Creation of Cooperative Development Authority

Policy, purpose, and principles

The State’s policy is to promote the viability and growth of cooperatives as instruments of equity, social justice, and economic development and to create an agency in fulfillment of Section 15, Article XII of the Constitution (Section 1).
The State must recognize cooperatives as associations organized for the economic and social betterment of their members, operating business enterprises based on mutual aid, and founded upon internationally accepted cooperative principles and practices (Section 1).
The appropriate national economic planning agency must include cooperative growth and expansion as a major and indispensable component of national development plans (Section 1).
All government departments, branches, subdivisions, and instrumentalities must promote the formation of cooperatives under their respective programs by providing appropriate and suitable incentives (Section 1).
The cooperative sector is recognized as primarily responsible for institutional development of cooperatives and is recognized’s rights to initiate and foster within its own ranks cooperative promotion, organization, training, information gathering, audit, and support services, with government assistance where necessary (Section 1).
Government assistance to cooperatives must be free from restriction and conditionality that infringes upon the objectives and character of cooperatives under the Act (Section 1).
The State must maintain a policy of noninterference in the management and operation of cooperatives, except as provided in the Act (Section 1).

Establishment and governance structure

The Cooperative Development Authority is created under the Office of the President (Section 2).
The Authority is governed by a Board of Administrators consisting of a Chairman and six (6) members appointed by the President (Section 4).
Board members must be chosen from among nominees of the cooperative sector, with two (2) representatives each from Luzon, Visayas and Mindanao (Section 4).
Board members serve six (6) years without reappointment (Section 4).
Among the first appointees, the Chairman serves six (6) years, three (3) members serve for four (4) years, and three (3) members serve for two (2) years (Section 4).
The Board includes four (4) ex officio members: (a) Department of Agriculture, (b) Department of Transportation and Communications, (c) National Electrification Administration, and (d) Sugar Regulatory Administration (Section 4).
Ex officio representation is nonvoting and terminates one (1) year from the operation of the Authority; ex officio members must not hold any other board position in any government entity (Section 4).
The Chairman and members serve on a full-time basis (Section 4).
Vacancies are filled by Presidential appointment consistent with the membership allocation; the appointee serves only the unexpired term (Section 4).

Board members’ qualifications and conflicts

No person may be appointed Chairman or member unless the person is a natural-born Filipino citizen of legal age (Section 5).
The person must have a Bachelor’s Degree in Cooperatives, Economics, Finance, Agriculture, Fisheries, Veterinary Medicine, Business, Social Science, Law, Management, or similar fields, and five (5) years of experience as an official or officer of a cooperative, government agency, or non-government organization engaged in cooperative development (Section 5).
If the person has no Bachelor’s Degree, the person must have at least ten (10) years of experience in cooperatives either as an officer of a cooperative or a government agency or non-government organization engaged in cooperative development (Section 5).
The person must be a resident of the region he represents for at least five (5) years (Section 5).
Upon appointment, the Chairman or regular member must divest of any direct or indirect pecuniary interest in or dealings with cooperatives (Section 5).

Meetings, executive director, and organization timeline

The Board must meet at least once a month for regular business (Section 6).
Special meetings may be called by the Chairman or by the majority of the members to consider specific matters (Section 6).
Decisions require a majority vote by the entire Board (Section 6).
Board meetings are held at the Authority’s head office in Metro Manila or at another place determined by the Board (Section 6).
The Board must appoint an Executive Director as the Authority’s chief operating officer; the Board fixes the compensation (Section 6).
The Authority must be organized within one hundred twenty (120) days from the effectivity of the Act (Section 7).

Registration, contempt power, and cooperative services

The Authority’s power to register cooperatives is vested solely in the Authority (Section 9).
The Authority registers all cooperatives and their federations and unions, including matters on division, merger, consolidation, dissolution, or liquidation (Section 3).
The Authority registers the transfer of all or substantially all assets and liabilities and other matters required by the Authority (Section 3).
Cooperatives, federations, and unions must submit annual financial statements duly audited by certified public accountants and must submit general information sheets as required by the Authority (Section 3).
The Authority may order cancellation of a cooperative’s certificate of registration after due notice and hearing for noncompliance with administrative requirements and in cases of voluntary dissolution (Section 3).
The Authority assists cooperatives in arranging financial and other assistance under terms and conditions designed to strengthen viability and autonomy (Section 3).
The Authority must establish extension offices as necessary and financially viable; initially, extension offices exist in the Cities of Dagupan, Manila, Naga, Iloilo, Cebu, Cagayan de Oro and Davao (Section 3).
The Authority must impose and collect reasonable fees and charges connected with registration of cooperatives (Section 3).
The Authority administers all grants and donations coursed through government for cooperative development, without prejudice to cooperative rights to directly receive and administer grants and donations upon agreement with grantors and donors (Section 3).

Mediation and dispute non-resolution

Upon request of either or both parties, the Authority must mediate and conciliate disputes within a cooperative or between cooperatives (Section 8).
If mediation or conciliation fails within three (3) months from the request, the Authority must issue a certificate of non-resolution prior to filing the proper action before proper courts, through the commission referenced for issuance (Section 8).

Cooperative development powers and planning

The Authority formulates, adopts, and implements integrated and comprehensive plans and programs on cooperative development consistent with national cooperative policy and overall government socioeconomic development plans (Section 3).
The Authority develops and conducts management and training programs upon request of cooperatives to provide members with entrepreneurial capabilities, managerial expertise, and technical skills for efficient cooperative operation and to inculcate the true spirit of cooperativism (Section 3).
The Authority provides technical and professional assistance when necessary to ensure cooperative viability and growth, with special concern for agrarian reform, fishery, and economically depressed sectors (Section 3).
The Authority supports voluntary organization and consensual development of activities that promote cooperative movements and provides assistance toward upgrading managerial and technical expertise upon request (Section 3).
The Authority coordinates efforts of local government units and the private sector in promotion, organization, and development of cooperatives (Section 3).
The Authority helps implement cooperative laws through necessary functions, adopts rules for internal operations, and submits an annual report to the President and Congress on the state of the cooperative movement (Section 3).

Administrative contempt sanction authority

The Authority may summarily punish for direct contempt any person guilty of misconduct in the presence of the Authority that seriously interrupts any hearing or inquiry (Section 3).
The penalty for direct contempt is a fine of not more than Five hundred pesos (P500.00) or imprisonment of not more than ten (10) days, or both (Section 3).
Acts constituting indirect contempt are punished in accordance with Rule 71 of the Rules of Court (Section 3).

Rulemaking, public hearings, and publication effect

The Authority may promulgate rules and regulations to implement the Act after due public hearing and upon approval of the President (Section 13).
Implementing rules and regulations take effect within fifteen (15) days after publication in the Official Gazette or in two (2) newspapers of general circulation (Section 13).
Subsequent amendments to the implementing rules and regulations must undergo the same process (Section 13).

Prohibition on using “cooperative” title

No organization may use the title “cooperative” in its name unless it follows generally accepted cooperative principles, applicable cooperative laws, and is duly registered under the Act (Section 14).
Organizations that used the word “cooperative” as part of their nomenclature but do not qualify as cooperatives must qualify and register with the Authority within three (3) years from the Act’s operation (Section 14).
After the three (3) year period, it becomes unlawful for those organizations to continue using the word “cooperative” in their names (Section 14).

Information campaign mandate

The Authority must conduct a six (6) months information campaign on the provisions of the Act (Section 15).
The campaign must begin three (3) months from the effectivity of the Act (Section 15).

Cooperatives in education and training

The history, philosophy, principles, and practices of cooperatives and their role in the national economy must be disseminated in both formal and non-formal education (Section 11).
The role of non-government organizations not registered as cooperatives but registered under Philippine laws and engaged in cooperative promotion, organization, research and education must be recognized (Section 11).
The Authority may accredit such non-government organizations as non-academic training organizations (Section 11).
Training courses offered by accredited non-government organizations may be eligible as credits for academic, professional, and career advancements (Section 11).
Existing training centers for cooperatives may qualify as non-government organizations under the Act (Section 11).
State colleges and universities must provide technical assistance and guidance to cooperatives in their communities upon request (Section 11).

Cooperative banking promotion

The promotion and development of cooperative banks as part of the Philippine banking system is a major concern of the Authority (Section 12).
The Authority must undertake necessary programs toward this end in collaboration with the Central Bank of the Philippines and the cooperative sector concerned (Section 12).

Transferred registration functions and abolished offices

The functions and responsibilities relating to registration of cooperatives as such are transferred to the Authority from the following: (1) Department of Agriculture, (2) Bureau of Agricultural Cooperatives Development, (3) Department of Transportation and Communications, (4) Sugar Regulatory Administration, (5) National Electrification Administration, and (6) any other pertinent government agency (Section 9).
The Bureau of Agricultural Cooperatives Development created under Executive Order No. 116, Series of 1987 is abolished (Section 9).
Qualified employees of the abolished Bureau are absorbed by the Cooperative Development Authority according to its staffing pattern, subject to Civil Service rules and regulations and rules of the Office of Compensation and Position Classification (Section 9).
The Regional Cooperative Development Assistance Offices of Regions IX and XII, created under Executive Order No. 634, are abolished and their employees are given preference for employment with the Authority according to its staffing pattern, subject to Civil Service rules and regulations (Section 9).
Employees not absorbed receive separation pay computed at one and one fourth (1 1/4) months salary for every year of service (Section 9).
Service of six (6) months or more is treated as one (1) year for computing years of service for severance pay and, where applicable, other retirement benefits under existing laws (Section 9).

Transferred funds, loans, and programs

The Cooperative Development Loan Fund created under Presidential Decree No. 175, as amended, is transferred from the Department of Agriculture to the Authority (Section 10).
The function of the Fund for Management Training and Assistance Program granted to the Department of Agriculture by Presidential Decree No. 175, as amended, is transferred to the Authority (Section 10).
The fund for the Management Training and Assistance Program under Presidential Decree No. 175, as amended is converted into a fund for the development of cooperatives and may be used for that purpose upon request of cooperatives concerned (Section 10).
Duly registered cooperatives have the right to establish their own private training centers or federations for purposes of cooperative development (Section 10).
The Cooperative Marketing Project created under loan agreements and managed by the Department of Agriculture is transferred to the Authority (Section 10).

Appropriations and initial funding

Funds needed to carry out the Act are charged to the appropriations of the Bureau of Agricultural Cooperatives Development and the Regional Cooperative Development Assistance Offices of Regions IX and XII under the current General Appropriations Act, plus appropriations of other departments/agencies/funds whose functions/programs are transferred to the Authority (Section 16).
In the Authority’s initial year of operations, an additional amount of up to Sixty million pesos (P60,000,000.00) may be requested and drawn from the Contingent Fund of the President (Section 16).
Thereafter, sums necessary for continued implementation must be included in the annual General Appropriations Act (Section 16).

Transitory registration of existing cooperatives

Cooperatives registered under Presidential Decree Nos. 175 and 775 and Executive Order No. 898 are deemed registered with the Cooperative Development Authority (Section 17).
Those cooperatives must submit to the nearest Cooperative Development Authority office their certificates of registration, copies of their articles of incorporation and bylaws, and their latest duly audited financial statements within one (1) year from effectivity of the Act, otherwise their registration is cancelled (Section 17).
Cooperatives created under Presidential Decree No. 269, as amended by Presidential Decree No. 1645, have three (3) years within which to qualify and register with the Authority (Section 17).
After such cooperatives qualify and register, Sections 3 and 5 of Presidential Decree No. 1645 cease to apply to those cooperatives (Section 17).

Repeals, separability, and consolidation

The Act repeals or modifies inconsistent acts, general orders, executive orders, letters of implementation, letters of instruction, regulations, circulars, or parts thereof, in favor of the Act; in case of doubt, the same is resolved in favor of cooperatives (Section 18).
If any part of the Act is declared unconstitutional, the remaining provisions remain in force (Section 19).