COOPERATIVES

Republic Act No. 9520 “Philippine Cooperative Code of 2008”

A cooperative is an autonomous and duly Fifteen (15) or more natural persons who have
registered association of persons, with a the following requisites may organize a primary
common bond of interest, who have voluntarily cooperative:
joined together to achieve their social, 1. Filipino citizens
economic, and cultural needs and aspirations by 2. Of legal age
making equitable contributions to the capital 3. Have a common bond of interest
required, patronizing their products and services 4. Actually residing or working in the
and accepting a fair share of the risks and intended area of operation
benefits of the undertaking in accordance with
universally accepted cooperative principles. Can a primary cooperative be registered as a
multi-purpose cooperative?
What are the essential characteristics of Any newly organized primary cooperative may
cooperatives? be registered as multi-purpose cooperative only
1. Autonomy and due registration after compliance with the minimum
2. Voluntary membership requirements for multipurpose cooperatives to
3. Equitable capital contributions of be set by the Cooperative Development
members Authority (CDA).
4. Patronizing by members of the products
and services of the cooperative Can a single-purpose cooperative become a
5. Share in the risks and benefits multi-purpose cooperative?
Yes. A single-purpose cooperative may
On Organization and registration of transform into a multipurpose or may create
cooperatives subsidiaries but only after at least 2 years of
operations.
What is a primary cooperative?
A primary cooperative is a cooperative whose What is the extent of the liability of a
members are natural persons. cooperative?
As to membership, the other categories are: A duly registered cooperative shall have limited
• Secondary cooperative – the members of liability.
which are primary cooperatives
• Tertiary cooperative – the members of which What is the legal life of a cooperative?
are secondary cooperatives A cooperative shall exist for a period not
exceeding 50 years from the date of registration
Who may organize a primary cooperative? unless sooner dissolved or unless said period is
extended.
What is the rule on extension of cooperative assistance to its members for productive and
life? provident purposes.
The cooperative term, as originally stated in the ▪ Consumers Cooperative – one the primary
articles of cooperation, may be extended for purpose of which is to procure and distribute
periods not exceeding 50 years in any single commodities to members and non-members.
instance by an amendment of the articles of ▪ Producers Cooperative – one that undertakes
cooperation. joint production whether agricultural or
industrial. It is formed and operated by its
However, no extension can be made earlier than members to undertake the production and
5 years prior to the original or subsequent expiry processing of raw materials or goods produced
date unless there are justifiable reasons for an by its members into finished or processed
earlier extension. products for sale by the cooperative to its
members and non-members. Any end product
What is the capital requirement to register a or its derivative arising from the raw materials
cooperative? produced by its members, sold in the name
No cooperative, other than a cooperative union, and for the account of the cooperative, shall
shall be registered unless the Articles of be deemed a product of the cooperative and
Cooperation is accompanied with the bonds of its members.
the accountable officers and a sworn statement ▪ Marketing Cooperative – one which engages
of the treasurer elected by the subscribers in the supply of production inputs to members
showing that: and markets their products.
• at least 25% of the authorized share capital ▪ Service Cooperative – one which engages in
has been subscribed; and medical and dental care, hospitalization,
• at least 25% of the total subscription has transportation, insurance, housing, labor,
been paid electric light and power, communication,
However, the paid-up share capital must be at professional and other services.
least P15,000. ▪ Multi-purpose Cooperative – one which
combines two (2) or more of the business
When does a cooperative acquire juridical activities of these different types of
personality? cooperatives.
A cooperative formed and organized under the ▪ Advocacy Cooperative – a primary
Code acquires juridical personality from the date cooperative which promotes and advocates
the CDA issues a certificate of registration under cooperativism among its members and the
its official seal. public through socially-oriented projects,
education and training, research and
What is the legal power of a certificate of communication, and other similar activities to
registration? reach out to its intended beneficiaries.
A certificate of registration issued by the CDA ▪ Agrarian Reform Cooperative – one organized
under its official seal shall be conclusive by marginal farmers majority of which are
evidence that the cooperative therein agrarian reform beneficiaries for the purpose
mentioned is duly registered, unless it is proved of developing an appropriate system of land
that the registration has been cancelled. tenure, land development, land consolidation
or land management in areas covered by
What are the different types of cooperatives? agrarian reform.
▪ Credit Cooperative – one that promotes and ▪ Cooperative Bank – one organized for the
undertakes savings and lending services primary purpose of providing a wide range of
among its members. It generates a common financial services to cooperatives and their
pool of funds in order to provide financial members.
▪ Dairy Cooperative – one whose members are members and manage it in accordance with
engaged in the production of fresh milk which cooperative principles.
may be processed and/or marketed as dairy
products. What is a laboratory cooperative?
▪ Education Cooperative – one organized for the A laboratory cooperative is one organized by
primary purpose of owning and operating minors. It shall be governed by special guidelines
licensed educational institutions to be promulgated by the CDA.
notwithstanding the provisions of Republic Act
No. 9155, otherwise known as the Governance On membership and administration of
of Basic Education Act of 2001. cooperatives
▪ Electric Cooperative – one organized for the
primary purposed of undertaking power What are the types of members in a
generations, utilizing renewable energy cooperative?
sources, including hybrid systems, acquisition A cooperative may have 2 types of members:
and operation of subtransmission or • Regular members
distribution to its household members. • Associate members
▪ Financial Service Cooperative – one organized
for the primary purpose of engaging in savings What is a regular member?
and credit services and other financial services. A regular member is one who has complied with
▪ Fishermen Cooperative – one organized by all the membership requirements and entitled to
marginalized fishermen in localities whose all the rights and privileges of membership.
products are marketed either as fresh or
processed products. What is an associate member?
▪ Health Services Cooperative – one organized An associate member is one who has no right to
for the primary purpose of providing medical, vote nor be voted upon and shall be entitled only
dental and other health services. to such rights and privileges as the bylaws may
▪ Housing Cooperative – one organized to assist provide.
or provide access to housing for the benefit of However, an associate who meets the minimum
its regular members who actively participate in requirements of regular membership, and
the savings program for housing. It is co- continues to patronize the cooperative for 2
owned and controlled by its members. years, and signifies his/her intention to remain a
▪ Insurance Cooperative – one engaged in the member shall be considered a regular member.
business of insuring life and poverty of
cooperatives and their members. Who are disqualified to become members or
▪ Transport Cooperative – one which includes elected as officers of a cooperative?
land and sea transportation, limited to small Any officer or employee of the CDA shall be
vessels, as defined or classified under the disqualified to be elected or appointed to any
Philippine maritime laws, organized under the position in a cooperative.
provisions of the Code. All elective officials of the Government shall be
▪ Water Service Cooperative – one organized to ineligible to become officers and directors of
own, operate and manage waters systems for cooperatives.
the provision and distribution of potable water
for its members and their households. What is the extent of a member’s liability?
▪ Workers Cooperative – one organized by A member shall be liable for the debts of the
workers, including the self-employed, who are cooperative to the extent of his contribution to
at same time the members and owners of the the share of the cooperative.
enterprise. Its principal purpose is to provide
employment and business opportunities to its
Unlike in partnership, and like in corporations, a Articles of Cooperation and bylaws of the
member’s personal assets shall not answer for cooperative
the debts of the cooperative.
What are the powers of the General Assembly?
May a member withdraw his membership from The General Assembly shall be the highest
the cooperative? policy-making body of the cooperative and shall
Yes. A member of a cooperative may, for any exercise such powers as are stated in the Code.
valid reason, withdraw his membership from the
cooperative by giving a 60-day notice to the Specifically, the following powers of the General
Board of Directors. Assembly cannot be delegated:
• To determine and approve amendments to
Will a withdrawing member receive a refund of the articles of cooperation and bylaws
his capital contribution? • To elect or appoint the members of the board
Yes, with qualifications. Subject to the bylaws of of directors, and to remove them for cause.
the cooperative, the withdrawing member shall However, in the case of the electric
be entitled to a refund of his share capital cooperatives registered under the Code,
contribution and all other interests in the election of the members of the board shall be
cooperative. held in accordance with its bylaws or election
guideline of such electric cooperative
However, the refund shall not be made if upon • To approve developmental plans of the
such payment the value of the assets of the cooperative
cooperative would be less than the aggregate
amount of its debts and liabilities exclusive of his When should general meetings of a cooperative
share capital contribution. be held?
A regular meeting shall be held annually by the
Can a member be removed from the General Assembly on a date fixed in the bylaws.
cooperative?
Yes. Membership in the cooperative may be What if the bylaws do not fix a period for the
terminated by a vote of the majority of all the regular meeting?
members of the BOD for any of the following If not fixed in the bylaws, the regular meeting
causes: shall be on any date within 90 days after the
• When a member has not patronized any of close of each fiscal year.
the services of the cooperative for an
unreasonable period of time as may be What constitutes a quorum in cooperative
previously determined by the BOD meetings?
• When a member has continuously failed to A quorum shall consist of at least 25% of all the
comply with his obligations members entitled to vote.
• When a member has acted in violation of the
bylaws and the rules of the cooperative Is the quorum the same for all types of
• For any act or omission injurious or prejudicial cooperatives?
to the interest or the welfare of the No, there are exceptions. In the case of electric
cooperative cooperatives, a quorum, unless otherwise
provided in the bylaws, shall consist of 5% of all
What is the composition of a cooperative’s the members entitled to vote.
General Assembly?
The General Assembly shall be composed of such In the case of cooperative banks, the quorum
members who are entitled to vote under the requirement for General Assembly meetings,
whether special or regular, shall be 1/2 plus one
of the number of voting shares of all the Who shall elect the officers of the cooperative?
members in good standing. The BOD shall elect from among themselves the
chairperson and vice-chairperson, and elect or
In the meetings of the BOD, whether special or appoint other officers of the cooperative from
regular, the quorum requirement shall be 1/2 outside of the board in accordance with their
plus one of all the members of the BOD. bylaws.

Each director shall only have 1 vote. What is the status of dealings of directors and
officers with the cooperative?
What is the voting system in meetings of A contract entered into by the cooperative with
cooperatives? 1 or more of its directors, officers, and
The voting system depends upon the category of committee members is voidable, at the option of
cooperative. the cooperative, unless all the following
For primary cooperatives, each member shall conditions are present:
have 1 vote. • That the presence of such director in the
For secondary or tertiary cooperatives, each board meeting wherein contract was
member shall have 1 basic vote and as many approved was not necessary to constitute a
incentive votes as provided for in the bylaws but quorum for such meeting
not to exceed 5 votes. • That the vote of such director was not
necessary for the approval of the contract
What is the composition of the BOD of • That the contract is fair and reasonable under
cooperatives? the circumstances
Like regular corporations, the BOD of • That in the case of an officer or committee
cooperatives shall be composed of not less than member, the contract with the officer or
5 but not more than 15 members. committee member has been previously
Who elects the members of the BOD? authorized by the General Assembly or by the
The members of the BOD are elected by the BOD
General Assembly. • On responsibilities, rights and privileges of
cooperatives
What is the term of office of the members of the • What cooperative books shall be kept open
BOD? for inspection?
BOD members shall be elected for a term of 2 • Every cooperative shall have the following
years and shall hold office until their successors documents ready and accessible to its
are duly elected and qualified, or until duly members and representatives of the CDA for
removed for cause. inspection during reasonable office hours at
its official address:
What are the powers and functions of the BOD? • A copy of the Cooperative Code and all other
The direction and management of the affairs of laws pertaining to cooperatives
the cooperative shall be vested in the BOD. • A copy of the regulations of the CDA
Also, the BOD shall be responsible for the • A copy of the articles of cooperation and
strategic planning, direction-setting and policy- bylaws of the cooperative
formulation activities of the cooperative. • A register of members
• The books of the minutes of the meetings of
What is the prohibition for BOD members on the General Assembly, BOD and committee
voting? • Share books, where applicable
Directors cannot attend or vote by proxy at • Financial statement
board meetings. • Such other documents as may be prescribed
by laws or the bylaws
 Cooperatives transacting business with both
The accountant or the bookkeeper of the members and non-members shall not be
cooperative shall be responsible for the subjected to taxon their transactions with
maintenance of the cooperative records in members.
accordance with generally accepted accounting
practices. What privileges do cooperatives have?
• The privilege of depositing their sealed cash
He shall also be responsible for the production of boxes or containers, documents or any
the same at the time of audit or inspection. valuable papers in the safes of the municipal
or city treasurers and other government
The audit committee shall be responsible for the offices free of charge
continuous and periodic review of the books and • Cooperatives organized among government
records of account to ensure that these are in employees enjoy the free use of any available
accordance with generally accepted accounting space in their agency, whether owned or
practices. rented by the Government
• Cooperatives rendering special types of
He shall also be responsible for the production of services and facilities such as cold storage, ice
the same at the time of audit or inspection. plant, electricity, transportation shall secure a
franchise therefore, and such cooperatives
For up to what period shall cooperatives keep shall open their membership to all persons
its records? qualified in their areas of operation
A cooperative may dispose by way of burning or • In areas where appropriate cooperatives
other method of complete destruction any exist, the preferential right to supply
document, record or book pertaining to its government institutions and agencies rice,
financial and nonfinancial operations which are corn and other grains, fish and other marine
already more than 5 years old except those products, meat, eggs, milk, vegetables,
relating to transactions which are the subject of tobacco and other agricultural commodities
civil, criminal and administrative proceedings. produced by their members shall be granted
to the cooperatives concerned
Which cooperative members need to be • Preferential treatment in the allocation of
bonded? fertilizers, including seeds and other
Every director, officer, and employee handling agricultural inputs and implements, and in
funds, securities or property on behalf of any rice distribution
cooperative shall be covered by a surety bond to • Preferential and equitable treatment in the
be issued for a duly registered insurance or allocation or control of bottomries of
bonding company for the faithful performance commercial shipping vessels in connection
of their respective duties and obligations. with the shipment of goods and products of
cooperatives
Are cooperatives required to pay tax? • Preferential rights in the management of
Duly registered cooperatives which do not public markets and/or lease of public market
transact any business with non-members or the facilities, stalls or spaces for cooperatives and
general public shall not be subject to any taxes their federations, such as farm and fishery
and fees imposed under the internal revenue producers and suppliers, market vendors and
laws and other tax laws. such other cooperatives, which have for their
primary purpose the production and/or the
What if the cooperatives have transaction with marketing of products from agriculture,
both members and non-members? fisheries and small entrepreneurial industries
and federations thereof
• Cooperatives engaged in credit services QUIZZER LECTURE PART 1:
and/or federations shall be entitled to loans 1) Which of the following does not
credit lines, rediscounting of their loan notes, necessarily characterize a cooperative?
and other eligible papers with the A. Autonomy
B. Common bond of interest
Development Bank of the Philippines, the
C. Voluntary involvement
Land Bank of the Philippines and other D. Absence of capital
financial institutions except the Bangko 2) A cooperative whose members are natural
Sentral ng Pilipinas persons is called
• A public transport service cooperative may be A. Primary
entitled to financing support for the B. Natural
acquisition and/or maintenance of land and C. Parent
sea transport equipment, facilities and parts D. De jure
through the program of the government
3) Which of the following is not a
financial institutions. It shall have the qualification for membership to a primary
preferential right to the management and cooperative?
operation of public terminals and ports A. Natural born resident citizen
whether land or sea transport where the B. Of legal age
cooperative operates and on securing a C. Common bond of interest
franchise for active or potential routes for the D. Actually residing or working in the
public transport intended area of operation
• Cooperatives transacting business with the
Government of the Philippines or any of its 4) A single-purpose cooperative may
transform into a multi-purpose
political subdivisions or any of its agencies or
cooperative only after at least how many
instrumentalities, including government- years of operations?
owned and controlled corporations shall be A. 2
exempt from prequalification bidding B. 3
requirements C. 4
• The privilege of being represented by the D. 5
provincial or city fiscal or the Office of the 5) Multi-purpose cooperatives must have a
Solicitor General, free of charge, except when minimum paid-up capital of
the adverse party is the Republic of the A. P15,000
Philippines B. P50,000
C. P100,000
• Preferential right in the management of the
D. P250,000
canteen and other services related to the *With the exception of agricultural and
operation of the educational institution agrarian reform cooperatives, only those
where they are employed for Cooperatives cooperatives with a minimum paid-up
organized by faculty members and employees capital of P100,000 may be allowed to
of educational institutions transform into a multi-purpose cooperative.
• The appropriate housing agencies and
government financial institutions shall create 6) Duly registered cooperatives shall have
a special window for financing housing what extent of liability?
projects undertaken by cooperatives, with A. Unlimited
B. Limited
interest rates and terms equal to, or better
C. None at all
than those given for socialized housing D. To the extent fixed by its by-laws
projects. This financing shall be in the form of
blanket loans or long-term wholesale loans to 7) Cooperatives have maximum legal life of
qualified cooperatives, without need for 50 years. This period may be extended for
individual processing periods not exceeding 50 years in any
 single instance by an amendment of the C. Service
articles of cooperation. However, no D. Producers
extension can be made earlier than ______ 12) This type of cooperative undertakes joint
prior to the original or subsequent expiry production whether agricultural or
date unless there are justifiable reasons industrial.
for an earlier extension. A. Producers
A. 3 years B. Multi-purpose
B. 5 years C. Consumers
C. 7 years D. Marketing
D. 10 years *It is formed and operated by its members
to undertake the production and processing
8) The preferred share capital of a of raw materials or goods produced by its
cooperative shall not exceed what percent members into finished or processed
of its total authorized share capital? products for sale by the cooperative to its
A. 5% members and non-members.
B. 10%
C. 20% 13) This type of cooperative is organized for
D. 25% the primary purpose of engaging in savings
9) No member shall own more than what and credit services and other financial
percent of the subscribed share capital of a services.
cooperative? A. Cooperative bank
A. 5% B. Financial service cooperative
B. 10% C. Lending cooperative
C. 15% D. Commercial cooperative
D. 20%
10) When does a cooperative acquire juridical 14) A laboratory cooperative is one organized
personality? by
A. From the formation of all its members A. Scientists
B. From the transfer of funds to the B. People of scientific background
cooperatives C. Minors
C. From the issuance of certificate of D. Researchers
registration by the CDA
D. From the assumption of offices by its 15) What type of cooperative member has no
directors right to vote or be voted upon and shall
only be entitled to any such rights and
*In addition, the certificate is conclusive privileges as the bylaws may provide?
evidence that the cooperative therein A. Regular member
mentioned is duly registered, unless it is B. Associate member
proved that the registration has been C. Loyal member
cancelled. D. Disloyal member

11) Which type of cooperative has the primary 16) It is the highest policy-making body of the
purpose of procuring and distributing cooperative.
commodities to its members and non- A. Board of Directors
members? B. Board of Trustees
A. Credit C. General Assembly
B. Consumers D. Cooperative Governance

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