COOPERATIVE

LAW
Atty. Ronel V. Marcelo
COOPERATIVE

A duly registered association of persons, with a common bond

of interest, who have voluntarily joined together to achieve a
lawful common social or economic end, making equitable
contributions to the capital required and accepting a fair share
of the risks and benefits of the undertaking in accordance with
universally accepted cooperative principles.

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 COOPERATIVE
Art. 4 Every Cooperative shall
conduct its affairs in accordance to
Filipino culture and experience and
universally accepted principles of
cooperation which include the
following:
 Open and voluntary membership
 Democratic control
 Limited Interest in Capital
 Division of Net Surplus
 Cooperative Education
 Cooperation among Cooperatives
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 COOPERATIVE
ORGANIZATION AND REGISTRATION
Art. 6 A cooperative may be organized and
registered by at least fifteen (15) persons for
any or all of the purposes.
Art. 8 No Cooperative or method or act
thereof which complies with this code shall
be deemed a conspiracy or combination in
restraint of trade or illegal monopoly, or an
attempt to lessen competition or fix prices
arbitrarily in violation of any of the laws in
the Philippines.
Art. 11 Every group of individuals or
cooperatives intending to form a cooperative
under this code shall submit to the
cooperative Development Authority a
general statement describing the structure,
purposes and economic feasibility of the
proposed cooperative indicating therein the
area of operation, the size of membership
and other pertinent data.
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 COOPERATIVE
ORGANIZATION AND REGISTRATION

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
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 Cooperative Development Authority

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COOPERATIVE
ORGANIZATION AND REGISTRATION

All cooperative applying for registration shall file with the

Cooperative Development Authority the articles of cooperation
which shall be signed by each of the organizers and
acknowledged by them if natural persons, and by the
presidents or secretaries, if juridical persons, before a notary
public.

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 COOPERATIVE
POWERS AND CAPACITIES

 Exclusive use of registered names, to sue and be sued.

 Of succession
 To amend its articles
 To adopt its bylaws not contrary to law, morals or public policy
 Deal with real and moral and personal property
 Enter into division, merger or consolidation

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 COOPERATIVE
POWERS AND CAPACITIES

 Form subsidiary cooperatives and join federations and union

 Avail of loans, credits, grants, donations fro0m domestic and
foreign sources
 Avail of preferential rights under RA 7160
 Organize and operate schools in accordance with RA 9155

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 COOPERATIVE
Amendments

 Amendments need 2/3 vote of member with voting rights

 Merger, consolidation and division of cooperatives require

¾ of all members with voting rights present and
constituting a quorum

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 COOPERATIVE
TYPES (Art. 23)

 Credit- promotes and undertakes savings and lending services to its

members

 Consumers- to procure and distribute commodities to members and

non-members

 Producers- undertakes joint production whether agricultural or

industrial
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 COOPERATIVE
TYPES

 Marketing- Supply of production inputs and markets their products

 Service- Engages in medical and dental care, hospitalization,

transportation, insurance, housing, labor, utilities and other services

 Multi-purpose- combines two or more business activities.

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COOPERATIVE
FUNCTIONS OF A COOP FEDERATION

 Functions should complement, augment, or supplement but

does nor conflict, compete with, nor supplant the business
or economic activities of its members.

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 COOPERATIVE
MEMBERSHIP (Art. 26)

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.

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COOPERATIVE
MEMBERSHIP

 Legal age, Filipino citizens

 Capable and willing to perform the responsibilities of a member
 Allows associate members but needs to qualify for regular
membership within 2 years
 All elective officials are ineligible to be officers or directors of
cooperatives except party list representatives

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COOPERATIVE
GENERAL ASSEMBLY

 shall be the highest policy making body of the cooperative.

 ¾ vote of members required to delegate some powers to a
representative assembly.
 Quorum is atleast 25% of all members entitled to vote.
 Voting in primary cooperatives is strictly one member, one vote
and no proxies allowed except for representative assembly.

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 COOPERATIVE
BOARD OF DIRECTORS (Articles 37, 38, 39)

 Responsible for strategic planning, direction, setting and policy

formulation.
 Term shall be fixed in the Coop bylaws. A term is two years
 Prohibition against holding any other position involved in the day
to day operations and management
 Disqualification of persons engaged in business similar to the
cooperatives.

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 COOPERATIVE
COMMITTEES AND OFFICCERS (Article 43)

Additional committees
•Mediation and conciliation
•Ethics
All officers and committee members required to undergo trainings conducted by accredited
institutions by the CDA
No compensation except per diems. If cooperative reports a net loss for the preceding year,
officers are not entitled per diems.
Removal of officers may be done by a majority vote of the members.

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 COOPERATIVE
FUNCTIONS, RESPONSIBILITIES AND TRAINING REQUIREMENTS
(ARTICLE 44)

 The functions and responsibilities of the directors,

officers and committee members, as well as their training
requirements, shall be in accordance with the riles and
regulations issued by the authority.

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 COOPERATIVE
RESPONSIBILITIES OF COOPERATIVES

 Accountant or bookkeeper is responsible for maintenance and safe

keeping of books of accounts
 Audit committee responsible for continuous and periodic review of
books of accounts: monitor adequacy and effectiveness of
management’s control systems and audit the performance of the
cooperative
 Audited financial statemets required to be posted in principal office .

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 COOPERATIVE
ANNUAL REPORTS (Article 53)

 Filed within 120 days from close of calendar year

 Regular activities including socio civic undertakings must show their
progress and achievements
 The form and contents of the reports shall be prescribed by the rules of the
authority
 Liability for non submission is fined and penalties imposable until the
cooperative has complied with the requirements.

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 COOPERATIVE
TAX TREATMENT OF COOPERATIVES (ARTICLE 60, 61)

 Not subject to taxes and fees imposed under NIRC and other
tax laws for cooperatives transacting business with members
only.
 Transactions with members are not subject to taxes and fee,
including final tax on members’ deposits and documentary
tax.

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 COOPERATIVE
TAX EXEMPTIONS

 Non members will pay VAT; coop will collect and remit to BIR
 Provided, finally that at least 25% of net surplus of coop is
returned to members as interest and patronage refund.
 Cooperative is responsible for collection and withholding taxes
(proper recording)

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 COOPERATIVE
ADDITIONAL PRIVILEGES

 Faculty cooperatives have right of first refusal in management of

canteen and other services related to the operations of educational
institutions

 Housing agencies and financial institutions shall create a window for

financing housing projects.

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 COOPERATIVE
CAPITAL

 Subsidies, donations, legacies, grants and aids shall not be divided into
individual share capital holdings anytime but subject to proceedings upon
dissolution.
 Limitation on share capital held by one member reduced from 20% to 10%
 Reasonable and realistic member capital build up program to allow the
continuing growth of the members’ investment in the Coop

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COOPERATIVE
Audit

▰ Financial Audit conducted by External Auditor in good

standing with PICPA And accredited by Board of
Accountancy and CDA
▰ Social and performance audit may be conducted by an
independent social auditor Accredited by CDA

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 COOPERATIVE
SOCIAL AUDITING

▰ 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 societyas a whole.

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 COOPERATIVE
DISTRIBUTION OF NET SURPLUS

▰ At least 10% of net surplus, however in first 5 years after

registration, this is not less than 50% of the net surplus.
▰ Not less than 3% for community development fund for
projects/activities for the benefit of the community where the
cooperative operates
▰ Not more than 7% for optional fun, land and building and other
funds
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 COOPERATIVE
OTHER PROVISION

▰ Congressional oversight committee to review and approve the

implementing rules and regulations
▰ Re-registration of all cooperatives to confirm their status by submittinga
a. Certificate of Confirmation
b. Articles of Cooperation
c. Bylaws
d. Latest audited financial statement
▰ Must secure tax exemption certificate from BIR

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 COOPERATIVE
OTHER PROVISION

▰ Additional Penal Provision

Liability of public officials or employees of any government Agency who
deprive, diminish, hinder or restrict coops from the full employment of
their privelege under Article 60 & 61 of the code.
The CDA may motu proprio, initiate complaints against person(s),
organizations Using the word “cooperative” not duly registered as a Coop
under the Code.

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 COOPERATIVE
OTHER PROVISION

▰ Making an entry required Under the code in a book or register,

Which the person knows to be false or misleading.
▰ Hindering an authorized person From making an inspection,
audit, examination or investigation required under the code.
▰ Failure to comply with an order or written instructions issued
or given by the CDA.

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