CHAPTER XIII

INSURANCE COOPERATIVE
Cooperative Insurance Societies (Art. 105)

Existing cooperatives may organize themselves into a cooperative insurance entity for
the purpose of engaging in the business of insuring life and property of cooperatives and their
members.

Types of Insurance Provided (Art.106)

Under the cooperative insurance program established and formed by the virtue of the
provisions of this Code, the cooperative insurance societies shall provide its constituting
members different types of insurance coverage consisting of, but not limited to:

 Life insurance with special group coverage

 Loan protection
 Retirement plans
 Endowment with health and accident coverage
 Fire insurance
 Motor vehicle coverage
 Bonding
 Crop and livestock protection and equipment insurance

Applicability of Insurance Laws (Art.107)

The provisions of the Insurance Code and all other laws and regulations relative to the
organization and operation of an insurance company shall apply to cooperative insurance
entities organized under this Code.

The requirements on capitalization, investments and reserves of insurance firms may be

liberally modified upon consultation with the Authority and the cooperative sector, but in no
case may be requirement to be reduced to less than half of those provided for under the
Insurance Code and other related laws.

Implementing Rules (Art.108)

The Insurance Commission and the Authority, in consultation with the concerned
cooperative sector, shall issue the appropriate rules and regulations implementing the
provisions of this Chapter."
 CHAPTER XIV
PUBLIC SERVICE COOPERATIVES
Definition and Coverage (Art.109)

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

Coverage: Such services may include the following:

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

(2) Ice plants and cold storage services;

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

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

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

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

Registration Requirements (Art.110)

Unless otherwise provided in this Code, no public service cooperative shall be registered
unless it satisfies the following requirements.

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

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

Regulation of Public Service Cooperatives (Art.111)

(1) The internal affairs of public service cooperatives such as the rights and privileges of
members, the rules and procedures for meetings of the general assembly, board of
directors and committees; for the election and qualifications of officers, directors, and
committee members; allocation and distribution of surpluses; and all other matters
relating to their internal affairs shall be governed by this Code.
 (2) All matters relating to the franchise or certificate of public convenience and necessity of
public service cooperatives such as capitalization and investment requirements,
equipment and facilities, frequencies, rate-fixing and such other matters affecting their
public service operations shall be governed by the proper government agency
concerned.

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

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

Engagement in Allied Business by Transportation Service Cooperatives (Art.112)

Subject to pertinent national laws and local ordinances, primary transportation service
cooperatives including secondary and tertiary federation of cooperatives may engage in a
business related to transportation service, including but not limited to:

(1) Importation, distribution and, marketing of petroleum products in accordance with existing
laws;
(2) Operation of gasoline stations and transportation service centers;
(3) Importation, distribution and marketing of spare parts and supplies; and
(4) Marketing of vehicle/drivers insurance policies.

Renewal of Franchise and Vehicle Registration (Art.113)

Renewals of franchise and vehicle registration shall be granted to transportation service

cooperatives: Provided, That such cooperative presents a certificate of good standing issued by
the Authority, OTC, and the local government unit concerned as proof that it has continuously
provided the required public transportation services.

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

Requirements to be presented:

-Certificate of Good Standing (Issued by Authority, OTC, and the local government unit)

NOTE: The certificate of good standing is now termed as certificate of compliance.

Refers to the certificate, in lieu of the

Certificate of Good Standing, issued to
all types of cooperatives after
compliance with rules of the Authority
Pursuant to the regulatory and developmental functions of the Cooperative Development
Authority under Republic Act No. 6939 and Republic Act No. 9520, the CDA hereby
promulgates the following guidelines for the submission of required reports of Micro
Cooperatives.

SECTION 1. TITLE

This Guidelines shall be known as the “Guidelines Governing the Submission of Required
Reports for Micro Cooperatives’.

SECTION 2. LEGAL BASES

This Guidelines are hereby promulgated consistent with the Article 113 of RA 9520; Rule 8,
Section 7 of the Revised IRR, Section 13 (e) of Joint BIR

–CDA Rules and Regulations and Section 13 of RA 6939.

SECTION 3. SCOPE

This Guidelines shall apply to all micro cooperatives registered with the Authority with at least
one (1) year of operation. Micro Cooperatives are those cooperative whose assets size are three
million (P3,000,000.00) and below exclusive of the land on which the particular cooperative's
office, plant and equipment, if any, are situated. (CDA MC 2007-07 dated 6/7/2007)

SECTION 4. REPORTS TO BE SUBMITTED BY MICRO COOPERATIVES

The following are the required reports to be submitted to the Authority in order to be issued a
Certificate of Compliance (COC).

1. Copy of the electronically encoded Cooperative Annual Progress Report (CAPR) with the
following attachments:

a.1 Original Copy of the Financial Statements (FS) audited by any of the following:

1) External auditor accredited by the Board of Accountancy (BOA);

2) Audit Committee of the cooperative; or

3) Audit committee of the federation or union where the cooperative is affiliated,

Audited Financial Statements shall comprise the following:

1. Statement of Financial Condition

2. Statement of Operation

3. Statement of Changes in Equity, Donations and Grants and Statutory Reserves

4. Statement of Cash Flow

5. Notes to Financial Statements

For FS audited by the Audit Committee of the cooperative or federation/union, the same shall
be duly signed by the chairman of the committee on the face of the FS.

Micro Cooperatives are also required to encode their Audited Financial Statement through the
subsystem in the CAPRIS found in the CDA’s Website.

a.2 List of Officers and Mandatory Trainings Undertaken/ Completed;

a.3 Social Audit Report (SAR) including its program of activities pursuant to its socio-civic
goals;

a.4 Governance and Management Report (GMR), including copies of the semi-annual Report on
mediation and conciliation as received by the Authority pursuant to Rule 7 of the Revised IRR;

SECTION 5. PLACE AND DEADLINE OF SUBMISSION

The required reports as specified in Section 4 shall be submitted to the Extension Office where
the cooperative is registered within one hundred twenty (120) days after the close of the
calendar period.

SECTION 6. PENALTY FOR NON-SUBMISSION OF REPORTS

Micro Cooperatives who failed to submit the required reports shall not be issued with a COC
and be tagged as NON-COMPLIANT COOPERATIVE.
 CHAPTER XV

CREDIT COOPERATIVES

Coverage (Art.114)

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

Definition and Objectives (Art.115)

Definition: A credit cooperative is a financial organization owned and operated by its members

Objectives:

(1) To encourage savings among its members;

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

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

Organization and Registration (Art.116)

Credit cooperatives shall be organized and registered in accordance with the general
provisions of this Code.

Organizational Linkage (Art.117)

Credit cooperatives may organize chapters or subsidiaries, or join leagues and

federations for the purpose of providing commonly needed essential services including but not
limited to the following:

(1) Interlending of surplus fund;

(2) Mutual benefits;
(3) Deposit guarantee;
(4) Bonding;
(5) Education and training;
(6) Professional and technical assistance;
(7) Research and development
(8) Representation; and
(9) Other services needed to improve their performance.
Existing support organizations such as federations of credit cooperatives, credit cooperatives at
the provincial, regional and national levels may continue as such under this Code
Conversion of Credit Cooperatives to Financial Service Cooperatives (Art.118)
Existing credit and multipurpose cooperatives with savings and credit facilities shall
formally inform the Authority of its intention to continue performing its present functions.
Should the said cooperatives decide to exercise enhanced functions, it shall notify the Authority
and satisfy the requirements for conversion to financial service cooperative.

CHAPTER XVI
FINANCIAL SERVICE COOPERATIVES

Definition and Functions of Financial Services Cooperatives (Art.119)

A financial service cooperative is a financial organization owned and operated by its

members and authorized to provide the following service, exclusively to its members:

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

The articles of cooperation and bylaws of any financial service cooperative, or any
amendment thereto, shall be registered with the Authority only if accompanied by a certificate
of authority issued by the BSP, under its official seal.
The authority granted this provision may be revoked by the BSP if any of the grounds
for receivership mentioned under Section 53 and 56 of Republic Act No. 8791 is present or if the
financial service cooperative has willfully violated this Code of any of the related rules and
regulations.
The BSP shall issue a cease and desist order to cooperatives exercising the function of a
financial service cooperative without authority from the BSP.
The BSP may charge equitable rates or fees, as may be prescribed by the Monetary Board
for licensing, examination and other services which it renders under this Code.
Upon the favorable certification of the BSP and the prior approval of the Authority, a
cooperative, the main purpose of which is to perform savings and credit functions, may convert
to financial service cooperative subject to the required qualifications and procedures provided
under this Code and in the implementing rules and regulations.

Membership and Affiliation (Art.120)

A financial service cooperative shall have the two (2) types of members:

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

(2) Associate members, who are natural persons but who do not immediately qualify under the
requirements for membership set out in the bylaws of the cooperative. All associate members
who are natural persons shall be given two (2) years to become regular members. Failure to
convert within the said period shall mean automatic withdrawal of their associate membership.
They may, however, re-apply as regular members after two (2) years.
Minors who are dependents of regular members can qualify as associate members.
When they reach the age of majority and within two (2) years from acceptances of their
associate membership, they have the option to convert into regular members. As associate
members, they may open accounts, deposit funds and withdraw from their account, subject to
the bylaws and rules of the cooperative, and the rules and regulations of the Authority,
notwithstanding the provisions of existing laws to the contrary.

Regulation and Supervision (Art.121)

The Authority shall exercise lead regulatory powers and supervision over the operations
of the financial service cooperatives, to wit:

(1) Issue rules and regulations for the safe and sound conduct of operations of financial service
cooperatives;
(2) Establish standards of operation for uniform application to all financial service cooperatives;
(3) Prescribe ratios, ceilings, limitations, or other forms of regulation on the different types of
accounts and practices of financial service cooperatives which shall, conform to internationally
accepted standards;
(4) Investigate to determine whether a financial service cooperative is conducting its business in
a safe and sound manner;
(5) Conduct regular examination of the books of accounts, records and other documents of
financial service cooperatives;
(6) Inquire into the solvency and liquidity of a financial service cooperatives;
(7) Prescribe appropriate fees for supervision and examination of financial service cooperatives
to among others, monitor and oversee that existing laws and regulations are complied with;
(8) Pass upon and review the qualifications and disqualifications of individuals elected or
appointed directors or officers and disqualify those found unfit;
(9) Disqualify, suspend or remove any director or officer who commits or omits an act which
render him unfit for the position;
(10) Select, designate and deputize federations, through an approved accreditation criteria, that
will supervise primary financial service cooperatives and issue basic guidelines therefor;
(11) Require the submission of relevant reports from the deputized supervisor;
(12) Provide remedial measures in the operations of financial service cooperatives that are in a
state of continuing inability or unwillingness to maintain a period of liquidity at the request of
the deputized supervisor or when the deputized supervisor fails to perform its functions;
(13) Accredit external auditors in accordance with standards for audit and financial reporting in
cooperation with the PICPA; and
(14) Appoint a conservator or a receiver as may be necessary subject to the rules and regulations
to be promulgated by the Authority in coordination with the BSP, taking into consideration the
grounds, powers and procedures under Sections 29 and 30 of Republic Act No. 7653 as may be
deemed appropriate to financial service cooperatives.

The Authority shall include in its rules and regulations, appropriate sanctions and
penalties, on the financial service cooperatives, its members, officers and responsible persons,
for any action that fails to adhere to sound and prudent management practices or are
inconsistent with the provisions of this Code, other applicable laws on cooperatives, rules,
regulations, circulars or orders issued by the Authority, and require the cooperative to
undertake corrective or remedial measures relative thereto.
 The BSP is authorized to conduct risk-based supervision and examination of financial
service cooperatives as it may deem necessary.

Promulgation of Rules and Regulations (Art.122)

The BSP, in coordination with the Authority, shall prescribe the appropriate prudential
rules and regulations applicable to the financial service cooperatives.

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

Financial Service Cooperative Federations (Art.123)

Financial service cooperatives may organize themselves into financial service

cooperative may organize themselves into financial service cooperative federations, and register
their federation with the Authority. These financial service cooperative federations may be
deputized by the Authority as the supervisor of their members, and they shall have the
following functions:

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

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

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

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

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

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

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

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

DEPUTIZED FEERATION – refers to the federation authorized to perform supervisory and

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

SUPERVISION – refers to the review and assessment of the entire cooperative operations
including the quality of the cooperative’s risk management process, cooperative governance,
internal controls, accountabilities and responsibilities, and adherence to regulatory and
prudential standards.

EXAMINATION – refers to the verification, review, and inspection of the cooperative’s books
and records, business affairs, administration, governance and management and financial
condition.

Designation of Existing Unit at the Cooperative Development Authority to Perform

Regulatory and Supervisory Functions (Art.124)

Within six (6) months from the approval of this Code, the Authority shall designate the
unit to formulate and implement the necessary regulations, rules, policies, guidelines and
standards applicable solely to financial service cooperatives and deputized federations in the
performance of their savings, credit and such other related enhanced financial service
operations.

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

Prohibition (Art.125)

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

CHAPTER XVII

ELECTRIC COOPERATIVE

Coverage (Art.126)

The provisions of this Code shall apply to all electric cooperatives registered with the
Authority. This shall also cover new distribution utilities that will register with the Authority.
 Electric cooperatives may undertake power generation utilizing renewable energy
sources, including hybrid systems, acquisition and operation of subtransmission or distribution
as its primary purposes.

Registration of Electric Cooperatives (Art.127)

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

REFERENDUM – refers to a mechanism of securing and the approval of the general

membership of an Electric Cooperative on issues affecting its registration, operation and
management.

The following are the procedures in the conduct of Referendum:

A. Referendum Initiated by the Board of Directors

The Board of Directors shall undertake the following:

1. Issue Notice referendum indicating the following:

a. Date of Referendum;
b. Mode of Conduct of the Referendum which may either be:
b.1 survey Form; and
b.2 Assembly Meeting in the respective districts which maybe simultaneous sequential.

2. Posting/Publication of Notice of referendum shall be done not later than 30 days prior to the
scheduled conduct of referendum.

3. Identification of members in good standing based on the qualification and disqualification

provisions in the By-laws.

4. Provision of Referendum Questionnaire Form to qualified members to vote whether to

register or not to register with the Authority.

5. Collection of Questionnaire forms and canvassing of Votes by the cooperative's Election

Committee.

6. Reporting of the results of the canvassing, i.e. favor or not favor.

7. Certification by the Election Committee as to the result of the referendum duly noted by the
majority of the Board of Directors.
 B. Referendum Initiated by the Member-Consumer

In case the Board of Directors shall refuse to conduct a referendum, the Member-Consumers
may initiate a referendum through a petition duly signed by at least three hundred (300)
members of each district of the cooperation who are entitled to vote by filling the same to the
Board of Directors. The Board of Directors shall act within thirty (30) days from receipt thereof
whether to grant or deny said petition. Failure of the Board of Directors to act within the given
period or the denial of the petition, the petitioners may conduct motu proprio the said
referendum through the procedures above prescribed. The result of the referendum shall be
certified by a committee designated during the conduct of a referendum to supervise the same.

The general membership through their proponents for referendum shall submit all the
documentary requirements for resignation to the concerned CDA Extension Office, which may
register the applicant Electric Cooperative upon finding that all the documents for registration
are complete and in order.

Voting Requirement for Registration (Art.128)

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

MEMBER-CONSUMER IN GOOD STANDING – refers to a regular member who is updated

in the payment of monthly bills, has complied with all the requisites for membership, possesses
all the qualifications and none of the disqualifications provided in the Cooperative by-laws as
ascertained by the Board of Directors.

Documents to be Submitted for Registration with the Authority (Art.129)

For purposes of registration, electric cooperatives shall submit the following documents:

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

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

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

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

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

(f) Bonds of accountable officers.

Registration Options of Electric Cooperatives (Art.130)

Electric Cooperatives registered with the National Electrification Administration (NEA)

under Presidential Decree No. 269, as amended which opt not to register with the Authority are
allowed to retain the word ‘cooperative’ in their registered names: Provided, That they shall not
be entitled to the benefits and privileges under this Code.

Role of the Energy Regulatory Commission (Art.131)

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

Effects of Registration with the Authority (Art.132)

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

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

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

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

(5) All condoned loans, subsidies, grants and other assistance shall form part of the donated
capital and funds of the electric cooperatives and as such, it shall not be sold, traded nor be
divided into shareholdings at any time; these donated capital/fund shall be valuated for the
sole purpose of determining the equity participation of the members: Provided, That in the case
of dissolution of the cooperative, said donated capital shall be subject to escheat; and
(6) Electric cooperatives registered and confirmed with the Authority under Republic Act No.
6938 and Republic Act No. 6939 are hereby deemed registered under this Code.

Share Capital in the Electric Cooperatives (Art.133)

The electric cooperative shall issue and distribute share certificates under the name of
their members, taking into consideration their previous equity contributions, the amortization
component through the payments made, capital build-up and other capital contributions.

SHARE CAPITAL CERTIFICATE – is a document issued by the electric cooperative under its
seal, if any, evidencing that a member has contributed a sum of money or value of property
received by the electric cooperative corresponding to his share contribution.

Form of Share Capital Certificate: The share capital certificate shall be written in English or
Filipino, typewritten or handwritten as long as it is eligible

Contents of Share Capital Certificate: The Share Capital Certificate shall contain the following:

a. The serial number of the share capital certificate;

b. The name and address of the cooperative issuing such certificate;

c. The name and address of the member to whom such certificate was issued;

d. The number of shares fully paid-up by the member;

e. The par value of each share which shall not be more than one thousand pesos
(Php1,000.00);

f. The total value of such shares contributed by the member;

g. The date of such share capital certificate;

h. The printed names and signatures of chairman and the secretary of the electric
cooperative issuing such certificate; and

i. The seal of the cooperative, if any.

Issuance of share capital certificate: No share capital certificate shall be issued to a subscriber
until the full amount of his subscription together with interest and expenses, if any is due, has
been paid.

Claiming of share capital certificate: In claiming the Share Capital Certificate, the member shall
present his/her I.D. issued by the electric cooperative or any valid I.D. However, the member
may authorize someone to claim the Share Capital Certificate with a letter of authorization,
together with the member’s I.D. and the I.D. of the authorized person.
Issuance of duplicate Share Capital Certificate in case of its loss or destruction: The electric
cooperative may issue a duplicate certificate if such certificate is proved to have been lost or
destroyed or having being defaced or mutilated or torn or is surrendered to the electric upon
execution and submission by a member of an Affidavit if Loss or such other document
evidencing defacement/mutilation or surrender of such share capital certificate.

Distribution of Share Capital Certificate: Shall be done annually preferably on its General
Assembly Meeting.

Factors to be considered in the distribution of Share Capital Certificate: The following factors
shall be considered in the distribution of share capital certificate:

a. The previous equity contributions made by the member;

b. The amortization component;

c. Payments made;

d. Capital build-up; and

e. Other capital contributions

Reports: The electric cooperative secretary shall submit a list of the share capital certificates
issued by him together with their value along with the annual mandatory report.

Cancellation of Registration with the Authority (Art.134)

The cancellation of the registration of an electric cooperative shall be granted by the

Authority as provided under Articles 64 to 70 of this Code.

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

CHAPTER XVIII

MISCELLANEOUS PROVISIONS

Compliance with Other Laws (Art.135)

The Labor Code and all other labor laws, the Social Security Act, the Medical Care Act,
and all other social legislations, and all other laws and executive orders shall apply to
cooperatives duly registered under this Code.

Register of Cooperatives (Art.136)

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

Settlement of Disputes, Conciliation, and Mediation Proceedings (Art.137)

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

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

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

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

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

Joint Congressional Oversight Committee on Cooperative (JCOCC) (Art.138)

There is hereby created a Joint Congressional Oversight Committee composed of the

Chairman of the Senate Committee on Cooperatives and the Chairman of the House Committee
on Cooperatives Development, with four (4) members each from both Houses. The said
members shall be duly appointed by the Senate President and the Speaker of the House of
Representatives from the members of the respective committee based on the proportional
representation of the parties or coalition therein.

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

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

FINAL PROVISIONS

Implementing Rules and Regulations (Art.139)

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

Penal Provisions (Art.140)

The following acts or omissions affecting cooperatives are hereby prohibited:

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

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

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

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

(4) Direct or indirect interference or intervention by any public official or employee into the
internal affairs of a cooperative of which he is not a member, such as, but not limited to, the
following:
 (a) Influencing the election or appointment of officers, directors, committee members
and employees through public or private endorsement or campaign for or against any
person or group of persons;

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

(c) Requesting or demanding for the creation of positions or organizational units, or

recommending any person for appointment, transfer, or removal from his position; or

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

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

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

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

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

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

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

(e) Hindering an authorized person from making an inspection, audit, examination or

investigation required under this Code;

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

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

(h) Abetting, counseling, allowing, authorizing or commanding another person to

commit an offense punishable by this Code: Provided, That in case the violator is a
cooperative or juridical person, the penalty shall be imposed on its directors and officers.
(7) Any violation of any provision of this Code for which no penalty is imposed shall be
punished by imprisonment of not less than six (6) months nor more than one (1) year and a fine
of not less than One thousand pesos (P1,000.00), or both at the discretion of the court.

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

Printing and Distribution (Art.141)

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

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

Interpretation and Construction (Art.142)

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

Repealing Clause (Art. 143)

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

Transitory Provisions (Art.144)

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

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

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

Separabilty Clause (Art.145)

Should any part of this code be declared unconstitutional, the validity of remaining
provision hereof shall remain in full and effect.

Effectivity Clause (Art.146)

This code shall take effect fifteen (15) days from its publication in a newspaper of
general circulation.

Approved: FEB 17, 2009