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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) is the lead government agency in the Philippines that is mandated by law to promote the sustained growth and development of the country’s cooperatives, to the end that they become instruments of social justice and inclusive economic progress. Part of the functions of the CDA under the CDA Charter of 2019 or Republic Act (R.A.) No. 11364, is the conduct of inspections of cooperatives. Pursuant to this, the CDA has issued Memorandum Circular No. 2024-10, entitled the “Revised Guidelines on the Conduct of Inspection of Cooperatives” (“Guidelines”).
The Cooperative Development Authority (CDA) is the lead government agency in the Philippines that is mandated by law to promote the sustained growth and development of the country’s cooperatives, to the end that these cooperatives become instruments of social justice and inclusive economic progress.
Under the Cooperative Development Authority Charter of 2019 or Republic Act (R.A.) No. 11364, part of the functions of the CDA is the conduct of inspections, examinations, and investigations of cooperatives, to wit:
(n) Conduct regular inspection or examination of a cooperative in accordance with the rules and regulations promulgated by the Authority and, when deemed necessary, conduct examination and investigation to protect the interest and welfare of the members of cooperatives and the general public.
Verily, and pursuant to the above function, the CDA has issued Memorandum Circular No. 2024-10, entitled the “Revised Guidelines on the Conduct of Inspection of Cooperatives” (“Guidelines”). The Guidelines cover the conduct of inspection of cooperatives except for the following:
- newly registered cooperatives;
- cooperatives which are under dissolution, liquidation, cancellation;
- delisted cooperatives;
- cooperatives issued with Show Cause Order (SCO) as of January 15 of the current year. However, cooperatives issued with SCO may be inspected, if necessary;
- Credit Surety Fund Cooperatives (CSFCs)
(Sec. 3, MC No. 2024-10)
The CDA’s cooperative inspectors (“coop inspectors”) – who are personnel authorized to conduct inspection – conduct either onsite or off-site inspection.
Onsite inspections are conducted at the registered/official address of the cooperative and with physical interaction with the cooperative key-informants. Meanwhile, off-site inspections are conducted without being physically present at the site, and based instead on the required reports submitted by the cooperatives and evaluation of the submitted compliance of the previous inspection findings. (Sec. 5, MC No. 2024-10)
As to the procedures involved in each mode of inspection, the Guidelines delineate the following:
Onsite Inspection
1. Sending of Notice of Inspection.
A Notice of Inspection shall be sent to the cooperative through its Board of Directors or the General Manager at least ten (10) calendar days prior to the conduct of the inspection.
The Notice of Inspection shall contain the following:
- The name/s of the duly authorized inspector/s.
- The date/duration of the inspection; and 3. Documents and records needed during the inspection including its branch/satellite office/s.
2. Inspection Proper.
An opening conference shall be conducted to present and discuss the objective, manner, scope, process, and duration of the inspection.
During the inspection, the cooperative’s officers and personnel must provide information, reports and documents required by the coop inspector/s.
Furthermore, the General Manager/Chief Executive Officer, compliance officers , and other staff shall be present during the opening conference and the inspection proper.
3. Exit Conference.
After the onsite inspection, the coop inspectors shall conduct an exit conference where they discuss all the findings and observations with the Board of Directors and other Officers of the cooperative. The General Manager/Chief Executive Officer, compliance officers, and other staff/s shall be present during the exit conference.
The cooperative may refute findings not supported by evidence. Such findings, if backed by proof provided by the cooperative, shall be removed from the report.
4. Issuance of the Inspection Report.
After the exit conference, the coop inspectors shall provide the cooperative with a copy of the final inspection report, which their Chairperson and General Manager, or the present officers and staff, must sign.
The cooperative shall thereafter have fifteen (15) calendar days from receipt to submit their response and compliance.
5. Submission of Management Response.
Within fifteen (15) calendar days from the receipt of the Final Inspection Report , the cooperative shall submit its response to the findings, including the supporting documents, in case of compliance.
If the cooperative failed to submit the management response, the CDA shall implement appropriate action based on the final inspection report.
6. Issuance of CDA Order.
After evaluation of the response of the cooperative, the Authority may issue the following:
- Order to Comply – if the submitted compliance/response is not acceptable or the cooperative undertakes to comply with the findings, or the findings was partially complied with.
- Show Cause Order (SCO) – if the cooperative failed to comply with the Order to Comply issued in the previous year or if there are findings which warrant an immediate issuance of a SCO
(Secs. 6-7, MC No. 2024-10)
Off-site Inspection
1. Notice to Submit.
A Notice to Submit shall be sent to the cooperative, requiring it to submit proofs of compliance to the previous findings and other documents within fifteen (15) calendar days from receipt of the said notice.
A Notice to Submit shall be sent to the cooperative, requiring it to submit proofs of compliance to the previous findings and other documents within fifteen (15) calendar days from receipt of the said notice.
2. Inspection Proper.
Within seven (7) working days from the receipt, the coop inspector/s shall validate the submitted documents . The coop inspector/s may call/email or conduct a video conferencing to the cooperatives to clarify a particular matter.
3. Issuance of the Inspection Report.
After evaluation and validation of the documents , the coop inspector/s shall provide the cooperative with the copy of the final inspection report through registered mail, e-mail or personal delivery.
4. Management Response.
Within fifteen (15) calendar days from the receipt of the Final Inspection Report , the cooperative shall submit its response to the findings, including the supporting documents, in case of compliance.
5. Issuance of CDA Order.
After evaluation of the response of the cooperative, the Authority may issue the following:
- Order to Comply – if the submitted compliance/response is not acceptable or the cooperative undertakes to comply with the findings, or the findings was partially complied with. The Order shall state all those findings and the period of compliance.
- Show Cause Order (SCO) – if the cooperative failed to comply with the Order to Comply issued in the previous year or if there are findings which warrant an immediate issuance of a SCO
(Sec. 8, MC No. 2024-10)
Prohibited Acts or Omissions
Any responsible officer or employee of the cooperative shall be penalized, after due notice and hearing, for the following violations, to wit:
- Omission or refusal to furnish any information, report or other document required under RA 9520;
- Providing information, reports, or other documents to the CDA which the persons responsible know to be false or misleading;
- Omission or refusal to keep a book or registry required under RA 9520 or to make the required entry therein;
- Making an entry required under RA 9520 in a book or registry which the persons responsible know to be misleading;
- Hindering an authorized inspector from making an inspection or refusal of the cooperative to be inspected;
- Failure to comply with an order or written instruction issued or given by the CDA;
- Violation of the provisions regarding transactions with a restricted party; and
- Abetting, counseling, allowing, authorizing or commanding another person to commit an offense punishable by this Code. Provided that in case the violator is a cooperative or juridical person, the penalty shall be imposed on its directors and officers.
(Sec. 9, MC No. 2024-10)
RELATED ARTICLES
- Cooperative Development Authority Charter of 2019 – ALBURO ALBURO AND ASSOCIATES LAW OFFICES
- Are cooperatives exempt from paying taxes? (Understanding tax exemptions for cooperatives in the Philippines) – ALBURO ALBURO AND ASSOCIATES LAW OFFICES
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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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