DON HONORIO VENTURA STATE UNIVERSITY

College of Business Studies

Business Laws and Regulations
Atty. Angela Dela Cruz-Lacanlale
PHILIPPINE COOPERATIVE CODE OF 2008
(Republic Act No. 9520)

I. COOPERATIVES - A cooperative is an autonomous and duly registered

association of persons, with a common bond of interest, who have voluntarily
joined together to achieve their social, economic, and cultural needs and
aspirations by making equitable contributions to the capital required,
patronizing their products and services and accepting a fair share of the risks
and benefits of the undertaking in accordance with universally accepted
cooperative principles.

II. COOPERATIVE PRINCIPLES

(1) Voluntary and Open Membership - Cooperatives are voluntary

organizations, open to all persons able to use their services and willing to
accept the responsibilities of membership, without gender, social, racial,
cultural, political or religious discrimination.

(2) Democrative Member Control - Cooperatives are democratic

organizations that are controlled by their members who actively participate
in setting their policies and making decisions. Men and women serving as
elected representatives, directors or officers are accountable to the
membership. In primary cooperatives, members have equal voting rights
of one-member, one-vote. Cooperatives at other levels are organized in the
same democratic manner.

(3) Member Economic Participation - Members contribute equitably to, and

democratically control, the capital of their cooperatives. At least part of
that capital is the common property of the cooperative. They shall receive
limited compensation or limited interest, if any, on capital subscribed and
paid as a condition of membership. Members allocate surpluses for any or
all of the following purposes: developing the cooperative by setting up
reserves, part of which should at least be indivisible; benefitting members
in proportion to their patronage of the cooperative's business; and,
supporting other activities approved by the membership.

(4) Autonomy and Independence - Cooperatives are autonomous, self-help

organizations controlled by their members. If they enter into aggreements
with other organizations, including government, or raise capital from
external sources, they shall do so on terms that ensure democratic control
of their members and maintain their cooperative autonomy.

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DON HONORIO VENTURA STATE UNIVERSITY
College of Business Studies
Business Laws and Regulations
Atty. Angela Dela Cruz-Lacanlale
(5) Education, Training and Information - Cooperatives shall provide education
and training for their members, elected and appointed representatives,
managers, and employees, so that they can contribute effectively and
efficiently to the development of their cooperatives.

(6) Cooperation Among Cooperatives - Cooperatives serve their members

most effectively and strengthen the cooperative movement by working
together through local, national, regional and international structures.

(7) Concern for Community - Cooperatives work for the sustainable

development of their communities through policies approved by their
members

III. DEFINITION OF TERMS

(1) Member includes a person either natural or juridical who adhering to the
principles set forth in this Code (Philippine Cooperative Code) and in the
Articles of Cooperative, has been admitted by the cooperative as member

(2) General Assembly shall mean the full membership of the cooperative
duly assembled for the purpose of exercising all the rights and performing
all the obligations pertaining to cooperatives, as provided by this Code, its
articles of cooperation and bylaws: 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

(3) Board of Directors shall mean that body entrusted with the management
of the affairs of the cooperative under its articles of cooperation and
bylaws;

(4) Committee shall refer to any body entrusted with specific functions and
responsibilities under the bylaws or resolution of the general assembly or
the board of directors

(5) Articles of Cooperation means the articles of cooperation registered

under this Code and includes a registered amendment thereof

(6) Bylaws means the bylaws registered under this Code and includes any
registered amendment thereof

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DON HONORIO VENTURA STATE UNIVERSITY
College of Business Studies
Business Laws and Regulations
Atty. Angela Dela Cruz-Lacanlale
(7) Registration means the operative act granting juridical personality to a
proposed cooperative and is evidenced by a certificate of registration

(8) Cooperative Development Authority refers to the government agency in

charge of the registration and regulation of cooperatives as such
hereinafter referred to as the Authority

(9) Universally Accepted Principles means that body of cooperative

principles adhered to worldwide by cooperatives

(10) Representative Assembly means the full membership of a body of

representatives elected by each of the sectors, chapter or district of the
cooperative duly assembled for the purpose of exercising such powers
lawfully delegated unto them by the general assembly in accordance with
its bylaws

(11) Officers of the Cooperative shall include the members of the

board of directors, members of the different committee created by the
general assembly, general manager or chief executive officer, secretary,
treasurer and members holding other positions as may be provided for in
their bylaws

(12) Social Audit is a procedure wherein the cooperative assesses its

social impact and ethical performance vis-à-vis its stated mission, vision,
goals and code of social responsibility for cooperatives to be established
by the Authority in consultation with the cooperative sector. It enables the
cooperative to develop a process whereby it can account for its social
performance and evaluate its impact in the community and be
accountable for its decisions and actions to its regular members

(13) Performance Audit shall refer to an audit on the efficiency and

effectiveness of the cooperative as a whole; its management and officers;
and its various responsibility centers as basis for improving individual team
or overall performance and for objectively informing the general
membership on such performance

(14) A Single-Line or Single-Purpose Cooperative shall include

cooperative undertaking activities which are related to its main line of
business or purpose

(15) Service Cooperatives are those which provide any type of service
to its members, including but not limited to, transport, information and

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DON HONORIO VENTURA STATE UNIVERSITY
College of Business Studies
Business Laws and Regulations
Atty. Angela Dela Cruz-Lacanlale
communication, insurance, housing, electric, health services, education,
banking, and savings and credit

(16) Subsidiary Cooperative refers to three or more primary

cooperatives, doing the same line of business, organized at the municipal,
provincial, city, special metropolitan political subdivision, or economic
zones created by law, registered with the Authority to undertake business
activities in support of its member-cooperatives

IV. OBJECTIVES AND GOALS OF COOPERATIVES

The primary objective of every cooperative is to help improve the quality of life
of its members. Towards this end, the cooperative shall aim to:

(a) Provide goods and services to its members to enable them to attain
increased income, savings, investments, productivity, and purchasing power,
and promote among themselves equitable distribution of net surplus through
maximum utilization of economies of scale, cost-sharing and risk-sharing

(b) Provide optimum social and economic benefits to its members

(c) Teach them efficient ways of doing things in a cooperative manner

(d) Propagate cooperative practices and new ideas in business and

management

(e) Allow the lower income and less privileged groups to increase their
ownership in the wealth of the nation

(f) Cooperate with the government, other cooperatives and people-oriented

organizations to further the attainment of any of the foregoing objectives.

V. POWERS AND CAPACITIES

A cooperative registered under this Code shall have the following powers,
rights and capacities:

(1) To the exclusive use of its registered name, to sue and be sued
(2) Of succession
(3) To amend its articles of cooperation in accordance with the provisions of
this Code
(4) To adopt bylaws not contrary to law, morals or public policy, and to amend
and repeal the same in accordance with this Code

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DON HONORIO VENTURA STATE UNIVERSITY
College of Business Studies
Business Laws and Regulations
Atty. Angela Dela Cruz-Lacanlale
(5) To purchase, receive, take or grant, hold, convey, sell, lease, pledge,
mortgage, and otherwise deal with such real and personal property as the
transaction of the lawful affairs of the cooperative may reasonably and
necessarily require, subject to the limitations prescribed by law and the
Constitution
(6) To enter into division, merger or consolidation, as provided in this Code
(7) To form subsidiary cooperatives and join federations or unions, as provided
in this Code
(8) To avail of loans, be entitled to credit and to accept and receive grants,
donations and assistance from foreign and domestic sources, subject to the
conditions of said loans, credits, grants, donations or assistance that will not
undermine the autonomy of the cooperative. The Authority, upon written
request, shall provide necessary assistance in the documentary requirements
for the loans, credit, grants, donations and other financial support
(9) To avail of preferential rights granted to cooperatives under Republic Act
No. 7160, otherwise known as the Local Government Code, and other laws,
particularly those in the grant of franchises to establish, construct, operate
and maintain ferries, wharves, markets or slaughterhouses and to lease public
utilities, including access to extension and on-site research services and
facilities related to agriculture and fishery activities
(10) To organize and operate schools in accordance with Republic Act No.
9155, Governance of Basic Education Act of 2001 and other pertinent laws
(11) To exercise such other powers granted by this Code or necessary to carry
out its purpose or purposes as stated in its Articles of cooperation.

VI. ORGANIZING A PRIMARY COOPERATIVE

Fifteen (15) or more natural persons who are Filipino citizens, of legal age,
having a common bond of interest and are actually residing or working in the
intended area of operation, may organize a primary cooperative under this
Code: Provided, That a prospective member of a primary cooperative must
have completed a Pre-Membership Education Seminar (PMES).

Any newly organized primary cooperative may be registered as multipurpose

cooperative only after compliance with the minimum requirements for
multipurpose cooperatives to be set by the Authority. A single-purpose
cooperative may transform into a multipurpose or may create subsidiaries
only after at least two (2) years of operations.

VII. TERM

A cooperative shall exist for a period not exceeding fifty (50) years from the date
of registration unless sooner dissolved or unless said period is extended. The

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DON HONORIO VENTURA STATE UNIVERSITY
College of Business Studies
Business Laws and Regulations
Atty. Angela Dela Cruz-Lacanlale
cooperative term, as originally stated in the articles of cooperation, may be
extended for periods not exceeding fifty (50) years in any single instance by an
amendment of the articles of cooperation, in accordance with this
Code: Provided, That no extension can be made earlier than five (5) years prior
to the original or subsequent expiry date/dates unless there are justifiable
reasons for an earlier extension as may be determined by the Authority

VIII. ARTICLES OF COOPERATION

All cooperatives applying for registration shall file with the Authority the
articles of cooperation which shall be signed by each of the organizers and
acknowledged by them if natural persons, and by the chairpersons or
secretaries, if juridical persons, before a notary public.

The articles of cooperation shall set forth:

(a) The name of the cooperative which shall include the word cooperative
(b) The purpose or purposes and scope of business for which the cooperative
is to be registered
(c) The term of existence of the cooperative
(d) The area of operation and the postal addresses of its principal office
(e) The names, nationality, and the postal addresses of the registrants
(f) The common bond of membership
(g) The list of names of the directors who shall manage the cooperative
(h) The amount of its share capital, the names and residences of its
contributors and a statement of whether the cooperative is primary, secondary
or tertiary in accordance with Article 23 of the Code

The articles of cooperation may also contain any other provisions not
inconsistent with this Code or any related law.

No cooperative, other than a cooperative union as described under Article 25

of the Code, shall be registered unless the articles of cooperation is
accompanied with the bonds of the accountable officers and a sworn
statements of the treasurer elected by the subscribers showing that at least
twenty-five per centum (25%) of the authorized share capital has been
subscribed and at least twenty-five per centum (25%) of the total subscription
has been paid: Provided, That in no case shall the paid-up share capital be less
than Fifteen thousand pesos (P15,000.00)

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DON HONORIO VENTURA STATE UNIVERSITY
College of Business Studies
Business Laws and Regulations
Atty. Angela Dela Cruz-Lacanlale
IX. BYLAWS

Each cooperative to be registered under this Code shall adopt bylaws not
inconsistent with the provisions of this Code. The bylaws shall be filed at the
same time as the articles of cooperation.

The bylaws of each cooperative shall provide:

(a) The qualifications for admission to membership and the payment to be

made or interest to be acquired as a conditions for the exercise of the right of
membership
(b) The rights and liabilities of membership
(c) The circumstances under which membership is acquired, maintained and
lost
(d) The procedure to be followed in cases of termination of membership
(e) The conditions under which the transfer of a share or interest of the
members shall be permitted
(f) The rules and procedures on the agenda, time, place and manner of calling,
convening, conducting meetings, quorum requirements, voting systems, and
other matters relative to the business affairs of the general assembly, board of
directors, and committees
(g) The general conduct of the affairs of the cooperative, including the powers
and duties of the general assembly, the board of directors, committees and
the officers, and their qualifications and disqualifications
(h) The manner in which the capital, may be raised and the purposes for which
it can be utilized
(i) The mode of custody and of investment of net surplus
(j) The accounting and auditing systems
(k) The manner of loaning and borrowing including the limitations thereof
(l) The method of distribution of net surplus
(m) The manner of adopting, amending, repealing, and abrogating bylaws
(n) A conciliation or mediation mechanism for the amicable settlement of
disputes among members, directors, officers and committee members of the
cooperative
(o) Other matters incident to the purposes and activities of the cooperative

X. REGISTRATION

A cooperative formed and organized under this Code acquires juridical

personality from the date the Authority issues a certificate of registration under
its official seal.

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DON HONORIO VENTURA STATE UNIVERSITY
College of Business Studies
Business Laws and Regulations
Atty. Angela Dela Cruz-Lacanlale
XI. MERGER AND CONSOLIDATION

Two (2) or more cooperatives may merge into a single cooperative which shall
either be one of the constituent cooperatives or the consolidated cooperative.

No merger or consolidation shall be valid unless approved by a three-fourths

(3/4) vote of all the members with voting rights, present and constituting a
quorum of each of the constituent cooperatives at separate general assembly
meetings. The dissenting members shall have the right to exercise their right to
withdraw their membership pursuant to Article 30.

Effects of Merger and Consolidation

(1) The constituent cooperatives shall become a single cooperative which, in

case of merger, shall be the surviving cooperative, and, in case of
consolidation, shall be the consolidated cooperative

(2) The separate existence of the constituent cooperatives shall cease, except
that of the surviving or the consolidated cooperative

(3) The surviving or the consolidated cooperative shall possess all the assets,
rights, privileges, immunities and franchises of each of the constituent
cooperatives

(4) The surviving or the consolidated cooperative shall possess all the assets,
rights, privileges, immunities and franchises of each of the constituent
cooperatives

(5) The surviving or the consolidated cooperative shall be responsible for all
the liabilities and obligation of each of the constituent cooperatives in the
same manner as if such surviving or consolidated cooperative had itself
incurred such liabilities or obligations. Any claim, action or proceeding
pending by or against any such constituent cooperatives may be
prosecuted by or against the surviving or consolidated cooperative, as the
case may be. Neither the rights of creditors nor any lien upon the property
of any such constituent cooperatives shall be impaired by such merger or
consolidation.

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DON HONORIO VENTURA STATE UNIVERSITY
College of Business Studies
Business Laws and Regulations
Atty. Angela Dela Cruz-Lacanlale
XII. TYPES AND CATEGORIES OF COOPERATIVES

Types of Cooperatives

(a) Credit Cooperative is one that promotes and undertakes savings and
lending services among its members. It generates a common pool of funds in
order to provide financial assistance to its members for productive and
provident purposes

(b) Consumers Cooperative is one of the primary purpose of which is to

procure and distribute commodities to members and non-members

(c) Producers Cooperative is one that undertakes joint production whether

agricultural or industrial. It is formed and operated by its members to
undertake the production and processing of raw materials or goods produced
by its members into finished or processed products for sale by the cooperative
to its members and non-members. Any end product or its derivative arising
from the raw materials produced by its members, sold in the name and for the
account of the cooperative, shall be deemed a product of the cooperative and
its members

(d) Marketing Cooperative is one which engages in the supply of production

inputs to members and markets their products

(e) Service Cooperative is one which engages in medical and dental care,
hospitalization, transportation, insurance, housing, labor, electric light and
power, communication, professional and other services

(f) Multipurpose Cooperative is one which combines two (2) or more of the
business activities of these different types of cooperatives

(g) Advocacy Cooperative is a primary cooperative which promotes and

advocates cooperativism among its members and the public through socially-
oriented projects, education and training, research and communication, and
other similar activities to reach out to its intended beneficiaries

(h) Agrarian Reform Cooperative is one organized by marginal farmers

majority of which are agrarian reform beneficiaries for the purpose of
developing an appropriate system of land tenure, land development, land
consolidation or land management in areas covered by agrarian reform

(i) Cooperative Bank is one organized for the primary purpose of providing a
wide range of financial services to cooperatives and their members

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DON HONORIO VENTURA STATE UNIVERSITY
College of Business Studies
Business Laws and Regulations
Atty. Angela Dela Cruz-Lacanlale

(j) Dairy Cooperative is one whose members are engaged in the production of
fresh milk which may be processed and/or marketed as dairy products

(k) Education Cooperative is one organized for the primary purpose of owning
and operating licensed educational institutions notwithstanding the
provisions of Republic Act No. 9155, otherwise known as the Governance of
Basic Education Act of 2001

(l) Electric Cooperative is one organized for the primary purposed of

undertaking power generations, utilizing renewable energy sources, including
hybrid systems, acquisition and operation of subtransmission or distribution
to its household members

(m) Financial Service Cooperative is one organized for the primary purpose
of engaging in savings and credit services and other financial services

(n) Fishermen Cooperative is one organized by marginalized fishermen in

localities whose products are marketed either as fresh or processed products

(o) Health Services Cooperative is one organized for the primary purpose of
providing medical, dental and other health services

(p) Housing Cooperative is one organized to assist or provide access to

housing for the benefit of its regular members who actively participate in the
savings program for housing. It is co-owned and controlled by its members

(q) Insurance Cooperative is one engaged in the business of insuring life and
poverty of cooperatives and their members

(r) Transport Cooperative is one which includes land and sea transportation,
limited to small vessels, as defined or classified under the Philippine maritime
laws, organized under the provisions of this Code

(s) Water Service Cooperative is one organized to own, operate and manage
waters systems for the provision and distribution of potable water for its
members and their households

(t) Workers Cooperative is one organized by workers, including the self-

employed, who are at same time the members and owners of the enterprise.
Its principal purpose is to provide employment and business opportunities to
its members and manage it in accordance with cooperative principles

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DON HONORIO VENTURA STATE UNIVERSITY
College of Business Studies
Business Laws and Regulations
Atty. Angela Dela Cruz-Lacanlale
(u) Other types of cooperative as may be determined by the Authority.

Categories of Cooperative – Cooperatives shall be categorized according to

membership and territorial considerations as follows:

(a) In terms of membership, cooperative shall be categorized into:

(i) Primary – The members of which are natural persons

(ii) Secondary – The members of which are primaries
(iii) Tertiary – The members of which are secondary cooperatives

(b) In terms of territory, cooperatives shall be categorized according to areas

of operations which may or may not coincide with the political subdivisions of
the country.

XIII. MEMBERSHIP

Kinds of Membership – A cooperative may have two (2) kinds of members, to

wit: (1) regular members and (2) associate members.

A regular member is one who has complied with all the membership
requirements and entitled to all the rights and privileges of membership. An
associate member is one who has no right to vote nor be voted upon and shall
be entitled only to such rights and privileges as the bylaws may
provide: Provided, That an associate who meets the minimum requirements
of regular membership, continues to patronize the cooperative for two (2)
years, and signifies his/her intention to remain a member shall be considered
a regular member.

A cooperative organized by minors shall be considered a laboratory

cooperative and must be affiliated with a registered cooperative. A laboratory
cooperative shall be governed by special guidelines to be promulgated by the
Authority.

Government Officers and Employees

• All elective officials of the Government shall be ineligible to become

officers and directors of cooperatives: Provided, That the
disqualification does not extend to a party list representative being an
officer of a cooperative he or she represents

• Any government employee or official may, in the discharge of his duties

as a member in the cooperative, be allowed by the end of office

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DON HONORIO VENTURA STATE UNIVERSITY
College of Business Studies
Business Laws and Regulations
Atty. Angela Dela Cruz-Lacanlale
concerned to use official time for attendance at the general assembly,
board and committee meetings of cooperatives as well as cooperative
seminars, conferences, workshops, technical meetings, and training
courses locally or abroad: Provided, That the operations of the office
concerned are not adversely affected.

Application – An applicant for membership shall be deemed a member after

approval of his membership by the board of directors and shall exercise the
rights of member after having made such payments to the cooperative in
respect to membership or acquired interest in the cooperative as may be
prescribed in the bylaws.

Liability of Members – A member shall be liable for the debts of the cooperative
to the extent of his contribution to the share capital of the cooperative.

Termination of Membership

(1) A member of a cooperative may, for any valid reason, withdraw his
membership from the cooperative by giving a sixty (60) day notice to the board
of directors. Subject to the bylaws of the cooperative, the withdrawing member
shall be entitled to a refund of his share capital contribution and all other
interests in the cooperative: Provided, That such fund shall not be made if
upon such payment the value of the assets of the cooperative would be less
than the aggregate amount of its debts and liabilities exclusive of his share
capital contribution.

(2) The death or insanity of a member in a primary cooperative, and the

insolvency or dissolution of a member in a secondary or tertiary cooperative
may be considered valid grounds for termination of membership: Provided,
That in case of death or insanity of an agrarian reform beneficiary-member of
a cooperative, the next-of-kin may assume the duties and responsibilities of
the original member

(3) Membership in the cooperative may be terminated by a vote of the majority

of all the members of the board of directors for any of the following causes:

(a) When a member has not patronized any of the services of the
cooperative for an unreasonable period of time as may be previously
determined by the board of directors
(b) When a member has continuously failed to comply with his obligations;
(c) When a member has acted in violation of the bylaws and the rules of the
cooperative

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DON HONORIO VENTURA STATE UNIVERSITY
College of Business Studies
Business Laws and Regulations
Atty. Angela Dela Cruz-Lacanlale
(d) For any act or omission injurious or prejudicial to the interest or the
welfare of the cooperative

A member whose membership the board of directors may wish to terminate

shall be informed of such intended action in writing and shall be given an
opportunity to be heard before the said board makes its decision.

XIV. CAPITAL SOURCES

Cooperatives registered under this Code may derive their capital from any or
all of the following sources:

(1) Member’s share capital

(2) Loans and borrowings including deposits
(3) Revolving capital which consists of the deferred payment of patronage
refunds, or interest on share capital
(4) Subsidies, donations, legacies, grants, aids and such other assistance from
any local or foreign institution whether public or private: Provided, That capital
coming from such subsides, donations, legacies, grants, aids and other
assistance shall not be divided into individual share capital holdings at any
time but shall instead form part of the donated capital or fund of the
cooperative.

XV. DISSOLUTION AND LIQUIDATION

DISSOLUTION

A. 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

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DON HONORIO VENTURA STATE UNIVERSITY
College of Business Studies
Business Laws and Regulations
Atty. Angela Dela Cruz-Lacanlale
board secretary. The Authority shall thereupon issue the certificate of
dissolution.

B. 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 of 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.

If the petition is sufficient in form and substance, the Authority shall issue
an order reciting the purpose of the petition.

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

C. 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

D. 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

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DON HONORIO VENTURA STATE UNIVERSITY
College of Business Studies
Business Laws and Regulations
Atty. Angela Dela Cruz-Lacanlale
(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
(5) Failure to meet the required minimum number of members in the
cooperative

E. 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 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.

LIQUIDATION

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.

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