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CDA Issues Order For Nutriwealth to Cease & Desist

QUEZON CITY -- The Cooperative Development Authority (CDA) has ordered Nutriwealth Multi-Purpose Cooperative (NWMPC) to 1) stop accepting deposits from members and non-members, 2) return all deposits to the depositors, and 3) stop establishing and operating satellite offices without the prior approval of the CDA including those satellite offices outside the area of operation.

According to Special Order No. 2017-364, s.2017 dated November 23, 2017, the Cooperative Development Authority-Manila Extension Office conducted an examination of NMPC’s savings program which may either be: “A. Time deposit for a period of five (5) years, to earn seven percent (7%) interest per annum, which deposit cannot be withdrawn within five (5) years but may be transferred to other members; or B. Direct savings deposit, where interest can be withdrawn monthly and the principal amount after a period of two (2) years.”

The CDA, however, said the NMPC’s savings program is not in accordance with its Articles of Cooperation and By-laws of the cooperative, and neither is it according to law.

“The savings program involving acceptance of deposits from members for a specified period of time to earn a stipulated interest is not one of the purposes for which it was organized, making this venture not in accordance with law,” the CDA said in its website, www.cda.gov.ph.

The CDA also ordered NMPC to “return all deposits received under the said program within one- hundred twenty (120) days from receipt of the Order.”

The CDA added: “As a multi-purpose cooperative, Nutriwealth MPC has embarked on different types of businesses. However, during the examination, it has come to our attention that these undertakings are not supported by feasibility study to determine its viability. Business ventures were done haphazardly which could expose the members’ interests at risk.”

CDA also ordered NMPC to stop its other “business activities without the necessary feasibility study to support the viability of the proposed business.”

NMPC also violated CDA’s Memorandum Circular 2016-05, which provides guidelines on the establishment and operation of a cooperative satellite office.  NMPC’s “business permits in some of its satellite offices are under the names of their members,” according to the CDA website.

Another serious violations were NMPC’s “overlapping directorate with private corporations, thus, causing confusion and creating the impression that the cooperative and the corporations are one and the same entity. This also creates the impression that the cooperative is being used as tax and labor shield.”

The CDA also ordered the NMPC from “serving as officers of corporations having the same purposes as the cooperative, specifically the following: 1. Nutriwealth Manufacturing Plant, Inc.; 2. Nutriphysics Wellness Association, Inc.; 3. Nutriwealth School of Wealth and Wellness Foundation, Inc.; and 4. Nutriwealth Wellness Association, Inc.” and also ordered the officers to divest their interests from said corporations within 120 days.

The CDA says the NMPC Articles of Cooperation and By-Laws show that it was organized only for: 1. To produce different herbal and nutritional products such as malunggay capsules, turmeric capsules, sambong capsules, lagundi capsules, alkaline powder, herbal coffee, healing crystal salt, pinagpala juice, EENT alkaline drops, feminine wash, and herbal soap for sale to members and non-members; and 2. Credit services.

According to the CDA: “ . . . the cooperative is engaged in diverse businesses such as . . . consumer products (coffee shop, water refilling station, grocery, store, bakery, and restaurant), wellness center, savings program, agricultural operation, and rental/leasing business but the same have not been presented to and approved by the General Assembly and consequently, by the CDA.”

The CDA listed in Executive Summary its observations and findings: 1) Acceptance of membership do not comply with the common bond requirement.  Members are already accepted in the cooperative prior to its joining the association; 2) Acceptance of institutions and minors as members in violation of Art 23 (2); 3) NMPC does notobserve the proper procedure in the acceptance and termination of members; 4) Acceptance of membership outside the area of operation; Violation of Art 42 . . . the existence of husband and wife team on the key position weakens internal control . . . ; 5) BOD is a stamp pad Board; 6) Violation of Article 46 of RA 9520 on non-approval of compensation granted to officers of the cooperative;  7) non-presentation and non-approval of the general assembly of the proposed business expansions and new business venture of the cooperative; 8) non-issuance of Shares  Certificate for paid shares in accordance with MC2013-04; 9) Violation of Article 52, books to be kept open; 10) establishment and operation of satellite offices without the approval of the CDA and outside the area of operation; 11) absence of Code of Governance and Ethical standards as well as internal Control Policies; 12) non-compliance with minimum wage law and mandatory provision for retirement benefit for employees; 13) No written policy on human resource; 14) deposit taking not provided for in by-laws; 15) officers have overlapping directorate with private corporations, leading to impression that the corporations and the cooperative are one and the same.  This also projects the image that the cooperative is being used as tax and labor shelter; 16) borrowings by the co-op have no approval of the General Assembly; 17) Accounting is not in place and recording in books of accounts is not updated; and 18) Mandatory Reserves are not funded, specifically Reserve Fund.

Disturbing was an admission by the members and officers that “revealed that every applicant should apply first as associate member. Upon meeting the requirement on number of members to be recruited and/or amount to be invested in the the cooperative . . . said member shall graduate into regular member. Regular member is further classifred into Regular A, B and C. Said conditions for membership are not embedded in their by-laws nor included in their written membership policy.”

Nutriwealth MPC issued a statement dated February 24, saying: “Although we disagree with some of the findings of the (CDA Manila Extension’s) Examination Report, as a law abiding cooperative, please be informed that NutriWealth MPC will fully comply with the orders and recommendations issued by the CDA-Manila Extension Office within the time frame given.  In fact, prior to the release of the said Examination Report, our cooperative already started complying with the requirements stated by the CDA-Extension Office.”

Signatories were NMPC Chairman, Jay Galang, and General Manager Editha Mabuyo.  In concluding, they said: “. . . NMPC have much to learn as moves forward for the benefit of its membership.  We assure everyone that no member or partner has lost financially or any amount from our cooperative.  In its entire existence, our cooperative honored all of its obligations and commitments to its members and partners.”

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