Title
Officers and Conflict of Interest in Cooperatives
Law
Cda Memorandum Circular No. 2011-04
Decision Date
Feb 22, 2011
CDA Memorandum Circular No. 2011-04 clarifies the election and appointment processes for cooperative officers under Article 42 of the Philippine Cooperative Code of 2008, emphasizing restrictions on familial relationships and conflicts of interest among appointed positions.

Law Summary

Grounds for Removal of Officers

  • Loss of confidence alone is not sufficient ground for removal.
  • Removal requires evidence of acts or omissions that cause loss of confidence affecting an officer’s honesty and integrity.

Restrictions on Appointive Officers Based on Relationship and Conflict of Interest

  • No two or more persons related by consanguinity or affinity up to the third civil degree may serve as appointive officers in the cooperative.
  • Individuals engaged in businesses similar to the cooperative or those having conflicting interests are prohibited from serving as appointive officers.
  • This restriction does not apply to elected officers.

Categories of Cooperative Officers Under RA 9520

  • Officers include:
    1. Members of the Board of Directors
    2. Committee Members created by the general assembly
    3. General Manager or Chief Executive Officer
    4. Secretary
    5. Treasurer
    6. Other positions provided in by-laws
  • Elected Officers by the General Assembly:
    1. Board of Directors Members
    2. Members of the Audit and Election Committee
  • Officers appointed by the Board of Directors:
    1. Treasurer
    2. Secretary
    3. Mediation and Conciliation Committee Members
    4. Ethics Committee Members
    5. Other committee members unless otherwise stated
    6. Board Members appointed to fill vacancies (except term expiration)

Application of Relationship Prohibition

  • No prohibition exists for elected officers up to the third civil degree of consanguinity or affinity to be elected in the same cooperative.
  • The prohibition applies strictly to appointed officers regarding the same relationship degree.
  • An elected officer may have one appointed relative within the third civil degree, but no two or more appointed officers can be thus related.

Specific Considerations on Marital Relations and Interests

  • Husband and wife are treated as a single entity with the same interests.
  • The prohibition for appointive officers applies equally to spouses.

Degrees of Relationship Under the Prohibition

  • Consanguinity:
    • First Degree: Parent to child
    • Second Degree: Grandparent to grandchild; Brother to sister
    • Third Degree: Uncle/Aunt to child; Great-grandparent to great-grandchild
  • Affinity:
    • First Degree: Parent-in-law to son/daughter-in-law
    • Second Degree: Brother-in-law to sister-in-law
    • Third Degree: Great-grandparent-in-law to great-grandchild-in-law; Uncle/Aunt-in-law to niece/nephew-in-law

Legal and Procedural Guidance

  • These provisions are pursuant to Article 42 of RA No. 9520 and clarified by CDA Memorandum Circular No. 2011-04.
  • The legal interpretation guides the cooperative’s compliance with election, appointment, and disqualification rules of officers.

This summary serves for information and guidance.


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