Interpretation of Cooperative Code Articles 28 and 43

Section 3(o) of RA 6939 authorizes the CDA to adopt interpretations needed to implement cooperative laws fully.
The circular interprets Article 28(2) and Article 43 of the Cooperative Code.
The circular explains how to apply Article 28(2) on government officials serving as cooperative officers or directors.
The circular explains how to apply Article 43 on cooperative officers and the prohibition on related persons serving on the same board.

Article 28(2 of the Cooperative Code** prohibits elective officials of the government—except barangay officials—from becoming officers and directors of cooperatives.
Barangay captains and other barangay officials are allowed to be officers and directors of cooperatives.
When a barangay captain is elected president of the Association of Barangay Captains (ABC) of his municipal council, the barangay captain remains qualified to become an officer or director of his cooperative.
The circular clarifies that the barangay captain’s seat in the municipal council arises from being the president of the ABC, rather than from being elected to the municipal council.

Article 43 establishes that the Board of Directors shall elect from among themselves only the chairman and vice-chairman.
Article 43 requires the board to elect or appoint other cooperative officers from outside the board in accordance with the cooperative’s by-laws.
Article 43 provides that all officers serve during good behavior.
Article 43 bars removal of officers except for cause after due hearing.
Article 43 provides that loss of confidence is not a valid ground for removal unless evidenced by acts or omissions showing loss of honesty and integrity.

The circular states that the officers of the cooperative include officers elected by the board from among board members, such as the Chairman and Vice-Chairman.
The circular states that the officers of the cooperative include officers elected or appointed by the board such as the Secretary, the Treasurer, and other officers as prescribed in the by-laws.
The circular interprets the prohibition in Article 43 on relationships within the third degree to apply within each category of officers (board-elected officers as one category; board-elected/appointed non-board officers as another category).
The circular anchors this interpretation on the rule that no two or more persons within the third civil degree of consanguinity or affinity shall serve as elective or appointive officers in the same board.

Article 43 prohibits two or more persons within the third civil degree of consanguinity or affinity from serving as elective or appointive officers in the same board.
Consanguinity refers to relationships by blood and is defined in covered degrees as follows:
- First degree: parent to child.
- Second degree: grandparent to child; brother to sister.
- Third degree: uncle to child; aunt to child; great-grandparent to child.
Affinity refers to relationships by marriage and is defined in covered degrees as follows:
- First degree: parent-in-law to daughter/son-in-law.
- Second degree: brother-in-law to sister-in-law.
- Third degree: great-grandparent-in-law to daughter/son-in-law; uncle/aunt-in-law to niece/nephews-in-law.
The circular applies these covered relationships as the degrees of relationship relevant to the prohibition under Article 43.

The circular states it was Adopted: 17 Mar. 1992.
The circular bears the signature of Edna E. Aberilla, identified as Chairman.
The circular is issued for information and guidance in applying Articles 28(2) and 43 of the Cooperative Code.