RA 9520 (1).pdf

REVISED RULES AND REGULATIONS IMPLEMENTING CERTAIN AND SPECIAL PROVISIONS OF THE PHILIPPINE COOPERATIVE CODE OF 2008 Pursuant to the provisions of Article 139 of Republic Act No. 9520, otherwise known as the Philippine Cooperative Code of 2008, the Cooperative Development Authority hereby issues the following rules and regulations implementing the provisions of the said Code. “Article 139.Implementing Rules and Regulations. 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.” TITLE AND DEFINITIONS Section 1. Title. These Rules shall be known as the “Revised Rules and Regulations Implementing Certain and Special Provisions of the Philippine Cooperative Code of 2008. Section 2. Definition of Terms. For the purpose of these Rules and Regulations, the following terms are defined, as follows: 1. Agrarian Reform Cooperative(ARCo) - refers to one organized by marginal farmers majority of which are Agrarian Reform Beneficiaries, duly registered with the Authority, for the purpose of developing an appropriate system of land tenure, land development, land consolidation or land management in areas covered by agrarian reform. It shall also refer to Agrarian Reform Beneficiaries Cooperative (ARB Coop) as defined in DAR Administrative Order No. 05, Series of 2009. For purposes of this definition, the following terms shall mean: a. Agrarian Reform Area - refers to the area subject for coverage under the Comprehensive Agrarian Reform Program (CARP)/Comprehensive Agrarian Reform Program Extension with Reforms (CARPER). b. Agrarian Reform Beneficiaries (ARBs) - refers to qualified beneficiaries under the Comprehensive Agrarian Reform Program (CARP), as defined under Section 22, Chapter VII of R.A. 6657. c. Agrarian Reform Community (ARC) - refers to a community composed and managed by ARBs who are willing to be organized and to undertake the integrated development of an area and/or their organizations or cooperatives as defined under RA 9700, otherwise known as the Comprehensive Agrarian Reform Program Extension with Reforms (CARPER) Act. 1 d. CLOA - refers to the Certificate of Land Ownership Award. e. DAR - refers to the Department of Agrarian Reform. f. Marginal Farmers - refers to farmers who are tilling an area of not more than three (3) hectares. g. Next of Kin – for purposes of ARB cooperative succession, refers to a natural person who is an heir of an agrarian reform beneficiary and who is qualified to be a member of the cooperative under its By-laws and as determined by DAR. 2. Alternative Dispute Resolution (ADR) - refers to a process or procedure used to resolve a dispute or controversy, other than by adjudication of a presiding Judge of Court or an officer of a government agency, in which a neutral third party participates to assist in the resolution of issues, which includes arbitration, mediation, conciliation, early neutral evaluation, mini trial, or a combination thereof. For purposes of this definition, the following terms shall mean: a. Arbitrator - refers to the person appointed to render an Award, in a dispute that is the subject of an arbitration agreement. b. Award - refers to any partial or final decision by an Arbitrator in resolving the issues in a controversy. c. Conciliation - refers to the process whereby a neutral third party takes an active role in assisting disputants to formulate between and among themselves an acceptable solution to reach an amicable settlement. d. Dispute - refers to intra/inter cooperative controversy or grievance arising from any violation or disagreement over any provision of law, including violations of the rights and conditions of membership provided in the By-laws of the cooperative and/or in the Cooperative Code, which may be the subject of a formal or informal request for conciliation/mediation or arbitration assistance sought by either parties. e. Mediation –refers to the process wherein a mediator, selected by the disputing parties, facilitates communication and negotiation, and assists the parties in reaching a voluntary agreement relative to the dispute. f. Settlement - refers to any compromise or agreements reached between the disputants to settle the matters in dispute and thus dispose of controversy. g. Submission Agreement - refers to the written agreement signed by the disputing parties to submit the dispute to voluntary arbitration. h. Voluntary Arbitration- refers to a dispute resolution process wherein any intra/inter cooperative dispute is settled by a voluntary arbitrator/s chosen by the disputing parties or appointed by the Authority from a list of accredited arbitrators, who shall render an Award. i. Voluntary Arbitrator/Arbitrators - refers to any accredited and authorized employee of the Authority or an accredited private 2 individual chosen by the parties or appointed by the Authority to hear, decide, and render an award in a dispute. 3. Area of Operation - refers to the area where the cooperative operates and where its members come from as provided for in their Articles of Cooperation and By-laws. 4. Articles of Cooperation - refers to the Articles of Cooperation of a registered cooperative, including registered amendments thereto, if any. 5. Associate Member - refers to a member of a cooperative who has no right to vote nor be voted upon and is entitled only to limited rights, privileges and membership duration as provided in the By-laws of the cooperative, the Philippine Cooperative Code of 2008, and its Implementing Rules and Regulation. 6. Authority - refers to the Cooperative Development Authority (CDA). 7. Bond of Membership - refers to the conditions where members group themselves to attain their common goals and objectives which may either be residential, occupational, associational, or institutional. 8. By-Laws - refers to the By-laws of a registered cooperative which includes its registered amendments, if any. 9. Capital - refers to the totality of the members’ share capital, loans and borrowings including deposits, deferred payment of interest on share capital and patronage refund, subsidies, donations, legacies, grants, aids, lands, structures, plants, equipment, facilities, machines and other assets of the cooperative. For purposes of this definition, the following terms shall mean: a. Authorized Share Capital - refers to the capitalization of the cooperative as provided in the Articles of Cooperation and as approved by the Authority. b. Donated Capital - refers to the subsidies, grants, donations and aids received by the cooperative from any person or institution, local or foreign. It shall form part of the capital of the cooperative. c. Equity - refers to the excess of cooperative assets over liabilities. d. Financial Statements - refer to the documents showing Statement of Financial Condition (Balance Sheet), Statement of Operation (Income Statement), Statement of Cash Flows, and Statement of Changes in Equity in a given period. e. Interest on Share Capital –refers to the interest earned by the members’ paid up capital. It is computed by multiplying the rate of interest on share capital by members’ average shares. The rate of interest on share capital is computed by dividing the amount allocated for total interest on share capital by the total average share month. f. Net Surplus – refers to the excess payments made by members, which shall not be construed as profits, from the loans or goods and services availed of or the difference of the rightful amount due to the members for their products sold or services rendered to the cooperative. It 3 includes other inflow of assets resulting from its other operating activities, which shall be returned to the members as prescribed in the Code. g. Net Worth - refers to equity inclusive of members’ equity, donations, grants and reserve funds less unbooked allowances for probable losses on loans, accounts receivable, investment and non-performing assets and other capital adjustments as may be allowed by the Authority. h. Paid-up Share Capital - refers to the portion of a member’s share capital that has been paid. i. Patronage Refund - refers to the amount returned to the individual members in proportion to their individual patronage of the cooperative’s products and services. j. Revolving Capital - refers to the amount constituting the patronage refund and interest on share capital of the members, the payment of which has been deferred by the cooperative. A corresponding revolving capital certificate shall be issued to the members. k. Revolving Capital Certificate – refers to the certificate issued by the Board of Directors of the cooperative indicating the serial number, name, amount, and rate of interest to be paid and shall distinctly set forth the time of retirement of such certificate and the amount to be returned. l. Risk Asset - refers to the cooperative’s total assets less cash on hand, evidence of indebtedness, loans to the extent covered by hold-outs or assignments of deposits, lands owned used for operations, buildings and land improvements net of depreciation, furniture and fixtures and equipment net of depreciation, real estate mortgage, loans and other non-risk items as the Authority may, from time to time, authorize to be deducted from total assets. m. Share Capital - refers to the money paid or required to be paid by the members for the conduct of the operations of the cooperative. n. Total Average Share Month – refers to the sum total of the average share month which is determined by adding the monthly ending balances of a member’s share capital and dividing the sum by twelve (12) months. o. Unpaid Subscription - refers to a member’ sunpaid subscribed share capital. 10. COC - refers to the Certificate of Compliance issued by the Authority to all types of cooperatives after compliance with the rules of the Authority. 11. Code - refers to Republic Act No. 9520, otherwise known as the Philippine Cooperative Code of 2008. 12. Cooperative Bank - refers to a cooperative organized primarily to provide a wide range of financial services to cooperatives and their members. 13. Credit Cooperative - refers to a cooperative that promotes thrift and wise use of money and undertakes savings and lending services among its members. It generates a common pool of funds in order to provide financial assistance and 4 other related financial services to its members for productive and provident purposes. 14. Dairy Cooperative - refers to a cooperative engaged in the production of fresh milk which may be processed and/or marketed as dairy products. All matters relating to the technical operations of the dairy business shall be supervised by the following government agencies: a. NDA - refers to the National Dairy Authority. b. FDA - refers to the Food and Drugs Administration. c. DOH - refers to the Department of Health. 15. Dissenting Member - refers to a member who votes against a proposed activity/project of a cooperative. 16. Division - refers to the act of splitting a single cooperative into two or more cooperatives, wherein the original cooperative shall be dissolved and the resulting cooperatives shall acquire separate and distinct juridical personalities. 17. Electric Cooperative - refers to a cooperative organized primarily for the purpose of undertaking power generation, utilizing renewable energy sources, including hybrid system, acquisition and operation of sub- transmission or distribution to its household members. For purposes of this definition, the following terms shall mean: a. Distribution of Electricity - refers to the conveyance of electric power by a distribution utility through its distribution system pursuant to the provisions of the EPIRA Law. b. Distribution Utility - refers to any Electric Cooperative, private corporation, government-owned utility, or existing local government unit which has an exclusive franchise to operate a distribution system in accordance with the EPIRA Law. c. EPIRA - refers to the Electric Power Industry Reform Act of 2001. d. Referendum - refers to a mechanism to secure the approval of the general membership of an Electric Cooperative on issues relative to its registration, operation and management. e. Renewable Energy Resources - refer to energy resources such as, but not limited to, biomass, solar, wind, hydro, geothermal and ocean energy. These resources do not have an upper limit on the total quantity of energy to be used and are renewable on a regular basis, the renewable rate of which is rapid enough to consider availability over an indefinite time. f. Sub-transmission Assets - refer to the facilities related to the power delivery service below the transmission voltages and based on the functional assignment of assets, including, but not limited to, step-down transformers used solely by load customers, associated switchyard/substation, control and protective equipment, reactive compensation equipment to improve customer power factor, overhead lines, and the land where such facilities / equipment are located. These include NPC assets linking transmission system and the distribution system which are neither classified as generation nor transmission. 5 g. Supply of Electricity - refers to the sale of electricity by a party other than a generator or a distributor in the franchise area of a distribution utility using the wires of the distribution utility concerned. h. Transmission of Electricity - refers to the conveyance of electricity through the high voltage system. 18. Escheat - refers to the power of the State to succeed to property, real or personal, for which there is no owner, heir or claimant. 19. Extension Offices - refers to the regional offices of the Authority. 20. Financial Service Cooperative (FSC) - refers to a cooperative organized for the primary purpose of engaging in savings and credit services and enhanced financial services subject to the regulations of the Bangko Sentral ng Pilipinas (BSP). For purposes of this definition, the following terms shall mean: a. BSP - refers to the Bangko Sentral ng Pilipinas. b. Conservator - refers to any person appointed by the Authority, empowered to take charge of the assets, liabilities, and the management of the cooperative, after finding that the cooperative is in a state of continuing inability or unwillingness to maintain a condition of liquidity which is deemed adequate to protect the interest of members and creditors of the cooperative. c. Internal Control - refers to all the systems and procedures adopted to safeguard the cooperative's assets, check the accuracy and reliability of its accounting data, promote operational efficiency and encourage adherence to prescribed managerial policies. d. Receiver - refers to any person of recognized competence appointed by the Authority and is empowered to take charge and administer all the assets and liabilities of the cooperative for the benefit of its creditors and exercises such other powers as provided under the Revised Rules of Court. 21. General Assembly –refers to 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 the Code, its Articles of Cooperation and By-laws. 22. Housing Cooperative - refers to a cooperative 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. For purposes of this definition, the following terms shall mean: a. Blanket Loan/Wholesale Loan - refers to a housing loan contracted/obtained by a housing cooperative intended to identify member-beneficiaries for land acquisition, land improvement, house 6 construction, home improvement, or renovation and other similar purposes. b. Cooperative Housing Program - refers to an alternative housing approach, in partnership with government/non-government agencies involved in a housing program, undertaken by a financially and organizationally stable cooperative to address the housing problems of its members, primarily the low-income earners, through its own cooperative efforts in planning and direct production of affordable, decent and adequate housing units. c. DBP –refers to the Development Bank of the Philippines. d. DENR –refers to the Department of Environment and Natural Resources. e. HDMF - refers to the Home Development Mutual Fund or Pag-IBIG Fund. f. HGC –refers to the Home Guarantee Corporation. g. HLURB - refers to the Housing and Land Use Regulatory Board. h. HUDCC –refers to the Housing and Urban Development Coordinating Council. i. Housing Beneficiaries - refer to regular members in good standing of the Housing Cooperative who actively participate in the savings programs for housing and qualify to own a unit as provided in the By- laws and duly approved internal policies of the cooperative. j. LBP –refers to the Land Bank of the Philippines. k. NHA - refers to the National Housing Authority. l. SSS - refers to the Social Security System. m. Socialized Housing - refers to the housing program and project undertaken by the government and private sector for the underprivileged and homeless which may also be undertaken by a Housing Cooperative. This includes sites and services development, long-term financing and liberalized terms on interest payments. n. SHFC –refers to the Social Housing Finance Corporation. o. Technical Plan - refers to all technical documents required in planning a housing project namely, the bar chart and construction schedule, systematic development plan, the architectural and detailed engineering and housing design, contract documents, technical and material specification. 22. Insurance Cooperative - refers to a cooperative engaged in the business of insuring life and property of the constituting cooperatives and their members. It shall also refer to Cooperative Insurance Societies (CIS). For purposes of this definition the following terms shall mean: a. Commission - refers to the Insurance Commission. b. Insurance-like Activity- refers to any activity involving regular collection of premiums, fees, contributions, or charges prior to the occurrence of contingent event and the payment of guaranteed benefits upon the 7 occurrence of such event. The term excludes risk pooling practices such as “damayan” or “abuloy” system wherein an individual or group of individuals voluntarily pledge and contribute a certain amount of money to a fund and the benefits are not pre-determined but are contingent to the amounts collected. c. Micro-Insurance - refers to an activity providing specific insurance and other similar products and services that meet the needs of the low- income sector for risk protection and relief against distress, misfortune and other contingent events. This shall include all forms of insurance and other similar activities, as may be defined by concerned regulatory bodies with features such as: premiums, contributions, fees or charges collected/deducted prior to the occurrence of a contingent event and guaranteed benefits provided upon the occurrence of a contingent event. d. Micro-Insurance Product - refers to a financial product or service that meets the risk protection needs of the poor where the amount of premiums, contributions, fees or charges computed on a daily basis does not exceed seven and a half percent (7.5%) of the current daily minimum wage rate for non-agricultural workers in Metro Manila, as approved by the National Wages Productivity Board (NWPB)/Regional Tripartite Wages Productivity Board (RTWPB), and the maximum sum of guaranteed benefits is not more than 1,000 times the daily minimum wage rate for non-agricultural workers in Metro Manila. e. Regular Insurance Product - refers to all other insurance policies not covered by Micro-Insurance Product. 23. Laboratory Cooperative - refers to a cooperative duly recognized by the Authority, formed and managed principally by minors and is affiliated with another registered cooperative which is called the guardian cooperative. For purposes of this definition, the following terms shall mean: a. Guardian Cooperative - refers to a duly registered cooperative with which a laboratory cooperative is affiliated. b. Minor - refers to an individual below eighteen (18) years of age. 24. Labor Service Cooperative- refers to a cooperative organized primarily to engage in providing a specific work, job, or service to a principal under a contracting or subcontracting arrangement as may be defined under existing laws and in accordance with the cooperative principles set forth under the Philippine Cooperative Code of 2008 (RA 9520). 25. Liquidation - refers to the process of settlement and closure of the cooperative affairs, disposition, conveyance and distribution of its assets. For purposes of this definition, the following terms shall mean: 8 a. Voluntary Dissolution- refers to the termination of the juridical personality of a cooperative at its own initiative or instance after complying with the requirements set forth in the Code, these rules and issuances by the Authority. b. Involuntary Dissolution - refers to the termination of the juridical personality of a cooperative through an appropriate judicial proceeding or by Order of the Authority. 26. Member in Good Standing - refers to a regular member who is entitled to vote and to such other privileges as provided in the by-laws. 27. Merger - refers to a union of two or more existing cooperatives belonging to the same category whereby the surviving cooperative, retaining its identity, absorbs one or more constituent cooperatives/s. For purposes of this definition, the following terms shall mean: a. Certificate of Merger - refers to the document issued by the Authority evidencing registration of merger. b. Consolidation - refers to a union of two or more existing cooperatives belonging to the same category to form a new cooperative called the consolidated cooperative. c. Constituent Cooperatives - refer to two or more existing cooperatives which are parties to a merger or consolidation. d. Plan of Merger or Consolidation - refers to a written document containing the proposed merger or consolidation of cooperatives duly approved by the General Assembly of each of the constituent cooperatives at separate General/Representative Assembly Meetings. e. Registration - refers to the operative act granting juridical personality to a proposed cooperative as evidenced by a Certificate of Registration. 28. Multipurpose Cooperative - refers to a cooperative, which combines two (2) or more business activities. 29. Primary Cooperative - refers to a cooperative, the members of which are natural persons. In case of electric and water service cooperatives, institutional users may be accepted as associate members. 30. Regular Members –refer to one who has complied with all the membership requirements and is entitled to all the rights and privileges of membership. 31. Reports - refer to any document or statement to be submitted regularly by the cooperative to the Authority. For purposes of this definition, the following term shall mean: a. Sanctions - refer to the penalties provided for in the by-laws of the cooperative, these Rules, and other administrative issuances of the Authority, the Code and other related laws. 9 32. Representative Assembly– refers to the full membership of the body of representatives elected from each of the sectors, chapters or districts of the cooperative, duly assembled for the purpose of exercising such powers lawfully delegated by the general assembly in accordance with the By-laws of the cooperative. For purposes of this definition, the following terms shall mean: a. Election Deputies –refer to those members of the cooperative from the sector, chapter or district appointed by the election committee as approved by the board of directors, tasked to facilitate the conduct of the election of the Representative/Delegate in their respective sector, chapter or district, in accordance with the By-laws of the cooperative, which shall not be more than five (5) for each sector, chapter, or district. b. Representative/Delegate - refers to a member duly elected during the sector, chapter or district meetings who shall represent his/her sector, chapter or district to the representative assembly meeting. c. Numerous and Dispersed Membership - refers to a cooperative with a large number of membership who are scattered/dispersed by reason of geographical location, work shift or other similar conditions making it impossible and difficult to conduct its general assembly meeting. d. Sector, Chapter or District - refers to an aggrupation of a cooperative membership, by reason of geographical location, work shift or other similar conditions. e. Sequential Election of Representative - refers to the election of the representatives during meetings held in sequence, in different days and/or at various venues, by several sectors, chapters or districts of a cooperative for the purpose of electing their respective Representatives to the representative assembly meeting. f. Simultaneous Election of Representative - refers to the election of the representatives during the meetings held, on the same day and at various venues, by several sectors, chapters, or districts of a cooperative for the purpose of electing their respective Representatives to the representative assembly meeting. 33. Service Cooperative – refers to a cooperative organized primarily to provide any type of service to its members including, but not limited to, labor, transport, information and communication, insurance, housing, electric, health services, education, banking and savings, and credit. 34. Secondary Cooperative - refers to a cooperative the members of which are primary cooperatives. 35. Subsidiary Cooperative - refers to a cooperative all or majority of whose membership or shareholders come from a cooperative called a parent cooperative. It is organized for a purpose other than that of the parent cooperative, and receives technical, managerial, and financial assistance from the said parent cooperative. 10 For purposes of this definition, the following term shall mean: a. Parent Cooperative - refers to a cooperative which organizes a subsidiary and provides technical, managerial and financial assistance thereto. 36. Tertiary Cooperative - refers to a cooperative, the members of which are secondary cooperatives. 37. Transportation Service Cooperative - refers to a cooperative organized primarily to provide land and sea/water transportation, provided that sea/water transportation shall be limited to small vessels as defined under Philippine Maritime laws. For purposes of this definition, the following terms shall mean: a. Accreditation - refers to the recognition extended by the OTC to a registered Transportation Service Cooperative, as evidenced by a Certificate of Accreditation. b. CPCN / Franchise / Permit - refers to the Certificate of Public Convenience and Necessity issued by the appropriate government agency. c. Cooperative Education and Transport Operation Seminar (CETOS) - refers to seminars conducted by OTC for the purpose of providing continuing education on cooperative and transport service operations to enhance the knowledge and capability of the officers and members of the Transportation Service Cooperative. d. DILG –refers to the Department of the Interior and Local Government. e. DOTC - refers to the Department of Transportation and Communications. f. LGU - refers to the Local Government Unit. g. LTFRB - refers to the Land Transportation Franchising and Regulatory Board. h. LTO - refers to the Land Transportation Office. i. MARINA - refers to the Maritime Industry Authority. j. OTC - refers to the Office of Transportation Cooperatives. k. PCG - refers to the Philippine Coast Guard. 38. Water Service Cooperative - refers to a cooperative organized primarily to own, operate and/or manage water supply distribution system to serve its members and their households. For purposes of this definition, the following terms shall mean: a. LWUA - refers to the Local Water Utilities Administration, created under PD 198, as amended. b. NWRB - refers to the National Water Resources Board, created under PD 424. 11 c. Water Permit - refers to the authority to appropriate and use water, issued by the NWRB. d. Water Right - refers to the privilege granted by the government to appropriate and use water. e. Water Tariff - refers to the water rate charged for water consumption as determined by the cooperative and approved by the NWRB. 39. Workers Cooperative–refers to a cooperative organized primarily by workers, including the self-employed, who are at the same time the member- owner of the enterprise, the purpose of which is to provide employment, business opportunities to its member-owners in accordance with the cooperative principles. PART I CERTAIN PROVISIONS RULE 1 REPRESENTATIVE ASSEMBLY Section 1.Legal Basis. The Legal basis for this Rule is Article 5 (2), (10) of the Code, quoted as follows: "(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 by-laws. 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 and in accordance with the rules and regulations of the Cooperative Development Authority." “(10) Representative Assembly means the full membership of the body of representatives elected by each of the sectors, chapter or district of the cooperative duly assembled for the purpose of exercising such powers lawfully delegated unto them by the general assembly in accordance with its by-laws." Section 2.Coverage.These Rules shall apply to a cooperative opting to conduct its general assembly meeting by way of representative assembly as provided for under Article 5 (2) and (10) of RA 9520. Section 3. Contents of the By-laws of the Cooperative with Representative Assembly Option. These Rules apply to cooperatives with numerous and dispersed membership; Provided, That the adoption of representative assembly shall be stipulated in their By-laws. 3.1Basis for determining Sector, Chapter, or District. The number of the members of the cooperative, which shall be at least One Thousand (1,000), and the geographical 12 location, scope of operation, cluster, work shift, or other similar conditions shall be the basis in dividing the cooperative into sector, chapter, or district. 3.2 Composition of Sector, Chapter, or District. The By-laws shall provide for the number of the regular members comprising each sector, chapter, or district. 3.3 Quorum requirement for Sector, Chapter or District meeting. At least twenty- five per centum (25%) of the members entitled to vote in each sector, chapter, or district shall constitute a quorum. 3.4 Number of Sector, Chapter or District Representative. The number of elected representatives of a sector, chapter, or district as provided in the By-laws, shall be within the range of 1% to 10% of the total number of the regular members entitled to vote in the sector, chapter, or district. 3.5 Term of Office of the Sector, Chapter, or District Representatives. The term of office of the Representative or Delegate shall be provided in the By-laws which shall not exceed two (2) years, commencing on the first regular representative assembly meeting. 3.6 Qualifications and Disqualifications of the Representative or Delegate. The sector, chapter, or district representative or delegate shall possess all the qualifications and none of the disqualifications as provided in the cooperative By- laws. Section 4.Powers, Functions, and Responsibilities of the Representative or Delegate.The Representative or Delegate shall have the following powers, functions, and responsibilities: 1. To represent the sector, chapter, or district in the Representative Assembly Meeting; 2. To present, after due consultation with the sector, chapter or district, the respective decision of the sector, chapter or district on issues and matters to be decided upon by the representative assembly. Discretion, however, is given to the respective representative/delegate to decide on new matters raised during the said representative assembly; and 3. To present to his/her sector, chapter, or district the report and the minutes of the proceedings of the Representative Assembly Meeting. Section 5. Election of Sector, Chapter, or District Representative or Delegate. The election of sector, chapter, or district Representative/Delegate shall be held not later than sixty (60) days before the scheduled date of the regular representative assembly meeting as provided for in the By-laws. The Board of Directors shall mandate the Election Deputies, through the Election Committee, to conduct the election of the sector, chapter, or district Representatives/Delegates, either simultaneously or sequentially. 13 In case the sector, chapter, or district fails to elect its Representative/s or Delegate/s, the right to send its Representatives/Delegates on the preceding representative assembly meetings shall be deemed waived. Section 6. Vacancy in the Sector, Chapter, or District Representative or Delegate. Any vacancy shall be filled up in accordance with the provisions of the cooperative By-laws. The Delegate or Representative elected/appointed to fill a vacancy shall serve only the unexpired term of his/her predecessor. Section 7. Resignation, Removal, Incapacity or Death of Sector, Chapter, or District Representative or Delegate. The sector, chapter, or district Representative or Delegate may, for any valid reason, resign as Representative or Delegate of his/her sector, chapter, or district. The Board of Directors shall act on the resignation within sixty (60) days from receipt thereof, otherwise, the resignation shall be deemed approved. Any sector, chapter, or district Representative/Delegate may be removed by a vote of three-fourths (3/4) of all the members with voting rights present and constituting a quorum at a sector, chapter, or district meeting called for the purpose on the following grounds: 1. Failure to attend the immediately preceding representative assembly meeting for unjustifiable reason; 2. Non-performance of any functions and responsibilities stated in the By-laws; 3. Any violation of the provisions of the Code, the By-laws of the cooperative and other issuances of the Authority; and 4. Any acts or omissions inimical or prejudicial to the interest of the cooperative. During the same meeting, the sector, chapter, or district shall fill the vacancy caused by the removal, resignation, incapacity or death of the Representative or Delegate. In case said Representative or Delegate is an incumbent Officer of the Cooperative, his/her position shall be declared vacant and shall be filled up in accordance with the Rule of Succession as provided for in the By-laws of the Cooperative. Unless otherwise provided for in the By- laws, such successor shall not necessarily assume the position of his/her predecessor. However, in the case of membership in the committee, the vacated post shall be filled up by the Board of Directors of the Cooperative from among the Representatives / Delegates. Section 8. Sector, Chapter, or District Assembly Meeting. The sector, chapter, or district meetings of the cooperative adopting this scheme shall be as follows: a. Regular meeting b. Special meeting A regular meeting shall be conducted to elect the sector, chapter, or district Representatives or Delegates, to discuss and decide the matters which shall be taken during the representative assembly meeting and for such other purposes as maybe provided in the By- laws. A special meeting shall be conducted to report on the proceedings during the representative assembly meeting and for such other purposes as maybe provided in the By-laws. After the 14 conduct of the representative assembly meeting and within thirty (30) days, the officers of the cooperative shall prepare a report on the agreement reached thereon and shall be distributed to all members on record. Said report shall also be included in the special meeting of the sector, chapter, or district. In either case, the conduct of the meeting shall be called and conducted by the elected delegates presided by the Lead Representative or Delegate. Such Lead Representative or Delegate shall be the Representative or Delegate who obtained the highest number of votes during the last sector, chapter, or district election. Section9. Quorum Requirements for Representative Assembly. At least twenty-five per centum (25%) of all Representatives/Delegates shall constitute a quorum for the representative assembly meeting. Section 10. Power of the Representative Assembly. The Representative Assembly shall exercise the powers provided for in the By-laws. Section 11. Conduct of Representative Assembly Meeting. Representative Assembly Meeting shall be conducted in accordance with the provision of the cooperative By-laws. In the absence thereof, the following shall be observed: 1. The representative assembly meeting shall be held in accordance with the order of business addressing the agenda prepared by the Board of Directors; 2. The Chairperson or in his/her absence, the Vice Chairperson or any member of the Board of Directors shall preside over the meeting; 3. The Election Committee shall supervise the election of the Board of Directors and committee members of the cooperative; and 4. Each Representative or Delegate shall be entitled to one (1) vote. The votes of the sector, chapter, or district Representatives or Delegates shall be considered the votes of all the members of the sector, chapter, or district they represent. The decision of the Representative Assembly shall be considered a valid cooperative act. Section 12. Eligibility and Term of Office of the Representative or Delegate to be elected as Officers of the Cooperative. The elected Officers of the cooperative shall come from the Representative/s or Delegate/s of the sector, chapter, or district. These Officers shall be elected during the Representative Assembly Meeting for a term fixed in the By-laws which shall in no case exceed two (2) years and shall hold office until their successors are duly elected and qualified, or until duly removed for cause. The term of office of the Officer of the Cooperative at the time of adoption of the Representative Assembly shall expire on the first representative assembly meeting. RULE 2 SUBSIDIARY COOPERATIVE 15 Section 1. Legal Basis. The legal basis for this Rule is Article 5 (16) of the Code, quoted as follows: "Art. 5 (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." Section 2. General Requirements. A parent cooperative may organize a subsidiary cooperative provided that: 1. The creation of a subsidiary cooperative and the technical, managerial and financial assistance to be provided shall be approved by at least two-thirds (2/3) vote of the members of the parent cooperative with voting rights, present and constituting a quorum in a regular or special general assembly/representative assembly meeting called for the purpose. 2. The Parent cooperative has been in operation for at least two (2) years and has not incurred a net loss for the last two (2) preceding years of operation 3. It has a total net worth of at least Fifty Million Pesos (Php50,000,000.00) as shown in its latest Audited Financial Statement. 4. The purpose of the subsidiary cooperative shall be different from that of the parent cooperative. 5. All or majority of the members of the subsidiary cooperative must come from the parent cooperative. 6. The Parent Cooperative shall be required to submit a feasibility study. Section 3. Conditions. The following conditions shall be considered in the registration and operation of Subsidiary Cooperatives: 1. Assistance in the form of technical, managerial and financial assistance shall be provided by the Parent Cooperative to its Subsidiary Cooperative; 2. Directors or Officers of the Parent Cooperative cannot be elected or appointed as Officers of the Subsidiary Cooperative. However, the Parent Cooperative through its General / Representative Assembly may appoint its Representative to act as Ex-Officio member of the Board of Directors of the Subsidiary Cooperative; 3. The Management Staff of the Parent Cooperative cannot at the same time be the Management Staff of the Subsidiary Cooperative; 4. Transfer of shares of members and other related interests from the Parent Cooperative to the Subsidiary Cooperative and vice versa is prohibited; and 5. In case of dissolution of the Parent Cooperative, the Subsidiary Cooperative cannot be a recipient of any grant, donations or other interests from the Parent Cooperative. Section 4. Name of Subsidiary Cooperative. The name of the Parent Cooperative shall appear in the name of the Subsidiary Cooperative. 16 Section 5. Assistance from Parent Cooperative. The financial assistance to be provided shall not exceed ten per centum (10%) of the net worth of the Parent Cooperative which shall be in the form of loans or donations. In case of grants/donations it shall not be distributed as member share capital. The technical and managerial assistance shall depend upon the needs of the Subsidiary Cooperative and capacity of the Parent Cooperative, which shall be taken up in the book at actual cost. A Memorandum of Agreement containing the terms and conditions of the financial and other assistance provided by the parent cooperative to the subsidiary cooperative shall be entered into by both cooperatives. Section 6.Effect of Dissolution of Parent or Subsidiary Cooperative. The dissolution of either cooperative shall not affect the existence of the other. However, in case of the dissolution of the parent cooperative, the Subsidiary Cooperative shall subsequently amend its cooperative name to remove the words “Subsidiary Cooperative of (Name of Parent Cooperative)”. RULE 3 MULTIPURPOSE COOPERATIVE Section 1.Legal Basis. The legal basis for this Rule is Article 10 of the Code quoted as follows: "Art. 10. Organizing a Primary Cooperative. Any newly organized primary cooperative may be registered as multipurpose cooperative only after compliance with the minimum requirements for multi- purpose 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 operation." Section 2. Coverage. No cooperative shall be registered as a multipurpose cooperative unless it has been in operation for at least two (2) years. Section 3. Minimum Capitalization Requirements. With the exception of the agriculture cooperatives and agrarian reform cooperatives, only those cooperatives with a minimum paid-up capital of One Hundred Thousand Pesos (Php100,000.00) or as required in the feasibility study, whichever is higher, may be allowed to transform into a multipurpose cooperative. Section 4. Requirements for Registration. The following requirements shall be submitted to the Authority: 17 a. Cooperative Name Reservation Notice(CNRN), in case of change of name; b. Amended Articles of Cooperation and By-Laws; c. A Resolution certified by the cooperative's Secretary and by the majority of the Board of Directors stating the fact that said amendments have been duly approved by at least two-thirds (2/3) vote of all the members with voting rights; d. Surety Bond of Accountable Officers; e. Audited Financial Statement showing profitable operations for the past two (2) years; f. Undertaking to Change Name in the event that another cooperative has acquired a prior right to the use of the proposed name; g. Favorable Endorsement from Other Government Agencies, if applicable; h. Feasibility Study indicating viability of each proposed business activity; i. Certificate that the cooperative has complied with the auditing and accounting standards prescribed by the Authority; j. Proof of business track records of the cooperative; and k. Amendment Fee. Section 5.Book of Accounts. Cooperatives covered by this Rule shall be required to maintain separate recording for each business activity in the books of account. RULE 4 DIVISION OF COOPERATIVES Section 1. Legal Basis. The legal basis for this Rule is Article 20 of the Code, quoted as follows: "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 two (2) or more cooperatives. The procedure for such division shall be prescribed in the regulations of the Authority. The new cooperatives shall become legally established upon registration with 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 cooperative in fraud of creditors shall be valid." Section 2. Procedure for Division of Cooperatives. The procedure for the division of cooperatives shall be, as follows: 1. Approval of Proposal to Divide; 2. Formulation of Plan of Division; 3. Presentation and Approval of the Plan of Division to the General Assembly; 4. Posting and Publication of the Notice of Division; 18 5. Written Notification to Creditors; 6. Filing with the Authority of the Required Documents for the Registration of Division; and 7. Issuance of the Certificate of Registration. Section 3. Proposal for Division. The majority members of the Board of Directors or at least ten per centum (10%) of members with voting rights may propose for division, which must be approved by at least majority of the members of the cooperative with voting rights, present and constituting a quorum, in a general/representative assembly meeting called for the purpose. Upon approval of the proposal to divide, a committee to formulate the Plan of Division shall be constituted by the General/Representative Assembly. Section 4. Preference of Members. Upon approval of the proposed division of the cooperative by the General/Representative Assembly in a meeting called for the purpose, members of the original cooperative shall be allowed within two (2) weeks to choose the new cooperative they prefer to join. The management of the original cooperative shall then transfer the member's share and all other interests to his/her chosen cooperative. Section 5. Presentation and Approval of the Plan of Division. The Board of Directors shall call a General/Representative Assembly meeting to act on such Plan of Division with notice to all members of record and Creditors at least thirty (30) days prior to the scheduled meeting. The Plan of Division shall be approved by a vote of three-fourths (3/4) of all members with voting rights, present and constituting a quorum in such general/representative assembly meeting. Section 6. Right of a Dissenting Member. A dissenting member shall be entitled to a refund of his/her share capital and all other interests under Article 30 of the Code. Section 7. Contents of the Plan of Division. The Plan of Division shall include the following: 1. The rationale or justification for the division of the cooperative; 2. A Financial Statement duly certified by an independent Certified Public Accountant including a schedule of assets, liabilities and share capital of the cooperative intending to divide; 3. A proposed revaluation of assets, determination of liabilities, statutory reserves, undivided net surplus and members' share capital; 4. List of all the receivables of the cooperative; 5. List of all the Creditors and their respective claims against the cooperative; 6. Procedure for the division of assets, allocation and settlement of the obligations and the collection of receivables of the cooperative; 7. Feasibility study ensuring the viability and sustainability of both cooperatives; 8. List of members showing their share capital contributions certified by the Secretary and attested by the Board Chairperson of the cooperative; 9. The proposed name, address and area of operation of the new cooperatives; and 10. Benefit package for Management Staff to be affected by the plan. 19 Section 8. Publication. Within seven (7) days after the date of approval of the division of the cooperative, the Secretary of the cooperative, duly noted by the Chairperson, shall publish such plan of division once a week for three (3) consecutive weeks in a newspaper of general circulation within its area of operation. Said publication may also be supplemented by radio and television announcements. Alternatively, the announcement of the division may also be done by posting in at least three (3) conspicuous public places for three (3) consecutive weeks within its area of operation. Likewise, letters/notices duly signed by the Chairperson announcing such division shall be sent by the Secretary of the cooperative through registered mails to their creditors. Section 9. Objection by a Third Party. Within fifteen (15) days from the day of posting or from the last day of publication, a party may file an objection or opposition to the Plan of Division before the Authority, copy furnished the cooperative concerned, which shall be decided upon, within sixty (60) days from receipt of the objection or opposition. If the objection or opposition is meritorious and in order not to prejudice the interest of the third party, the Authority shall cause the deferment or disapproval of the registration of the new cooperatives. After the lapse of the period to file an objection/opposition and no objection/opposition has been filed or after all objections/oppositions have been resolved, the cooperative can file its application for registration. Section 10. Additional Requirements for Registration. In addition to the regular requirements for registration of cooperatives, the following documents shall be filed with the Authority: 1. The resolution of division as approved by the General/Representative Assembly duly certified by the Secretary and duly noted by the Chairperson; 2. The Plan of Division including all its attachments; 3. The Minutes of the General/Representative Assembly Meeting approving the Plan of Division; 4. The Financial Statements of each of the new cooperatives duly certified by the respective Treasurers and Chairpersons; 5. Proof of Notice of Publication and/or posting of the announcement of such division; 6. Proof of Notice to the Creditors; 7. Written Agreement to Settle Obligation; 8. Original Certificate of Registration; and 9. Written approval or recommendation from the concerned government agency, if applicable. Section 11. Issuance of Certificate. Once the registration requirements are found to be complete and in order, the Authority shall issue the Certificates of Registration to the new cooperatives. 20 Section 12. Effect of Registration. Cooperatives formed and organized under this Rule shall acquire juridical personality from the date of the issuance of their respective Certificates of Registration. RULE 5 GUIDELINES GOVERNING THE PROCEDURE FOR MERGER OR CONSOLIDATION Section 1. Legal Basis. The legal bases for this Rule are Articles 21 and 22 of the Code, quoted, as follows: "Art. 21. Merger and Consolidation of Cooperatives. - (1) Two (2) or more cooperatives may merge into a single cooperative which shall be either one of the constituent cooperatives or the consolidated cooperatives. (2) No merger or consolidation shall be valid unless approved by three-fourths (3/4) vote of all 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 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 the 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 all rights, privileges, immunities and powers and shall be subject to all the duties and liabilities of a cooperative organized under this Code; 21 (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 obligations 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 of such constituent shall be impaired by such merger or consolidation." Section 2. Parties to the Merger or Consolidation. Only cooperatives belonging to the same category can be parties to the Merger or Consolidation. A primary cooperative can only merge or consolidate with another primary cooperative, a secondary with another secondary cooperative, and a tertiary with another tertiary cooperative. Section 3. Procedure for Merger or Consolidation. The procedure for the Merger or Consolidation of cooperatives shall be, as follows: 1. Duly approved board resolution of each constituent cooperatives to enter into merger or consolidation; 2. Execution of a Memorandum of Understanding to Merge or Consolidate, stating the creation of a joint committee to formulate the plan and proposal to merge or consolidate; 3. Formulation of Plan of Merger or Consolidation by the representatives of the constituent cooperatives to the joint committee; 4. Calling of a General/Representative Assembly to present and approve the Proposal and Plan of Merger or Consolidation of each constituent cooperative and the Amendment / New Articles of Cooperation and By-laws; 5. Posting/Publication of the Notice of Merger or Consolidation; 6. Written Notification to Creditors through registered mail with return card and other applicable electronic means; 7. Filing with the Authority of the required documents for the registration of merger or consolidation; and 8. Issuance of Certificate of Registration of Merger/Consolidation by the Authority. Section 4. Contents of Plan of Merger or Consolidation. The Plan of Merger or Consolidation shall set forth the following: 1. Statement of Purpose of such Merger or Consolidation; 22 2. The Registered Names, Addresses and Registration/Confirmation Numbers, Contact Details and Respective Areas of Operation of the Constituent Cooperatives; 3. The Proposed Amendments to the Surviving Cooperative's Articles of Cooperation and By-laws, in case of Merger and with respect to Consolidation, the Proposed Articles of Cooperation and By-laws; 4. List of Members of each Constituent Cooperatives showing their Share Capital Contribution duly certified by the respective Board Secretaries and attested to by the respective Board Chairpersons; 5. The Name, Address and Area of Operation of the Surviving Cooperative, in case of Merger, the Proposed Name, Address and Area of Operation, in case of Consolidation; 6. Feasibility Study indicating the Viability and Sustainability of the Merging/Consolidating Cooperatives; 7. The Audited Financial Statements as of the immediate preceding year including the schedule of assets, liabilities and capital of the merging or consolidating cooperatives; and 8. Package Benefits of the Management Staff to be affected by the Plan. Section 5. Proposal for Merger or Consolidation. The proposal to merge or consolidate shall be made and approved by at least majority of the members of the respective Board of Directors of each constituent cooperative. During the same meeting, the respective Board of Directors shall appoint or elect the representatives to the joint committee that will draft the Plan of Merger or Consolidation. Section 6. Approval of the Plan of Merger or Consolidation. The Plan of Merger or Consolidation jointly prepared by the representatives of the constituent cooperatives to the joint committee shall be submitted for approval to the members of each constituent cooperative at separate general/representative assembly meetings duly called for the purpose. Notice of such meeting shall be given to all members of the respective cooperative, served either personally, or by registered mail with return card, or by electronic means, within the period as indicated in their By-laws. The affirmative vote of at least three-fourths (3/4) of all members with voting rights, present and constituting a quorum from each of the constituent cooperatives, at separate general/representative assembly meetings, shall be necessary for the approval of the Plan of Merger or Consolidation, or amendments thereto, if any. Section 7. The Articles of Cooperation and By-Laws. In the case of Merger, the Amended Articles of Cooperation and By-Laws, if applicable, shall be attested to by the incumbent directors of the surviving cooperative. In the case of Consolidation, the Articles and By-Laws shall be signed by the Board of Directors of the consolidated cooperative. Section 8. Posting/Publication. Announcement of the Merger or Consolidation may be done by posting in at least three (3) conspicuous places in their respective areas of operation, or by publication in a newspaper of general circulation once a week for three (3) consecutive 23 weeks. Said publication may also be supplemented by radio and television announcements or any other electronic means of communication. Section 9. Notice to Creditors and Investors. The Officers of the Merged or Consolidated Cooperatives shall also notify by registered mail the creditors and investors of their respective cooperatives to inform them of such Merger or Consolidation. Section 10. Objection/s by a Third Party. Within fifteen (15) days after the date of posting or from the last day of publication, a third party may file an objection or opposition to the Plan of Merger or Consolidation before the Authority which shall be decided within sixty (60) days from receipt of the objection or opposition. Upon a finding that the objection or opposition is meritorious, and in order not to prejudice the interest of the third party, the Authority will cause the deferment or disapproval of the registration of the Merger or Consolidation. After the period to file an objection has lapsed and all objections have been resolved, the surviving cooperative, in case of merger; or the consolidated cooperative, in case of consolidation, may file its application for registration. Section 11. Additional Requirements for Registration. The Officers of the Merged or Consolidated cooperatives shall file with the Authority the following additional requirements for registration: A. For Merger 1. The Original Certificate of Registration of the absorbed cooperative; 2. The resolution of the Board of Directors of both merging cooperatives approving the proposal to merge, duly certified by the respective Secretaries and attested to by the respective Chairpersons; 3. The General/Representative Assembly resolutions of both constituent cooperatives approving the proposed Plan of Merger duly certified by the respective Secretaries and attested to by the respective Chairpersons; 4. The excerpts from the minutes of the Board of the General/Representative Assembly meeting stating among others the approval of the Merger; 5. Certification of the respective Secretaries duly attested to by the Chairpersons of the constituent cooperatives that there was a quorum in the General/Representative Assembly meetings conducted and the required number of votes for the approval was met; 6. The approved Plan of Merger and all its attachments as required under Section 4 of this Rule; 7. The proposed amendment to the Articles of Cooperation and By-laws of the Surviving Cooperative, if necessary; 8. Surety Bond of Accountable Officers; 9. Proof of Publication/Posting of the Announcement of Merger; 10. Proof of Notice to Creditors; 11. Written Agreement to settle Obligations; 24 12. Favorable endorsement from the concerned government agency if necessary/applicable; and 13. Registration fee in accordance with the Schedule of Fees prescribed by the Authority. B. For Consolidation 1. The Original Certificate of Registration of both constituent cooperatives; 2. The resolution of the Board of Directors of both constituent cooperatives approving the proposal to consolidate duly certified by the respective Secretaries and attested to by the Chairpersons of the Consolidating Cooperatives; 3. The General/Representative Assembly resolutions of both constituent cooperatives approving the proposed plan of consolidation duly certified by the respective Secretaries and attested to by the Chairpersons of the Consolidating Cooperatives; 4. The excerpts from the minutes of the General/Representative Assembly meetings of the Consolidating Cooperatives with their respective attendance sheets duly certified by the Secretary and Chairperson or Presiding Officer; 5. Certification of the Secretaries duly attested to by the Chairpersons of the Constituent Cooperatives that there was a quorum in the General/Representative Assembly meetings conducted and the required number of votes for the approval was met; 6. The approved Plan of Consolidation and all its attachments as required under Section 4 of this Rule; 7. The Economic Survey; 8. The proposed Articles of Cooperation and By-laws of the Consolidated Cooperative; 9. Surety Bond of Accountable Officers; 10. Proof of Publication/Posting of the announcement of consolidation; 11. Proof of Notice to Creditors; 12. Written Agreement to settle Obligations; 13. Undertaking to Change Name in the event that another cooperative has acquired prior right to the use of the proposed name; and 14. Registration fee in accordance with the Schedule of Fees prescribed by the Authority. Section 12. Issuance of Certificate. Once the registration requirements are complied with, the Authority shall issue the Certificate of Merger, in cases of merger. In cases of consolidation, a new Certificate of Registration shall be issued in addition to the Certificate of Consolidation. The absorbed cooperative in cases of Merger, and the consolidated cooperatives in cases of Consolidation, shall surrender their respective original Certificates of Registration to the Authority. 25 RULE 6 GUIDELINES FOR LABORATORY COOPERATIVES Section 1. Legal Basis. The legal basis for this Rule is the third paragraph of Article 26 of the Code, quoted as follows: "Art. 26. Kinds of Membership. 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." Section 2. Organizing a Laboratory Cooperative. A cooperative may assist in the organization of a laboratory cooperative composed of fifteen (15) or more individuals who are minors, who may be students or out of school minors, Filipino citizens and are actually studying or residing within the nearest area of operation of the intended guardian cooperative. Section 3. Purposes of Laboratory Cooperatives. A Laboratory Cooperative shall be organized for any or all of the following purposes: 1. To serve as a training ground for its members to prepare them for membership in regular cooperatives; 2. To teach the values of thrift and saving mobilization among its members; 3. To instill cooperative values, principles, financial discipline, business skills and leadership skills among its members; 4. To promote and advocate Filipino social and cultural values, financial education ecological awareness and sustainable development. Section 4. Requirements for Recognition of Laboratory Cooperative. The Guardian Cooperative shall submit the following requirements to the Authority for the issuance of a Certificate of Recognition of the proposed Laboratory Cooperative: 1. Articles of Cooperation and By-laws of the Guardian Cooperative stating the acceptance of its responsibilities as Guardian Cooperative; and 2. Resolution of the Board of Directors of the Guardian Cooperative accepting its responsibility and liability as Guardian of the Laboratory Cooperative. Section 5. Affiliation. A Laboratory Cooperative shall be affiliated with a duly registered cooperative, to be known as the Guardian Cooperative, before the Authority shall issue a Certificate of Recognition. A Laboratory Cooperative primarily composed of students from a particular school may affiliate with the school's cooperative, if any, or appoint a cooperative of its choice within its area of operation. If the Laboratory Cooperative is composed primarily of out-of-school 26 minors, it shall be affiliated with a cooperative of its own choice within or nearest its area of operation. Section 6. Responsibility of the Guardian Cooperative. The Guardian Cooperative shall supervise, monitor, and act for and in behalf of the Laboratory Cooperative in its dealings and transactions with third parties when capacity to contract is required. The Guardian Cooperative shall be responsible for the cooperative education and training of all officers and members of the laboratory cooperative. Submission of reports to the Authority on the activities and economic operations of the Laboratory Cooperative shall likewise be the responsibility of the Guardian Cooperative. Section 7. Liability of the Guardian Cooperative. The Guardian Cooperative exercising supervisory authority over the laboratory cooperative shall be liable for any violations in the operation of the Laboratory Cooperative. Section 8. Issuance of Certificate of Recognition. A Certificate of Recognition shall be issued by the Authority upon compliance with all the requirements set forth by this Rule. The Certificate shall be a conclusive evidence that the Laboratory Cooperative named therein is duly recognized unless such recognition has been earlier revoked or cancelled. The issuance of the Certificate of Recognition does not bestow upon a Laboratory Cooperative a juridical personality. Section 9. Termination of Membership. The following shall be the conditions for termination of membership in a Laboratory Cooperative: 1. Upon reaching the age of majority (18 years of age); and 2. Such other conditions as may be provided for in the By-laws of the Guardian Cooperative. Section 10. Option of Member Who Reaches the Age of Majority. Any member reaching the age of majority may opt to join the Guardian Cooperative by signifying his/her intention to become a member of the Guardian Cooperative and upon compliance with all the requirements for membership therein. Section 11. Miscellaneous Provision. A Guardian Cooperative may supervise more than one (1) laboratory cooperative. The Guidelines for the creation, organization, supervision and monitoring of laboratory cooperatives shall be prescribed by the Authority. 27 RULE 7 FUNCTIONS, RESPONSIBILITIES AND TRAINING REQUIREMENTS OF DIRECTORS, OFFICERS AND COMMITTEE MEMBERS Section 1. Legal Basis. The legal basis for this Rule is Article 44 of the Code, quoted as follows: "Art. 44. Functions, Responsibilities, and Training Requirements of Directors, Officers, and Committee Members. The functions and responsibilities of the directors, officers and committee members, as well as their training requirements shall be in accordance with the rules and regulations issued by the Authority." Section 2. Officers of the Cooperative. The Officers of the cooperative shall include the members of the Board of Directors, members of the different committees created by the General Assembly, General Manager or Chief Executive Officer, Secretary, Treasurer and Members holding other positions as maybe provided for in their By-laws. As such they are entrusted with the power of exercising authority within the scope of their defined functions which shall include the exercise of control and discretion in the performance of their duties. Section 3. Committees of Cooperatives. The By-laws shall provide for the creation of the following committees: 1. Audit Committee; 2. Election Committee; 3. Mediation and Conciliation Committee; 4. Ethics Committee; and 5. Other Committees as may be necessary for the conduct of the affairs of the cooperative. The members of both the Audit and Election Committees shall be elected by the General Assembly and the rest shall be appointed by the Board of Directors. Section 4. Functions and Responsibilities of the Officers of the Cooperative. The Officers of the cooperative shall have the following functions and responsibilities: 4.1. Board of Directors. The Board of Directors shall have the following functions and responsibilities: a. Provide over-all policy direction; b. Formulate development plan; c. Review the annual plan and budget and recommend for the approval of the General/Representative Assembly; d. Evaluate the capability and qualification and recommend for the approval of the General/Representative Assembly the engagements of the services of an External Auditor; 28 e. Appoint and terminate, based on just cause, the General Manager or Chief Executive Officer (CEO); f. Review, monitor and evaluate the effectiveness of the programs, projects and activities; g. Formulate and review the vision, mission and goals of the cooperative; h. Establish risk management system; i. Establish performance evaluation system at all levels; j. Review and approve the organizational and operational structures; k. Establish policies and procedures for the effective operation and ensure proper implementation of such; l. Appoint the members of the Mediation and Conciliation Committee, Ethics Committee, Education and Training Committee and other Officers as specified in the Code and By-laws of the cooperative; m. Decide election-related cases involving the Election Committee and its members; n. Act on the recommendation of the Ethics Committee on cases involving violations of the Code of Governance and Ethical Standards; o. Ensure compliance by the cooperative with the regulations of the Authority and other statutory requirements of appropriate government agencies; p. Report to the general/representative assembly the performance and achievements of the cooperative; q. Present to the general/representative assembly policies which require confirmation as provided under the law, the cooperative by-laws, and regulations; r. Present to the general/representative assembly the financial, social and performance reports; and s. Perform such other functions as may be prescribed in the By-laws or authorized by the General/Representative Assembly. 4.1.1. The Chairperson shall: a. Set and prepare the agenda for board meetings in coordination with the other members of the Board of Directors; b. Preside all meetings of the Board of Directors and General/Representative Assembly; c. Sign contracts, agreements, certificates and other documents on behalf of the cooperative as authorized by the Board of Directors or by the General/Representative Assembly as prescribed in their By-laws; and d. Perform such other functions as may be authorized by the Board of Directors. 4.1.2. The Vice Chairperson shall: a. Perform all duties and functions of the Chairperson in the absence of the latter; and 29 b. Perform such other duties as may be delegated to him/her by the Board of Directors. 4.2. Other Officers 4.2.1. The Treasurer shall: a. Ensure that all cash collections are deposited in accordance with the policies set by the Board of Directors; b. Have custody of funds, securities, and documentations relating to assets, liabilities, income and expenditures; c. Monitor and review the financial management operations of the cooperative, subject to such limitations and control as may be prescribed by the Board of Directors; d. Ensure the maintenance of full and complete records of cash transactions; e. Ensure maintenance of a Petty Cash Fund; f. Maintain a Daily Cash Position Report; and g. Perform such other functions as may be prescribed in the By-laws or authorized by the Board of Directors. 4.2.2. The Secretary shall: a. Keep an updated and complete registry of all members; b. Record, prepare and maintain records of all minutes of meetings of the Board of Directors and the General/Representative Assembly; c. Ensure that the necessary actions and decisions of the Board of Directors are transmitted to the management for compliance and implementation; d. Issue and certify the list of members who are entitled to vote as determined by the Board of Directors; e. Prepare and issue Share Certificates and maintain the share and transfer book; f. Serve notice of all meetings called and certify the presence of quorum in the conduct of all meetings of the Board of Directors and the General/Representative Assembly; g. Keep copies of the Treasurer's reports and other reports; h. Serve as custodian of the cooperative seal; and i. Perform such other functions as may be prescribed in the By-laws or authorized by the Board of Directors. 4.3. Committees of the Cooperative 4.3.1. The Election Committee shall: a. Formulate election rules and guidelines and recommend to the General/Representative Assembly for approval; 30 b. Recommend necessary amendments to the election rules and guidelines, in coordination with the Board of Directors, for the General/Representatives Assembly's approval; c. Implement election rules and guidelines duly approved by the General/Representative Assembly; d. Supervise the conduct, manner and proceedings of election and other election- related activities and act on the changes thereto; e. Canvass and certify the results of the election; f. Proclaim the winning candidates; g. Decide election and other election-related cases except those involving the Election Committee or its members; and h. Perform such other functions as prescribed in the By-laws or authorized by the General/Representative Assembly. 4.3.2. The Audit Committee shall: a. Audit the performance of the cooperative and its various responsibility centers; b. Monitor the adequacy and effectiveness of the cooperative's management and internal control system; c. Review continuously and periodically the books of account, financial records, and policies governing internal control, accounting and risk management to ensure that these are in accordance with the cooperative principles and generally accepted accounting procedures; d. Review the internal audit report of the cooperative; e. Follow up actions on the internal and external audit recommendations; f. Discuss the result of the internal audit with the Board of Directors; g. Submit reports on the result of the internal audit and recommend necessary changes on policies and other related matters on operation to the General/Representative Assembly; h. Review, approve or amend the report and recommendation of the Ethics Committee involving violations of the Code of Governance and Ethical Standards if the remaining members of the Board of Directors fail to act on said report and recommendation within a period of thirty (30) days, or the violation is committed by the majority of the Board of Directors; and i. Perform such other functions as may be prescribed in the By-laws or authorized by the General/Representative Assembly. 4.3.3. The Mediation and Conciliation Committee shall: a. Conduct mediation-conciliation proceedings and services; b. Formulate, develop and improve the Conciliation-Mediation policies, guidelines and program and ensure its proper implementation; c. Monitor Conciliation-Mediation program and processes; d. Submit semi-annual reports of cooperative cases to the Authority within fifteen (15) days after the end of every semester; e. Accept and file Evaluation Reports; 31 f. Submit recommendations for improvement to the Board of Directors; g. Recommend to the Board of Directors any member of the cooperative for Conciliation-Mediation Trainings as Cooperative Conciliator-Mediator; h. Issue the Certificate of Non-Settlement ( CNS); i. Act as conciliator-mediator during their term, provided the persons who will mediate are mutually selected by both parties; and j. Perform such other functions as may be prescribed in the By-laws or authorized by the Board of Directors. 4.3.4. The Ethics Committee shall: a. Formulate, develop, implement and monitor the Code of Governance and Ethical Standards (CGES) to be observed by the members, officers and employees of the cooperative subject to the approval of the Board of Directors and ratification by the General/Representative Assembly; b. Conduct initial investigation or inquiry, upon receipt of a complaint involving violations of the Code of Governance and Ethical Standards. c. Submit report on its recommendation together with the appropriate sanctions, to the Board of Directors for its proper action, or to the remaining members of the Board of Directors, if the violation is committed by any members of the Board of Directors. Provided, that if the remaining members of the Board of Directors fail to act on the report within a period of thirty (30) days, or the violation is committed by the majority of the Board of Directors, the Audit committee shall act on the same; and d. Perform such other functions as may be prescribed in the By-laws or authorized by the Board of Directors. 4.3.5. Other Committees. Other committees that may be created shall assist in the formulation of policies and rules and in the implementation of the service of the cooperative. Their powers, functions, and responsibilities shall be defined in the By- laws. 4.4. General Manager or Chief Executive Officer or equivalent position. The General Manager or Chief Executive Officer or equivalent position shall: a. Oversee the overall day to day business operations of the cooperative by providing direction, supervision, management and administrative control over all the operating departments subject to such limitations as may be set forth by the Board of Directors or the General/Representative Assembly; b. Assist the Board of Directors in the formulation of the Cooperative's Development Plan including Annual Plan and Budget, Programs and Projects, for approval of the General/Representative Assembly; c. Provide systems and procedures in the implementation of policies; d. Implement the duly approved plans and programs of the cooperative and any other directive or instruction of the Board of Directors; 32 e. Provide and submit to the Board of Directors monthly reports on the status of the cooperative's operation vis-a-vis its targets and recommend appropriate policy or operational changes, if necessary; f. Represent the cooperative in any agreement, contract, business dealing, and in any other official business transaction as may be authorized by the Board of Directors; g. Ensure compliance with all administrative and other requirements of regulatory bodies; and h. Perform such other functions as may be prescribed in the By-laws delegated by the Board of Directors or authorized by the General/Representative Assembly. Section 5. Training Requirements for the Officers of the Cooperative. The following officers of the cooperative regardless of type and size, such as: 1. Board of Directors; 2. Secretary; 3. Treasurer; 4. Election Committee; 5. Audit Committee; 6. Ethics Committee; 7. Mediation and Conciliation Committee; 8. Other Committees created by the General/Representative Assembly; and 9. General Manager or Chief Executive Officer, shall be required to undergo a minimum of sixteen (16) hours of training on the fundamentals of cooperatives and another sixteen (16) hours on governance and management of cooperatives within the first half of their term. Provided, That, in case of micro-cooperatives, they shall only undergo sixteen (16) hours of training on the fundamentals, governance and management of cooperatives. The content of the training program shall be prescribed by the Authority in consultation with the accredited training providers and the cooperative sector. In addition to the above-mentioned trainings, the officers of cooperatives engaged in savings and credit operations shall be required to undergo an additional sixteen (16) hours of specialized training on financial management, risk management and credit management, provided that these cooperatives have at least Five Million Pesos (Php5,000,000.00) worth of deposit liabilities based on the latest Audited Financial Statement of the cooperative. Cooperative officers shall likewise endeavor to undergo additional appropriate trainings. Section 6. Training Provider. The trainings shall be conducted by federations, unions, training institutions, or local cooperative development offices and National Government Agencies (NGA)duly accredited by the Authority. 33 Advocacy cooperatives which promote and advocate cooperativism through socially- oriented projects, education and training, research and communication and other similar activities, may also be accredited as training providers. Section 7. Sanction for Non-Compliance with the Training Requirements. a. Willful failure of the cooperative to comply with the training requirements for its officers despite due notice from the Authority shall be a ground for the non- issuance of Certificate of Compliance for the succeeding year. b. Failure of any officer/s of a cooperative to undergo the prescribed trainings shall disqualify said officer/s to hold any elective or appointive position. RULE 8 REPORTS REQUIRED FOR COOPERATIVES Section 1. Legal Basis. The legal basis for this Rule is Art. 53 of this Code, quoted as follows: "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 of 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 by-laws. (2) If a cooperative fails to make, publish and file the reports required herein, or fails to include therein any matter required by this 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." Section 2. Required Regular Reports. All cooperatives registered with the Authority shall be required to submit annually, the Cooperative Annual Progress Report (CAPR) with the following attachments: 34 a. Social Audit Report including its program of activities pursuant to its socio-civic goals of the cooperative; b. Performance Audit Report, including copies of the semi-annual Report on mediation and conciliation as received by the Authority pursuant to EO 97; c. Audited Financial Statements; and d. List of Officers and Trainings Undertaken /Completed. In the case of CDA registered electric cooperatives, they shall be required to submit the List of Members issued with Share Capital Certificate in addition to the Cooperative Annual Progress Report (CAPR). The Cooperative Annual Progress Report (CAPR) including all of the reports shall be made part of the Annual Report of the cooperative to its members during the Annual General Assembly Meeting. Section 3. Additional Attachments for Federations and Unions. In addition to the above, Federations and Unions shall submit to the Authority the following on an annual basis: 1. List of affiliates and cooperatives which have remitted their respective Cooperative Education and Training Funds (CETF); 2. Business consultancy assistance to include the nature and cost, including the use of CETF; and 3. Other training activities undertaken specifying therein the nature, participants, and cost of each activity. Section 4. Mode of Filing Reports. All registered cooperatives shall file with the Authority a copy of the required reports either through personal delivery, by registered mail, by courier service, or by electronic means, within one hundred twenty (120) days from the end of each calendar year. The date of mailing the required reports either by registered mail, by courier service, or by electronic means shall be considered the date of filing. For reports submitted by electronic means, the Authority shall be furnished the printed copy of the electronically transmitted report within five (5) days from the date of transmission. Failure of the cooperative to furnish the Authority with a printed copy shall be considered as if no report has been filed, hence the cooperative shall be considered in delay in the submission. Likewise, any material alterations or tampering, which made the electronic documents different from the original shall be considered as if no report has been filed and the electronic documents have never been received. Section 5. Form of the Reports. The reports shall be typewritten or printed in a form prescribed by the Authority, duly certified by the Accountable Officers as specified in Section 8 hereof. Section 6. Delay in the Filing of the Report. Failure to file the reports on the prescribed time as provided in this Rule shall be considered in Delay. However, if the delay is due to fortuitous events, including but not limited to fire, storms, or other natural calamities; an order from any competent court or government agency; or a declared national emergency 35 or public disorder including strikes and lockout, the period for such delay may be excused, provided that the Authority is given due notice within fifteen (15) days from the cessation of the cause of the delay. Thereafter, the cooperative shall be given another thirty (30) days to file the required report, the lapse of which shall consider the cooperative in delay. Delay shall commence on the day following the last day prescribed for the filing of reports. However, should the last day of filing fall on a non-working holiday, the last day for filing shall be on the next working da

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