Chapter 1: General Concept and Principles

ARTICLE 1. Title – This Act shall be known as the "Philippine Cooperative Code of 2008".
ART. 2. Declaration of Policy – It is the declared policy of the State to foster the creation and
growth of cooperatives as a practical vehicle for promoting self-reliance and harnessing people power
towards the attainment of economic development and social justice. The State shall encourage the
private sector to undertake the actual formation and organization of cooperatives and shall create an
atmosphere that is conducive to the growth and development of these cooperatives.
"Toward this end, the Government and all its branches, subdivisions, instrumentalities and agencies
shall ensure the provision of technical guidance, financial assistance and other services to enable
said cooperatives to develop into viable and responsive economic enterprises and thereby bring
about a strong cooperative movement that is free from any conditions that might infringe upon the
autonomy or organizational integrity of cooperatives.
ART. 3. General Concepts. - A cooperative is 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.
ART. 4. Cooperative Principles. - Every cooperative shall conduct its affairs in accordance with
Filipino culture, good values and experience and the universally accepted principles of cooperation
which include, but are not limited to, the following:

(1) Voluntary and Open Membership - Cooperatives are voluntary organizations, open to all
persons able to use their services and willing to accept the responsibilities of membership, without
gender, social, racial, cultural, political or religious discrimination.

(2) Democrative Member Control - Cooperatives are democratic organizations that are controlled by
their members who actively participate in setting their policies and making decisions. Men and women
serving as elected representatives, directors or officers are accountable to the membership. In
primary cooperatives, members have equal voting rights of one-member, one-vote. Cooperatives at
other levels are organized in the same democratic manner.

(3) Member Economic Participation - Members contribute equitably to, and democratically control,
the capital of their cooperatives. At least part of that capital is the common property of the
cooperative. They shall receive limited compensation or limited interest, if any, on capital subscribed
and paid as a condition of membership. Members allocate surpluses for any or all of the following
purposes: developing the cooperative by setting up reserves, part of which should at least be
indivisible; benefitting members in proportion to their patronage of the cooperative's business; and,
supporting other activities approved by the membership.

(4) Autonomy and Independence - Cooperatives are autonomous, self-help organizations controlled
by their members. If they enter into agreements with other organizations, including government, or
raise capital from external sources, they shall do so on terms that ensure democratic control of their
members and maintain their cooperative autonomy.
(5) Education, Training and Information - Cooperatives shall provide education and training for
their members, elected and appointed representatives, managers, and employees, so that they can
contribute effectively and efficiently to the development of their cooperatives.

(6) Cooperation among Cooperatives - Cooperatives serve their members most effectively and
strengthen the cooperative movement by working together through local, national, regional and
international structures.

(7) Concern for Community - Cooperatives work for the sustainable development of their
communities through policies approved by their members.
ART. 5. Definition of Terms. The following terms shall mean:
(1) Member includes a person either natural or juridical who adhering to the principles set forth in this
Code and in the Articles of Cooperative, has been admitted by the cooperative as member;
(2) General Assembly 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, as
provided by this Code, its articles of cooperation and bylaws: Provided, That for cooperatives with
numerous and dispersed membership, the general assembly may be composed of delegates elected
by each sector, chapter or district of the cooperative in accordance with the rules and regulations of
the Cooperative Development Authority;
(3) Board of Directors shall mean that body entrusted with the management of the affairs of the
cooperative under its articles of cooperation and bylaws;
(4) Committee shall refer to anybody entrusted with specific functions and responsibilities under the
bylaws or resolution of the general assembly or the board of directors;

(5) Articles of Cooperation means the articles of cooperation registered under this Code and
includes a registered amendment thereof;
(6) Bylaws means the bylaws registered under this Code and includes any registered amendment
thereof;

(7) Registration means the operative act granting juridical personality to a proposed cooperative and
is evidenced by a certificate of registration;

(8) Cooperative Development Authority refers to the government agency in charge of the
registration and regulation of cooperatives as such hereinafter referred to the Authority;
(9) Universally Accepted Principles means that body of cooperative principles adhered to
worldwide by cooperatives;

(10) Representative Assembly means the full membership of a body of representatives elected by
each of the sectors, chapter or district o the cooperative duly assembled for the purpose of exercising
such powers lawfully delegated unto them by the general assembly in accordance with its bylaws;

(11) Officers of the Cooperative 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 positions as may be provided for in their bylaws;
(12) Social Audit is a procedure wherein the cooperative assesses its social impact and ethical
performance vis-a-vis its stated mission, vision, goals and code of social responsibility for
cooperatives to be established by the Authority in consultation with the cooperative sector. It enables
the cooperative to develop a process whereby it can account for its social performance and evaluate
its impact in the community and be accountable for its decisions and actions to its regular members;
(13) Performance Audit shall refer to an audit on the efficiency and effectiveness of the cooperative
as a whole; its management and officers; and its various responsibility centers as basis for improving
individual team or overall performance and for objectively informing the general membership on such
performance;

(14) A Single-Line or Single-Purpose Cooperative shall include cooperative undertaking activities

(15) Service Cooperatives 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;

(16) Subsidiary Cooperative refers to any organization all or majority of whose membership or
shareholders come from a cooperative, organized for any other purpose different from that of, and
receives technical, managerial and financial assistance from, a cooperative, in accordance with the
rules and regulations of the Authority;" and
(17) Federation of Cooperatives refers to three or more primary cooperatives, doing the same line o
f business, organized at the municipal, provincial, city, special metropolitan political subdivision, or ec
onomic zones created by law, registered with the Authority to undertake business activities in support
of its member-cooperatives."