QuestionsQuestions (LETTER OF IMPLEMENTATION NO. 23)
A Samahang Nayon is a body corporate composed primarily of small farmers residing and/or farming within the geographical limits of a barrio, formed to improve the quality of life of barrio people. Its purpose is tied to improving barrio life through organized collective action.
A small farmer is one who is the actual tiller (full-owner, amortizing owner, or lessee) of not more than seven (7) hectares of rice or corn land, or their equivalent in other crops, as determined by the Department of Local Government and Community Development.
Twenty-five (25) or more persons primarily small farmers, Filipino citizens, residing and/or farming in the proposed area may organize a Samahang Nayon. For registration, at least fifteen (15) incorporators must sign the articles of incorporation.
They must be duly signed and acknowledged before a Notary Public (or other officers authorized to take acknowledgments), and they must conform substantially to the model articles prescribed by the Bureau of Cooperatives Development.
All Samahang Nayon must adopt a code of by-laws for management. No by-laws are registered unless they conform substantially to the model by-laws prescribed by the Bureau.
Upon registration and issuance of the certificate, the Samahang Nayon becomes a body corporate with powers to own and dispose of property, enter into contracts, sue and be sued, and perform other acts necessary to pursue its objectives.
Applicants must be at least fifteen (15) years old, or heads of a household residing and/or farming within the barrio boundaries. Before acceptance, they must complete a pre-membership training, pledge improved farming practices, pledge to comply with a savings program, pay membership fees, and agree to comply with membership agreement stipulations conforming to the model agreement.
Grounds include failure to pay membership fees/dues/contributions; failure to comply with membership duties; failure to comply with membership agreement terms; act or omission injurious or prejudicial to the Samahang Nayon; and other grounds provided by the Department.
The Samahang Nayon must adopt and implement both programs as prescribed by the Department through the Bureau. For the Barrio Guarantee Fund, members contribute at least one cavan of palay per hectare harvest or equivalent. For the Barrio Savings Fund, production loans are subject to automatic deduction of 5% at loan release; the amount is held as a special time deposit in the Samahang Nayon’s name for the member’s account. Those without production loans must contribute at least P5.00 per month.
Operation may be suspended or registration cancelled by the Secretary of the Department after hearing for: failure to function within six months; failure to exercise powers/discharge membership agreement duties; when amortizing owners in default exceed 20%; or violation of Department/Bureau rules. The Secretary’s decision is final and conclusive.
Voluntary dissolution: resolution by at least 2/3 of all members at an annual or special assembly, submitted to the Provincial Development Officer with a sworn statement of the board that the resolution is genuine/authentic and dissolution won’t prejudice third persons. Involuntary dissolution: ordered by the Secretary upon causes including repeated failure to meet obligations and causes under Regulation 10.
Pre-cooperative organizations (existing or newly formed that don’t meet minimum requirements for Kilusang Bayan) may be registered to obtain provisional cooperative status and thereafter enjoy benefits and obligations under PD 175 and the implementing regulations. They are given two years to qualify as Kilusang Bayan or face cancellation.
They may merge or amalgamate, following the procedures in Regulations 25 and 26.
A Kilusang Bayan refers only to organizations that have complied with PD 175, the rules and regulations, and Department/Bureau requirements; for Section 9 purposes, “kilusang bayan” is considered equivalent to “cooperative” in the vernacular.
Articles must be signed by at least 15 incorporators if composed of natural persons, or at least 10 incorporators represented by their presidents if membership is composed of Samahang Nayon or other pre-cooperative organizations; and must conform substantially to the model. Registration also requires a treasurer’s sworn statement showing either: with capital stock, at least 20% of authorized shares subscribed and 20% of the subscriptions paid in cash; or without capital stock, the number of members and capital contribution paid in cash, with the Bureau ensuring sufficiency for initial operations.
For limited liability, members are liable for debts only to the extent of the unpaid portion of their subscription to capital stock or unpaid membership capital. For unlimited liability, members are jointly and severally liable for debts upon liquidation of the Kilusang Bayan.
Final authority is vested in the general assembly of the members. Management is by a board of directors of not less than five nor more than fifteen directors elected by the general assembly for a term fixed in the by-laws but not exceeding two years; they serve until successors are elected/qualified or removed. By-laws may provide for committees.