Philippines - Cooperatives (FAQ)

FREQUENTLY ASKED QUESTIONS 1. What is a cooperative? A cooperative is 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 and who contribute equitably to the capital required and accept a fair share of the risk and benefits of the undertaking in accordance with universally accepted cooperative principles [Chapter I Art.2 Sec.8 of RA 6938]. 2. What government agency is charged with promotion and development of cooperative? The Cooperative Development Authority (CDA) which was created by Republic Act No. 6939 is the government agency that has the obligation to promote and help develop cooperatives. 3. What is meant by the registration of cooperative? In law, the registration of the cooperative is the operative act that grants juridical personality to a proposed cooperative and is evidenced by a certificate of registration [Art. 5, par. 7]. 4. What other documents have to be submitted to CDA for purposes of the registration of a cooperative? Document that describes the structure, purposes and economic feasibility of a cooperative that is being organized, its area of operation, the size of membership and other pertinent data are required to be submitted to the CDA [Art. 11] 5. With what CDA office may cooperatives be registered? To facilitate registration, applicants for registration should go to the nearest CDA office, which is located in the regional centers of the country, and ask for all the papers required for the registration of cooperatives. 6. What remedy has an applicant for registration if the application is denied by the CDA? The applicant may appeal to the Office of the President within 90 days from receipt of the notice of denial, provided that failure on the part of the Office of the President to act on the appeal within 90 days from the filling thereof shall mean the approval of the application [Art. 16]. 7. Who is considered a member of cooperative? Any natural or juridical person who adheres to the principles governing cooperatives and to the articles of cooperation of particular cooperative and has been submitted to its membership is a member thereof [Art. 5 (1)].

Who qualifies for membership of a cooperative? Any natural person, who is a citizen of the Philippines and is of legal age or a juridical person like a cooperative or non-profit organization is qualified to be a member of cooperative, provided that the person meets the qualifications prescribed in the bylaws of the cooperative [Art. 26]. 9. But may minors also qualify to be members of cooperatives? Yes, but only of laboratory cooperative. 10. When does an applicant for membership in a cooperative acquire his rights as a member? An applicant becomes a cooperative member when his application is approved by the board of directors. He may exercise his rights as a member after he makes the payments that are due to the cooperative [Art. 29]. 11. How is membership in a cooperative terminated? Membership in a cooperative may be terminated voluntarily or involuntarily [Art. 31]. 12. May a member withdraw his membership from a coop? The member may withdraw his membership from the cooperative by giving a 60-day notice to the board of directors [Art. 31, par. 1]. Although the provision does not state that the notice should be written. 13. What is the highest policy-making body of a cooperative? The general assembly [Art. 34]. 14. What is meant by a general assembly of cooperative members? A general assembly of cooperative members is the meeting of the full membership for the purpose of exercising the rights and discharging the obligations of the cooperative as provided by the Code, its articles of cooperation and bylaws [Art. 5, par. 2]. 15. Who conducts and manages the affairs of cooperative? The board of directors [Art. 38]. 16. What is the composition of the board of directors? The board is composed of not less than 5 and not more than 15 members [Art. 38]. 17. How many persons are needed to organize a cooperative? Not less than 15 persons are needed to organize and register a cooperative. They must also have a common bond of interest [Art. 10].

18. What qualifications are required of the persons organizing and registering a cooperative? They must be Filipino citizens and residents of or working in the area where the cooperative will operate [Art. 10]. They must all be of legal age. However, minors may organize laboratory cooperatives [see Nos. 16-18 & 66, above]. 19. For what general purposes may cooperatives be organized? In general, cooperatives may be organized for economic, social and educational purposes [Art. 6]. 20. What is life (term) of a cooperative? A cooperative has a basic term of 50 years from the date of registration. The term may be shortened by dissolving it [Art. 13], for example, by action of the general assembly. 21. May the term of a cooperative be extended? For how long? The term may be extended - for another 50 years provided that no extension may be made earlier than 5 years prior to the original or subsequent expiry date of the term or unless there are justifiable reasons for an earlier extension as may be determined by the CDA [Art. 13]. 22. What books, records of account and documents are required to be kept by a cooperative? The following books, records of account and documents are to be kept by a cooperative at its office: (a) a copy of the Code and all other laws pertaining to cooperatives; (b) a copy of the regulations of the CDA; (c) a copy of its articles of cooperation and of its bylaws; (d) a register of members; (e) books of the minutes of the meetings of the general assembly, board of directors and committees; (f) share books, where applicable; (g) financial statements; and (h) such other documents as may be prescribed by law or by the bylaws [Art. 53, par. 1 (a) to (h); see Nos. 211215]. 23. Are cooperatives obliged to prepare annual reports of their status? Yes, cooperatives are required to prepare annual reports. 24. What sanction is imposed upon a cooperative if it fails to make or submit an annual report? The failure of cooperative to prepare and submit an annual report is a ground for the revocation of its certificate of registration or its authority to operate as such [Art. 54, par. 1]. 25. What are the sources of the capital of a cooperative?

The sources are: (a) the members share capital; (b) loans and borrowings including deposits; (c) revolving capital consisting of deferred payment of Patronage refunds or interests on share capital; and (d) subsidies, donations, legacies, grants, aids and other assistance from local or foreign institutions whether public or private [Art. 73]. 26, What is the share capital of a cooperative? The share capital of a cooperative is the money paid or required to be paid for the conducts of its operations [Art. 77]. 27, What is the extent of the right of members to examine cooperative records? Members have the right to examine and copy cooperative records within reasonable office hours on business days. Only the cost of reproduction of the documents they copy shall be charged to them [Art. 84, par. 1; 216, 217, 346, 347]. 28. What are some of the privileges of cooperative? -To deposit sealed cash boxes or containers, documents or any valuable papers in the public safes free of charge; -Cooperatives organized among government employees shall enjoy the free use of any available space in their agency; -Preferential right to supply government institutions and agencies rice and other grains, fish and other marine products, and other agricultural commodities produced by their members, -Preferential treatment in the allocation of fertilizers and in rice distribution; -Cooperatives and their federations shall have preferential rights in management of public market and/ or lease of public market facilities, stall or spaces; and -Credit cooperatives and/or federation shall be entitled to loans, credit lines rediscounting of their loan notes, and other illegible papers with the Development Bank of the Philippines (DBP), the Philippines National Bank (PNB), and other financial institutions except the Central Bank of the Philippines (CB). 29. What are some of the powers of a registered cooperative? 1. To sue and be sued in its cooperative name.

2. To enjoy the of corporate succession.

3. To acquire and dispose of property, both real and personal.

4. To accept and receive grants and donations.

5. To exercise such other powers as are necessary to attain its purpose under the Articles of Cooperation. 30. May government officials and employees be members of a cooperative? Yes. 31. What is the Schedule of Fees in registration of cooperatives? CDA Memorandum Circular No. 2004-05, Series of 2004 thereby amending MC No. 02-03, Series of 2002 provides the schedule of fees as follows: The initial registration fee to be imposed shall be 1/10 of 1% of the authorized share capital or the basic fee below whichever is higher. TYPE OF COOPERATIVE Laboratory Cooperative Primary Cooperative Regular Lane Primary Cooperative Express Lane Secondary Cooperative Tertiary Cooperative

FEES (Php) No registration fee 500.00 1,000.00 2,000.00 3,000.00