CDA Guidelines on Cooperative Cancellation and Liquidation

The Extension Office of the Authority has primary jurisdiction over cooperatives within its region under CDA Memorandum Circular No. 2010-08.
The CDA Central Office has primary jurisdiction over tertiary cooperatives, cooperative banks, electric cooperatives, and insurance cooperatives.

Cancellation of the Certificate of Registration of cooperatives that failed to comply with Article 144 begins when the Authority issues a formal notice via registered mail with return card.
The formal notice informs the cooperative that it failed to secure a new Certificate of Registration pursuant to Republic Act No. 9520.
After the lapse of Thirty (30) days counted from receipt of the formal notice, the Authority issues an Order of Cancellation.

Within thirty (30) days from receipt of the Order of Cancellation, the cancelled cooperative must liquidate its assets and liabilities by adopting the liquidation procedures under CDA Memorandum Circular No. 2010-08, unless otherwise agreed upon by the members.
Liquidation must follow the required steps including:
- Constitution of a Panel of Liquidators from among the previous officers and members of the cancelled cooperative.
- Inventory of assets and liabilities.
- Payment of creditors in accordance with the New Civil Code rules on Preference and Concurrence of Credits.
- Transfer of statutory funds to intended beneficiaries.
- Distribution of remaining assets.
- Submission of a final report by the Panel of Liquidators to the Authority.

The Panel of Liquidators must be composed of former officers and/or members of the cooperative with at least three (3) and not more than five (5) members.
The Panel of Liquidators may receive a reasonable honorarium paid out of the funds of the cooperative.
The Panel must formally notify the Authority of its assumption to office and commencement of liquidation proceedings.
The Panel must inventory all assets and determine all liabilities, including share capital holdings.
The Panel must preserve existing assets, convert assets to cash, pay outstanding obligations and valid claims, distribute remaining assets according to the Guidelines, and submit a final liquidation report to the Authority.

Payment of creditors must be made in accordance with the contract basis and the New Civil Code rules on Preference and Concurrence of Credits.
Statutory and other funds of the cancelled cooperative must be disposed of in accordance with Article 86 of the Cooperative Code.
All subsidies, donations, legacies, grants, aids, and other assistance from any local or foreign institution, whether public or private, are subject to escheat.

After payment of the cancelled cooperative’s obligations to its creditors, remaining assets must be distributed by the Panel to the members for payment of their respective share capital.
If remaining assets are insufficient to pay full share capital contribution of members, distribution must be in proportion to each member’s share capital.

Assets distributable to a creditor or member whose whereabouts is unknown or cannot be found must be given to the federation/union to which the cancelled cooperative is affiliated for cooperative development.
If there is no federation/union affiliation, undistributed assets must be given to the Local Government Unit (LGU) of their choice.
If there is non-affiliation, undistributed assets must be given to the community where the cooperative operated.

If a cancelled cooperative fails to comply with the liquidation requirements, members and other parties in interest may file either a civil or criminal action against the officers of the cooperative prior to its cancellation, before the appropriate Courts of Justice.
The Authority, through its Extension Offices, must cause the posting of the list of cancelled and delisted cooperatives under these Guidelines in each province, city, and municipality covered by their respective jurisdictions.
CDA Memorandum Circular No. 2010-08 takes effect fifteen (15) days after its publication with the Official Gazette or in a newspaper of general circulation.

CDA Memorandum Circular No. 2010-08 is approved through Per Board Administrators Resolution No. 165, s. 2010 dated August 24, 2010.
The Chairperson for the issuance is LECIRA V. JUAREZ.
The Guidelines are issued as CDA Memorandum Circular No. 2010-08 with the title “Guidelines on the Cancellation of Cooperatives Pursuant to Article 144 of Republic Act No. 9520 and Prescribing the Procedures for Their Liquidation.”