RIZAL TECHNOLOGICAL UNIVERSITY

Cities of Mandaluyong and Pasig

SESSION NO. / WEEK NO. 6

MODULE NO. 06: Republic Act 9520 – Chapter 6 & 7

Republic Act 9520 – Chapter 6

Insolvency of Cooperatives

• Proceeding Upon Insolvency

Republic Act 9520 – Chapter 7

Dissolution of Cooperatives

• Voluntary Dissolution Where no Creditors are Affected

• Voluntary Dissolution Where Creditors Are Affected
• Involuntary Dissolution
• Dissolution by Order of the Authority
• Dissolution by Failure to Organize and Operate
• Liquidation of a Cooperative
• Rules and Regulations on Liquidation

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Cities of Mandaluyong and Pasig

Overview

In Chapter 6, we discussed the insolvency, and examined the Act 1956: Insolvency Law.

In Chapter 7, we discussed the different reasons and factors for dissolution and explained the
liquidation of its assets.

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Cities of Mandaluyong and Pasig

Study Guide

1. The students should come to class prepared.

2. Complete all activities and quizzes on time.
3. Create a schedule of all of your activities and stick to the schedule.
4. Understand the course requirements.
5. Break tasks into easy pieces and collaborate with your groupmates.
6. Your class representative is in-charge of communicating matters to your professor,
such as requests for consultation, exam problems, etc.
7. The students are expected to participate actively in the discussions.
8. All students are expected to be academically honest.
9. Cheating, lying and other forms of unethical behavior will not be tolerated.
10. Any student found guilty of cheating in examinations or plagiarism in submitted
course requirements will receive an F or Failure in the course requirement or in
the course.
11. It is the responsibility of the student to monitor her/his own tardy incidents and
absences that might accumulate leading to grade of F.
12. Special examinations will be allowed only in special cases, such as prolonged illness.
It is also his/her responsibility to consult with the teacher, department head or
dean should his/her case be of special nature.

Learning Outcomes

• Discuss the insolvency, and examine the Act 1956: Insolvency Law.

• Discuss the different reasons and factors for dissolution and explain the liquidation of its
assets.

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 RIZAL TECHNOLOGICAL UNIVERSITY
Cities of Mandaluyong and Pasig

Topic Presentation

Chapter 6: Insolvency of Cooperatives

“ART. 63. Proceeding Upon Insolvency.

In case a cooperative is unable to fulfill its obligations to creditors due to insolvency, such
cooperative may apply for such remedies as it may deem fit under the provisions of Act No.
1956, as amended, otherwise known as the Insolvency Law.

“Nothing in this Article, however, precludes creditors from seeking protection from said
insolvency law.”

Chapter 7: Dissolution of Cooperatives

“ART. 64. Voluntary Dissolution Where no Creditors are Affected.

If the dissolution of a cooperative does not prejudice the rights of any creditor having a claim
against it, the dissolution may be affected by a majority vote of the board of directors, and by
a resolution duly adopted by the affirmative vote of at least three-fourths (3/4) of all the
members with voting rights, present and constituting a quorum at a meeting to be held upon
call of the directors: Provided, That the notice of time, place and object of the meeting shall be
published for three (3) consecutive weeks in a newspaper published in the place where the
principal office of said cooperative is located, or if no newspaper is published in such place, in
a newspaper of general circulation in the Philippines: Provided, further, That the notice of such
meeting is sent to each member of record either by registered mail or by personal delivery at
least thirty (30) days prior to said meeting. A copy of the resolution authorizing the dissolution
shall be certified to by a majority of the board of directors and countersigned by the board
secretary. The Authority shall thereupon issue the certificate of dissolution.

“ART. 65. Voluntary Dissolution Where Creditors Are Affected.

Where the dissolution of a cooperative may prejudice the rights of any creditor, the petition
for dissolution shall be filed with the Authority. The petition shall be signed by a majority of its
board or directors or other officers managing its affairs, verified by its chairperson or board
secretary or one of its directors and shall set forth all claims and demands against it and that
its dissolution was resolved upon by the affirmative vote of at least three-fourths (3/4) of all
the members with voting rights, present and constituting a quorum at a meeting called for that
purpose.

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 RIZAL TECHNOLOGICAL UNIVERSITY
Cities of Mandaluyong and Pasig

“If the petition is sufficient in form and substance, the Authority shall issue an order reciting
the purpose of the petition and shall fix a date which shall not be less than thirty (30) nor more
than sixty (60) days after the entry of the order. Before such date, a copy of the order shall be
published at least once a week for three (3) consecutive weeks in a newspaper of general
circulation published in the municipality or city where the principal office of the cooperative is
situated or in the absence of such local newspaper, in a newspaper of general circulation in the
Philippines, and a copy shall likewise be posted for three (3) consecutive weeks in three (3)
public places in the municipality or city where the cooperative’s office is located.

“Upon expiry of the five (5) day notice to file objections, the Authority shall proceed to hear
the petition and try any issue raised in the objection filed; and if the objection is sufficient and
the material allegations of the petition are proven, it shall issue an order to dissolve the
cooperative and direct the disposition of its assets in accordance with existing rules and
regulations. The order of dissolution shall set forth therein:

“(1) The assets and liabilities of the cooperative;

“(2) The claim of any creditor;

“(3) The number of members; and

“(4) The nature and extend of the interests of the members of the cooperative.

“ART. 66. Involuntary Dissolution.

A cooperative may be dissolved by order of a competent court after due hearing on the grounds
of:

“(1) Violation of any law, regulation or provisions of its bylaws; or

“(2) Insolvency.

“ART. 67. Dissolution by Order of the Authority.

The Authority may suspend or revoke, after due notice and hearing, the certificate of
registration of a cooperative on any of the following grounds:

“(1) Having obtained its registration by fraud;

“(2) Existing for an illegal purpose;

“(3) Willful violation, despite notice by the Authority, of the provisions of this Code or its bylaws;

“(4) Willful failure to operate on a cooperative basis; and

“(5) Failure to meet the required minimum number of members in the cooperative.

“ART. 68. Dissolution by Failure to Organize and Operate.

If a cooperative has not commenced business and its operation within two (2) years after the
issuance of its certificate of registration or has not carried on its business for two (2)
consecutive years, the Authority shall send a formal notice to the said cooperative to show
cause as to its failure to operate. Failure of the cooperative to promptly provide justifiable

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 RIZAL TECHNOLOGICAL UNIVERSITY
Cities of Mandaluyong and Pasig

cause for its failure to operate shall warrant the Authority to delete its name from the roster of
registered cooperatives and shall be deemed dissolved.

“ART. 69. Liquidation of a Cooperative.

Every cooperative whose charter expires by its own limitation or whose existence is terminated
by voluntary dissolution or through an appropriate judicial proceeding shall nevertheless
continue to exist for three (3) years after the time it is dissolved; not to continue the business
for which it was established but for the purpose of prosecuting and defending suits by or
against it; settlement and closure of its affairs; disposition, conveyance and distribution of its
properties and assets.

“At any time during the said three (3) years, the cooperative is authorized and empowered to
convey all of its properties to trustees for the benefit of its members, creditors and other
persons in interest. From and after any such conveyance, all interests which the cooperative
had in the properties are terminated.

“Upon the winding up of the cooperative affairs, any asset distributable to any creditor,
shareholder or member who is unknown or cannot be found shall be given to the federation or
union to which the cooperative is affiliated with.

“A cooperative shall only distribute its assets or properties upon lawful dissolution and after
payment of all its debts and liabilities, except in the case of decrease of share capital of the
cooperative and as otherwise allowed by this Code.

“ART. 70. Rules and Regulations on Liquidation.

The Authority shall issue the appropriate implementing guidelines for the liquidation of
cooperatives.”

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Cities of Mandaluyong and Pasig

Guided Exercises / Learning Activities

Available at e-rtu

Assessment

Available at e-rtu

Assignment

Available at e-rtu

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Cities of Mandaluyong and Pasig

References

Republic Act 9520. (2022, August 1). Retrieved from Cooperative Development Authority:
https://cda.gov.ph/issuances/republic-act-9520/

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