Question & AnswerQ&A (CDA MEMORANDUM CIRCULAR NO. 2010-08)
The legal basis is Paragraph 1, Article 144 of Republic Act No. 9520, which mandates that all cooperatives registered and confirmed under RA 6938 and RA 6939 must submit their certificate of registration or confirmation, articles of cooperation, by-laws, and latest audited financial statements within one year from the effectivity of the Code, otherwise they are deemed cancelled motu proprio.
The guidelines cover all existing cooperatives previously registered and confirmed under RA 6938 and RA 6939 that failed to comply with the requirements under Article 144 of RA 9520 as implemented by CDA MC No. 2009-02.
The Extension Office of the CDA Authority has primary jurisdiction over cooperatives within its region, except for tertiary cooperatives, cooperative banks, electric cooperatives, and insurance cooperatives, which fall under the CDA Central Office.
The process begins with issuance of a formal notice via registered mail to the cooperative informing it of failure to secure a new Certificate of Registration. After 30 days from receipt, the Authority issues an Order of Cancellation.
Within 30 days from receipt, the cancelled cooperative must liquidate its assets and liabilities following prescribed procedures, unless agreed otherwise by members.
The Panel is constituted from the former officers and/or members of the cooperative, consisting of not less than three but not more than five members.
The Panel must notify the Authority of liquidation commencement, inventory assets and liabilities, preserve assets, convert assets to cash, pay valid obligations, distribute remaining assets per guidelines, and submit a final report to the Authority.
Creditors are paid in accordance with their contracts and the provisions of the New Civil Code on the Preference and Concurrence of Credits.
They are disposed of in accordance with Article 86 of the Cooperative Code.
All subsidies, donations, legacies, grants, aids, and similar assistance from any local or foreign institution are subject to escheat upon cancellation.
Remaining assets after payment of obligations are distributed to members in payment of their share capital; if insufficient to pay full share capital, distribution is proportional to share capital contributions.
Such assets shall be given to the federation or union affiliated with the cooperative for cooperative development, or if none, to the Local Government Unit of their choice, or to the community where the cooperative operated if there is no affiliation or LGU choice.
The report shall include assets sold, assets written off, assets donated, expenses of liquidation, payment of liabilities, settlement of reserves, refund of share capital and interest to members, and other important matters.
Members and interested parties may file civil or criminal actions against the cooperative's officers prior to cancellation before appropriate courts of justice to recover their interests.
The Authority through its Extension Offices posts lists of cancelled and delisted cooperatives in each covered province, city, and municipality under their jurisdiction.
They take effect fifteen days after publication in the Official Gazette or a newspaper of general circulation.