Cooperative Code of the Philippines

(Multiple Choice)

1. A cooperative may be organized and registered by

A. Not less than 5 but not more than 15 persons.
B. Not less than 10 but not more than 20 natural persons.
C. At least 15 persons, natural or juridical.
D. At least 15 natural persons.
Answer: D
2. One of the following is not a purpose for the creation of a cooperative
A. To encourage thrift and savings mobilization among the members.
B. To develop expertise and skills among its members.
C. To promote and advance the economic, social and educational status of the
members.
D. To generate funds and utilize it in making charitable activities.
Answer: D
3. A cooperative acquires juridical personality.
A. From the time it commences its operation.
B. From the time it is organized.
C. From the time it is issued a Certificate of Registration by the Cooperative
Development Authority.
D. From the time the application for registration is submitted to the Cooperative
Development Authority.
Answer: C
4. Term of a cooperative, except
A. Shall exist for a period not exceeding 50 years from the date of registration.
B. Shall exist for a period not exceeding 50 years from the date of registration but
maybe extended for periods not exceeding 50 years in any single instance.
C. Shall exist for a period net exceeding 50 years from the date of registration but
maybe extended for more than 50 years.
D. Shall exist for a period not exceeding 50 years from the date of formation.
Answer: D
5. Which is not correct? The issuance of a Certificate of Registration to a cooperative
by the Cooperative Development Authority.
 A. Is the operative act granting juridical personality to a proposed cooperative.
B. Shall be conclusive evidence that the cooperative therein mentioned is duly
registered.
C. Entitles the cooperative to organize a Board of Directors.
D. Empowers the cooperative to operate legally.
Answer: C
6. All of the following, except one, are contained in the Article of Cooperation. Which
one
A. Name of cooperative
B. Powers and capacities
C. Term of existence
D. Membership
Answer: D
7. Which of the following is not required to appear in the by-laws of a cooperative?
A. Qualifications for membership
B. Administration of the cooperative
C. Term of existence
D. Composition of the board of directors
Answer: C
The term of existence must appear in the Articles of Cooperation
8. Which of the following statement is not correct?
A. If the application for registration is not finally disposed of by the CDA within a
period of 60 days from the filing thereof, it shall be deemed approved.
B. Derail by the Cooperative Development Authority of the application for
registration may be appealed to the Court of Appeals.
C. Denial by the Cooperative Development Authority of the application for
registration may be appealed to the office of the President within 90 days
from receipt of notice of such denial.
D. Failure of the Office of the President to act on the appeal within 90 days from
the filing thereof shall mean approval of said application.
Answer: B
Denial of the Application for Registration by the CDA is appealable to the Office
of the President.
9. The highest policy-making body of the cooperative.
A. Board of Directors
B. General assembly
 C. Members
D. Committees
Answer: B
10.The general assembly shall have the following exclusive powers which cannot be
delegated, except
A. To elect or appoint the members of the board of directors (BOD), and to
remove them for cause
B. To determine and approve amendments to the articles of cooperation and
bylaws;
C. Strategic planning, direction-setting and policy-formulation activities of the
cooperatives
D. To approve developmental plans of the cooperative
Answer: C
11.For purposes of prompt and intelligent decision-making, the general assembly may
be a __________, present and constituting a quorum, delegate some of its powers
to a smaller body of the cooperative.
A. ¾ vote of all its members
B. ¾ vote of all its members with voting rights
C. Majority vote of all its members with voting rights
D. 2/3 vote of all its members with voting rights
Answer: B
12.Which is not correct? The regular meeting of the general assembly
A. Must be preceded by a notice to all members of record.
B. Must be held annually on any date within 90 days after the close of each
fiscal year.
C. Shall be held annually on a date fixed in the by-laws.
D. Shall be held on a date fixed in the Articles of Certification, or if not so fixed,
on any date within 90 days after the close of each fiscal year.
Answer: D
Matters which pertain to internal government of the cooperative such as
meetings, membership, board of directors and creation of committees must be
contained in the by-laws.
13.The following are rules to be followed in calling for a special meeting of the general
assembly, except
A. Cannot be initiated by the Cooperative Development Authority.
B. May be called at any time by a majority vote of the board of directors.
 C. Notice in writing must be sent one (1) week prior to the meeting to all
members who are entitled to vote.
D. The Cooperative Development Authority may, upon petition of 10% of all the
members of the cooperative who are entitled to vote, and for good cause
shown, shall issue an order to the Board of Directors directing them to call a
meeting of the general assembly.
Answer: A
The CDA may call a special meeting of the cooperative for the purpose of
reporting to the members the result of any examination or other investigation of
the cooperative affairs.
14.Quorum required in meeting of the members of a cooperative
A. At least majority of all the members entitled to vote.
B. At least 25% of all the members, whether voting or non-voting.
C. In an electric cooperative, a quorum shall consist of 15% of all the members
entitled to vote, unless otherwise provided in the bylaws.
D. At least 25% of all the members entitled to vote.
Answer: D
For electric cooperatives registered under this Code, a quorum shall consist of
5% of all the members entitled to vote, unless otherwise provided in the bylaws.
15.Similarly between a primary cooperative and a corporation
A. The management of the affairs of cooperative shall be vested in a Board of
Directors.
B. Voting by proxy.
C. Cumulative voting
D. The directors shall hold office for a term of two years until their successors
are duly qualified, or until duly removed for cause.
Answer: A
Voting by proxy and cumulative voting are not allowed in a primary cooperative.
16.Which body in a cooperative requires a number of not less than 5 but not more than
15?
A. Membership
B. Board of Directors
C. Committee Membership
D. Cooperators
Answer: B
17.The following are qualifications of the members of the Board of Directors in a
cooperative, except
A. Has no delinquent account with the cooperative.
B. A member in good standing for the last two years.
C. Having direct or indirect personal interest with the business of the
cooperative.
D. Has paid the minimum capital requirement.
Answer: C
The purpose is to avoid giving preference to his personal interest by taking
advantage of his position.
18.To become a member of the Board of Directors of a cooperative a person must
possess the following qualifications, except
A. Member of the cooperative
B. Graduate of any college degree
C. Has the right to vote
D. Not engaged in a business similar to that of the cooperative.
Answer: B
19.To have a valid meeting of the Board of Directors of a cooperative, the following
requirements must be complied, except
A. Regular meeting: Must be held at least once in every quarter.
B. Notice: Must be in writing and indicating therein the agenda
C. Quorum: Majority of the members of the Board of Directors unless the by-
laws provide for a greater or lesser number.
D. Special meeting: Maybe be called upon by the majority of the members of the
Board.
Answer: A
Regular meting of the BOD of primary cooperatives shall be held at least once a
month.
20.In a Board of Directors of a cooperative
A. In case of incapacity, a member of the Board maybe represented by proxy.
B. In case of expiration of term of a member, the Board may fill the vacancy by
a majority vote of the remaining members.
C. A director so elected to fill a vacancy shall serve only the unexpired term of
his predecessor in office.
D. A vacancy shall be filled by the general assembly in a regular meeting only.
Answer: C
 Any vacancy in the BOD, other than expiration of term may be filled by the vote
of at least a majority of the remaining directors, if still constituting a quorum;
otherwise, the vacancy must be filled by the general assembly in a regular or
special meeting called for the purpose.
A director so elected to fill a vacancy shall serve only the unexpired term of his
predecessor in office.
21. The following statements about officers of the cooperative are correct. Which
statement is false?
A. The chairperson musty be a member of the Board of Directors.
B. They cannot be removed except for cause after due hearing.
C. A nephew of the board chairman cannot be appointed as manager of the
cooperative.
D. All officers must be members of the Board of Directors.
Answer: D
Secretary and Treasurer may be elected or appointed from outside of the Board.
22.Statement 1: The members of both the audit and election committee shall be
elected by the general assembly and the rest shall be appointed by the board.
Statement 2: The creation and the functions of the audit, election, mediation and
conciliation, ethics committee must be provided in the bylaws of the cooperative.
A. True, true
B. True, false
C. False, false
D. False, true
Answer: A
23.All of the following, except one, are functions/responsibilities of the Audit Committee
A. Monitor the adequacy and effectiveness of the cooperative’s management
and internal control system.
B. Conduct initial investigation or inquiry, upon receipt of a complaint involving
violations of the Code of Governance and ethical Standards.
C. Audit the performance of the cooperative and its various responsibility
centers.
D. Review the report and recommendation of the Ethics Committees involving
violations of the Code of Governance and Ethical Standards if the remaining
members of the Board of Directors fail to act on said report and
recommendation within a period of 30 days.
Answer: B
 Letter B is a function of the Ethics Committee.
24.A director, officer or committee member is not liable for the following action
A. Establishing policies for the effective operation and ensuring proper
implementation of such.
B. Acquiring any personal or pecuniary interest in conflict with his duty as such
directors, officers or committee members.
C. Willfully and knowingly vote for or assent to patently unlawful acts.
D. Guilty of gross negligence or bad faith in directing the affairs of the
cooperative.
Answer: A
25.The Audit Committee, Election Committee, and Ethics Committee must comply with
the following rules, except
A. Shall elect from among themselves a Chairperson, Vice-Chairperson and a
secretary.
B. Shall serve for a team of one (1) year.
C. Composed of three (3) members to be appointed by the Board of Directors.
D. Within ten (10) days after their election, they shall elect the Chairperson,
Vice-Chairperson and a Secretary.
Answer: C
Audit and Election Committee shall be elected during a General Assembly
meeting.
26.The members of the following committee shall be appointed during a general
assembly
A. Election Committee
B. Ethics Committee
C. Education and Training Committee
D. Gender and Development Committee
Answer: A
The members of the Ethics Committee, Education and Training Committee, and
Gender and Development Committee shall be appointed by the Board of
Directors;
27.The officers of the cooperative shall include the following, except
A. Chairperson
B. Secretary
C. Treasurer
D. General Manager
 Answer: D
28.Not a core Management team of a cooperative
A. General Manager
B. Accountant
C. Vice-Chairperson of the Board
D. Bookkeeper
Answer: C
The core management team of the cooperative composed of manager, cashier,
bookkeeper, accountant and other position as provided for in the Human
Resource Manual shall take charge of the day-to-day operations of the
cooperative.
29.The following are qualifications of accountant, cashier and bookkeeper of a
cooperative, except
A. Must have at least two (2) years of experience in cooperative or related
business.
B. Must be a bachelors’ degree holder in accountancy
C. Must be willing to undergo pre-service and/or in-service trainings in
accounting.
D. Must be of good moral character
Answer: B
Bachelors’ degree in accountancy must be required for Accountant, however,
Cashier and Bookkeeper must be knowledgeable in handling monetary
transactions, accounting and/or bookkeeping, respectively.
30.Rules on compensation of cooperative directors and/or officers, except
A. The directors and officers shall not be entitled to any per diem when, in the
preceding calendar year, the cooperative reported a net or loss had a
dividend rate less than the official inflation rate for the same year.
B. The compensation of officers of the cooperative and members of the
committee as well as the members of the committee may be fixed in the
bylaws.
C. Any compensation other than per diems may be granted to directors by a
majority vote of the members with voting rights at a regular or special
general assembly meeting specifically called for the purpose
D. No additional compensation including per diems shall be paid during the first
year of existence of any cooperative.
Answer: D
31.A contract entered into by the cooperative where the contratee is an officer of the
cooperative is voidable. Which is not exception?
A. Presence of such director in the board meeting wherein contract was
approved was not necessary to constitute a quorum for such meeting.
B. Vote of such director was not necessary for the approval of the contract.
C. Contract is fair and reasonable under the circumstances
D. The director is receiving per diem only and no other compensation.
Answer: D
32.A contract with an interlocking director may be ratified
A. If the presence of such director in the board meeting where the contract was
approved was not necessary to constitute a quorum and his vote is not
necessary for the approval of the contract.
B. May be ratified by a 2/3 vote of all the members with voting rights, present
and constituting a quorum in a meeting called for the purpose.
C. May be ratified by a majority vote of all the members of the Board present
and constituting a quorum in a meeting called for the purpose.
D. By the Board, provided that full disclosure of the adverse interest of the
directors involved is made at such meeting and that the contract is fair and
reasonable under the circumstances.
Answer: A
33.A director who, by virtue of his office, acquires for himself an opportunity which
should belong to the cooperative.
A. Disloyalty of a director
B. Conflict of interest
C. Interlocking director
D. Ultra-vires act
Answer: A
34.Which of the following is the best answer? A disloyal director of a cooperative shall
be liable for
A. Damages
B. Damages and must account for double the profits that otherwise would have
accrued to the cooperative.
C. Damages and must account for double the profits that otherwise would have
accrued to the cooperative, unless his act has been ratified by a ¾ vote of all
the members with voting rights
D. Damages and must account for double the profit that otherwise would have
Accrued to the cooperative by refunding the same, unless his act has been
 ratified by a ¾ vote of all the members with voting rights, present and
constituting a quorum.
Answer: D
35.Complaints for removal of an elected officer of a cooperative shall be filed with the
A. Board of Director
B. Ethics Committee
C. Mediation and Conciliation Committee
D. General Assembly
Answer: A
36.What is the required measure for the removal of an elective officer of a cooperative?
A. ¾ votes of the regular members of the general assembly present and
constituting a quorum.
B. ¾ votes of the members of the Board of Directors.
C. 2/3 votes of the regular members present and constituting a quorum.
D. 2/3 votes of the members of the Board of Directors.
Answer: A
37.ABC Cooperative was dissolved and thereby all of its members, assets, rights,
privileges, liabilities and obligations were transferred to DEF Cooperative. This
method of combination refers to
A. Merger
B. Consolidation
C. Merger and Consolidation
D. Neither merger no consolidation
Answer: A
38.The following cases/effects may apply to merger and/or consolidation of
cooperatives, except
A. No merger or consolidation shall be valid unless approved by 2/3 of all the
members eligible to vote of each of the constituent cooperatives at separate
general assembly meetings.
B. The constituent cooperatives shall be the surviving cooperative
C. The separate existence of the constituent cooperatives shall cease, except
that of the surviving cooperative
D. The dissenting members shall have the right to exercise their right to
withdraw their membership.
Answer: B
39.The primary purpose of this cooperative is to procure and distribute commodities to
members and non-members
A. Credit Cooperative
B. Producers Cooperative
C. Marketing Cooperative
D. Consumers Cooperative
Answer: D
40.Engages in medical and dental care, hospitalization, transportation, insurance,
housing, labor, electric light and power, communication and other services
A. Service Cooperative
B. Multipurpose cooperative
C. Producers Cooperative
D. Marketing Cooperative
Answer: A
41.Those cooperative the members of which are cooperatives shall known as
A. Primary
B. Secondary
C. Tertiary
D. Federation
Answer: D
42.The members of this cooperative are natural persons
A. Primary
B. Secondary
C. Tertiary
D. Federation
Answer: A
43.This cooperative is engaged in the following activities: promotes and undertakes
savings and lending services among its members, procure and distribute
commodities to members, and engaged in the business of insuring life and poverty
of cooperatives and their members
A. Credit cooperative
B. Consumers’ cooperative
C. Insurance cooperative
D. Multi-purpose cooperative
Answer: D
44.Every cooperative shall have the following open to its members and representatives
of the CDA for inspecting during reasonable office hours at its official address,
except
A. The books of the minutes of the meetings of the general assembly, board of
directors and committees
B. Certificate of Membership of every member
C. A copy of this Code and all other laws pertaining to cooperative
D. A copy of the articles of cooperation and by-laws of the cooperative
Answer: B
45.Which of the following statements on Annual Reports is false?
Statement 1: Every cooperative shall draw up an annual report of its affairs as of the
end of every fiscal year, and publish the same furnishing copies to all its members of
record.
Statement 2: A copy of the annual report shall be filed with the CDA within 60 days
from the end of every fiscal year.
A. Statement 1 only
B. Statement 2 only
C. Both statements
D. Neither statements.
Answer: D
46.Which of the following statement is false?
A. Duly registered cooperative which do transact business only with members
shall not be subject to any government taxes and fees imposed under the
Internal Revenue Laws and other tax laws
B. Cooperatives transacting business with both members and non-members
shall not be subject to tax on their transactions to members.
C. Even if dealing with non-members, cooperatives with accumulated reserves
and undivided net savings of not more than P10 million shall be exempt from
all national, city, provincial, municipal or barangay taxes of whatever name
and nature.
D. If dealing with non-members, cooperatives with accumulated reserves and
undivided net savings of not more than P10 million shall not be exempt from
all national, city, provincial, municipal or barangay taxes of whatever name
nature.
Answer: D
47.Cooperatives with accumulated reserves and undivided net savings of more than
P10 million shall pay the following taxes at the full rate, except
 A. Income Tax: On the amount allocated for interest on capitals: provided, that
the same tax is not consequently imposed on interest individually received by
members
B. Sales Tax: On sales to non-members: provided, however, that all
cooperatives, regardless of classification, are exempt from the payment of
income and sales taxes for a period of 10 years.
C. Donor’s Tax
D. None of the above
Answer: C
48.Not a privilege of a cooperative
A. Preferential treatment in the allocation of fertilizers and in rice distribution
shall be granted by the appropriate government agencies.
B. Cooperatives and their federations, such as market and/or lease of public
market facilities, stall or spaces.
C. Depositing their sealed cash boxes or containers, documents or any valuables
papers in the sale of the municipal or city treasurers and other government
offices free of charge.
D. Not given
Answer: D
49.A member who has no right to vote nor be voted upon and shall be entitled only to
such rights and privileges as the bylaws may provide
A. Regular member
B. Board of Director
C. Officer
D. Associate member
Answer: D
50.One of the following is a disqualification for membership of a cooperative
A. Minor
B. Government elective official
C. Employee of the Cooperative Development Authority, in a cooperative
organized by employees of the CDA.
D. Congressman representing the cooperative as a partylist in the House of
Representatives.
Answer: B
51.Grounds for termination of membership in a primary cooperative, except
A. Withdrawal
B. Death
 C. Insanity
D. Insolvency
Answer: D
52.Voluntary dissolution of cooperatives where no creditors are affected may be
affected by
A. Majority vote of the Board of Directors.
B. At least two-thirds vote of all the members with voting rights.
C. Majority vote of the Board of Directors and duly adopted by the affirmative
vote of at least majority of all the members with voting rights.
D. Majority vote of the Board of Directors and duly adopted by the affirmative
vote of at least two-third of all the members with voting rights.
Answer: D
53.In case of voluntary dissolution where creditors are affected, the cooperative
Development Authority (CDA) shall issue an order dissolving the cooperative and
directing such disposition of its assets as justice requires. The order of dissolution
shall set forth therein the following, except
A. The assets and liabilities of the cooperative.
B. The claim of any creditor.
C. The petition duly signed by a majority of its BOD
D. The number of members.
Answer: C
54.The following are grounds for involuntary dissolution of cooperatives, except
A. Violation of any law or regulation
B. Disinterest of members to continue operating due to continued losses.
C. Violation of any provisions of its by-laws
D. Insolvency
Answer: B
55.If a cooperative has not commenced business and operation within 2 years after the
date shown on its certificate of registration or has not carried on business for two
(2) consecutive years
A. The cooperative shall be automatically dissolved.
B. The Cooperative Development Authority shall automatically suspend its
operation.
C. The CDA shall send formal inquiry to the said cooperative as to the status of
its operation.
D. Shall warrant the CDA to strike off its name from the register and, for all
intents and purposes, the cooperative shall be deemed dissolved.
 Answer: C
56.Every cooperative whose charter expires by its own limitation or whose cooperative
existence id terminated by voluntary dissolution or is terminated by appropriate
judicial proceedings shall nevertheless be continued as a body cooperative for
________ after the time when it would have been so dissolved
A. 5 years
B. 3 years
C. 12 months
D. 2 years
Answer: B
57.Which of the following is not a source of capital of a cooperative?
A. Subsidies, donations legacies, grants, aids and such other assistance from
any local or foreign institution whether public or private
B. Loans and borrowings including deposits
C. Member’s share capital
D. None of them
Answer: D
58.Where a member of a cooperative dies
A. His heir shall inherit the shares of the decedent
B. The total shareholding of the heir does not exceed 20% of the share capital
of the cooperative
C. Where the shareholding of the heir exceeds 20% of the share capital, the
shares in excess will revert to the corporative upon payment to this heir of
the value of such shares
D. The heir shall automatically succeed.
Answer: D
The heir must qualify and is admitted as member of the cooperative.
59.Which statement is false? No member shall transfer his share or interest in the
cooperative or any part thereof unless
A. He is in need of money.
B. The assignment is made to the cooperative or to a member of the
cooperative or to a person who fails within the field of membership of the
cooperative.
C. He has held such share contribution or interest for not less than one (1) year.
D. The board of directors has approved such assignment.
Answer: A
60.The term “share” refers to a unit of capital the par value of which may be fixed at
any figure but not more than
A. P1,000
B. 5,000
C. 500
D. 100
Answer: A
61.A cooperative may not invest its capital in any of the following
A. In shares or debentures or securities of any other cooperative without the
need of approval from the general membership.
B. In any reputable bank in the locality, or any cooperative.
C. In securities issued or guaranteed by the Government
D. In real estate primarily for the use of the cooperative or its member
Answer: A
62.Cooperatives under this Code shall be subject to an annual audit by an auditor who
satisfies all the following qualifications, except
A. He is independent of the cooperative being audited and of any subsidiary of
the cooperative.
B. He is a member of any recognized professional accounting or cooperative
auditor’s association with similar qualifications
C. He is duly accredited by the Board of Accountancy.
D. He is an accredited auditor by the Cooperative Development Authority even if
not accredited by the Board of Accountancy.
Answer: D
63.Rules on the right of a member of the cooperative to examine the books, except
A. Examination should be made during reasonable hours on business days.
B. He may be furnished a copy of excerpts from the records without charges
except the cost of reproduction.
C. Any officer of the cooperative who shall refuse to allow any member of the
cooperative to examine and copy excerpts from its records shall be liable to
such member for damages.
D. The member who demanded a copy of the cooperative records can use the
same for any purpose he shall so desire.
Answer: D
The purpose of the member must be legitimate and he must act in good faith.
64.Which of the following statements is false? The net surplus of the cooperative
 A. Shall be determined in accordance with its by-laws
B. Shall be determined at the close of every fiscal year and at such other time as
may be prescribed by the by-laws
C. Shall be subject to income tax even if the transaction of the cooperative is
with its members only.
D. Shall not be construed as profit but as excess of payments made by the
members for the loans borrowed, or the goods and services bought by them
from the cooperative and which shall be deemed to have been returned to
them if the same is distributed as prescribed herein
Answer: C
65.The net surplus of every cooperative shall be distributed as follows, except
A. An amount for the reserve fund – at least 20% of net surplus
B. An amount for the reserve fund – at least 10% of net surplus
C. An amount for the education and training fund – not more than 10% of net
surplus
D. An optional fund, a land building, community development, and any other
necessary fund – not exceeding 10%
Answer: A