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Chapter II: The Cooperatives

Objectives

1. Discuss the definition of cooperative

2. Enumerate the types of Cooperatives
3. Discuss the cooperative principles
4. Discuss the objectives and goals of a cooperative
5. Discuss the manner of creation of a cooperative

Learning Content

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.

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 partonage of the
cooperative's bubsiness; 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

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aggreements 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.

 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 any body 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;

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"(8) Cooperative Development Authority refers to the government agency

in charge of the registration and regulation of cooperatives as such
hereinafter referred to s 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-à-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 which are related to its main line of
business or purpose;

"(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 three or more primary

cooperatives, doing the same line of business, organized at the municipal,
provincial, city, special metropolitan political subdivision, or economic
zones created by law, registered with the Authority to undertake business
activities in support of its member-cooperatives."

Purposes of Cooperatives. – A cooperative may be organized and

registered for any or all of the following purposes:

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"(1) To encourage thrift and savings mobilization among the members;

"(2) To generate funds and extend credit to the members for productive
and provident purposes;

"(3) To encourage among members systematic production and marketing;

"(4) To provide goods and services and other requirements to the

members;

"(5) To develop expertise and skills among its members;

"(6) To acquire lands and provide housing benefits for the members;

"(7) To insure against losses of the members;

"(8) To promote and advance the economic, social and educational status
of the members;

"(9) To establish, own, lease or operate cooperative banks, cooperative

wholesale and retail complexes, insurance and agricultural/industrial
processing enterprises, and public markets;

"(10) To coordinate and facilitate the activities of cooperatives;

"(11) To advocate for the cause of the cooperative movements;

"(12) To ensure the viability of cooperatives through the utilization of new

technologies;

"(13) To encourage and promote self-help or self-employment as an

engine for economic growth and poverty alleviation; and

"(14) To undertake any and all other activities for the effective and
efficient implementation of the provisions of this Code.

Objectives and Goals of a Cooperative. – The primary objective of every

cooperative is to help improve the quality of life of its members. Towards
this end, the cooperative shall aim to:

"(a) Provide goods and services to its members to enable them to attain
increased income, savings, investments, productivity, and purchasing
power, and promote among themselves equitable distribution of net
surplus through maximum utilization of economies of scale, cost-sharing
and risk-sharing;

"(b) Provide optimum social and economic benefits to its members;

"(c) Teach them efficient ways of doing things in a cooperative manner;

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"(d) Propagate cooperative practices and new ideas in business and

management;

"(e) Allow the lower income and less privileged groups to increase their
ownership in the wealth of the nation; and

"(f) Cooperate with the government, other cooperatives and people-

oriented organizations to further the attainment of any of the foregoing
objectives.

Cooperative Powers and Capacities. – A cooperative registered under this

Code shall have the following powers, rights and capacities:

"(1) To the exclusive use of its registered name, to sue and be sued;

"(2) Of succession;

"(3) To amend its articles of cooperation in accordance with the provisions

of this Code;

"(4) To adopt bylaws not contrary to law, morals or public policy, and to
amend and repeal the same in accordance with this Code;

"(5) To purchase, receive, take or grant, hold, convey, sell, lease, pledge,
mortgage, and otherwise deal with such real and personal property as the
transaction of the lawful affairs of the cooperative may reasonably and
necessarily require, subject to the limitations prescribed by law and the
Constitution;

"(6) To enter into division, merger or consolidation, as provided in this

Code;

"(7) To form subsidiary cooperatives and join federations or unions, as

provided in this Code;

"(8) To avail of loans, be entitled to credit and to accept and receive

grants, donations and assistance from foreign and domestic sources,
subject to the conditions of said loans, credits, grants, donations or
assistance that will not undermine the autonomy of the cooperative. The
Authority, upon written request, shall provide necessary assistance in the
documentary requirements for the loans, credit, grants, donations and
other financial support;

"(9) To avail of preferential rights granted to cooperatives under Republic

Act No. 7160, otherwise known as the Local Government Code, and other
laws, particularly those in the grant of franchises to establish, construct,
operate and maintain ferries, wharves, markets or slaughterhouses and to
lease public utilities, including access to extension and on-site research
services and facilities related to agriculture and fishery activities;

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"(10) To organize and operate schools in accordance with Republic Act No.
9155, Governance of Basic Education Act of 2001 and other pertinent
laws; and

"(11) To exercise such other powers granted by this Code or necessary to

carry out its purpose or purposes as stated in its Articles of cooperation.

Type and Categories of Cooperatives. – (1) Types of Cooperatives –

Cooperatives may fall under any of the following types:

"(a) Credit Cooperative is one that promotes and undertakes savings and

lending services among its members. It generates a common pool of
funds in order to provide financial assistance to its members for
productive and provident purposes;

"(b) Consumers Cooperative is one of the primary purpose of which is to

procure and distribute commodities to members and non-members;

"(c) Producers Cooperative is one that undertakes joint production

whether agricultural or industrial. It is formed and operated by its
members to undertake the production and processing of raw materials or
goods produced by its members into finished or processed products for
sale by the cooperative to its members and non-members. Any end
product or its derivative arising from the raw materials produced by its
members, sold in the name and for the account of the cooperative, shall
be deemed a product of the cooperative and its members;

"(d) Marketing Cooperative is one which engages in the supply of

production inputs to members and markets their products;

"(e) Service Cooperative is one which engages in medical and dental care,

hospitalization, transportation, insurance, housing, labor, electric light and
power, communication, professional and other services;

"(f) Multipurpose Cooperative is one which combines two (2) or more of

the business activities of these different types of cooperatives;

"(g) Advocacy Cooperative is a primary cooperative which promotes and

advocates cooperativism among its members and the public through
socially-oriented projects, education and training, research and
communication, and other similar activities to reach out to its intended
beneficiaries;

"(h) Agrarian Reform Cooperative is one organized by marginal farmers

majority of which are agrarian reform beneficiaries for the purpose of
developing an appropriate system of land tenure, land development, land
consolidation or land management in areas covered by agrarian reform;

"(i) Cooperative Bank is one organized for the primary purpose of

providing a wide range of financial services to cooperatives and their
members;

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"(j) Dairy Cooperative is one whose members are engaged in the

production of fresh milk which may be processed and/or marketed as
dairy products;

"(k) Education Cooperative is one organized for the primary purpose of

owning and operating licensed educational institutions notwithstanding the
provisions of Republic Act No. 9155, otherwise known as the Governance
of Basic Education Act of 2001;

"(l) Electric Cooperative is one organized for the primary purposed of

undertaking power generations, utilizing renewable energy sources,
including hybrid systems, acquisition and operation of subtransmission or
distribution to its household members;

"(m) Financial Service Cooperative is one organized for the primary

purpose of engaging in savings and credit services and other financial
services;

"(n) Fishermen Cooperative is one organized by marginalized fishermen in

localities whose products are marketed either as fresh or processed
products;

"(o) Health Services Cooperative is one organized for the primary purpose

of providing medical, dental and other health services;

"(p) Housing Cooperative is one organized to assist or provide access to

housing for the benefit of its regular members who actively participate in
the savings program for housing. It is co-owned and controlled by its
members;

"(q) Insurance Cooperative is one engaged in the business of insuring life

and poverty of cooperatives and their members;

"(r) Transport Cooperative is one which includes land and sea

transportation, limited to small vessels, as defined or classified under the
Philippine maritime laws, organized under the provisions of this Code;

"(s) Water Service Cooperative is one organized to own, operate and

manage waters systems for the provision and distribution of potable water
for its members and their households;

"(t) Workers Cooperative is one organized by workers, including the self-

employed, who are at same time the members and owners of the
enterprise. Its principal purpose is to provide employment and business
opportunities to its members and manage it in accordance with
cooperative principles; and

"(u) Other types of cooperative as may be determined by the Authority.

"(2) Categories of Cooperative – Cooperatives shall be categorized

according to membership and territorial considerations as follows:

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"(a) In terms of membership, cooperative shall be categorized into:

"(i) Primary – The members of which are natural persons;

"(ii) Secondary – The members of which are primaries; and

"(iii) Tertiary – The members of which are secondary cooperatives; and

"(b) In terms of territory, cooperatives shall be categorized according to

areas of operations which may or may not coincide with the political
subdivisions of the country.

Organizing a Primary 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 under this Code: Provided, That a
prospective member of a primary cooperative must have completed a Pre-
Membership Education Seminar (PMES).

"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 Authority. A
single-purpose cooperative may transform into a multipurpose or may
create subsidiaries only after at least two (2) years of operations.

Economic Survey. - Every group of individuals or cooperatives intending to

form a cooperative under this Code shall submit to the Authority a general
statement describing, among others the structure and purposes of the
proposed cooperative: Provided, That the structure and actual staffing
pattern of the cooperative shall include a bookkeeper; Provided, further,
That they shall not be allowed to operate without the necessary personnel
and shall also submit an economic survey, indicating therein the area of
operation, the size of membership, and other pertinent data in a format
provided by the Authority.

 Liability. – A cooperative duly registered under this Code shall have

limited liability.

Term. – 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. 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 Authority.

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References:

CPAR-Regulatory Framework for business transaction

https://lawphil.net/statutes/repacts/ra2009/ra_9520_2009.html