CHAPTER.

I
GENERAL CONCEPTS AND PRINCIPLES

“ARTICLE1. 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 research, 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.

“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-a-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 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;” and

“(17) Federation of Cooperatives 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;

“(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

“(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;

“(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;

“(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;

“(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;

“(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.

“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.”

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 ten per
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.

“(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;

“(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.

“(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.

“(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 undivided 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 Sec. 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 Sec. 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;

“(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.”