Title
Guidelines on Cooperative Branch Establishment
Law
Cda Memorandum Circular No. 2011-17
Decision Date
May 6, 2011
The Amended Policy Guidelines on the Establishment of Cooperative Branch provides guidelines for the orderly establishment and operation of cooperative branch offices in the Philippines, promoting the growth and viability of cooperatives as instruments of equity, social justice, and economic development.
cooperative branch
policy guidelines
establishment

Legal basis and governing authority

  • The CDA issues these guidelines under its authority to formulate, adopt, and implement integrated and comprehensive plans and programs on cooperative development under Sections 1 and 3(a) of Republic Act No. 6939.
  • The CDA exercises its powers to implement cooperative development policies under Republic Act No. 9520.
  • The CDA promulgates the policy and minimum requirements to guide the orderly and systematic establishment and operation of cooperative branches.

Policy and purpose

  • The guidelines promote the viability and growth of cooperatives as instruments of equity, social justice, and economic development.
  • The guidelines provide an orderly and systematic framework for establishing and operating a cooperative branch.
  • The guidelines prescribe minimum requirements to support continuous growth in membership and expansion of business undertaking.

Scope and coverage

  • The guidelines apply to all cooperatives intending to set up a branch and those with existing branches.
  • The guidelines exclude cooperative banks from coverage.

Key definitions for branch terms

  • “Area of Operation” refers to the area where cooperative members come from as provided in the cooperative’s Articles of Cooperation and By-Laws.
  • “Area of Business Operation” refers to the principal place of business where the cooperative conducts its business as provided in the cooperative’s Articles of Cooperation and By-Laws.
  • “Authority” refers to the Cooperative Development Authority.
  • “Branch” refers to a business office outside the principal office with full cooperative activities and business operation.
  • “Branch Office” refers to the place where the branch operation takes place and provides necessary services to members.
  • “Certificate of Authority” is the document issued by the Authority authorizing a cooperative branch to operate.
  • “Cooperative” refers to a duly registered cooperative with the Authority.
  • “Principal Office” refers to the registered main office indicated in the cooperative’s Articles of Cooperation.
  • “Satellite Office” refers to an office within the area of operation that provides limited service/business addressing members’ needs and complementing principal office activities.

Branch operations: required elements

  • A cooperative branch must be separate from the principal office and must have these operational elements:
    • Office with signage.
    • Operational Structure together with a Manual of Operation.
    • Management Staff.
    • Operational plan and budget.
    • Books of Accounts.
    • Full business operation.
    • Cooperative activities, including acceptance of membership applications and conduct of PMES and sectoral/district/chapter meetings.
    • Display of:
      • Certificate of Registration.
      • Certificate of Authority.
      • Business Plate/permit.

Pre-qualification requirements to establish branches

  • A cooperative may establish a branch subject to CDA approval and must meet the following pre-qualification requirements:
    • Minimum paid-up capital:
      • Primary: PHP 2 Million.
      • Secondary: PHP 5 Million.
      • Tertiary: PHP 10 Million.
    • Available start-up operating capital for each branch:
      • Primary: PHP 1 Million.
      • Secondary: PHP 3 Million.
      • Tertiary: PHP 5 Million.
    • Track record of operational growth and viability and no net loss for the last three (3) consecutive years.
    • Progressive net worth for the last three (3) years from the date of application.
  • “NET WORTH” is computed as: Total Equity inclusive of Members’ equity, donations/grants and reserve funds less unbooked allowances and probable losses, receivables and investment.

Documentary requirements and application processing

  • A letter request for authority to establish a cooperative branch must be signed by the Chairman of the cooperative or the General Manager as authorized by the Board.
  • The request must include these documents/information:
    • A business plan detailing cooperative activities/products/services offered and financial projections for the first three (3) years of operations showing sustained viability, with due consideration for resource allocation to the proposed branch.
    • A copy of a general assembly resolution authorizing establishment of the branch and commitment of investment or allocation of resources for its proposed site.
    • An organizational set up showing the proposed staffing pattern able to employ at least a core team consisting of manager, bookkeeper, and staff for the intended branch office.
    • A certification signed by the Chairman/General Manager stating:
      • Presence of a Manual of Operations for Branch; and
      • Exact location of the proposed branch.
  • Processing fee for issuance of a Certificate of Authority per branch:
    • Primary: PHP 500.00.
    • Secondary: PHP 2,000.00.
    • Tertiary: PHP 3,000.00.

Certificate of Authority requirement

  • No cooperative may operate a branch without the necessary Certificate of Authority to set up a branch after complying with the required conditions.

Issuing jurisdiction and approving authorities

  • The approving authority depends on the cooperative level and the branch location:
    • Extension Office Director: Approves applications for Certificate of Authority for primary and secondary cooperatives where the cooperative is registered within that Extension Office’s jurisdiction.
    • Extension Office Director (cross-jurisdiction notice): If the branch is outside the jurisdiction of the Extension Office where the cooperative is registered, the issuing Extension Office must send an official notice together with a copy of the Certificate of Authority to the Extension Office where the branch is to be established.
    • Executive Director: Approves applications for Certificate of Authority for tertiary cooperatives.
    • Executive Director (cross-jurisdiction notice): The Executive Director must send an official notice together with a copy of the Certificate of Authority to the concerned Extension Office where the branch is to be established.

Relocation, monitoring, and reportorial flow

  • A cooperative may be authorized by the CDA to relocate/transfer a branch if these conditions are met:
    • The new location is within the registered area of operation indicated in the Articles of Cooperation, or the proponent secures an amendment certificate of area of operation.
    • Posting of notice of relocation/transfer at least three (3) months prior to the scheduled relocation/transfer.
    • Notice to CDA of relocation/transfer at least three (3) months before the actual transfer.
  • Branch monitoring:
    • The Extension Office (EO) where the branch is located may conduct validation of the elements required for branch operation.
    • The cooperative branch directly reports its operation to its principal office, because the branch is merely an extension of the cooperative’s business.
    • Full reporting responsibility for branch operations lies with the principal office of the cooperative within the jurisdiction of the EO where it is registered.
  • Reportorial requirements:
    • Branch office reports are submitted to the principal office, which consolidates the whole operations of the cooperative and its branch/es.

Voluntary closure of a branch

  • Voluntary closure of a cooperative branch is subject to these conditions:
    • Send/post a Notice of Closure in a conspicuous place of the branch office to inform members and creditors at least three (3) months prior to closure.
    • Send notice of closure with reasons by registered mail to the CDA Extension Office where the branch office is located at least three (3) months prior to closure.
    • Submit a certification signed by the branch office manager and noted by the Chairman informing the Authority of the closure and confirming compliance with the above requirements, submitted at least ten (10) working days after the closure date.
    • The certification must be accompanied by a certified true copy of the resolution of the cooperative’s Board of Directors authorizing the closure.

Sanctions and administrative consequences

  • Any violation of these guidelines is a ground for cancellation of the Certificate of Authority and closure of any branch established under these guidelines, without prejudice to the imposition of the applicable administrative sanctions under Republic Act No. 9520.
  • If any part of the certification required under the closure rules is found to be false, sanctions are imposed:
    • On the cooperative: Non-issuance of Certificate of Good Standing (CGS) for one (1) year.
    • On the certifying officer: a fine of PHP 10,000 if the certification was found to be false and/or in fraud.

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