Section 7February 17, 2009, Sec./Art. 7

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

CHAPTER VII

DISSOLUTION OF COOPERATIVES

"ART. 64. Voluntary Dissolution Where no Creditors are Affected.

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

A copy of the resolution authorizing the dissolution shall be certified to by a majority of the board of directors and countersigned by the board secretary. The Authority shall thereupon issue the certificate of dissolution.

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

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

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

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

"(2) The claim of any creditor;

"(3) The number of members; and

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

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

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

"(2) Insolvency.

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

"(1) Having obtained its registration by fraud;

"(2) Existing for an illegal purpose;

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

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

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

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

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

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

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

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

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