Section 2February 17, 2009, Sec./Art. 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;

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

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

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

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

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

Both the original and amended articles and/or bylaws shall contain all provisions required by law to be set out in the articles of cooperation and by laws. Amendments shall be indicated by underscoring or otherwise appropriately indicating the change or changes made and a copy of the amended articles or amended bylaws duly certified under oath by the cooperative secretary and a majority of the directors stating the fact that said amendment or amendments to the articles of cooperation and/or bylaws have been duly approved by the required vote of the members. All amendments to the article of cooperation and/or bylaws shall be submitted to the Authority.

The amendments shall take effect upon its approval by the authority or within thirty (30) days from the date of filing thereof if not acted upon by the Authority for a cause not attributable to the cooperative.

"ART. 19. Contracts Executed Prior to Registration and Effects Thereof. Contracts executed between private persons and cooperatives prior to the registration of the cooperative shall remain valid and binding between the parties and upon registration of the cooperative. A formal written contract shall be adopted and made in the cooperatives 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 latters development activities in their respective jurisdictions."