MALLIG PLAINS COLLEGES, INC.

Casili, Mallig, Isabela

Bachelor of Science in Accountancy

SPECIAL LAWS
Atty. Jimmy I. Peru, MBM,MICB,CPA

R.A. 9520: PHILIPPINE COOPERATIVE CODE OF 2008

7.4 Cooperatives and services and accepting a fair share of the

• Organization and Registration of Cooperatives
risks and benefits of the undertaking in
accordance with universally accepted cooperative
• Administration principles.
• Responsibilities, Rights and Privileges of
Cooperatives ART. 4. Cooperative Principles . –

• Membership (1) Voluntary and Open Membership –

• Capital, Property of Funds
Cooperatives are voluntary organizations, open
to all persons able to use their services and
• Audit, Inquiry and Members’ Right to Examine willing to accept the responsibilities of
membership, without gender, social, racial,
• Allocation and Distribution of Funds
cultural, political or religious discrimination.
• Types and Categories of Cooperatives
(2) Democrative Member Control – Cooperatives
• Merger and Consolidation of Cooperatives
are democratic organizations that are controlled
• Dissolution of Cooperatives by their members who actively participate in
setting their policies and making decisions. Men
and women serving as elected representatives,
AN ACT AMENDING THE COOPERATIVE directors or officers are accountab le to the
CODE OF THE PHILIPPINES TO BE KNOWN membership.
AS THE “PHILIPPINE In primary cooperatives, members have equal
COOPERATIVE CODE OF 2008″ voting rights of one-member, one-vote.

CHAPTER I (3) Member Economic Participation – Members

GENERAL CONCEPTS AND PRINCIPLES contribute equitably to, and democratically
control, the capital of their cooperatives. At
ARTICLE 1. Title . – This Act shall be known as least part of that capital is the common property
the “ Philippine Cooperative Code of 2008 “. of the cooperative. They shall receive limited
compensation or limited interest, if any, on
ART. 2. Declaration of Policy .- It is the capital
declared policy of the State to subscribed and paid as a condition of
• foster the creation and growth of membership.
cooperatives as a practical vehicle for
promoting self-reliance and harnessing (4) Autonomy and Independence – Cooperatives
people are autonomous, self-help organizations
power towards the attainment of economic controlled by their members. If they enter into
development and social justice. The State agreements with other organizations, including
shall government, or raise capital from external
• encourage the private sector to undertake sources, they shall do so on terms that ensure
the actual formation and organization of democratic control of their members and
cooperatives maintain their cooperative autonomy.
• and shall create an atmosphere that is
conducive to the growth and development (5) Education, Training and Information –
of these cooperatives. Cooperatives shall provide education and training
for their members, elected and appointed
ART. 3. General Concepts . – A cooperative is representatives, managers, and employees, so
an autonomous and duly registered association of that they can contribute effectively and
persons, with a common bond of interest, who efficiently to the development of their
have voluntarily joined together to achieve their cooperatives.
social, economic, and cultural needs and
aspirations by making equitable contributions to (6) Cooperation Among Cooperatives –
the capital required, patronizing their products Cooperatives serve their members most
1 | Cooperative Code
effectively and strengthen the cooperative goals and code of social responsibility for
movement by working together through local, cooperatives to be established by the Authority
national, regional and international structures. in consultation with the cooperative sector. It
enables the cooperative to develop a process
(7) Concern for Community – Cooperatives work whereby it can account for its social performance
for the sustainable development of their and
communities through policies approved by their evaluate its impact in the community and be
members. accountable for its decisions and actions to its
regular members;
ART. 5. Definition of Terms . – The following
terms shall mean: (13) Performance Audit shall refer to an audit
on the efficiency and effectiveness of the
(1) Member includes a person either natural or cooperative as a whole; its management and
juridical who adhering to the principles set forth officers; and its various responsibility centers as
in this Code and in the Arti cles of Cooperative, basis for improving individual team or overall
has been admitted by the cooperative as performance and for objectively informing the
member; general membership on such performance;

(2) General Assembly shall mean the full (14) A Single-Line or Single-Purpose Cooperative
membership of the cooperative duly assembled shall include cooperative undertaking activities
for the purpose of exercising all the rights and which are related to its main line of business or
performing all the obligations pertaining to purpose;
cooperatives, as provided by this Code, its
articles of cooperation and bylaws: Provided, (15) Service Cooperatives are those which
That for cooperatives provide any type of service to its members,
with numerous and dispersed membership, the including but not limited to, transport,
general assembly may be composed of delegates information and communication, insurance,
elected by each sector, chapter or district of the housing, electric, health services, education,
cooperative in accordance with the rules and banking, and savings and credit;
regulations of the Cooperative Development
Authority; (16) Subsidiary Cooperative refers to three or
more primary cooperatives, doing the same line
(3) Board of Directors shall mean that body of business, organized at the municipal,
entrusted with the management of the affairs of provincial, city, special metropolitan political
the cooperative under its articles of cooperation subdivision, or economic zones created by law,
and bylaws; registered with the Authority to undertake
business activities in support of its member -
(4) Committee shall refer to any body entrusted cooperatives.”
with specific functions and responsibilities under
the bylaws or resolution of the general assembly CHAPTER II
or the board of directors; ORGANIZATION AND REGISTRATION

(10) Representative Assembly means the full ART. 6. Purposes of Cooperatives . – A

membership of a body of representatives elected cooperative may be organized and registered for
by each of the sectors, chapter or district o the any or all of the following purposes:
cooperative duly assembled for the purpose of
exercising such powers lawfully delegated unto (1) To encourage thrift and savings mobilization
them by the general assembly in accordance with among the members;
its bylaws; (2) To generate funds and extend credit to the
members for productive and provident purposes;
(11) Officers of the Cooperative shall include the (3) To encourage among members systematic
members of the board of directors, members of production and marketing;
the different committee created by the general (4) To provide goods and services and other
assembly, general manager o r chief executive requirements to the members;
officer, secretary, treasurer and members holding (5) To develop expertise and skills among its
other positions as may be provided members;
for in their bylaws; (6) To acquire lands and provide housing benefits
for the members;
(12) Social Audit is a procedure wherein the (7) To insure against losses of the members;
cooperative assesses its social impact and ethical (8) To promote and advance the economic, social
performance vis-à-vis its stated mi ssion, vision, and educational status of the members;

2 | Cooperative Code
“(9) To establish, own, lease or operate necessarily require, subject to the limitations
cooperative banks, cooperative wholesale and prescribed by law and the Constitution;
retail complexes, insurance and (6) To enter into division, merger or
agricultural/industrial processing enterprises, consolidation, as provided in this Code;
and public markets; (7) To form subsidiary cooperatives and join
(10) To coordinate and facilitate the activ ities of federations or unions, as provided in this Code;
cooperatives; (8) To avail of loans, be entitled to credit and to
(11) To advocate for the cause of the cooperative accept and receive grants, donations and
movements; assistance from foreign and domestic sources,
(12) To ensure the viability of cooperatives subject to the conditions of said loans, credits,
through the utilization of new technologies; grants, donations or assistance that will not
(13) To encourage and promote self -help or self- undermine the autonomy of the cooperative. The
employment as an engine for econom ic growth Authority, upon written request, shall provide
and poverty alleviation; and necessary assistance in the documentary
(14) To undertake any and all other activities for requirements for the loans, credit, grants,
the effective and efficient implementation of the donations and other financial support;
provisions of this Code. (9) To avail of preferential rights granted to
cooperatives under Republic Act No. 7160,
ART. 7. Objectives and Goals of a Cooperative . – otherwise known as the Local Government Code,
The primary objective of every cooperative is to and other laws, particularly those in the grant of
help improve the quality of life of its members. franchises to establish, construct, operate and
Towards this end, the cooperative shall aim to: maintain ferries, wharves, markets or
slaughterhouses and to lease public utilities,
(a) Provide goods and services to its members to including access to extension and on -site
enable them to attain increased income, savings, research services and facilities related to
investments, productivity, and purchasing power, agriculture and fishery activities;
and promote among themselves equitable (10) To organize and operate schools in
distribution of net surplus through maximum accordance with Republic Act No. 9155,
utilization of economies of scale, cost -sharing Governance of Basic Education Act of 2001 and
and risk-sharing; other pertinent laws; and
(b) Provide optimum social and economic benefits (11) To exercise such other powers granted by
to its members; this Code or necessary to carry out its purpose or
(c) Teach them efficient ways of doing things in purposes as stated in its Articles of cooperation.
a cooperative manner;
(d) Propagate cooperative practices and new ART. 10. Organizing a Primary Cooperati ve . –
ideas in business and management; Fifteen (15) or more natural persons who
(e) Allow the lower income and less privileged are Filipino citizens , of legal age, having a
groups to increase their ownership in the wealth common bond of interest and are actually
of the nation; and residing or working in the intended area of
(f) Cooperate with the government, other operation, may organize a primary cooperative
cooperatives and people -oriented organizations under this Code: Provided , That a prospective
to further the attainment of any of the foregoing member of a primary cooperative must have
objectives. completed a Pre-Membership Education
Seminar (PMES).
ART. 9. Cooperative Powers and Capacities . – A
cooperative registered under this Code shall have Any newly organized primary cooperative may be
the following powers, ri ghts and capacities: registered as multipurpose cooperative only
after compliance with the minimum requir ements
(1) To the exclusive use of its registered name, for multipurpose cooperatives to be set by the
to sue and be sued; Authority. A single-purpose cooperative may
(2) Of succession; transform into a multipurpose or may create
(3) To amend its articles of cooperation in subsidiaries only after at least two (2) years of
accordance with the provisions of this Code; operations.
(4) To adopt bylaws not contrary to law, morals
or public policy, and to amend and repeal the ART. 12. Liability . – A cooperative duly
same in accordance with this Code; registered under this Code shall have limited
(5) To purchase, receive, take or grant, hold, liability.
convey, sell, lease, pledge, mortgage, and
otherwise deal with such real and personal ART. 13. Term . – A cooperative shall exist for a
property as the transaction of the lawful aff airs period not exceeding fifty (50) years from the
of the cooperative may reasonably and

3 | Cooperative Code
date of registration unless sooner dissolve or that the cooperative therein mentioned is duly
unless said period is extended. registered unless it is prove d that the registration
thereof has been cancelled.
ART. 14. Articles of Cooperation . –
(2) The articles of cooperation shall set forth: ART. 18. Amendment of Articles of Cooperation
(a) The name of the cooperative which shall and Bylaws . – Unless otherwise prescribed by this
include the word cooperative ; Code and for legitimate purposes, any provision
(b) The purpose or purposes and scope of or matter stated in the articles of cooperation and
business for which the cooperative is to be by laws may be amended by two-thirds (2/3)
registered; vote of all the members with voting rights ,
(c) The term of existence of the cooperative; without prejudice to the right of the dissenting
(d) The area of operation and the posta l members to exercise their right to withdraw their
addresses of its principal office; membership under Article 30.
(e) The names, nationality, and the postal
addresses of the registrants; ART. 19. Contracts Executed Prior to
(f) The common bond of membership; Registration and Effects Thereof . – Contracts
(g) The list of names of the directors who shall executed between private persons and
manage the cooperative; and cooperatives prior to the registration of the
(h) The amount of its share capita l, the names cooperative shall remain valid and binding
and residences of its contributors and a between the parties and upon registration of the
statement of whether the cooperative is primary, cooperative. A formal written contr act shall be
secondary or tertiary in accordance with Article adopted and made in the cooperative’s name or
23 hereof. on its behalf prior to its registration.

(5) No cooperative, other than a cooperative ART. 20. Division of Cooperatives . – Any
union as described under Article 25 hereof, sh all registered cooperative may, by a resolution
be registered unless the articles of cooperation is approved by a vote of three -fourths (3/4) of all
accompanied with the bonds of the accountable the members with voting rights, present and
officers and a sworn statements of the treasurer constituting a quorum, resolve to divide itself
elected by the subscribers showing that at least into the two (2) or more cooperatives. The
twenty-five per centum (25%) of the procedure for such division shall be prescribed in
authorized share capital has been subscribed and the regulations of the Authority: Provided , That
at least twenty-five per centum. Provided , That all the requirements set forth in this Cod e have
in no case shall the paid-up share capital be been complied with by the new cooperatives:
less than Fifteen thousand pesos Provided , further , That no division of a
(P15,000.00). (25%) of the total cooperative in fraud of creditors shall be valid.
subscription has been paid :
ART. 21. Merger and Consolidation of
ART. 15. Bylaws . – Cooperatives . – (1) Two (2) or more cooperatives
may merge into a single cooperative which shall
ART. 16. Registration . – A cooperative formed either be one of the constituent cooperatives or
and organized under this Code acquires juridical the consolidated cooperative.
personality from the date the Authority issues a (2) No merger or consolidation shall be valid
certificate of registration under its official seal. unless approved by a three -fourths (3/4) vote of
All applications for registration shall be finally all the members with voting rights, present and
disposed of by t he Authority within a period of constituting a quorum of each of the constituent
sixty (60) days from the filing thereof, otherwise cooperatives at separate general assembly
the application is deemed approved, unless the meetings. The dissenting members shall have the
cause of the delay is attributable to the applicant: right to exercise their right to withdraw their
Provided , That in case of a denial of the membership pursuant to Article 30.
application for registration, a n appeal shall lie (3) The Authority shall issue the gui delines
with the Office of the President within ninety (90) governing the procedure of merger or
days from receipt of notice of such denial: consolidation of cooperatives. In any case, the
Provided , further , That failure of the Office of the merger or consolidation of cooperatives. In any
President to act on the appeal within ninety (90) case, the merger or consolidation shall be
days from the filing thereof shall mea n approval effective upon the issuance of the certificate of
of said application. merger or consolidatio n by the Authority.

ART. 17. Certificate of Registration . – A ART. 23. Type and Categories of Cooperatives . –
certificate of registration issued by the Authority (1) Types of Cooperatives – Cooperatives may fall
under its official seal shall be conclusive evidence under any of the following types:

4 | Cooperative Code
(a) Credit Cooperative is one that promotes (l) Electric Cooperative is one organized for
and undertakes savings and lending services the primary purposed of undertaking power
among its members. It generates a common pool generations, utilizing renewable energy sources,
of funds in order to provide financial assistance including hybrid systems, acquisition and
to its members for productive and provident operation of subtransmission or distribution to its
purposes; household members;
(b) Consumers Cooperative is one of the (m) Financial Service Cooperative is one
primary purpose of which is to procure and organized for the primary purpose of engaging in
distribute commodities to members and non - savings and credit services and other financial
members; services;
(c) Producers Cooperative is one that (n) Fishermen Cooperative is one organized by
undertakes joint production whether agricultural marginalized fishermen in localities whose
or industrial. It is formed and operated by its products are marketed either as fresh or
members to undertake the pr oduction and processed products;
processing of raw materials or goods produced by (o) Health Services Cooperative is one
its members into finished or processed products organized for the primary purpose of providing
for sale by the cooperative to its members and medical, dental and other health services;
non-members. Any end product or its derivative (p) Housing Cooperative is one organized to
arising from the raw materials produced by its assist or provide access to housing for the benefit
members, sold in the name and for the account of its regular members who actively participate in
of the cooperative, shall be deemed a product of the savings program for housing. It is co -owned
the cooperative and its members; and controlled by its members;
(d) Marketing Cooperative is one which (q) Insurance Cooperative is one engaged in
engages in the supply of production inputs to the business of insuring life and poverty of
members and markets their products; cooperatives and their members;
(e) Service Cooperative is one which engages (r) Transport Cooperative is one which
in medical and dental care, hospitalization, includes land and sea transportation, limited to
transportation, insurance, housing, labor, electric small vessels, as defined or classified under the
light and power, communication, professional Philippine maritime laws, organized under the
and other services; provisions of this Code;
(f) Multipurpose Cooperative is one which (s) Water Service Cooperative is one
combines two (2) or more of the business organized to own, operate and manage waters
activities of these different types of cooperatives; systems for the provision and distribution of
(g) Advocacy Cooperative is a primary potable water for its members and their
cooperative which promotes and advocates households;
cooperativism among its members and the public (t) Workers Cooperative is one organized by
through socially-oriented projects, education and workers, including the self-employed, who are at
training, research and communication, and other same time the members and owners of the
similar activities to reach out to its intended enterprise. Its principal purpose is to provide
beneficiaries; employment and business opportunities to its
(h) Agrarian Reform Cooperative is one members and manage it in accordance with
organized by marginal farmers majority of which cooperative principles; and
are agrarian reform beneficiaries for the purpose (u) Other types of cooperative as may be
of developing an appropriate system of land determined by the Authority.
tenure, land development, land consolidation or
land management in areas covered by agrarian (2) Categories of Cooperative – Cooperatives
reform; shall be categorized according to membership
(i) Cooperative Bank is one organized for the and territorial considerations as follows:
primary purpose of providing a wide range of
financial services to cooperatives and their (a) In terms of membership, cooperative shall
members; be categorized into:
(j) Dairy Cooperative is one whose members (i) Primary – The members of which are natural
are engaged in the production of fresh milk which persons;
may be processed and/or marketed as dairy (ii) Secondary – The members of which are
products; primaries; and
(k) Education Cooperative is one organized for (iii) Tertiary – The members of which are
the primary purpose of owning and operating secondary cooperatives; and
licensed educational institutions notwithstanding
the provisions of Republic Act No. 9155, (b) In terms of territory, cooperatives shall be
otherwise known as the Governance of Basic categorized according to areas of operations
Education Act of 2001;

5 | Cooperative Code
which may or may not coincide with the political
subdivisions of the country. ART. 27. Government Officers and Employees . –
(1) Any officer or employee of the Authority shall
ART. 25. Cooperative Unions . – Registered be disqualified to be elected or appointed to any
cooperatives and federations at the appropriate position in a cooperative: Provided , That the
levels may organize or join cooperative unions to disqualification does not extend to a cooperative
represent the interest and welfare of all types of organized by the officers or employees of the
cooperatives at the provincial, city, regional, and Authority.
national levels. Cooperative unions may have the (2) All elective officials of the Government shall
following purposes: be ineligible to become officers and directors of
(a) To represent its member organizations; cooperatives: Provided , That the disqualification
(b) To acquire, analyze, and disseminate, does not extend to a party list representative
economic, statistical, and other information being an officer of a cooperative he or she
relating to its members and to all types of represents; and
cooperatives within its area of operation; (3) Any government employee or official may, in
(c) To sponsor studies in the economic, legal, the discharge of is duties as a member in the
financial, social and other phases of cooperation, cooperative, be allowed by the end of office
and publish the results thereof; concerned to use official time for attendance at
(d) To promote the knowledge of cooperative the general assembly, board and committee
principles and practices; meetings of cooperatives as well as cooperative
(e) To develop the cooperative movement in their seminars, conferences, workshops, technical
respective jurisdictions; meetings, and training courses locally or abroad:
(f) To advise the appropriate authorities on all Provided, That the operations of the office
questions relating to cooperatives; concerned are not adversely affected.
(g) To raise funds through membe rship fees,
dues and contributions, donations, and subsidies ART. 28. Application . – An applicant for
from local and foreign sources whether private or membership shall be deemed a member after
government; and approval of his membership by the board of
(h) To do and perform such other non -business directors and shall exercise the rights of member
activities as may be necessary to attain the after having made such payments to the
foregoing objectives. cooperative in respect to membership or acquired
Cooperative unio ns may assist the national and interest in the cooperative as may be prescribed
local governments in the latter’s development in the bylaws. In case membership is refused or
activities in their respective jurisdictions.” denied by the board of directors, an appeal may
be made to the general assembly and the latter’s
CHAPTER III decision shall be final. For this purpose, the
MEMBERSHIP general assembly may opt to create an appeal
and grievance committee, the members of which
ART. 26. Kinds of Membership . – A cooperative shall serve for a period of one (1) year and shall
may have two (2) kinds of members, to wit: decide appeals on membership application within
thirty (30) days upon receipt thereof. If the
A regular member is one who has complied with committee fails to decide within the prescribed
all the membership requirements and entitled to period, the appeal is deemed approved in favor
all the rights and privileges of membership. of the applicant.

An associate member is one who has no right ART. 29. Liability of Members . – A member shall
to vote nor be voted upon and shall be entitled be liable for the debts of the cooperative to the
only to such rights and privileges as t he bylaws extent of his contribution to the share capital of
may provide: Provided , That an associate who the cooperative.
meets the minimum requirements of regular
membership, continues to patronize the ART. 30. Termination of Membership . –
cooperative for two (2) years, and signifies
his/her intention to remain a member shall be (1) A member of a coope rative may, for any valid
considered a regular member. reason, withdraw his membership from the
cooperative by giving a sixty (60) day notice to
A cooperative organized by minors sh all be the board of directors. Subject to the bylaws of
considered a laboratory cooperative and must be the cooperative, the withdrawing member shall
affiliated with a registered cooperative. A be entitled to a refund of his share capital
laboratory cooperative shall be governed by contribution and all other interests in the
special guidelines to be promulgated by the cooperative: Provided , That such fund shall not
Authority. be made if upon such payment the value of the

6 | Cooperative Code
assets of the cooperative would be less than the following exclusive powers which cannot be
aggregate amount of its debts and liabilities delegate:
exclusive of his share capital contribution. (1) To determine and approve amendments to
(2) The death or insanity of a member in a the articles of cooperation and bylaws;
primary cooperative, and the insolvency or (2) To elect or appoint the members of the
dissolution of a member in a secondary or tertiary board of directors , and to remove them for
cooperative may be considered valid grounds for cause. However, in the cas e of the electric
termination of membership: Provided, That in cooperatives registered under this Code, election
case of death or insanity of an agrarian reform of the members of the board shall be held in
beneficiary-member of a cooperative, the next - accordance with its bylaws or election guideline
of-kin may assume the duties and responsibilities of such electric cooperative; and
of the original member (3) To approve developmental plans of the
(3) Membership in the cooperative may be cooperative.
terminated by a vote of the majo rity of all the Subject to such other provisions of this Code and
members of the board of directors for any of the only for purposes of prompt and intelligent
following causes: decision-making, the general assembly may be a
(a) When a member has not patronized any of the three-fourths (3/4) vote of all its members with
services of the cooperative for an unreasonable voting rights, present and constituting a quorum,
period of time as may be previously determined delegate some of its powers to a smaller body of
by the board of directors; the cooperative. These powers shall be
(b) When a member has continuously failed to enumerated under the bylaws of the cooperative.
comply with his obligations;
(c) When a member has acted in violation of the ART. 34. Meetings . – (1) A regular meeting shall
bylaws and the rules of the cooperative; and be held annually by the general assembly on a
(d) For any act or omission injurious or date fixed in the bylaws, or if not so fixed, on any
prejudicial to the interest or the welfare of the dated within ninety (90) days after the close of
cooperative. each fiscal year:
ART. 35. Quorum . – A quorum shall consist of
A member whose membership the board of at least twenty-five per centum (25%) of all
directors may wish to terminate shall be informed the members entitled to vote. In the case of
of such intended action in writing and shall be cooperative banks, the quorum shall be as
given an opportunity to be heard before the said provided in Article 99 of this Code. In the case of
board makes its decision. electric cooperatives registered under this
Code, a quorum, unless otherwise provide d in the
The decision of the board shall be in writing and bylaws, shall consist of five per centum (5%)
shall be communicated in person or by registered of all the members entitled to vote .
mail to said member and shall be appealable
within thirty (30) days from receipt thereof to the ART. 36. Voting System . – Each member of a
general assembly whose decision shall be final. primary cooperative shall have only one (1) vote.

ART. 31. Refund of Interests . – All sums ART. 37. Composition and Term of the Board of
computed in accordance with the bylaws to be Directors . – Unless otherwise provided in the
due from a cooperative to a former member shall bylaws, the direction and management of the
be paid to him either by the cooperative or by the affairs of a cooperative shall be vested in a board
approved transferee, as the case may be, in of directors which shall be composed of not less
accordance with this Code.” that five (5) nor more than fifteen (15) m embers
elected by the general assembly for a term of two
CHAPTER IV (2) years and shall hold office until their
ADMINISTRATION successors are duly elected an qualified, or until
duly removed for caused.
ART. 32. Composition of the General
Assembly . – The general assembly shall be ART. 38. Powers of the Board of Directors . – The
composed of such members who are entitled to board of directors shall be responsible for the
vote under the articles of cooperation and bylaws strategic pla nning, direction-setting and policy-
of the cooperative. formulation activities of the cooperatives.
ART. 33. Powers of the General Assembly . –
The general assembly shall be the highest policy - ART. 42. Officers of the Cooperative . – The
making body of the cooperative and shall exercise board of directors shall elect from among
such powers as are stated in this Code, in the themselves the chairperson and vice -chairperson,
articles of cooperation and in the bylaws of the and elect or appoint other officers of the
cooperative. The general assembly shall h ave the cooperative from outside of the board in

7 | Cooperative Code
accordance with their bylaws. All officers shall by a majority vote of the members w ith voting
serve during good behavior and shall not be rights at a regular or special general assembly
removed except for cause after due hearing. Loss meeting specifically called for the purpose:
of confidence shall not be a valid ground for Provided , That no additional compensation
removal unless evidenced by acts or omission other than per diems shall be paid during
causing loss of confidence in the honesty and the first year of existence of any
integrity of such officer. No two (2) or more cooperative.
persons with relationships up to the third civil (2) The compensation of officers of the
degree of consanguinity or affinity nor shall any cooperative as well as the members of the
person engaged in a business similar to that of committee as well as the members of the
the cooperative nor who in any other manner has committees created pursuant to this Code or its
interests in conflict with the cooperative shall bylaws may be fixed in the bylaws.
serve as an appointive officer. (3) Unless already fixed in the bylaws, the
compensation of all other e mployee shall be
ART. 43. Committees of Cooperatives . – determined by the board of directors.
(1) The bylaws may create an executive
committee to be appointed by the board of CHAPTER V
directors with such powers and duties as may be RESPONSIBILITIES, RIGHTS AND
delegated to it in the bylaws or by a majority vote PRIVILEGES OF COOPERATIVE
of all the members of the board of directors.
(2) The bylaws shall provide for the creation of CHAPTER VI
an INSOLVENCY OF COOPERATIVES
• audit
• election ART. 63. Proceeding Upon Insolvency .- In case
• mediation and conciliation a cooperative is unable to fulfill its obligations to
• ethics creditors due to insolvency, such cooperative
• and such other committees as may be may apply for such remedies as it may deem fit
necessary for the conduct of the affairs of the under the provisions of Act No. 1956, as
cooperative. amended, otherwise known as the Insolvency
Law.
The members of both the audit and election Nothing in this Article, however, precludes
committee shall be elected by the general creditors from seeking protection from said
assembly and the rest shall be appointed by the insolvency law.”
board.
CHAPTER VII
The audit committee shall be directly DISSOLUTION OF COOPERATIVES
accountable and responsible to the general
assembly. It shall have the power and duty to ART. 66. Involuntary Dissolution . – A
continuously monitor the adequacy and cooperative may be dissolved by order of a
effectiveness of the cooperative’s management competent court after due hearing on th e
control system and audit the performance of the grounds of:
cooperative and its various responsibility centers. (1) Violation of any law, regulation or provisions
of its bylaws; or
Unless otherwise provided in the bylaws, the (2) Insolvency.
board, in case of a vacancy in th e committees, ART. 67. Dissolution by Order of the Authority .
may call an election to fill the vacancy or appoint – The Authority may suspend or revoke, after due
a person to fill the same subject to the provision notice and hearing, the certificate of registration
that the person elected or appointed shall serve of a cooperative on any of the following grounds:
only for the unexpired portion of the term. (1) Having obtained its registration by fraud;
(2) Existing for an illegal purpose;
ART. 46. Compensation . – (3) Willful violation, despite notice by the
(1) In the absence of any provisions in the bylaws Authority, of the provisions of this Code or its
fixing their compensation, the directors shall not bylaws;
receive any compensation except for reasonable (4) Willful failure to operate on a cooperative
per diems : Provided however , That the directors basis; and
and officers shall not be entitled to any per (5) Failure to meet the required minimum number
diem when, in the preceding calendar year, of members in the cooperative.
the cooperative reported a net loss or had a ART. 68. Dissolution by Failure to Organize and
dividend rate less than the official inflation Operate .- If a cooperative has not commenced
rate for the same year. Any compensation business and its operation withi n two (2) years
other than per diems may be granted to directors after the issuance of its certificate of registration

8 | Cooperative Code
or has not carried on its business for two (2) allow the continuing growth of the members’
consecutive years, the Authority shall send a investment in their cooperative as their economic
formal notice to the said cooperative to show conditions continue to improve.
cause as to its failure to operate. Failure of the
cooperative to promptly provide justifiable cause ART.76. Shares .- The term “share” refers to a
for its failure to operate shall warrant the unit of capital in a primary cooperative the par
Authority to delete its name from the roster of value of which may be fixed to any figure not
registered cooperatives and shall be deemed more than One thousand pesos (P1,000.00). The
dissolved. share of capital of a cooperative is the money
ART. 69. Liquidation of a Cooperative . – Every paid or required to be paid for the op erations of
cooperative whose charter expires by its own the cooperative. The method for the issuance of
limitation or whose existence is terminated by share certificates shall prescribed in its bylaws.
voluntary dissolution or through an appropriate
judicial proceeding shall nevertheless continue to ART. 79. Revolving Capital . – The general
exist for three (3) years after the time it is assembly of any cooperative may authorize the
dissolved; not to continue the business for which board of directors to raise a revolving capital to
it was established but for the purpose of strengthen its capital structure by deferring the
prosecuting and defending suits by or against it; payment of patronage refunds and interest on
settlement and closure of its affairs; disposition, share capital or by the authorized deduction of a
conveyance and distribution of its properties and percentage from the proceeds of products sold or
assets. services rendered, or per unit of product or
At any time during the said three (3) years, the services handled. The board of directors shall
cooperative is authorized and empowered to issue revolving capital certificates with serial
convey all of its properties to trustees for the number, name, amount, and rate of interest to
benefit of its members, creditors and other be paid and shall distinctly set forth the time of
persons in interest. From and after any such retirement of such certificates and the amounts
conveyance, all interests which the cooperative to be returned.”
had in the properties are terminated.
ART. 80. Annual Audit . – Cooperatives registered
CHAPTER VIII under this Code shall be subject to an annual
CAPITAL, PROPERTY, AND FUNDS financial, performance and social audit .

ART. 72. Capital Sources .- Cooperatives The financial audit shall be conducted by an
registered under this Code may derive their external auditor who satisfies all the following
capital from any or all of the following sources: qualifications:
(1) Member’s share capital; (1) He is independent of the cooperative or any
(2) Loans and barrowings including deposits; of its subsidiary that he is auditing; and
(3) Revolving capital which consists of the (2) He is a member in good standing of the
deferred payment of patronage r efunds, or Philippine Institute of Certified Public
interest on share capital; and Accountants (PICPA) and is accredited by both
(4) Subsidies, donations, legacies, grants, aids the Board and Accountancy and the Authority.
and such other assistance from any local or The social audit shall be conducted by an
foreign institution whether public or private: independent social auditor accredited by the
Provided , That capital coming from such Authority.
subsides, donations, legacies, gra nts, aids and Performance and social audit reports which
other assistance shall not be divided into contain the findings and recommendations of the
individual share capital holdings at any time but auditor shall be submitted to the board of
shall instead form part of the donated capital or directors.
fund of the cooperative. The Authority, in consultation with the
Upon dissolution, such donated capital shall be cooperative sector, shall promulgate the rules
subject to escheat. and standards for the social audit of
cooperatives.
ART. 73. Limitation on Share Capital Holdings .-
No member of primary cooperative other than CHAPTER X
cooperative itself shall own or hold more than ten ALLOCATION AND DISTRIBUTION OF NET
per centum (10%) of the share capital of the SURPLUS
cooperative.
ART. 85. Net Surplus . –
ART.75. Capital Build-Up .- The bylaws of every
cooperative shall be provided for a reasonable
and realistic member capital build -up program to

9 | Cooperative Code
ART. 86. Order of Distribution . – The net surplus (ii) Business consultancy assistance to include
of every cooperative shall be distributed as the nature and cost; and
follows: (iii) Other training activities undertaken
specifying therein the nature, participants and
(1) An amount for the reserve fund which shall cost of each activity.
be at least ten per centum (10%) of net surplus: (b) Upon the dissolution of the cooperative, the
Provided , That, in the first five (5) years of unexpended balance of the education and
operation after registration, this amount shall not training fund appertaining to the cooperative
be less than fifty per centum (50%) of the net shall be credited to the cooperative education
surplus: and training fund of the chosen union or
federation.
(a) The reserve fund shall be used for the
stability of the cooperative and to meet net losses (3) An amount for the community
in its operat ions. The general assembly may development fund, which shall not be less than
decrease the amount allocated to the reserve three per centum (3%) of the net surplus. The
fund when the reserve fund already exceeds the community development fund shall be used for
share capital. projects or activities that will benefit the
Any sum recovered on items previously charged community where the cooperative operates.
to the reserve fund shall be credited to such fund.
(b) The reserve fund shall not be utilized for (4) An optional fund, a land and building , and
investment, other than those allowed in this any other necessary fund the total of which sh all
Code. Such sum of the reserve fund in excess of not exceed seven per centum (7%).
the share capital may be used at anytime for any
project that would expand the operations of the (5) The remaining net surplus shall be made
cooperative upon the resolution of the general available to the members in the form of
assembly.
(c) Upon the dissolution of the cooperative, the interest on share capital not to exceed the
reserve fund shall not be distributed among the normal rate of return our investments and
members. The general assembly may resolves:
(i) To establish a usufructuary trust fund for the patronage refunds :
benefit of any federation or union to which th e
cooperative is affiliated; and Provided , That any amount remaining after the
(ii) To donate, contribute, or otherwise dispose allowable interest and the patronage refund have
of the amount for the benefit of the community been deducted shall be credited to the reserve
where the cooperative operates. If the members fund.
cannot decide upon the disposal of the reserve The sum allocated for patronage refunds shall be
fund, the same shall go to the fe deration or union made available at the same rate to all patrons of
to which the cooperative is affiliated. the cooperative in proportion t o their individual
patronage: Provided , That:
(2) An amount for the education and training (a) In the case of a member patron with paid -up
fund, shall not be more than ten per centum share capital contribution, his proportionate
(10%) of the net surplus. The bylaws may provide amount of patronage refund shall be paid to him
that certain fees or a portion thereof be credited unless he agrees to credit the amount to his
to such fund. The fund shall provide for the account as additional share capital contribution;
training, development and similar other (b) In the case of a member patron with unpaid
cooperative activities geared towards the growth share capital contribution, his proportionate
of the cooperative movement: amount of patronage refund shall be credited to
his account until his account until his share
(a) Half of the amounts transferred to the capital contribution has been fully paid;
education and training fund annually under this (c) In the case of a non-member patron, his
subsection shall be spent by the cooperative for proportionate amount of patronage refund shall
education and training purposes; while the other be set aside in a general fund for such patrons
half may be remitted to a union or federation and shall be allocated to individual non -member
chosen by the cooperative or of which it is a patrons only upon request and presentation of
member. The said union or federation shall evidence of the amount of his patronage. The
submit to the Authority and to i ts contributing amount so allocated shall be credited to such
cooperatives the following schedules: patron toward payment of the minimum capital
(i) List of cooperatives which have remitted their contribution for membership. When a sum equal
respective Cooperative Education and Training to this amount has accumulated at any time
Funds (CETF); within a period specified in the bylaws, s uch
patron shall be deemed and become a member of

10 | Cooperative Code
the cooperative if he so agrees or requests and
complies with the provisions of the bylaws for
admission to membership; and
(d) If within any period of time specified in the
bylaws, any subscriber who has n ot fully paid his
subscribed share capital or any non -member
patron who has accumulated the sum necessary
for membership but who does not request nor
agree to become a member or fails to comply with
the provisions of the bylaws for admission to
membership, the amount so accumulated or
credited to their account together with any part
of the general fund for nonmember patrons shall
be credited to the reserve fund or to the
education and training fund of the cooperative,
at the option of the cooperative.”

CHAPTER XI
AGRARIAN REFORM COOPERATIVES

CHAPTER XII
COOPERATIVE BANKS

CHAPTER XIII
INSURANCE COOPERATIVE

CHAPTER XIV
PUBLIC SERVICE COOPERATIVES

CHAPTER XV
CREDIT COOPERATIVES

CHAPTER XVI
FINANCIAL SERVICE COOPERATIVES

CHAPTER XVII
ELECTRIC COOPERATIVE

CHAPTER XVIII
MISCELLANEOUS PROVISIONS

CHAPTER XIX
FINAL PROVISIONS

Approved: FEB 17, 2009

(Sgd.) GLORIA MACAPAGAL-ARROYO
President of the Philippines

11 | Cooperative Code