University of San Carlos

School of Business and Economics

Department of Accountancy

Regulatory Framework for Business Transactions November 8, 2020

Law on Cooperatives J.M.DENILA

1. Includes a person either natural or juridical who adhering to the principles set forth in the Philippine
Cooperative Code and in the Articles of Cooperative, has been admitted by the cooperative as
member.
a. Member
b. Stockholder
c. Shareholder
d. Partner

2. 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.
a. Shareholder’s meeting
b. Members meeting
c. General assembly
d. Partners assembly

3. Shall mean that body entrusted with the management of the affairs of the cooperative under its
articles of cooperation and bylaws.
a. Board of trustees
b. Officers
c. Board of regents
d. Board of directors

4. Shall refer to anybody entrusted with specific functions and responsibilities under the bylaws or
resolution of the general assembly or the board of directors.
a. Assembly
b. Committee
c. Consultant
d. Technical working group

5. Means the operative act granting juridical personality to a proposed cooperative and is evidenced
by a certificate of registration.
a. Incorporation
b. Dissolution
c. Registration
d. Winding up

6. Refers to the government agency in charge of the registration and regulation of cooperatives.
a. Securities and Exchange Commission (SEC)
b. Department of Trade and Industry (DTI)
c. Civil Service Commission (SEC)
d. Cooperative Development Authority (CDA)

7. Means the body of cooperative principles adhered to worldwide by cooperatives.

a. Universally accepted principles
b. International accounting standards
 c. Generally accepted principles
d. Transnational principles

8. Means the full membership of a body of representatives elected by each of the sectors of
cooperative duly assembled for the purpose of exercising such powers lawfully delegated unto
them by the general assembly.
a. Officers
b. Member
c. Representative assembly
d. Social audit

9. 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 position as may be provided for in their bylaws.
a. Officers
b. Members
c. Representative assembly
d. Social audit

10. Shall include cooperative undertaking activities which are related to its main line of business or
purpose.
a. Subsidiary cooperative
b. Single line or purpose cooperative
c. Service cooperative
d. Social audit

11. Are those which provide any type of service to its members, including but not limited to, transport,
information and communication, insurance, housing, electric, health services, education, banking,
and savings and credit.
a. Subsidiary cooperative
b. Single line or purpose cooperative
c. Service cooperative
d. Social audit

12. A cooperative may be organized and registered for any or all of the following purposes:
a. To encourage thrift and savings mobilization among the members
b. To generate funds and extend credit to the members for productive and provident purposes
c. To encourage among members systematic production and marketing
d. All of the above

13. A cooperative registered under this Code shall have the following powers, rights and capacities:
a. To the exclusive use of its registered name, to sue and be sued
b. Of succession
c. To amened its articles of cooperation
d. All of the above

14. I: 15 or more juridical or natural persons may organize a primary cooperative.

II: A prospective member of a primary cooperative must have completed a Pre-Membership
Education Seminar.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
15. I. 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
CDA.
II. A single-purpose cooperative may transform into a multipurpose or may create subsidiaries only
after at least three (3) years of operations.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

16. I. A cooperative duly registered shall have limited liability.

II. A cooperative shall exist for a period not exceeding fifty (50) years from the date of registration
unless sooner dissolve or unless said period is extended.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

17. Is one who has complied with all the membership requirements and entitled to all the rights and
privileges of membership
a. Regular member
b. Irregular member
c. Principal member
d. Associate member

18. I: A certificate of registration issued by CDA under its official seal shall be prima facie evidence that
the cooperative is duly registered.
II: Any provision or matter stated in the articles of cooperation and by laws may be amended by
2/3 vote of all the members with voting rights.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

19. I: All amendments to the articles of cooperation and/or bylaws shall be submitted to the CDA.
II: The amendments shall take effect upon its approval by CDA or within 30 days from the date of
filing thereof it not acted upon by the CDA for cause not attributable to the cooperative.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

20. I: A cooperative formed and organized acquired juridical personality from the date the CDA issues
certificate of registration under its official seal.
II: Any registered cooperative may, by a resolution approved by vote of ¾ of all the members with
voting rights, present and constituting a quorum, resolve to divide itself into two or more
cooperatives.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false
21. I: No merger or consolidation shall be valid unless approved by ¾ vote of all the members with
voting rights, present and constituting a quorum of each of the constituent cooperatives and
separate general assembly meetings.
II: the merger or consolidation shall be effective upon the issuance of the certificate of merger or
consolidation by the CDA.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

22. I. Any officer or employee of the CDA shall be disqualified to be elected or appointed to any
position in a cooperative: Provided, that the disqualification does not extend to a cooperative
organized by the officers or employees of the CDA.
II. All appointive 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.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

23. 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.
a. Regular member
b. Irregular member
c. Principal member
d. Associate member

24. I: Any officer or employee of CDA shall be disqualified to be elected or appointed to any position
in a cooperative.
II: All appointive officials of the Government shall be ineligible to become officers and directors of
cooperative.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

25. 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
d. All of the above

26. I. The general assembly shall be composed of such members who are entitled to vote under the
articles of cooperation and bylaws of the cooperative.
II. The general assembly shall be the highest policy-making body of the cooperative and shall
exercise such powers as are stated in the Philippine Cooperative Code, in the articles of cooperation
and in the bylaws of the cooperative.
a. Only I is true
b. Only II is true
c. Both are true
 d. Both are false

27. The general assembly shall have the following exclusive powers which cannot be delegated:
a. To determine and approve amendments to the articles of cooperation and bylaws
b. To elect or appoint the members of the board of directors, and to remove them for a cause.
However, in the case of the electric cooperatives registered under the Philippine Cooperative
Code, election of the members of the board shall be held in accordance with its bylaws or
election guideline of such electric cooperative; and
c. To approve developmental plans of the cooperative
d. All of the above

28. I. A quorum shall consist of at least twenty-five per centum (25%) of all the members entitled to
vote.
II. In the case of electric cooperatives registered under the Philippine Cooperative Code, a quorum,
unless otherwise provided in the bylaws shall consist of five per centum (5%) of all the members
entitled to vote.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

29. I. Each member of a primary cooperative shall have only one (1) vote.
II. In the case of members of secondary or tertiary 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.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

30. I. Unless otherwise provided in the bylaws, the direction and management of the affairs of a
cooperative shall be vested in a board of directors which shall be composed of not less than five
(5) nor more than fifteen (15) members elected by the general assembly for a term of two (2)
years and shall hold office until their successors are duly elected and qualified, or until duly removed
for caused.
II. The board of directors shall be responsible for the strategic planning, direction-setting and
policy-formulation activities of the cooperatives.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

31. I: Any vacancy in the board, other than expiration of term, may be filled by vote of at least a
majority of the remaining directors, is still constituting a quorum.
II: A director so elected to fill a vacancy shall serve only the unexpired term of his predecessor in
office.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

32. I: The board shall elect among themselves the chairperson and vice chairperson, and elect or
appoint other officers of the cooperative from outside of the board in accordance with their bylaws.
 II: All officers shall serve during good behavior and shall not be removed except for cause after
due hearing.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

33. I: The members of the board shall not hold any other position directly involved in the day to day
operation and management of the cooperative.
II: Only regular members of the cooperative are eligible for election as director.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false

34. A contract entered into by the cooperative with one (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.
a. That the presence of such director in the board meeting wherein contract was approved was
not necessary to constitute a quorum for such meeting.
b. That the vote of such director was not necessary for the approval of the contract
c. That the contract is fair and reasonable under the circumstances
d. All of the above

35. I. Cooperatives transacting business with both members and non-members shall not be subjected
to tax on their transactions with members.
II. The transactions of members with the cooperative shall not be subject to any taxes and fees.
a. Only I is true
b. Only II is true
c. Both are true
d. Both are false