LESSON 4

CLASSIFICATION & TYPES OF COOPERATIVES and

PROVISIONS ON MEMBERSHIP

TOPICS
1. Classification of Cooperatives
2. Important Provisions on Membership
3. Types of Cooperatives

LEARNING OUTCOMES
At the end of the lesson, you should be able to:
1. Identify and describe the classification and types of cooperatives;
2. Give examples of the activities of the different types of cooperatives;
3. Discuss the rights and duties of members of a cooperative; and
4. Explain how membership is terminated;

TOPIC 1: CLASSIFICATION OF COOPERATIVES

1. According to Membership:

a. PRIMARY – the members of which are natural persons of legal age;

Who may become members of a Primary Cooperative?

 If you are a Filipino of legal age, you can be a coop member if you meet the
qualifications prescribed by the cooperative’s by-laws.
 The board of directors act on application for membership.
 A member may exercise his rights only after having paid the fees for membership
and acquired shares in the cooperative.

What are the kinds of membership in the Cooperative?

 A cooperative has two kinds of members: 1) regular members and 2) associate
members.
 A regular member is entitled to all the rights and privileged of membership as stated
in the Cooperative Code and the coops by- laws.
 An associate member has no right to vote and to be voted upon and is entitled to
such rights and privileged provided by the cooperatives by laws.

NOTE: An associate who meets the minimum requirements of regular membership,

continues to patronize the cooperative for two (2) years, and signifies his/her
intention to remain a member shall be considered a regular member. (Art 26 p.2,
RA9520)

What is the Minimum Number of members in a Cooperative?

 Fifteen (15) natural persons of legal age who are citizens of the Philippines.

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 b. SECONDARY – the members of which are primaries;

c. TERTIARY - The members of which are secondaries upward to one or more apex
organizations. Cooperatives whose members are cooperatives are called federations or
unions.

2) According to territory

Cooperatives are categorized according to areas of operations which may or may not
coincide with the political subdivisions of the country.

3) Laboratory Cooperative – a cooperative organized by minors must be affiliated with a

registered cooperative and shall be governed by the guidelines by the the CDA. Refer to MC 2015-
03/ Guidelines for the creation and, supervision and monitoring of Laboratory Cooperatives,
August 18, 2015.

TOPIC 2: TYPES OF COOPERATIVES in the PHILIPPINES

1) 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 and other related financial services to its
members for productive and provident purposes;
2) Consumer’s Cooperative – is one the primary
purpose of which is to procure and distribute
commodities to members and non-members;
3) Producer’s Cooperative – is one that undertakes a
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;
4) Marketing Cooperative – is one which engages in the supply of production inputs to
members and markets their products;
5) 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;
6) Multipurpose Cooperative – is one which combines two (2) or more of the business
activities of these different types of cooperatives;
7) 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;
8) 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;
9) 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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 10) Dairy Cooperative – is one whose members are engaged in the production of fresh milk
which may be processed and/or -marketed as dairy products;
11) 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;
12) Electric Cooperative – is one organized for the primary purpose of undertaking power
generation, utilizing renewable energy sources, including hybrid systems, acquisition and
operation of sub-transmission or distribution to its household members;
13) Financial Service Cooperative – is one organized for the primary purpose of engaging in
savings and credit services and other financial services;
14) Fishermen Cooperative – is one organized by marginalized fishermen in localities whose
products are marketed either as fresh or processed products;
15) Health Services Cooperative – is one organized for the primary purpose of providing
medical, dental and other health services;
16) 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;
17) Insurance Cooperative – is one engaged in the business of insuring life and property of
cooperatives and their members;
18) 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;
19) Water Service Cooperative – is one organized to own, operate and manage water systems
for the provision and distribution of potable water for its members and their households;
20) Worker’s Cooperative – is one organized by workers, including the self-employed, who are
at the 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
Other types of cooperative as may be determined by the CDA. The types of
cooperatives are defined in the Joint Rules and Regulations for the taxation of
cooperatives, issued pursuant to the Philippine Cooperative Code of 2008 (RA 9520).

TOPIC 3: PROVISIONS ON MEMBERSHIP

Application for Membership.

 An applicant shall be deemed a member after approval of his membership by the board of
directors and shall exercise the rights of member after having made such payments to the
cooperative in respect to membership or acquired interest in the cooperative as may be
prescribed in the bylaws.
 If refused or denied by the board of directors, an appeal may be made to the general
assembly and the latter's decision shall be final.

 For this purpose, the general assembly may opt to create an appeal and grievance
committee, the members of which shall serve for a period of one (1) year and shall
decide appeals on membership application within thirty (30) days upon receipt thereof. If
the committee fails to decide within the prescribed period, the appeal is deemed
approved in favor of the applicant.
(Art 28, RA 9520)

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 Duties and Responsibilities of a Member.
a) Pay the installment of his/her share capital subscription as it falls due and to participate in the
capital build-up and savings mobilization activities of the Cooperative;
b) Patronize the Cooperative’s business(es) and services;

c) Participate in the membership education programs and other activities and affairs of the
Cooperative;

d) Attend and participate in the deliberation of all matters taken during General Assembly meetings;
and

e) Observe and obey all lawful orders, decisions, rules and regulations adopted by the Board of
Directors and the General Assembly. (Indicated in the by Laws)

Rights and Privileges of Members.

Regular Members
a) Attend general membership meetings;
b) Avail himself of the services of the Cooperative, subject to certain conditions as may be
prescribed by the Board of Directors;
c) Inspect and examine the books of accounts, the audited financial statements, the minutes
books, the share register, and other records of the Cooperative during reasonable office
hours;
d) Secure copies of Cooperative records/documents pertaining to the account information of
the concerned member;
e) Participate in the continuing education and other training programs of the Cooperative;
and
f) Such other rights and privileges as may be granted by the General Assembly (Indicated in
the by Laws).
Associate Members
a) Attend general membership meetings;
b) Avail themselves of the services of the Cooperative, subject to certain conditions as may
be prescribed by the Board of Directors;
c) Inspect and examine the books of accounts, the audited financial statements, the minutes
books, the share register, and other records of the Cooperative during reasonable office
hours;
d) Secure copies of Cooperative records/documents pertaining to the account information of
the concerned member;
e) Such other rights and privileges as may be granted by the General Assembly (Indicated in
the by Laws).
Conditions for a Regular Members Entitled to Vote.
a) Paid the membership fee and the value of the minimum shares required for membership;
b) Not delinquent in the payment of his/her share capital subscriptions and other accounts
or obligations;
c) Has completed the continuing education program prescribed by the Board of Directors;
d) Has participated in the affairs of the Cooperative and patronized its businesses in
accordance with Cooperative’s policies and guidelines; (Indicated in the by Laws)
 Failure of the member to meet any of the above conditions shall mean suspension of
voting until the same have been lifted upon the determination of the Board of
Directors.

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 ADDITIONAL RIGHTS A MEMBER ENTITLED TO VOTE:
a. Participate and vote on all matters deliberated upon during General Assembly meetings;
b. Seek any elective or appointive position, subject to the provisions of this By-laws and the
Philippine Cooperative Code of 2008; and
c. Such other rights and privileges as may be provided by the General Assembly.
Nota Bene: Enumerations provided herein are not exclusive, members may include other
rights, privileges and duties in their by laws.
Liability of Members.
A member shall be liable for the debts of the Cooperative only to the extent of his/her
subscribed share capital.
Termination of Membership.
Termination of membership may be automatic, voluntary or involuntary, which shall have the
effect of extinguishing all rights of a member in the Cooperative, subject to refund of share
capital contributions.
a) Automatic Termination of Membership.
The death or insanity of a member shall be considered an automatic termination of
his/her membership in the Cooperative: Provided, however, that in case of death or
insanity of a member of a Cooperative, the next-of-kin shall assume the duties and
responsibilities of the original member.

Failure of the associate member to meet the minimum requirement of regular

membership, to continue to patronize the products and services of the Cooperative for
two (2) years, and signify his/her intention to become regular member shall automatically
terminate his/her membership.

a. Voluntary Termination.
A member may, for any valid reason, withdraw his/her membership from the
Cooperative by giving a sixty (60) day notice to the Board of Directors.

b. Involuntary Termination.
A member may be terminated by a vote of the majority of all the members of the
Board of Directors for any of the following causes:
i. Has not patronized the service(s)/business(es) of the Cooperative as
provided for in the policies of the cooperative;
ii. Has continuously failed to comply with his/her obligations as provided for
in the policies of the Cooperative;
iii. Has violated any provision of this By-laws and the policies of the
Cooperative; and
iv. For any act or omission injurious or prejudicial to the interest or the welfare
of the Cooperative, as defined by the General Assembly Section
(Art 30, RA9520, indicated also in the by laws).

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 ASSESSMENT:

I. TRUE or FALSE. Write T if the statement is correct and F if it is otherwise.

____1. Members of primary cooperatives are juridical persons.
____2. Membership in a cooperative may be regular and irregular members.
____3. Laboratory Cooperatives are organized by minors.
____4. As a general rule, an applicant shall be deemed a member only after approval of his
membership by the general assembly and shall exercise the rights of member after
having made such payments to the cooperative.
____5. Cooperatives are categorized according to areas of operations which may or may not
coincide with the political subdivisions of the country.
____6. A member shall be liable for the debts of the Cooperative only to the extent of
his/her personal properties.
____7. Termination of membership may be automatic, voluntary or involuntary, which shall have
the effect of extinguishing all rights of a member in the Cooperative.
____8. A member may at anytime and for any reason may withdraw his/her membership
from the Cooperative.
____9. Minimum of 15 persons of legal age who are residents of the of the Philippines may
form a cooperative.
____10. An associate member has no right to vote and to be voted upon and is entitled to
such rights and privileged provided by the cooperatives by laws.
II. Write the letter of the TYPES of COOPERATIVES that best describes the given statements.

a. Advocacy Cooperative k. Health Services Cooperative

b. Agrarian Reform Cooperative l. Housing Cooperative
c. Credit Cooperative m. Insurance Cooperative
d. Consumer’s Cooperative n. Producer’s Cooperative
e. Cooperative Bank o. Marketing Cooperative
f. Dairy Cooperative p. Multipurpose Cooperative g.
Education Cooperative q. Service Cooperative
h. Electric Cooperative r. Transport Cooperative
i. Financial Service Cooperative s. Worker’s Cooperative
j. Fishermen Cooperative t. Water Service Cooperative

_____1. Its principal purpose is to provide employment and business opportunities to its members
and manage it in accordance with cooperative principles.
_____2. Organized to assist or provide, access to housing for the benefit of its regular members
who actively participate in the savings program for housing.
_____3. Organized for the primary purpose of owning and operating licensed educational
institutions.

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_____4. One that promotes and undertakes savings and lending services among its members.
_____5. One which combines two (2) or more of the business activities of these different types of
cooperatives.
_____6. One which engages in medical and dental care, hospitalization, transportation, insurance,
housing, labor, electric, light and power, communication, professional and other services.
_____7. One which engages in the supply of production inputs to members and markets their
products.
_____8. The primary purpose of which is to procure and distribute commodities to members and
non-members.
_____9. 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.
_____10. 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.
_____11. Organized for the primary purpose of providing a wide range of financial services to
cooperatives and their members.
_____12. One organized for the primary purpose of providing medical, dental and other health
services.
_____13. One organized to own, operate and manage water systems for the provision and
distribution of potable water for its members and their households.
_____14. 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.
_____15. One organized by marginalized fishermen in localities whose products are marketed
either as fresh or processed products.
_____16. One engaged in the business of insuring life and property of cooperatives and their
members.
_____17. 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.
_____18. One whose members are engaged in the production of fresh milk which may be processed
and/or -marketed as dairy products.
_____19. One organized for the primary purpose of engaging in savings and credit services and other
financial services.
_____20. One organized for the primary purpose of undertaking power generation, utilizing
renewable energy sources, including hybrid systems, acquisition and operation of sub-
transmission or distribution to its household members.

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