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Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE:
The Cooperative Development Authority (CDA) issued Memorandum Circular (MC) No. 2024-16 entitled “Reiteration of the Prohibitions under Articles 45, 48, and 49 of Republic Act (RA) No. 9520″ to serve as guidance to cooperative officers to uphold the best interest of their members pursuant to the universally accepted cooperative principles and to refrain from using their privileges and the cooperative’s financial resources for their personal gains and to benefit their business interests in another company where they have personal investment or interest.
The MC shall apply to all cooperatives registered with the CDA, regardless of size and category, its officers and its members.
In 2024, the Cooperative Development Authority (CDA) issued Memorandum Circular No. 2024-16, which reiterates essential prohibitions for cooperative officers under Republic Act No. 9520.
OBJECTIVE OF THE MEMORANDUM: The memorandum aims to safeguard cooperatives by reminding officers of specific prohibitions that prevent personal gains at the expense of cooperative resources. It ensures that officers act in the best interest of their members and not for personal benefits.
SCOPE AND COVERAGE: It covers all cooperative officers, directors, and committee members under the CDA’s authority.
LEGAL BASES
The circular is based on two main legal sources:
- Republic Act No. 11364 empowers the CDA to develop rules and regulations for the sound management of cooperatives.
- Republic Act No. 9520, known as the Philippine Cooperative Code, outlines specific prohibitions and penalties for cooperative officers.
Cases Cognizable as Grave Offenses
– Serious Dishonesty;
– Grave Misconduct;
– Conviction of a crime involving moral turpitude;
– Falsification or tampering of documents;
– Disgraceful or Immoral Conduct;
– Inefficiency and Incompetence in the performance;
– Willfully and knowingly assent or vote to patently unlawful product;
– Gross Negligence or bad faith in directing the affairs of the cooperative;
– Attempts to acquire or acquire in violation of his duty, any interest or equity adverse to the cooperative in respect to any matter which has been reposed in him in confidence;
– By virtue of his office, acquires for himself an opportunity which should belong to the cooperative; and
– Illegal use of confidential information.
SPECIFIC PROHIBITED ACTS UNDER MC 2024-16
Section 4 of the MC reiterated that officers, directors, and members of the cooperative are prohibited from committing the following:
- Those acts and or omissions provided under Article 45 (Liability of Directors, Officers and Committee Members), Article 48 (Disloyalty of a Director), and Article 49 (Illegal Use of Confidential in Nature) of Republic Act No. 9520 as these acts and or omissions are classified as grave offenses as defined under Rule VII of the CDA Omnibus Rules of Procedure;
- Willfully and knowingly vote for or assent to patently unlawful acts such as but not limited to owning a business entity that is distinct and separate from the cooperative;
- The officers and members of a cooperative are not allowed to be a party, in any capacity, to another company or business that engages in the same business as that of their cooperative; and
- All resources of the cooperative, including but not limited to money, personnel, office, equipment, intellectual properties, licensed program and software cannot be used to support another company or business entity engaging in the same business as that of the cooperative, except those allowed investment of capital under Art. 78 of Republic Act No. 9520.
The above-enumerated prohibited acts and/or omissions shall be a ground for administrative or disciplinary action against the officers who committed the same and shall be dealt with in accordance with the CDA Omnibus Rules of Procedure on Administrative/Disciplinary Procedure or such rules/issuances as may be issued by the CDA.
- Major Violations Under the Law – Certain actions, like misusing confidential information or abusing your position as a cooperative leader, are considered serious offenses under the law.
- No Supporting Illegal Business Activities – Cooperative leaders cannot support or vote for illegal actions, such as owning a competing business.
- No Involvement in Competing Businesses – Cooperative officers and members are not allowed to be part of any business that competes with their cooperative.
- No Sharing Cooperative Resources with Competitors – Cooperative resources (like money, staff, vehicles, or office space) cannot be used to help other businesses that compete with the cooperative. There are only a few legal exceptions for investments.
SANCTIONS
- Removal or Suspension – Offending officers can be removed or suspended in addition to pay the losses, if applicable.
- Financial Responsibility – Officers who gain personally from violations may be required to repay any lost profits.
FILING CLAIMS AGAINST NON-MEMBERS OR NON-OFFICERS
If there are any legal claims against someone who is not an officer or member of the cooperative, those claims must be filed in a regular court that has the authority over the claim and the person involved.
MONITORING AND EVALUATION
- CDA’s Role: The CDA will keep a database to monitor how well the guidelines of this Memorandum Circular are followed. They will regularly check compliance, set up a feedback system, and review policy issues or implementation problems that arise. These guidelines may be updated or revised when necessary.
- Annual Requirement for Cooperative Boards: Every year, the Board of Directors and Officers must submit an oath along with the Cooperative Annual Progress Report (CAPR) to the Regional Office that oversees the cooperative. This sworn statement confirms that they are following the rules outlined in Republic Act 9520 and this Memorandum Circular.
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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding legal services, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/ 0917-5772207/ 09778050020.
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