Presidential Decree No. 2008




M a n i l a



WHEREAS, cooperatives constitute institutional vehicles to enhance productivity and increase the income of the people through built-in-mechanisms of economics of scale, costs-sharing and risk-sharing;

WHEREAS, it is vital and necessary for the government to encourage people to organize cooperatives that will provide for their need at the lowest possible cost and at the same time increase their incomes and productivity;

WHEREAS, to strengthen the cooperatives, there is need to restore to them certain privileges which were suspend by PD 1955;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby decree:

Section 1. Sec. 4 of Presidential Decree Numbered One Hundred Seventy-Five, as amended by Presidential Decree Numbered Nineteen Hundred and Fifty-Five, is hereby amended to read as follows:

"Sec. 4. Powers of Cooperatives. Cooperatives shall have the following powers:

"(a) To exercise the same rights and privileges given to persons, partnerships and corporations provided under existing laws;"

"(b) To establish and operate business enterprises of all kinds as their needs dictate and their capabilities allow subject to the provisions of existing laws;"

"(c) To establish rural banks under the Rural Bank Act and/or to purchase government-held preferred shares of rural banks which may be converted to voting common stocks, under the rules and regulations to be promulgated by the Monetary Board of the Central Bank and the Agrarian Reform Fund Commission: Provided, however, That registration with the Bureau of Cooperatives Development of Cooperatives Rural Banks and other cooperative banks organized under this Decree shall be sufficient for said banks to acquire legal personality to apply and qualify for licensing by the Central Bank of the Philippines, without need for registration as corporations with the Securities and Exchange Commission, notwithstanding the provisions of R.A. 337, as amended and/or R.A. 720 as amended: Provided, further, That said banks shall be subject to the supervision of the Bureau of Cooperatives Development so far as the provisions of this Decree are concerned and to the Central Bank of the Philippines on banking transactions;"

"(d) To enjoy all the privileges and incentives granted by the NACIDA Act and those granted by all government agencies to business organizations under existing laws, provided that all requirements are met;"

"(e) To petition the government to expropriate idle, urban or rural lands for agricultural production, cottage industry, business or housing purposes; and"

"(f) To own and dispose of property, to enter into contract, to sue or be sued, and to do and perform such other acts as may be necessary in the pursuit of its objectives."

Sec. 2. Sec. 5 of the same Decree is amended to read as follows:

"Sec. 5. Privileges of Cooperatives. Cooperatives which are in good standing as certified by the BCOD/MAF shall enjoy the following privileges;

"(a) Exemption from income and sales taxes until December 31, 1991: Provided, That a substantial portion of the net income of the Cooperative is returned to members in the form of interests and/or patronage refunds: Provided, further, That those cooperatives whose tax exemption privileges under this Decree have already expired shall continue to enjoy such privileges but in no case shall extension go beyond December 31, 1991: Provided, finally, That the cooperative's taxable income shall mean that portion of the Cooperative's income after deducting the interest and patronage funds to its members;"

"(b) In areas where appropriate cooperatives exist, the preferential right to supply rice, corn and other grains, fish and other marine products, meat, eggs, milk, vegetables, tobacco and other agricultural commodities produced by members of the cooperatives concerned to State Agencies administering price stabilization programs;"

"(c) In appropriate cases, exemption from the application of the Minimum Wage Law upon the recommendation of the Bureau of Cooperatives Development subject to the approval of the Minister of Labor and Employment;"

"(d) Exemption of its securities from all provisions of the Securities Act provided such securities are not speculative;"

"(e) Of being represented in the Court by the Provincial or City Fiscal where the cooperative is located or the Solicitor General in any case in which the Cooperative is either a Plaintiff or Defendant, except where the Philippine Government is the plaintiff or defendant;"

"(f) Cooperatives and/or their Federations shall have preferential rights in the management of public markets and/or lease of public market facilities, stalls, or spaces;"

"(g) Credit cooperatives and/or federations shall be entitled to loans, credit lines, rediscounting of their loan notes and other eligible papers with the Development Bank of the Philippines, the Philippine National Bank, the Land Bank of the Philippines, and other financial institutions except the Central Bank of the Philippines;"

"(h) Whenever a Cooperative Rural Bank of the Cooperative Bank organized under this Decree distressed or may need assistance in the rehabilitation of its financial condition or to avoid bankruptcy, the Land Bank of the Philippines shall take such steps to strengthen and/or rehabilitate such banks, including interim take over or management of said banks pursuant to the provisions of Sec. 29 Republic Act No. 215, as amended."

Sec. 3. Sec. 9 of the same Decree is amended to read as follows:

"Sec. 9. Penal Provisions. (a) No person or group of persons other than cooperatives registered pursuant to the provisions of this act or other existing laws shall use in its name the word "cooperatives" or its equivalent in the vernacular: Provided, however, That any person or group of persons or their successors-in-interest who have been using the word cooperative on its equivalent in the vernacular in the name or its under which they have carried on their business before the promulgation of this Act may continue to use the word Cooperative or its equivalent in the vernacular. Violators shall suffer a fine of ten thousand pesos and/or imprisonment of not more than two years, at the discretion, of the Court."

"(b) Any official of the cooperative elected or appointed who commits an offense punishable under the Revised Penal Code or other laws where the offended party is a Cooperative shall in addition to the penalty therein, be penalized in the same way as if such official was a civil servant with perpetual disqualification to hold any elective or appointive office."

"(c) Any official of the State elected to appointed and not belonging to the Ministry of Agriculture and Food, who willfully and unduly interferes with the business activities and internal affairs of any cooperative of which may not be a member shall be penalized by a fine of not more than five thousand pesos (P5,000.00) and/or imprisonment of not more than six (6) months."

"(d) Individuals who are found to have original cooperatives for the evident purpose of taking advantage of the privileges granted to cooperatives under this act or who operated such organizations in clear violation of cooperative principles herein set forth or who use cooperatives as fronts to evade taxes or to take advantage of cooperative privileges as adjudged by a competent court shall be subject to attachment of all their assets in such organizations and such organizations shall summarily be stopped from operation; And such individuals shall upon conviction, suffer a fine of Ten Thousand Pesos or imprisonment of three years at the discretion of the Court without prejudice to other penalties as provided for under existing laws. The tax exemption privileges of such cooperatives shall be considered automatically withdrawn."

"(e) Any officer, Director or Committee member of a cooperative who commits any of the following acts, shall upon conviction be punished with a fine of not less than Two Thousand Pesos (P2,000.00) without prejudice to other legal remedies and/or penalties under existing laws, to wit:

"1) Fails, without reasonable excuse, to give notice, send any return or document, do or allow to be done anything which the cooperative, officer, director or committee member or members is by this Decree required to give, send, do or allow to be done; or

"2) Neglects or refuses to do any act to furnish information required for the purposes of this Act by the Bureau of Cooperatives Development or other officer duly authorized by said office in writing in its behalf; or

"3) Recommends or sanctions for his own benefit or personal use a loan in the name of any other person inspite of the concurrence of such other person; or

"4) In case of credit cooperative and credit union grant loans to non-members except on the security of their depositors or to members on the pledge of their shares or for the return of shares of certain members or all the members without resolution of the Board or the General Assembly, as the case may be, with a view of depriving the creditors of the cooperative."

Sec. 4. Repealing Clause. All laws, decrees, proclamation, letters of instructions, rules and regulations or any part thereof which are inconsistent with the provisions of this Decree are hereby repealed or modified accordingly. If for any reason, any section or provision of this Decree is declared unconstitutional or invalid, the other sections or provisions hereof which are not affected thereby, shall continue in full force and effect.

Sec. 5. This Decree shall take effect immediately.

DONE in the City of Manila, this 8th day of January, in the Year of Our Lord, Nineteen Hundred and Eighty-Six.

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