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Applicability of provisions.
SEC. 113. Applicability of provisions.—The special provisions under this Chapter are applicable only to co-operative banks registered under this Act and the other provisions of this Act will apply to them only in so far as they are not against the express provisions contained in this Chapter.
Definitions.
SEC. 114. Definitions.—As used in this Act, unless a different meaning is intended in the context— "Affiliated co-operative or member co-operative" means a co-operative or a federation of co-operatives registered under this Act which has been admitted to membership in the Philippine National Co-operative Bank or the Provincial Co-operative Bank as the case may be; and "Individual member" means any person other than a body corporate who is a shareholder and has been admitted to membership of the Philippine National Co-operative Bank or the Provincial Co-operative Bank as the case may be.
Objects.
SEC. 115. Objects.— The objects of the co-operative banks are to facilitate the operation of non-agricultural co-operatives by furnishing credit for the Co-operative Movement, and the Philippine National Co-operative Bank may— Carry on banking and credit business for the affiliated co-operatives; Receive financial aid from the Government and the Central Bank of the Philippines for and on behalf of the provincial co-operative banks and primary co-operatives and supervise the lending and collection of such loans; Mobilize the savings from urban areas for the benefit of the Co-operative Movement; Act as a balancing medium for the surplus funds of co-operatives and federations of co-operatives; Discount bills and promissory notes issued and drawn by affiliated co-operatives; Issue drafts on demand to facilitate the activities of affiliated co-operatives; Issue debentures with the approval of and under conditions and guarantees to be prescribed by the Government; Borrow money from other banks within the limit to be prescribed by the Government; Supervise the lending and collection of funds by the provincial co-operative banks; Provide for the training of its employees and the employees of the affiliated co-operatives and other; and Carry on all other objects as may be prescribed in the regulations. The provincial co-operative banks may in addition to objects noted in clauses (a), (c), (d) and (f) of subsection (1) of this section may— Act as agents of the Philippine National Co-operative Bank; Supervise the lending and collection of funds borrowed by primary co-operatives; Receive financial aid from the Government and Central Bank of the Philippines through the Philippine National Co-operative Bank; Provide for the training of its employees and the employees of the affiliated co-operatives and others; and Carry on all other objects as may be prescribed in the regulations.
Registration.
SEC. 116. Registration.—No co-operative bank shall be registered by the Administrator unless the articles of incorporation and the by-laws of such bank have been approved by the Secretary of Commerce and Industry and the Central Bank of the Philippines and the co-operative bank satisfies all the provisions for registration of federations of co-operatives. There may be registered one co-operative bank at the national level to serve as the chief bank for non-agricultural and other types of cooperatives together with their federations, and one Provincial Co-operative Bank in each province.
Name and jurisdiction.
SEC. 117. Name and jurisdiction.—The co-operative bank at the national level may be known as "The Philippine National Co-operative Bank." The co-operative banks at the provincial level may be known as "The Provincial Co-operative Bank" and shall include in their names the name of the province for which they are registered. The jurisdiction of the Philippine National Co-operative Bank may extend to the entire country with its headquarters at Manila while the jurisdiction of the provincial co-operative banks may extend to the province for which each one is registered unless necessary sanction is obtained under subsection (3) of section twenty-five of this Act and their headquarters shall be in the capital or any city of the province concerned as determined.by the Administrator.
Membership.
SEC. 118. Membership.—Membership of co-operative banks may include co-operatives, federations of co-operatives and individual members who join in the articles of incorporation of the co-operative bank and co-operatives, federations of co-operatives and individual members admitted to membership by the board of directors of such bank after registration. Affiliated co-operatives shall be known as class "A" members and individual members shall "be known as class "B" members.
Board of Directors.
SEC. 119. Board of Directors.—The general assembly of every co-operative bank shall elect a board of directors, whose number and proportionate representation between class "A" and class "B" members shall be determined from time to time by the Secretary of Commerce and Industry in the regulations or by special order in writing, but in no case shall the directors representing the class "B" members be more than one third of the entire board of directors. Each class of members shall exercise their right to elect their share of representatives in the board of directors. The President, Secretary, Treasurer and Manager of every co-operative bank shall be appointed, their salaries determined and paid by the Secretary of Commerce and Industry in consultation with the board of directors of the co-operative bank concerned and the Administrator, until such time as, but not earlier than five years after registration of, the co-operative bank concerned, through a resolution of its general assembly, expresses to the Secretary of Commerce and Industry that it can elect or appoint, as the case may be, all or any of the said persons and pay their or his salary out of its fund without jeopardizing the co-operative bank's financial stability and thereafter the Secretary of Commerce and Industry shall withdraw all or any of the persons appointed by him and requested to be withdrawn by the co-operative bank and allow the co-operative bank to fill in the post according to its by-laws. The persons appointed by the Secretary of Commerce and Industry and the Administrator or his representative shall be ex officio directors of the board and ex officio members of the executive committee, if any, created. The president shall be the chairman of the general assembly, board and the executive committee.
Budget control.
SEC. 120. Budget control.—The board of directors shall not recommend a budget to the general assembly nor shall the general assembly approve a budget which shall involve an expenditure exceeding such percentage of the gross earnings of the previous year or the anticipated realizable gross earnings of the next year whichever is lower as shall be determined by the Administrator and the Central Bank of the Philippines.
Loans.
SEC. 121. Loans.—All loans which shall be granted by the co-operative banks to the affiliated co-operatives shall be for short and intermediate terms, the former not to exceed a maximum period of fifteen months and the latter not to exceed a maximum period of three years and shall be brought to the notice of the Administrator, except loans on investments held or deposited by the affiliated co-operatives in the co-operative banks. Loans which are declared to be risky by the Administrator shall not be granted by the board of directors of the co-operative banks. Class "B" members shall not be eligible for loans except on deposits they hold in the co-operative banks and other securities that may be approved by the board of directors.
Administrative control.
SEC. 122. Administrative control.—The co-operative banks registered under this Act shall submit to the supervision of the Administrator so far as the provisions of this Act are concerned and to the Monetary Board of the Philippines on banking transactions so far as the supervision of the Monetary Board of the Philippines is not inconsistent with the provisions of this Act.
Capital.
SEC. 123. Capital.— The Philippine National Cooperative Bank shall have an authorized capital of ten million pesos (P10,000,000) divided into shares of one hundred pesos par value each. The shares shall be divided into two groups marked series "A" and series "B". Series "A" shall comprise of five million pesos (P5,000,000) to be subscribed for by the Government of the Philippines. On registration of the Philippine National Co-operative Bank, the Philippine Government shall pay towards subscription of the said amount, one million pesos (P1,000,000) and the balance shall be paid in each year on a fund-matching basis with the owned capital of the Philippine National Cooperative Bank. The owned capital shall include share capital under clause (b) of this section, reserve fund and other funds set apart in accordance with this Act and excludes payments received from the Philippine Government under this clause. The shares held by the Philippine Government shall not be entitled to any interest or votes. Series "B" shall comprise of five million pesos (P5,000,000) to be subscribed for by the affiliated co-operatives and individual members. If the Philippine National Co-operative Bank does not have sufficient owned capital to receive further payments towards capital by the Philippine Government on fund-matching basis under clause (a) of this section, the Government of the Philippines may authorize the said bank to issue debentures under subsection (2) of section seventy-seven of this Act. Each provincial co-operative bank shall have an initial authorized capital of one million pesos (P1,000,000) divided into shares of one hundred pesos par value each. The shares shall be divided into two groups marked series "A" and series "B". Series "A" shall comprise of five hundred thousand pesos (P500,000) to be subscribed for by the Government of the Philippines. On registration of each provincial co-operative bank, the Government shall pay towards subscription of the said amount one hundred thousand pesos (Pl00,000) and the balance shall be paid in each year on the fund-matching basis with the owned capital of the provincial co-operative bank. The owned capital shall be as mentioned in clause (a) of subsection (1). The Government may provide its share of capital contribution under this clause by directing the Central Bank of the Philippines to extend the same benefits as are extended to the rural banks under the Rural Bank Act, without contravening the co-operative basis or the provisions of this Act. The shares held by the Government shall not be entitled to any interest or votes while contribution towards shares if paid in under the Rural Bank Act shall be entitled only to interest as provided under the Rural Bank Act. Series "B" shall comprise of five hundred thousand pesos (P500,000) to be subscribed for by the affiliated co-operatives and individual members. The by-laws of every co-operative bank shall specify a percentage of each loan borrowed by affiliated cooperatives to be invested as share capital in the lending co-operative bank.
Audit.
SEC. 124. Audit.—Subject to the provisions of Section eighty-six the general assembly of every co-operative bank shall also make separate arrangement for audit of their accounts and shall appoint an auditor to audit the accounts of the bank and to submit report to the board of directors and the general assembly as often as is required by them.
Distribution of savings.
SEC. 125. Distribution of savings.—The provisions under Chapter VIII—Allocation and Distribution of savings—of this Act shall apply to the distribution of savings of co-operative banks except that the Reserve Fund to be set apart shall at least be twenty-five per cent of the net savings and the general assembly shall decide whether to allow patronage refund or not; and if to be allowed, the amount to be utilized for patronage refund.
Privileges.
SEC. 126. Privileges.—In addition to the privileges granted in Chapter VI, the co-operative banks shall be granted the following privileges: The Government of the Philippines shall provide free transfer of funds between the co-operative banks and its affiliated co-operatives; and The co-operative banks registered under this Act shall be given the same privileges as are granted to the rural banks under the Rural Bank Act of the Philippines without affecting in any way the provisions of this Act.
Provisions on this page are reproduced verbatim from official open data. See the attribution line.
Source: Supreme Court E-Library, Republic of the Philippines. Philippine laws are public documents (works of the government).