PMES to know about the cooperative movement

& Lipa Beekeepers Marketing Cooperative

(LBMC)
 Legal Basis for Cooperatives

THE PHILIPPINE COOPERATIVE CODE OF 2008

( REPUBLIC ACT NO. 9520)
THE PHILIPPINE COOPERATIVE CODE OF 2008
( REPUBLIC ACT NO. 9520)
 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.
C -Capitalized by Members with common goal

O -Owned by Members

O -Operated by Members

P -Patronized by Members
Art. 4. Cooperative Principles

1. Voluntary and open membership

2. Democratic member control
3. Member Economic Participation
4. Education, Training and Information
5. Autonoy and Independent
6. Cooperation among cooperatives

7. Concern for community

 7 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 :
Voluntary and Open Membership

• cooperatives are voluntary organizations

•open to all persons

•able to use their services

•willing to accept the responsibilities of membership

9
Democratic Member Control
Cooperatives are :

Democratic organizations.

Controlled by their members

Directors or officers are accountable to the

Membership.

Members have equal voting rights

( eligible members one member one vote,
Members in Good Standing)
10
Member Economic Participation

• members contribute equitably to the capital of their

cooperative. Subscibed capital and monthly
contribution.

• shall receive limited compensation or limited

interest, if any, on capital subscribed and paid up as
a condition of membership.

11
Autonomy and Independence

• cooperatives are autonomous,

• self-help organizations controlled by their
members.
• ensure democratic control of their members
• Maintain their cooperative autonomy

12
Education, Training and Information
cooperatives shall provide
education and training for their
members, elected and appointed
representatives, managers, and
employees.

13
Cooperation Among Cooperatives

Cooperatives serve their members

most effectively
and strengthen the cooperative
movement by working together
through local, national, regional and
international structures.

14
Concern for Community

cooperatives work for the

sustainable development of
their communities through policies
approved by their members.

15
Concern for Community

cooperatives work for the

sustainable development of
their communities through policies
approved by their members.

16
Art. 23 Types of
Cooperatives ...
Types of Coops....
(a)Credit Cooperative

(b) Consumers Cooperative;

(c) Producers

(d) Marketing Cooperative

(e) Service Cooperative

(f) Multi-purpose Cooperative;

(h) Agrarian Reform Cooperative

Types of Coops....
(i) Cooperative Bank
(j) Dairy Cooperative
(k) Education Cooperative
(l) Electric Cooperative
(m) Financial Service Cooperative
(n) Fishermen Cooperative
(o) Health Services Cooperative
Types of Coops....

(p) Housing Cooperative

(r) Transport Cooperative
(s) Water Service Cooperative
(t) Workers Cooperative
(u) Other types of cooperatives as
may be determined by the Authority
Purpose of Cooperatives
Purposes ...

(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;
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;
Purposes ...

(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;
Purposes ...

(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;
Purposes ...

(11) To advocate for the cause of the

cooperative movement;

(12) To ensure the viability of cooperatives

through the utilization of new
technologies
Purposes ...

(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 of
cooperatives
Art. 9 Powers and Capacities of
Cooperatives
Powers ...

(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;
Powers ...

(4) To adopt by-laws not contrary to law,

morals or public policy, and to
amend and repeal the same in
accordance with the Code;
Powers ...

(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;
Powers ...

(6) To enter into division, merger or consolidation;

(7) To form subsidiary cooperatives;

(8) To join federations or unions;

Powers ...

(9) To avail of loans, be entitled to credit and to

accept and receive grants, donations and
assistance from foreign and domestic sources;

(10) To avail of preferential rights granted to

cooperatives under Republic Act No. 7160,
otherwise known as the Local Government
Code, and other laws.
Powers ...

(11) To organize and operate schools in

accordance with Republic Act No.
9155;

(12) To exercise such other powers granted by the

Code or as stated in its articles of
cooperation.
Organizing a Primary Cooperative
ORGANIZING...
The following may organize a primary cooperative

• Fifteen (15) or more natural persons who are

Filipino citizens
• Of legal age (18 years old)
• Having common bond of interest
• Residing or working in the intended area of
operation
• Have completed a Pre-Membership
Education Seminar (PMES)
ORGANIZING...

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.
Term

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.
Articles Of Cooperation
All cooperatives applying for registration shall
file with the Authority the Articles of Cooperation
which shall be signed by each of the organizers and
acknowledged by them before a notary public.

BY-LAWS
Each cooperative to be registered under this
Code shall adopt by-laws not inconsistent with the
provisions of this Code.
Registration
A cooperative formed or organized under this
Code acquires juridical personality from the date the
Authority issues a certificate of registration under its
official seal.

Certificate Of Registration
A certificate of registration issued by the
Authority under its official seal shall be conclusive
evidence that the cooperative therein is duly
registered unless it is proved that the registration
thereof has been cancelled.
AMENDMENT OF ARTICLES OF
COOPERATION AND BY-LAWS

Unless otherwise prescribed by this Code and for

legitimate purpose, any provision or matter stated in
the articled of cooperation and by-laws may be
amended by two-thirds (2/3) vote of all the members
with voting rights
Chapter III Art. 26
Membership
 Kinds of Membership
REGULAR MEMBERS
A regular member is one who has complied with
all the membership requirements and entitled to all the
rights and privileges of membership.
ASSOCIATE MEMBERS
An associate member is one who has no right to vote nor
be voted upon. Provided, that an associate member 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.
Government Officers and Employees
Any officer or employee of the Authority shall be
disqualified to be elected or appointed to any position in
a cooperative.
All elective officials of the Government shall be ineligible
to become officers and directors of cooperatives.
Any government employees or official may, in the
discharge of his duties as member in the cooperative, be
allowed by the head of office concerned to use official
time for attendance at the general assembly, board and
committee meetings of cooperatives as well as
cooperative seminars, workshops, technical meetings
and training courses locally or abroad
 Application for Membership

An applicant for membership 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 case membership is 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.
 Duties and Responsibilities of a
member
Pay share capital to participate in the capital build-
up and savings mobilization activities;
Patronize LBMC business and services;
Participate in membership education programs;
Attend & participate in deliberation during General
Assembly;
Promote LBMCs' purpose and goals, business,
welfare of its members and the cooperative
movement in general.
 Member entitled to vote
Members in Good Standing
Paid the membership fee and value of the minimum
shares required;
NOT delinquent in the payment of share capital
subscriptions and other accounts or obligations;
Not violated any provision of the cooperative laws,
CDA administrative issuances, Article of
Cooperation and By-Laws, terms and conditions of
scubscription agreement;
Participate in the affairs of the Cooperative and
patronize LBMC businesses.
 Liability of Members

A member shall be liable for the debts of the cooperative

to the extent of his contribution to the share capital of
the cooperative.
 Termination of Membership

A member of a cooperative may, for any valid reason,

withdraw his membership from the cooperative by giving a
sixty (60) day notice to the board of directors.
The death or insanity of a member in a primary cooperative
Membership in the cooperative may be terminated by a vote
of the majority of all the members of the board of directors:
do not patronized any of the services of the cooperative
Continuously failed to comply with obligations as provided
for in the policies of LBMC, i.e. delinquency in loans
 Refund of Interests

All sums in accordance with the by-laws to be due from

a cooperative to a former member shall be paid to him
either by the cooperative or by the approved transferee,
as the case may be, in accordance with this Code.
Organizational Structure of
Cooperative
Organizational Structure

General Assembly

Board of Election
Audit Committee
Directors Committee

Mediation/ Ethics Gender and Education Other

Conciliation Secretary Treasurer
Committee
Committee Development and Training Committees

Management
Staff

The members of Audit and Election Committees shall be elected by the General Assembly
while the Board of Directors shall appoint the rest .
Administration
 COMPOSITION OF THE GENERAL
ASSEMBLY

The General Assembly shall be composed of such

members who are entitled to vote under the Articles
of cooperation and By-laws of the cooperative.
 POWERS OF THE GENERAL
ASSEMBLY
The General Assembly shall be the highest policy-
making body of the cooperative. The general assembly
shall have the following powers:

To determine and approve amendments to the articles of

cooperation and by-laws

To elect or appoint the members of the board of directors,

and to remove them for cause.

To approve developmental plans of the cooperative

 MEETINGS
A regular meeting shall be held by the general
assembly on a date fixed in the by-laws, or if not so
fixed, on any date within ninety (90) days after the
close of each fiscal year. Provided, that notice of
regular meetings shall be sent in writing, by posting
or publication, or through other electronic means to
all members of record.
Whenever necessary, a special meeting of the general
assembly may be called at any time by a majority of
the board of directors or as provided for in the by-
laws.
 QUORUM

A quorum shall consist

of at least twenty-five per centum (25%) of all the
members entitled to vote.

Voting System. - Each member of

a primary cooperative shall have only one (1) vote.
COMPOSITION AND TERM OF THE BOARD OF
DIRECTORS

The direction and management of the affairs of a

cooperative shall be vested in a board of directors
which shall be composed of not less than five (5) nor
more than fifteen (15) members elected by the
general assembly for a term fixed in the by-laws but
not exceeding a term of two (2) years and shall hold
office until their succesors are duly elected and
qualified, or until duly removed for cause.
 POWERS OF THE BOARD OF
DIRECTORS

The board of directors shall be responsible for the

strategic planning, direction-setting and policy-
formulation of the cooperatives.
 DIRECTORS

Any member of a cooperative , who has the right to vote

and possess all the qualifications provided in the by-laws
shall be eligible for election as director.
The members of the board of directors shall not hold any
other position directly involved in the day to day operation
and management of the cooperative.
Any person engaged in a business similar to that of the
cooperative or who in any way has a conflict of interest
with it, is disqualified from election as a director of said
cooperative.
MEETING OF THE BOARD AND QUORUM
REQUIREMENTS
Regular meetings of the board of directors shall be
held at least once a month.
Special meetings of the board of directors may be
held at any time upon the call of the chairperson or a
majority of the members of the board.
A majority of the members of the board shall
constitute a quorum for the conduct of business.
Directors cannot attend or vote by proxy at board
meetings.
 VACANCY IN THE BOARD OF
DIRECTORS
Any vacancy in the board of directors, other than
expiration of term, may be filled by the vote of at least a
majority of the remaining directors.

Otherwise, the vacancy must be filled by the general

assembly in a regular or special meeting called for the
purpose.

A director so elected to fill a vacancy shall serve only the

unexpired term of his predecessor in office.
 OFFICERS OF THE COOPERATIVE

The board of directors shall elect from among

themselves the chairperson and vice-chairperson and
elect or appoint other offices of the cooperative from
outside of the board.

No two (2) or more persons with relationships up

to the third degree of consanguinity or affinity nor
shall any person engaged in business similar to that
of the cooperative shall serve as an appointive office.
 DEGREE OF RELATIONSHIP

The prohibition on relationship by consanguinity and

affinity within the third civil degree applies within
each category since the Code says no two or more
persons within the third civil degree of
consanguinity or affinity shall serve as elective or
appointive officers in the same board.
 
For purposes of clarity here under are the degree
of relationships covered under the said prohibition.
 DEGREE OF RELATIONSHIP
I. RELATIONSHIP BY CONSANGUINITY 
1. First Degree Parent to Child 
2. Second Degree Grandparent to Child
Brother to Sister
3. Third Degree Uncle to Child
Aunt to Child
Great grandparent to Child
DEGREE OF RELATIONSHIP

II.                 RELATIONSHIP BY AFFINITY

 
1. First Degree Parent-in-law to Daughter –in –law
 
2. Second Degree Brother –in-law to sister-in-law
 
3. Third degree Greatgrandparent-in-law to
Daughter/Son-in-law to
Uncle/Aunt-in-law to
Niece/Nephew-in-law 
OFFICERS OF THE COOPERATIVE

The officers of the cooperative shall include:

Members of the board of directors

Members of the different committees created by
the general assembly
General manager
Secretary
Treasurer
Other positions as maybe provided for in the
• by-laws
COMMITTEES OF COOPERATIVES

The By-laws shall provide for the creation of the

following committees:

Audit committee - elected by GA

Election committee - elected by GA
Mediation and Conciliation committee - appointed
Ethics committee - appointed by BOD
Education committee - appointed by BOD
Gender and Development – appointed by BOD
Other committees as may be necessary for the conduct
of the affairs of the cooperative (ex. Credit committee)
FUNCTIONS, RESPONSIBILITIES
AND TRAINING REQUIREMENTS OF
DIRECTORS, OFFICERS AND
COMMITTEE MEMBERS

The functions and responsibilities of the

directors, officers and committee members,
as well as their training requirements, shall
be in accordance with the rules and
regulations issued by the Authority.
COMPENSATION

In the absence of any provision in the by-laws

fixing their compensation, the directors shall not
receive any compensation except for reasonable per
diems.
REMOVAL OF ELECTED OFFICERS
All complaints for the removal of any elected officer
shall be filed with the board of directors.

Such officer shall be given the opportunity to be

heard. Upon finding of a prima facie evidence of guilt,
the board shall present its recommendation for
removal to the general assembly.

An elective officer may be removed by ¾ votes of

the regular members present and constituting a
quorum, in a regular or special general assembly
meeting called for the purpose. 75
RESPONSIBILITIES, RIGHTS AND
PRIVILEGES OF COOPERATIVES
 ADDRESS

Every cooperative shall have an official postal

address to which all notices and communications
shall be sent. Such address and every change thereof
shall be registered with the Authority.
 BOOKS TO BE KEPT OPEN
Every cooperative shall have the following documents ready and
accessible to its members and representative of the Authority for
inspection:
A copy of this Code and all other laws pertaining to cooperatives;
A copy of the regulations of the Authority
A copy of the articles of cooperation and by-laws of the
cooperative
The books of the minutes of the meetings of the General
Assembly, board of directors and committess
Share books
Financial Statements
REGISTER OF MEMBERS AS PRIMA
FACIE EVIDENCE
Any register or list of members or shares kept by any
registered cooperative shall be prima facie evidence
of the following particulars enetered therein:

The date on which the name of any person was

entered in such register or list as member

The date on which any such person ceased to be a

member.

79
 BONDING OF ACCOUNTABLE
OFFICERS
Every director, officer and employee handling
funds, securities or property on behalf of any
cooperative shall be covered by a surety bond to be
issued by a duly registered insurance or bonding
company for the faithful performance of their duties
and obligations.

Upon filing the application for registration of a

cooperative, the bonds of the accountable officers
shall be required by the Authority.
80
 TAX TREATMENT OF COOPERATIVES

Duly registered cooperatives under this Code which

do not transact any business with non-members or
the general public shall not be subject to any taxes
and fees imposed under the internal revenue laws
and other tax laws.
CAPITAL, PROPERTY, AND FUNDS
CAPITAL

The capitalization of cooperative and the

accounting procedures shall be governed by
the provisions of this Code and the
regulations which shall be issued.

83
SHARE CAPITAL

The term ‘share’ refers to a unit in a primary

cooperative the par value of which may be fixed at any
figure not more than 1000 pesos.

The share capital of the cooperative is the money

paid or required to be paid for the operations of the
cooperative.

The share capital consist of:

Common share capital-issued to regular members
Preferred share capital-issued to associate members
84
CAPITAL SOURCES

Cooperative registered under this Code may derive

their capital from any or all of the following sources:

1. Members’ share capital

2. Loans and borrowings including deposits
3. Revolving capital which consists of the deferred
payment of patronage refunds or interest on share
capital
4. Subsidies, donations, legacies, grants, aids and such
other assistance from any local or foreign institution
whether public or private.
86
LIMITATION ON SHARE CAPITAL
HOLDINGS

No member of a primary cooperative other than a

cooperative itself shall own or hold more than ten
percent (10%) of the subscribed share capital of
the cooperative.

87
ASSIGNMENT OF SHARE CAPITAL
CONTRIBUTION OR INTEREST

No member shall transfer his shares or interest in

the coopertaive or any part thereof unless:

He has held such share capital contibution or interest

for not less than 1 year

The assignment is made to the cooperative or to a

member of the cooperative

The board of directors shall approve such assignment

CAPITAL BUILD-UP

The by-laws of every cooperative shall provide for

a reasonable and realistic member capital build-up
program to allow for continuing growth of the
members’investment in their cooperative as their
own economic conditions continue to improve.

The share capital contribution of the members shall

be considered as equity.
It shall not be withdrawn and should not be used in
offsetting obligations whether past due or current.
89
Share Capital

Share Capital Certificate shall be issued to all their

members

List of share capital certificate issued to members

shall be maintained by
the coop

91
ALLOCATION AND DISTRIBUTION
OF NET SURPLUS
NET SURPLUS

Every cooperative shall determine its net surplus at

the close of every fiscal year.

The net surplus shall not be construed as profit but

an excess of payments made by the members for the
loans borrowed or goods and services availed by
them and which shall be deemed to have been
returned to them if the same is distributed as
prescribed herein.

93
 Statutory Funds
Reserve Fund : At least 10% of the Net Surplus
New Cooperatives should allocate 50% of its net
surplus for the first 5 years
Cooperative Education and Training Fund: Not more
than 10% of the Net Surplus
Community Development Fund: Not less than 3% of
Net Surplus
Optional Fund : Not more than 7% of the Net Surplus
DISTRIBUTION OF NET SURPLUS
The net surplus of every cooperative shall be
distributed as follows:

Reserve Fund –at least 10% of net surplus.

Provided, That, in the first 5 years of operation after
registration, this amount shall not be less than 50% of
the net surplus.

2. Education and Training Fund-shall not be more

than 10% of the net surplus.

3. Community Development Fund-shall not be less 95

than 3% of the net surplus.

DISTRIBUTION OF NET SURPLUS

Optional Fund (Land and Building)- shall not

exceed 7% of the net surplus.

The remaining net surplus shall be made available

to the members in the form of:

Interest on share capital

Patronage refund

96
REPORTS REQUIRED FOR
COOPERATIVE
 REQUIRED REGULAR REPORTS
1. Cooperative Annual Performance Report (CAPR);
2. Social Audit Report including its program of activities
in pursuance of its socio-civic undertakings showing its
achievements at the end of every fiscal year ;
3. Performance Report ;
4. Audited Financial Statements duly stamped “
Received “ by BIR; and
5. List of Officers and Trainings Undertaken/
Completed.
FILING

All registered cooperatives shall file with the Authority

a copy of the required reports either through personal,
registered mail, courier or electronic means, within 120
days from the end of every calendar year.
Cooperative as a Business Entity
Cooperative as a Business Entity

They follow all business norms like:

Compliance with all business requirements
such as but not limited to business permits;
registration with BIR; social legislation and
labor laws;

Adherence to local laws;

Healthy competition;

Open trade;

Cash trading
Cooperative as a Business Entity

They follow all business norms like:

Selling at market price
Avoid destructive competition among coops
Adequate capitalization
Adherence to business governance
Cooperative as a Business Entity

Constant expansion
Quality Standardized Goods
Minimize Expenditures
Comply with basic requirements of a business
enterprise.
Cooperative as a Business Entity

1. BIR REGISTRATION
Articles of Cooperation and By-laws
Certificate of Registration from CDA

2. Tax Identification Number (TIN)

Cooperative as a Business Entity

3. Book of Accounts
- yearly, on or before the last
working day of December
- 2 Columnar, Cash Receipt,
Cash Disbursement,
Ledger,Journal

105
Cooperative as a Business Entity
4. Certificate of Tax Exemption
Certified true copy of Articles of
Cooperation, By-laws and
Certificate of Registration
Application Letter
BIR Registration
TIN of member or cedula

106
END

Prepared 2019 by :
Paolo Villegas
Vice-Chair LBMC
Chair Education and Training Committee