Cooperation refers to the collaborative effort of Effect of Gratification of Responsibility and rights of

individuals or groups working together towards a common cooperative

goal or mutual benefit.
1. Enhanced Economic Development
Importance of… 2. Enhanced Functionality
3. Promotion of Self-Reliance
Responsibilities
4. Community Empowerment
Understanding and fulfilling responsibilities is crucial for 5. Support Autonomy and Organizational Integrity
maintaining a smooth and efficient cooperative 6. Wealth Distribution and Incentives for
environment. Community Improvement

Rights Importance of ensuring rights is upheld for all members

Members possess certain rights within the cooperative, 1. Transparency and Accessibility of Information
such as the right to participate in decision-making 2. Accountability in Financial Management
processes. 3. Member Reports and Communication
4. Prima Facie Evidence and Legal Protection
Privileges 5. Preference of Claims and Liens
6. Tax Exemptions and Privileges
Privileges may include accessing cooperative resources or
7. Legal and regulatory Supports
enjoying specific benefits based on membership.
8. Legal Assistance
ROLES
What happens if the Responsibility, Rights, and Privileges
Members, Directors and Employees of the Cooperative is unbalanced?

• Financial Contribution 1. Member dissatisfaction

• Participation 2. Conflict and tension
• Labor 3. Decreased motivation
• Promotion 4. Decreased productivity
• Advocacy Bylaws 5. Strained relationship

Punishments How to balance Responsibility, Rights, and Privileges in a

Cooperative
1. Warning
2. Fines 1. Shared duties
3. Loss of benefits 2. Equal say
4. Suspensions 3. Open communication
5. Expulsion 4. Accountability measures
5. Service participation
Rights of members 6. Fair benefits
Rules that give each individual in the cooperative certain
powers. Dissolution
1. Equal Voting Rights - Refers to the termination or cessation of the
2. Right to Participate in Decision-Making business of the cooperative. This means ending
3. Right to Information its operations and winding up its affairs.
4. Right to Dividends and Patronage Refunds
5. Right to Run for Leadership Positions Voluntary Dissolution
6. Right to Education and Training - Occurs when the cooperative itself, through a
7. Right to a Fair Return on Investments resolution passed by its board of directors and
Privileges general assembly, decides to terminate its
business. This can happen when there are no
Cooperatives are granted certain privileges in recognition creditors affected by the dissolution.
of their unique structure and contributions to the
economy. These privileges are designed to support the Rules for Voluntary Dissolution
growth and sustainability of cooperatives.
Specific steps must be followed, including passing a
1. Tax Exemption resolution by the board and general assembly, providing
2. Access to Government Support notice of the meeting, ensuring members receive the
3. Priority in Government Procurement notice, and filing dissolution papers.
4. Limited Liability Involuntary Dissolution
5. Democratic Control
6. Training and Technical Assistance Can occur by the order of a competent court, such as the
7. Provide Financial Benefits Regional Trial Court (RTC), after a hearing. This usually
8. Offer Competitive Advantages happens due to violations of laws, regulations, or by-laws,
9. Encourage Expansion or due to insolvency.
10. Ensures Active Participation
11. Improve Skills and Knowledge
Insolvency
- Refers to bankruptcy or the state when the
cooperative is unable to pay all debts as they
become due. In such cases, the cooperative may
avail of remedies provided by insolvency laws,
such as Republic Act No. 1956.
Proceeding upon Insolvency: There are two main
options:
Suspension of payments: Allowed when the cooperative's
assets are sufficient to pay all its debts but cannot
currently muster enough cash to pay all its maturing
obligations.
Discharge from debts and liabilities: May be obtained
when the cooperative's assets are not enough to pay off
all its debts or liabilities. This means that creditors may
have to accept less than the full amount owed to them.
CAUSES OF DISSOLUTION:
Declining membership or Lack of member participation
If a cooperative experiences a significant decrease in
membership, it may struggle to sustain its operations and
ultimately dissolve. If members lose interest or fail to
engage in cooperative activities, it can contribute to its
dissolution
Lack of financial Sustainability
Financial difficulties, such as insufficient funds, high debt,
or mismanagement of finances, can lead to the dissolution
of a cooperative because they will be unable to cover its
operational expenses and fulfill its financial obligations.
Internal disagreements and conflicts
Conflicts among members, board members, or
management can create a hostile environment within the
cooperative, leading to its dissolution, because this can
create a toxic and unproductive work environment,
leading to a breakdown in communication, loss of trust,
and ultimately the dissolution of the cooperative.
Legal and regulatory issues
Non-compliance with legal and regulatory requirements
can result in legal actions that may force the dissolution of
a cooperative.
Inadequate management and ineffective governance
Incompetent or ineffective management and leadership
can hinder the growth and success of a cooperative,
potentially leading to dissolution.
Loss of purpose and relevance
If a cooperative fails to meet the needs or demands of its
members or the market, it may lose its purpose or become
irrelevant, ultimately resulting in dissolution.
Having obtained its registration by fraud; If a cooperative
obtained its registration through fraudulent means, it
undermines the legitimacy of its existence and can lead to
dissolution.
Existing for an illegal purpose; -If a cooperative is found to
be operating for an illegal purpose, it can be dissolved to
prevent further unlawful activities.
Willful violation, despite notice by the Authority, of the
provisions of this Code or its bylaws; - Willfully violating
the provisions of the cooperative code or its bylaws, even
after being notified by the regulatory authority, shows a
disregard for the governing rules, which can result in
dissolution.
Willful failure to operate on a cooperative basis; - If a
cooperative fails to operate according to its cooperative
principles and functions as a non-cooperative entity, it
may be dissolved due to non-compliance.
Failure to meet the required minimum number of
members in the cooperative.
Cooperatives rely on a minimum number of members to
function effectively. Failure to meet these requirements
indicates an inability to sustain cooperative operations
and can lead to dissolution.
DETERMINANTS OF LIQUIDATION
Section 1. Legal Basis.
The Authority shall issue the appropriate implementing
guidelines for the liquidation of cooperatives.
Sec 2. Coverage of Liquidation.
Cooperatives with expired charters.
Cooperatives that are dissolved voluntarily.
Cooperatives that are terminated through judicial
proceedings.
Sec. 3. Mode of Liquidation.
The cooperative may avail of the following modes of
liquidation:
Liquidation by the cooperative itself through a Board of
Liquidators.
By conveying all the cooperative assets to Trustee or
Trustees who will take charge of liquidation.
Sec. 4. Procedure of Liquidation.
The following procedures shall be observed in liquidation:
Constitution of the Board of Liquidators /Trustees.
Inventory of Assets and Liabilities of the Cooperative.
Payment of Creditors in accordance with the Provision of
the New Civil Code on the Preference and Concurrence of
Credits.
Transfer of the Statutory Funds to the intended
beneficiaries.
Distribution of the remaining assets.
Submission of the Board of Liquidators/Trustees of the
Liquidator's Final Report.
Cancellation of the Certificate of Registration and delisting
of the name of the cooperative in the Cooperative
Registry.
Sec. 5. Board of Liquidators/Trustees.
Within 60 days of receiving the Order of Dissolution, the
Board of Directors must appoint the Board of Liquidators.
If they fail, 25 percent of the voting members can convene
for the appointment. And if both the Board of Directors
and the General/Representative Assembly fail to select the
Board of Liquidators, the Authority appoints them.
Sec. 6. Functions, Powers and Obligations of the Board of
Liquidators/Trustees.
The Board of Liquidators/Trustees shall:
Make an inventory of all assets and to determine all
liabilities including Share Capital holdings;
Preserve the existing assets of the cooperative;
Convert all assets of the cooperative into cash;
Pay the outstanding obligations including any and all valid
claims against the cooperative;
Distribute remaining assets pursuant to the provisions of
the Code and this Rule; and
Make a final report on the liquidation and submit the same
to the Authority.
Sec. 7. Power to Sue and Be Sued.
The Board of Liquidators/Trustees may sue and be sued
under the name of the cooperative in order to protect and
defend its rights and interests.
Sec. 8. Payment of Creditors.
Creditors will be paid based on the terms of the contract
and in accordance with the provisions outlined in the New
Civil Code regarding the preference and concurrence of
credits.
Sec 9. Statutory Fund.
Statutory funds of a cooperative must be managed
according to Article 86 of the Code. This means funds are
handled in compliance with legal requirements.
Sec 10. Treatment of Donated Capital.
Donated capital, including subsidies and grants, becomes
property of the cooperative and cannot be returned to
donors.
Sec 11. Distribution of Assets.
After settling debts, any remaining assets of the
cooperative are distributed among members based on
their share capital. If there's not enough to cover
everyone's share, distribution is proportional.
Sec. 12. Undistributed Assets.
After a cooperative is dissolved, any assets intended for
members or creditors who cannot be located are given to
the cooperative's federation or union for further
cooperative development. If the cooperative isn't
affiliated, the assets are given to the community where it
operated.
Sec 13. Periods Allowed for the Winding Up of the Affairs
of the Cooperative. The dissolved cooperative shall
continue to exist for three (3) years from the issuance of
the Order of Dissolution.
After dissolution, a cooperative has three years to settle
affairs, defend lawsuits, and distribute assets. It can
transfer properties to trustees for the benefit of members,
creditors, and other stakeholders, terminating its interests
in the properties
Sec. 14. Submission of the Board of Liquidators/
Trustees’ Final Report.
The Board of Liquidators/Trustees of a dissolved
cooperative must submit a final report to members,
regulatory authorities, and affiliated organizations. If the
report is satisfactory, the authority cancels the
cooperative's registration. Failure to submit the report
keeps the liquidators/trustees responsible.
Sec. 15. Summary Proceedings.
Summary proceedings can be initiated for cooperatives
with assets under P100,000 and no known creditors. The
Board of Directors must submit a schedule of assets,
distribution proposal, beneficiary list, no-creditor affidavit,
and audited financial statement to the Authority. After
evaluation, the Authority grants permission to distribute
assets, and the Board submits a final report
Sec. 16. Suppletory Laws.
Suppletory Laws. The provisions of Chapter Two (2) and
Three (3) of Title 19 on the Concurrence and Preference of
Credits under the New Civil Code and the provisions of
Rule 104 of the Revised Rules of Court, apply to
cooperative dissolution. They serve as additional rules
when cooperative laws are insufficient.
Sec. 17. Exception.
The Authority has the discretion to cancel a cooperative's
registration if it has no assets or cannot be located despite
efforts. The cancellation order must state these facts.
APPROPRIATE ACTION OF INSOLVENCY:
1. Assessment of Financial Situation
Conduct a thorough analysis of the cooperative's financial
records to understand the extent of insolvency and
identify the underlying causes.
2. Formulate a Recovery Plan
Develop a comprehensive recovery plan that outlines
specific steps to address financial challenges, including
debt restructuring, cost reduction measures, and revenue
enhancement strategies.
3. Engage Stakeholders
Communicate transparently with cooperative members,
creditors, suppliers, and other stakeholders about the
insolvency situation and seek their input and support in
implementing the recovery plan.
4. Negotiate with Creditors
Initiate negotiations with creditors to renegotiate
payment terms, interest rates, and debt repayment
schedules to alleviate financial pressure and improve cash
flow.
5. Implement Cost-Cutting Measures
Identify areas where expenses can be reduced without
compromising the cooperative's core operations, such as
streamlining processes, reducing overhead costs, and
renegotiating contracts.
6. Explore Revenue Generation Opportunities
Explore new revenue streams or opportunities for
increasing sales and profitability to improve the
cooperative's financial health and sustainability.
7. Seek Professional Assistance
Consider seeking advice from financial advisors, legal
experts, or insolvency practitioners who specialize in
cooperative management to guide the recovery process
and ensure compliance with relevant laws and regulations.
8. Monitor Progress and Adjust Plans
Regularly monitor the implementation of the recovery
plan, track financial performance indicators, and make
adjustments as needed to achieve the desired outcomes
and restore the cooperative's financial stability.
9. Maintain Transparency and Communication
Keep cooperative members and stakeholders informed
about progress, challenges, and decisions related to the
insolvency situation to maintain trust and support
throughout the recovery process.
10. Comply with Legal Obligations
Ensure compliance with all legal and regulatory
requirements governing insolvency proceedings, including
filing necessary paperwork, fulfilling obligations to
creditors, and protecting the rights of cooperative
member.
CHAPTER VIII
CAPITAL, PROPERTY, AND FUNDS
“ART. 71. Capital. – The capitalization of cooperatives and
the accounting procedures shall be governed by the
provisions of this Code and the regulations which shall be
issued.
“ART. 72. 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 barrowings including deposits;
“(3) Revolving capital which consists of the deferred
payment of patronage refunds, or interest on share
capital; and
“(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.
“Upon dissolution, such donated capital shall be subject to
escheat.
“ART. 73. Limitation on Share Capital Holdings.- No
member of primary cooperative other than cooperative
itself shall own or hold more than ten per centum (10%)
of the share capital of the cooperative.
“Where a member of cooperative dies, his heir shall be
entitled to the shares of the decedent: Provided, That the
total share holding of the heir does not exceed ten per
centum (10%) of the share capital of the cooperative;
Provided, further, That the heir qualify and is admitted as
members of the cooperative: Provided finally , That where
the heir fails to qualify as a member or where his total
share holding exceeds ten per centum (10%) of the share
capital , the share or shares excess will revert to the
cooperative upon payment to the heir of the value of such
shares.
“ART. 74. Assignment of Share Capital Contribution or
Interest.- Subject to the provisions of this Code, no
member shall transfer his shares or interest in the
cooperative or any part thereof unless.
“(1) He has held such share capital contribution or interest
for not less than one (1) year.
“(2) The assignment is made to the cooperative or to a
member of the cooperative or to a person who falls within
the field of the membership of the cooperative; and
“(3) The board of directors has approved such assignment.
“ART.75. Capital Build-Up.- Te bylaws of every cooperative
shall be provided for a reasonable and realistic member
capital build-up program to allow the continuing growth of
the members’ investment in their cooperative as their
economic conditions continue to improve.
“ART.76. Shares.- The term “share” refers to a unit of
capital in a primary cooperative the par value of which
may be fixed to any figure not more than One thousand
pesos (P1,000.00). The share of capital of a cooperative is
the money paid or required to be paid for the operations
of the cooperative. The method for the issuance of share “ART. 86. Order of Distribution. The net surplus of every
certificates shall prescribed in its bylaws. cooperative shall be distributed as follows:

“ART.77. Fines. – The bylaws of a cooperative may
prescribe a fine on unpaid subscribed share capital.
Provided, that such fine is fair and reasonable under the
circumstances.
“(1) An amount for the reserve fund which shall be at
least ten per centum (10%) of net surplus: Provided, That,
in the first five (5) years of operation after registration, this
amount shall not be less than fifty per centum (50%) of the
net surplus:

“ART.78. Investment of Capital. – A cooperative may invest

its capital in any of the following:
“(a) In shares or debentures or securities of any other
cooperative;
“(b) In any reputable bank in the locality, or any
cooperative;
“(a) The reserve fund shall be used for the stability of the
cooperative and to meet net losses in its operations. The
general assembly may decrease the amount allocated to
the reserve fund when the reserve fund already exceeds
the share capital.

“(c) In securities issued or guaranteed by the Government;

“Any sum recovered on items previously charged to the
“(d) In real state primarily for the use of the cooperative or reserve fund shall be credited to such fund.
its members; or

“(e) In any other manner authorized in the bylaws.

“ART. 79. Revolving Capital. 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 by the authorized deduction of a
percentage from the proceeds of products sold or services
rendered, or per unit of product or services handled. The
board of directors shall issue revolving capital certificates
with serial number, name, amount, and rate of interest to
be paid and shall distinctly set forth the time of retirement
of such certificates and the amounts to be returned.”
“(b) The reserve fund shall not be utilized for investment,
other than those allowed in this Code. Such sum of the
reserve fund in excess of the share capital may be used at
anytime for any project that would expand the operations
of the cooperative upon the resolution of the general
assembly.
“(c) Upon the dissolution of the cooperative, the reserve
fund shall not be distributed among the members. The
general assembly may resolves:
“(i) To establish a usufructuary trust fund for the benefit of
any federation or union to which the cooperative is
affiliated; and

CHAPTER X
“(ii) To donate, contribute, or otherwise dispose of the
ALLOCATION AND DISTRIBUTION OF NET SURPLUS
amount for the benefit of the community where the
cooperative operates. If the members cannot decide upon
the disposal of the reserve fund, the same shall go to the
“ART. 85. Net Surplus. Notwithstanding the provisions of
federation or union to which the cooperative is affiliated.
existing laws, the net surplus of cooperatives shall be
determined in accordance with its bylaws. Every
cooperative shall determine its net surplus at the close of
“(2) An amount for the education and training fund, shall
every fiscal year and at such other times as may be
not be more than ten per centum (10%) of the net surplus.
prescribed by the bylaws.
The bylaws may provide that certain fees or a portion
thereof be credited to such fund. The fund shall provide
for the training, development and similar other
“Any provision of law to the contrary notwithstanding, the
cooperative activities geared towards the growth of the
net surplus shall not be construed as profit but as an
cooperative movement:
excess of payments made by the members for the loans
borrowed, or the goods and services availed by them from
the cooperative or the difference of the rightful amount
“(a) Half of the amounts transferred to the education and
due to the members for their products sold or services
training fund annually under this subsection shall be spent
rendered to the cooperative including other inflows of
by the cooperative for education and training purposes;
assets resulting from its other operating activities and
while the other half may be remitted to a union or
which shall be deemed to have been returned to them if
federation chosen by the cooperative or of which it is a
the same is distributed as prescribed herein.
member. The said union or federation shall submit to the
Authority and to its contributing cooperatives the
following schedules:
“(i) List of cooperatives which have remitted their
respective Cooperative Education and Training Funds
(CETF);
“(ii) Business consultancy assistance to include the nature
and cost; and
“(iii) Other training activities undertaken specifying
therein the nature, participants and cost of each activity.
“(b) Upon the dissolution of the cooperative, the
unexpended balance of the education and training fund
appertaining to the cooperative shall be credited to the
cooperative 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.”c
NAVIGATING THE COOPERATIVE CODE OF THE
PHILIPPINES
Cooperatives
- are autonomous associations of people united
voluntarily to meet their common economic,
social, and cultural needs and aspirations through
a jointly-owned and democratically-controlled
enterprise.
Significance of Cooperatives
- Economic Development
- Poverty Alleviation
- Social Equity
- Community Development
- Resilience & Sustainability
Historical Context of Cooperatives in the Philippines
Pre-Colonial Era - "Bayanihan"
American Colonial Period (1898-1946) -Cooperative
Marketing Act (1913)
Japanese Occupation (1942-1945) and Post-War Period) -
Cooperative Act of 1947
Marcos Era (1965-1986) - Cooperative Development
Authority (1973)
Post-Marcos Era & Modern Times - The Cooperative Code
of the Philippines (2008)
The Philippine Cooperative Code of 2008 Governance Structure

(Republic Act No. 9520)

Objectives and Scope of a Cooperative Code

• Objectives and Scope of a Cooperative Code

• Cooperative Manner
• Cooperate with government, other cooperatives,
& people-oriented organizations
• Allow the lower income and less and less
privileged groups to increase their ownership in
the wealth of nation Responsibilities of the Cooperative Code of the
• Propagate cooperative practices Philippines
• Provide optimum social and economic benefits • Compliance with Laws and Regulations
Types of Cooperative • Financial Management & Transparency
• Democratic Governance
• Agricultural Cooperatives • Socio-Economic Development
• Consumer Cooperatives • Promotion of cooperative principles
• Housing Cooperatives • Education and training
• Service Cooperatives • Conflict resolution
• Credit Cooperatives (Credit Unions)
• Worker Cooperatives
• Marketing Cooperatives
• Multipurpose Cooperatives

How to form a 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. A
prospective member of a primary cooperative must have
completed a Pre-Membership Education Seminar (PMES).

Registration Requirements

• Create bylaws consistent with the Cooperative Code.

• Election for the cooperative's board of directors,
officers, and committees.
• Prepare and submit the following:

1. Certificate of deposit
2. Treasurer’s Audit
3. Bylaws
4. and other documents as required by the
5. Cooperative Development Authority (CDA)

REGISTRATION PROCESS

1. 1. The cooperative submits the required

documents to the CDA office in its jurisdiction.

2. The CDA evaluates the documents and ensures

compliance with the Cooperative Code and other
relevant regulations.

3. Upon approval, the cooperative is issued a

Certificate of Registration, which signifies its legal
recognition as a cooperative entity.