MANILA, Philippines – (UPDATE) President Gloria Macapagal-Arroyo signed into law on Tuesday Republic Act 9520 or the Philippine Cooperative Code of 2008 which will strengthen the cooperative system in the country.
The new law amends Republic Act 6938 or the Cooperative Code of 1990.
Among those present during the signing at Malacañang’s Rizal Hall were the sponsors of the measure, Senator Juan Miguel Zubiri and Congressman Ernesto Pablo, Senate President Juan Ponce Enrile, Speaker Prospero Nograles, Executive Secretary Eduardo Ermita, Finance Secretary Margarito Teves, and Energy Secretary Angelo Reyes.
“The new cooperative legislation gives cooperatives greater opportunities to serve their members, not only in terms of financial assistance, but also in undertaking more productive activities geared towards the upliftment of their members,” the Palace said in a statement.
“The new cooperative code outlines in greater detail the requirements in professionalizing the management and operation of cooperatives, while providing a monitoring and evaluation tool for the cooperatives to conduct self-assessments in terms of its managerial, financial, and social objectives,” it said.
Amendments to the cooperative code were sponsored by the late COOP-NATCCO Representative Guillermo Cua.
Among the most significant changes in the new code is the section allowing the conversion of Credit Cooperatives into Financial Service Cooperatives.
“When members of a credit cooperative deposit their money and their pool gets bigger, they will naturally want more sophisticated services. With this amendment, credit cooperatives can evolve into a Financial Service Cooperative,” Congressman Jose Ping-ay, newly appointed COOP-NATCCO representative who replaced Cua, said in a statement.
A Credit Cooperative is a financial organization owned and operated by its members that creates a pool of savings from which loans for productive and provident purposes are drawn – all for the benefit of members.
A Financial Service Cooperative is an outgrowth of credit cooperatives, and is defined in the Code as a “financial organization owned and operated by its members and authorized to provide the same services as credit cooperatives plus other financial services subject to regulation by the Bangko Sentral ng Pilipinas (BSP).”
This means that Financial Service Cooperatives will be providing more than just savings and loans services, which cooperatives have been known to offer.
The Code does not list down the particular services Financial Services Cooperatives can provide although the minimum capital requirements prescribed in the General Banking Act will determine what services a Financial Services Cooperative can offer.
Depending on the capitalization, a Financial Services Cooperative can provide services like opening current or checking accounts, act as depositary of municipal, city or provincial funds where the cooperative is located, act as collection agent for government entities like the Social Security System (SSS) and Government Service Insurance System (GSIS), or even buying or selling foreign exchange.
The Code also stipulates that if a credit cooperative decides to “exercise enhanced functions,” it must first notify the Cooperative Development Authority (CDA) and the BSP and “satisfy the requirements for conversion to Financial Service Cooperative.” The CDA and BSP will soon be issuing rules governing the conversion.
Cua, along with Representatives Rozzano Biazon, Nicanor Briones, Ma. Isabelle Climaco, Eufrocino Codilla, Mauricio Domogan, Eduardo Gullas, Ernesto Pablo, Candido Pancrudo, Rufus Rodriguez, Judy Syjuco, Edgar Valdez, and Eduardo Zialcita, introduced the bill in the Lower House, which passed the measure on Oct. 8, 2008.
The Senate version of the bill was approved on Aug. 12, 2008, with Zubiri, chairman of the Senate committee on cooperatives, presenting the legislation to the plenary. Originally posted at 10:30 am
February 17, 2009 2:27 PM