Hon. Minister Ricardo Puno

April 22, 1983 Hon. Minister Ricardo Puno Department of Justice Padre Faura, Manila Dear Minister Puno: This is to request for a legal opinion as to whether registration of cooperatives with the Bureau of Cooperatives Development under P.D. No. 175 is sufficient for them to acquire juridical personality without any further need of registration as corporations with the Securities and Exchange Commission. On April 14, 1973, P.D. No. 175, strengthening the cooperative movement, was promulgated, in order to effect the desired changes and reform in the economic, social and political structure of our society. Among the responsibilities charged to the Bureau of Cooperative Development, as per Letters of Implementation Nos. 23 and 7 , are as follows: 1. Promulgate rules and regulations to govern the promotion, organization, registration, regulation and supervision of cooperatives; 2. Register/re-register cooperatives existing before the issuance of P.D. #175; 3. Regulate and supervise all types of cooperatives; 4. Development of the cooperatives movement in the Philippines . . ." It was previously observed by the BOCD, in its letter to this Commission dated December 15, 1981, that ". . . in instances where some primary cooperatives are beneficiaries of foreign and local financial assistance, their leaders have to organize and register with the SEC. This prevents the BOCD from imposing the requirements of the Ministry of Agriculture . . . Circular No. 74-47 , which requires a clearance from the BOCD before receiving financial or technical assistance from whatever source. Furthermore, this office cannot supervise their status, operations and utilization of funds through audit and inspection." Accordingly, the BOCD requested the SEC to transfer the registration of organizations/associations composed of cooperatives to the BOCD, which request has been granted. However, Section 3 of P.D. #902-A, reorganizing the Securities and Exchange Commission, as amended by P.D. #1758, provides thus: "The Commission shall have absolute jurisdiction, supervision and control over all corporations, partnerships, or associations, who are the grantees of primary franchises and/or a license or permit by the government to operate in the Philippines. . . . ." It would, therefore, seem that registration with the Securities and Exchange Commission of cooperatives is necessary to acquire juridical personality. cdlex This view is further strengthened by Parliamentary Bill No. 1926, amending among others, Section 4 of P.D. #175, which provides thus: "SECTION 1. Section 4 of Presidential Decree Numbered One Hundred Seventy-Five, as amended, is amended to read as follows: "SECTION 4. Powers of Cooperatives . Cooperatives shall have the following powers: xxx xxx xxx 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 COOPERATIVE DEVELOPMENT OF COOPERATIVE 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 SUBMIT TO THE SUPERVISIONS OF THE BUREAU OF COOPERATIVE DEVELOPMENT SO FAR AS THE PROVISIONS OF THIS DECREE ARE CONCERNED AND TO THE CENTRAL BANK OF THE PHILIPPINES ON BANKING TRANSACTIONS." Should the above proposed amendment to Section 4 of P.D. #175 be approved, it is explicit that only cooperative rural banks and other cooperative banks organized under P.D. 175, may register with the BOCD to acquire legal personality and qualify for licensing by the CB, without any further need to register with the SEC as corporations. Inasmuch as the query posed by the Commission herein involves a drawing of conclusion with respect to a subject beyond our jurisdiction, said query is thus brought to the attention of the Honorable Minister of Justice for a proper ruling on the matter. Very truly yours, (SGD.) JESUS J. VALDES Associate Commissioner