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Background
The Philippine Cooperative
Code of 2008
(Republic Act No. 9520)
Salient Features
4th NATIONAL TRIPARTITE CONFERENCE
The Republic Act No. 6938
o The Cooperative Code of the
Philippines
o Enacted into law on March 10,
1990
Cooperative Development Authority
o  Amended the Coop Code
promulgated in 1990;
o  Discussed in four (4) Congresses
(starting the 11th Congress up to the
14th) spanning over ten (10) years;
o  Approved by the Bicameral Committee
on November 18,2008;
o  Signed into law last February 17,2009
The Republic Act No. 9520
o The Philippine Cooperative Code
of 2008 (Article1)
o Signed on February 17, 2009
o Published on March 7, 2009
o Effective March 22, 2009
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State Policy (Article 2)
o  Foster creation and growth of
cooperatives as a practical vehicle for self-
reliance and harnessing people power for
the attainment of economic development
and social justice
o  Encourage private sector to undertake
actual formation and organization;
o  Create an atmosphere conducive to the
growth and development of cooperatives
Cooperatives defined (Article 3)
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.
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State Policy
o  Ensure technical guidance, financial
assistance and other services
o  Recognizes the principle of subsidiarity
wherein the sector will initiate the
promotion and organization, training
and research, audit and support
services with government assistance
where necessary
Cooperative Principles (Article 4)
•  Patterned after the Principles as
formulated by the International Co-
operative Alliance (ICA)
–  Voluntary and Open Membership
–  Democratic Member Control
–  Member Economic Participation
–  Autonomy and Independence
–  Education, Training and Information
–  Cooperation Among Cooperatives
–  Concern for Community
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Additional Definitions (Article 5)
o  Representative assembly – full membership
elected by sectors, chapter or district to
exercise powers delegated to them by the
general assembly
o  Officers – members of board of directors,
different committees created by the GA,
general manager or CEO, secretary,
treasurer and members holding other
positions as provided for in their bylaws
Additional Definitions
o  Subsidiary cooperative – any organization
all or majority of whose membership comes
from a cooperative, organized for any
other purpose different from that of, and
receives technical, managerial and
financial assistance from, a cooperative
o  Federation of cooperatives– three or more
primary cooperatives, doing the same line
of business
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Additional Definitions
o  Social Audit – 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 coops…
o  Performance Audit – refer to an audit
on the efficiency and effectiveness of
the cooperative as a whole, its
management and officers, and its
various responsibility centers…
Purposes of Cooperatives (Article 6)
o  Encourage thrift and savings mobilization;
o  Generate funds and extend credit;
o  Encourage systematic production and
marketing;
o  Provide goods and services and other
requirements;
o  Develop expertise and skills among
members;
o  Acquire land and provide housing benefits
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Purposes of Cooperatives
o  Insure against losses of members;
o  Establish, own, lease or operate cooperative
banks, wholesale and retail complexes,
insurance and agricultural/ industrial
processing enterprises and public markets;
o  Coordinate and facilitate activities of
cooperatives;
o  Advocate for the cause of the cooperative
movement
Powers and Capacities (Article 9)
o  Exclusive use of registered names, to sue
and be sued;
o  Of succession;
o  To amend its articles;
o  To adopt its bylaws not contrary to law,
morals or public policy
o  Deal with real and personal property
o  Enter into division, merger or consolidation
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Purposes of Cooperatives
o  Ensure viability of cooperatives through
utilization of new technologies;
o  Encourage and promote self-help or self-
employment as an engine for economic
growth and poverty alleviation; and
o  Undertake any and all activities for the
efficient and effective implementation of
the provisions.
Powers and Capacities
o  Form subsidiary cooperatives and join
federations and unions;
o  Avail of loans, credits, grants, donations
from domestic and foreign sources;
o  Avail of preferential rights under RA7160;
o  Organize and operate schools in
accordance with RA 9155
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Requirements for Registration Amendments (Article 18)

(Articles 10,11,14,15,)

ž  Pre-membership Education Seminar required

ž  Newly organized primary may be registered as MPC
after compliance with requirements set by CDA; SPC o  Amendments need 2/3 vote of
may transform into an MPC or create subsidiaries
after two (2) years members with voting rights
ž  Economic Survey including staffing pattern which
includes at least a bookkeeper
ž  Articles of Cooperation o  Merger, consolidation and division of
—  At least 15 members cooperatives require 3/4 of all
—  Minimum Capitalization of PhP 15,000; reviewed every 5
years members with voting rights present
ž  By-laws and constituting a quorum
ž  Bonds of accountable officers

Types (Article 23) Types

o  Credit – promotes and undertakes o  Marketing – supply of production inputs

savings and lending services to its
members;
o  Consumers – to procure and distribute
commodities to members and non-
members;
o  Producers – undertakes joint production
whether agricultural or industrial
and markets their products;
o  Service – engages in medical and dental
care, hospitalization, transportation,
insurance, housing, labor, electric light and
power, communication, professional and
other services;
o  Multi-purpose – combines 2 or more
business activities

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Additional Types of Cooperatives
o  Advocacy – promotes and advocates
cooperativism among its members and the public;
o  Agrarian Reform – organized by marginal farmers
majority of whom are agrarian reform
beneficiaries;
o  Cooperative Bank – providing a wide range of
financial services to cooperatives and their
members;
o  Dairy – production of fresh milk which may be
processed and/or marketed as dairy products;
Additional Types
o  Fishermen – marginalized fishermen where
their products are marketed either as fresh
or processed products;
o  Health Services – providing medical, dental
and other health services;
o  Housing – assist or provide access to
housing for members who participate in the
savings program for housing;
o  Insurance – business of insuring life and
property of cooperatives and members
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Additional Types
o  Education – owning and operating
licensed educational institutions;
o  Electric – undertaking power generation,
acquisition and operation of
subtransmission or distribution to its
household members;
o  Financial service – engaging in savings
and credit services and other financial
services;
Additional Types
o  Transport – services including land and sea
transportation;
o  Water Service – own, operate and
manage water systems for the provision
and distribution of potable water to its
members;
o  Workers – organized by workers, including
self-employed, to provide employment
and business opportunities
o  Other types as maybe determined by the
Authority
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Functions of a Coop Federation
( Article 24)
o  Functions should complement, augment
or supplement but does not conflict ,
compete with, nor supplant the business or
economic activities of its members.
Membership
o  Legal age, Filipino citizens
o  Capable and willing to perform the
responsibilities of a member
o  Allows associate members but needs to
qualify for regular membership within
(2) years
o  All elective officials are ineligible to be
officers or directors of cooperatives
except party-list representatives
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Membership (Chapter 3, Art.26)
o  Kinds of Membership
1.  Regular member one who has complied
with all the membership requirements and
entitled to all rights and privileges of
membership.
2.  Associate member one who has no right to
vote or be voted upon and shall be
entitled only to such rights and privileges
as the by laws may provide.
General Assembly (Chapter 4,)
o  Shall be the highest policy making body of
the cooperative
o  3/4 vote of members required to delegate
some powers to a representative assembly
o  Quorum is at least 25% of all members
entitled to vote
o  Voting in primary cooperatives is strictly
one-member, one vote and no proxies
allowed except for representative assembly
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Board of Directors (Articles 37,38,
39)
o  Responsible for strategic planning,
direction, setting and policy formulation
o  Term shall be fixed in the coop bylaws. A
term is 2 years
o  Prohibition against holding any other
position involved in the day-to-day
operations and management
o  Disqualification of persons engaged in
business similar to the cooperative
Functions, Responsibilities and
Training Requirements (Article 44)
o  The functions and responsibilities of the
directors, officers and committee
members, AS WELL AS THEIR TRAINING
REQUIREMENTS, shall be IN
ACCRODANCE WITH THE RULES AND
REGULATIONS ISSUED BY THE
AUTHORITY.
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Committees and Officers (Art.43)
ž Additional committees
—  Mediation and Conciliation
—  Ethics
ž All officers and committee members required
to undergo trainings conducted by accredited
institutions by the CDA
ž No compensation except for per diems. If
cooperative reports a net loss for the
preceding year, officers are not entitled to per
diems
ž Removal of officers may be done by a majority
vote of the members
Responsibilities of Cooperatives
o  Accountant or bookkeeper is responsible for
maintenance and safekeeping of books of
accounts
o  Audit committee responsible for continuous
and periodic review of books of accounts;
monitor adequacy and effectiveness of
management’s control system and audit the
performance of the cooperative
o  Audited financial statements required to be
posted in principal office
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Annual Reports (Article 53)
o  Filed within 120 days from close of calendar year
o  Regular activities including socio-civic
undertakings
o  Must show their progress and achievements
o  The form and contents of the report shall be
prescribed by the rules of the Authority
o  Liability for non-submission is fines and other
penalties imposable until the cooperative has
complied with the requirements
Tax Exemptions
o  Non-members will pay VAT; coop will
collect and remit to BIR
o  Provided, finally that at least 25% of net
surplus of coop is returned to members
as interest and patronage refund
o  Cooperative is responsible for
collection and remittance of individual
withholding taxes (proper recording)
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Tax Treatment of Cooperatives
(Article 60, 61)
o  Not subject to taxes and fees imposed
under NIRC and other tax laws for
cooperatives transacting business with
members only
o  Transactions with members are not subject
to taxes and fees, including final tax on
members’ deposits and documentary tax
Additional Privileges
o  Faculty cooperatives have right of first
refusal in management of canteen and
other services related to the operations of
educational institutions
o  Housing agencies and financial institutions
shall create a window for financing
housing projects
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Capital
o  Subsidies, donations, legacies, grants, and
aids shall not be divided into individual
share capital holdings anytime but subject
to escheat proceedings upon dissolution
o  Limitation on share capital held by one
member reduced from 20% to 10%
o  Reasonable and realistic member capital
build-up program to allow the continuing
growth f the members’ investment in the
coop
Social Auditing
o  Based on the 7th Cooperative Principle –
Concern for Community
o  Defined as the systematic review and
appraisal of the cooperative in relation to
the development of its most essential
building blocks-its members, its people,
and its distinctive contribution to the
development of its community and society
as a whole.
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Audit
o  Financial audit conducted by external
auditor in good standing with PICPA and
accredited by Board of Accountancy and
CDA
o  Social and performance audits may be
conducted by an independent social
auditor accredited by CDA
Distribution of Net Surplus
o  At least10% of net surplus; however, in first 5
years after registration, this is not less than 50%
of the net surplus
o  Not for than 10% for CETF; half to be used by
the cooperative; other half is remitted to the
federation/union chosen by the cooperative
o  Federation/ union should submit: (a) list of
contributing cooperatives; business
consultancy assistance with nature and cost;
and (c) training activities specifying the
nature, participants, and cost
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Distribution of Net Surplus Other Provisions

o  Not less than 3% for community
development fund for projects/activities
for the benefit of the community where
the cooperative operates
o  Not more than 7% for optional fund, land
and building, and other funds
ž Additional Special Provisions
—  Transportation Cooperatives
—  Electric Cooperatives
—  Cooperative Banks
—  Credit Cooperatives
—  Financial Service Cooperatives
—  Housing Cooperatives
ž Conciliation and Mediation Committee (ADR)
ž Additional Penal Provisions
ž CDA allowed to formulate rules on the
Cooperative Code on certain provisions

Other Provisions

o  Congressional Oversight Committee to review

and approve the implementing rules and o Changes in the New
regulations
o  Re-registration of all cooperatives to confirm
Coop Code are not
their status by submitting: (a) Certificate of
Registration/Confirmation; (b) articles of
threats, they are
cooperation; (c) bylaws; and (d) latest
audited financial statement
opportunities that can
o  Must secure tax exemption certificate from be pursued.
BIR

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