code which includes any registered amendments thereto.

          (13) Capital - shall refer to the sum total of member's share capital including deposits, revolving capital, subsidies, donations,
          legacies, grants, aids, land structures, plants, equipment facilities, machines and other assets of a cooperative.

          (14) Certificate of Merger - shall refer to the document issued by the Authority evidencing registration of merger.

          (15) Code - shall refer to the Republic Acts No. 9520, otherwise known as the Philippine Cooperative Code of 2008.


          (16) Conciliation - shall refer to the process whereby a neutral third party takes a vigorous and active role in assisting disputants
          to formulate between and among them an acceptable solution in order to reach an amicable settlement.

          (17) Conservator - shall refer to any person appointed by the Authority empowered to take charge of the assets, liabilities, and
          the management of the cooperative, after finding that the cooperative is in the state of continuing illiquidity or unwillingness to
          maintain a condition of liquidity which is deemed adequate to protect the interest of members and creditors of the cooperative.

          (18) Consolidation - shall refer to a union of two or more existing cooperatives belonging to the same category to a form a new
          cooperative called the consolidated cooperative.

          (19) Constituent Cooperatives - shall refer to two or more existing cooperatives which are parties to a merger or consolidation.

          (20) Credit Cooperative - shall refer to one that promotes and undertakes savings and lending services among its members. It
          generates a common pool of funds in order to provide financial assistance and other related financial services to its members for
          productive and provident purposes.
                                                                                                                                     30

(21) Cumulative Interest - shall refer to the interest due to a member that must be added to in future interest if it is not paid when
due.

(22) Delay in the submission of reports - shall refer to the failure of the cooperatives to submit a report on time.


(23) Dispute - shall refer to intra/inter cooperative controversy or grievance from any violation or disagreement over any
provisions, including any violations of the rights and conditions of membership provided in the cooperative By-laws and/or in the
Cooperative Code, which may be the subject of a formal or informal request for conciliation/mediation or arbitration assistance
sought by either one or both parties.

(24) Dissenting Member - shall refer to a member present during the meeting and who actually voted against the proposed
activity/project of a cooperative.

(25) Division - shall refer to the act of spiting a single cooperative into two or more cooperatives, wherein the original cooperative
shall be dissolved and the resulting cooperatives shall acquire separate and distinct juridical personalities.

(26) Donated Capital - shall refer to the subsidies, grants, donations and aids received by the cooperative from any person,
whether natural or juridical, local or foreign both government and private.

(27) Escheat - shall refer to the right of the State to succeed to property either real or personal, when no heir or rightful claimant
can be found through an appropriate legal proceeding.

(28) Equity - shall refer to the excess of cooperative assets over liabilities.

(29) Financial Statements - shall refer to the means i.e. Statement of Financial Condition (Balance Sheet), Statement of
Operation (Statement of Net Surplus) and Statement of Cash Flows, by which the financial information accumulated and
processed in financial accounting, is periodically communicated to those who use it.

(30) Financial Service Cooperative (FSC) - shall refer to one organized for the primary purpose of engaging in saving and credit
services and other financial services regulated by the Bangko Sentral ng Pilipinas (BSP).

(31) General Assembly - shall refer to the full membership of the cooperative duly assembled for the purpose of exercising all the
rights and performing all the obligations pertaining to cooperatives, as provided by this Code, its Cooperation and By-laws.

(32) Guardian Cooperative - shall refer to duly registered cooperative to which a laboratory cooperative is affiliated with.

(33) Internal Control - shall refer to all the system and procedures adopted to safeguard the cooperative's assets, check the
accuracy and reliability of its accounting data, promote operational efficiency and encourage adherence to prescribed managerial
policies.

(34) Involuntary Dissolution - shall refer to the termination of the juridical personality of the cooperative through an appropriate
judicial proceeding or by Order of the Authority.

(35) Laboratory Cooperative - shall refer to a cooperative duly recognized by the Authority, formed and managed principally by
minors and is affiliated with another registered cooperative which is called the guardian cooperative.

(36) Liquidation - shall refer to the process of settlement and closure of the cooperative affairs, disposition, conveyance and
distribution of its assets.

(37) Mediation - shall refer to the process in which a mediator, selected by the disputing parties, facilities a communication and
negotiation, and assists the parties in reaching a voluntary agreement regarding a dispute.

(38) Merger - shall refer to a union of two or more existing cooperatives belonging to the same category whereby the surviving
cooperative, retaining its identity, absorbs one or more constituent cooperatives/s.

(39) Minor - shall refer to an individual below eighteen (18) years of age but at least seven (7) years old.

(40) Multipurpose Cooperative - shall refer to a cooperative, which combines two (2) or more of the business activities of the
different types of cooperatives as enumerated under Art. 23 of the Code.

(41) Net worth - shall refer to equity inclusive of member's equity, donations, grants and reserve funds less un-booked allowance
for probable losses on loans, investment and other assets and other capital adjustments as may be required by the CDA.

(42) Numerous and Dispersed Membership - shall refer to a cooperative whose membership are in large number and
geographically scattered/distributed by reason of geographical location, work shift or other similar conditions making it impossible
and difficult to conduct their general assembly meeting.

(43) Paid-up Share Capital - shall refer to the portion of the subscribed share capital, which has been paid by the members of the
cooperative.

(44) Parent Cooperative - shall refer to a cooperative, which initiates the organizational of another cooperative called a subsidiary
cooperative and provides technical, managerial, and financial assistance thereto.

(45) Patronage Refund - shall refer to the amount returned to individual members who patronize the goods and services of the
cooperative in proportion to their individual patronage.
                                                                                                                                  31

(46) Plan of Merger or Consolidation - shall refer to a written document containing the proposed merger or consolidation of
cooperatives duly approved by the General Assembly of each of the constituent cooperatives at separate General/Representative
Assembly Meetings.

(47) Primary Cooperative - shall refer to a cooperative, the members of which are natural persons.

(48) Receiver - shall refer to any person of recognized competence appointed by the Authority empowered to take charge of all
the assets and liabilities of the cooperative administer the same for the benefit of its creditors and exercise such other powers as
provided under the Revised Rules of Court.

(49) Registration - shall refer to the operative act gaining juridical personality to a proposed cooperative as evidenced by a
Certificate of Registration.

(50) Representative Assembly - shall refer to the full membership of the body of representatives elected by each of the sectors,
chapters or districts of the cooperative duly assembled for the purpose of exercising such powers lawfully delegated unto them by
the general assembly in accordance with its By-laws.

(51) Reports - shall refer to any documents or statement required from cooperatives to be submitted to the Authority on a regular
basis.

(52) Representative/Delegate - shall refer to a member duly elected during the sector, chapter or district meetings who shall
represent his/her sector, chapter or district to the representative assembly meeting.

(53) Revolving Capital - shall refer to the amount available out of the deferred payment of the patronage refund and interest on
share capital of the members or by authorized deduction of a percentage from the product sold or per unit of product handled by
the cooperative. The Board of Director shall issue revolving capital certificates with serial number, name, amount, and rate of
interest to be paid and shall distinctly set forth the time of retirement of such certificates and the amounts to be returned.

(54) Risk Asset - shall refer to the total assets minus cash on hand, evidences of indebtedness, loans to the extent covered by
hold-outs or assignments of deposits, lands owned used for operations, buildings and land improvements net of depreciation,
furniture and fixtures and equipment net of depreciation, real estate mortgage loan and other non-risk items as the Authority may,
from time to time, authorized to be deducted from total assets.

(55) Sanctions - shall refer to the penalties provided for in the cooperative bylaws, these rules, and other administrative
issuances, the Code and other related laws

(56) Secondary Cooperative - shall refer to a cooperative the members of which are primaries.

(57) Sector, Chapter or District - shall refer to a division of a cooperative, which may be by reason of geographical location,
scope of operation, cluster, work shift or such other similar sub-groupings.

(58) Settlement - shall refer to any compromise or arrangements between the disputants to settle the matters in dispute and thus
dispose of controversy. The term may be used in the sense of "payment" or "adjustment" depending upon the circumstances
under which, and the connection in which, use of the term is made.

(59) Sequential Election of Representative/Delegate - shall refer to the election of the representatives during the meetings held,
one after the other, in different days and/or at various venues, by several sectors, chapters or districts of a cooperative for the
purpose of electing their respective Representatives/Delegates to the representative assembly meeting.

(60) Share Capital - shall refer to the money paid or required to be paid by the members for the conduct of the operations of the
cooperative.

(61) Simultaneous Election of Representatives/Delegates - shall refer to the election of the representatives during the
meetings held, on the same day and at various venues, by several sectors, chapters, or districts of a cooperative for the purpose
of electing their respective Representatives/Delegates to the representative assembly meeting.

(62) Submission Agreement - shall refer to the written agreement signed by the disputing parties to submit the dispute to
voluntary arbitration.

(63) Subsidiary Cooperative - shall refer to any organization all or minority of whose membership or shareholders come from a
cooperative called a parent cooperative, organized for any other purpose different from that of, and receives technical,
managerial, and financial assistance from the said parent cooperative.

(64) Tertiary Cooperative - shall refer to a cooperative, the members of which are secondary cooperative.


(65) Total Average Share Month - shall refer to the sum total of the average share month, which is determined by adding the
monthly ending balances of the member's share capital and dividing the sum by twelve (12) months.      1avvphi1




(66) Unpaid Subscription - shall refer to the subscribed share capital, which is not yet fully paid by a member.


(67) Voluntary Arbitration - shall refer to a dispute resolution process wherein any intra/inter cooperative dispute is settled by a
voluntary arbitrator/s chosen by the disputing parties from a list of qualified and accredited arbitrators, who shall decide on the
merits of the case by rendering an award.

(68) Voluntary Arbitrator/Arbitrators - shall refer to any authorized employee of the Authority or an accredited private individual
chosen by the parties to hear, decide, and render an award in a dispute.
                                                                                                                                                  32

           (69) Voluntary Dissolution - shall refer to the termination of the juridical personality of the cooperative at its own initiative or
           instance after complying with the requirements set forth in the Code and these rules.

                                                                  RULE 1
                                                         REPRESENTTATIVE ASSEMBLY

Section 1. Legal Basis. The Legal basis for this rule is Art. 5 (2), (10) of the Code, quoted as follows:


"(2) General Assembly shall mean the full membership of the cooperative duly assembled for the purpose of exercising all rights and
performing all the obligations pertaining to cooperatives, as provided by this Code, its articles of cooperation and by-laws. Provided; that for
cooperatives with numerous and dispersed membership, the district of the cooperative and in accordance with the rules and regulations of
the Cooperative Development Authority."

"(10) Representative Assembly shall refer to the full membership of the body of representative elected by each of the sector, chapter, or
district of the cooperative duly assembled for the purpose of exercising such powers lawfully delegated unto them by the general assembly in
accordance with its by-laws"

Section 2. Applicability - This rule shall apply to cooperatives, which by reason of having numerous and dispersed membership, the conduct
of the general assembly meetings becomes extremely difficult; Provided, That the adoption of representative assembly shall be stipulated in
the cooperative By-laws, which shall specify the following matters:


a. The basis for dividing the cooperative into sector, chapter, or district;

b. The minimum number of regular members to compose each sector, chapter, or district;

c. The quorum required in the sector, chapter, or district assembly meeting;

d. The number of Representative/s or Delegate/s to be elected to represent the total number of the regular members in the sector, chapter,
or district;

e. The term of office of the Representative or Delegate;


f. The qualification and disqualification of the Representative or Delegate;

g. The powers, function and responsibilities of the Representative or Delegate;


h. The election of the sector, chapter, or district Representative or Delegate;

i. Vacancy in the sector, chapter, or district Representative or Delegate;

j. The resignation or removal as well as the appeal of the sector, chapter, or district Representative or Delegate

k. The sector, chapter, or district assembly meetings;

l. The quorum required in the representative assembly meeting;

m. The powers of the Representative Assembly;

n. The conduct of the representative meeting;

o. The eligibility of the Representative/Delegate to be elected as Officers of the cooperative; and


p. Other matters relevant to the conduct or representative assembly meeting.

Section 3. Division of Cooperative into Sector, Chapter, or District. The Number of the members of the cooperative, which shall be at least
One Thousand (1,000) and the geographical location, scope of operation cluster, work shift, or other similar conditions shall be the basis in
dividing the cooperative into sector, chapter, or district.

Section 4. Composition of the Regular Members of Each Sector, Chapter, or District. The Bylaws shall provide for the number of the regular
members to compose each sector, chapter, or district, which shall not be less than one hundred (100) members.

Section 5. Quorum Requirement for Sector, Chapter, or District. At least twenty-five per centum (25%) of the members entitled to vote in
each sector, chapter, or district shall constitute a quorum.

Section 6. Number of Sector, Chapter, or District Representative. The number of sector, chapter, or district Representative or Delegate to be
elected shall be provided in the By-laws but in no case, shall be less than ten percent (10%) of the total number of the regular members
entitled to vote of the sector, chapter, or district.

Section 7. Term of Office of the Sector, Chapter, or District Representatives. The term of office of the Representative or Delegate shall be
provided in the By-laws but not exceed two (2) years, which shall commence on the first regular representative assembly meeting.

Section 8. Qualifications and Disqualifications of the Representative or Delegate. The sector, chapter, or district representative or delegate
shall possess all the qualifications and none of the disqualifications as provided in the cooperative By-laws.
                                                                                                                                                 33

Section 9. Powers, Functions, and Responsibilities of the Representative or Delegate. The Representative or Delegate shall have the
following powers, functions, and responsibilities:

           (1) To represent the sector, chapter, or district in the Representative Assembly Meeting;

           (2) To decided for and in behalf of the sector, chapter, or district he/she represents in the Representative Assembly Meeting; and

           (3) To inform his/her sector, chapter, or district of what transpired during the Representative Assembly Meeting.

Section 10. Election of Sector, Chapter, or District Representative or Delegate. Each sector, chapter, or district during the General Assembly
meeting approving the adoption of the Representative Assembly shall elect its Local election Committee that will conduct the election of
sector, chapter, or district Representative/Delegate to be held no later than sixty (60) days before the schedule date of the regular
representative assembly meeting as provided for in the By-laws.

The Board of Directors shall direct sector, chapter, or district Local Election Committee to conduct the sector, chapter, or district assembly
meeting to elect its Representative/s or Delegate/s, which may be held either simultaneously or sequentially.

In case the sector, chapter, or district failed to elect its Representative/s or Delegate/s, the right to send its Representative/s or Delegate/s on
that particular representative or assembly meeting shall be deemed and waived.

Section 11. Vacancy in the Sector, Chapter, or District Representative or Delegate. Any vacancy shall be filled up in accordance with the
provisions of the cooperative By-laws. The Delegate or Representative elected/appointed to fill a vacancy shall serve only the unexpired term
of his/her predecessor.

Section 12. Resignation and Removal of Sector, Chapter, or District Representative or Delegate. The sector, chapter, or district
Representative or Delegate may resign, for valid reason, as Representative or Delegate of his sector, chapter, or district. Upon the receipt of
the notice, the Board of Directors shall act on the resignation letter within sixty (60) days otherwise, the resignation shall be deemed
approved. Any sector, chapter, or district Representative/Delegate may be removed by a vote of three-fourths (3/4) of all the members with
voting rights present and constituting a quorum at a sector, chapter, or district meeting called for the purpose on the following grounds:

           1. Failure to attend the immediate preceding representative assembly meeting for unjustifiable reason;


           2. Non-performance of any functions and responsibilities stated in the By-laws;

           3. Any violation of the provisions of the Code, the By-laws of the cooperative and other issuances of the Authority; and

           4. Any acts or omissions inimical or prejudicial to the interest of the cooperative.

During the same meeting, the sector, chapter, or district shall fill the vacancy. In case the removed Representative or Delegate is an
incumbent Officer of the Cooperative, his/her position shall be declared vacant and shall be filled up in accordance with the Rule of
Succession as provided for in the By-laws of the Cooperative. Unless otherwise provided for in their By-laws, such successor shall not
necessarily assume the position of his/her predecessor. However, in the case of the membership in the committee, the vacated membership
shall be filled up by the Board of Directors of the Cooperative from among the Representatives/Delegates.

Section 13. Sector, Chapter, or District Assembly Meeting. The sector, chapter, or district meetings of the cooperative adopting this scheme
shall be as follows:

           a. Regular

           b. Special


The regular meeting shall be conducted to elect the sector, chapter, or district Representatives or Delegates and for such other purposes as
maybe provided in the Bylaws.

The special meeting shall be conducted to report what has transpired during the representative assembly meeting and for such other
purposes as maybe provided in the By-laws.


In either case, the conduct of the meeting shall be called and presided by the Lead Representative of Delegate. Such Lead Representative
or Delegate shall be Representative or Delegate who obtained the highest number of votes during the last sector, chapter, or district election.

Section 14. Quorum Requirements for Representative Assembly. At least twenty-five per centum (25%) of all Representatives/Delegates
shall constitute a quorum for the representative assembly meeting.

Section 15. Power of the Representative Assembly. The Representative Assembly shall exercise the powers as provided for in the By-laws.


Section 16. Conduct of Representative Assembly Meeting. Representative Assembly Meeting shall be conducted in accordance with the
provision of the cooperative By-laws. In the absence thereof, the following shall be observed:

           1. The representative assembly meeting shall be held in accordance with the order of business addressing the agenda prepared
           by the Board of Directors;


           2. The chairperson or in his/her absence, the Vice Chairperson or any member of the Board of Directors shall preside over the
           meeting;

           3. The Election Committee shall supervise the election of the Board of Directors and committee members of the cooperative; and
                                                                                                                                              34

           4. Each Representative or Delegate shall be entitled to one (1) vote. The Votes of the sector, chapter, or district Representatives
           or Delegates shall be considered the votes of all the members of the sector, chapter, or district they represent.

The decision of the Representative Assembly shall be considered a valid cooperative act.

Section 17. Eligibility of the Representative or Delegate to be elected as Officers of the Cooperative. The Officers of the cooperative shall
come from the Representative/s or Delegate/s of the sector, chapter, or district. These Officer shall be elected during the Representative
Assembly Meeting for a term fixed in the By-laws but not exceeding a term of two (2) years and shall hold office until their successor are duly
elected and qualified, or until duly removed for cause.

The term of office of the Officer of the Cooperative at the time of adoption of the Representative Assembly shall expire on the first
representative assembly meeting.

                                                                RULE 2
                                                        SUBSIDIARY COOPERATIVE


Section 1. Legal Basis. The legal basis for this Rule is Art. 5 (16) of the Code, quoted as follows;

"Art. 5 (16) Subsidiary Cooperative refers to any organization all or majority of whose membership or shareholders come from a cooperative,
organized for any other purpose different from that of, and receives technical, managerial and financial assistance from, a cooperative, in
accordance with the rules and regulations of the Authority."

Section 2. General Requirements. A parent cooperative may organize a subsidiary cooperative provided that:

           1. It has been in operation for at least two (2) years and has incurred no losses for the two (2) preceding years of operation.


           2. It has a net worth of at least Ten Million Pesos (Php 10,000,000.00) as shown in its latest Audited Financial Statements.

           3. All or majority of the Members of the Parent Cooperative are willing to become members of the Subsidiary Cooperative.

           4. The business of the Subsidiary Cooperative shall be different from that of the Parent Cooperative.

           5. The creation of a Subsidiary Cooperative and the technical, managerial and financial assistance to be provided shall be
           approved by at least three-fourths (3/4) vote of members of Parents Cooperative with voting rights present and constituting a
           quorum in a regular special general assembly/representative assembly meeting called for the purpose.

Section 3. Documentary Requirements for Registration of Subsidiary Cooperatives. In addition to the requirements for registration of a new
cooperative, an applicant Subsidiary Cooperative shall submit a resolution from the Parent Cooperative approving the creation of such
Subsidiary Cooperative and accepting the responsibilities therewith.

Section 4. Conditions. The following conditions shall be considered in the registration and operation of Subsidiary Cooperative:

           1. Only assistance in the form of technical, managerial and financial assistance shall be provided by the Parent Cooperative to its
           Subsidiary Cooperative;


           2. Directors or Officers of the Parent Cooperative cannot be elected or appointed as Officers of the Subsidiary Cooperative.
           However, the Parent Cooperative through its General Assembly may appoint its Representative to act as Ex-Officio member of the
           Board of Directors of the Subsidiary Cooperative;

           3. The Management Staff of the Parent Cooperative cannot be at the time the Management Staff of the Subsidiary Cooperative;


           4. Transfer of shares of members and other related interests from Parent Cooperative to Subsidiary Cooperative and vice versa
           are prohibited; and

           5. In case of dissolution of the Parent Cooperative, the Subsidiary Cooperative cannot be a recipient of any grant, donations or
           other interests from the Parent Cooperative and vice versa.

Section 5. Name of Subsidiary Cooperative. The subsidiary Cooperative shall include in its name the word "Subsidiary Cooperative of
(Name of Parent Cooperative)".

Section 6. Assistance for Parent Cooperative. The financial assistance to be provided shall not exceed ten (10%) of the net worth of the
Parent Cooperative. The technical and managerial assistance shall depend upon the needs of the Subsidiary Cooperative and capacity of
the Parent Cooperative, which shall be taken up in the book at actual cost.

The terms and conditions of the financial assistance provided by the Parent Cooperative to the Subsidiary Cooperative shall be governed by
a Memorandum of Agreement entered into by both parties.

Section 7. Effect of Dissolution of Parent or Subsidiary Cooperative. The dissolution of either cooperative shall not affect the existence of the
other.

                                                                RULE 3
                                                      MULTI-PURPOSE COOPERATIVE

Section 1. Legal Basis. The legal basis for this Rule is Article 10 of the Code quoted as follows:
                                                                                                                                                 35

"Art. 10. Organizing a Primary Cooperative. - Any newly organized primary cooperative may be registered as multi-purpose cooperative only
after compliance with the minimum requirements for multi-purpose cooperatives to be set by the Authority. A single-purpose cooperative may
transform into a multi-purpose or may create subsidiaries only after at least two (2) years of operation."

Section 2. Coverage. This Rule shall cover (a) all types of newly organized primary cooperative with combined two (2) or more business
activities of different types of cooperative as provided for in Art. 23 of the Code, (b) a single-purpose cooperative desiring to transform itself
into a multi-purpose cooperative after at least two (2) years of operation.

Section 3. Minimum Capitalization Requirements. Only those cooperative with a minimum paid-up capital of One Hundred Thousand Pesos
(P100,00.00) or as required in the feasibility study whichever is higher shall qualified to register as a multi-purpose cooperative or can
transform into a multi-purpose cooperative.

Section 4. Requirements for registration. The following documents shall be submitted to the Authority:


           (1) For a newly organized Multi-Purpose Cooperative:

                      1. Name Verification Slip;

                      2. Articles of Cooperative and By-Laws;


                      3. Treasurer's Affidavit;

                      4. Surety Bond of Accountable Officers;


                      5. Certificates of Pre-Membership Education Seminar (PMES);

                      6. Economic Survey;

                      7. Undertaking to Change Name in the event that another cooperative has acquired prior right to the use of the
                      proposed name;

                      8. Favorable Endorsement from Other government Agencies, if applicable;

                      9. Detailed Feasibility Study indicating viability of the proposed business activity;


                      10. Undertaking to comply with the auditing and accounting standards prescribed by the Authority; and

                      11. Registration fee.

           (2) For existing cooperatives desiring to be transformed into a Multi-Purpose Cooperative:

                      1. Name Verification Slip, in case of change of name;


                      2. Amended Articles of Cooperative and By-Laws;

                      3. A Resolution certified by the cooperative's Secretary and by the majority of the Board of Directors stating the fact
                      that said amendments have been duly approved by at least two-thirds (2/3) vote of all the members with voting rights;

                      4. Surety Bond of Accountable Officers;

                      5. Audited Financial Statement showing profitable operations for the past two (2) years;


                      6. Undertaking to Change Name in the event that another cooperative has acquired a prior right to the use of the
                      proposed name;

                      7. Favorable Endorsement from Other Government Agencies, if applicable;

                      8. Detailed Feasibility Study indicating viability of the proposed business activities;

                      9. Certificate that the cooperative has complied with the auditing and accounting standards prescribed by the Authority;


                      10. Proof of business track records of the cooperative; and

                      11. Amendment Fee.

Section 5. Book of Accounts. The new and existing cooperatives transformed into a Multi-Purpose Cooperative are required to maintain
separate Book of Accounts for each business activity.

                                                                   RULE 4
                                                         DIVISION OF COOPERATIVES

Section 1. Legal Basis. The legal basis for this Rule is Art. 20 of the Code, quoted as follows:
                                                                                                                                              36

"Art. 20. Division of Cooperatives. - Any registered cooperative, may by a resolution approved by a vote of three-fourths (3/4) of all the
members with voting rights, present and constituting a quorum, resolve to divide itself into two (2) or more cooperatives. The procedure for
such division shall be prescribed in the regulations of the Authority. The new cooperatives shall become legally established upon registration
with the Authority: Provided, That all the requirements set forth in this Code have been complied with by the new cooperatives: Provided,
further, That no division of cooperative in fraud of creditors shall be valid."

Section 2. Procedures. The following procedures shall be observed in the division of cooperatives:


           1. Approval of Proposal to Divide;

           2. Formulation of Plan of Division;

           3. Presentation and Approval of the Plan of Division to the General Assembly;

           4. Posting and Publication of the Notice of Division;

           5. Written Notification to Creditors;

           6. Filing with the Authority of the Required Documents for the Registration of Division; and

           7. Issuance of the Certificate of Registration.

Section 3. Proposal of Division. The majority members of the Board of Directors or at least ten percent (10%) of members with voting rights
may propose for division, which must be approved by at least majority of the members of the cooperative with voting rights present and
constituting a quorum in a general/representative assembly meeting called for the purpose. Upon approval of the proposal to divide, a
committee to formulate the Plan of Division shall be constituted by the General/Representative Assembly.

Section 4. Preference of Members. Upon approval by the General/Representative Assembly in the meeting called for the purpose, members
of the original cooperative shall be allowed within two (2) weeks to choose the new cooperative they prefer to join. The management of the
original cooperative shall then transfer the member's share and all other interests to his/her chosen cooperative.

Section 5. Presentation and Approval of the Plan of Division. The Board of Directors shall call a General/Representative Assembly meeting
to action such Plan of Division with notice to all members of record and Creditors at least thirty (30) days prior to the scheduled meeting. The
Plan of Division shall be approved by a vote of three-fourths (3/4) of all members with voting rights, present and constituting a quorum in
such general/representative assembly meeting.

Section 6. Right of a Dissenting Member. A dissenting member shall be entitled to a refund of his/her share capital and all other interests
under Art. 30 of the Code.

Section 7. Contents of the Plan of Division. The Plan of Division must include the following:


           1. The rationale or justification for the division of the cooperative;

           2. A Financial Statement duly certified by an independent Certified Public Accountant including a schedule of assets, liabilities and
           share capital of the cooperative intending to divide;


           3. A proposed revaluation of assets, determination of liabilities, statutory reserves, undivided net surplus and members' share
           capital;

           4. List of all the receivables of the cooperative;


           5. List of all the Creditors and their respective claims against the cooperative;

           6. Procedure for the division of assets, allocation and settlement of the obligations and the collection of receivables of the
           cooperative;


           7. Feasibility study ensuring the viability and sustainability of both cooperatives;

           8. List of members showing their share capital contributions certified by the Secretary and attested by the Board Chairperson of
           the cooperative;

           9. The proposed name, address and area of operation of the new cooperatives; and

           10. Benefit package for Management Staff to be affected by the plan.

Section 8. Publication. Within seven (7) days after the date of approval of the division of the cooperative, the Secretary of the cooperative,
duly noted by the Chairperson, shall publish such plan of division once a week for three (3) consecutive weeks in a newspaper of general
circulation within its area of operation. Said publication may also be supplemented by radio and television announcements.

Alternatively, the announcement of the division may also be done by posting in at least three (3) conspicuous public places for three (3)
consecutive weeks within its area of operation.

Likewise, letters/notices duly signed by the Chairperson announcing such division shall be sent by the Secretary of the cooperative through
registered mails to their creditors.
                                                                                                                                                  37

Section 9. Objection by a Third Party. Within fifteen (15) days from the day of posting or from the last day of publication, a party may file an
objection or opposition to the Plan of Division before the Authority, copy furnished the cooperative concerned, which shall be decided within
sixty (60) days from receipt of the objection or opposition. If the objection or opposition is meritorious, in order not to prejudice the interest of
the third party, the Authority shall cause the deferment or disapproval of the registration of the new cooperatives.

After the lapse of the period to file an objection/opposition and no objection/opposition has been filed or after all objections/oppositions have
been resolved, the cooperative can file its application for registration.

Section 10. Additional Requirements for Registration. In addition to the regular requirements for registration of cooperatives, the following
documents shall be filed with the Authority:

           1. The resolution of division as approved by the General/Representative Assembly duly certified by the Secretary and duly noted
           by the Chairperson;

           2. The Plan of Division including all its attachments;

           3. The Minutes of the General/Representative Assembly Meeting approving the Plan of Division;

           4. The Financial Statements of each of the new cooperatives duly certified by the respective Treasurers and Chairpersons;


           5. Proof of Notice of Publication and/or posting of the announcement of such division;

           6. Proof of Notice to the Creditors;


           7. Written Agreement to Settle Obligation; and

           8. Original Certificate of Registration.

Section 11. Issuance of Certificate. Once the registration requirements are found to be completed and in order, the Authority shall issue the
Certificates of Registration to the new cooperatives. The Certificate of Registration of the original cooperative shall be surrendered to the
Authority for cancellation.

Section 12. Effect of Registration. Cooperatives formed and organized under this Rule shall acquire juridical personality from the date the
Authority issues a Certificates of Registration under the Authority's official seal.

                                                              RULE 5
                                              GUIDELINES GOVERNING THE PROCEDURE FOR
                                                      MERGER OR CONSOLIDATION

Section 1. Legal Basis. The legal bases for this Rule are Articles 21 and 22 of the Code, quoted as follows:


"Art. 21. Merger and Consolidation of Cooperatives. -

Two (2) or more cooperatives may merge into a single cooperative, which shall be either one of the constituent cooperatives or the
consolidated cooperatives.


No merger or consolidation shall be valid unless approved by three-fourths (3/4) vote of all members with voting rights, present and
constituting a quorum of each of the constituent cooperatives at separate general assembly meetings. The dissenting members shall have
the right to exercise their right to withdraw their membership pursuant to Article 30.


(3) The Authority shall issue the guidelines governing the procedure of merger or consolidation of cooperatives. In any case, the merger or
consolidation shall be effective upon the issuance of the Certificate of Merger or Consolidation by the Authority.

Art. 22. Effects of Merger and Consolidation. - The merger or consolidation of the cooperatives shall have the following effects:

                       (1) The constituent cooperatives shall become a single cooperative, which in case of merger shall be the surviving
                       cooperative, and in case of consolidation, shall be the consolidated cooperative.

                       (2) The separate existence of the constituent cooperatives shall cease, except that of the surviving or the consolidated
                       cooperative.

                       (3) The surviving or the consolidated cooperative shall possess all rights, privileges, immunities and powers and shall
                       be subject to all the duties and liabilities of a cooperative organized under this Code;

                       (4) The surviving or the consolidated cooperative shall possess all the assets, rights, privileges, immunities and
                       franchises of each of the constituent cooperatives; and

                       (5) The surviving or the consolidated cooperative shall be responsible for all the liabilities and obligations of each of the
                       constituent cooperatives in the same manner as if the surviving or consolidated cooperative had itself incurred such
                       liabilities or obligations. Any claim, action, or proceeding pending by or against any such constituent cooperatives may
                       be prosecuted by or against the surviving or consolidated cooperative, as the case may be. Neither the rights of
                       creditors nor any lien upon the property of any of such constituent shall be impaired by such merger or consolidation."

Section 2. Parties to the Merger or Consolidation. Only cooperatives belonging to the same category can be parties to Merger or
Consolidation. A primary cooperative can only merge or consolidate with a primary cooperative, a secondary with a secondary cooperative,
and a tertiary with a tertiary cooperative.
                                                                                                                                                38

Section 3. Procedures. The following are the procedures to the Merger or Consolidation of cooperatives:


           1. Approval of the proposal to merge or consolidate by the General/Representative Assembly of each constituent cooperatives;

           2. Formulation of Plan of Merger or Consolidation by the representatives of the constituent cooperatives;

           3. Presentation to and Approval of the Plan of Merger or Consolidation by the General/Representative Assembly of each
           constituent cooperatives;


           4. Formulation of the Amendment/New Articles of Cooperation and By-laws;


           5. Posting/Publication of Merger or Consolidation;

           6. Written Notification to Creditors through registered mail with return card and other applicable electronic means;

           7. Filing with the Authority the required documents for the registration of merger or consolidation; and

           8. Issuance of Certificate of Registration of Merger/Consolidation by the Authority.

Section 4. Contents of Plan of Merger or Consolidation. The Plan of Merger or Consolidation shall include the following:


           1. Statement of Purpose of such Merger or Consolidation;

           2. The Registered Names, Addresses and Registration/Confirmation Numbers, Contact Details and Respective Areas of
           Operation of the Constituent Cooperatives;

           3. The Proposed Amendments to the Surviving Cooperative's Articles of Cooperation and By-laws, in case of Merger and with
           respect to Consolidation, the Proposed Articles of Cooperation and By-laws;

           4. List of Members of each Constituent Cooperatives showing their Share Capital Contribution duly certified by the respective
           Board Secretaries and attested by the respective Board Chairpersons;


           5. The Name, Address and Area of Operation of the Surviving Cooperative, in case of Merger, the Proposed Name, Address and
           Area of Operation, in case of Consolidation;

           6. Feasibility Study indicating the Viability and Sustainability of the Merging/Consolidating Cooperatives;

           7. The Audited Financial Statements as of the immediate preceding year including the schedule of assets, liabilities and capital of
           the merging or consolidating cooperatives; and

           8. Package Benefits of the Management Staff to be affected by the Plan.

Section 5. Proposal of Merger or Consolidation. The Proposal to Merge or Consolidate may be made by the Board of Directors or by at least
ten percent (10%) of the members with voting rights. It shall be approved by at least majority of the members of each of the constituent
cooperatives with voting rights, present and constituting a quorum in separate general/representative assembly meetings called for the
purpose.


During the same meeting, the General/Representative Assembly shall appoint or elect the representatives to the joint committee to draft the
Plan of Merger or Consolidation.

Section 6. Approval of the Plan of Merger or Consolidation. The Plan of Merger or Consolidation jointly prepared by representatives from the
constituent cooperatives shall be submitted for approval to the members of each constituent cooperative at separate general/representative
assembly meetings duly called for the purpose. Notice of such meeting shall be given to all members of the respective cooperative, served
either personally, or by registered mail with return card or electronic means within the period as indicated in their By-laws.

The affirmative vote of members representing at least three-fourths (3/4) of all members with voting rights, present and constituting a quorum
of each of the constituent cooperatives at separate general/representative assembly meetings shall be necessary for the approval of the Plan
of Merger or Consolidation, or amendments thereto, if any.

Section 7. The Articles of Cooperation and By-Laws. In case of Merger, the Amended Articles of Cooperation and By-Laws, if applicable,
shall be attested by the Incumbent Directors of the Surviving Cooperative while in Consolidation, the Articles and By-Laws shall be signed by
the Cooperating Directors.

Section 8. Posting/Publication. Announcement of the Merger or Consolidation may be done by posting in at least three (3) conspicuous
places in their respective areas of operation; or publication in a newspaper of general circulation once a week for three (3) consecutive
weeks. Said publication may also be supplemented by radio and television announcements or any other electronic means of communication.

Section 9. Notice to Creditors and Investors. The Officers of the Merging or Consolidating Cooperatives shall also send letters by registered
mail with return card to the Creditors and investors of their respective cooperatives announcing such Merger or Consolidation.

Section 10. Objection/s by a Third Party. Within fifteen (15) days after the date of posting or from the last day of publication, a third party
may file an objection or opposition to the Plan of Merger or Consolidation before the Authority which shall be decided within sixty (60) days
from receipt of the objection or opposition. Finding the objection or opposition meritorious, in order not to prejudice the interest of the third
party, the Authority will cause the deferment or disapproval of the registration of the Merger or Consolidation.
                                                                                                                                               39

After the lapse of the period to file an objection/opposition and no objection/opposition has been filed or after all objections/oppositions have
been resolved, the cooperative can file its application for registration.

Section 11. Additional Requirements for Registration. The Officers of the merged or consolidated cooperatives shall file with the Authority
the following additional requirements for registration:

A. For Merger

           1. The Original Certificate of Registration of the absorbed cooperative;


           2. The General/Representative Assembly resolutions of both constituent cooperatives approving the Plan of Merger duly certified
           by the Secretaries and attested by the respective Chairpersons;

           3. The excerpts from the minutes of the general/representative assembly meeting stating among others the approval of the
           Merger;

           4. Certification of the Secretaries duly attested by the Chairpersons of the constituent cooperatives that there was a quorum and
           the required number of votes for the approval was met;

           5. The approved Plan of Merger and all its attachments as required under Section 4 of this Rule;


           6. The proposed amendment to the Articles of Cooperation and By-laws of the Surviving Cooperative, if necessary;

           7. Surety Bond of Accountable Officers;

           8. Proof of Publication/Posting of the Announcement of Merger;

           9. Proof of Notice to Creditors;


           10. Written Agreement to settle Obligations

           11. The original Certificate of Registration of the Surviving Cooperative;

           12. Favorable endorsement from the concerned government agency if necessary/applicable; and

           13. Registration fee in accordance with the Schedule of Fees prescribed by the Authority.

B. For Consolidation

           1. The Original Certificate of Registration of both constituent cooperatives;

           2. The General/Representative Assembly resolutions approving the consolidation of the cooperative duly certified by the
           Secretaries and attested by the Chairpersons of the Consolidating Cooperatives;

           3. The excerpts from the minutes of the General/Representative Assembly meetings of the Consolidating Cooperatives with their
           respective attendance sheets duly certified by the Secretary and Chairperson or Presiding Officer;


           4. Certification of the Secretaries duly attested by the Chairpersons of the Constituent Cooperatives that there was a quorum and
           the required number of votes for the approval was met;

           5. The approved Plan of Consolidation and all its attachments as required under Section 4 of this Rule;


           6. The Economic Survey;

           7. The proposed Articles of Cooperation and By-laws of the Consolidated Cooperative;


           8. Surety Bond of Accountable Officers;

           9. Proof of Publication/Posting of the announcement of consolidation;

           10. Proof of Notice to Creditors;

           11. Written Agreement to settle Obligations;


           12. The original Certificates of Registration of the Consolidating Cooperatives;

           13. Undertaking to Change Name in the event that another cooperative has acquired prior right to the use of the proposed name;
           and

           14. Registration fee in accordance with the Schedule of Fees prescribed by the Authority.
                                                                                                                                              40

Section 12. Issuance of Certificate. Once the registration requirements are complied with, the Authority shall issue the Certificate of Merger,
or new Certificate of Registration in case of consolidation. The Certificate of Registration of the original cooperatives shall be surrendered to
the Authority.

                                                             RULE 6
                                            GUIDELINES FOR LABORATORY COOPERATIVES

Section 1. Legal Basis. The legal basis for this Rule is the third paragraph of Art. 26 of the Code, quoted as follows:


"Art. 26. Kinds of Membership. - A cooperative organized by minors shall be considered a laboratory cooperative and must be affiliated with a
registered cooperative. A laboratory cooperative shall be governed by special guidelines to be promulgated by the Authority."

Section 2. Organization of Laboratory Cooperative. Fifteen (15) or more minors who are Filipino citizens, actually residing in the community
or enrolled in an educational institution within or near the area of operation of the Guardian Cooperative or out of school minor actually
residing in the community, may organize a Laboratory Cooperative composed of minors, which shall be seven (7) years old but below
eighteen (18) years of age.

Section 3. Purposes of Laboratory Cooperatives. A Laboratory Cooperative shall be organized for any or all of the following purposes:

           1. To serve as a training ground for its members to prepare them for membership in regular cooperatives;


           2. To teach the value of thrift and saving mobilization among its members;

           3. To instill cooperative values, principles, financial discipline and leadership skills among its members;

           4. To promote and advance Filipino social and cultural values, ecological awareness and sustainable development.

Section 4. Contents of the Articles of Cooperation. The Articles of Cooperation of a Laboratory Cooperative signed by each of the organizers
shall provide the following:

           1. The name of the cooperative which shall include the words "Laboratory Cooperative";

           2. The purpose or purposes for which it is organized;

           3. The term of existence;

           4. The area of operations and the postal address of the principal office of the laboratory cooperative;

           5. The area of operations and the postal address of the principal office of the guardian cooperative;

           6. The names, nationality, birthdates, and postal addresses of the cooperators;

           7. The names, and postal addresses of members of the board of directors of its guardian cooperative; and


           8. The amount of its share capital, the names, and addresses of its members.

Section 5. Contents of the By-Laws. The By-laws of a Laboratory Cooperative shall provide for the following:


           1. The qualifications for admission to membership and the payment to be made or interest to be acquired as a condition to the
           exercise of the right of membership;

           2. The rights and liabilities of membership;


           3. The circumstances under which membership is acquired, maintained and lost;

           4. The procedures to be followed in cases of termination of membership;

           5. The conditions under which the transfer of a share or interest of the members shall be permitted;

           6. The rules and procedures on the agenda, time, place and manner of calling, convening, conducting meetings, quorum
           requirements, voting systems, and other matters relative to the business affairs of the general assembly, board of directors, and
           committees;

           7. The general conduct of the affairs of the cooperative, including the powers and duties of the General Assembly, the board of
           directors, committees and, officers, and their qualifications and disqualifications;


           8. The manner in which the capital may be raised and the purposes for which it can be utilized;

           9. The accounting and auditing systems;


           10. The method of distribution of net surplus;

           11. The manner of adopting and amending by-laws;
                                                                                                                                                 41

           12. Other matters incident to the purposes and activities of the cooperative.

Section 6. Capitalization Requirements. The Laboratory Cooperative shall include in its Bylaws a program on continuous Capital Build-Up.

Section 7. Affiliation. A Laboratory Cooperative must be affiliated with a duly registered cooperative, to be known as the Guardian
Cooperative, before the authority shall issue a Certificate of Recognition.

A Laboratory Cooperative primarily composed of students from a particular school shall be affiliated with the school's cooperative, if any. If
the Laboratory Cooperative is composed primarily of out-of-school minors, it shall be affiliated with a cooperative of its choice within or
nearest its area of operation.

In the absence of a duly registered cooperative in the area or refusal of a duly registered cooperative to accept the affiliation of a Laboratory
Cooperative, the said Laboratory Cooperative may request assistance from the nearest CDA Office in identifying a possible Guardian
Cooperative.

Section 8. Responsibility of the Guardian Cooperative. The Guardian Cooperative shall supervise, monitor, and act for and in behalf of the
Laboratory Cooperative in their dealings, transactions with third parties when capacity to contract is required.

It shall be responsible for the cooperative education and training of all officers and members of the laboratory cooperative.


Submission of reports to the Authority on the activities and economic operations of the Laboratory Cooperative shall likewise be the
responsibility of the Guardian Cooperative.

Section 9. Liability of the Guardian Cooperative. - The Guardian Cooperative exercising parental authority may be liable for any violations in
the cooperative's operation.

Section 10. Requirements for Recognition of Laboratory Cooperative. A Laboratory Cooperative seeking recognition as such shall submit,
through the Guardian Cooperative, the following requirements to the Authority for the issuance of a Certificate of Recognition:

           1. Articles of Cooperation and By-laws; and

           2. Resolution of the Board of Directors of the Guardian Cooperative accepting its responsibility and liability as Guardian of the
           Laboratory Cooperative.

Section 11. Issuance of Certificate of Recognition. A Certificate of Recognition shall be issued by the Authority under its official seal upon
compliance with all the requirements set forth by this rule. The Certificate shall be conclusive evidence that the Laboratory Cooperative
therein mentioned is duly recognized unless such recognition has been earlier revoked.

The issuance of the Certificate of Recognition does not bestow upon a Laboratory Cooperative with a juridical personality.

Section 12. Termination of Membership. The following shall be conditions for termination of membership in a Laboratory Cooperative:

           1. Upon reaching the age of majority (18 years of age);


           2. Those provided under Art. 30 of the Code; and


           3. Such other conditions as may be provided for in the By-laws.

Section 13. Refund of Share Capital. Upon termination of membership, the former member shall be entitled to a refund of his share capital
contribution and all other interests in the Laboratory Cooperative in accordance with Art. 31 of the Code.

Section 14. Option of Member Who Reaches the Age of Majority. Any member reaching the age of majority may opt to join the Guardian
Cooperative upon compliance of all the requirements for membership.

Section 15. Limitation. A Guardian Cooperative shall supervise only one (1) laboratory cooperative.

                                                   RULE 7
   FUNCTIONS, RESPONSIBILITIES AND TRAINING REQUIREMENTS OF DIRECTORS, OFFICERS AND COMMITTEE MEMBERS

Section 1. Legal Basis. The legal basis for this Rule is Art. 44 of the Code, quoted as follows:


"Art. 44. Functions, Responsibilities, and Training Requirements of Directors, Officers, and Committee Members. The functions and
responsibilities of the directors, officers and committee members, as well as their training requirements shall be in accordance with the rules
and regulations issued by the Authority."

Section 2. Officers of the Cooperative. The Officers of the cooperative shall include the Members of the Board of Directors, Members of the
Different Committees created by the General Assembly, General Manager or Chief Executive Officer, Secretary, Treasurer and Members
holding other positions as maybe provided for in their By-laws. As such they are entrusted with the power of exercising authority within the
scope of their defined functions which is permanent in nature and include the exercise of control and discretion in the performance of their
duly.

Section 3. Committees of Cooperatives. The By-laws shall provide for the creation of the following committees:


           1. Audit Committee;
                                                                                                                                         42

           2. Election Committee;

           3. Mediation and Conciliation Committee;

           4. Ethics Committee; and

           5. Other Committees as may be necessary for the conduct of the affairs of the cooperative.

The members of Audit Election Committees shall be elected by the General Assembly while the Board of Directors shall appoint the rest.

Section 4. Functions and Responsibilities of the Officers of the Cooperative.


4.1 Board of Directors.

4.1.1 The Board of Directors shall have the following functions and responsibilities:

           a. Provide general policy direction;


           b. Formulate the strategic development plan;

           c. Determine and prescribe the organizational and operational structure;

           d. Review the Annual Plan and Budget and recommend for the approval of the General/Representative Assembly;

           e. Establish policies and procedures for the effective operation and ensure proper implementation of such;


           f. Evaluate the capability and qualification and recommended to the General/Representative Assembly the engagement of the
           services of an External Auditor;

           g. Appoint the members of the Mediation/Conciliation and Ethics Committees and other Officers as specified in the Code and
           cooperative By-laws;


           h. Decide election related cases involving the Election Committee or its members;

           i. Act on the recommendation of the Ethics Committee on cases involving violations of Code of Governance and Ethical
           Standards; and

           j. Perform such other functions as may be prescribed in the By-laws or authorized by the General/Representative Assembly.

4.1.2 The Chairperson shall:

           a. Set the agenda foe board meetings in coordination with the other members of the Board of Directors;

           b. Preside over all meetings of the Board of Directors and of the General/Representative assembly;

           c. Sign contracts, agreements, certificates and other documents on behalf of the cooperative as authorized by the Board of
           Directors or by the General/Representative Assembly;

           d. Issue Certificate of Non-Affiliation with any Federation or Union; and

           e. Perform such other functions as may be authorized by the Board of Directors or by the General/Representative Assembly.

4.1.3 The Vice Chairperson shall:


           a. Perform all duties and functions of the Chairperson in the absence of the latter;

           b. To act as ex-officio Chairperson of the Education and Training Committee; and


           c. Perform such other duties as may be delegated to him/her by the Board of Directors.

4.2 Treasurer. The Treasurer shall:

           a. Ensure that all cash collections are deposited in accordance with the policies set by the Board of Directors;

           b. Have custody of all funds, securities, and documentation's relating to all assets, liabilities, income and expenditures;

           c. Monitor and review the financial management operations of the cooperative, subject to such limitations and control as may be
           prescribed by the Board of Directors;

           d. Maintain full and complete records of cash transactions;
                                                                                                                                          43

          e. Maintain a Petty Cash Fund and Daily Cash Position Report; and Perform such other functions as may be prescribed in the By-
          laws or authorized by the General/Representative Assembly.

4.3 Secretary. The Secretary shall:

          a. Keep an updated and complete registry of all members;

          b. Record, prepare and maintain records of all minutes of meetings of the Board of Directors and the General/Representative
          Assembly;


          c. Ensure that necessary Board of Directors actions and decisions are transmitted to the management for compliance and
          implementation;

          d. Issue and certify the list of members who are in good standing entitled to vote as determined by the Board of Directors;


          e. Prepare and issue Share Certificates;

          f. Serve notice of all meetings called and certify the presence of quorum of all meetings of the Board of Directors and the
          General/Representative Assembly;

          g. Keep copy Treasure's reports and other reports;

          h. Keep and maintain the Share and Transfer Book;


          i. Serve as custodian of the cooperative seal; and

Perform such other functions as may be prescribed in the By-laws or authorized by the General/ Representative Assembly.


4.4 Election Committee. The Election Committee shall:

          a. Formulate election rules and guidelines and recommended to the General/Representative Assembly for approval;


          b. Implement election rules and guidelines duly approved by the General/Representative Assembly;

          c. Recommended necessary amendments to the election rules and guidelines, in consultation with the Board of Directors, for the
          General/Representatives Assembly's approval;

          d. Supervise the conduct, manner and procedure of election and other election related activities and act on the changes thereto;

          e. Canvass and certify the results of the election;

          f. Proclaim the winning candidates;


          g. Decide election and other election related cases except those involving the Election Committee or its members; and

          h. Perform such other functions as prescribed in the By-laws or authorized by the General/Representative Assembly.


4.5 Audit Committee. The committee shall:

          a. Monitor the adequacy and effectiveness of the cooperative's management and control system;

          b. Audit the performance of the cooperative and its various responsibility centers;

          c. Review continuously and periodically the books of account and other financial records to ensure that these are in accordance
          with the cooperative principles and generally accepted accounting procedures;

          d. Submit reports on the result of the internal audit and recommend necessary changes on policies and other related matters on
          operation to the Board of Directors and General/Representative Assembly;


          e. Perform such other functions as may be prescribed in the By-laws or authorized by the General/Representative Assembly.

4.6 Mediation and Conciliation Committee. The committee shall:

          a. Formulate and develop the Conciliation-Mediation Program and ensure that it is properly implemented;


          b. Monitor Conciliation-Mediation program and processes;

          c. Submit semi-annual reports of cooperative cases to the Authority within fifteen (15) days after the end of every semester;

          d. Accept and file Evaluation Reports;
                                                                                                                                                44

           e. Submit recommendations for improvement to the Board of Directors;

           f. Recommend to the Board of Directors any member of the cooperative for Conciliation-Mediation Trainings as Cooperative
           Conciliator-Mediator;

           g. Issue the Certificate of Non-Settlement (CNS);

           h. Perform such other functions as may be prescribed in the By-laws or authorized by the General/Representative Assembly.


4.7 Ethics Committee. The committee shall:


           a. Develop Code of Governance and Ethical Standards to be observed by the members, officers and employees of the
           cooperative subject to the approval of the Board of Directors and ratification of the General/Representative Assembly;

           b. Disseminate, promote and implement the approved Code of Governance and Ethical standards;

           c. Monitor compliance with the Code of Governance and Ethical Standards and recommend to the Board of Directors measures to
           address the gap, if any;

           d. Conduct initial investigation or inquiry upon receipt of a complaint involving Code of Governance and Ethical Standards and
           submit report to the Board of Directors together with the appropriate sanctions.

           e. Recommend ethical rules and policy to the Board of Directors;


           f. Perform such other functions as may be prescribed in the By-laws or authorized by the General/Representative Assembly.

4.8 Other Committees. Other Committees that may be created shall assist in the formulation of policies and rules and in the implementation
of the service of the cooperative. Their powers, functions, and responsibilities shall be defined in the By-laws.


4.9 General Manager. The General Manager shall:

           a. Oversee the overall day to day business operations of the cooperative by providing general direction, supervision, management
           and administrative control over all the operating departments subject to such limitations as may be set forth by the Board of
           Directors or the General/Representative Assembly;


           b. Formulate and recommend in coordination with the operating departments under his/her supervision, the Cooperative's Annual
           and Medium Term Development Plan, programs and projects, for approval of the Board of Directors and ratification of the
           General/Representative Assembly;

           c. Implement the duly approved plans and programs of the Cooperative and any other directive or instruction of the Board of
           Directors.

           d. Provide and submit to the Board of Directors monthly reports on the status of the Cooperative's operation vis-à-vis its targets
           and recommend appropriate policy or operational changes, if necessary;


           e. Represent the Cooperative in any agreement, contract, business dealing, and in any other official business transaction as may
           be authorized by the Board of Directors;

           f. Ensure compliance with all administrative and other requirements of regulatory bodies; and

           g. Perform such other functions as may be prescribed in the By-laws or authorized by the General/Representative Assembly.

Section 5. Training Requirements for the Officers of the Cooperative. Officers of the cooperative shall be required to undergo necessary
training conducted by cooperatives, Federations and/or other trainers or training institutions duly accredited by the Authority. The training
program should contain the minimum requirements in the module/curriculum as prescribed by the Authority. The initial courses or any
equivalent substitute thereof must be undertaken.

A. Board of Directors

           1. Basic Cooperative Course primarily on:

                        a. Articles of Cooperative and By-laws;


                        b. Cooperative Vision;

                        c. Cooperative Mission;

                        d. Cooperative Strategic Plan;

                        e. Fundamentals of Cooperative;


                        f. Policies and Programs of Cooperatives;
                                                                         45

                     g. Cooperative Code of 2008 (RA 9520);

                     h. Implementing Rules and Regulations of RA 9520;

          2. Cooperative Management and Governance.

          3. Policy Development.

          4. Financial Management.


          5. Conflict Management.

          6. Parliamentary Procedure

          7. Leadership and Values Re-orientation

          8. Strategic Planning


          9. Orientation on Labor and Other Related Laws

B. Secretary

          1. Basic Cooperative Course

          2. Records Management for Non Financial Transaction


          3. Parliamentary Procedure

          4. Basic Computer Program


C. Treasurer

          1. Basic Cooperative Course

          2. Records Management (Financial Transaction)

          3. Basic Accounting for Non-Accountants

          4. Cooperative Standards

          5. Investment and Banking Procedures

          6. Financial Management


D. Audit Committee

          1. Basic Cooperative Course


          2. Audit Management

          3. Records Management


          4. Basic Accounting for Non-Accountant

          5. Cooperative Standards

          6. Internal Control including Inventory System


          7. Basic Computer Program

E. Election Committee


          1. Basic Cooperative Course

          2. Records Management


          3. Rules Formulation

          4. Leadership and Value Re-orientation
                                                                                                                                                 46

           5. Basic Computer Program

F. Ethics Committee

           1. Basic Cooperative Course

           2. Leadership and Values Re-orientation

           3. Conflict Management


           4. Records Management

           5. Basic Computer Program

G. Mediation/Conciliation Committee

           1. Basic Cooperative Course


           2. Leadership and Values Re-orientation

           3. Conflict Management

           4. Records Management

           5. Effective Communication


           6. Basic Computer Program

H. General Manager / Chief Executive Officer


           1. Basic Cooperative Course

           2. Cooperative Management and Governance

           3. Cooperative Standards

           4. Human Resource Management

           5. Effective Communication Skills

           6. Entrepreneurial and Business Management Course

           7. Labor and other related Laws


           8. Leadership and Values Re-orientation

           9. Computer Literacy Course


           10. Strategic Planning and Management

Section 6. Compliance. The training is required for all cooperative officers. In cases where the incumbent has not undergone the required
training program, he/she shall undergo such training within twelve (12) months from the effectivity of this Rule. Non-compliance with the
required trainings shall be considered grounds for disqualification for future election or appointment until such time that he/she has complied
with all the trainings required for the position.

Section 7. Duration of Trainings Attended. All trainings attended by cooperative officers shall be considered valid compliance with the intent
of this Rule for a period of five (5) years from date of issuance of the Certificate of Training. After which, they shall be required to undergo re-
training of the same.

Section 8. Transitory Period. All cooperatives are hereby given two (2) years from effectivity of this Rule to comply with the Training
Requirements as provided above.

                                                               RULE 8
                                                  REPORTS REQUIRED FOR COOPERATIVE


Section 1. Legal Basis. The legal basis for this rule is Art. 53 of this Code, quoted as follows:

"Art. 53. Report.

           (1) Every cooperative shall draw up regular reports of its program of activities, including those in pursuance of their socio-civic
           undertakings, showing their progress and achievements at the end of every fiscal year. The reports shall be made accessible to its
           members of record. These reports shall be filed with the Authority within one hundred twenty (120) days from the end of the
                                                                                                                                                   47

           calendar year. The form and contents of the reports shall be prescribed by the rules of Authority. Failure to file the required reports
           shall subject the accountable officer/s to fines and penalties as may be prescribed by the Authority, and shall be a ground for the
           revocation of authority of the cooperative to operate as such. The fiscal year of every cooperative shall be the calendar year,
           except as may be otherwise provided in the by-laws.

           (2) If a cooperative fails to make, publish and file the reports required herein, or fails to include therein any matter required by this
           Code, the Authority within fifteen (15) days from the expiration of the prescribed period, send such cooperative a written notice
           stating its non-compliance and the commensurate fines and penalties that will be imposed until such time that the cooperative has
           complied with the requirement."

Section 2. Required Regular Reports. The following reports shall submitted to the Authority:


           1. Cooperative Annual Performance Report (CAPR);

           2. Social Audit Report including its program of activities in pursuance of its socio-civic undertakings showing its achievements and
           end of every fiscal year;

           3. Performance Report;

           4. Audited Financial Statements duly stamped "Received " by the BIR; and


           5. List of Officers and Trainings Undertaken /Completed.

Section 3. Additional Reports for Federations and Unions. Federations and Unions shall submit to the Authority the following additional
reports:


           1. List of cooperatives which have remitted their respective Cooperative Education and Training Funds (CETF);

           2. Business consultancy assistance to include the nature and cost; and

           3. Other training activities undertaken specifying therein the nature, participants, and cost of each activity.

Section 4. Filling. All registered cooperatives shall file with the Authority a copy of the required reports either through personal, registered
mail courier, or electronic means, within one hundred twenty (120)days from the end of every year calendar year.

Section 5. Preparation of the Required Reports. The reports shall be typewritten or printed in a form prescribed by the Authority. The
Chairperson and the General Manager shall certify to the truthfulness of the statement contained in the reports.

Section 6. Preparation of the Submit Reports on Time. Failure to submit reports on time shall be considered as Delay or Default. However, if
the failure to submit reports on time is due to fortuitous events; such as fire and other natural calamities and public disorders including strike
or lock-out or a national emergency which affects the operation of the cooperative, the failure shall not be considered a delay. Provided, That
the Authority shall be officially notified of the occurrence of such fortuitous events.

Delay or default shall commence on the day following the last day required for the submission of reports. However, should the last day of
filing falls on a non-working day in the locality where the reporting cooperative is situated. Delay or Default shall start to run\on the day
following the next working day.

For the purpose of establishing Delay or Default, the date of acknowledgement by the Authority appearing on the copies of such reports filed
or submitted or mailing postmarked on the envelope/the date of registry or special delivery receipt, or the date the electronic mail was sent as
the case may be shall be considered as the date of filing.

Section 7. Sanction For Delayed Submission. Failure to file the required reports on time shall subject the Accountable Officer to pay a fine of
Php 100.00 per day of delay.

Within thirty (30) calendar days upon receipt of Statement of Accounts, the Accountable Officer may request for Reconsideration of such fine
on the grounds of fortuitous event and court litigation/order, which the Authority shall act upon within sixty (60) calendar days otherwise the
sanctions, shall be deemed lifted. The decision of the Authority shall become final and executory.

Other than the imposition of monetary penalties, the Authority may dissolve/revoke, after due process, the authority of the cooperative to
operate as such.

                                                              RULE 9
                                         GUIDELINES FOR THE LIQUIDATION OF COOPERATIVES

Section 1. Legal Basis. The legal bases for the Rule are Art. 69,70 and par. 2, Art. 72 (4) of the code, quoted as follows:


"Art. 69. Liquidation of a Cooperative. - Every cooperative whose charter expires by its own limitation or whose existence is terminated by
voluntary dissolution or through an appropriate judicial proceeding shall nevertheless continue to exist for three (3) years after the time it is
dissolved, not to continue the business for which was established but for the purpose of prosecuting and defending suits by or against it;
settlement6 and closure of its affairs, disposition, conveyance and distribution of its properties and asset.

At any time during the said three (3) years, the cooperative is authorized and empowered to convey all its properties to trustees for the
benefit of its members, creditors and other persons in interest. From and after any such conveyance, all interests which the cooperative had
in the properties are terminated.
                                                                                                                                                 48

Upon the winding up the cooperative affairs, any6 asset distributable to any creditor, shareholder or member(s) who is unknown or cannot be
found shall be given to the federation or union to which the cooperative is affiliated with.

A cooperative shall only distribute its assets or properties upon unlawful dissolution and after payment of all its debts and liabilities, except in
the case of decrease of share capital of the cooperative and as otherwise allowed by this Code."

"Art. 70. Rules and Regulations on Liquidation. - The Authority shall issue the appropriate implementing guidelines for the liquidation of
cooperatives."

"Art. 72. Capital Sources.-xxx

(b) Subsidies, donations, legacies, grants, aids and such other assistance from any local or foreign institution whether public or private:
Provided, That capital coming from such subsidies, donations, legacies, grants, aids and other assistance shall not be divided into individual
share capital holding at any time but shall instead from part of the donated capital or fund of the cooperative.


Upon dissolution, such donated capital shall be subject to escheat."

Section 2. Coverage of Liquidation. These Guidelines shall cover the following:

           1. Cooperatives whose charter expires by its own limitation.


           2. Cooperatives whose existence is terminated by voluntary dissolution.

           3. Cooperatives whose existence is terminated by appropriate judicial proceedings.

Section 3. Mode of Liquidation. The manner of liquidation or winding up may be provided for in the cooperative By-laws and this would
prevail unless it is inconsistent with law. In this jurisdiction, the cooperative may avail of the following modes of liquidation:

(1) Liquidation by cooperative itself through a Board of Liquidators. The members of cooperative entitled to vote shall elect from among
themselves their Board Liquidators; and/or

By conveying all the cooperative assets to Trustee or Trustees who will take charge of liquidation.

Section 4. Procedure of Liquidation. The following procedure shall be observed in liquidation:


           1. Constitution of the Board of Liquidators/Trustees.

           2. Inventory of Assets and Liabilities of the Cooperative.

           3. Payments of Creditors in accordance with the Provisions of the New Civil Code on the Preference and Concurrence of Credits.

           4. Transfer of the Statutory Funds to the intended beneficiaries.


           5. Distribution of the remaining assets.

           6. Submission of the Board of Liquidators/Trustees of the Liquidation's Final Report.


           7. Cancellation of the Certificates of Registration and delisting of the name of the cooperative in the Cooperative Registry.

Section 5. Board of Liquidators/Trustees.


Within sixty (60) days from receipt of the Order of Dissolution from the Authority or competent Court, the board of Directors shall
select/constitute the Board of Liquidators/Trustees. In the event the Board of Directors fails or refuses to constitute the Board of
Liquidators/Trustees, at least twenty five percent (25%) of the members entitled to vote shall convene and select/appoint the
Liquidators/Trustees. In case the Board of Directors and the General/Representative Assembly fail to select the Board of
Liquidators/Trustees, the Authority shall appoint the same.


The Board of Liquidators/Trustees shall not be less than three (3) but not more than five (5) members. They shall take their oath of office
before the Authority prior to assumption of their functions and responsibilities.

The Board of Liquidators/Trustees shall post an adequate bond as may be fixed by the Authority during the period of liquidation, to be paid
out of the funds of the cooperative.


The Board of Liquidators/Trustees shall be allowed to receive a reasonable honorarium to be paid out from the funds of the cooperative
which shall be equal to but not less than the honorarium being received by the Board of Directors of the cooperative before its dissolution.

Section 6. Functions, Powers and Obligations of the Board of Liquidators/Trustees. The Board of Liquidators/Trustees shall:


           1. Make an inventory of all assets and to be determine all liabilities including Share Capital holdings;

           2. Preserve the existing assets of the cooperative;


           3. Convert all assets of the cooperative into cash;
                                                                                                                                                49

           4. Pay the outstanding obligations including any and all valid claims against the cooperative;

           5. Distribute remaining assets pursuant to the provision of the Code and this Rules; and

           6. Make final report on the liquidation and submit the same to the Authority.

Section 7. Power to Sue and Be Sued. In the discharge of the above-mentioned functions, the Board of Liquidators/Trustees may sue and
be sued under the name of the cooperative in order to protects and defend its rights and interests.

Section 8. Payment of Creditors. Payment of creditors shall be in accordance with the contract upon which it is based and the provision of
the New Civil Code on the Preference and Concurrence of Credits.

Section 9. Statutory Funds. All the statutory funds established by the cooperative shall be disposed of in accordance with the provision for
Art. 86 of the Code.

Section 10. Treatment of Donated Capital. All studies, donations, legacies, grants, aids and such other assistance from any local or foreign
institutions whether public or private shall be subjected to escheat.

Section 11. Distribution of Assets. Subject to the preceding sections and upon written authority from the Authority, any assets remaining
after the payments of the cooperative's obligations to its creditors shall be distributed to the members in payments of their respective share
capital. If the remaining assets is not sufficient to pay the full share capital contribution of the members, the distribution shall be done in
proportion to their capital.

Section 12. Undistributed Assets. After the winding up of the affairs of the cooperative, the assets distributable to creditor or member whose
whereas about is unknown or cannot be found shall be given to the federation/union to which the cooperative is affiliated with, for cooperative
development, at the option of the Board of Liquidators/Trustees. In case of non-affiliation, the undistributed assets shall be given to the
community where the cooperative operated.

Section 13. Periods Allowed for the Winding Up of the Affairs of the Cooperative. The dissolved cooperative shall continue to exist for three
(3) years from the issuance of the Order of Dissolution. The purpose of which is not to continue the business for which it was established but
for purpose of prosecuting and defending suits filed or against the cooperative, settlement and closure of its affairs, distribution of its assets.


Nevertheless, at any time during the said three (3) year period, the cooperative is authorized and empowered to convey all its properties to
Trustees for the benefits of its members, creditors and other persons in interest, after which, all interest which the cooperative had in
properties are terminated.

Section 14. Submission of the Board of Liquidators/Trustees' Financial Report. The Cooperative Board of Liquidators/Trustees shall submit a
final report to the members of the liquidated cooperative and to the Authority, Federation, or Union to which the cooperative is affiliated with.

Upon receipt of the Final Report of the Board of Liquidators/Trustees and finding that said final report is complete and in order, the Authority
shall release the Liquidators/Trustees from their duties and functions. Thereafter shall effect the cancellation of the Certificate of Registration
of the subject cooperative and delisting of the name of the cooperative in the Cooperative Registry.

For failure to submit the Final Report the Board of Liquidators/Trustees shall not be released from their duties and functions, hence no
clearance shall be issued by the Authority.

Section 15. Summary Proceedings. For cooperative with assets of not more that One Hundred Thousand Pesos (P100,000.00) as shown in
the Audited Financial Statements and with no known creditors, the Authority may choose to initiate summary proceedings.


The following documents shall be required to be submitted by the Board of Directors to the Authority:

           1. Schedule of Assets;

           2. Proposal of Distribution of Assets to its members;

           3. List of intended beneficiaries of the Statutory Funds;


           4. Affidavit of No Creditors; and

           5. Audited Financial Statement;


After due evaluation by the Authority, the same shall issues a written authority to the Board of Directors to distributed the assets of the
cooperative. After which, the Board of Directors shall submit a final report.

Section 16. Suppletory Laws. The provisions of Chapter Two (2) and Three (3) of title 19 on the Concurrence and Preference of Credit under
the New Civil Code and the provisions of Rule 104 of the Revised Rules of Court on the Voluntary Dissolution of Corporations shall be used
as suppletory rules.

Section 17. Exception. The Authority, at its own discretion, may outrightly cancel the Certificate of Registration of a cooperation of a
cooperative which has been proven to have no assets, or in case the cooperative can no longer be located despite the best to locate it. Such
facts shall be stated in the Order of Cancellation.

                                                         RULE 10
                                CAPITALIZATION AND ACCOUNTING PROCEDURES OF COOPERATIVES

Section 1. Legal Basis. The legal basis for this Rule is Art. 71 of the Code, quoted as follows:
                                                                                                                                                50

"Art. 71. Capital. - The Capitalization of cooperatives and the accounting procedures shall be governed by the provisions of this Code and the
regulations which shall be issued."

Section 2. Capital Sources. Capitalization of a duly registered cooperative may be derived from any or all of the following sources;


           1. Members' Share Capital;

           2. Loans and Borrowing Including Deposits;


           3. Revolving Capital which consist of the deferred payment of patronage refunds, or interest on share capital; and


           4. Subsidies, donations, legacies, grants, aids and such other assistance from any local or foreign institution whether public or
           private; Provided, That capital coming from such subsidies, donations, legacies, grants, aids and other assistance shall not be
           divided into individual share capital holdings at any time but shall instead form part of the donated capital or fund of the
           cooperative.

Section 3. Share Capital. The Share Capital of a cooperative, the per value of which may be fixed at any figure not more than One
Thousand Pesos (P1,000.00), may consist of common share capital and preferred share capital if the latter is provided for under the
cooperative's Articles of Cooperation and By-laws. The share capital contribution of the members shall be considered as equity. Provided,
that it shall not be withdrawn and should not be used in offsetting obligations whether past due or current while the membership subsists.


           (a) Common Share Capital shall be issued only to regular members. Its holders shall be entitled to vote and be voted under the
           principle of one-man, one vote principle, and shall receive interest, the rate which should not exceeded the normal rate on
           investment.

           (b) Preferred Share Capital may be issued to regular and associate members. However, associate Members shall not be eligible
           to vote nor be voted on account of such shareholdings but shall be entitled to, among others the following:

                      1. Preference in the payment of interest as provided for in the Bylaws of the cooperative; and

                      2. In case of liquidation, priority in the distribution on Preferred Share Capital shall be prescribed in the By-laws of the
                      cooperative.

Section 4. Preferred Shares. Issuance and limitation on Preferred Share Capital shall be prescribed in the By-laws of the cooperative.


Section 5. Capital Build-Up. The By-laws of every cooperative shall provide for a reasonable and realistic member capital build-up program
to allow the continuing growth of the members' investment in their cooperative as their own economic conditions continue to improve.

Section 6. Limitation on Share Capital Holdings. No member of a primary cooperative other that a cooperative itself shall own or hold mere
than ten percent (10%) of the share capital of the cooperative. In the case of Secondary and Tertiary Cooperatives, members should own not
more that ten percent (10%) of the share capital of the cooperative.

Section 7. Fines on Unpaid Subscribed Share capital. The By-laws of a cooperative shall prescribe a fine on unpaid subscribed share
capital. Provided, that such fine is fair and reasonable under the circumstances as determined by the Board of Directors.

Section 8. Assignment of Share Capital Contribution or Interest. Subject to the provision of R.A. 9520, no member shall transfer his/her
shares or interest in the cooperative or any part thereof unless:

           1. He/She has held such share capital contribution or interest for not less than one (1) year;


           2. The assignment is made to the cooperative or to a person who falls within the field of membership of the cooperative; and


           3. The Board of Directors has approved such assignment.

Section 9. Interest on Share Capital. Interest on Share Capital shall not exceed the Rate of Return on Investment.


Unless otherwise provided for in the By-laws of the cooperative, share capital shall earn interest; the Rate of Interest shall be computed as
follows:


                                  X (Net Surplus less Statutory Reserves)
           Rate of Interest   =
                                        Total Average Share Month


Where: X shall be a percentage to be determined by the Board of Directors allocated for interest on share capital.

No allocation of interest on share capital shall be made without the approval of the Board of Directors which may increase or decrease any or
both.


Payment of interest, unless otherwise provided for in the By-laws, must be made on such date as may be determined by the Board of
Directors. The General/Representative Assembly ',owever, upon the recommendation of the Board of Directors, may defer the payment of
such interest including Patronage Refund to raise Revolving Capital.

No cumulative interest shall be allowed for any kind or class of share issued by the cooperative.
                                                                                                                                                51

Share Capital shall receive a strictly limited Rate of Interest.

Section 10. Withdrawal of Share Capital. A member of a cooperative may, for any valid reason, withdraw his/her membership from the
cooperative by giving a sixty (60) days notice to the Board of Directors. Subject to the By-laws of the cooperative, the withdrawing member
shall be entitled to a refund of his/her share capital contribution and all other interests in the cooperative. Provided, That such refund shall not
be made if upon such payment the value of the assets of the cooperative would be less than the aggregate amount of its debts and liabilities
exclusive of his/her share capital contribution.

Section 11. Patronage Refund. The principle of Patronage Refund is a principle of a equity wherein an equal right of members to participate
in the organization and to equitably share in the benefits accruing is established. Under the principle, the Net Surplus shall not be construed
as profit, but as excess payments made by them from the cooperative and which shall be deemed to have been returned to them if the same
is distributed as prescribed by the Code and by this Rule. Provided, however, That the amount allocated for patronage refund shall not be
less than thirty percent (30%) of the net surplus after deducting the statutory reserves based on the principle of equity. Provided, further, that
in no case shall the rate of patronage refund be more than twice the rate of interest on share capital.

Section 12. Accounting Procedure. The accounting system to be installed/maintained in the cooperative shall be in accordance with the
generally accepted accounting principles and practices, taking into consideration cooperative principles and practices. The cooperative shall
use the Standard Chart of Accounts and its accompanying Accounting Manual prescribed by the Authority.

                                                                 RULE 11
                                                       SOCIAL AUDIT OF COOPERATIVE

Section 1. Legal Basis. The legal basis for this Rule is Art. 80, paragraph 4, 5 and 6 of the Code, quoted as follows:


"Art. 80. Annual Audit. - Cooperatives registered under this Code shall be subject to an annual financial, performance and social audit."

"The social audit shall be conducted by an independent social auditor accredited by the Authority."

"The Authority in consultation with the cooperative sector, shall promulgated the rules and standards for the social audit of cooperatives."

Section 2. Coverage. All registered cooperatives regardless of types and categories shall be subject to social audit.


Section 3. Social Audit. It is a procedure where the cooperative assesses its social impact and ethical performance vis-à-vis its stated
mission, vision, goals and code of social responsibility. It is a process to assess the cooperative's contribution for the upliftment of the status
not only to its members' economic needs but also social needs and the community where it operates. The cooperative's actual performance
and accomplishment are compared to its vision, goals, and social responsibility as it relates to the impact not only to the community but to its
regular members as the immediate beneficiary of the decisions and actions it promulgated, passed and implemented. Social Audit will serve
as control mechanism to account for its social performance and evaluate its impact in the community taking into account the community
development fund which shall be used for projects or activities that will benefit the community where the cooperative operates.

Section 4. Objectives/Uses of Social Audit. Social Audit validates the support of the cooperative to the seventh cooperative principles on the
"Concern Community" and determines whether the cooperative work for the community's sustainable development through policies approved
by their members. The audit focuses not only to the economic side of the cooperative but also the social aspect of the organization and
appraises the cooperative performance as valuebased organization usually participative, user and community oriented and non-profit but
service organization and how its social responsibility for its members and the community as a whole was fulfilled. Social Auditing is the
systematic review of the attitudes, values, behavior, and degree of interaction of people within the cooperative as well as the policies,
programs and activities being implemented by the cooperative.

Section 5. Components and Social Audit Indicators. The Social Audit of the cooperative shall consists of but not limited to the following
major components/categories with its objectives:

1. Membership. To determine the effectiveness of the cooperative in meeting the needs of its members vis-à-vis the socio-economic
upliftment and empowerment of the members.

2. Assets building. To determine the cooperatives' performance in building up its economic capacity to respond to its social responsibility and
development income generating undertakings for its members.

3. Community Involvement and Solidarity. To determine the degree of community, social, environmental involvement and solidarity of the
cooperative. In relation to this, all cooperatives are encourage to promote environmental awareness and instill environmental protection and
conservation to their members and the community where they operate, and as far as practicable to conduct tree-planting activities in the
community where they operate or its immediate environs.

4. Information accessing and dissemination. To determine the capability of the cooperative to access, process and disseminate information
from/to its members and community. It looks into the function of the organization as an empowering and responsive mechanism.

5. Gender, Youth, Elderly, Children, and Persons with Disability. To determine how the cooperative has contributed in the social capital
development for the welfare of the youth, the elderly, children, and persons with disability and the promotion of the gender fair culture and
practices.

6. Leadership and Organizational Management. To highlight the attributes of the leaders/officers of the cooperative and efficiency in
managing the affairs of the organization as it relates with its members and with government.

Section 6. Social Audit Manual. The Authority shall develop a Social Audit Manual that will be used for the purpose.

Section 7. Applicability. All registered cooperatives shall submit to the Authority the Annual social Audit Report as conducted by an
Independent Social Auditor accredited by the Authority.
                                                                                                                                               52

Section 8. Sanctions. The failure of the cooperatives to the Authority of the required Social Audit Report conducted by the Accredited
Independent Social Auditor shall mean non-compliance with the required reports and will be meted with corresponding penalties in
accordance with R.A. 9520.

Section 9. Transitory Period. All cooperative are hereby given two (2) years from effectivity of this Rule to comply with the Social Audit
Requirements as provided above.

                                                                 RULE 12
                                                   FINANCIAL SERVICE COOPERATIVE (FSC)

Section 1. Legal Basis. The legal basis for this Rule is Art. 121 (1) and (14) of the Code, quoted as follows:


"Art. 121. Regulation and Supervision. - The Authority shall exercise lead regularity powers and supervision over the operations of the
financial service cooperatives, to wit:


(1) Issue rules and regulations for the safe and sound operations of financial service cooperatives. xxx

(14) Appoint a conservator or a receiver as may be necessary subject to the rules and regulations to be promulgated by the Authority in
coordination with the BSP, taking into consideration the grounds, powers and procedures under Sections 29 and 30 of Republic Act. No.
7653 as may be deemed appropriate to financial service cooperatives.


The Authority shall include in its rules and regulation appropriate sanctions and penalties, on the financial service cooperatives, its members,
and officers and responsible, its members, officers and responsible persons, for any action that fails to adhere to sound and prudent
management practices or are inconsistent with the provisions of this Code xxx."

Section 2. Functions of FSC. A FSC is a financial organization owned and operated by its members and authorized to provide the following
services, exclusively to its members: (a) the functions of credit cooperatives and other cooperatives, including multipurpose cooperatives,
that provide savings and credit to their members; and (b) other financial services subject to regulation by the BSP.

Section 3. Coverage. (1) All Financial Service Cooperative organized for the primary purpose of engaging in savings and credit services and
other financial services, and (2) Existing cooperatives with savings and credit facilities which has formally notified the Authority of their
intention to exercise enhanced functions and satisfied the requirements of CDA for conversion to Financial Service Cooperative.

Section 4. Registration. The Articles of Cooperation and By-laws of any FSC, or any amendment thereto, shall be registered with the
Authority only if accompanied by a Certificate of Authority issued by the BSP, under its official seal. Existing cooperative engaged in credit
and multi purpose activities, after it has notified the Authority of its decision to exercise enhanced functions and satisfied the requirements for
the conversion to Financial Service Cooperative, shall register its amended Articles of Cooperation and By-laws to the Authority upon
approval of the Authority and favorable certification of the BSP.

Section 5. Revocation of Authority. The authority granted, may be revoked by the BSP if any of the grounds for receivership mentioned
under Section 30 of Republic Act. No. 7653, otherwise known as The New Central Bank Act and sections 53 and 56 of Republic Act No.
8791, otherwise known as An Act Providing for the Regulation of the Organization and Operations of Banks, Quasi-Banks, Trust Entities and
for Other Purposes are present or if the FSC has willfully violated the Code or any of the related rules and regulations.

Section 6. Minimum Capitalization Requirements. Only those cooperatives with minimum Paid-up capital of at least Ten Million pesos (Php
10,000,000.00) shall qualify to register as FSC without prejudice to additional capital requirements that maybe prescribed by the BSP for a
particular financial service regulated by the BSP that will be offered by the FSC.

Section 7. Documentary Requirements. In addition to the documents required by the authority for registration of new
cooperative/amendments, the following shall be likewise submitted:

           1. Certificate of Authority from BSP;


           2. Resolution of the Board stating that:


                      2.1 The function or one of the functions of the cooperative shall be savings, credit and other financial services;

                      2.2 The amount of paid-up capital allocated for such purposes shall be at least Ten Million Pesos (Php 10,000,000.00);

           3. Undertaking to accomplish within a year from the issuance of Certificate of Registration to establish the business site equipped
           with facilities, forms, stationeries, and vault and provide required special training/seminar for officers of the cooperative;

           4. Audited Financial Statement of the immediately preceding year in case of existing cooperative;


           5. Other papers, which may be required by Authority.

Section 8. Reportorial Requirements. The FSC shall submit the regular reports as provided under Section 2 of Rule 8 of this Rule.


Section 9. Membership and Affiliation. A FSC shall have two (2) types of members: (1) Regular members, who are natural persons; and (2)
Associate members who are natural persons but who do not immediately qualify under the requirements for membership set out in the By-
laws of the cooperative. All associate members who are natural persons shall be given two (2) years to become regular members. Failure to
convert within said period shall mean automatic withdrawal of their associate membership. They may, however, re-apply as regular members
after two (2) years. Minors who are dependents of regular members can qualify as associate members. When they reach the age of majority
and within two (2) years from acceptance of their associate membership, they have the option to convert into regular members. As associate
members, they may open accounts, deposit funds, and withdraw from their account, subject to the By-laws and rules of the cooperative, and
the rules and regulations of the Authority, notwithstanding the provisions of existing laws to the contrary.
                                                                                                                                              53

Section 10. Officers. The officers of the FSC shall be composed of the Members of the Board of Directors, Committee Members, General
Manager or Chief Executive Officer, Secretary, Treasurer and Members holding other positions as may be provided for in their By-laws.

Section 11. Bonding of Accountable Officers. Every Director, Officer, and Employees handling funds, securities, or property on behalf of the
FSC shall be covered by a surety bond to be issued by a duly registered insurance or bonding company for the faithful performance of their
respective duties and obligations. The Board of Directors shall determine the adequacy of such bonds.

Section 12. Compensation. In the absence of any provision in the By-laws fixing their compensation, the Directors, shall not receive any
compensation except for reasonable per diems: Provided, however, That the Directors and Officers shall not be entitled to any per diem
when, in the preceding calendar year, the cooperative reported a net loss or had dividend rate less than the official inflation rate for the year.
Any compensation other than per diems may be granted to Directors by a majority vote of the members with voting rights at a regular or
special general assembly meeting specifically called for the purpose: Provided further, That no additional compensation other than per diems
shall be paid during the first year of existence of the FSC. Provided finally, That the immediately preceding proviso shall not apply to
cooperatives which converted into Financial Service Cooperative. The compensation of Officers as well as the Members of the Committee
created pursuant to the Code or its By-laws maybe fixed in By-laws.

Section 13. Removal of Officers. All complaints for the removal of any elected Officer shall be filed with the Board of Directors. Such Officer
shall be given the opportunity to be heard. Majority of the Board of Directors may place the Officer concerned under preventive suspension
pending the resolution of the investigation which period shall be specified in the By-laws or policies of the cooperative duly approved by the
General/Representative Assembly. Upon finding of a prima facie evidence of guilt, the Board of Directors shall present its recommendation
for removal to the General/Representative Assembly.

An Elective Officer may be removed by three-fourths (3/4) vote of the regular members present and constituting a quorum in a regular or
special general assembly meeting called for the purpose. The Officer concerned shall be given an opportunity to be heard at said assembly.

Section 14. Net worth. The Net Worth of the FSC shall, at all times, not be less than an amount equal to eight percent (8%) of its risk assets.
The net worth positions should be sufficient to meet competitive pressure and adverse economic conditions as they arise. It should enhance
the safety of the members' share and keep pace with growth in FSC assets.

Section 15. Deposit and Borrowing Operations. Savings and Time Deposits with FSC may be opened with a minimum amount to be
determined by the Board of Directors. Only members and its affiliate laboratory cooperative may open savings and/or time deposit accounts.
The FSC, through the Board of Directors as authorized by the General Assembly, may borrow from any source at the best terms or
conditions available and in such amount that may be needed.

Section 16. Reserve Requirements against Deposit Liabilities. FSC shall maintain a Liquidity Reserve Fund that will be restricted in nature
equivalent to at least two percent (2%) of their savings and time deposit liabilities.

Section 17. Loans. The Board of Directors shall be responsible for setting loan policies and lending procedures. It shall comply with the
provisions of R.A. 3765, otherwise known as the "Truth in Lending Act" and shall make the true and effective cost of borrowing, an integral
part of every loan contract.

Section 18. Investment Program. A sound investment program shall be the sole responsibility and accountability of the Board of Directors.
The scope of the program will depend largely on the FSC size and the extent of its surplus funds. Investment policies should be in writing
and should address the safety, liquidity and yield, diversification, delegation of authority, and valuation/assessment of securities. The FSC
shall not invest in any single entity more than 20% of its net worth.

Section 19. Internal Control. The FSC shall adopt a proper plan of organization, accounting control, accounting system, administrative
control, internal control standards, accounting records procedures and other measures to safeguard the FSC's assets, check the accuracy
and reliability of accounting data, promote operational efficiency, and encourage adherence to prescribed managerial policies.

Section 20. Performance Standards. A policy of transparency and openness must be always maintained whereby the Books of Accounts,
General/Representative Assembly, Board Resolutions and Committee Reports are properly kept and made accessible to members, and the
regular financial statements are periodically prepared and made known to the members, to the Authority and to other parties interested in the
FSC's operations.

Section 21. Standard Chart of Accounts. All FSCs shall adopt the Standard Chart of Accounts and its accompanying Accounting Manual for
Credit and Other Types of Cooperatives with Credit Service issued by the Authority.

Section 22. Manual of Rules and Regulations. The Authority shall develop a Manual that will cover: (1) the Rules and Regulations for the
safe and sound conduct of operations of Financial Service Cooperatives; (2) Rules and Regulations for the appointment of a Conservator or
a Receiver as may be necessary in coordination with the BSP, taking into consideration the grounds, powers and procedures under Section
29 and 30 of Republic Act No. 7653 as may deemed appropriate to Financial Service Cooperatives; and (3) the appropriate sanctions and
penalties on the Financial Service Cooperatives, its Members, Officers and Responsible Persons, for any action that fails to adhere to sound
and prudent management practices or are inconsistent with the provisions of the Code, other applicable laws on cooperatives, rules,
regulations, circulars or orders issued by the Authority, and require the cooperative to undertake corrective or remedial measures relative
thereto.

The appropriate prudential Rules and Regulations applicable to the Financial Service Cooperatives will be developed by the BSP, in
coordination with the Authority.

Section 23. Prohibition. The terms 'Credit Cooperatives', 'Financial Service Cooperative', and 'Financial Service Cooperative Federation'
shall be used exclusively by those who are duly registered under the Code, and no person, group of persons, or organization shall use the
said terms unless duly registered with the Authority. Violations of this prohibition shall be punishable in accordance with Art. 140 of the Code.

                                                                RULE 13
                                                         VOLUNTARY ARBITRATION

Section 1. Legal Basis. The legal basis for this Rule is Art. 137 of the Code quoted as follows:
                                                                                                                                                     54

"Art. 137. Settlement of Disputes, Conciliation, and Mediation Proceedings. - Disputes among members, officers, directors, and committee
members, and intra-cooperative, inter-cooperative, intra-federation or intra-federation disputes shall, as far as practicable, be settled
amicably in accordance with the conciliation or mediation mechanism embodied in the bylaws of cooperatives and in such other applicable
laws.

The conciliation and mediation committee of the cooperative shall facilitate the amicable settlement of intra-cooperative disputes and
disputes among members, officers, directors, and committee members.


Should such conciliation and mediation proceedings fail, the matter shall be settled through voluntary arbitration: Provided, however, That
before any party can validly file a complaint with the Authority for voluntary arbitration, it must first secure a certification from its conciliation
and mediation committee and from the cooperative union or federation to which it belongs that despite all efforts to settle the issues, the
same have failed.

The jurisdiction of the voluntary arbitration shall be exclusive and original and their decisions shall be appealable to the Office of the
President. The Authority shall issue and adopt the proper rules of procedure governing arbitration as the primary and exclusive mode for
dispute resolution in accordance with the Alternative Dispute Resolution Act of 2004.


For this purpose, the Authority shall constitute a list of Qualified Voluntary Arbitrators."

Section 2. Exclusive and Original Jurisdiction of the Voluntary Arbitrator/Arbitrator. The Voluntary Arbitrator/Arbitrator mutually chosen by the
parties shall have exclusive and original jurisdiction over the dispute, and their decision shall be appealable to the Office of the President of
the Republic of the Philippines.

Section 3. Powers/Authority of the Voluntary Arbitrator/s. The Voluntary Arbitrator/s shall have the following powers/authority:


           a. To hold hearings and to receive evidence necessary to resolve the issue/s subject of the dispute.

           b. To require any person to attend hearing/s as witness or to cause production of documents when the relevancy and the
           materiality thereof are vital to the resolution of the case.

           c. To administer oath.


           d. To cite contempt any person disturbing the proceeding and/or who willfully defy lawful orders of the Voluntary
           Arbitrator/Arbitrators.

           e. To issue a Writ of Execution, if necessary.

           f. To exercise such other powers and functions as may be necessary to resolve the dispute.

Section 4. Nature of Proceedings. Voluntary Arbitration is an administrative proceeding. The technical rules applicable to court or judicial
proceedings may not apply strictly. However, the requirements of due process must be observed at all times. The hearing may proceed even
in the absence of any party, provided the parties were duly notified and their failure to appear in such scheduled meeting is unjustified as
determined by the Voluntary Arbitrator/s handling the proceedings.

Section 5. Coverage. All intra/inter cooperative disputes not resolved amicably in accordance with the Conciliation/Mediation Mechanisms
embodied in the By-laws of a cooperative shall be governed by this Rule.

Section 6. Commencement of Action. Any party of a dispute not resolved through Conciliation/Mediation Proceeding in the primary and
union/federation level can commence an action for Voluntary Arbitration by filing a Verified Complaint with the Authority.

In the case of a primary cooperative affiliated with any federation/union, the complaint shall be accompanied by a Certificate of Non-
Settlement issued by the said federation/union to which the primary cooperative is affiliated with.

In the case of a primary cooperative not affiliated with any federation or union, the complaint shall be accompanied by a Certificate of Non-
Settlement issued by the Conciliation/Mediation Committee of such primary cooperative together with a Certificate of Non-Affiliation with any
Federation/Union signed by the Chairperson of the Board of Directors of the same cooperative.

Section 7. Venue of Action. All complaints shall be filed with CDA-Extension Office having administrative jurisdiction over the cooperatives.
However, for complaints involving cooperatives registered with the Central Office such complaint shall be filed with the latter.

Section 8. Contents of the Complaint. The complaint shall contain:


           1. The Names and Addresses of the Complainant/s and Respondent/s;

           2. A Brief Description of the Complaint and the Documentary Evidences, if any; and


           3. The Relief Prayed For.

Section 9. Parties to the Dispute. The Party who filed the complaint shall be called the "Complainant/s" and the Party complained of shall be
called the "Respondent/s".

Section 10. Procedures. Upon receipt of the Complaint, the Authority shall issue a Notice/Summons to the Respondent/s to file
Answer/Comment. Upon receipt of the Answer/Comment, a Preliminary Conference shall be scheduled.

Section 11. Preliminary Conference. A Notice shall be sent to all parties concerned, indicating the time and date of the conference. The
Notice shall be served on Counsel, or on the party who has no Counsel. It shall be the duty of the parties or their Counsel to appear at the
                                                                                                                                                55

Preliminary Conference. The non-appearance of a party may be excused only if a valid cause is shown therefore or if a Representative shall
appear in his/her behalf fully authorized in writing. The unjustified failure of the Complaint to appear in the Preliminary Conference shall be
cause for dismissal of the complaint. A similar failure on the part of the Respondent at the first instance, a second Notice/Summons shall be
issued. Non-compliance with the second Notice/Summons by the Respondent/s shall be cause for the dismissal of the complaint. However, a
Certificate of Non-Resolution may be issued upon request of the Complainant.


Whenever the Respondent's whereabouts are unknown or cannot be ascertained by diligent inquiry, the notice may be effected by
publication in a newspaper of general circulation at the expense of the complainant, otherwise the complaint shall be dismissed. However, a
Certificate of Non-Resolution may be issued to the Complainant.

Should the parties appear in the Preliminary Conference, the parties shall be required to sign a Submission Agreement.

Section 12. Contents of the Submission Agreement. The Agreement shall contain, among other things, the following matters:


           1. The agreement to submit to Voluntary Arbitration;

           2. The specific issue/s or dispute/s to be submitted for resolution;

           3. The name of the Voluntary Arbitrator/s chosen by the parties;


           4. The manner of paying the cost of arbitration proceedings including the Arbitrator's fee;

           5. The name of the public official whom the parties may designate to execute the final decision or award, if necessary; and


           6. The Agreement to perform or abide by the Decision/Award.

Section 13. Arbitration Proceedings. All parties to the dispute shall attend the arbitration proceedings. The attendance of any third party or
the exclusion of any witness in the proceeding shall be determined by the Voluntary Arbitrator/s. Hearings may be adjourned for a valid
cause or upon agreement of the parties. Unless the parties agree otherwise, it is mandatory for the Voluntary Arbitrator/s to render a
Decision or Award within thirty (30) calendar days from the date the parties agreed to submit the case for resolution.

Section 14. Decision/Award. The final disposition of the issue/s submitted to Voluntary Arbitration is the Decision/Award.

The Decision or Award must be stated in clear, concise and definite terms. It shall include the facts and the law and/or contract upon which
the Decision/Award is based and shall be signed by the Voluntary Arbitrator/s. A copy of this Decision/Award shall be furnished the Authority.

Section 15. Extent of Decision/Award. The Voluntary Arbitrator/s shall have the power to decide only the matters which have been submitted
for arbitration.

Section 16. Enforcement/Execution of Decision/Award. The parties shall comply voluntarily and faithfully the Decision/Award. In instances of
non-compliance, a Motion to Enforce or Execute may be filed with the Voluntary Arbitrator/s who may issue a Writ Execution requiring either
the sheriff of the Authority, if any, or the regular courts or any public official whom the parties may designate in the submission agreement to
execute the final decision or award.

Section 17. Appeal to the Office of the President of the Republic of the Philippines. The Decision/Award rendered shall be appealable to the
Office of the President of the Republic of the Philippines. The Appeal is taken by filing a Notice of Appeal within fifteen (15) days after receipt
of the copy of the Decision/Award appealed from. If no appeal is filed within the time as provided herein, such Decision/Award becomes final
and executory.

Section 18. Stenographic Notes/Transcript. The Voluntary Arbitrator/Arbitrator shall arrange the taking of stenographic notes/transcript of the
testimony when one or more parties request such a record, and such party or parties thereof assume payment of the cost.

Section 19. Cost of Arbitration and Arbitrator's Fee. Unless agreed otherwise, the parties shall equally share the cost of the proceedings
including the Arbitrator's Fee.

Section 20. Accreditation of Voluntary Arbitrator/s. The Authority shall issue guidelines concerning the accreditation and de-listing of
Voluntary Arbitrator/s as well as the list of qualified Voluntary Arbitrator/s.

                                                            COMMON PROVISIONS

Section 1. Requirements. A copy of these Rules shall be among the documents required to be kept ready and accessible for inspection and
examination by the members of the cooperative and the Authority in accordance with Art. 52 of the Code.

Section 2. Interpretation. Unless otherwise stated in these Rules, in case of doubt as to the meaning of any provision of these Rules, the
same shall be resolved and interpreted liberally in favor of the cooperatives and their members.

Section 3. Suppletory Rule. Bureau of Local Government Finance Memorandum Circular No. ____ and Bangko Sentral ng Pilipinas Circular
No. 682, S-2010 shall from part of these Rules. Special Rules, Circulars, Orders and other issuances by appropriate government agencies in
pursuance of the provisions of the Code and these Rules, and not inconsistent thereto, shall have suppletoy application to these Rules.

Section 4. Mandate. The Authority is mandated to implement and enforce these Rules and Regulations.

Section 5. Applicability. The provisions of this Rule shall apply to Rules 1 to 13.

Section 6. Separability. If any provision of these Rules and Regulations is declared null and void or unconstitutional, the other provisions not
affected thereby shall continue to be in force and effect.
                                                                                                                                            56

Section 7. Amendment. These Rules and Regulations shall be subject to automatic review three (3) years after the effectivity thereof. Any
amendment thereto, shall be subject to the review and approval of the JCOCC.

Section 8. Effectivity. These Rules and Regulations shall take effect fifteen (15) days after publication in the Official Gazette or in a
newspaper or general circulation.

RECOMMENDING APPROVAL:

                                                 FOR THE BOARD OF ADMINISTRATORS
                                                COOPERATIVE DEVELOPMENT AUTHORITY

                                                               LECIRA V. JUAREZ
                                                                   Chairman

This Implementing Rules and Regulations (Part I) was approved by the Joint Congressional Oversight Committee on Cooperatives during its
meeting on February 16, 2010 at the Senate of the Philippines, Pasay City pursuant to Article 138 of RA 9520.

                                      For Joint Congressional Oversight Committee on Cooperatives


                      For the Senate of the Philippines:                               For the House of the Representatives:

                       Sen. JUAN MIGUEL F. ZUBIRI                                           Rep. ERNESTO C. PABLO
                            Chair, Senate Panel                                                Chair, House Panel

The Lawphil Project - Arellano Law Foundation




                                           RULES AND REGULATIONS IMPLEMENTING
                             THE SPECIAL PROVISIONS OF THE PHILIPPINE COOPERATIVE CODE OF 2008
                                                  (REPUBLIC ACT NO. 9520)

                                                           TITLE AND DEFINITIONS

Section 1. Title. These Rules shall be known as the "Rules and Regulations Implementing the Special Provisions of the Philippine
Cooperative Code of 2008."

Section 2. Definition of Terms. For the purpose of these Rules and Regulations, the following terms are defined as follows:


           1. Accreditation - shall refer to the act of the OTC Board of Directors recognize the Transportation Service Cooperatives and
           which shall take place after registration with the CDA as evidenced by a Certificate of Accreditation.

           2. Agrarian Reform Area - shall refer to the area subject to the coverage of Comprehensive Agrarian Reform Program
           (CARP)/Comprehensive Agrarian Reform Program Extension with Reform (CARPER).

           3. Agrarian Reform Beneficiaries (ARBs) - shall refer to the qualified beneficiaries of Comprehensive Agrarian Reform Program
           (CARP) as defined under Section 22, Chapter VII of R.A. 6657.

           4. Agrarian Reform Community (ARC) - shall refer to a community composed and managed by ARBs who are willing to be
           organized and to undertake the integrated development of an area and/or their organizations or cooperatives as defined under RA
           9700, otherwise known as the Comprehensive Agrarian Reform Program Extension with Reform (CARPER) Act.

           5. Agrarian Reform Cooperative - shall refer to one organized by marginal farmers majority of which are Agrarian Reform
           Beneficiaries duly registered with the Authority for the purpose of developing an appropriate system of land tenure, land
           development, land consolidation or land management in areas covered by agrarian reform and for other purposes as provided by
           law. The same shall also refer to Agrarian Reform Beneficiaries Cooperative (ARB Coop) as defined in DAR Administrative Order
           No. 05, Series of 2009.

           6. Authority - shall refer to Cooperative Development Authority (CDA).


           7. BFAD - shall refer to Bureau of Food and Drugs.

           8. Blanket Loan/Wholesale Loan - shall refer to a housing loan contracted/obtained by a housing cooperative intended to identify
           member-beneficiaries for land acquisition, land improvement, house construction, home improvement, or renovation and other
           similar purposes.

           9. BSP - shall refer to Bangko Sentral Pilipinas.

           10. CGS - shall refer to the Certificate of Good Standing issued by the Authority to all types of cooperatives. Transportation
           Service Cooperative shall also secure another CGS from OTC or LGU, whichever is applicable.

           11. CLOA - shall refer to the Certificate of Land Ownership Award.

           12. Commission - shall refer to the Insurance Commission.
                                                                                                                                       57

13. Cooperative Education and Transport Operation Seminar (CETOS) - shall refer to seminars conducted by CDA and/or
OTC for the purpose of providing continuing education on cooperative and transport operation to enhance the knowledge and
capability of the officers as well as the members of the Transportation Service Cooperative.

14. Cooperative Housing Program - shall refer to an alternative housing approach, in partnership with government/non-
government agencies involved in a housing program, undertaken by a financially and organizationally stable cooperative to
address the housing problems of its members primarily the low-income earners through its own cooperative efforts in planning and
direct production of affordable, decent and adequate housing units.

15. CPCN/Franchise/Permit - shall refer to the Certificate of Public Convenience and Necessity issued by the appropriate
government agencies which authorizes the grantee thereof to render the appropriate public service.

16. Dairy Cooperative - shall refer to one whose members are engaged in the production of fresh milk which may be processed
and/or marketed as dairy products.

17. Distribution of Electricity - shall refer to the conveyance of electric power by a distribution utility through its distribution
system pursuant to the provisions of the EPIRA Law.

18. Distribution of Utility - shall refer to any Electric Cooperative, private corporation, government-owned utility, or existing local
government unit which has an exclusive franchise to operate a distribution system in accordance with the EPIRA Law.

19. DAR - shall refer to the Department of Agrarian Reform.

20. DOH - shall refer to Department of Health.

21. DOTC - shall refer to Department of Transportation and Communications.


22. Electric Cooperative - shall refer to one organized for the primary purpose of undertaking power generation, utilizing
renewable energy sources, including hybrid system, acquisition and operation of subtransmission or distribution to its household
members.

23. Extension Offices - shall refer to the offices of the Authority covering one geo-political region each as their area of
jurisdiction.

24. EPIRA - shall refer to the Electric Power Industry Reform Act of 2001.

25. GSIS - shall refer to the Government Service Insurance System.

26. High Rise/Condominium Housing - shall refer to the construction of at least five (5) storey residential building in high density
urban and rural areas to provide housing to low income earners.

27. HDMF - shall refer to the Home Development Mutual Fund or Pag-IBIG Fund.

28. HLURB - shall refer to the Housing and Land Use Regulatory Board.

29. Housing Beneficiaries - shall refer to regular members in good standing of the Housing Cooperative who actively in the By-
laws and duly approved internal policies of the cooperative.

30. Housing Cooperative - shall refer to one organized to assist or provide access to housing for the benefit of its regular
members who actively participate in the savings program for housing. It is co-owned and controlled by its members.

31. Insurance Cooperative - shall refer to one engaged in the business of insuring life and property of cooperatives and their
members. It shall also refer to Cooperative Insurance Societies (CIS).

32. Insurance Like Activity - shall refer to any activity involving regular collection of premiums, fees, contributions, or charges
prior to the occurrence of contingent event and the payment of guaranteed benefits upon the occurrence of such event.

33. LBP - shall refer to the Land Bank of the Philippines.


34. LGU - shall refer to Local Government Unit.


35. LTFRB - shall refer to the Land Transportation Franchising and Regulatory Board.

36. LTO - shall refer to the Land Transportation Office.

37. LWUA - shall refer to the Local Water Utilities Administration, created under PD 198, as amended.

38. MARINA - shall refer to Maritime Industry Authority.

39. Marginal Farmers - shall refer to farmers who are tilling an area of not more than three (3) hectares.

40. Medium Rise Housing - shall refer to the construction of a maximum of four (4) storey residential building in high density
urban and rural areas to provide housing to low income earners.
                                                                                                                                         58

41. Member in Good Standing - shall refer to one who is a regular member and has complied with all the requisites for
membership. One who possesses all the qualifications and none of the disqualifications provided in the Cooperative By-laws as
ascertained by the Board of Directors and has the right to vote and be voted upon.

42. Micro-Insurance - shall refer to an activity providing specific insurance, insurance-like, and other similar products and
services that meet the needs of the low-income sector for risk protection and relief against distress, misfortune and other
contingent events. This shall include all forms of insurance, insurance-like and other similar activities, as may be defined by
concerned regulatory bodies with features such as: premiums, contributions, fees or charges collected/deducted prior to the
occurrence of a contingent event and guaranteed benefits provided upon occurrence of a contingent event.

43. Micro-Insurance Product - shall refer to a financial product or service that meets the risk protection needs of the poor where
the amount of premiums, contributions, fees or charges computed on a daily basis does not exceed five percent (5%) of the
current daily minimum wage rate for non-agricultural workers in Metro Manila, as approved by the National Wages Productivity
Board (NWPB)/Regional Tripartite Wages Productivity Board (RTWPB) and the maximum sum of guaranteed benefits is not more
than 500 times the daily minimum wage rate for non-agricultural workers in Metro Manila.

44. NDA - shall refer to National Dairy Authority.


45. Next of Kin - shall, for purposes of succession, refer to an natural person who is an heir of an agrarian reform beneficiary and
who is qualified to be a member of the cooperative as ARB under its By-laws and as determined by DAR.

46. NHA - shall refer to the National Housing Authority.

47. NWRB - shall refer to the National Water Resources Board, created under PD 424.

48. OTC - shall refer to the Office of Transportation Cooperatives.


49. PCG - shall refer to the Philippine Coast Guard.

50. Referendum - shall refer to a mechanism of securing the approval of the general membership of an Electric Cooperative on
issues affecting its registration, operation, and management.

51. Regular Insurance Product - shall refer to all other insurance policies not covered by Micro-Insurance Product.

52. Renewable Energy Resources - shall refer to energy resources that do no have an upper limit on the total quality to be used.
Such resources are renewable on a regular basis and the renewable rate is rapid enough to consider availability over an infinite
time. These include among others, biomass, solar, wind, hydro and ocean energy.

53. RTWPB - shall refer to the Regional Tripartite Wages Productivity Board.

54. SSS - shall refer to the Social Security System.

55. Socialized Housing - shall refer to the housing program and project undertaken by the government and private sector for the
underprivileged and homeless which may also be undertaken by a Housing Cooperative. This includes sites and services
development, long-term financing and liberalized terms on interest payments.

56. Sub-transmission Assets - shall refer to the facilities related to the power delivery service below the transmission voltages
and based on the functional assignment of assets, including, but not limited to stepdown transformers used solely by load
customers, associated switchyard/substation, control and protective equipment, reactive compensation equipment to improve
customer power factor, overhead lines, and the land where such facilities/equipment are located. These include NPC assets
linking transmission system and the distribution system which are neither classified as generation nor transmission.

57. Supply of Electricity - shall refer to the sale of electricity by a party other than a generator or a distributor in the franchise
area of a distribution utility using the wires of the distribution utility concerned.

58. Technical Plan - shall refer to all technical documents required in planning a housing project namely, the bar chart and
construction schedule, systematic development plan, the architectural and detailed engineering and housing design, contract
documents, technical and material specification.

59. Transmission of Electricity - shall refer to the conveyance of electricity through the high voltage system.

60. Transportation Service Cooperative - shall refer to one which engages in land and sea transportation, limited to small
vessels, as defined or classified under the Philippine Maritime laws, organized under the provision of the Code.

61. Urban Areas - shall refer to all cities regardless of their population density and to municipalities with a population density of at
least 500 persons per square kilometer.

62. Urbanizable Areas - shall refer to the sites and lands within display marked and great potential of becoming urban areas
within the period of five (5) years.

63. Water Tariff - shall refer to the water rate charged to customers/members for water consumption as determined by the
cooperative and approved by the NWRB.

64. Water Permit - shall refer to the authority to appropriate and use water.

65. Water Right - shall refer to the privilege granted by the government to appropriate and use water.
                                                                                                                                                59

           66. Water Service Cooperative - shall refer to a duly registered cooperative organized to own, operate, and manage water
           supply systems for the provision and distribution of potable water for its members/consumers.

           67. Water Supply - shall refer to the supply of potable water as provided by the cooperative for domestic, industrial, commercial,
           and other uses.

           68. Worker Beneficiaries - shall refer to a natural person who renders service for a value as an employee or laborer in an
           agricultural enterprise or farm within an ARC, regardless of whether his compensation is paid on a daily, weekly, monthly or
           "pakyaw" basis.

                                                     RULE I - HOUSING COOPERATIVES


Pursuant to the provisions of Art. 62(13) (par.2) under Chapter V of Republic Act No. 9520, otherwise known as the Philippine Cooperative
Code of 2008, the Cooperative Development Authority in consultation with NHA, HDMF, SSS, LBP, and concerned cooperative sector
hereby promulgates the following rules and Regulations for the proper guidance and compliance of Housing Cooperatives.

Section 1. Coverage. This Rule shall cover all cooperatives duly registered with the Authority under R.A. 9520 organized to assist or provide
access to housing for the benefit of its regular members.

Section 2. Organization. Fifteen (15) or more natural persons who are Filipino citizens, of legal age, having a common bond of interest and
actually residing or working in the intended area of operation, may organize a housing cooperative.

Section 3. Purpose and Objectives. A Housing Cooperative shall be organized for any or all of the following purposes:

           (1) To facilitate access and/or provide affordable housing units to its members;


           (2) To create a resource mobilization program to ensure financial stability for the cooperative;

           (3) To foster and strengthen the principles of cooperativism by promoting a comprehensive and integrated community
           development program which are planned and managed by the cooperative members thereby ensuring a sustained and self-reliant
           cooperative community.


           (4) To develop collaborative efforts and partnership with other cooperatives, CDA, NHA, GSIS, HDMF, SSS, LBP, DBP, HLURB
           and other government agencies, financial institutions and entities thereby assuring availability of resources and lower cost of
           housing development.

           (5) To expand the cooperatives business operations by stabilizing the available resources for the continuing production of housing
           units for its members.

           (6) To undertake such other economic or social activities as may be necessary or incidental in the pursuit of the foregoing
           purposes.

Section 4. Housing Programs and activities. Housing Cooperatives may engage in the following activities:


           a. Socialized Housing;


           b. Medium Rise Public and Private Housing;

           c. High Rise/Condominium Housing;


           d. Student/Faculty Dormitory Housing;

           e. Production and Distribution of Housing Materials;


           f. Estate Management; and

           g. Other similar activities.

Section 5. Registration Jurisdiction. Housing Cooperatives shall file their application for registration with the CDA Extension Office, which
shall have jurisdiction over the said cooperatives.

Section 6. Capitalization. For purposes of registration with the Authority, a housing cooperative shall have a minimum paid-up capitalization
of Fifteen Thousand Pesos (P 15, 000.00).

Section 7. Requirements for Registration. The following shall be complied with upon filing of application:

           A. New Applicant


                       (1) Name Verification Slip;

                       (2) Articles of Cooperation and by-Laws;


                       (3) Sworn Statement of the treasurer elected by the subscribers showing that at least ` twenty-five per centum (25%) of
                       the authorized share capital has been subscribed and at least twenty-five per centum (25%) of the total subscription
                                                                                                                                               60

                      has been paid: Provided, That in no case shall the paid-up share capital be less than Fifteen Thousand Pesos
                      (15,000.00);

                      (4) Surely Bond of Accountable Officers handling funds, properties and securities;

                      (5) Pre-Membership Education Seminar (PMES);

                      (6) Economic Survey;


                      (7) Pre-Feasibility Study of the housing projects undertaking as reviewed by NHA;


                      (8) Undertaking to Change Name in the event that another cooperative has acquired prior right to the use of the
                      proposed name; and

                      (9) Registration Fee.

           B. Existing Cooperative


                      (1) Amended Articles of Cooperation and By-laws;

                      (2) A Resolution certified by the Board Secretary and by the majority of the Board of Directors stating that the said
                      amendments have been duly approved by at least two-thirds (2/3) vote of the members with voting rights;


                      (3) Audited Financial Statements showing profitable operations for the past two (2) years;

                      (4) Pre-feasibility study of the housing projects undertaking as reviewed by NHA;


                      (5) Proof of business track record of the cooperative; and

                      (6) Amendment Fee.

Section 8. Financing and Technical Assistance. The Authority, in coordination with appropriate government agencies and financial
institutions, shall assist the housing cooperative in availing technical and financial assistance for its housing projects.

For this purpose, a special window for the financing of the housing projects shall be created by the appropriate housing agencies and
government financial institutions. The financing shall be in the form of blanket loans or wholesale loans to qualified housing cooperatives,
with interest rates and terms equal to, or better than those given for socialized housing projects without need for individual processing.

Section 9. Documentary Requirements in Availing for Technical and/or Financial Assistance. The cooperative in availing technical and/or
financial assistance shall file its application with the appropriate government financial institutions.

For this purpose, the applicant cooperative shall comply with the documentary requirements as maybe required by such appropriate
government financial institution.

Section 10. Conditions for the Proposed Housing Project. The proposed housing project of the cooperative shall have the following features
as certified by the NHA:


           1. Availability of Land Suitable for Housing. The land proposed for housing is classified as a safe and buildable area and not
           affected by any government infrastructure project, agricultural or industrial reserve.

           2. Land Ownership. The land is owned by the cooperative or there is an on-going negotiation between the landowner and
           cooperative through a Contract to Sell or Reservation Agreement between the landowner and the cooperative and that the land is
           free from any liens and encumbrances.

           3. Target Beneficiaries. The proposed housing project should have at least 30 initial target member-beneficiaries.

Section 11. Membership. Membership in Housing Cooperatives shall be open to all natural persons who meet the qualifications for
membership prescribed in the cooperative By-laws.

Section 12. Regulatory Power. The Authority shall have the power to regulate the internal affairs of Housing Cooperative such as:

           a. Exercise of rights and privileges of members;


           b. Formulation of rules and procedures and the conduct of meetings of General Assembly, Board of Directors and Committees.

           c. Manner of election and qualifications of Officers, Directors and Committee Members;

           d. Allocation and distribution of surplus; and

           e. Other matters relating to the internal affairs of Housing Cooperatives.

All matters relating to the technical aspects of the housing program and such other similar matters affecting the Housing Cooperatives shall
be regulated by the NHA or HLURB as the case maybe.
                                                                                                                                              61

Section 13. Joint Monitoring and Evaluation Committee. The Joint Monitoring and Evaluation Committee shall be composed of CDA, as the
lead agency, NHA, HLURB, HDMF, SSS, GSIS, LBP, DBP, concerned cooperative sector and other appropriate government agencies and
financial institutions.

The Committee shall have the following functions:

           1. To formulate joint standards for the proper implementation, monitoring, organization, management, and development of
           cooperative housing project all matters relating to the organizations, management, and development of the cooperative housing
           projects.

           2. To recommend changes to this IRR from time to time if the need arises.

           3. To assist in settling inter/intra cooperative disputes.

           4. To submit annual accomplishment report to the Authority.

Section 14. Settlement of Disputes. Intra/inter cooperative disputes shall, as far as impracticable, be settled amicably through the
conciliation and mediation mechanism embodied in the By-laws of the cooperative, which shall be in accordance with the CDA Guidelines for
the Implementation of Conciliation-Mediation for Cooperative Disputes, and in applicable laws.


Should such conciliation-mediation proceedings fail, the matter may be settled through voluntary arbitration or in court of competent
jurisdiction.

However, in cases where the dispute/s fall within the jurisdiction of the NHA or HLURB, the same shall be referred to the said agency and it
shall be resolved in accordance with the NHA or HLURB regulations.

                                               RULE II - AGRARIAN REFORM COOPERATIVES


Pursuant to the provisions of Art. 93 (6) and Art. 94 (par. 2) under Chapter XI of Republic Act. No. 9520, otherwise known as the Philippine
Cooperative Code of 2008, the Authority in consultation with the DAR, BSP, LBP, and the concerned cooperative sector hereby promulgates
the following rules and regulations for proper guidance and compliance of Agrarian Reform Cooperatives.

Section 1. Coverage. This Rule shall cover all Agrarian Reform Cooperatives duly registered with the Authority under R.A. No. 9520.

Section 2. Organization. At least fifteen (15) marginal farmers majority of which are Agrarian Reform Beneficiaries in an agrarian reform
areas may organized an Agrarian Reform Cooperative.

Section 3. Purposes and Objectives. Agrarian Reform Cooperatives shall be organized for any or all of the following purposes:

           (1) To develop an appropriate system of land tenure, land development, land consolidation or land management in areas covered
           by agrarian reform;

           (2) To coordinate and facilitate the dissemination of scientific methods of production and provide assistance in the processing,
           storage, transport, and marketing of farm products for Agrarian Reform Beneficiaries and their immediate families, hereinafter
           referred to as "beneficiaries";


           (3) To provide financial facilities to beneficiaries for provident or production purposes at reasonable costs;

           (4) To arrange and facilitate the expeditious transfer of appropriate and suitable technology to beneficiaries and marginal farmers
           at the lowest possible costs;


           (5) To provide social security benefits, health, medical and social insurance benefits and other social and economic benefits that
           promote the general welfare of the agrarian reform beneficiaries and marginal farmers;

           (6) To provide a non-formal education, vocational/technical training and livelihood program to beneficiaries and marginal farmers;


           (7) To act as channels for external assistance and services to the beneficiaries and marginal farmers;

           (8) To undertake a comprehensive and integrated development program in agrarian reform and resettlement areas with special
           concern for the development of agro-based, marine-based, and cottage-based industries;

           (9) To represent the beneficiaries on any or all matters that affect their interest; and

           (10) To undertake such other economic or social activities as may be necessary or incidental in the pursuit of the foregoing
           purposes. 1avv phi




Section 4. Registration Jurisdiction. Agrarian Reform Cooperatives shall file their duly accomplished application for registration with the CDA
Extension Office, which shall have jurisdiction over the said cooperatives.

Section 5. Registration Requirements. The following shall be complied with upon filing of application:

           (1) Name Verification Slip;


           (2) Articles of Cooperation and By-Laws;
                                                                                                                                                 62

           (3) Sworn Statement of the Treasurer elected by the subscribers showing that at least twenty-five per centum (25%) of the
           authorized share capital has been subscribed and at least twenty-five per centum (25%) of the total subscription has been paid:
           Provided, That in no case shall the paid-up share capital be less than Fifteen Thousand Pesos (P15,000.00);

           (4) Surety Bond of Accountable Officers;

           (5) Pre-Membership Education Seminar (PMES);

           (6) Economic Survey;


           (7) Undertaking to Change Name in the event that another cooperative has acquired prior right to the use of the proposed name;

           (8) Mother CLOA in case of plantation based ARBs;

           (9) Written verification from the DAR to the effect that the cooperative organization is needed and desired by the beneficiaries;
           results of a study that has bee conducted fairly indicate the economic feasibility of organizing the same and that will be
           economically viable in the operations; that at least majority of the members are Agrarian Reform Beneficiaries, and the same may
           now be organized and registered in accordance with the requirements of the Philippine Cooperative Code of 2008; and

           (10) Registration fee.

Section 6. Cooperative Name. All cooperatives organized for any or all of the purposes/objectives enumerated under Section 3 of this Rule
shall always bear the word "Agrarian Reform" whether engaged in the operation of public utilities and services and/or other business
activities/services.

Existing ARB Coops shall amend their cooperative name to conform to this Section.

Section 7. Amendments of Articles of Cooperation and By-laws. Agrarian Reform Cooperative intending to engage in the operation of public
utilities and services shall amend its Articles of Cooperation and By-Laws to legally provide for such services. IT shall also comply with the
other requirements imposed by the Authority and the appropriate government agencies for cooperatives engaged in public utilities and
services.

Section 8. Capitalization. For purposes of registration with the Authority, Agrarian Reform Cooperatives shall have a minimum paid up
capitalization of Fifteen Thousand Pesos (P15,000.00).

However, to engage in the operation of public utilities and services, the minimum capitalization shall be in accordance with the Rules and
Regulations prescribed by the Authority for Multi-Purpose cooperatives under Rule 3 of the Rules and Regulations Implementing Certain
Provisions of the Philippine Cooperative Code of 2008 (Republic Act No. 9520) and by the concerned government agency.

In case the ARB Coop engages in Transport Service, it shall comply with the other requirements prescribed in Section 5, Rule 5 of these
Rules and Regulation.

Section 9. Membership Termination and Valuation and/or Transfer of Share Capital. Agrarian Reform Cooperative, other than plantation-
based Agrarian Reform Cooperative shall be governed by Articles 30,31 and 74 of RA 9520 and the By-laws of the Cooperative.

However, plantation-based Agrarian Reform Cooperative which is covered by collective Certificate of Land Ownership Award (CLOA), shall
be governed by the joint DAR-CDA Administrative Order No. 09, Series of 2008 entitled "Revised Rules and Regulations on ARB
Membership Status and Valuation and/or Transfer of Paid-Up Share Capital in Agrarian Reform Plantation-Based Cooperatives dated
September 4, 2008" including any amendments thereto or subsequent issuances.

Section 10. Privileges. Subject to reasonable terms and conditions that may be imposed by the DAR and the Authority, an Agrarian Reform
Cooperatives duly registered with the Authority may be given exclusive right to do any or all of the following economic activities in agrarian
reform and resettlement areas:

           (1) Supply and distribution of consumer, agricultural, aqua-cultural, and industrial good, production inputs, and raw material and
           supplies, machinery, equipment, facilities and other services and other services and requirements of the beneficiaries and
           marginal farmers at reasonable prices;

           (2) Marketing of the products and services of the beneficiaries in local and foreign markets;

           (3) Provision of essential public services at cost such as power, irrigation, potable water, passenger and/or cargo transportation by
           land or sea, communication services, and public health and medical care services;

           (4) Management, conservation, and commercial development of marine, forestry, mineral, water and other natural resources
           subject to compliance with the laws and regulations on environmental and ecological controls; and

           (5) Provision of financial, technological, and other services and facilities requires by the beneficiaries in their daily lives and
           livelihood. Such terms and conditions shall be jointly formulated by the DAR and the Authority.

Section 11. Preferential Right/Treatment. In an agrarian reform and resettlement areas, a duly registered Agrarian Reform Cooperatives
shall have preferential right/treatment form the government in the following matters:


           (1) In the construction, maintenance and management of roads, bridges, canals, wharves, ports, reservoirs, irrigation systems,
           waterworks systems, and other infrastructures with government funding

           The technical assistance, facilities and equipments to such agrarian reform cooperatives shall be provided by the Government.
                                                                                                                                               63

           (2) In the grant of Franchise and Certificate of Public Convenience and Necessity for the operation of public utilities and services:
           Provided, that it meets the requirements and conditions imposed by the appropriate government agency granting the Franchise or
           Certificate of Public Convenience and Necessity,

In case of electric service provider in the area, it shall, upon the request of an Agrarian Reform Cooperative, immediately provide electric
services to the agrarian reform areas. If the electric service provided fails to provide the services requested within a period of one (1) year,
the Agrarian Reform Cooperative may undertake to provide the electric services in the area through its own resources. All investments made
by the said Agrarian Reform Cooperative for the electrification of the agrarian reform resettlement areas shall be subject to the electric
services provider once it takes on the service.

Section 12. Lease of Public Lands. Agrarian Reform Cooperative may lease public lands for a period not exceeding twenty five (25) years,
subject to renewal for another twenty five (25) years only, provided the application for renewal shall be made one (1) year before the
expiration of the lease and such lease shall be for the exclusive use and benefit of the beneficiaries and marginal farmers subject to the
provisions of the CARP, as amended..

Section 13. Cooperative Estates. Landholdings like plantations, estates, or haciendas acquired by the State in accordance with the CARP,
as amended, for the benefit of the workers shall be collectively owned through a Mother CLOA by the worker beneficiaries under a
cooperative set-up.

Section 14. Assistance. The Government shall provide the necessary financial and technical assistance to Agrarian Reform Cooperatives to
enable them to discharge the purposes and objectives under Section 3 of this Rule which shall be in accordance with a joint program for the
organization and financing of the Agrarian Reform Cooperatives. The joint program shall be geared towards the gradual assumption of full
ownership and management control of the cooperative estate by the Agrarian Reform Cooperatives.

Section 15. Regulatory Power. The Authority shall have the power to regulate the internal affairs of Agrarian Reform Cooperative such as:


           a. Exercise of rights and privileges of members;


           b. Formulation of rules and procedures and the conduct of meetings of General Assemble, Board of Directors and Committees;

           c. Manner of election and qualifications of Officers, Directors, and Committee Members;


           d. Allocation and distribution of surplus; and

           e. Other matters relating to the internal affairs of Agrarian Reform Cooperatives.

All matters relating to land acquisition, development of an appropriate system of land tenure, land development, land consolidation, or land
management in areas covered by agrarian reform and such other similar matters affecting the Agrarian Reform Cooperatives shall be
regulated by the DAR.

All matters relating to land valuation and assessment shall be regulated by the LBP.

Section 16. Financing Program. Any Financing Program to be availed of by ARB Coops shall be in accordance with the joint program to be
developed by the DAR, the BSP, and the Authority.

Section 17. Settlement of Disputes. Intra/inter cooperative disputes shall other than land disputes, as far as practicable, be settled amicably
through the conciliation and mediation mechanism embodied in the By-laws of the cooperative, which shall be in accordance with the CDA
Guidelines for the Implementation of Conciliation- Mediation for Cooperative Disputes and in applicable laws.


Should such conciliation - mediation proceedings fail, the matter may be settled through voluntary arbitration or in court of competent
jurisdiction.


However, in cases where the dispute/s fall within the jurisdiction of the DAR, the same shall be referred to the said agency and it shall be
resolved in accordance with the DAR regulation.

                                                   RULE III- INSURANCE COOPERATIVES


Pursuant to the provisions of Art. 108 under Chapter XIII of Republic Act. No. 9520, otherwise known as the Philippine Cooperative Code of
2008, the Commission and the Authority in consultation with the concerned cooperative sector hereby promulgate the following rules and
regulations for the proper guidance and compliance of the Insurance Cooperatives.

Section 1. Coverage. This Rules shall cover all Insurance Cooperatives duly registered under R.A. 9520 organized for the purpose of
engaging in the business of insuring life and property of cooperatives and their members.

Section 2. Organization. Fifteen (15) or more duly registered cooperatives may organize as Insurance Cooperative.

Section 3. Purposes and Objectives. An Insurance Cooperative shall provide its constituting members different types of insurance coverage
consisting of, but not limited to, life insurance with special group coverage, loan protection, retirement plans, endowment with health and
accident coverage, fire insurance, motor vehicle coverage, bonding, crop, livestock protection and equipment insurance.

It may also provide "micro-insurance products" and regular insurance to cooperatives and its members.

Section 4. Membership. Membership in Insurance Cooperative shall be open to all duly registered cooperatives of all types and categories
                                                                                                                                              64

Section 5. Registration Jurisdiction. Any applicant cooperative proposing to engage into the business of insuring life and property of
cooperatives and their members shall file their duly accomplished application for registration with the CDA Central Office Registration
Division.

Section 6. Capitalization. An Insurance Cooperative registered with the Authority pursuant to this Rule shall secure a Certificate of Authority
from the Commission within two (2) years from the date of its registration. Failure to secure the same shall be a ground for the
revocation/cancellation of the certificate of Registration.


Said Certificate of Authority shall be valid until the 30th day of June of the year following its issuance.

Section 8. Suspension or Revocation of Certificate of Authority. The Commission may, after due notice and hearing, suspend or revoke the
Certificate of Authority issued to an Insurance cooperative for violation of any existing laws, rules or regulations, or any provisions of the
Insurance Code.

Section 9. Regulatory Power. The Authority shall have the power to regulate the internal affairs of Insurance Cooperative such as:


           a. Exercise of rights and privileges of members;

           b. Formulation of rules and procedures and the conduct of meetings of the General Assembly, Board of Directors and
           Committees;


           c. Manner of election and qualifications of Officers, Directors, and Committee Members;

           d. Allocation and distribution of net surplus; and

           e. Other matters relating to the internal affairs of Insurance Cooperatives.

All matters relating to the organization and operations concerning insurance business of such Insurance Cooperative shall be regulated by
the Commission as provided for in the Insurance Code and other related laws.

Section 10. Joint Committee. In order to fully implement the provisions of this Rule, a Joint Committee, to be composed of two (2)
representatives each from the Authority and the Commission and a representative from the Insurance Cooperatives shall be formed. The
representative from the Authority shall Chair of the Committee.

The Joint Committee shall be constituted within thirty (30) days upon effectivity of these Rules and Regulations.

Section 11. Functions of the Joint Committee. The Joint Committee shall have the following functions:

           1. To oversee the implementation of this Rule;

           2. To ensure compliance with the administrative and other requirements of the Authority and the Commission;

           3. To make recommendation on the amendment of this Rule as maybe necessary; and

           4. Such other function as the need arises.

Section 12. Limitation. Cooperatives intending to engage in insurance, insurance like, and other similar activities shall register with the
Authority and secure a Certificate of Authority from the Commission.

However, CIS are not allowed to serve the insurance needs of other cooperatives that are not member-owners of the CIS. A CIS serving the
insurance needs of non-member cooperatives and the general public shall be required to get a commercial insurance license from the
Insurance Commission.

Primary Cooperatives which are not registered and licensed to operate as Insurance Cooperative, are prohibited to engage in insurance,
insurance like and other similar activities with their members. However, those already engaging in such shall be given two (2) years transition
period to undertake any of the following options:

To organize an insurance cooperative with other primary cooperatives that have the same insurance-like business activity;

           (2) To join an existing Insurance Cooperative;

           (3) To partner with licensed micro-insurance providers; and


           (4) To buy a micro-Insurance product through a licensed agent or broker.

All existing Insurance Cooperative with members which are non-cooperative and/or cooperative oriented societies and organizations are
hereby given five (5) year period to terminate and remove such entities from their member registry. Failure to comply within the given period
shall constitute a violation of this Rule and shall be dealt with accordance with the provision of RA 9520 and other applicable laws.

Section 13. Settlement of Disputes. Intra/inter cooperative disputes shall be settled as far as practicable through conciliation-mediation
mechanism embodied in the cooperative by-laws, which shall be in accordance with the CDA Guidelines for the Implementation of
Conciliation of Cooperative Disputes, and applicable laws. Should such conciliation-mediation proceedings fail, the matter may be settled
through voluntary arbitration by the Authority or in court of competent jurisdiction.
                                                                                                                                              65

However, in cases where the dispute/s fall within the jurisdiction of the Commission, the same shall be referred to the said agency and it shall
be resolved in accordance with the Commission regulation.

                                                RULE IV-WATER SERVICE COOPERATIVES


Pursuant to the provisions of Art. 111 (3) under Chapter XIV of Republic Act. No. 9520, otherwise known as the Philippine Cooperative Code
of 2008, the Authority in consultation with the NWRB, the LWUA, and concerned cooperative hereby promulgates the following rules and
regulations for the proper guidance and compliance of the Water Service Cooperative.

Section 1. Coverage. This Rule shall apply to all cooperative duly registered with the Authority under R.A. 9520 whose main purpose or one
of its purposes is to own, operate, and manage water supply systems for the provision and distribution of potable water to its members and
other customers.

Section 2. Organization. Fifteen (15) or more natural person who are Filipino citizens, of legal age, having a common bond of interest and
actually residing or working in the intended area of operation, may organize a Water Service Cooperative.

Section 3. Membership in Water Service Cooperative. Membership in Water Service Cooperative is composed of two kinds:

           a. Regular Member - refers to a natural person (member-consumer) with water service connection with the right to voted upon and
           entitled to all the rights and privileges of membership under the Code.


           b. Associate Member - refers to a natural person other than a regular member of the household. It shall also refer to member-
           institution or entity availing of the services of Water service Cooperative, such as, but not limited to: corporation, industrial and
           commercial establishment, joint venture, other cooperative, place worship, local government building or facility, etc, as maybe
           represented by the head of such establishment or entity, but is not entitled to vote and be voted upon. However, shall be entitled
           to the preferential rights and privileges as indicated in the Cooperative By-laws and under the Code.

Section 4. Requirements for Registration. The following shall be complied with upon filing of application:

           (1) Name Verification Slip;


           (2) Articles of Cooperation and By-laws;

           (3) Sworn statement of the treasurer elected by the subscribers showing that at least twenty-five per centum (25%) of the
           authorized share capital be less than Fifteen Thousand Pesos (P15,000.00);

           (4) Surely Bond of Accountable Officers handling funds properties and securities;

           (5) Certificate of Pre-Membership Education Seminar (PMES);


           (6) Economic Survey;

           (7) Undertaking to Change Name in the event that another cooperative has acquired prior right to the use of the proposed name;


           (8) Land Ownership (any of the following: Certificate of Title Declaration. Lease Agreement, Deed of Donation, Deed of Sale, etc.)


           (9) Well Drilling Data (in case of existing groundwater source ) including Physical & Chemical Analysis of water; and

           (10) Registration fee.

Section 5. Registration Jurisdiction. Water Service Cooperatives shall file their application with the CDA Extension Office, which shall have
jurisdiction over the said cooperatives.

Section 6. Capitalization. For purposes of registration with the Authority, a Water Service Cooperative shall have a minimum paid-up
capitalization of Fifteen Thousand Pesos (P15,000.00).

Section 7. Service Area. The cooperative shall only provide services within the area specified in the CPC. In case of expansion, the
cooperative shall apply for an extension of service area with the NWRB.

Section 8. Water Permit. Every Water Service Cooperative shall secure a water permit from the NWRB in accordance with the provisions of
the Water Code of the Philippines.

Section 9. Requirements for Filing Water Permit Applications. All applications shall be filed in the prescribed form, sworn to by the applicants
and supported by the following documents:

           1. For domestic purpose

                      1. Duly accomplished Water Permit Application and Notices;


                      2. Land Ownership (any of the following: Certificate of Title, Tax Declaration, Lease Agreement, Deed of Donation,
                      Deed of Sale, etc;

                      3. Certificate of Conformance from the LWUA;
                                                                                                                                                66

                      4. Vicinity map/Location Plan with scale : 1:10,000 or scale 1:500 showing the exact location of the point of diversion;

                      5. Subdivision Plan (if applicable);

                      6. Well drilling Data (in case of existing ground water source): and

                      7. Clearance from DOH, if reuse of wastewater for human consumption.

          2. For Municipal Use


                      1. Proof of land ownership of, legal title to, or right to use, the property on which the water source is situated;

                      2. Certificate of Registration with the Authority;

                      3. Certificate of Conformance from LWUA;

                      4. Vicinity map/Location Plan with scale : 1:10,000 or scale 1:500 showing the exact location of the point of diversion;


                      5. Submission Plan (if applicable);

                      6. Well Drilling Data (in case of existing groundwater source authenticated by the well driller) including Physical and
                      Chemical, Analysis water;

                      7. Environmental Compliance Certificate (for projects considered as Environmentally Critical Projects Areas) or
                      Certificate of Non-Coverage from the Department of Environment and Natural Resources- Regional Office; and

                      8. Such other documents that may be required by the NWRB.

Section 10. Requirements for the Issuance of CPC and Tariff Approval. The following documents are required to be submitted for an
Application for a CPC and Approval of Tariff:

          1. Certificate of Registration from the Authority;

          2. Articles of Cooperation and By-Laws;

          3. Special Power of Attorney authorizing the signatory to sign and file the application;

          4. Favorable Endorsement from LWUA;

          5. Approved water permits and/or MOA with water service provider, in case of bulk water supply;

          6. Official receipt of annual water charge(s);

          7. Clearance that applicant has no unpaid fees and charges from NWRB;

          8. Plan of water distribution system;

          9. Plan elevation and cross-sectional views of tank/reservoir;


          10. Plan elevation and cross-sectional views of pump house, machinery and equipment;

          11. Certificate of Potability;


          12. Latest Audited Financial Statements for the last two years, if applicable;


          13. Actual Balance sheet showing Balance Sheet items for water operations for the last 2 years, if not available, submit the
          following:


                      a. Accounts receivable -Water Supply

                      b. Materials Inventory

                      c. Property and Equipment in Service, at cost

                      d. Accumulated Depreciation

                      e. Customers Deposits

          14. Itemized list of assets entitled to return as of the end of the last historical year. This should support the Property and
          Equipment in Service referred to in item 10 above;
                                                                                                                                            67

           15. Actual Income Statement showing Income Statement items for water operations for the last 2 years, if applicable;

           16. Business plan for the next 5 years;

           17. Projected Financial Statement for five years with the following:

                      a. Income Statement

                      b. Balance Sheet


                      c. Assumptions

           18. Itemized list of new investments for the next 5 years;

           19. Proposed schedule of water rates; and

           20. Levels of Service agreed with consumers commensurate with proposed rates.

Section 11. Regulatory Power. The Authority shall have the power to regulate the internal affairs of Water Service Cooperative, such as:


           a. Exercise of rights and privileges of members;

           b. Formulation of rules and procedures and the conduct of meetings of the General Assembly, Board of Directors and
           Committees;

           c. Manner of election and qualifications of Officers, Directors, and Committee Members;


           d. Allocation and Distribution of surplus; and

           e. Other matters relating to the internal affairs of Water Service Cooperatives.

All matters relating to the Certificate of Public Convenience such as capitalization

and investment requirements, equipment and facilities, water tariff, and such other matters affecting their water service operations shall be
governed by the NWRB.

Section 12. ROLE OF LWUA. The LWUA shall have the following roles relating to Water Service Cooperative:

           1. To provide technical assistance such as capacity building;

           2. To assist in the determination of water potability; and

           3. Such other assistance as maybe requested by the cooperatives.

Section 13. Preferential Rights. Whenever two or more public service entities have competing interests with respect to the granting and
renewal of CPC and one is an Water Service Cooperative duly registered with the Authority under R.A. 9520, the NWRB shall accord
preference to the latter over any type of public service entity.

Section 14. Responsibility of Water Service Cooperative. Every Water Service Cooperative shall operate, maintain, and provide safe and
adequate potable water service. In all cases where practicable, the concerned Water Service Cooperative shall give notice to its member-
consumers in advance of any contemplated interruption of water supply and the probable duration thereof in the area(s) affected. In addition,
the Water Service Cooperative's responsibilities shall include:

           1. Service Standards

                      a. Service Coverage

                      b. Water Quality


                      c. Reliability of Supply

           2. Operational Performance

                      a. Operational Efficiency


                      b. Financial Viability

           3. Customer Service

                      a. Service Request and Complaints
                                                                                                                                           68

                      b. Standard Response Time

          4. Operating Policies and Procedures on Billing and Collection

          5. Protection of Member-Consumers

In relation to this Section, the cooperative shall develop its own Customer Service Code consistent with its By-laws and in compliance with
the NWRB Economic Regulatory Guidelines.

Section 15. Reporting Requirements. All Water Service Cooperatives shall submit reports to the Authority as required under Rule 8 of the
Rules and Regulations Implementing Certain Provisions of the Philippine Cooperative Code of 2008 (RA 9250). Other reports required by the
NWRB, the DOH and other government agencies shall likewise be submitted to the concerned agency.

Section 16. Sanctions and Penalties. All Water Service Cooperative shall be subjected to corresponding Sanctions and Penalties as maybe
imposed by the Authority and the NWRB for violation or non-compliance with administrative and statutory requirements.

Section 17. Requirements for Renewal of CPC. The CPC shall be valid for five (5) years and renewable prior to its expiry date. The following
requirements to be submitted:

          1. Board Resolution authorizing the signatory to sign and file the application;


          2. Certificate of Good Standing issued by the Authority;

          3. Approved Water Permits;

          4. Official receipts of Annual Water change;

          5. Official receipt of Supervision and Regulation Fee;


          6. Clearance that applicant has no unpaid fees and charges from the NWRB;

          7. Plan of Water Distribution System;

          8. Plan elevation and cross-sectional views of tank/reservoir;

          9. Plan elevation and cross-sectional views of pump house, machinery and equipment;

          10. Certificate of Potability;

          11. Annual Reports for the last five years;

          12. Latest Audited Financial Statement for the last five years;


          13. Actual Balance Sheet showing Balance Sheet items for water operations for the last 5 years, if not available, submit the
          following:


                      a. Account Receivable - Water Supply

                      b. Materials Inventory

                      c. Property and Equipment in Service, at cost


                      d. Accumulated Depreciation

                      e. Customers' Deposits

          14. Itemized list of assets entitled to return as of the end of the last historical year. This should support the Property and
          Equipment in Service referred to in item 13 (c) above;


          15. Actual Income Statement showing Income Statement items for water operations for the last 5 years;

          16. Business plan for the next 5 years;

          17. Projected Financial Statement for five years with the following:


                      a. Income Statement

                      b. Balance Sheet

                      c. Assumptions
                                                                                                                                              69

           18. Itemized list of new investments for the next 5 years;

           19. Proposed Schedule of Water Tariff; and

           20. Levels of Service agreed with consumers commensurate with proposed rates.

Section 18. Securing of Water Permit and/or CPC. Water Service Cooperative including Multi-Purpose Cooperative with water service
operation is required to secure water permit from the NWRB.


For Water Service Cooperative operating without water permit and/or CPC, the Authority shall report the matter to the NWRB for appropriate
action. The NWRB shall notify the Authority of whatever action taken on the matter. Henceforth, failure of the cooperative to legalize its
operation within two (2) years from the date of referral to the NWRB, the same shall be considered a valid ground for the revocation of its
Certificate of Registration, after due process.

Section 19. Action on the Application for CPC. Upon submission of the complete requirements for the issuance of CPC, the NWRB shall
approve or reject the same within six (6) months from date of receipt thereof.

Section 20. Settlement of Disputes. Intra/inter cooperative disputes shall be settled as far as practicable through conciliation-mediation
mechanism embodied in the cooperative by-laws, which shall be in accordance with the CDA Guidelines for the Implementation of
Conciliation-Mediation of Cooperative Disputes, and applicable laws.


Should such conciliation-mediation proceedings fail, the matter may be settled through voluntary arbitration or in court of competent
jurisdiction.

However, in cases where the issue/s fall within the jurisdiction of the NWRB, the same shall be referred to the said agency and it shall be
resolved in accordance with the NWRB regulation.

                                         RULE V - TRANSPORTATION SREVICE COOPERATIVES


Pursuant to the provisions of Art. 113 (par. 2) under Chapter XIV of Republic Act. No. 9520, otherwise known as the Philippine Cooperative
Code of 2008, the Authority in consultation with the DOTC, LTO, LTFRB, MARINA, OTC and the concerned cooperative sector, hereby
promulgates the following rules and regulations for the proper guidance and compliance of Transportation Service Cooperatives.

Section 1. Coverage. This Rule shall cover all Transportation Service Cooperatives duly registered with the Authority under RA 9520 which
are organized to render public services such as land and sea/water transportation services, limited to small vessels, for the safe conveyance
of passengers and/or cargo. Transportation Service Cooperative organized under the provisions of Executive Order No. 898, Series of 1983,
shall be governed by Chapter XIV of RA 9520, and by this Rule.

Section 2. Allied Businesses by Transportation Service Cooperative. Subject to pertinent national laws and local ordinances, primary
Transportation Service Cooperatives including secondary and tertiary federation of cooperatives, may engage in a business related to
transportation service, including but not limited to:

           (1) Importation, distribution and marketing of petroleum products in accordance with existing laws;

           (2) Operation of gasoline stations and transportation service centers;

           (3) Importation, distribution and marketing of spare parts and supplies; and

           (4) Marketing of vehicle/drivers insurance policies.

Section 3. Multi-purpose Cooperatives intending to engage in Transportation Service. Multi-purpose cooperatives intending to engage in
regular passenger and/or cargo services as an additional activity shall comply with the foregoing requirements:

           1. Amended Article of Cooperation and By-Laws;


           2. CETOS;

           3. Franchise and vehicle units requirement, as provided in this Rule and other requirements as may be prescribed by appropriate
           regulatory agencies; and

           4. Amendment Fee.

Section 4. Registration Jurisdiction. Transportation Service Cooperative shall file its duly accomplished registration documents with the
CDA-Extension Office where its principal office is located, which shall have jurisdiction over the said cooperative.

Section 5. Capitalization. For purposes of registration with CDA, Transportation Service Cooperatives shall have a minimum paid up
capitalization of Fifteen Thousand Pesos (P15,000.00).

However, to operate as such, the minimum capitalization and number of cooperatively owned units shall be in accordance with the rules and
regulations prescribed by the concerned government agency as shown below:


           TYPE OF TRANSPORTATION SERVICE                MINIMUM              MINIMUM NO.
           COOPERATIVE                                   CAPITALIZATION       OF UNITS

           A. LAND
                                                                                                                                               70


                 Tricycle                                   P 15,000.00         5

                 Jeepney                                    P 30,000.00         5

                 Taxi                                       P 30,000.00         5

                 AUV/FX/Van                                 P 30,000.00         5

                 Mini Bus/Bus P                             50, 000.00          2

                 Trucks for Hire                            P 50, 000.00        2

           B. WATER

                 Ship                                       P 10,000,000.00     1

                 Ferry Boat                                 P 5,000,000.00      1

                 Motorized Banca                            P 100,000.00        1


Section 6. Registration Requirements. The following shall be complied with upon filing of application:


           (1) Name Verification Slip;

           (2) Articles of Cooperation and By-laws;

           (3) Sworn Statement of the treasurer elected by the subscribers showing that at least twenty-five per centum (25%) of the
           authorized share capital has been subscribed and least twenty-five per centum (25%) of the total subscription has been paid:
           Provided, That in no case shall the paid-up share capital be less than Fifteen Thousand Pesos (P15,000.00);

           (4) Pre-Membership Education seminar (PMES);


           (5) Cooperative Education and Transport Operation Seminar (CETOS);

           (6) Surety Bond Of Accountable Officers handling funds, properties and sureties;

           (7) Economic Survey;

           (8) Undertaking to Change Name in the event that another cooperative has acquired prior right to the use of the proposed name;

           (9) Undertaking to comply with the auditing and accounting standards prescribed by the Authority;

           (10) Other requirements as may be required by law; and

           (11) Registration Fee.

Section 7. Regulatory Power. The Authority shall have the power to regulate the internal affairs of Transportation Service Cooperative, such
as:

           a. Exercise of rights and privileges of members;


           b. Formulation of rules and procedures and the conduct of meetings of the General Assembly, Board of Directors and
           Committees;

           c. Manner of election and qualifications of Officers, Directors, and Committee Members;


           d. Allocation and distribution of surplus; and

           e. Other matters relating to their internal affairs of Transportation Service Cooperatives.


All matters relating to the Franchise or Certificate of Public Convenience and Necessity of Transportation Service Cooperatives such as
capitalization and investment requirements, equipment and facilities, frequencies, rate-fixing, registration, dropping and substitution of units,
and such other matters affecting their transportation service operations shall be governed by the following government agency:

           (a) For land transportation - LTFRB/LTO/OTC


           (b) For water transportation - MARINA/PCG

           (c) For tricycle - LGU/LTO/OTC


In case there are two (2) or more applicants for the same public service Franchise or Certificate of Public Convenience and Necessity, all
things being equal, preference shall be given to a Transportation Service Cooperative by the concerned government agency.

Section 8. Monitoring Committee. The Authority shall establish a committee for the monitoring of Transportation Service Cooperative
composed of representative from the Authority, who shall be Ex-Officio Chairperson thereof, the LTO, LTFRB, OTC, LGU, and other
                                                                                                                                                  71

concerned government agencies as may be necessary, and the National Federation of Transportation Cooperatives. Said Committee shall
be organized within thirty (30) days from the effectivity of this Rule and establish its own internal rules as to its operation, conduct of meeting,
and other matters necessary to exercise such functions.

The Authority shall likewise create a Local Monitoring Committee in its extension offices to facilitate the monitoring of these Transportation
Service Cooperatives. Said Committee shall likewise be organized within ninety (90) days from the receipt of the rules and functions
formulated by the National Committee convene every quarter to discharge its functions and appoint a Secretary from among its members.


The permanent Secretariat shall come from the Authority.

The Committee shall have the following functions:

           (1) To oversee the implementation of this Rule;

           (2) To recommend changes on this Rule from time to time if a need arises;

           (3) To assist as far as practicable the cooperative in settling inter and intra cooperative disputes;

           (4) To submit quarterly accomplishment report including recommendation/resolution to be adopted in the settlement of the
           aforesaid disputes to the CDA Board of Administrators through the Executive Director and to the OTC Board of Directors through
           its Executive Director copy furnished all agencies involved.

Section 9. Continuing Education and Training. The concerned government agencies shall coordinate to support registered cooperatives by
extending seminars for the purpose of continuing education on cooperative and other related trainings in order to enhance the knowledge
and capability of the officers as well as members of the cooperative. The concerned agencies involved in the Transportation Service
Cooperative shall form a trainer's team which shall formulated educational program/module to be used in the training seminar.

Section 10. Renewal of Franchise and Vehicle Registration. Renewals of franchise and vehicle registration shall be granted to
Transportation Service Cooperatives provided such cooperative presents a Certificate of Good Standing from the Authority and the OTC. In
the case of Tricycle Transportation Service Cooperative, a Certificate of Operation from the Local Government Unit concerned shall be
required as proof that it has continuously provided the required public transportation services.

Section 11. Settlement of Disputes. Intra/Inter cooperative dispute shall be settled as far as practicable through conciliation-mediation
mechanism embodied in the cooperative by-laws, which shall be in accordance with the CDA Guidelines for the Implementation of
Conciliation-Mediation of Cooperative Disputes, and applicable laws.

Should such conciliation-mediation proceedings fail, the matter may be settled through voluntary arbitration or in court of competent
jurisdiction.

However, in cases where the issue/s fall within the jurisdiction of the DOTC, LTFRB, LTO, MARINA, and OTC the same shall be referred to
the said agencies and shall be resolved in accordance with their regulations.

                                                     RULE VI - ELECTRIC COOPERATIVES


Pursuant to the provisions of Art. 134 (par.2) under Chapter XVII of Republic Act No. 9520, otherwise known as the Philippine Cooperative
Code of 2008, the Authority in consultation with the concerned cooperative sector hereby promulgates the following rules and regulations for
the proper guidance and compliance of Electric Cooperatives.

Section 1. Purposes and Objectives. Electric Cooperatives shall be organized to undertake power generation utilizing new and renewable
energy sources, including hybrid systems, acquisition, and operation of sub-transmission and/or distribution and supply of electricity as its
primary purposes. However, it shall not be precluded to venture into any other purpose that other laws, rules, regulations, and their own By-
laws may allow as long as it is related to the primary purpose and objective of the cooperative. It shall also continue to undertake the
implementation of the Rural Electrification Program in their respective areas of coverage in consonance with the terms and conditions
appurtenant to their Certificates of Franchise; provided the right of the Electric Cooperatives to exercise the power of eminent domain in
furtherance of the rural electrification program, shall not be diminished, instead it shall be in full force and effect, subject to the requirements
of the Constitution and existing relevant laws.

Section 2. Coverage. This Rule shall apply to all Electric Cooperatives registered with the Authority under R.A. 9520 that may undertake
power generation utilizing renewable energy sources, including hybrid systems, acquisition and operation of sub transmission or distribution
as its primary purposes. This Rule shall also cover new distribution utilities that will register with the Authority.

Section 3. Cooperative Principles and Practices. Electric Cooperatives registered with the Authority shall conduct their affairs in accordance
with Filipino culture, good values and experience and the universally-accepted principles of cooperation which include, but are not limited to,
the following:

           1. Voluntary and Open Membership - Electric Cooperatives are voluntary organizations, open to all persons able to use their
           services and willing to accept the responsibilities of membership, without gender, social, racial, political or religious discrimination;

           2. Democratic Member Control - Electric Cooperatives are democratic organizations that are controlled by their members who
           actively participate in setting their policies and making decisions. Men and women serving as elected representatives, directors, or
           officers are accountable to the membership. In primary cooperatives, members have equal voting rights of one-member, one-vote.
           Cooperatives at other levels are organized in the same democratic manner;

           3. Member Economic Participation - Members of the Electric Cooperatives contribute equitably to, and democratically control,
           the capital of their cooperative. At least part of that capital is the common property of the cooperative. They shall receive limited
           compensation or limited interest, if any, on capital subscribed and paid as a condition of membership. Members allocate surpluses
           for any or all of the following purposes: developing the cooperative by setting-up reserves, part of which should at least be
           indivisible; benefiting members in proportion to their patronage of the cooperative's business; and supporting other activities
           approved by the membership;
                                                                                                                                                 72

          4. Autonomy and Independence - Electric Cooperatives are autonomous, self-help organizations controlled by their members. If
          they enter into agreements with other organizations, including government, or raise capital from external sources, they shall do so
          on terms that ensure democratic control of their members and maintain their cooperative autonomy;

          5. Education, Training and Information - Electric Cooperatives shall provide education, training and information for their
          members, elected and appointed representatives, managers, and employees so that they can contribute effectively and efficiently
          to the development of their cooperatives;

          6. Cooperation Among Cooperatives - Electric Cooperatives serve their members most effectively and strengthen the
          cooperative movement by working together through local, national, regional and international structures; and

          7. Concern for Community - Electric Cooperatives work for the sustainable development of their communities through policies
          approved by their members.

Section 4. Membership in the Electric Cooperatives. Membership in Electric Cooperatives registered with the Authority shall have the
following types:

          a. Regular Member - refers to a natural person (member-consumer) with electrical service connection who has the right to vote
          and be voted upon and entitled to all the rights and privileges of membership under the Code.

          b. Associate Member - refers to a member-institution or entity availing of the services of electric cooperative, such as, but not
          limited to: corporation, industrial and commercial establishment, joint venture, other cooperative, place of worship, local
          government building or facility, etc, as represented by its head of such establishment or entity, but is not entitled to vote and be
          voted upon. However, shall be entitled to the preferential rights and privileges as indicated in the by-laws and under the Code.

Section 5. Registration Requirements. The following are the requirements for the registration of electric cooperatives which shall be
submitted in four (4) copies to the Authority:

A. Registration Documents:

          a.1 For existing electric cooperative not registered with the Authority:


                     1. certificate true copy of the board resolution certifying the result of the vote approved through a referendum approving
                     the registration of the cooperative with the Authority in compliance with Article 128;

                     2. Certified copy of Articles of Cooperation and By-Laws;

                     3. Duly audited financial statement for the past two (2) immediately preceding years;

                     4. List of names of incumbent Board of Directors and their addresses certified by the Board Secretary and attested to
                     by the Chairperson;

                     5. Sworn Statement of the Treasurer of the authorized share capital, the subscribed share capital of the members, and
                     the amount of paid-up share capital of members and the amount of paid-up share capital received by the Treasurer, to
                     be submitted within six (6) months from the registration; and

                     6. Surety Bond of Accountable Officers handling funds, properties and sureties;

          a.2 For new electric cooperatives:


                     1. Name Verification Slip;


                     2. Certified true copy of the Grant Franchise;

                     3. Articles of Cooperation and By-laws;


                     4. Sworn Statement of the treasurers elected by the subscribers showing that at least twenty-five per centum (25%) of
                     the authorized share capital has been subscribed and at least twenty-five per centum (25%) of the total subscription
                     has been paid: Provided, That in no case shall the paid-up share capital be less than Fifteen Thousand Pesos
                     (P15,000.00);


                     5. Surely Bond Accountable Officers handling funds, properties and sureties;

                     6. Certificate of Pre-Membership Education seminar (PMES);

                     7. Economic Survey;

                     8. Undertaking to Change Name in the event that another cooperative has acquired prior right to the use of the
                     proposed name;


                     9. Detailed feasibility study indicating viability of the proposed business activity; and

                     10. Undertaking to comply with the auditing and accounting standards prescribed by the Authority.


          a.3. Electric Cooperative Deemed Registered under Art. 144 of the Code:
                                                                                                                                               73

                      1. Certificate of Registration and/or Certificate of Confirmation;

                      2. Articles of Cooperation and By-laws; and

                      3. Latest audited financial statement.

The said documents shall be submitted to the nearest office of the Authority of to the CDA Central Office, at the option of the Cooperative.
Upon submission of the abovementioned documents, the Authority shall issue the new certificate of registration to the Cooperative.

B. Registration fee as prescribed by the Authority.

Section 6. Jurisdiction Upon Registration. Electric Cooperative intending to register with the Authority shall file their application with the CDA
Extension Office, which shall have jurisdiction over the said cooperatives upon approval of their registration. However, if an electric
cooperative opted to register with the CDA Central Office as provided for in the preceding Section, and such registration has been processed
and approved by the CDA Central Office, such registration shall be forwarded to the CDA Extension Office where the cooperative is located
and the same Extension Office shall assume jurisdiction over the said cooperative.

Section 7. Registration Options. Electric Cooperatives registered with the National Electrification Administration (NEA) under Presidential
Decree No. 269, as amended, which opt not to register with the Authority, are allowed to retain the world "cooperative" in their registered
names, but they shall not be entitled to the benefits and privileges provided under R.A. 9520.

Section 8. Registration of Electric Cooperatives. The registration on an Electric Cooperative with the Authority under Article 127 of the Code
shall be submitted for approval to the members through a referendum, as a voting procedure, specially called for such purpose.

The required number of votes for registration with the Authority shall be twenty percent (20%) of all members in good standing within the
area of coverage. No proxy voting shall be allowed.

Unless otherwise provided in the By-laws of the cooperative, the term member in good standing shall be as defined in the Code of in this
Rule.

Section 9. Procedure in the Conduct of Referendum for registration with the Authority. In compliance with Art. 128 of RA 9520 hereunder are
the procedures in conducting the same:

A. BOD Initiated Referendum. The Board of Directors shall undertake the following:


           1. Issue Notice referendum indicating the following:


                      a. Date of Referendum;

                      b. Mode of Conduct of the Referendum which may either be:


                                  b.1 survey Form; and

                                  b.2 Assembly Meeting in the respective districts which maybe simultaneous sequential.


           2. Posting/Publication of Notice of referendum shall be done not later than 30 days prior to the scheduled conduct of referendum.

           3. Identification of members in good standing based on the qualification and disqualification provisions in the By-laws.

           4. Provision of Referendum Questionnaire Form to qualified members to vote whether to register or not to register with the
           Authority.

           5. Collection of Questionnaire forms and canvassing of Votes by the cooperative's Election Committee.

           6. Reporting of the results of the canvassing, i.e. favor or not favor.

           7. Certification by the Election Committee as to the result of the referendum duly noted by the majority of the Board of Directors.

B. Member-Consumer Initiated referendum. In case the Board of Directors shall refuse to conduct a referendum, the Member-Consumers
may initiate a referendum through a petition duly signed by at least three hundred (300) members of each district of the cooperation who are
entitled to vote by filling the same to the Board of Directors. The Board of Directors shall act within thirty (30) days from receipt thereof
whether to grant or deny said petition. Failure of the Board of Directors to act within the given period or the denial of the petition, the
petitioners may conduct motu proprio the said referendum through the procedures above prescribed. The result of the referendum shall be
certified by a committee designated during the conduct of a referendum to supervise the same.

The general membership through their proponents for referendum shall submit all the documentary requirements for resignation to the
concerned CDA Extension Office, which may register the applicant Electric Cooperative upon finding that all the documents for registration
are complete and in order.

Section 10. Amendments of Existing Articles of Cooperation and By-laws. Any provision or any part thereof in the existing Articles of
Cooperation and By-laws of the cooperative, which are found to be inconsistent or contrary to the provisions of the Code and of this Rule
shall be amended accordingly. Such amendments shall conform to the provision of Art. 18 of the Code. Said application for amendments
shall be filed with the concerned CDA Extension Office or the CDA Central Office, at the option of the Cooperative, in four (4) copies for
registration.
                                                                                                                                                   74

Section 11. Capitalization. An electric cooperative shall not be registered with the Authority unless it complies with the financial requirements
of minimum paid up capitalization of Five Million Pesos (P5,000,000.00).

Section 12. Share Capital in the Electric Cooperatives. Electric Cooperatives shall issue and distribute share certificates under the name of
each of their members. Said share certificates shall take into consideration, among others, the previous equity contributions, and the
amortization component, through the payments made, capital build-up and other capital contributions. The interest on share capital shall be
paid to the members in accordance with the provision of Sec. 9, Rule 10 of the Rules and Regulations Implementing Certain Provisions of
the Philippine Cooperative Code of 2008 (RA 9520).

Section 13. Quorum Requirement. Unless otherwise provided in the By-laws of the Electric Cooperative, quorum shall be five per centum
(5%) of all the members entitled to vote.

Section 14. Term of Office. Unless otherwise provided in the By-laws of the Electric Cooperative, the term of office of the members of the
Board shall not exceed two (2) years, however, they shall be eligible for re-election.

Section 15. rates and Tariffs. All electricity rates and tariffs of electric cooperatives registered under the Authority shall be subject to the
rules on application and approval of and by the Energy Regulatory Commission.

Section 16. Settlement of Disputes. Intra/inter cooperative disputes shall be settled as far as practicable through conciliation-mediation
mechanism embodied in the cooperative by-laws, which shall be in accordance with the CDA Guidelines for the Implementation of
Conciliation of Cooperative Disputes, and applicable laws.

Should such conciliation-mediation proceedings fail, the matter may be settled through voluntary arbitration or in court of competent
jurisdiction.

However, in cases where the issue/s fall within the jurisdiction of the Energy Regulatory Commission, the same shall be referred to the said
agency and shall be resolve in accordance with this regulation.

                                                       RULE VII-DAIRY COOPERATIVES

Pursuant to the provisions of Republic Act. No. 9520, otherwise known as the Philippine Cooperative Code of 2008, the Cooperative
development Authority and National Dairy Authority hereby promulgated the following rules and regulations for the guidance and compliance
of the Dairy Cooperatives.

Section 1. Coverage. This Rule shall cover all dairy Cooperatives duly registered under R.A. 9520 organized for the purpose of engaging in
the procurement, processing and marketing of milk and dairy products.

Section 2. Organization. Fifteen (15) or more natural persons who are Filipino citizens, of legal age, having a common bond interest and
actually residing or working in the intended area of operation, may organize a dairy cooperative.

Section 3. Purposes and Objectives. A Dairy Cooperative shall be organized for any or all of the following purpose:


           1. To standardize the quality, uniformly of grade of milk, and other dairy products;

           2. To assist its members a guaranteed market outlet, to bargain for the best price terms possible in the market place, including
           over-order premiums in milk marketing orders, and to market the milk efficiently, i.e., balancing plant needs, diverting milk
           surpluses, and assembling producer milk and to have the highest quality producer milk possible in the market; and

           3. To effectively represent their constituting members in the legislative, regulatory and public relations arenas.

Section 4. Membership. Membership in Dairy Cooperative shall be open to all dairy farmers.


Section 5. Registration Jurisdiction. Any applicant Dairy Cooperative shall file its duly accomplished application for registration with the VDA
Extension Office, which shall have jurisdiction over the said cooperative.

Section 6. Registration Requirements. The following shall be compiled with upon filing of application:


           1. Name Verification;

           2. Articles of Cooperation and By-laws;


           3. Sworn Statement of the treasurer elected by the subscribers showing that the least twenty-five per centum (25%) of the
           authorized share capital has been subscribed and at least twenty-five per centum (25%) of the total subscription has been paid:
           Provided, That in no case shall the paid-up share capital be less than Fifteen Thousand Pesos (P15,000.00);

           4. Pre-membership Education Seminar (PMES);


           5. Surety Bond Accountable Offices handling funds, properties and sureties;

           6. Economic Survey;

           7. Undertaking to Change Name in the event that another cooperative acquired prior right to the use of the proposed name;

           8. Undertaking to comply with the auditing and accounting standards prescribed by the Authority;
                                                                                                                                             75

           9. Other requirements as may be required by law; and

           10. Registration fee.

Section 7. Capitalization. A Dairy Cooperative shall have a minimum paid-up capitalization of at least Fifteen Thousand Pesos (P15,000.00).


Section 8. Regulatory Power. The Authority shall have the power to regulate the internal affairs of Dairy Cooperative, such as:

           a. Exercise of rights and privileges of members;


           b. Formulation of Rules and procedures and the conduct of meetings of the General Assembly, Board of Directors and
           Committees;

           c. Manner of election and qualifications of Officers, Directors, and Committee Members;

           d. Allocation and distribution of net surplus; and

           e. Other matters relating to the internal affairs of Dairy Cooperatives.

All matters relating to the technical and operations concerning dairy business of such Dairy Cooperative shall be regulated by NDA, DOH-
BFAD and other concerned government agency.

Section 9. Settlement of Disputes. Intra/inter cooperative disputes shall be settled as far as practicable through conciliation-mediation
mechanism embodied in the cooperative by-laws and in applicable laws.

Should such conciliation-mediation proceedings fail, the matter may be settled through voluntary arbitration by the Authority or adjudication
by the Commission or in a Court of competent jurisdiction.


However, in cases where the issue/s fall within the jurisdiction of the NDA, DOH-BFAD the same shall be referred to the said agencies and
shall be resolved in accordance with their regulations.

                                                            COMMON PROVISIONS

Section 1. Requirements. A copy of these Rules shall be among the documents required to be kept ready and accessible for inspection and
examination by the members of the cooperative and the Authority in accordance with Art. 52 of the Code.

Section 2. Interpretation. Unless otherwise stated in these Rules, In case of doubt as to the meaning of any provision of these Rules, the
same shall be resolved and interpreted liberally in favor of the cooperatives and their members.

Section 3. Suppletory Rule. Special Rules, Circulars, Orders and other issuances by the appropriate government agencies in pursuance of
the provisions of the Code and these Rules, and not inconsistent thereto, shall have suppletory application to these Rules.

Section 4. Mandate. The Authority is mandated to implement and enforce these Rules and Regulations.


Section 5. Separability. If any provision of these Rules and Regulations is declared null and void or unconstitutional, the other provisions not
affected thereby shall continue to be in force and effect.

Section 6. Amendment. These Rules and Regulations shall be subject to automatic review three (3) years after the effectivity thereof. Any
amendment thereto, shall be subject to the review and approval of the JCOCC.

Section 7. Effectivity. These Rules and Regulations shall take effect fifteen (15) days after publication in the Official Gazette or in a
newspaper of general circulation.

RECOMMENDING APPROVAL:

                            THE BOARD OF ADMINISTRATORS COOPERATIVE DEVELOPEMNT AUTHORITY


                                                                LECIRA V. JUAREZ
                                                                    Chairman

This Implementing Rules and Regulations (Part I) was approved by the Joint Congressional Oversight Committee on Cooperatives during its
meeting on February 16, 2010 at the Senate of the Philippines, Pasay City pursuant to Article 138 of RA 9520.

                               Members of the Joint Congressional Oversight Committee on Cooperatives.


                      For the Senate of the Philippines:                               For the House of the Representatives:

                       Sen. JUAN MIGUEL F. ZUBIRI                                           Rep. ERNESTO C. PABLO
                            Chair, Senate Panel                                                Chair, House Panel




Source: http://www.lawphil.net/statutes/repacts/ra2009/ra_9520_2009.html

				
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