REPUBLIC ACT 9520 instrumentalities and agencies shall ensure the provision of technical

guidance, financial assistance and other services to enable said cooperatives

Fourteenth Congress "Further, the State recognizes the principle of subsidiarity under which the
Second Regular Session cooperative sector will initiate and regulate within its own ranks the
promotion and organization, training and reserach, audit and support services
Begun and held in Metro Manila, on Monday, the twenty-eighth day of July, relative to cooperatives with government assistance where necessary.
two thousand eight.
"ART. 3. General Concepts. - A cooperative is an autonomous and duly
Republic Act No. 9520 registered association of persons, with a common bond of interest, who have
voluntarily joined together to achieve their social, economic, and cultural
February 17, 2009 needs and aspirations by making equitable contributions to the capital
required, patronizing their products and services and accepting a fair share of
AN ACT AMENDING THE COOPERATIVE CODE OF THE the risks and benefits of the undertaking in accordance with universally
PHILIPPINES TO BE KNOWN AS THE "PHILIPPINE COOPERATIVE accepted cooperative principles.
CODE OF 2008"
"ART. 4. Cooperative Principles. - Every cooperative shall conduct its affairs
Be it enacted by the Senate and House of Representatives of the Philippines in accordance with Filipino culture, good values and experience and the
in Congress assembled: universally accepted principles of cooperation which include, but are not
limited to, the following:
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 "(1) Voluntary and Open Membership - Cooperatives are voluntary
Code of the Philippines," are hereby amended to read as follows: organizations, open to all persons able to use their services and willing to
accept the responsibilities of membership, without gender, social, racial,
CHAPTER I cultural, political or religious discrimination.
GENERAL CONCEPTS AND PRINCIPLES
"(2) Democrative Member Control - Cooperatives are democratic
"ARTICLE 1. Title. - This Act shall be known as the "Philippine Cooperative organizations that are controlled by their members who actively participate in
Code of 2008". setting their policies and making decisions. Men and women serving as
elected representatives, directors or officers are accountable to the
"ART. 2. Declaration of Policy.- It is the declared policy of the State to foster membership. In primary cooperatives, members have equal voting rights of
the creation and growth of cooperatives as a practical vehicle for promoting one-member, one-vote. Cooperatives at other levels are organized in the
self-reliance and harnessing people power towards the attainment of same democratic manner.
economic development and social justice. The State shall encourage the
private sector to undertake the actual formation and organization of "(3) Member Economic Participation - Members contribute equitably to, and
cooperatives and shall create an atmosphere that is conducive to the growth democratically control, the capital of their cooperatives. At least part of that
and development of these cooperatives. 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
"Toward this end, the Government and all its branches, subdivisions, condition of membership. Members allocate surpluses for any or all of the
following purposes: developing the cooperative by setting up reserves, part "(4) Committee shall refer to any body entrusted with specific functions and
of which should at least be indivisible; benefitting members in proportion to responsibilities under the bylaws or resolution of the general assembly or the
their partonage of the cooperative's bubsiness; and, supporting other board of directors;
activities approved by the membership.
"(5) Articles of Cooperation means the articles of cooperation registered
"(4) Autonomy and Independence - Cooperatives are autonomous, self-help under this Code and includes a registered amendment thereof;
organizations controlled by their members. If they enter into aggreements
with other organizations, including government, or raise capital from external "(6) Bylaws means the bylaws registered under this Code and includes any
sources, they shall do so on terms that ensure democratic control of their registered amendment thereof;
members and maintain their cooperative autonomy.
"(7) Registration means the operative act granting juridical personality to a
"(5) Education, Training and Information - Cooperatives shall provide proposed cooperative and is evidenced by a certificate of registration;
education and training for their members, elected and appointed
representatives, managers, and employees, so that they can contribute "(8) Cooperative Development Authority refers to the government agency in
effectively and efficiently to the development of their cooperatives. charge of the registration and regulation of cooperatives as such hereinafter
referred to s the Authority;
"(6) Cooperation Among Cooperatives - Cooperatives serve their members
most effectively and strengthen the cooperative movement by working "(9) Universally Accepted Principles means that body of cooperative
together through local, national, regional and international structures. principles adhered to worldwide by cooperatives;

(7) Concern for Community - Cooperatives work for the sustainable "(10) Representative Assembly means the full membership of a body of
development of their communities through policies approved by their representatives elected by each of the sectors, chapter or district o the
members. cooperative duly assembled for the purpose of exercising such powers
lawfully delegated unto them by the general assembly in accordance with its
"ART. 5. Definition of Terms. The following terms shall mean: bylaws;

"(1) Member includes a person either natural or juridical who adhering to the "(11) Officers of the Cooperative shall include the members of the board of
principles set forth in this Code and in the Articles of Cooperative, has been directors, members of the different committee created by the general
admitted by the cooperative as member; assembly, general manager or chief executive officer, secretary, treasurer and
members holding other positions as may be provided for in their bylaws;
"(2) General Assembly shall mean the full membership of the cooperative
duly assembled for the purpose of exercising all the rights and performing all "(12) Social Audit is a procedure wherein the cooperative assesses its social
the obligations pertaining to cooperatives, as provided by this Code, its impact and ethical performance vis- -vis its stated mission, vision, goals
articles of cooperation and bylaws: Provided, That for cooperatives with and code of social responsibility for cooperatives to be established by the
numerous and dispersed membership, the general assembly may be Authority in consultation with the cooperative sector. It enables the
composed of delegates elected by each sector, chapter or district of the cooperative to develop a process whereby it can account for its social
cooperative in accordance with the rules and regulations of the Cooperative performance and evaluate its impact in the community and be accountable
Development Authority; for its decisions and actions to its regular members;

"(3) Board of Directors shall mean that body entrusted with the management "(13) Performance Audit shall refer to an audit on the efficiency and
of the affairs of the cooperative under its articles of cooperation and bylaws; 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; "(8) To promote and advance the economic, social and educational status of
the members;
"(14) A Single-Line or Single-Purpose Cooperative shall include cooperative
undertaking activities which are related to its main line of business or "(9) To establish, own, lease or operate cooperative banks, cooperative
purpose; wholesale and retail complexes, insurance and agricultural/industrial
processing enterprises, and public markets;
"(15) Service Cooperatives are those which provide any type of service to its
members, including but not limited to, transport, information and "(10) To coordinate and facilitate the activities of cooperatives;
communication, insurance, housing, electric, health services, education,
banking, and savings and credit; "(11) To advocate for the cause of the cooperative movements;

"(16) Subsidiary Cooperative refers to three or more primary cooperatives, "(12) To ensure the viability of cooperatives through the utilization of new
doing the same line of business, organized at the municipal, provincial, city, technologies;
special metropolitan political subdivision, or economic zones created by law,
registered with the Authority to undertake business activities in support of its "(13) To encourage and promote self-help or self-employment as an engine
member-cooperatives." for economic growth and poverty alleviation; and

Sec. 2. Articles 6, 7, 9, 10, 11, 12, 13, 14, 16, 17, 18, 20, 21, 23, 24 and 25 of "(14) To undertake any and all other activities for the effective and efficient
Chapter II on Organization and Registration of the same Code are hereby implementation of the provisions of this Code.
amended to read as follows:
"ART. 7. Objectives and Goals of a Cooperative. The primary objective of
CHAPTER II every cooperative is to help improve the quality of life of its members.
ORGANIZATION AND REGISTRATION Towards this end, the cooperative shall aim to:

"ART. 6. Purposes of Cooperatives. A cooperative may be organized and "(a) Provide goods and services to its members to enable them to attain
registered for any or all of the following purposes: increased income, savings, investments, productivity, and purchasing power,
and promote among themselves equitable distribution of net surplus through
"(1) To encourage thrift and savings mobilization among the members; maximum utilization of economies of scale, cost-sharing and risk-sharing;

"(2) To generate funds and extend credit to the members for productive and "(b) Provide optimum social and economic benefits to its members;
provident purposes;
"(c) Teach them efficient ways of doing things in a cooperative manner;
"(3) To encourage among members systematic production and marketing;
"(d) Propagate cooperative practices and new ideas in business and
"(4) To provide goods and services and other requirements to the members; management;

"(5) To develop expertise and skills among its members; "(e) Allow the lower income and less privileged groups to increase their
ownership in the wealth of the nation; and
"(6) To acquire lands and provide housing benefits for the members;
"(f) Cooperate with the government, other cooperatives and people-oriented
"(7) To insure against losses of the members; organizations to further the attainment of any of the foregoing objectives.
 lease public utilities, including access to extension and on-site research
"ART. 8. Cooperatives Not in Restraint of Trade. No cooperative or method services and facilities related to agriculture and fishery activities;
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 "(10) To organize and operate schools in accordance with Republic Act No.
lessen competition or fix prices arbitrarily in violation of any laws of the 9155, Governance of Basic Education Act of 2001 and other pertinent laws;
Philippines. and

"ART. 9. Cooperative Powers and Capacities. A cooperative registered under "(11) To exercise such other powers granted by this Code or necessary to
this Code shall have the following powers, rights and capacities: carry out its purpose or purposes as stated in its Articles of cooperation.

"(1) To the exclusive use of its registered name, to sue and be sued; "ART. 10. Organizing a Primary Cooperative. Fifteen (15) or more natural
persons who are Filipino citizens, of legal age, having a common bond of
"(2) Of succession; interest and are actually residing or working in the intended area of
operation, may organize a primary cooperative under this Code: Provided,
"(3) To amend its articles of cooperation in accordance with the provisions of That a prospective member of a primary cooperative must have completed a
this Code; Pre-Membership Education Seminar (PMES).

"(4) To adopt bylaws not contrary to law, morals or public policy, and to "Any newly organized primary cooperative may be registered as
amend and repeal the same in accordance with this Code; multipurpose cooperative only after compliance with the minimum
requirements for multipurpose cooperatives to be set by the Authority. A
"(5) To purchase, receive, take or grant, hold, convey, sell, lease, pledge, single-purpose cooperative may transform into a multipurpose or may create
mortgage, and otherwise deal with such real and personal property as the subsidiaries only after at least two (2) years of operations.
transaction of the lawful affairs of the cooperative may reasonably and
necessarily require, subject to the limitations prescribed by law and the "ART. 11. Economic Survey. - Every group of individuals or cooperatives
Constitution; intending to form a cooperative under this Code shall submit to the Authority
a general statement describing, among others the structure and purposes of
"(6) To enter into division, merger or consolidation, as provided in this Code; the proposed cooperative: Provided, That the structure and actual staffing
pattern of the cooperative shall include a bookkeeper; Provided, further, That
"(7) To form subsidiary cooperatives and join federations or unions, as they shall not be allowed to operate without the necessary personnel and
provided in this Code; shall also submit an economic survey, indicating therein the area of
operation, the size of membership, and other pertinent data in a format
"(8) To avail of loans, be entitled to credit and to accept and receive grants, provided by the Authority.
donations and assistance from foreign and domestic sources, subject to the
conditions of said loans, credits, grants, donations or assistance that will not "ART. 12. Liability. A cooperative duly registered under this Code shall have
undermine the autonomy of the cooperative. The Authority, upon written limited liability.
request, shall provide necessary assistance in the documentary requirements
for the loans, credit, grants, donations and other financial support; "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
"(9) To avail of preferential rights granted to cooperatives under Republic period is extended. The cooperative term, as originally stated in the articles
Act No. 7160, otherwise known as the Local Government Code, and other of cooperation, may be extended for periods not exceeding fifty (50) years in
laws, particularly those in the grant of franchises to establish, construct, any single instance by an amendment of the articles of cooperation, in
operate and maintain ferries, wharves, markets or slaughterhouses and to 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 twenty-five per centum (25%) of the authorized share capital has been
there are justifiable reasons for an earlier extension as may be determined by subscribed and at least twenty-five per centum (25%) of the total subscription
the Authority. has been paid: Provided, That in no case shall the paid-up share capital be
less than Fifteen thousand pesos (P15,000.00).
"ART. 14. Articles of Cooperation. (1) All cooperatives applying for
registration shall file with the Authority the articles of cooperation which "The Authority shall periodically assess the required paid-up share capital
shall be signed by each of the organizers and acknowledged by them if and may increase it every five (5) years when necessary upon consultation
natural persons, and by the chairpersons or secretaries, if juridical persons, with the cooperative sector and the National Economic and Development
before a notary public. Authority (NEDA).

"(2) The articles of cooperation shall set forth: "ART. 15. Bylaws. (1) Each cooperative to be registered under this Code
shall adopt bylaws not inconsistent with the provisions of this Code. The
"(a) The name of the cooperative which shall include the word cooperative; bylaws shall be filed at the same time as the articles of cooperation.

"(b) The purpose or purposes and scope of business for which the "(2) The bylaws of each cooperative shall provide:
cooperative is to be registered;
"(a) The qualifications for admission to membership and the payment to be
"(c) The term of existence of the cooperative; made or interest to be acquired as a conditions for the exercise of the right of
membership;
"(d) The area of operation and the postal addresses of its principal office;
"(b) The rights and liabilities of membership;
"(e) The names, nationality, and the postal addresses of the registrants;
"(c) The circumstances under which membership is acquired, maintained and
"(f) The common bond of membership; lost;

"(g) The list of names of the directors who shall manage the cooperative; and "(d) The procedure to be followed in cases of termination of membership;

"(h) The amount of its share capital, the names and residences of its "(e) The conditions under which the transfer of a share or interest of the
contributors and a statement of whether the cooperative is primary, members shall be permitted;
secondary or tertiary in accordance with Article 23 hereof.
"(f) The rules and procedures on the agenda, time, place and manner of
"(3) The articles of cooperation may also contain any other provisions not calling, convening, conducting meetings, quorum requirements, voting
inconsistent with this Code or any related law. systems, and other matters relative to the business affairs of the general
assembly, board of directors, and committees;
"(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 "(g) The general conduct of the affairs of the cooperative, including the
submitted to the Authority. powers and duties of the general assembly, the board of directors,
committees and the officers, and their qualifications and disqualifications;
"(5) No cooperative, other than a cooperative union as described under
Article 25 hereof, shall be registered unless the articles of cooperation is "(h) The manner in which the capital, may be raised and the purposes for
accompanied with the bonds of the accountable officers and a sworn which it can be utilized;
statements of the treasurer elected by the subscribers showing that at least
"(i) The mode of custody and of investment of net surplus; laws. Amendments shall be indicated by underscoring or otherwise
appropriately indicating the change or changes made and a copy of the
"(j) The accounting and auditing systems; amended articles or amended bylaws duly certified under oath by the
cooperative secretary and a majority of the directors stating the fact that said
"(k) The manner of loaning and borrowing including the limitations thereof; 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
"(l) The method of distribution of net surplus; 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
"(m) The manner of adopting, amending, repealing, and abrogating bylaws; 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.
"(n) A conciliation or mediation mechanism for the amicable settlement of
disputes among members, directors, officers and committee members of the "ART. 19. Contracts Executed Prior to Registration and Effects Thereof.
cooperative; and Contracts executed between private persons and cooperatives prior to the
registration of the cooperative shall remain valid and binding between the
"(o) Other matters incident to the purposes and activities of the cooperative. 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
"ART. 16. Registration. A cooperative formed and organized under this Code its registration.
acquires juridical personality from the date the Authority issues a certificate
of registration under its official seal. All applications for registration shall be "ART. 20. Division of Cooperatives. Any registered cooperative may, by a
finally disposed of by the Authority within a period of sixty (60) days from resolution approved by a vote of three-fourths (3/4) of all the members with
the filing thereof, otherwise the application is deemed approved, unless the voting rights, present and constituting a quorum, resolve to divide itself into
cause of the delay is attributable to the applicant: Provided, That in case of a the two (2) or more cooperatives. The procedure for such division shall be
denial of the application for registration, an appeal shall lie with the Office of prescribed in the regulations of the Authority: Provided, That all the
the President within ninety (90) days from receipt of notice of such denial: requirements set forth in this Code have been complied with by the new
Provided, further, That failure of the Office of the President to act on the cooperatives: Provided, further, That no division of a cooperative in fraud of
appeal within ninety (90) days from the filing thereof shall mean approval of creditors shall be valid.
said application.
"ART. 21. Merger and Consolidation of Cooperatives. (1) Two (2) or more
"ART. 17. Certificate of Registration. A certificate of registration issued by cooperatives may merge into a single cooperative which shall either be one
the Authority under its official seal shall be conclusive evidence that the of the constituent cooperatives or the consolidated cooperative.
cooperative therein mentioned is duly registered unless it is proved that the
registration thereof has been cancelled. "(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
"ART. 18. Amendment of Articles of Cooperation and Bylaws. Unless constituting a quorum of each of the constituent cooperatives at separate
otherwise prescribed by this Code and for legitimate purposes, any provision general assembly meetings. The dissenting members shall have the right to
or matter stated in the articles of cooperation and by laws may be amended exercise their right to withdraw their membership pursuant to Article 30.
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 "(3) The Authority shall issue the guidelines governing the procedure of
withdraw their membership under Article 30. merger or consolidation of cooperatives. In any case, the merger or
consolidation of cooperatives. In any case, the merger or consolidation shall
Both the original and amended articles and/or bylaws shall contain all be effective upon the issuance of the certificate of merger or consolidation by
provisions required by law to be set out in the articles of cooperation and by the Authority.
 by its members into finished or processed products for sale by the
"ART. 22. Effects of Merger and Consolidation. The merger or consolidation cooperative to its members and non-members. Any end product or its
of cooperatives shall have the following effects: 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
"(1) The constituent cooperatives shall become a single cooperative which, in the cooperative and its members;
case of merger, shall be the surviving cooperative, and, in case of
consolidation, shall be the consolidated cooperative; "(d) Marketing Cooperative is one which engages in the supply of production
inputs to members and markets their products;
"(2) The separate existence of the constituent cooperatives shall cease, except
that of the surviving or the consolidated cooperative; "(e) Service Cooperative is one which engages in medical and dental care,
hospitalization, transportation, insurance, housing, labor, electric light and
"(3) The surviving or the consolidated cooperative shall possess al the assets, power, communication, professional and other services;
rights, privileges, immunities and franchises of each of the constituent
cooperatives; "(f) Multipurpose Cooperative is one which combines two (2) or more of the
business activities of these different types of cooperatives;
"(4) The surviving or the consolidated cooperative shall possess all the
assets, rights, privileges, immunities and franchises of each of the constituent "(g) Advocacy Cooperative is a primary cooperative which promotes and
cooperatives; and advocates cooperativism among its members and the public through socially-
oriented projects, education and training, research and communication, and
"(5) The surviving or the consolidated cooperative shall be responsible for all other similar activities to reach out to its intended beneficiaries;
the liabilities and obligation of each of the constituent cooperatives in the
same manner as if such surviving or consolidated cooperative had itself "(h) Agrarian Reform Cooperative is one organized by marginal farmers
incurred such liabilities or obligations. Any claim, action or proceeding majority of which are agrarian reform beneficiaries for the purpose of
pending by or against any such constituent cooperatives may be prosecuted developing an appropriate system of land tenure, land development, land
by or against the surviving or consolidated cooperative, as the case may be. consolidation or land management in areas covered by agrarian reform;
Neither the rights of creditors nor any lien upon the property of any such
constituent cooperatives shall be impaired by such merger or consolidation. "(i) Cooperative Bank is one organized for the primary purpose of providing
a wide range of financial services to cooperatives and their members;
"ART. 23. Type and Categories of Cooperatives. (1) Types of Cooperatives
Cooperatives may fall under any of the following types: "(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;
"(a) Credit Cooperative is one that promotes and undertakes savings and
lending services among its members. It generates a common pool of funds in "(k) Education Cooperative is one organized for the primary purpose of
order to provide financial assistance to its members for productive and owning and operating licensed educational institutions notwithstanding the
provident purposes; provisions of Republic Act No. 9155, otherwise known as the Governance of
Basic Education Act of 2001;
"(b) Consumers Cooperative is one of the primary purpose of which is to
procure and distribute commodities to members and non-members; "(l) Electric Cooperative is one organized for the primary purposed of
undertaking power generations, utilizing renewable energy sources, including
"(c) Producers Cooperative is one that undertakes joint production whether hybrid systems, acquisition and operation of subtransmission or distribution
agricultural or industrial. It is formed and operated by its members to to its household members;
undertake the production and processing of raw materials or goods produced
"(m) Financial Service Cooperative is one organized for the primary purpose "(b) In terms of territory, cooperatives shall be categorized according to areas
of engaging in savings and credit services and other financial services; of operations which may or may not coincide with the political subdivisions
of the country.
"(n) Fishermen Cooperative is one organized by marginalized fishermen in
localities whose products are marketed either as fresh or processed products; "ART. 24. Functions of a Federation of Cooperatives. A federation of
cooperatives shall undertake the following functions:
"(o) Health Services Cooperative is one organized for the primary purpose of
providing medical, dental and other health services; "(a) To carry on any cooperative enterprise authorized under Article 6 that
complements augments, or supplements but does not conflict, complete with,
"(p) Housing Cooperative is one organized to assist or provide access to nor supplant the business or economic activities of its members;
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; "(b) To carry on, encourage, and assist educational and advisory work
relating to its member cooperatives;
"(q) Insurance Cooperative is one engaged in the business of insuring life and
poverty of cooperatives and their members; "(c) To render services designed to encourage simplicity, efficiency, and
economy in the conduct of the business of its member cooperatives and to
"(r) Transport Cooperative is one which includes land and sea transportation, facilitate the implementation of their bookkeeping, accounting, and other
limited to small vessels, as defined or classified under the Philippine systems and procedures;
maritime laws, organized under the provisions of this Code;
"(d) To print, publish, and circulate any newspaper or other publication in the
"(s) Water Service Cooperative is one organized to own, operate and manage interest of its member cooperatives and enterprises;
waters systems for the provision and distribution of potable water for its
members and their households; "(e) To coordinate and facilitate the activities of its member cooperatives;

"(t) Workers Cooperative is one organized by workers, including the self- "(f) To enter into joint ventures with national or international cooperatives of
employed, who are at same time the members and owners of the enterprise. other countries in the manufacture and sale of products and/or services in the
Its principal purpose is to provide employment and business opportunities to Philippines and abroad; and
its members and manage it in accordance with cooperative principles; and
"(g) To perform such other functions as may be necessary to attain its
"(u) Other types of cooperative as may be determined by the Authority. objectives.

"(2) Categories of Cooperative Cooperatives shall be categorized according "A federation of cooperatives may be registered by carrying out the
to membership and territorial considerations as follows: formalities for registration of a cooperative.

"(a) In terms of membership, cooperative shall be categorized into: "Registered cooperatives may organize a federation according to the type of
business activity engaged in by the cooperatives.
"(i) Primary The members of which are natural persons;
"ART. 25. Cooperative Unions. Registered cooperatives and federations at
"(ii) Secondary The members of which are primaries; and the appropriate levels may organize or join cooperative unions to represent
the interest and welfare of all types of cooperatives at the provincial, city,
"(iii) Tertiary The members of which are secondary cooperatives; and regional, and national levels. Cooperative unions may have the following
purposes:
 signifies his/her intention to remain a member shall be considered a regular
"(a) To represent its member organizations; member.

"(b) To acquire, analyze, and disseminate, economic, statistical, and other "A cooperative organized by minors shall be considered a laboratory
information relating to its members and to all types of cooperatives within its cooperative and must be affiliated with a registered cooperative. A laboratory
area of operation; cooperative shall be governed by special guidelines to be promulgated by the
Authority.
"(c) To sponsor studies in the economic, legal, financial, social and other
phases of cooperation, and publish the results thereof; "ART. 27. Government Officers and Employees. (1) Any officer or
employee of the Authority shall be disqualified to be elected or appointed to
"(d) To promote the knowledge of cooperative principles and practices; any position in a cooperative: Provided, That the disqualification does not
extend to a cooperative organized by the officers or employees of the
"(e) To develop the cooperative movement in their respective jurisdictions; Authority.

"(f) To advise the appropriate authorities on all questions relating to "(2) All elective officials of the Government shall be ineligible to become
cooperatives; officers and directors of cooperatives: Provided, That the disqualification
does not extend to a party list representative being an officer of a cooperative
"(g) To raise funds through membership fees, dues and contributions, he or she represents; and
donations, and subsidies from local and foreign sources whether private or
government; 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
"(h) To do and perform such other non-business activities as may be use official time for attendance at the general assembly, board and committee
necessary to attain the foregoing objectives. meetings of cooperatives as well as cooperative seminars, conferences,
workshops, technical meetings, and training courses locally or abroad:
"Cooperative unions may assist the national and local governments in the Provided, That the operations of the office concerned are not adversely
latter's development activities in their respective jurisdictions." affected.

Sec. 3. Articles 26, 27, 28, 29, 30, 31 and 32 of Chapter III on Membership "ART. 28. Application. An applicant for membership shall be deemed a
of the same Code are hereby renumbered and amended to read, as follows: 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
CHAPTER III cooperative in respect to membership or acquired interest in the cooperative
MEMBERSHIP 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
"ART. 26. Kinds of Membership. A cooperative may have two (2) kinds of the latter's decision shall be final. For this purpose, the general assembly may
members, to wit: (1) regular members and (2) associate members. 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
"A regular member is one who has complied with all the membership application within thirty (30) days upon receipt thereof. If the committee fails
requirements and entitled to all the rights and privileges of membership. An to decide within the prescribed period, the appeal is deemed approved in
associate member is one who has no right to vote nor be voted upon and shall favor of the applicant.
be entitled only to such rights and privileges as the bylaws may provide:
Provided, That an associate who meets the minimum requirements of regular "ART. 29. Liability of Members. A member shall be liable for the debts of
membership, continues to patronize the cooperative for two (2) years, and the cooperative to the extent of his contribution to the share capital of the
cooperative. decide appeals on membership termination. The committee is given thirty
(30) days from receipt thereof to decide on the appeal. Failure to decide
"ART. 30. Termination of Membership. (1) A member of a cooperative may, within the prescribed period, the appeal is deemed approved in favor of the
for any valid reason, withdraw his membership from the cooperative by member. Pending a decision by the general assembly, the membership
giving a sixty (60) day notice to the board of directors. Subject to the bylaws remains in force.
of the cooperative, the withdrawing member shall be entitled to a refund of
his share capital contribution and all other interests in the cooperative: "ART. 31. Refund of Interests. All sums computed in accordance with the
Provided, That such fund shall not be made if upon such payment the value bylaws to be due from a cooperative to a former member shall be paid to him
of the assets of the cooperative would be less than the aggregate amount of either by the cooperative or by the approved transferee, as the case may be,
its debts and liabilities exclusive of his share capital contribution. in accordance with this Code."

"(2) The death or insanity of a member in a primary cooperative, and the Sec. 4. Articles 33, 34, 35, 36, 37, 38, 39, 40, 42, 42, 43, 44, 45, 46, 47, 48,
insolvency or dissolution of a member in a secondary or tertiary cooperative 49, 50 and 51 of Chapter IV on Administration of the same Code are hereby
may be considered valid grounds for termination of membership: Provided, renumbered and amended to read, as follows:
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 CHAPTER IV
the original member ADMINISTRATION

"(3) Membership in the cooperative may be terminated by a vote of the "ART. 32. Composition of the General Assembly. The general assembly
majority of all the members of the board of directors for any of the following shall be composed of such members who are entitled to vote under the
causes: articles of cooperation and bylaws of the cooperative.

"(a) When a member has not patronized any of the services of the "ART. 32. Powers of the General Assembly. The general assembly shall be
cooperative for an unreasonable period of time as may be previously composed of such members who are entitled to vote under the articles of
determined by the board of directors; cooperation and bylaws of the cooperative.

"(b) When a member has continuously failed to comply with his obligations; "ART. 33. Powers of the General Assembly. The general assembly shall be
the highest policy-making body of the cooperative and shall exercise such
"(c) When a member has acted in violation of the bylaws and the rules of the powers as are stated in this Code, in the articles of cooperation and in the
cooperative; and bylaws of the cooperative. The general assembly shall have the following
exclusive powers which cannot be delegate:
"(d) For any act or omission injurious or prejudicial to the interest or the
welfare of the cooperative. "(1) To determine and approve amendments to the articles of cooperation and
bylaws;
"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 "(2) To elect or appoint the members of the board of directors, and to remove
opportunity to be heard before the said board makes its decision. The them for cause. However, in the case of the electric cooperatives registered
decision of the board shall be in writing and shall be communicated in person under this Code, election of the members of the board shall be held in
or by registered mail to said member and shall be appealable within thirty accordance with its bylaws or election guideline of such electric cooperative;
(30) days from receipt thereof to the general assembly whose decision shall and
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 "(3) To approve developmental plans of the cooperative.
 centum (25%) of all the members entitled to vote. In the case of cooperative
"Subject to such other provisions of this Code and only for purposes of banks, the quorum shall be as provided in Article 99 of this Code. In the case
prompt and intelligent decision-making, the general assembly may be a of electric cooperatives registered under this Code, a quorum, unless
three-fourths (3/4) vote of all its members with voting rights, present and otherwise provided in the bylaws, shall consist of five per centum (5%) of all
constituting a quorum, delegate some of its powers to a smaller body of the the members entitled to vote.
cooperative. These powers shall be enumerated under the bylaws of the
cooperative. "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
"ART. 34. Meetings. (1) A regular meeting shall be held annually by the cooperatives, they shall have one (1) basic vote and as many incentive votes
general assembly on a date fixed in the bylaws, or if not so fixed, on any as provided for in the bylaws but not exceed five (5) votes. The votes cast by
dated within ninety (90) days after the close of each fiscal year: Provided, the delegates shall be deemed as votes cast by the members thereof.
That notice of regular meetings shall be sent in writing, by posting or
publication, or through other electronic means to all members of record. "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
"(2) Whenever necessary, a special meeting of the general assembly may be to represent or vote in behalf of another delegate of the same cooperative.
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) "ART. 37. Composition and Term of the Board of Directors. Unless
week prior to the meeting to all members who are entitled to vote. However, otherwise provided in the bylaws, the direction and management of the
a special meeting shall be called by the board of directors after compliance affairs of a cooperative shall be vested in a board of directors which shall be
with the required notice within from at least ten per centum (10%) of the composed of not less that five (5) nor more than fifteen (15) members elected
total members who re entitled to vote to transact specific business covered by by the general assembly for a term of two (2) years and shall hold office until
the call. their successors are duly elected an qualified, or until duly removed for
caused.
"If the board fails to call a regular or a special meeting within the given
period, the Authority, upon petition of ten per centum (10%) of all the "ART. 38. Powers of the Board of Directors. The board of directors shall be
members of the cooperative who are entitled to vote, and for good cause responsible for the strategic planning, direction-setting and policy-
shown, shall issue an order to the petitioners directing them to call a meeting formulation activities of the cooperatives.
of the general assembly by giving proper notice as required in this Code or in
the bylaws; "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
"(3) In the case of a newly approved cooperative, a special general assembly qualifications and none of the disqualifications provided in the laws or
shall be called, as far as practicable, within ninety (90) days from such bylaws shall be eligible for election as director.
approval;
"(2) The cooperative may, by resolution of its board of directors, admit as
"(4) The Authority may call a special meeting of the cooperative for the directors, or committee member one appointed by any financing institution
purpose of reporting to the members the result of any examination or other from which the cooperative received financial assistance solely to provide
investigation of the cooperative affairs; and technical knowledge not available within its membership. Such director or
committee member not be a member of the cooperative and shall have no
"(5) Notice of any meeting may be waived, expressly or impliedly, by any powers, rights, nor responsibilities except to provided technical assistance as
member. required by the cooperative.

"ART. 35. Quorum. A quorum shall consist of at least twenty-five per "(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 executive committee to be appointed by the board of directors with such
cooperative. 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.
"(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 "(2) The bylaws shall provide for the creation of an audit, election, mediation
as a director of said cooperative. 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
"ART. 40. Meeting of the Board and Quorum Requirement. (1) In the case of and election committee shall be elected by the general assembly and the rest
primary cooperatives, regular meetings of the board of directors shall be held shall be appointed by the board. The audit committee shall be directly
at least once a month. accountable and responsible to the general assembly. It shall have the power
and duty to continuously monitor the adequacy and effectiveness of the
"(2) Special meetings of the board of directors may be held at any time upon cooperative's management control system and audit the performance of the
the call of the chairperson or a majority of the members of the board: cooperative and its various responsibility centers.
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) "Unless otherwise provided in the bylaws, the board, in case of a vacancy in
week before the said meeting. 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
"(3) A majority of the members of the Board shall constitute a quorum or the shall serve only for the unexpired portion of the term.
conduct of business, unless the bylaws proved otherwise.
"ART. 44. Functions, Responsibilities and Training Requirements of
"(4) Directors cannot attend or vote by proxy at board meetings. Directors, Officers and Committee Members. the functions and
responsibilities of directors, officers and committee members, as well as their
"ART. 41. Vacancy in the Board of Directors. Any vacancy in the board of training requirements, shall be in accordance with the rules and regulations
directors, other than by expiration of term, may be filled by the vote of at issued by the Authority.
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 "ART. 45. Liability of Directors, Officers and Committee Members.
special meeting called for the purpose. A director so elected to fill a vacancy Directors, officers and committee members, who are willfully and knowingly
shall serve only the unexpired term of his predecessor in office. 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
"ART. 42. Officers of the Cooperative. The board of directors shall elect any personal or pecuniary interest in conflict with their duty as such
from among themselves the chairperson and vice-chairperson, and elect or directors, officers or committee members shall be liable jointly and severally
appoint other officers of the cooperative from outside of the board in for all damages or profits resulting therefrom to the cooperative, members,
accordance with their bylaws. All officers shall serve during good behavior and other persons.
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 "When a director, officer or committee member attempts to acquire or
or omission causing loss of confidence in the honesty and integrity of such acquires, in violation of his duty, any interest or equity adverse to the
officer. No two (2) or more persons with relationships up to the third civil cooperative in respect to any matter which has been reposed in him in
degree of consanguinity or affinity nor shall any person engaged in a confidence, he shall, as a trustee for the cooperative, be liable for damages
business similar to that of the cooperative nor who in any other manner has and shall be accountable for double the profits which otherwise would have
interests in conflict with the cooperative shall serve as an appointive officer. accrued to the cooperative.

"ART. 43. Committees of Cooperatives. (1) The bylaws may create an "ART. 46. Compensation. (1) In the absence of any provisions in the bylaws
fixing their compensation, the directors shall not receive any compensation "ART. 48. Disloyalty of a Director. A director who, by virtue of his office,
except for reasonable per diems: Provided however, That the directors and acquires for himself an opportunity which should belong to the cooperative
officers shall not be entitled to any per diem when, in the preceding calendar shall be liable for damages and must account for double the profits that
year, the cooperative reported a net loss or had a dividend rate less than the otherwise would have accrued to the cooperative by refunding the same,
official inflation rate for the same year. Any compensation other than per unless his act has been ratified by a three-fourths (3/4) vote of all the
diems may be granted to directors by a majority vote of the members with members with voting rights, present and constituting a quorum. This
voting rights at a regular or special general assembly meeting specifically provision shall be applicable, notwithstanding the fact that the director used
called for the purpose: Provided, That no additional compensation other than his own funds in the venture.
per diems shall be paid during the first year of existence of any cooperative.
"ART. 49. Illegal Use of Confidential Information. (1) A director or officer,
"(2) The compensation of officers of the cooperative as well as the members or an associate of a director or officer, who, for his benefit or advantage or
of the committee as well as the members of the committees created pursuant that of an associate, makes use of confidential information that, if generally
to this Code or its bylaws may be fixed in the bylaws. known, might reasonably be expected to adversely affect the operation and
viability of the cooperative, shall be held:
"(3) Unless already fixed in the bylaws, the compensation of all other
employee shall be determined by the board of directors. "(a) Liable to compensate the cooperative for the direct losses suffered by the
cooperative as a result of the illegal use of information; and
"ART. 47. Dealings of Directors, Officers, or Committee Members. A
contract entered into by the cooperative with one (1) or more of its directors, "(b) Accountable to the cooperative for any direct benefit or advantage
officers, and committee members is voidable, at the option of the received or yet to be received by him or his associate, as a result of the
cooperative, unless all the following conditions are present. transaction.

"(1) That the presence of such director in the board meeting wherein contract "(2) The cooperative shall take the necessary steps to enforce the liabilities
was approved was not necessary to constitute a quorum for such meeting; described in subsection (a)

"(2) That the vote of such director was not necessary for the approval of the "ART. 50. Removal. All complaints for the removal of any elected officer
contract; 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
"(3) That the contract is fair and reasonable under the circumstances; and officer concerned under preventive suspension pending the resolution of the
investigation. Upon finding of a prima facie evidence of guilt, the board shall
"(4) That in the case of an officer or committee member, the contract with the present its recommendation for removal to the general assembly.
officer or committee member has been previously authorized by the general
assembly or by the board of directors. "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
"Where any of the first two conditions set forth in the preceding paragraph is general assembly meeting called for the purpose. The officer concerned shall
absent, in the case of a contract with a director, such contract may be ratified be given an opportunity to be heard at said assembly.
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.