COOPERATIVE CODE OF THE PHILIPPINES (3) Board of Directors shall mean that body entrusted with the

management of the affairs of the cooperative under its articles of

1. Define Cooperative. cooperation and bylaws;
P. 522 (Art. 3)
(4) Committee shall refer to any body entrusted with specific
A cooperative is an autonomous and duly registered association of functions and responsibilities under the bylaws or resolution of the
persons, with common bonds of interests, who have voluntarily general assembly or the board of directors;
joined together to achieve their social, economic and cultural needs
and aspirations by making equitable contributions to the capital (5) Articles of Cooperation means the articles of cooperation
required,patronizing their products and services and accepting a fair registered under this Code and includes a registered amendment
share of the risks and benefits of undertaking in accordance with thereof;
universally accepted cooperative principles.
(6) Bylaws means the bylaws registered under this Code and
2. Cooperative Principles includes any registered amendment thereof;
P. 523- 524 (Art. 4)
(7) Registration means the operative act granting juridical
1. Voluntary and Open Membership personality to a proposed cooperative and is evidenced by a
Cooperatives are voluntary organizations, open to all certificate of registration;
persons able to use their services and willing to accept the
responsibilities of membership, without gender, social, (8) Cooperative Development Authority refers to the government
racial, political, or religious discrimination. agency in charge of the registration and regulation of cooperatives
2. Democratic Member Control as such hereinafter referred to as the Authority;
Cooperatives are democratic organizations controlled by
their members, who actively participate in setting policies (9) Universally Accepted Principles means that body of
and making decisions. Men and women serving as elected cooperative principles adhered to worldwide by cooperatives;
representatives (directors/trustees) are accountable to the
membership. In primary cooperatives, members have equal (10) Representative Assembly means the full membership of a
voting rights (one member, one vote); cooperatives at other body of representatives elected by each of the sectors, chapter or
levels are organized in a democratic manner. district o the cooperative duly assembled for the purpose of
3. Members’ Economic Participation exercising such powers lawfully delegated unto them by the general
Members contribute equitably to, and democratically assembly in accordance with its bylaws;
control, the capital of their cooperative. At least part of
that capital is usually the common property of the (11) Officers of the Cooperative shall include the members of the
cooperative. Members usually receive limited board of directors, members of the different committee created by
compensation, if any, on capital subscribed as a condition the general assembly, general manager or chief executive officer,
of membership. Members allocate surpluses for any or all secretary, treasurer and members holding other positions as may be
of the following purposes: developing the cooperative, provided for in their bylaws;
possibly by setting up reserves, part of which at least
would be indivisible; benefiting members in proportion to (12) Social Audit is a procedure wherein the cooperative assesses
their transactions with the cooperative; and supporting its social impact and ethical performance vis-a-vis its stated
other activities approved by the membership. mission, vision, goals and code of social responsibility for
4. Autonomy and Independence cooperatives to be established by the Authority in consultation with
Cooperatives are autonomous, self-help organizations the cooperative sector. It enables the cooperative to develop a
controlled by their members. If they enter into agreements process whereby it can account for its social performance and
with other organizations, including governments, or raise evaluate its impact in the community and be accountable for its
capital from external sources, they do so on terms that decisions and actions to its regular members;
ensure democratic control by their members and maintain
their cooperative autonomy. (13) Performance Audit shall refer to an audit on the efficiency
5. Education, Training, and Information and effectiveness of the cooperative as a whole; its management
Cooperatives provide education and training for their and officers; and its various responsibility centers as basis for
members, elected representatives, managers, and improving individual team or overall performance and for
employees so they can contribute effectively to the objectively informing the general membership on such
development of their cooperatives. They inform the performance;
general public, particularly young people and opinion
leaders, about the nature and benefits of cooperation. (14) A Single-Line or Single-Purpose Cooperative shall include
6. Cooperation Among Cooperatives cooperative undertaking activities which are related to its main line
Cooperatives serve their members most effectively and of business or purpose;
strengthen the cooperative movement by working together
through local, national, regional, and international
(15) Service Cooperatives are those which provide any type of
structures.
service to its members, including but not limited to, transport,
7. Concern for Community
information and communication, insurance, housing, electric, health
Cooperatives work for the sustainable development of their
services, education, banking, and savings and credit;
communities through policies supported by the
membership.
(16) Subsidiary Cooperative refers to any organization all or
majority of whose membership or shareholders come from a
3. Definition of Terms
cooperative, organized for any other purpose different from that of,
P. 524 - 527 (Art. 5)
and receives technical, managerial and financial assistance from, a
cooperative, in accordance with the rules and regulations of the
(1) Member includes a person either natural or juridical who
Authority;" and
adhering to the principles set forth in this Code and in the Articles
of Cooperative, has been admitted by the cooperative as member;
(17) Federation of Cooperatives refers to three or more primary
cooperatives, doing the same line of business, organized at the
(2) General Assembly shall mean the full membership of the
municipal, provincial, city, special metropolitan political
cooperative duly assembled for the purpose of exercising all the
subdivision, or economic zones created by law, registered with the
rights and performing all the obligations pertaining to cooperatives,
Authority to undertake business activities in support of its member-
as provided by this Code, its articles of cooperation and bylaws:
cooperatives."
Provided, That for cooperatives with numerous and dispersed
membership, the general assembly may be composed of delegates
elected by each sector, chapter or district of the cooperative in
accordance with the rules and regulations of the Cooperative
Development Authority;
 (2) Of succession;
4. Purposes of Cooperatives
P. 534 (Art. 6) (3) To amend its articles of cooperation in accordance with the
provisions of this Code;
(1) To encourage thrift and savings mobilization among the
members; (4) To adopt bylaws not contrary to law, morals or public policy,
and to amend and repeal the same in accordance with this Code;
(2) To generate funds and extend credit to the members for
productive and provident purposes; (5) To purchase, receive, take or grant, hold, convey, sell, lease,
pledge, mortgage, and otherwise deal with such real and personal
(3) To encourage among members systematic production and property as the transaction of the lawful affairs of the cooperative
marketing; may reasonably and necessarily require, subject to the limitations
prescribed by law and the Constitution;
(4) To provide goods and services and other requirements to the
members; (6) To enter into division, merger or consolidation, as provided in
this Code;
(5) To develop expertise and skills among its members;
(7) To form subsidiary cooperatives and join federations or unions,
(6) To acquire lands and provide housing benefits for the members; as provided in this Code;

(7) To insure against losses of the members; (8) To avail of loans, be entitled to credit and to accept and receive
grants, donations and assistance from foreign and domestic sources,
(8) To promote and advance the economic, social and educational subject to the conditions of said loans, credits, grants, donations or
status of the members; assistance that will not undermine the autonomy of the cooperative.
The Authority, upon written request, shall provide necessary
(9) To establish, own, lease or operate cooperative banks, assistance in the documentary requirements for the loans, credit,
cooperative wholesale and retail complexes, insurance and grants, donations and other financial support;
agricultural/industrial processing enterprises, and public markets;
(9) To avail of preferential rights granted to cooperatives under
(10) To coordinate and facilitate the activities of cooperatives; Republic Act No. 7160, otherwise known as the Local Government
Code, and other laws, particularly those in the grant of franchises to
(11) To advocate for the cause of the cooperative movements; establish, construct, operate and maintain ferries, wharves, markets
or slaughterhouses and to lease public utilities, including access to
(12) To ensure the viability of cooperatives through the utilization extension and on-site research services and facilities related to
of new technologies; agriculture and fishery activities;

(13) To encourage and promote self-help or self-employment as an (10) To organize and operate schools in accordance with Republic
engine for economic growth and poverty alleviation; and Act No. 9155, Governance of Basic Education Act of 2001 and
other pertinent laws; and

(11) To exercise such other powers granted by this Code or

(14) To undertake any and all other activities for the effective and necessary to carry out its purpose or purposes as stated in its
efficient implementation of the provisions of this Code. Articles of cooperation.

7. Types and Categories

5. Objectives and Goals of Cooperatives P. 561 (Art. 23)
P. 534-535 (Art. 7)
Types of Cooperatives Cooperatives may fall under any of
The primary objective of every cooperative is to help improve the the following types:
quality of life of its members. Towards this end, the cooperative
shall aim to: (a) Credit Cooperative is one that promotes and
undertakes savings and lending services among its
(a) Provide goods and services to its members to enable them to members. It generates a common pool of funds in order to
attain increased income, savings, investments, productivity, and provide financial assistance to its members for productive
purchasing power, and promote among themselves equitable and provident purposes;
distribution of net surplus through maximum utilization of
economies of scale, cost-sharing and risk-sharing; (b) Consumers Cooperative is one of the primary
purpose of which is to procure and distribute commodities
(b) Provide optimum social and economic benefits to its members; to members and non-members;

(c) Teach them efficient ways of doing things in a cooperative (c) Producers Cooperative is one that undertakes joint
manner; production whether agricultural or industrial. It is formed
and operated by its members to undertake the production
(d) Propagate cooperative practices and new ideas in business and and processing of raw materials or goods produced by its
management; members into finished or processed products for sale by
the cooperative to its members and non-members. Any end
(e) Allow the lower income and less privileged groups to increase product or its derivative arising from the raw materials
their ownership in the wealth of the nation; and produced by its members, sold in the name and for the
account of the cooperative, shall be deemed a product of
(f) Cooperate with the government, other cooperatives and people- the cooperative and its members;
oriented organizations to further the attainment of any of the
foregoing objectives. (d) Marketing Cooperative is one which engages in the
supply of production inputs to members and markets their
6. Powers and Capacities products;
P. 535-538 (Art. 9)
(e) Service Cooperative is one which engages in medical
A cooperative registered under this Code shall have the following and dental care, hospitalization, transportation, insurance,
powers, rights and capacities: housing, labor, electric light and power, communication,
professional and other services;
(1) To the exclusive use of its registered name, to sue and be sued;
8. Functions and Federation of Cooperatives Cooperative unions may assist the national and local
P. 588 (Art. 24) governments in the latter's development activities in their
respective jurisdictions."
A federation of cooperatives is a cooperative the
members of which are primary cooperatives doing the 10. Cooperatives not in restraint of trade
same line of business. P. 535 (Art. 8)

The ff. Are the functions: No cooperative or method or act thereof which complies with this
(a) To carry on any cooperative enterprise authorized Code shall be deemed a conspiracy or combination in restraint of
under Article 6 that complements augments, or trade or an illegal monopoly, or an attempt to lessen competition or
supplements but does not conflict, complete with, nor fix prices arbitrarily in violation of any laws of the Philippines.
supplant the business or economic activities of its
members;
11. Organization of primary cooperative
(b) To carry on, encourage, and assist educational and P.538 (Art. 10)
advisory work relating to its member cooperatives;
Requisites:
(c) To render services designed to encourage simplicity, ● Fifteen (15) or more natural persons who are
efficiency, and economy in the conduct of the business of Filipino citizens,
its member cooperatives and to facilitate the ● Of legal age,
implementation of their bookkeeping, accounting, and ● Having a common bond of interest and
other systems and procedures; ● Are actually residing or working in the intended
area of operation
(d) To print, publish, and circulate any newspaper or other
publication in the interest of its member cooperatives and A prospective member of a primary cooperative must have
enterprises; completed a Pre-Membership Education Seminar (PMES).

(e) To coordinate and facilitate the activities of its member Any newly organized primary cooperative may be registered as
cooperatives; multipurpose cooperative only after compliance with the minimum
requirements for multipurpose cooperatives to be set by the
(f) To enter into joint ventures with national or Authority. A single-purpose cooperative may transform into a
international cooperatives of other countries in the multipurpose or may create subsidiaries only after at least two (2)
manufacture and sale of products and/or services in the years of operations.
Philippines and abroad; and
12. Economic Survey before formation of a proposed
(g) To perform such other functions as may be necessary cooperative
to attain its objectives. P. 538 (Art. 11)

9. Purposes of Cooperative Unions Every group of individuals or cooperatives intending to

P. 588-589 (Art. 25) form a cooperative under this Code shall submit to the
Authority a general statement describing, among others the
A cooperative union refers to a cooperative the members structure and purposes of the proposed cooperative:
of which are registered cooperatives and/or federations Provided, That the structure and actual staffing pattern of
organized purposely to represent the interest and welfare the cooperative shall include a bookkeeper; Provided,
of all types of cooperatives at the provincial, city, regional further, That they shall not be allowed to operate without
and national levels. the necessary personnel and shall also submit an economic
survey, indicating therein the area of operation, the size of
Registered cooperatives and federations at the appropriate membership, and other pertinent data in a format provided
levels may organize or join cooperative unions to represent by the Authority.
the interest and welfare of all types of cooperatives at the
provincial, city, regional, and national levels. Cooperative 13. LIABILITY OF COOPERATIVE DULY REGISTERED UNDER
unions may have the following purposes: THE PH COOPERATIVE CODE?

(a) To represent its member organizations; (p539) Shall have LIMITED LIABILITY.
14. TERM OF COOPERATIVE
(b) To acquire, analyze, and disseminate, economic,
statistical, and other information relating to its members (p539)
and to all types of cooperatives within its area of
operation; General Rule: Shall exist not exceeding 50 years from the date
of registration
(c) To sponsor studies in the economic, legal, financial,
social and other phases of cooperation, and publish the Unless:
results thereof; o sooner dissolve
o The said period is extended
(d) To promote the knowledge of cooperative principles
and practices; *Cooperative term may be extended for periods not exceeding
50 years by amendment of the articles of cooperation.
(e) To develop the cooperative movement in their
respective jurisdictions; Provided,

(f) To advise the appropriate authorities on all questions  that NO EXTENSION CAN BE MADE EARLIER THAN 5
relating to cooperatives; YEARS PRIOR TO THE ORIGINAL OR SUBSEQUENT
EXPIRY DATE UNLESS THERE ARE JUSTIFIABLE
(g) To raise funds through membership fees, dues and REASONS FOR AN EARLIER EXTENSION AS MAY BE
contributions, donations, and subsidies from local and DETERMINED BY THE AUTHORITY.
foreign sources whether private or government; and

(h) To do and perform such other non-business activities as 15. ARTICLES OF COOPERATION (Contents and
may be necessary to attain the foregoing objectives. Requirements of Registration with CDA)
(p.539-541)
  All cooperatives applying for registration shall file with  In case of denial of application- AN APPEAL SHALL LIE
the Authority the Articles of Cooperation. WITH THE OFFICE OF THE PRESIDENT within 90 days
 Shall be signed: from receipt of notice of such denial.
o by each of the organizers and acknowledged by  If the office of president fail to act on the appeal within
them if natural persons 90 days from the filing- SHALL MEAN APPROVAL OF
APPLICATION.
o by chairpersons or secretaries before a notary
17. EVIDENCE OF JURIDICAL PERSONALITY OF
public if juridical persons
COOPERATIVE
It shall set forth:
(p544)
i. Cooperative name which include the word
A Certificate of Registration issued by the COOPERATIVE
“Cooperative”
DEVELOPMENT AUTHORITY under its official seal shall be
ii. Purpose(s) and Scope of business
conclusive evidence that such cooperative is duly registered
iii. Term of Existence
unless its registration has been cancelled.
iv. Area of operation and postal addresses of its principal
office. Note:
v. Names, Nationality, and Registrants’ postal addresses.
vi. Common bond of membership  All applications for registration of cooperative and
vii. List of names of the directors who shall manage the amendment shall be filed and registered with the CDA
cooperative EXTENSION OFFICE having jurisdiction over the
viii. Share Capital amount, names and residences of principal office of the proposed cooperative.
contributors and a statement of whether the
cooperative is: (Article 23 PCC)  (Secondary or Tertiary) shall be registered where its
a. Primary principal office is located. Shall operate with
b. Secondary municipal/city, provincial, regional, or inter-regional
c. Or Tertiary coverage.
 May also contain any other provisions consistent with
the PCC or any related law.  Tertiary shall be registered with national coverage and
selected types of cooperatives including amendments.
 4 copies of each proposed articles of incorporation, by-
laws, and the general statement required under article  Tertiary Cooperatives with National Coverage shall
11 of PCC shall be SUBMITTED TO AUTHORITY refer to a cooperative whose area of operation covers
three or more regions in LUZON, VISAYAS, AND
 No cooperative other than a cooperative union as MINDANAO.
described under article 25 of PCC shall be registered
unless the articles of cooperation is accompanied with
the:
18. AMENDMENT OF ARTICLES OF COOPERATION & BY-
o BONDS OF THE ACCOUNTABLE OFFICERS and LAWS
o SWORN STATEMENT OF TREASURER (p552)
ELECTED BY SUBSCRIBERS showing at least
25% per centum of the authorized share Unless otherwise prescribed by PCC and for legitimate
capital has been subscribed and at least 25% purposes, any provision or matter stated in the articles of
per centum has been paid. cooperation and by-laws may be amended by 2/3 vote of all the
members with voting rights, without prejudice to the right of
 Paid-in Capital must not be less than 15,000 pesos. the dissenting members to exercise their right to withdraw
their membership under article 30.
 The AUTHORITY shall periodically assess the required
Both original and amended articles and or by-laws shall contain
paid-in capital and may increase it every 5 years when
all provisions required.
necessary upon consultation with the NEDA.
Duly certified under oath by cooperative secretary and a
majority of the directors stating the fact that said amendment
NOTE:
have been duly approved and must be submitted to the
 25% rule shall be paid up by the members. Shall be Authority.
applied to common share capital only.
Shall take effect upon approval within 30 days from filing if not
 No members shall own more than 10% of the total
acted upon by the authority for a cause not attributable to the
subscribed share capital.
cooperative.
 In case of Secondary & Tertiary Cooperatives, no
member should own more than 10% of the Total 19. TYPES OF MEMBERSHIP IN COOPERATIVE
Subscribed SC of the Cooperative Federation/Union.
 For both Common & Preferred SC- NO FRACTIONAL (p604)
SHARES SHALL BE ISSUED.
a) Regular Members- one who has complied with all the
membership requirements and entitled to all the rights
and privileges of membership.
16. JURIDICAL PERSONALITY OF COOPERATIVE
b) Associate Members- one who has no right to vote nor
(p542)
be voted upon and shall be entitled only to such rights
A cooperative formed and organized under the PCC acquired and privileges as the bylaws may provide.
juridical personality from the date the Authority issues a
-Provided, that an associate who meets the minimum
certificate of registration under its official seal.
requirements of regular membership, continues to
patronize the cooperative for 2 years, and signifies
his/her intention to remain a members shall be
 All applications for registration shall be finally considered a regular member
disposed of by the Authority within a period of 60 days
from the filing otherwise the application is deemed *A cooperative organized by minors shall be considered a
approved, unless the cause of delay is attributable to LABORATORY COOPERATIVE and must be affiliated with a
the applicant. registered cooperative.
*Laboratory Cooperative- a cooperative duly recognized by The committee is given thirty (30) days from receipt
the cooperative development authority formed and managed thereof to decide on the appeal. Failure to decide within
primarily by minors, and is affiliated with another registered the prescribed period, the appeal is deemed approved
cooperative which is called the GUARDIAN COOPERATIVE. in favor of the member.
*GUARDIAN COOPERATIVE- refers to a duly registered Pending a decision by the general assembly, the
cooperative to which a laboratory cooperative is affiliated with. membership remains in force.
*MINOR- refers to an individual below 18 years of age.
*AFFILIATION- refers to the act of being formally connected or
joined by a Laboratory Cooperative to a guardian cooperative. 22. Refund of interests

All sums computed in accordance with the bylaws to be

20. LIABILITY OF MEMBERS due from a cooperative to a former member shall be
paid to him either by the cooperative or by the
-A member shall be liable for the debts of the cooperative to the approved transferee, as the case may be, in accordance
extent of his contribution to the share capital of the cooperative. with this Code."
 
23. Administration of cooperative
21. TERMINATION OF MEMBERSHIP (Grounds &
 Composition of General Assembly
Procedures)
 A member of a cooperative may, for any valid reason, i. members who are entitled to vote under the articles
withdraw his membership from the cooperative by of cooperation
giving a 60 day notice to the board of directors. Subject ii. bylaws of the cooperative.
to the bylaws of the
Subject to the bylaws of the cooperative, the
withdrawing member shall be entitled to a refund of
23. ADMINISTRATION OF COOPERATIVE (within pages 615-
his share capital contribution and all other interests in
619)
the cooperative: 
● POWER AND DEFINITION OF GA
i. Provided, That such fund shall not be made if
upon such payment the value of the assets of The GA shall be the highest policy making body of the
the cooperative would be less than the coop and shall exercise such power as are stated in the PH
aggregate amount of its debts and liabilities Cooperative Code, in the AoC and in the bylaws of the
exclusive of his share capital contribution. cooperative.

 The death or insanity of a member in a primary ● NONDELEGABLE POWER OF GA

cooperative, and the insolvency or dissolution of a
member in a secondary or tertiary cooperative may be The GA shall have the ff powers which cannot be
considered valid grounds for termination of delegated:
membership: 1. To determine and approve amendments to the Aoc
I. Provided, That in case of death and bylaws
or insanity of an agrarian 2. To elect of appoint the members of the BOD, and to
reform beneficiary-member of a remove them for cause. However, in the case of
cooperative, the next-of-kin may electric cooperative registered under PH cooperative
assume the duties and code, election of the members of the board shall be
responsibilities of the original held in accordance with its bylaws or election
member. guidelines of such electric cooperative
 Membership in the cooperative may be terminated by a 3. To approve developmental plans of the cooperative
vote of the majority of all the members of the board of
directors for any of the following causes:
i. When a member has not patronized any of
● PROCEDURE AND REQUIRED VOTE FOR
the services of the cooperative for an unreasonable
DELEGATION OF POWERS OF GA TO BOD
period of time
ii. When a member has continuously failed to
Subject to such other provision of the PH cooperative
comply with his obligations;
Code and only for the purpose of prompt decision-making,
iii. When a member has acted in violation of the bylaws
the GA may by a ¾ votes of all its voting members with
and the rules of the cooperative; and voting rights, present and constituting a quorum, delegate
iiii. For any act or omission injurious or some of its powers to a smaller body of the cooperative.
prejudicial to the interest or the welfare of the These powers shall be enumerated under the bylaws of the
cooperative. cooperative.
"A member whose membership the board of directors ● COOPERATIVE MEETINGS
may wish to terminate shall be informed of such
intended action in writing and shall be given an 1. Regular meetings shall be held annually by the GA on
opportunity to be heard before the said board makes a fixed date in the bylaws, or if nit fixed, on any date
its decision. The decision of the board shall be in withing 90 days after the close of each fiscal year:
writing and shall be communicated in person or by provided, that notice of regular meetings shall be sent
registered mail to said member and shall be appealable in writing, by posting or publication, or through other
within thirty (30) days from receipt thereof to the electronic means to all members of records.
general assembly whose decision shall be final. 2. Whenever necessary, a special meeting of the general
assembly may be called at any time by a majority vote
The general assembly may create an appeal and of the board of directors or as provided for in the
grievance committee whose members shall serve for a bylaws: Provided, That a notice in writing shall be
period of one (1) year and shall decide appeals on sent one (1) week prior to the meeting to all members
membership termination. who are entitled to vote. However, a special meeting
shall be called by the board of directors after
compliance with the required notice within from at
 least ten per centum (10%) of the total members who
re entitled to vote to transact specific business covered ● MEETING OF THE COOPERATIVE BOARD AND
by the call. QUOROM REQUIREMENT
3. In the case of a newly approved cooperative, a special
general assembly shall be called, as far as practicable, 1. In the case of primary cooperatives, regular meetings of the
within ninety (90) days from such approval; board of directors shall be held at least once a month.
4. The Authority may call a special meeting of the 2. Special meetings of the board of directors may be held at any
cooperative for the purpose of reporting to the time upon the call of the chairperson or a majority of the
members the result of any examination or other members of the board: Provided, That written notices of the
investigation of the cooperative affairs; and meeting specifying the agenda of the special meeting shall be
given to all members of the board at least one (1) week before
5. Notice of any meeting may be waived, expressly or the said meeting.
impliedly, by any member.
3. A majority of the members of the Board shall constitute a
quorum or the conduct of business, unless the bylaws proved
● QUOROM otherwise.
 A quorum shall consist of at least twenty-five per centum 4. Directors cannot attend or vote by proxy at board meetings.
(25%) of all the members entitled to vote. In the case of
cooperative banks, the quorum shall be as provided in
Article 99 of this Code. In the case of electric cooperatives ● VACANCY
registered under this Code, a quorum, unless otherwise
provided in the bylaws, shall consist of five per  Any vacancy in the board of directors, other than by
centum (5%) of all the members entitled to vote. expiration of term, may be filled by the vote of at least a
majority of the remaining directors, if still constituting a
● VOTING SYSTEM quorum; otherwise, the vacancy must be filled by the
general assembly in a regular or special meeting called for
Each member of a primary cooperative shall have only one the purpose. A director so elected to fill a vacancy shall
(1) vote. In the case of members of secondary or tertiary serve only the unexpired term of his predecessor in office.
cooperatives, they shall have one (1) basic vote and as
many incentive votes as provided for in the bylaws but not
exceed five (5) votes. The votes cast by the delegates shall ● OFFICERS OF THE COOPERATIVE
be deemed as votes cast by the members thereof. - Page 619
-
"However, the bylaws of a cooperative other than a - The BOD shall elect from themselves the chairperson and
primary may provide for voting by proxy. Voting by proxy vice-chairperson, and elect or appoint other officers of the
means allowing a delegate of a cooperative to represent or cooperative from outside of the board in accordance with
vote in behalf of another delegate of the same cooperative. their bylaws
- All officers shall serve during good behavior and shall not
be removed except for cause after due hearing
● COMPOSITION AND TERM OF THE BOD
- Loss of confidence shall not be a valid ground for removal
Unless otherwise provided in the bylaws, the direction and unless evidenced by acts or omission causing loss of
management of the affairs of a cooperative shall be vested confidence in the honesty and integrity of such officer
in a board of directors which shall be composed of not less - No two or more persons with relationship up to the third
than five (5) nor more than fifteen (15) members elected civil degree of consanguinity or affinity nor shall any
by the general assembly for a term of two (2) years and person engaged in a business similar to that of the
shall hold office until their successors are duly elected an cooperative nor who in any other manner has interests in
qualified, or until duly removed for caused. conflict with the cooperative shall serve as an appointive
officer.
● POWERS OF THE BOD - No two or more persons with relationship up to third civil
degree of consanguinity shall serve as appointive officer
The board of directors shall be responsible for the strategic A. Officers of the Cooperative as provided under Art.5(11) of
planning, direction-setting and policy-formulation RA 9520:
activities of the cooperatives. 1. Members of the BOD
2. Member of the different committee created by the
● QUALIFICATIONS OF DIRECTORS IN A general assembly
COOPERATIVE 3. General manager or the CEO
●  Any member of a cooperative who under the bylaws of 4. Secretary
the cooperative, has the right to vote and who possesses all 5. Treasurer
the qualifications and none of the disqualifications 6. Members holding other positions as may be provided
provided in the laws or bylaws shall be eligible for election for in the bylaws of the cooperative
as director. B. Officers elected by the General Assembly
1. Members of the BOD
● The cooperative may, by resolution of its board of 2. Members of the Audit and Election Committee
directors, admit as directors, or committee member one C. Officers appointed by the Board of Directors
appointed by any financing institution from which the 1. Treasurer
cooperative received financial assistance solely to provide 2. Secretary
technical knowledge not available within its membership. 3. Members of the mediation and conciliation committee
Such director or committee member not be a member of 4. Members of the ethics committee
the cooperative and shall have no powers, rights, nor 5. Members of other committees unless otherwise
responsibilities except to provided technical assistance as provided in the bylaws
required by the cooperative. 6. Members of the BOD appointed by the remaining
directors for vacancy other than expiration of term
● The members of the board of directors shall not hold any 7. General Manager
other position directly involved in the day to day operation
and management of the cooperative. For reference:

● Any person engaged in a business similar to that of the 1. Relationship by Consanguinity

cooperative or who in any way has a conflict of interest a. First Degree- parent to child
with it, is disqualified from election as a director of said b. Second Degree- grandparent to grandchild, brother to
cooperative. sister
 c. Third Degree- uncle to child, aunt to child, great The officers of cooperatives engaged in savings and credit
grandparent to great grandchild operations shall be required to undergo an additional 16 hours of
specialized training on financial management, risk management and
● COMMITTEES OF COOPERATIVES credit management, provided that these cooperatives have at least
- Page 621 5M worth of deposit liabilities based on the latest Audited FS of the
1. The bylaws may create an executive committee to be coop.
appointed by the BOD with such powers and duties as may
be delegated to it in the bylaws or by a majority vote of all Cooperative officers shall likewise endeavor to undergo additional
the members of the BOD appropriate trainings
2. The bylaws shall provide for the creation of an audit,
election, mediation, and conciliation, ethics, and such other Period of Compliance- Cooperative officers shall complete the
committees as may be necessary for the conduct of the required trainings within the first half of their term
affairs of the cooperative. Sanctions for noncompliance/failure to comply with the mandatory
- The members of both the audit and election committee training:
shall be elected by the general assembly and the rest shall
be appointed by the board. 1. For the Cooperative Officers
- The audit committee shall be directly accountable and -failure to comply shall be a ground for his/her
responsible to the general assembly. It shall have the disqualification as future officer of the cooperative in any
power and duty to continuously monitor the adequacy and position until he/she has complied with the required
effectiveness of the cooperative’s management control training
system and audit the performance of the cooperative and
its various responsibility centers 2. For the Cooperative

Unless otherwise provided in the bylaws, the board, in case if a - willful failure of the concerned cooperative to comply with the
vacancy in the committees, may call an election to fill the training requirements for its officers, despite notice shall be a
vacancy or appoint a person to fill the same subject to the ground for the non-issuance of the certificate o compliance to the
provisions that the person elected or appointed shall serve only cooperative for the next immediate year
for the unexpired portion of the term Note: Certificate of good standing is now termed as Certificate of
● FUNCTIONS, RESPONSIBILITIES, AND Compliance
TRAINING REQUIREMENTS OF DIRECTORS, Certificate of Compliance- it refers to the certificate, in lieu of the
OFFICERS, AND COMMITTEE MEMBERS certificate of good standing, issued to all types of cooperatives after
- Page 622 compliance with the rules of the authority
- Shall be in accordance with the rules and regulations
issued by the authority
Standard Training Curricula for Cooperative Officers ● LIABILITY OF DIRECTORS, OFFICERS AND
COMMITTEE MEMBERS
1. Basic Cooperative course - Page 628
2. Cooperative management and governance - Directors, officers and committee members who willfully
3. Financial management and knowingly vote for or assent to patently unlawful acts
4. Conflict management or who are guilty of gross negligence or bad faith in
5. Parliamentary procedure directing the affairs of the cooperative or acquire any
6. Leadership and values re-orientation personal or pecuniary interest in conflict with their duty as
7. Strategic planning such directors, officers or committee members shall be
8. Audit management liable jointly and severally for all damages or profits
9. Records management resulting therefrom to the cooperative, members, and other
10. Entrepreneurial and business management persons
11. Basic accounting for non-accountants - When a director, officer or committee member attempts to
12. Internal control acquire, in violation of his duty, any interest or equity
13. Rules formulation adverse to the cooperatives in respect to any matter which
14. Cooperative standards has been reposed in him in confidence, he shall, as a
trustee for the cooperative, be liable for damages and shall
- The CDA Accredited Cooperative training provider must be accountable for double the profits which otherwise
adopt these in the conduct of the training for the would have accrued to the cooperative.
cooperative officer.
- Non-compliance therein shall be a valid ground for ● COMPENSATION OF DIRECTORS
revocation/cancellation of their accreditation with the - Page 629
authority 1. In the absence of any provisions in the bylaws fixing
The following officers of the cooperative regardless of type and their compensation, the directors shall not receive any
size compensation except for reasonable per diems.
Provided however, that the directors and officers shall
1. BOD not be entitled to any per diem when, in the preceding
2. Secretary calendar year, the cooperative reported a net loss or
3. Treasurer had a dividend rate less than the official inflation rate
4. Election committee for the same year. Any compensation other than per
5. Audit committee diems may be granted to directors by a majority vote
6. Ethics committee of the members with voting rights at a regular or
7. Mediation and conciliation committee special journal assembly meeting specifically called
8. Other committees created by the general/representative for the purpose: Provided, that no additional
assembly compensation other than per diems shall be paid
9. General manager or CEO during the first year of existence of any cooperative.
2. The compensation of officers of the cooperative as
Shall be required to undergo a maximum of sixteen hours training well as the members of the committee created
on the fundamentals of cooperatives and another sixteen hours on pursuant to this code or its bylaws may be fixed in the
governance and management of cooperatives within the first half of bylaws.
their term. 3. Unless already fixed in the bylaws, the compensation
of all other employees shall be determined by the
Micro-cooperatives- shall only undergo 16 hours of training on the
BOD.
fundamentals, governance and management cooperatives.
Purpose- the authority issued these guidelines in order to ensure the
proper implementation of article 46 of RA 9520 and to enhance the
sense of accountability and fiduciary responsibility of cooperative Where any of the first 2 conditions set forth in the preceding
as trustees of the members paragraph is absent, in the case of a contract with a directors, such
contract may be ratified by a ¾ vote of all the members with voting
Terms: rights, present and constituting a quorum in a meeting called for the
Compensation- a broad term that includes all forms of purpose: Provide, that full disclosure of the adverse interest of the
remunerations. It refers to any remuneration given for services directors involved is made at such meeting, and that the contract is
rendered, like salary which is a compensation paid regularly, as by fair and reasonable under the circumstances.
month. It does not apply an immediate payment, or direct return, ● DISLOYALTY OF A DIRECTOR
nor the payment of cash fare or its equivalent. It refers to any - Page 632
remuneration, by whatever name or euphemism it is designated.
A director who by virtue of his office acquire for himself an
Per diem- refers to the allowance given as a reimbursement for opportunity which should belong to the cooperative shall be liable
extra expenses incurred by one in the performance of his duties. for damages and must account for double the profits that otherwise
Honorarium- a gesture of appreciation for the service pf one with would have accrue to the cooperative by refunding the same, unless
expertise of professional standing in recognition of his broad and his act has been ratified by a ¾ vote of all the members with voting
superior knowledge in specific fields. It is given to rights, present and constituting a quorum. This provision shall be
official/employee not as a matter of obligation but in appreciation applicable, notwithstanding the fact that the director used his own
for services which admits of no compensation in money. funds in the venture.

Primary Basis of and Prohibition on Compensation to Directors ● ILLEGAL USE OF CONFIDENTIAL

INFORMATION
- As a general rule, the bylaws of the cooperative shall fix
the compensation of the directors. However, if the bylaws -page 632
of the cooperative have not fixed it the directors are not 1. A director or officer, or an associate of a director or officer, who,
entitled to receive any compensation from the cooperative. for his benefit or advantage or than pf an associate, makes use of
Only reasonable per diem are given. confidential information that, if generally known, might reasonably
Alternative Basis of Granting Compensation to Directors be expected to adversely affect the operation and viability of the
cooperative, shall be held:
- Any compensation other than per diem may be given to the
a. liable to compensate the cooperative for the direct losses suffered
directors if such compensation is authorized by majority
by the cooperative as a result of the illegal use of information
vote of all members with voting rights at a regular or
special general assembly meeting specifically called for b. accountable to the cooperative for any direct benefit or advantage
the purpose. received or yet to be received by him or his associate, as a result of
the transaction
Suspension of the Grant of Per Diem
2. The cooperative shall take the necessary steps to enforce the
- When any of the ff adverse circumstances occurs in the
liabilities described in subsection a.
cooperative:
a. When the cooperative incurred net loss in the ● REMOVAL OF ELECTED OFFICERS OR
preceding year DIRECTORS
b. When the dividend rate of the cooperative fell below - All complaints for the removal of any elected officer shall
the official national inflation rate during the preceding be filed with the BOD. Such officers shall be given the
year opportunity to be heard. Majority of the BOD may place
the officer concerned under preventive suspension pending
Entitlement During 1st year of Existence
the resolution of the investigation. Upon finding of a prima
- Only reasonable per diem allowed facie evidence of guilt, the board shall present its
recommendations for removal to the general assembly
Compensation of Committee members - An elective officer may be removed by ¾ votes of the
regular members present and constituting a quorum, in a
- May be fixed in the bylaws of the cooperative
regular or special general assembly meeting called for the
Compensation of Cooperative Employees purpose. The officer concerned shall be given an
opportunity to be heard at said assembly.
- Determined by the BD subject to the existing labor laws
Monitoring
- All inspectors or examiners of the authority shall include
the implementation of article 46 of RA 9520 and this
memorandum circular as one of the items for inspection or
examination and the same shall be reflected in the
inspection or examination report
● DEALING OF DIRECTORS, OFFICERS, OR
COMMITTEE MEMBERS
- Page 631
- A contract entered into by the cooperative with 1 or more
of its directors, officers, and committee members is
voidable, at the option of the cooperative, unless all the
following conditions are present.
1. That the presence of such directors in the board
meeting wherein the contract was approved was not
necessary to constitute a quorum for such meeting.
2. That the vote of such director was not necessary for
the approval of the contract
3. That the contract is fair and reasonable under the
circumstance
4. That in the case of an officers or committee member,
the contrast with the officer or committee member has
been previously authorized by the general assembly or
by the BOD.
APPLE LACKING

CHAPTER V- RESPONSIBILITIES, RIGHTS AND

PRIVILEGES OF COOPERATIVE
Privileges of Cooperatives
Notwithstanding the provisions of any law to the contrary:
1. Privilege of depositing their sealed cash boxes or
containers, documents or any valuable papers in the safes
of the municipal or city treasures and other government
offices free of charge, and the custodian of such articles
shall issue a receipt acknowledging the articles received
duly witnessed by another person;
2. Cooperatives organized among government employees,
notwithstanding any law or regulation to the contrary, shall
enjoy the free use of any available space in their agency,
whether owned or rented by the Government;
3. Cooperatives rendering special types of services and
facilities such as cold storage, ice plant, electricity,
transportation and similar services and facilities shall
secure a franchise therefore, and such cooperatives shall
open their membership to all persons qualified in their
areas of operation;
4. In areas where appropriate cooperatives exist, the
preferential right to supply government institutions and
agencies rice, corn and other grains, fish and other marine
products, meat, eggs, milk, vegetables, tobacco, and other
agricultural commodities produced by their ;
5. Preferential treatment in the allocation of fertilizers,
including seeds and other agricultural inputs and
implements, and in rice distribution shall be granted to
cooperatives by the appropriate government agencies;
6. Preferential and equitable treatment in the allocation or
control of bottomries of commercial shipping vessels in
connection with the shipment of goods and products of
cooperatives;
7. Cooperatives and their federations, such as farm and
fishery producers and suppliers, market vendors and such
other cooperatives, which have for their primary purpose
the production and/or the marketing of products from
agriculture, fisheries and small entrepreneurial industries
and federations thereof, shall have preferential rights in the
management of public markets and/or lease of public
market facilities, stalls or spaces: Provided, That these
rights shall only be utilized exclusively by cooperatives:
Provided further, That no cooperative forming a joint
venture, partnership or any other similar arrangement with
a non-cooperative entity can utilize these rights;
8. Cooperatives engaged in credit services and/or federations
shall be entitled to loans credit lines, rediscounting of their
loan notes, and other eligible papers with the
Development Bank of the Philippines, the Landbank of
the Philippines and other financial institutions except
the Bangko Sentral ng Pilipinas (BSP);
The Philippine Deposit Insurance
Corporation (PDIC) and other government agencies,
government-owned and controlled corporations and
government financial institutions shall provide technical
assistance to the registered national federations and unions
of cooperatives which have significant engagement in
savings and credit operations in order for these federations
and unions to establish and/or strengthen their own
autonomous cooperative deposit insurance systems;
9. A public transport service cooperative may be entitled to
financing support for the acquisition and/or maintenance of
 land and sea transport equipment, facilities and parts published in the municipality or city where the principal office of
through the program of the government financial the cooperative is situated or In the absence of such local
institutions. It shall have the preferential right to the newspaper, in a newspaper of general circulation in the Philippines,
management and operation of public terminals and ports and a copy shall likewise be posted for three (3) consecutive weeks
whether land or sea transport where the cooperative in three (3) public places in the municipality or city where the
operates and or securing a franchise for active or potential cooperative’s office is located.
routes for the public transport;
10. Cooperatives transacting business with the Government of Upon expiry of the five (5) day notice to file objections, the
the Philippines or any of its political subdivisions or any of Authority shall proceed to hear the petition and try any issue raised
its agencies or instrumentalities, including government- in the objection filed; and if the objection is sufficient and the
owned and controlled corporations shall be exempt from material allegations of the petition are proven, it shall issue an order
prequalification bidding requirements notwithstanding the to dissolve the cooperative and direct the disposition of its assets in
provisions of Republic Act No.9184, otherwise known as, accordance with existing rules and regulations. The order of
the Government Procurement Act; dissolution:
11. Privilege of being represented by the provincial or city 1. The assets and liabilities of the cooperative;
fiscal or the Office of the Solicitor General, free of charge, 2. The claim of any creditor;
except when the adverse party is the Republic of the 3. The number of members; and
Philippines; 4. The nature and extent of the interests of the members
12. Cooperatives organized by faculty members and of the cooperative.
employees of educational institutions shall have the
preferential right in the management of the canteen and Involuntary Dissolution
other services related to the operation of the educational
institution where they are employed: Provided, That such By order of a competent court after due hearing on the grounds
services are operated within the premises of the said of:
educational institution; and
1. Violation of any law, regulation or provisions of its
13. The appropriate housing agencies and government
bylaws; or
financial institutions shall create a special window for
2. Insolvency.
financing housing projects undertaken by cooperatives,
with interest rate and terms equal to, or better than those Dissolution by Order of the Authority
given for socialized housing projects. This financing shall
be in the form of blanket loans or long-term wholesale The Authority may suspend or revoke, after due notice and
loans to qualified cooperatives, without need for individual hearing, the certificate of registration of a cooperative on any of
processing. the following grounds:
The Authority, in consultation with the appropriate
1. Having obtained its registration by fraud;
government agencies and concerned cooperative sector,
2. Existing for an illegal purpose;
shall issue rules and regulations on all matters concerning
3. Willful violation, despite notice by the Authority, of the
housing cooperatives.
provisions of this Code or its bylaws;
4. Willful failure to operate on a cooperative basis; and
25. DISSOLUTION OF COOPERATIVES (CHAPTER 7) 5. Failure to meet the required minimum number of members
in the cooperative.
Voluntary Dissolution Where No Creditors Are Affected
Dissolution by Failure to Organize and Operate
The dissolution may be affected by a majority vote of the board of
directors, and by a resolution duly adopted by the affirmative vote If a cooperative has not commenced business and its
of at least three-fourths (3/4) of all the members with voting rights, operation within two (2) years after the issuance of its certificate of
present and constituting a quorum at a meeting to be held upon call registration or has not carried on its business for two (2)
of the directors consecutive years, the Authority shall send a formal notice to the
said cooperative to show cause as to its failure to operate. Failure of
Provided, That the notice of time, place and object of the meeting the cooperative to promptly provide justifiable cause for its failure
shall be published for three (3) consecutive weeks in a newspaper to operate shall warrant the Authority to delete its name from the
published in the place where the principal office of said cooperative roster of registered cooperatives and shall be deemed dissolved.
is located, or in a newspaper of general circulation in the
Philippines 26. LIQUIDATION

Provided, that the notice is sent to each member of record either by Nature- The various activities undertaken by a dissolved
registered mail or by personal delivery at least thirty (30) days prior cooperative, through its duly constituted Board of Liquidators,
to said meeting. namely to:

A copy of the resolution authorizing the dissolution shall be a. Make inventory of assets and liabilities of the Cooperative;
certified to by a majority of the board of directors and b. Preserve the existing assets of the cooperative;
countersigned by the board secretary. The Authority shall thereupon c. Convert all assets of the cooperative into cash;
issue the certificate of dissolution. d. Pay the creditors;
e. Prosecute and depend suits by or against the cooperative;
Voluntary Dissolution Where Creditors are Affected f. Settle and closure of its affairs;
g. Dispose, convey and distribute its remaining assets;
Where the dissolution of the cooperative may prejudice the rights of
h. Transfer of the statutory funds to the intended
any creditor, the petition for dissolution shall be filed with the
beneficiaries; and
Authority.
i. Submit the Final Report to the Cooperative Development
The petition shall be signed by a majority of its board of directors or Authority.
other officers managing its affairs, verified by its chairperson or
The dissolved cooperative shall continue to exist for three (3)
board secretary or one of its directors and shall set forth all claims
years from the issuance of the Order of Dissolution except that
and demands against it and that its dissolution was resolved upon
at any time during the said period, the cooperative is authorized
by the affirmative vote of at least three-fourth (3/4) of all the
and empowered to convey all of its properties to Trustees for
members with voting rights, present and constituting a quorum at a
the benefit of its members, creditors and other persons in
meeting called for that purpose.
interest. From and after any such conveyance, all interests
If the petition is sufficient in form and substance, the which the cooperative had in the properties are terminated.
Authority shall issue an order reciting the purpose of the petition
27. CHAPTER II- ORGANIZATION AND REGISTRATION
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 Division of Cooperatives
copy of the order shall be published at least once a week for three
(3) consecutive weeks in a newspaper of general circulation
Page 553. Any registered cooperative may by a resolution approved 3. Revolving capital which consists of the deferred payment of
by a vote of three-fourths (3/4) of all the members with voting patronage refunds, or interest on share capital; and
rights, present and constituting a quorum, resolve to divide itself 4. Subsidies, donations, legacies, grants, aids and such other
into two (2) or more cooperatives; assistance from any local or foreign institution whether public
or private: Provided, That capital coming from such subsides,
The procedure shall be prescribed in the regulations of the donations, legacies, grants, aids and other assistance shall not
Authority: Provided, all the requirements set forth in the Philippine be divided into individual share capital holdings at any time
Cooperative Code have been complied by the new cooperatives: but shall instead form part of the donated capital or fund of the
provided, further, that no division of a cooperative in fraud of cooperative.
creditors shall be valid.
Merger and Consolidation of Cooperatives Upon dissolution, such donated capital shall be subject to escheat.
1. Two (2) or more cooperatives may merge into a single
cooperatives which shall either be one of the constituent
cooperatives or the consolidated cooperative. MAXIMUM LIMITATIONS ON SHARE ON SHARE CAPITAL
2. No merger or consolidation shall be valid unless approved HOLDINGS OF A MEMBER (ART. 73)
by a three-fourths (3/4) vote of all the members with
voting rights, present and constituting a quorum of each of No member of primary cooperative other than cooperative itself
the constituent cooperatives at separate general assembly shall own or hold more than ten per centum (10%) of the share
meetings. The dissenting members shall have the right to capital of the cooperative.
exercise their right to withdraw their membership pursuant
Note: Where a member of cooperative dies, his heir shall be
to Article 30.
entitled to the shares of the decedent: Provided, That the total
3. The Authority shall issue the guidelines governing the
shareholding of the heir does not exceed ten per centum (10%) of
procedure of merger or consolidation of cooperatives. In
the share capital of the cooperative; Provided, further, That the heir
any case, the merger or consolidation shall be effective
qualify and is admitted as members of the cooperative: Provided
upon the issuance of the certificate of merger or
finally , That where the heir fails to qualify as a member or where
consolidation by the Authority.
his total shareholding exceeds ten per centum (10%) of the share
Consolidation- a union of two or more existing cooperatives capital , the share or shares excess will revert to the cooperative
belonging to the same category to form a new cooperative called upon payment to the heir of the value of such shares
the consolidated cooperative.
Merger- a union of two or more existing cooperatives belonging to
MAXIMUM LIMIT ON THE AMOUNT OF “PAR VALUE” OF
the same category whereby the surviving cooperative, retaining its
SHARE OF A COOPERATIVE (ART. 76)
identity, absorbs one or more constituent cooperative/s.
Share refers to a unit of capital in a primary cooperative the par
Constituent Cooperatives- cooperatives, which are parties to the
value of which may be fixed to any figure not more than One
merger/consolidation.
thousand pesos (P1,000.00).
Surviving Cooperative- cooperative which survives and continue
Notes:
the business of the combined cooperative in case of merger.
The share of capital of a cooperative is the money paid or required
Consolidated Cooperative- new cooperative created after the
to be paid for the operations of the cooperative.
termination of the old cooperative in case of consolidation.
The method for the issuance of share certificates shall prescribed in
Third Party- any person natural or juridical, who or which shall be
its bylaws.
adversely affected in case of merger or consolidation.

FINES ON UNPAID SUBSCRIBED SHARE CAPITAL (ART.

EFFECTS OF MERGER
77)
1. The constituent cooperatives shall become a single
The bylaws of a cooperative may prescribe a fine on unpaid
cooperative which, in case of merger, shall be surviving
subscribed share capital. Provided, that such fine is fair and
cooperative;
reasonable under the circumstances.
2. The separate existence of the constituent cooperative shall
cease;
3. The surviving cooperative shall possess all the assets,
rights, privileges, immunities and franchises of each of the ASSIGNMENT OF SHARE CAPITAL CONTRIBUTION OR
constituent cooperatives; INTEREST OR INTEREST IN A COOPERATIVE (ART. 74)
4. The surviving shall be responsible for all the liabilities and
NO member shall transfer his shares or interest in the cooperative
obligation of each of the constituent cooperatives in the
or any part thereof unless.
same manner as if such surviving had itself incurred such
liabilities or obligations; 1. He has held such share capital contribution or interest for not
5. Any claim, action or proceeding pending by or against any less than one (1) year.
such constituent cooperatives may be prosecuted by or 2. The assignment is made to the cooperative or to a member of
against the surviving cooperative, as the case may be; and the cooperative or to a person who falls within the field of the
6. Neither the rights of creditors nor any lien upon the membership of the cooperative; and
property of any such constituent cooperatives shall be 3. The board of directors has approved such assignment.
impaired by such merger.

CAPITAL BUILD UP OF A COOPERATIVE (ART. 75)

28. CAPITAL, PROPERTY, ANDFUNDS OF COOPERATIVE
Bylaws of every cooperative shall be provided for a reasonable and
realistic member capital build-up program to allow the continuing
CHAPTER VIII growth of the members' investment in their cooperative as their
CAPITAL, PROPERTY, AND FUNDS economic conditions continue to improve.

SOURCES OF CAPITAL (ART. 72)

REVOLVING CAPITAL OF A COOPERATIVE. (ART. 79)
1. Member's share capital;
2. Loans and barrowings including deposits; The general assembly of any cooperative may authorize the board
of directors to
 ✔ Raise a revolving capital to strengthen its capital structure
by deferring the payment of patronage refunds and
interest on share capital, or CHAPTER X
✔ By the authorized deduction of a percentage from the ALLOCATION AND DISTRIBUTION OF NET SURPLUS
proceeds of products sold or services rendered, or per unit
of product or services handled. NET SURPLUS (ART. 85)
NET SURPLUS of cooperatives shall be determined in
The board of directors shall issue revolving capital certificates accordance with its bylaws.
with Every cooperative shall determine its net surplus at the close of
every fiscal year and at such other times as may be prescribed by
1. Serial number, the bylaws.
2. Name,
3. Amount, and Note: Any provision of law to the contrary notwithstanding, the
4. Rate of interest to be paid and shall distinctly set forth net surplus shall not be construed as profit but as an excess of
the time of retirement of such certificates and the payments made by the members for the loans borrowed, or the
amounts to be returned. goods and services availed by them from the cooperative or the
INVESTMENT OF CAPITAL BY A COOPERATIVE (ART. 78) difference of the rightful amount due to the members for their
products sold or services rendered to the cooperative including
Cooperative may invest its capital in any of the following: other inflows of assets resulting from its other operating activities
and which shall be deemed to have been returned to them if the
1. In shares or debentures or securities of any other cooperative; same is distributed as prescribed herein.
2. In any reputable bank in the locality, or any cooperative;
3. In securities issued or guaranteed by the Government;
4. In real state primarily for the use of the cooperative or its ORDER OF DISTRIBUTION (ART. 86)
members; or
5. In any other manner authorized in the bylaws. BE DISTRIBUTED AS FOLLOWS:
✔ Amount for the reserve fund,
✔ Amount for the education and training fund,
CHAPTER IX ✔ Amount for the community development fund,
AUDIT, INQUIRY AND MEMBERS’ RIGHTS TO ✔ Optional fund, and
EXAMINE ✔ Remaining net surplus shall be made available to the
members

1. An amount for the reserve fund which shall be at least

ANNUAL AUDIT (ART. 80) ten per centum (10%) of net surplus: Provided, That, in the
first five (5) years of operation after registration, this
Cooperatives registered under this Code shall be subject to an
amount shall not be less than fifty per centum (50%) of the
annual financial, performance and social audit.
net surplus:
FINANCIAL AUDIT- conducted by an external auditor who A. Reserve fund shall be used for the stability of the
satisfies all the following qualifications: cooperative and to meet net losses in its operations.
The general assembly may decrease the amount
1. He is independent of the cooperative or any of its subsidiary allocated to the reserve fund when the reserve fund
that he is auditing; and already exceeds the share capital.
2. He is a member in good standing of the Philippine Institute of
Certified Public Accountants (PICPA) and is accredited by Note: Any sum recovered on items previously charged to
both the Board and Accountancy and the Authority. the reserve fund shall be credited to such fund.

SOCIAL AUDIT- conducted by an independent social auditor B. The reserve fund shall not be utilized for investment,
accredited by the Authority. other than those allowed in this Code.

PERFORMANCE and SOCIAL AUDIT reports which contain the Note: Such sum of the reserve fund in excess of the share
findings and recommendations of the auditor shall be submitted to capital may be used at any time for any project that would
the board of directors. expand the operations of the cooperative upon the
resolution of the general assembly.
Note: The Authority, in consultation with the cooperative sector,
shall promulgate the rules and standards for the social audit of C. Upon the dissolution of the cooperative, the reserve
cooperatives. fund shall not be distributed among the members. The
general assembly may resolve:
i. To establish a usufructuary trust fund for the benefit
of any federation or union to which the cooperative is
MEMBERS RIGHT TO EXAMINE (ART. 83)
affiliated; and
A member shall have the right to examine the records required to ii. To donate, contribute, or otherwise dispose of the
be kept by the cooperative under Article 52 of this Code during amount for the benefit of the community where the
reasonable hours on business days and he may demand, in writing, cooperative operates. If the members cannot decide
for a copy of excerpts from said records without charge except the upon the disposal of the reserve fund, the same shall
cost of production. go to the federation or union to which the cooperative
is affiliated.
Note: Any officer of the cooperative who shall refuse to allow any 2. An amount for the education and training fund, shall
member to examine and copy excerpts from its records shall be: not be more than ten per centum (10%) of the net surplus.
1. Liable to such member for damages and Note: Bylaws may provide that certain fees or a portion thereof
2. Shall be guilty of an offense which shall be punishable under be credited to such fund.
Article 140 of this Code:
The fund shall provide for the training, development and
Provided, That if such refusal is pursuant to a resolution or order similar other cooperative activities geared towards the growth
of the board of directors, the liability under this article shall be of the cooperative movement:
imposed upon the directors who voted for such refusal: Provided,
further, That it shall be a defense to any action under this article A. Half of the amounts transferred to the education and
that the member demanding to examine and copy excerpts from training fund annually under this subsection shall be spent
the cooperative records has improperly used any information by the cooperative for education and training purposes;
secured through any prior examination of the records of such while the other half may be remitted to a union or
cooperative or was not acting in good faith or for a legitimate federation chosen by the cooperative or of which it is a
purpose in making his demand. member. The said union or federation shall submit to the
 Authority and to its contributing cooperatives the Insolvency Of a Cooperative
following schedules:
i. List of cooperatives which have remitted their PROCEEDINGS UPON INSOLVENCY OF COOPERATIVES
respective Cooperative Education and Training (ART. 63)
Funds (CETF); In case a cooperative is unable to fulfill its obligations to creditors
ii. Business consultancy assistance to include the due to insolvency, such cooperative may apply for such remedies as
nature and cost; and it may deem fit under the provisions of Act No. 1956, as amended,
iii. Other training activities undertaken specifying otherwise known as the Insolvency Law.
therein the nature, participants and cost of each
activity. Notes: Nothing in this Article, however, precludes creditors from
B. Upon the dissolution of the cooperative, the unexpended seeking protection from said insolvency law.
balance of the education and training fund appertaining to Republic Act No. 10142 or the Financial Rehabilitation
the cooperative shall be credited to the cooperative and Insolvency Act repealed the Insolvency Law.
education and training fund of the chosen union or
federation.

3. An amount for the community development fund,

which shall not be less than three per centum (3%) of the
net surplus. The community development fund shall be
used for projects or activities that will benefit the
community where the cooperative operates.

4. An optional fund, a land and building, and any other

necessary fund the total of which shall not exceed seven
per centum (7%).

5. The remaining net surplus shall be made available to

the members in the form of interest on share capital not to
exceed the normal rate of return our investments and
patronage refunds: Provided, That any amount remaining
after the allowable interest and the patronage refund have
been deducted shall be credited to the reserve fund.

The sum allocated for patronage refunds shall be made

available at the same rate to all patrons of the cooperative
in proportion to their individual patronage: Provided, That:
a. In the case of a member patron with paid-up share
capital contribution, his proportionate amount of
patronage refund shall be paid to him unless he agrees
to credit the amount to his account as additional share
capital contribution;
b. In the case of a member patron with unpaid share
capital contribution, his proportionate amount of
patronage refund shall be credited to his account until
his account until his share capital contribution has
been fully paid;
c. In the case of a non-member patron, his proportionate
amount of patronage refund shall be set aside in a
general fund for such patrons and shall be allocated to
individual non-member patrons only upon request and
presentation of evidence of the amount of his
patronage. The amount so allocated shall be credited
to such patron toward payment of the minimum
capital contribution for membership. When a sum
equal to this amount has accumulated at any time
within a period specified in the bylaws, such patron
shall be deemed and become a member of the
cooperative if he so agrees or requests and complies
with the provisions of the bylaws for admission to
membership; and
d. If within any period of time specified in the bylaws,
any subscriber who has not fully paid his subscribed
share capital or any non-member patron who has
accumulated the sum necessary for membership but
who does not request nor agree to become a member
or fails to comply with the provisions of the bylaws
for admission to membership, the amount so
accumulated or credited to their account together with
any part of the general fund for nonmember patrons
shall be credited to the reserve fund or to the
education and training fund of the cooperative, at the
option of the cooperative.

SHANELLE

30. INSOLVENCY OF COOPERATIVE

CHAPTER VI