COOPERATIVE CODE OF THE PHILIPPINES (6) Cooperation Among Cooperatives -

Cooperatives serve their members most

COOPERATIVE: is an autonomous and duly registered effectively and strengthen the cooperative
association of persons, with a common bond of movement by working together through local,
interest, who have voluntarily joined together to national, regional and international structures.
achieve their social, economic, and cultural needs and (7) Concern for Community - Cooperatives work
aspirations by making equitable contributions to the for the sustainable development of their
capital required, patronizing their products and communities through policies approved by their
services and accepting a fair share of the risks and members.
benefits of the undertaking in accordance with
universally accepted cooperative principles. ORGANIZATION AND REGISTRATION

COOPERATIVE PRINCIPLES: ARTICLES OF COOPERATION: Filed with the

Cooperative Development Authority (Authority) which
ART. 4. Cooperative Principles. - Every cooperative shall be signed by the organizers and acknowledged by
shall conduct its affairs in accordance with Filipino them if natural persons, and by the chairpersons or
culture, good values and experience and the secretaries, if juridical persons, before a notary public.
universally accepted principles of cooperation which
include, but are not limited to, the following: It shall set forth:

(1) Voluntary and Open Membership - a. The name of the cooperative

Cooperatives are voluntary organizations, open which shall include the word
to all persons able to use their services and cooperative;
willing to accept the responsibilities of b. The purpose or purposes and
membership, without gender, social, racial, scope of business for which the
cultural, political or religious discrimination; cooperative is to be registered;
(2) Democrative Member Control - Cooperatives c. The term of existence of
are democratic organizations that are controlled the cooperative;
by their members who actively participate in d. The area of operation and the postal addresses of
setting their policies and making decisions. Men its principal office;
and women serving as elected representatives, e. The names, nationality, and the postal addresses
directors or officers are accountable to the of the registrants;
membership. In primary cooperatives, members f. The common bond of membership;
have equal voting rights of one-member, one- g. The list of names of the directors who shall manage
vote. Cooperatives at other levels are organized the cooperative; and
in the same democratic manner. h. The amount of its share capital, the names and
(3) Member Economic Participation - Members residences of its contributors and a statement of
contribute equitably to, and democratically whether the cooperative is primary, secondary or
control, the capital of their cooperatives. At least tertiary
part of that capital is the common property of the
cooperative. They shall receive limited Organizing a primary cooperative: would require
compensation or limited interest, if any, on 15 or more natural persons who are:
capital subscribed and paid as a condition of 1. Filipino citizens;
membership. Members allocate surpluses for any
2. Of legal age;
or all of the following purposes: developing the
3. Having a common bond of interest; and
cooperative by setting up reserves, part of which
4. Are actually residing or working in the intended area
should at least be indivisible; benefitting
members in proportion to their partonage of the of operation,
cooperative's bubsiness; and, supporting other
Provided that a prospective member of a primary
activities approved by the membership.
cooperative must have complete a Pre-Membership
(4) Autonomy and Independence - Cooperatives
Education Seminar (PMES).
are autonomous, self-help organizations
controlled by their members. If they enter into
Any newly organized primary cooperative may be
aggreements with other organizations, including
registered as multi-purpose cooperative only after
government, or raise capital from external
compliance with the minimum requirements for
sources, they shall do so on terms that ensure
multipurpose cooperatives to be set by the CDA.
democratic control of their members and
maintain their cooperative autonomy.
A single-purpose cooperative may transform into a
(5) Education, Training and Information -
multi-purpose or may create subsidiaries only after at
Cooperatives shall provide education and training
least 2 years of operations.
for their members, elected and appointed
representatives, managers, and employees, so
Under Article VI of CDA MC 2015-07, except for
that they can contribute effectively and
agriculture cooperatives and agrarian reform
efficiently to the development of their
cooperatives, only those cooperatives with a minimum
cooperatives.
paidup capital of P100,000.00 or as required in the 5. The use of the “Federation” and “Union” in the
feasibility study, whichever is higher, may be allowed name of the proposed primary cooperative is
to transform into a multi-purpose cooperative. prohibited except if it is part of the registered name
of association or institution where the members of
Minimum subscription: 25% of authorized share the proposed cooperative come from.
capital 6. Name shall not be written in all capital letters
except if it is an acronym. Acronym shall be written
Under CDA MC 2011-05, this requirement shall apply to after the full name of cooperative.
common share capital only. Should preferred share
capital be provided in the bylaws, it shall not exceed Registration of Secondary and Tertiary
25% of the total authorized share capital of the Cooperatives (Section IX of CDA MC 2015-01):
cooperative. No fractional shares shall be issued for
both the common and preferred share capital. The minimum number of members and minimum paid-
up share capital for the Secondary Category:
Minimum paid-up share capital: 25% of the total
subscription but not less than P15,000.00 (note that for Minimum Minimum paid-up
Corporations, the minimum paid-up capital is P5,000), number of capital
except for multipurpose cooperatives which should members
have at least P100,000.00 or as required by the Federati 10 primary P500,000
feasibility study whichever is higher (Article on cooperatives
VIII, Section 2.2 of CDA MC 2015-01)
Union 15 primary Not applicable
CDA shall periodically assess the required paid-up cooperatives
share capital and may increase it every 5 years when
necessary upon consultation with the cooperative For Tertiary Categories:
sector and NEDA.
Minimum Minimum paid-up capital
Registration: A cooperative formed and organized number
under The Cooperative Code acquires juridical of
personality from the date the Authority issues a members
certificate of registration under its official seal. Federati 10 P5,000,000 or feasibility
on secondary study requirement
Approval of applications for registration: All
cooperativ whichever is higher
applications for registration shall be finally disposed of
es
by the Authority within a period of sixty (60) days from
the filing, otherwise the application is deemed Union 15 Not applicable
approved, unless the cause of the delay is attributable secondary
to the applicant. cooperativ
es
Appeal in case of denial: in case of a denial of the
application for registration, an appeal can be made to Registration Fee: to be paid by the proposed federation
the Office of the President within ninety (90) days from shall be 1/10 (or 10%) of the 1% of the authorized
receipt of notice of such denial. share capital or the amount prescribed in the CDA
schedule of fees, whichever is higher.
Failure of the Office of the President to act on the
appeal within ninety (90) days from the filing thereof Certificate of registration: A certificate of
shall mean approval of said application. registration issued by the CDA under its official seal
shall be conclusive evidence that the cooperative
Rules on Cooperative Name (Article VIII, Section 3 of therein mentioned is duly registered unless it is proved
CDA MC 2015-01): that the registration thereof has been cancelled.
1. The word “Cooperative”, “Kooperatiba”, or
“Cooperativa” shall be included in the name of the Amendment of articles of cooperation and by-
cooperative, which name shall likewise specify the laws: can only be made by 2/3 vote of all the
type of cooperative. members with voting rights without prejudice to the
2. No cooperative name shall be allowed by the CDA if right of the dissenting members to exercise their right
the proposed name is identical or deceptively or to withdraw their membership
confusingly similar to that of any existing
cooperative, contrary to public policy, morals, and Contracts executed prior to registration: Contracts
existing laws. executed between private persons and cooperatives
3. The use of the words “development” and prior to the registration of the cooperative shall remain
“integrated” shall be discouraged. valid and binding between the parties and upon
4. The use of “Incorporated”, “Corporation”, registration of the cooperative. A formal written
“Company”, “Incorporation”, “Partnership”, or other contract shall be adopted and made in the
similar connotation and abbreviation shall not be cooperative’s name or on its behalf prior to its
allowed. registration.
 3. Agrarian Reform Cooperative is one organized by
CHARACTERISTICS marginal farmers majority of which are agrarian
reform beneficiaries for the purpose of developing
Liability: A cooperative duly registered shall have an appropriate system of land tenure, land
limited liability. development, land consolidation or land
management in areas covered by agrarian reform;
Separate personality: A cooperative can be likened 4. Consumers Cooperative is one of the primary
to a corporation with a personality separate and purpose of which is to procure and distribute
distinct from its owner-members. (Republic v. commodities to members and non-members;
Asiapro, GR 172101, November 23, 2007) 5. Cooperative Bank is one organized for the primary
purpose of providing a wide range of financial
Term: for a period not exceeding 50 years from the services to cooperatives and their members;
date of registration; may be extended for periods not 6. Credit Cooperative is one that promotes and
exceeding 50 years, but no extension can be made undertakes savings and lending services among its
earlier than 5 years prior to the original or subsequent members. It generates a common pool of funds in
expiry date/dates unless there are justifiable reasons order to provide financial assistance to its
members for productive and provident purposes;
DIVISION AND MERGER 7. Dairy Cooperative is one whose members are
engaged in the production of fresh milk which may
Division of cooperatives: Any registered cooperative be processed and/or marketed as dairy products;
may, by a resolution approved by a vote of three- 8. Education Cooperative is one organized for the
fourths (3/4) of all the members with voting rights, primary purpose of owning and operating licensed
present and constituting a quorum, resolve to divide educational institutions notwithstanding the
itself into the two (2) or more cooperatives. The provisions of Republic Act No. 9155, otherwise
procedure for such division shall be prescribed in the known as the Governance of Basic Education Act of
regulations of the CDA: Provided, That all the 2001;
requirements have been complied with by the new
9. Electric Cooperative is one organized for the
cooperatives: Provided, further, That no division of a
primary purpose of undertaking power generations,
cooperative in fraud of creditors shall be valid.
utilizing renewable energy sources, including
hybrid systems, acquisition and operation of
Merger and Consolidation:
subtransmission or distribution to its household
1. Two (2) or more cooperatives may merge into a
members;
single cooperative which shall either be one of the
10. Financial Service Cooperative is one organized for
constituent cooperatives or the consolidated
the primary purpose of engaging in savings and
cooperative.
credit services and other financial services;
2. No merger or consolidation shall be valid unless
11. Fishermen Cooperative is one organized by
approved by a three-fourths (3/4) vote of all the
marginalized fishermen in localities whose products
members with voting rights, present and
are marketed either as fresh or processed
constituting a quorum of each of the constituent
products; 12. Health Services Cooperative is one
cooperatives at separate general assembly
organized for the primary purpose of providing
meetings. The dissenting members shall have the
medical, dental and other health services;
right to exercise their right to withdraw their
13. Housing Cooperative is one organized to assist or
membership.
provide access to housing for the benefit of its
3. In any case, the merger or consolidation of
regular members who actively participate in the
cooperatives. In any case, the merger or
savings program for housing. It is co-owned and
consolidation shall be effective upon the issuance
controlled by its members;
of the certificate of merger or consolidation by the
14. Insurance Cooperative is one engaged in the
CDA.
business of insuring life and property of
cooperatives and their members;
TYPES OF COOPERATIVES
15. Marketing Cooperative is one which engages in the
1. Advocacy Cooperative is a primary cooperative
supply of production inputs to members and
which promotes and advocates cooperativism
markets their products;
among its members and the public through
sociallyoriented projects, education and training, 16. Multipurpose Cooperative is one which combines
research and communication, and other similar two (2) or more of the business activities of these
activities to reach out to its intended beneficiaries; different types of cooperatives;
2. Agriculture Cooperative refers to a primary
17. Producers Cooperative is one that undertakes joint
cooperative which or whose members are production whether agricultural or industrial. It is
involved/engaged in raising/culture of plants, formed and operated by its members to undertake
animals, fungi, and other living organism for the production and processing of raw materials or
productive and economic purpose and in related goods produced by its members into finished or
activities that lead to the reduction of cost and/or processed products for sale by the cooperative to
value addition of outputs (Article V(a), CDA MC its members and non-members. Any end product
2015-07); 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 continues to patronize the cooperative for two (2)
product of the cooperative and its members; years, and signifies his/her intention to remain a
18. Service Cooperative is one which engages in member shall be considered a regular member.
medical and dental care, hospitalization,
transportation, insurance, housing, labor, electric Rules on Government Officers and Employees:
light and power, communication, professional and 1. Any officer or employee of the CDA shall be
other services; disqualified to be elected or appointed to any
19. Transport Cooperative is one which includes land position in a cooperative: Provided, That the
and sea transportation, limited to small vessels, as disqualification does not extend to a cooperative
defined or classified under the Philippine maritime organized by the officers or employees of the CDA.
laws, organized under the provisions of this Code; 2. All elective officials of the Government shall be
20. Water Service Cooperative is one organized to own, ineligible to become officers and directors of
operate and manage waters systems for the cooperatives: Provided, That the disqualification
provision and distribution of potable water for its does not extend to a party list representative being
members and their households; and an officer of a cooperative he or she represents;
21. Workers Cooperative is one organized by workers, and
including the self-employed, who are at same time 3. Any government employee or official may, in the
the members and owners of the enterprise. Its discharge of his duties as a member in the
principal purpose is to provide employment and cooperative, be allowed by the end of office
business opportunities to its members and manage concerned to use official time for attendance at the
it in accordance with cooperative principle. general assembly, board and committee meetings
of cooperatives as well as cooperative seminars,
The list is not exclusive since under Article 23(1)(u) of conferences, workshops, technical meetings, and
RA 9520, CDA may determine other types of training courses locally or abroad: Provided, That
cooperative. the operations of the office concerned are not
adversely affected.
CATEGORIES:
1. In terms of membership: Termination of Membership
a. Primary – The members of which are natural 1. Withdrawal for a valid reason and giving of a sixty
persons except electric cooperative, water (60) day notice to the board of directors.
service cooperative and other cooperatives
which the implementing rules and the Subject to the by-laws of the cooperative, the
Authority may allow; withdrawing member shall be entitled to a refund
b. Secondary – The members of which are of his share capital contribution and all other
primaries; and interests in the cooperative: Provided, That such
c. Tertiary – The members of which are secondary fund shall not be made if upon such payment the
cooperatives; and value of the assets of the cooperative would be
2. In terms of territory, cooperatives shall be
less than the aggregate amount of its debts and
categorized according to areas of operations which liabilities exclusive of his share capital
may or may not coincide with the political contribution.
subdivisions of the country.
2. The death or insanity of a member in a primary
3. A group of cooperatives can either be a:
cooperative and the insolvency or dissolution of a
a. Union – which shall refer to a cooperative the
member in a secondary or tertiary cooperative may
members of which are registered cooperatives
be considered valid grounds for termination of
and/or federations organized purposely to
membership: Provided, That in case of death or
represent the interest and welfare of all types
insanity of an agrarian reform beneficiarymember
of cooperatives at the provincial, city, regional
of a cooperative, the next-of-kin may assume the
and national levels.
duties and responsibilities of the original member
b. Federation – which refers to a cooperative the
3. Membership in the cooperative may be terminated
members of which are primary cooperatives
by a vote of the majority of all the members of the
doing the same line of business.
board of directors for any of the following causes:
a. When a member has not patronized any of
the services of the cooperative for an
MEMBERSHIP
unreasonable period of time as may be
previously determined by the board of
Kinds of Membership
directors;
1. A regular member is one who has complied with
b. When a member has continuously failed to
all the membership requirements and entitled to all
comply with his obligations;
the rights and privileges of membership.
c. When a member has acted in violation of the
2. An associate member is one who has no right to
by-laws and the rules of the cooperative; and
vote nor be voted upon and shall be entitled only
d. For any act or omission injurious or prejudicial
to such rights and privileges as the by-laws may
to the interest or the welfare of the
provide: Provided, That an associate who meets
cooperative.
the minimum requirements of regular membership,
 A member whose membership the board of
directors may wish to terminate shall be informed Composition: all members who are entitled to vote
of such intended action in writing and shall be under the articles of cooperation and by-laws.
given an opportunity to be heard before the said
board makes its decision. The decision of the Exclusive powers which cannot be delegated:
board shall be in writing and shall be 1. To determine and approve amendments to the
communicated in person or by registered mail to articles of cooperation and bylaws;
said member and shall be appealable within 2. To elect or appoint the members of the board of
thirty (30) days from receipt thereof to the directors, and to remove them for cause. However,
general assembly whose decision shall be final. in the case of the registered electric cooperatives,
election of the members of the board shall be held
The general assembly may create an appeal and in accordance with its bylaws or election guidelines
grievance committee whose members shall serve of such electric cooperative; and
for a period of one (1) year and shall decide 3. To approve developmental plans of the
appeals on membership termination. The cooperative.
committee is given thirty (30) days from receipt
thereof to decide on the appeal. Failure to decide Delegation of powers of the GA: only for purposes
within the prescribed period, the appeal is of prompt and intelligent decision-making, the general
deemed approved in favor of the member. assembly may by a three-fourths (3/4) vote of all its
Pending a decision by the general assembly, the members with voting rights, present and constituting a
membership remains in force. quorum, delegate some of its powers to a smaller body
of the cooperative; these powers shall be enumerated
Refund of Interest: All sums computed in accordance under the bylaws of the cooperative.
with the bylaws to be due from a cooperative to a
former member shall be paid to the member whose Meetings
membership has been terminated either by the
cooperative or by the approved transferee, as the case Regular meeting: shall be held annually on a date fixed
may be. in the by-laws, or if so not fixed, any date within 90
days after the close of each fiscal year.
LABORATORY COOPERATIVE
Special meeting: whenever necessary, a special
A cooperative organized by minors shall be considered meeting of the general assembly may be called at any
a laboratory cooperative and must be affiliated with a time by a majority vote of the board of directors or as
registered cooperative. provided for in the by-laws. A notice in writing shall be
sent one (1) week prior to the meeting to all members
Purposes (Section 7 of CDA MC 2015-03): who are entitled to vote.
1. To serve as a training ground for its members to
prepare them for membership in regular However, a special meeting shall be called by the
cooperatives; board of directors after compliance with the required
2. To teach the values of thrift and saving mobilization
notice within 1 month after receipt of a request in
among its members; writing from at least ten per centum (10%) of the total
members who are entitled to vote to transact specific
3. To instill cooperative values, principles, financial
business covered by the call.
discipline, business skills, and leadership skills
among its members; or
If he board fails to call a regular or a special meeting
4. To promote and advocate Filipino social and
within the given period, the Authority, upon petition of
cultural values, financial education, ecological
ten per centum (10%) of all the members of the
awareness and sustainable development
cooperative who are entitled to vote, and for good
cause shown, shall issue an order to the petitioners
Causes of Termination of Membership in a directing them to call a meeting of the general
Laboratory Cooperative (Section 16 of CDA MC assembly by giving proper notice as required by the
2015-03): Code or in the by-laws
1. Upon reaching the age of majority (18 years of
age); and In the case of a newly approved cooperative, a special
2. Such other causes as may be provided for in the general assembly shall be called, as far as practicable,
by-laws of the Guardian Cooperative and in the within ninety (90) days from such approval;
Manual of Operations for the Laboratory
Cooperative The Authority may call a special meeting of the
cooperative for the purpose of reporting to the
GENERAL ASSEMBLY members the result of any examination or other
investigation of the cooperative affairs;
The General Assembly refers to the full membership of
the cooperative duly assembled for the purpose of Notice: may be done in writing, by posting or
exercising the rights and performing all the obligations publication or through electronic means. Note,
pertaining to cooperatives, and is considered the however, that notice of any meeting may be waived,
highest policy-making body of the cooperative. expressly or impliedly, by any member.
 Meeting of the board and quorum requirement:
Quorum: consist of at least 25% of all the members 1. In the case of primary cooperatives, regular
entitled to vote. meetings of the board of directors shall be held at
Cause of the Who will fill-up the vacancy
Except:
vacancy
1. Cooperative banks: ½ plus 1
2. Electric cooperatives: 5% of all members entitled Expiration of General Assembly, in a general or
to vote, unless the by-laws provides otherwise the term special meeting called for the purpose
Other causes Board of Directors, if they still
Voting system: Each member of a primary constitute a quorum
cooperative shall have only one vote. least once a month.
2. Special meetings of the board of directors may be
In case of members of secondary or tertiary held at any time upon the call of the chairperson or
cooperatives, they shall have one basic vote and as a majority of the members of the board: Provided,
many incentive votes as provided for in the bylaws but That written notices of the meeting specifying the
not to exceed 5 votes. agenda of the special meeting shall be given to all
members of the board at least one (1) week before
Delegates: the votes cast by the delegates shall be the said meeting.
deemed as votes cast by the members thereof. 3. A majority of the members of the Board shall
constitute a quorum for the conduct of business,
Voting by proxy may be allowed by the by-laws of a unless the bylaws provide otherwise.
cooperative other than a primary cooperative. 4. Directors cannot attend or vote by proxy at board
meetings.
BOARD OF DIRECTORS
Vacancy:
The direction and management of the affairs of the
cooperatives shall be vested in a Board of Directors,
unless the by-laws provide otherwise. Note that for corporations, removals are filled-up only
by the stockholders in the same meeting where the
Composition: not less than 5 but not more than 15 director was removed.
elected by the general assembly.
OFFICERS OF THE COOPERATIVES
Term: 2 years (maximum term allowed as per CDA MC
2012-20) Rules Applicable:
1. The board of directors shall elect from among
Powers: themselves the chairperson and vice-chairperson,
1. Strategic planning; and elect or appoint other officers of the
2. Direction-setting; and cooperative from outside of the board in
3. Policy formulation accordance with their by-laws.
2. All officers shall serve during good behavior and
Directors: shall not be removed except for cause after due
1. Any member of a cooperative who under the hearing.
bylaws of the cooperative, has the right to vote 3. Loss of confidence shall not be a valid ground for
and who possesses all the qualifications and none removal unless evidenced by acts or omission
of the disqualifications provided in the laws or causing loss of confidence in the honesty and
bylaws shall be eligible for election as director. integrity of such officer.
2. The cooperative may, by resolution of its board of 4. No two (2) or more persons with relationships up to
directors, admit as directors, or committee the third civil degree of consanguinity or affinity
member one appointed by any financing institution nor shall any person engaged in a business similar
from which the cooperative received financial to that of the cooperative nor who in any other
assistance solely to provide technical knowledge manner has interests in conflict with the
not available within its membership. Such director cooperative shall serve as an appointive officer.
or committee member need not be a member of
the cooperative and shall have no powers, rights, COMMITTEES
nor responsibilities except to provide technical
assistance as required by the cooperative. Executive committee: may be created under the by-
3. The members of the board of directors shall not laws and appointed by the board of directors with such
hold any other position directly involved in the day powers and duties as may be delegated to it in the by-
to day operation and management of the laws or by a majority vote of all the members of the
cooperative. board of directors.
4. Any person engaged in a business similar to that of
the cooperative or who in any way has a conflict of Those required to be provided under the by-laws:
interest with it, is disqualified from election as a 1. Audit
director of said cooperative. 2. Election
3. Mediation and conciliation
4. Ethics DEALINGS OF DIRECTORS, OFFICERS, OR
5. Such other committees as may be necessary COMMITTEE MEMBERS WITH COOPERATIVES

Committees whose members are elected by the GA: A contract entered into by the cooperative with one (1)
1. Audit or more of its directors, officers, and committee
2. Election members is voidable, at the option of the cooperative,
unless all the following conditions are present:
Committees whose members are appointed by the 1. That the presence of such director in the board
board of directors: all other committees meeting wherein contract was approved was not
necessary to constitute a quorum for such
LIABILITY OF DIRECTORS, OFFICERS AND meeting;
COMMITTEE MEMBERS 2. That the vote of such director was not necessary
for the approval of the contract;
Directors, officers and committee members shall be 3. That the contract is fair and reasonable under the
liable jointly and severally for all damages or profits circumstances; and
resulting therefrom to the cooperative, members and 4. That in the case of an officer or committee
other persons if they: member, the contract with the officer or committee
a. Willfully and knowingly vote for or assent to member has been previously authorized by the
patently unlawful acts or general assembly or by the board of directors.
b. Guilty of gross negligence or bad faith in directing
the affairs of the cooperative or Where any of the first two conditions set forth in the
c. Acquire any personal or pecuniary interest in preceding paragraph is absent, in the case of a
conflict with their duty as such directors, officers or contract with a director, such contract may be ratified
committee members by a three-fourths (3/4) vote of all the members with
voting rights, present and constituting a quorum in a
When a director, officer or committee member meeting called for the purpose: Provided, That full
attempts to acquire or acquires, in violation of his duty, disclosure of the adverse interest of the directors
any interest or equity adverse to the cooperative in involved is made at such meeting, and that the
respect to any matter which has been reposed in him contract is fair and reasonable under the
in confidence, he shall, as a trustee for the circumstances.
cooperative, be liable for damages and shall be
accountable for double the profits which otherwise DISLOYALTY OF A DIRECTOR: A director who, by
would have accrued to the cooperative. virtue of his office, acquires for himself an opportunity
which should belong to the cooperative shall be liable
COMPENSATION: GR: No compensation for damages and must account for double the profits
a. Reasonable per diems, except that otherwise would have accrued to the cooperative
i. if in the preceding calendar year, the by refunding the same, unless his act has been ratified
cooperative reported a net loss or by a three-fourths (3/4) vote of all the members with
ii. had a dividend rate less than the official voting rights, present and constituting a quorum. This
inflation rate for the same year. provision shall be applicable, notwithstanding the fact
b. By a majority vote of the members with voting that the director used his own funds in the venture.
rights at a regular or special general assembly
meeting specifically called for the purpose ILLEGAL USE OF CONFIDENTIAL INFORMATION: A
director or officer, or an associate of a director or
officer, who, for his benefit or advantage or that of an
3. No additional compensation other than per diems
associate, makes use of confidential information that, if
shall be paid during the first year of existence of generally known, might reasonably be expected to
any cooperative. adversely affect the operation and viability of the
4. The compensation of officers of the cooperative as cooperative, shall be held:
well as the members of the committee as well as 1. Liable to compensate the cooperative for the direct
the members of the committees may be fixed in losses suffered by the cooperative as a result of
the by-laws. the illegal use of information; and
5. Unless already fixed in the by-laws, the 2. Accountable to the cooperative for any direct
compensation of all other employees shall be benefit or advantage received or yet to be received
determined by the board of directors. by him or his associate, as a result of the
6. Under Section 5 of CDA MC 2013-17, the grant of transaction.
compensation other than per diem to the directors
shall be made only after the adoption of a General REMOVAL:
Assembly Resolution approving such 1. All complaints for the removal of any elected
compensation. officer shall be filed with the board of directors.
7. Under Section 6, resumption of grant of per diem 2. Such officer shall be given the opportunity to be
after a period of suspension shall not be heard.
compounded. No recovery of per diem during the 3. Majority of the board of directors may place the
period of suspension shall be allowed. officer concerned under preventive suspension
pending the resolution of the investigation.
4. Upon finding of a prima facie evidence of guilt, the Such cooperatives shall be exempt from
board shall present its recommendation for customs duties, advance sales or
removal to the general assembly. compensating taxes on their importation of
5. An elected officer may be removed by three machineries, equipment and spare parts used
fourths (3/4) votes of the regular members present by them and which are not available locally a
and constituting a quorum, in a regular or special certified by the department of trade and
general assembly meeting called for the purpose. industry (DTI). All tax free importations shall
6. The officer concerned shall be given an opportunity not be sold nor the beneficial ownership
to be heard at said assembly. thereof be transferred to any person until after
five (5) years, otherwise, the cooperative and
REPORTS the transferee or assignee shall be solidarily
1. Every cooperative shall draw up regular reports of liable to pay twice the amount of the imposed
its program of activities, including those in tax and / or duties.
pursuance of their socio-civic undertakings, 2. Cooperatives with accumulated reserves and
showing their progress and achievements at the divided net savings of more than Ten million
end of every fiscal year. pesos (P10,000,000.00) shall pay the following
2. The reports shall be made accessible to its taxes at the full rate:
members, and copies thereof shall be furnished to a. Income Tax - On the amount allocated for
all its members or record. interest on capitals: Provided, That the
3. These reports shall be filed with the CDA within one same tax is not consequently imposed on
hundred twenty (120) days from the end of the interest individually received by members:
calendar year. Provided, further, That cooperatives
4. Failure to file the required reports shall subject the regardless of classification, are exempt
accountable officer/s to fines and penalties as may from income tax from the date of
be prescribed by the CDA, and shall be a ground registration with the CDA;
for the revocation of authority of the cooperative to b. Value-Added Tax – On transactions with
operate as such. non-members: Provided, however, That
5. The fiscal year of every cooperative shall be the cooperatives duly registered with the
calendar year except as may be otherwise Authority are exempt from the payment of
provided in the by-laws. value-added tax subject to exemptions
6. If a cooperative fails to make, publish and file the under Section 109 of the Tax Code.
reports required herein, or fails to include therein c. All other taxes unless otherwise provided
any matter required, the CDA shall, within fifteen herein; and
(15) days from the expiration of the prescribed d. Donations to charitable, research and
period, send such cooperative a written notice, educational institutions and reinvestment
stating its non-compliance and the commensurate to socioeconomic projects within the area
fines and penalties that will be imposed until such of operation of the cooperative may be tax
time that the cooperative has complied with the deductible.
requirements. 3. All cooperatives, regardless of the amount of
accumulated reserves and undivided net savings
TAX EXEMPTION OF COOPERATIVES: shall be exempt from payment of local taxes and
1. Duly registered cooperatives which do not transact taxes on transactions with banks and insurance
any business with non-members or the general companies: Provided, That all sales or services
public shall not be subject to any taxes and fees rendered for non-members shall be subject to the
imposed under the internal revenue laws and other applicable percentage taxes sales made by
tax laws. producers, marketing or service cooperatives.
2. Cooperatives transacting business with both
members and non-members shall not be subjected Other Exemptions:
to tax on their transactions with members. In 1. In areas where there are no available notaries
relation to this, the transactions of members with public, the judge, exercising his ex officio capacity
the cooperative shall not be subject to any taxes as notary public, shall render service, free of
and fees, including not limited to final taxes on charge, to any person or group of persons requiring
members’ deposits and documentary tax. the administration of oath or the acknowledgment
of articles of cooperation and instruments of loan
Notwithstanding the provisions of any law or from cooperatives not exceeding Five Hundred
regulation to the contrary, such cooperatives Thousand Pesos (P500,000.00).
dealing with non-members shall enjoy the 2. Any register of deeds shall accept for registration,
following tax exemptions: free of charge, any instrument relative to a loan
1. Cooperatives with accumulated reserves and made under the Code which does not exceed Two
undivided net savings of not more than Ten Hundred Fifty Thousand Pesos (P250,000.00) or the
million pesos (P10,000,000.00) shall be exempt deeds of title of any property acquired by the
from all national, city, provincial, municipal or cooperative or any paper or document drawn in
barangay taxes of whatever name and nature. connection with any action brought by the
cooperative or with any court judgment rendered in
its favor or any instrument relative to a bond of
 any accountable officer of a cooperative for the federations thereof, shall have preferential rights in
faithful performance of his duties and obligations. the management of public markets and/or lease of
3. Cooperatives shall be exempt from the payment of public market facilities, stalls or spaces: Provided,
all court and sheriff’s fees payable to the Philippine That these rights shall only be utilized exclusively
Government for and in connection with all actions by cooperatives: Provided, further, That no
brought under RA 9520, or where such action is cooperative forming a joint venture, partnership or
brought by the CDA before the court, to enforce the any other similar arrangement with a non-
payment of obligations contracted in favor of the cooperative entity can utilize these rights;
cooperative. 8. Cooperatives engaged in credit services and/or
4. All cooperatives shall be exempt from putting up a federations shall be entitled to loans credit lines,
bond for bringing an appeal against the decision of rediscounting of their loan notes, and other eligible
an inferior court or for seeking to set aside any papers with the Development Bank of the
third party claim: Provided, That a certification of Philippines, the Land Bank of the Philippines and
the CDA showing that the net assets of the other financial institutions except the Bangko
cooperative are in excess of the amount of the Sentral ng
bond required by the court in similar cases shall be Pilipinas (BSP);
accepted by the court as a sufficient bond. 9. The Philippine Deposit Insurance Corporation
5. Any security issued by cooperatives shall be (PDIC) and other government agencies,
exempt from the provisions of the Securities Act government-owned and controlled corporations
provided such security shall not be speculative. and government financial institutions shall provide
technical assistance to registered national
PRIVILEGES OF COOPERATIVES: Cooperatives federations and unions of cooperatives which have
registered, notwithstanding the provisions of any law significant engagement in savings and credit
to the contrary, be also accorded the following operations in order for these federations and
privileges: unions to establish and/or strengthen their own
1. Cooperatives shall enjoy the privilege of depositing autonomous cooperative deposit insurance
their sealed cash boxes or containers, documents systems;
or any valuable papers in the safes of the 10. A public transport service cooperative may be
municipal or city treasurers and other government entitled to financing support for the acquisition
offices free of charge, and the custodian of such and/or maintenance of land and sea transport
articles shall issue a receipt acknowledging the equipment, facilities and parts through the
articles received duly witnessed by another person; program of the government financial institutions. It
2. Cooperatives organized among government shall have the preferential right to the
employees, notwithstanding any law or regulation management and operation of public terminals and
to the contrary, shall enjoy the free use of any ports whether land or sea transport where the
available space in their agency, whether owned or cooperative operates and on securing a franchise
rented by the Government; for active or potential routes for the public
3. Cooperatives rendering special types of services transport;
and facilities such as cold storage, ice plant, 11. Cooperatives transacting business with the
electricity, transportation, and similar services and Government of the Philippines or any of its political
facilities shall secure a franchise therefore, and subdivisions or any of its agencies or
such cooperatives shall open their membership to instrumentalities, including government-owned and
all persons qualified in their areas of operation; controlled corporations shall be exempt from
4. In areas where appropriate cooperatives exist, the prequalification bidding requirements
preferential right to supply government institutions notwithstanding the provisions of Republic Act
and agencies rice, corn and other grains, fish and No.9184, otherwise known as, the Government
other marine products, meat, eggs, milk, Procurement Act;
vegetables, tobacco and other agricultural 12. Cooperative shall enjoy the privilege of being
commodities produced by their members shall be represented by the provincial or city fiscal or the
granted to the cooperatives concerned; Office of the Solicitor General, free of charge,
5. Preferential treatment in the allocation of except when the adverse party is the Republic of
fertilizers, including seeds and other agricultural the Philippines;
inputs and implements, and in rice distribution 13. Cooperatives organized by faculty members and
shall be granted to cooperatives by the appropriate employees of educational institutions shall have
government agencies; the preferential right in the management of the
6. Preferential and equitable treatment in the canteen and other services related to the operation
allocation or control of bottomries of commercial of the educational institution where they are
shipping vessels in connection with the shipment of employed: Provided, That such services are
goods and products of cooperatives; operated within the premises of the said
7. Cooperatives and their federations, such as farm educational institution; and
and fishery producers and suppliers, market 14. The appropriate housing agencies and government
vendors and such other cooperatives, which have financial institutions shall create a special window
for their primary purpose the production and/or the for financing housing projects undertaken by
marketing of products from agriculture, fisheries cooperatives, with interest rates and terms equal
and small entrepreneurial industries and to, or better than those given for socialized housing
 projects. This financing shall be in the form of 1. To adopt a policy of continuing subscription on
blanket loans or long-term wholesale loans to share capital upon full payment of the initial
qualified cooperatives, without need for individual subscription.
processing. 2. To execute subscription agreement upon admission
of members and whenever additional subscription
CAPITAL, PROPERTY AND FUNDS shall be made by members upon full payment of
their initial subscription.
Sources of Capital 3. Unless otherwise provided for in their bylaws,
1. Member’s share capital; cooperatives shall issue Share Certificates at least
2. Loans and borrowings including deposits; every end of the calendar year based on the
3. Revolving capital which consists of the deferred number of shares fully paid for the said period.
payment of patronage refunds, or interest on share a. Cooperatives are prohibited from issuing
capital; and multiple types of common shares and different
4. Subsidies, donations, legacies, grants, aids and par value per share.
such other assistance from any local or foreign b. It is likewise prohibited for any cooperative
institution whether public or private: Provided, That increase/decrease the par value of the share
capital coming from such subsides, donations, capital by way of amending their Articles of
legacies, grants, aids and other assistance shall not Cooperation and Bylaws.
be divided into individual share capital holdings at
any time but shall instead form part of the donated Share: refers to a unit of capital in a primary
capital or fund of the cooperative. cooperative the par value of which may be fixed to any
figure not more than One thousand pesos (P1,000.00).
Upon dissolution, such donated capital shall be The share of capital of a cooperative is the money paid
subject to escheat. or required to be paid for the operations of the
cooperative. The method for the issuance of share
Limitation on Share Capital Holdings: certificates shall prescribed in its by-laws.
1. No member of primary cooperative other than
cooperative itself shall own or hold more than ten Fines: The by-laws of a cooperative may prescribe a
per centum (10%) of the share capital (total fine on unpaid subscribed share capital. Provided, that
subscribed share capital as per CDA MC 2011-05) such fine is fair and reasonable under the
of the cooperative. circumstances.
2. Where a member of cooperative dies, his heir shall
be entitled to the shares of the decedent: Provided, Investment of Capital: A cooperative may invest its
a. the total shareholding of the heir does not capital in any of the following:
exceed ten per centum (10%) of the share 1. In shares or debentures or securities of any other
capital of the cooperative; cooperative;
b. the heir qualifies and is admitted as members 2. In any reputable bank in the locality, or any
of the cooperative; and cooperative;
c. where the heir fails to qualify as a member or 3. In securities issued or guaranteed by the
where his total shareholding exceeds ten per Government;
centum (10%) of the share capital, the share or 4. In real state primarily for the use of the
shares in excess will revert to the cooperative cooperative or its members; or
upon payment to the heir of the value of such 5. In any other manner authorized in the bylaws.
shares.
Revolving Capital: The General Assembly may
Assignment of Share Capital Contribution or authorize the board of directors to raise a revolving
Interest: No member shall transfer his shares or capital to strengthen its capital structure by deferring
interest in the cooperative or any part thereof unless: the payment of patronage refunds and interest on
1. He has held such share capital contribution or share capital or by the authorized deduction of a
interest for not less than one (1) year. percentage from the proceeds of products sold or
2. The assignment is made to the cooperative or to a services rendered, or per unit of product or services
member of the cooperative or to a person who falls handled. The board of directors shall issue revolving
within the field of the membership of the capital certificates with serial number, name, amount,
cooperative; and and rate of interest to be paid and shall distinctly set
3. The board of directors has approved such forth the time of retirement of such certificates and the
assignment. amounts to be returned.

Capital Build-Up: The by-laws of every cooperative AUDIT, INQUIRY AND MEMBERS’ RIGHT TO
shall provide for a reasonable and realistic member EXAMINE
capital build-up program to allow the continuing growth
of the members’ investment in their cooperative as ANNUAL AUDIT:
their economic conditions continue to improve. 1. Cooperatives shall be subject to an annual
financial, performance and social audit.
Continuing Subscription: cooperatives are required
2. The financial audit shall be conducted by an offense which shall be punishable under RA 9520:
external auditor who satisfies all the following Provided,
qualifications: a. That if such refusal is pursuant to a resolution
a. He is independent of the cooperative or any of or order of the board of directors, the liability
its subsidiary that he is auditing; and shall be imposed upon the directors who voted
b. He is a member in good standing of the for such refusal; and
Philippine Institute of Certified Public b. That it shall be a defense to any action under
Accountants (PICPA) and is accredited by both this article that the member demanding to
the Board of Accountancy and the CDA. examine and copy excerpts from the
3. The social audit shall be conducted by an cooperative records has improperly used any
independent social auditor accredited by the CDA. information secured through any prior
4. Performance and social audit reports which contain examination of the records of such cooperative
the findings and recommendations of the auditor or was not acting in good faith or for a
shall be submitted to the board of directors. legitimate purpose in making his demand.
5. The CDA, in consultation with the cooperative
sector, shall promulgate the rules and standards Not included in such right to examine:
for the social audit of cooperatives. 1. Subsidiary ledgers and
2. Records of natural or juridical members other than
Audit Report: their own personal records.
1. The auditor shall submit to the board of directors
and to the audit committee the financial audit Safety of Records: Every cooperative shall, at its
report which shall be in accordance with the principal office, keep and carefully preserve the records
generally accepted auditing standards for required to be prepared and maintained. It shall take
cooperatives as jointly promulgated by the all necessary precaution to prevent its loss, destruction
Philippine Institute of Certified Public Accountants or falsification.
(PICPA) and the CDA.
2. Thereafter, the board of directors shall present the NET SURPLUS:
complete audit report to the general assembly in 1. Every cooperative shall determine its net surplus at
its next meeting. the close of every fiscal year and at such other
times as may be prescribed by the bylaws.
No liability for defamation: The auditor is not liable 2. It shall not be construed as profit but as an excess
to any person in an action for defamation based on any of payments made by the members for the loans
act, done, or any statement made by him in good faith borrowed, or the goods and services availed by
in connection with any matter he is authorized or them from the cooperative or the difference of the
required to do pursuant to RA 9520. rightful amount due to the members for their
products sold or services rendered to the
Limitation on auditor as to familiarity: the cooperative including other inflows of assets
external auditor, whether on his/her individual capacity resulting from its other operating activities and
or as partner of a firm, may undertake the external which shall be deemed to have been returned to
audit of the concerned cooperative for not more than them if the same is distributed as prescribed
5 consecutive years, provided that the external herein.
auditor may be allowed to audit the same client after a
gap of 2 years. Distribution The net surplus of every cooperative
shall be distributed as follows:
CDA MC 2014-02 further clarifies that the 5-
consecutive-year limit shall apply to the accredited Purpose Amount
cooperative external auditor, either as individual CPA
Reserve a. The reserve fund At least 10% of
or as partnership/auditing firm. For shall be used for the
Fund the net surplus;
partnership/auditing firm, accreditation is an authority stability of the Provided, that
vested to them as an organization per se and that all cooperative and to in the first 5
the partners and associates are part of the meet net losses in
organization. years of
its operations. The
operation after
General Assembly
MEMBERS’ RIGHT TO EXAMINE: may decrease the registration, it
1. A member shall have the right to examine the amount allocated to shall not be
records required to be kept by the cooperative the reserve fund less than 50%
during reasonable hours on business days and he when the reserve of the net
may demand, in writing, for a copy of excerpts fund already surplus.
from said records without charge except the cost of exceeds the share
production. capital.
2. Any officer of the cooperative who shall refuse to b. Any sum recovered
allow any member of the cooperative to examine on items previously
and copy excerpts from its records shall be liable to charged to the
such member for damages and shall be guilty of an reserve fund shall
be credited to such
 fund. education and
c. The reserve fund training purposes;
shall not be utilized while the other half
for investment, may be remitted to
other than those a union or
allowed in RA 9520. federation chosen
Such sum of the by the cooperative
reserve fund in or of which it is a
excess of the share member. The said
capital may be used union or federation
at any time for any shall submit to the
project that would CDA and to its
expand the contributing
operations of the cooperatives the
cooperative upon following schedules:
the resolution of the i. List of cooperatives
general assembly. which have
d. Upon the dissolution remitted their
of the cooperative, respective
the reserve fund Cooperative
shall not be Education and
distributed among Training
the members. The Funds (CETF);
GA may resolve: ii. Business
i. To establish a consultancy
usufructuary trust assistance to include
fund for the benefit the nature and cost;
of any federation or and iii. Other training
union to which the activities undertaken
cooperative is specifying therein the
affiliated; and ii. To nature, participants
donate, contribute, and cost of each
or otherwise dispose activity.
of the amount for b. Upon the dissolution
the benefit of the of the cooperative,
community where the unexpended
the cooperative balance of the
operates. If the education and
members cannot training fund
decide upon the appertaining to the
disposal of the cooperative shall be
reserve fund, the credited to the
same shall go to the cooperative
federation or union education and
to which the training fund of the
cooperative is chosen union or
affiliated. federation.

Education The bylaws may Not more than Community The community Not less than
and provide that certain 10% of the net Developme development fund shall 3% of the net
Training fees or a portion surplus nt Fund be used for projects or surplus
Fund thereof be credited to activities that will
such fund. The fund benefit the community
shall provide for the where the cooperative
training, development operates.
and similar other
cooperative activities Optional A land and building and Not exceeding
geared towards the Fund other necessary fund 7% of the net
growth of the surplus
cooperative movement:
a. Half of the amounts
Remaining Interest on share capital Not to exceed
transferred to the surplus the normal rate
education and of return on
training fund investments
annually shall be and patronage
spent by the funds. Any
cooperative for amounts
 remaining after
the allowable Effect: terminates the right of the cooperative to
interest and continue the business or purposes for which it was
established and is bound to wind up its affairs within
patronage
the period as specified by law
refund shall be
credited to the
Voluntary Dissolution Where no Creditors are
reserve fund.
Affected:
1. By a majority vote of the board of directors, and by
The sum allocated for patronage refunds shall be made
a resolution duly adopted by the affirmative vote of
available at the same rate to all patrons of the
at least three-fourths (3/4) of all the members with
cooperative in proportion to their individual patronage:
voting rights, present and constituting a quorum at
Provided, That:
a meeting to be held upon call of the directors
1. In the case of a member patron with paid-up share
2. That the notice of time, place and object of the
capital contribution, his proportionate amount of
meeting shall be published for three (3)
patronage refund shall be paid to him unless he
consecutive weeks in a newspaper published in the
agrees to credit the amount to his account as
place where the principal office of said cooperative
additional share capital contribution;
is located, or if no newspaper is published in such
2. In the case of a member patron with unpaid share
place, in a newspaper of general circulation in the
capital contribution, his proportionate amount of
Philippines
patronage refund shall be credited to his account
3. That the notice of such meeting is sent to each
until his account until his share capital contribution
member of record either by registered mail or by
has been fully paid;
personal delivery at least thirty (30) days prior to
3. In the case of a non-member patron, his
said meeting.
proportionate amount of patronage refund shall be
4. A copy of the resolution authorizing the dissolution
set aside in a general fund for such patrons and
shall be certified to by a majority of the board of
shall be allocated to individual non-member
directors and countersigned by the board secretary.
patrons only upon request and presentation of
5. The CDA shall thereupon issue the certificate of
evidence of the amount of his patronage. The
amount so allocated shall be credited to such dissolution.
patron toward payment of the minimum capital
contribution for membership. When a sum equal to Voluntary Dissolution Where Creditors Are
this amount has accumulated at any time within a Affected:
period specified in the bylaws, such patron shall be 1. The petition for dissolution shall be filed with the
deemed and become a member of the cooperative CDA.
if he so agrees or requests and complies with the 2. The petition shall be:
provisions of the bylaws for admission to a. signed by a majority of its board of directors or
membership; and other officers managing its affairs;
4. If within any period of time specified in the bylaws, b. verified by its chairperson or board secretary
any subscriber who has not fully paid his or one of its directors; and
subscribed share capital or any non-member c. shall set forth all claims and demands against
patron who has accumulated the sum necessary it and that its dissolution was resolved upon by
for membership but who does not request nor the affirmative vote of at least three-fourths
agree to become a member or fails to comply with (3/4) of all the members with voting rights,
the provisions of the bylaws for admission to present and constituting a quorum at a
membership, the amount so accumulated or meeting called for that purpose.
credited to their account together with any part of 3. If the petition is sufficient in form and substance,
the general fund for nonmember patrons shall be the CDA shall issue an order reciting the purpose of
credited to the reserve fund or to the education the petition and shall fix a date which shall not be
and training fund of the cooperative, at the option less than thirty (30) nor more than sixty (60) days
of the cooperative." after the entry of the order.
4. Before such date, a copy of the order shall be
DISSOLUTION published at least once a week for three (3)
consecutive weeks in a newspaper of general
Dissolution is the termination of the juridical circulation published in the municipality or city
personality of the cooperative through appropriate where the principal office of the cooperative is
judicial proceedings, or by an order of the CDA, or situated or in the absence of such local newspaper,
through its own initiative (Section 2, CDA MC 2012-21) in a newspaper of general circulation in the
Philippines, and a copy shall likewise be posted for
Modes: three (3) consecutive weeks in three (3) public
1. Voluntary: if initiated through the voluntary places in the municipality or city where the
decision of the members of cooperatives cooperative’s office is located.
2. Involuntary: if ordered by the CDA or a competent 5. Upon expiry of the five (5) day notice to file
court having jurisdiction over the cooperatives on objections, the CDA shall proceed to hear the
grounds as specified by law, and after due process petition and try any issue raised in the objection
 filed; and if the objection is sufficient and the 2. At any time during the said three (3) years, the
material allegations of the petition are proven, it cooperative is authorized and empowered to
shall issue an order to dissolve the cooperative and convey all of its properties to trustees for the
direct the disposition of its assets in accordance benefit of its members, creditors and other persons
with existing rules and regulations. in interest.
6. The order of dissolution shall set forth therein: 3. From and after any such conveyance, all interests
a. The assets and liabilities of the cooperative; which the cooperative had in the properties are
b. The claim of any creditor; terminated.
c. The number of members; and 4. Upon the winding up of the cooperative affairs, any
d. The nature and extend of the interests of the asset distributable to any creditor, shareholder or
members of the cooperative. member who is unknown or cannot be found shall
be given to the federation or union to which the
Involuntary Dissolution by the Court: A cooperative is affiliated with.
cooperative may be dissolved by order of a competent 5. A cooperative shall only distribute its assets or
court after due hearing on the grounds of: properties upon lawful dissolution and after
1. Violation of any law, regulation or provisions of its payment of all its debts and liabilities, except in
bylaws; or 2. Insolvency. the case of decrease of share capital of the
cooperative and as otherwise allowed by this Code.
Upon receipt of final and executory decision of the
court, the CDA shall issue an order to proceed with the
winding up of the affairs of the cooperative (Section
7(A)(2) of CDA MC 2012-21).

Involuntary Dissolution by Order of the CDA: The

CDA may suspend or revoke, after due notice and
hearing, the certificate of registration of a cooperative
on any of the following grounds: 1. Having obtained its
registration by fraud;
2. Existing for an illegal purpose;
3. Willful violation, despite notice by the CDA, of the
provisions of RA 9520 or its bylaws;
4. Willful failure to operate on a cooperative basis;
and
5. Failure to meet the required minimum number of
members in the cooperative.

Dissolution by Failure to Organize and Operate: If

a cooperative:
1. has not commenced business and its operation
within two (2) years after the issuance of its
certificate of registration; or
2. has not carried on its business for two (2)
consecutive years,

the CDA shall send a formal notice to the said

cooperative to show cause as to its failure to operate.
Failure of the cooperative to promptly provide
justifiable cause for its failure to operate shall warrant
the CDA to delete its name from the roster of
registered cooperatives and shall be deemed
dissolved.

LIQUIDATION
1. Every cooperative whose charter expires by its own
limitation or whose existence is terminated by
voluntary dissolution or through an appropriate
judicial proceeding shall nevertheless continue to
exist for three (3) years after the time it is
dissolved; not to continue the business for which it
was established but for the purpose of prosecuting
and defending suits by or against it; settlement
and closure of its affairs; disposition, conveyance
and distribution of its properties and assets.