a prelude to joining a cooperative

introducing

PRE-REGISTRATION SEMINAR (PRS)

I LAYUNIN NG PAGSASANAY
 The
Par. “b”
Article 10 Cooperative
Section 3
of RA9520 and Your
of RA6939
Role
Article 10 of RA9520
“Organizing a Primary Cooperative – Fifteen
(15) or more natural persons who are Filipino
citizens, of legal age, having a common bond of
interest and are actually residing or working in
their intended area of operation, may organize a
primary cooperative under this code: Provided,
That a prospective member of a primary
cooperative MUST HAVE COMPLETED a PMES.”
 Paragraph “e”, Section 3 of RA6939

2 – The Authority shall have the following powers,

functions and responsibilities:
e) Register all cooperatives and their federations
and unions, including their division, merger,
consolidation, dissolution or liquidation. It shall
also register the transfer of all or substantially
all of their assets and liabilities and such other
matters as may be required by the Authority.
The Cooperative and Your Role
- The prospective member will get to know what a
cooperative is, its purpose for existence and goals,
its organizational and management structure,
functions and responsibilities of its officers and
committees, sources and uses of funds, allocation
and distribution of net surplus, differences from
other business entities, qualifications and
requirements for membership, obligations and
responsibilities of members, rights and privileges of
members, and termination of membership.
II
WHY COOPERATIVE ?
A better way of doing business and balance to the economy
Article 12, Section 15
of the Constitution

The Congress shall create an

agency to promote the viability
and growth of cooperatives as
instruments for social justice
and economic development.
III
Cooperative as
Social and Business
Enterprise
What is a COOPERATIVE
(under Article 3 of RA 9520)

Is an
autonomous
In accordance&with
duly registered
universally
Making accepted
equitable
association
Who have of
contributions to
To Patronizing
cooperative
persons,
With a
achieve common
their
voluntarily their
principles.
joined
bondthe capital
products
of and
interest,
social, economic
together
required and
services
cultural needs and
And accepting a fair
aspirations,
share of the risks &
benefits of the
undertaking
KAHULUGAN NG KOOPERATIBA
 COOPERATIVE
PRINCIPLES
AND PRACTICES
1st Principle:
VOLUNTARY AND OPEN MEMBERSHIP

Cooperatives are voluntary organization open to all persons able

to use their services and willing to accept the responsibilities of
membership without gender, social, racial, political or religious
discrimination.
Bukas at kusang loob na pagsapi

Walang sapilitan

Walang diskriminasyon
2nd Principle:
DEMOCRATIC MEMBER CONTROL

Cooperatives are democratic organizations controlled by their

members, who actively participate in setting their policies and
making decisions.
DEMOKRATIKONG PAMAMAHALA

Mga kasapi, bilang pangkalahatang kapulungan, ang humihirang sa

mga mamumuno
Pagkilala sa desisyon ng nakararami
Bilang ng kasapi at hindi halaga ng saping puhunan
Isang kasapi, isang boto [Art 37]
3rd Principle:
MEMBER ECONOMIC PARTICIPATION
Members contribute equitably to and control the capital of their
cooperative. At least part of that capital is usually the common
property of the cooperative.
PAKIKIISA NG KASAPI SA PANGKABUHAYANG
ASPETO NG LIPUNAN

 ang mga miyembro ay pantay na nagbibigay ng kapital na siyang ginagamit ng

kooperatiba sa kanyang negosyo;
 malayang pagkontrol ng miyembro sa kapital;
 limitadong kompensasyon;
 limitadong interes sa kapital
4th Principle:
AUTONOMY AND INDEPENDENCE

Members contribute equitably to and control the capital of their

cooperative. At least part of that capital is usually the common
property of the cooperative.
PAGSASARILI AT KALAYAAN

isang samahang tinutulungan ang sarili sa pamamagitan ng

pagbibigay ng saping puhunan o kontribusyon ng bawat
kasapi.
5th Principle:
EDUCATION, TRAINING AND INFORMATION

Cooperatives provide education and training for their members,

elected representatives, managers, and employees so they can
contribute effectively to the development of their cooperatives.
PATULOY NA EDUKASYON, PAGSASANAY AT KAALAMANG
PANG-KOOPERATIBA

 paglalaan para sa edukasyong ng mga kasapi, mga pinuno at mga

kawani at sa pangkalahatang publiko

 Itinakda upang palakasin ang kooperatiba

6th Principle:
COOPERATION AMONG COOPERATIVES

Cooperatives serve their members most effectively and

strengthen the cooperative movement by working together
through local, national, regional and international structures.
PAGTUTULUNGAN NG MGA KOOPERATIBA

masigasig na pakikipagtulungan sa ibang mga kooperatiba sa antas

na lokal, nasyonal at internasyonal

Pagsapi sa nakatataas na kooperatiba

7th Principle:
CONCERN FOR COMMUNITY

Cooperatives work for the sustainable development of their

communities through policies approved by their members.
PAGPAPAHALAGA SA KAPAKANAN NG
KOMUNIDAD

 Ang kooperatiba ay kumikilos para alalayan sa pag-unlad ang

kanilang pamayanan sa pamamagitan ng mga patakaran na
inabrubahan ng mga kasapi nito.
1. Capital Formation

Capital structure highly influences the success and failure of

cooperatives. Past failures proved that capital should really be
contributed by the members. This is because they are self-help
community projects. There would be better cooperation when
money of the members form the capital of the association, Dole
–outs often result to competition for personal advantages.
Cooperatives have non-withdrawable savings programs. This
provision educates the members towards community
centeredness and inculcates the habit of thrift.

Capital build-up coming from other sources do not help much.

Borrowing is tolerated but the organization will answer for it.
Borrowing has its advantages. It dissipates to outsiders the
members’ benefits from the business operation. It also adds
financial burdens to management.
2. Cash Trading

This is business done on cash and carry basis. The customer

enjoys at least the use of the goods and services for the cash
payment he/she gives. Cash and carry does not exclude regular
salary deduction for regularly employed members.
Cash trading promotes equality since anybody with cash can
enjoy the service and patronage. This practice can train
members to observe the habit of balanced spending.
Furthermore, the cooperative would be able to avoid bad debts,
and stabilize business operations. Finally, it is a way of
increasing growth.
3. Selling Market Price

Cooperatives offer goods and services at prevailing market

prices. This promotes stability. It can cope with operational
expenses and cover up the negative effect of shrinkage,
depreciation, and losses. It helps maintain the price of goods.
Cooperatives can avoid destructive competition. This could
invite retaliation from competitors which may create unstable
market situation. This also has an accompanying difficulty, of
estimating operating cost with accuracy.
4. Constant Expansion

Cooperatives are associations for the development and business

of community services. As organizations, they have to grow for
community services. Expansion is a must. It is done intensively
and extensively. New members should be recruited. More
capital should be provided. Members undertake continuous
education, officers’ training, management practices, financial
supervision and worthwhile activities.
5. Quality Standardized Goods

Cooperatives are intended to develop communities through the

production of high-quality goods and provision of better services.
Cooperatives could help by patronizing only standardized
products and services of high quality. This indirectly forces goods
and services to improved.
Different types of cooperatives should strive for improved goods
and services to stand competition with business establishments.
They would be instrumental in improving life in the country.
6. Cooperative wholesale or interlending
(cooperative bank)

Cooperatives can be organized with enough people and capital.

They answer to the needs of the community. Needs arise when
there are people. The expansion of membership may result in
wholesale business. In fact, to be effective, wholesale business,
interlending (cooperative bank) could be done by primary
societies. Defects from retail business can be avoided.
The benefits from the wholesale are considerable. Members can
market and acquire the goods and services at the right price and
quality. They can even lower the raise savings. They can also
influence the production of badly needed goods and services.
7. Minimize Expenditures

A significant factor favoring the growth of cooperatives is being a

community project. Officers do not receive remuneration. If
they get compensation, it is only in the form of allowances, per
diems or honoraria. When audit shows the cooperative is not
capable or afford the minimum wage, only employees get paid
regularly. The government can give exemption. Furthermore,
laws may allow exemption from income and sales taxes.
The possible minimization of expenses favoring cooperatives
should not be taken as a remedy to cover up the weakness of the
system. It is not to be conceived as a form of dole-outs, rather, it
is considered as motivation to make the movement stand on its
own and soon attain its objectives. Once its objectives are
achieved, the movement can take its rightful place in the
development of the country.
COOPERATIVES are both associations of people and
business enterprises. They are distinguished from other
organizations by their philosophy, nature and character.
Failure to appreciate their true nature and character
deviates from cooperative principles and ideals and loses
sight of the ultimate objective of the cooperative
movement.
1. Cooperatives are service oriented
Cooperatives are organized to serve their members by
providing goods and services at reasonable cost.
2. Cooperatives are community-oriented
Cooperatives work for the welfare of their members by
integrating themselves into the life of the community in
particular and the nation in general.
3. Cooperatives are people-oriented
Cooperatives are not merely economic instruments
concerned with dividends and related economic and financial
returns. They are the mechanisms of change for total human
development. This means the total development of man as
human being in all the economic, political, cultural and
spiritual aspects.
4. Cooperatives are owned, managed and patronized
by members.
Cooperatives are member-owned, member-controlled and
member-used. Ownership is a very important factor in the
success of any cooperative. It is very important that
members have full authority to manage and control their
cooperative.
5. Cooperatives are business enterprises
Cooperatives engage in businesses with social responsibility.
They play a meaningful economic role in the community life by
servicing and performing as efficiently and responsively as the
other financial and business enterprises. Cooperatives have to
generate surplus to be able to continually improve and expand its
services.
6. Cooperatives develop best through self-help and
mutual respect
Robert Owen advocated the philosophy of self-help that inspired the
“Rochadale Pioneers” to organize. He said “ if you want some thing
done, do it yourself”. This philosophy has been responsible for the
success of many cooperatives all over the world. - and it is the best
alternative for the poor in any country to unite and help themselves
out of their depressed condition.
This is not to say that they should not be assisted. But
assistance from outside, whether technical or financial, must
not stifle but stimulate initiative, self-help and self-reliance.
The principle of subsidiarity also applies – that before asking
or soliciting aid from the outside, self-determination and self-
capability should be considered.
7. Cooperatives serve best when they answer the real and
felt needs of the members
It is important therefore that proper approaches and techniques
are employed to ensure that the real needs of the members are
identified and recognized before any cooperative is organized.
The assisting agency or agencies should make the real need be
felt by the members.
8. Cooperatives develop best from bottom to top
Being mass-based organizations, cooperatives develop
best from the bottom to top. Organizationally ,their
development should be from the primary level to the
secondary, tertiary and up to the apex.
9. The development of cooperatives is enhanced through a multi-
sectoral approach
The government, non-government, and the cooperative sector – must
play, a multi-sectoral approach can ensure that all aspects of the
development process are considered. This enhances the smooth and
continuous development of the cooperatives. This approach involves
the participation of all sectors from the planning stage to the
implementation, evaluation, and monitoring of all activities.
Collaboration • Hears & approves develop-
mental plans & budget
• Implements policies, • Elect the members of the
programs BOD, Audit Committee &
• Performs day-to- Election Committee
day business & • Hears & accepts reports,
operational AFS & hiring of an external
activities STAFF & auditor
EMPLOYEES • Has the final decision
MEMBERS

B.O.D. Formulates:
• Plans, Programs & Activities
• Budget
• Policies
• Appoints other officers
• Approves hiring of staff &
employees

BOARD OF DIRECTORS Other Officers:

& OTHER OFFICERS • Performs their duties as
prescribed in the By-laws
and Rule 7 of the IRR
At least 15 natural persons for primaries (while juridical can be
members of federations or unions)

At least 5 persons (natural & juridical persons can be

stockholders at the same time)

At least 2 or more persons

Only 1 person
Must be registered with the CDA

Must be registered with the SEC

Mere agreement of partners can be a partnership.

However, it is better if registered under SEC

No separate juridical personality from owner but

business name should be registered with the DTI
Articles of Cooperation, By-Laws, Treasurer’s Affidavit,
Economic Survey & Surety Bond

Articles of Incorporation, By-Laws & Bank Statement

Contract of Partnership

Application Form
Member contributes based on CBU program (limited to
1o% of the cooperative’s total subscribed capital)

Stockholders pay for amount of stocks they want to buy

Partners contribute cash or services

Only owner contributes capital

Often the Board of Directors, but General Assembly
has final decision

Based on capital contribution

Partners make a collective decision

Only 1 person decides

One Member One Vote, No proxy voting allowed

Vote proportional to stocks owned, proxy voting allowed

Vote proportional to interest

No voting occurs as it concerns only 1 person

Limited to member’s subscribed share capital

Limited to authorized capital

Unlimited as to partner (except limited partnership)

Unlimited as to owner
Net Surplus non-taxable, shareholders pay taxes on interest
on share capital received by them

Income tax & VAT, stockholder pay taxes on dividends

received

Partners pay tax on shares as partners

Income tax of owner

Cooperative continues, heirs become members if qualified

Corporation continues, heirs inherit stocks

Partnership automatically dissolves

End of business operation unless heir/s takes over the business

Service above profit

Profit

Profit or service

Profit
CATEGORIES OF COOPERATIVES
(IN TERMS OF MEMBERSHIP)

[Art.23(2a),RA9520]
The
The 1st Category is a IN
The2 1stcategory
nd Categoryisisa a
TERMS
PRIMARY
SECONDARY
PRIMARY OF MEMBERSHIP,
COOPERATIVE
COOPERATIVE
COOPERATIVE
athe
the
theCooperative
members
membersofof
members ofshall be
which
which
whichare
are
categorized
are natural
primary into:
persons.
cooperatives.
INDIVIDUALS.
CATEGORIES OF COOPERATIVES
(IN TERMS OF MEMBERSHIP)

[Art.23(2a),RA9520]
The
The 1st Category is a IN
The2 2rdcategory
nd Categoryis isa a
TERMS
PRIMARY
SECONDARY
SECONDARYOF MEMBERSHIP,
COOPERATIVE
COOPERATIVE
COOPERATIVE
athe
the
theCooperative
members
membersofof
members ofshall be
which
which
whichare
are
categorized
are natural
primary
PRIMARY into:
persons.
cooperatives.
cooperatives.
CATEGORIES OF COOPERATIVES
(IN TERMS OF MEMBERSHIP)

[Art.23(2a),RA9520]
The
The 1st Category is a IN
The23rdcategory
nd Categoryisisa a
TERMS
PRIMARY
SECONDARY
TERTIARY OF MEMBERSHIP,
COOPERATIVE
COOPERATIVE
COOPERATIVE
athe
the
the Cooperative
members
members
membersof ofshall
ofwhich
whichbe
whichare
are
categorized
are natural
primary into:
persons.
cooperatives.
secondary cooperatives.
 TYPES OF COOPERATIVE

1. CREDIT
COOPERATIVE Promotes and undertakes:
savings and lending services
among its members.
generates common pool of funds
in order to provide financial
assistance and other related
financial services to its members
for productive and provident
purposes.
 TYPES OF COOPERATIVE

2. CONSUMERS COOPERATIVE

procures and
and distributes retail
commodities to
members as well as to
non-members.
 TYPES OF COOPERATIVE

3. PRODUCERS COOPERATIVE
undertakes joint
production activities
whether
• agricultural or
• industrial in nature.
 TYPES OF COOPERATIVE

3. PRODUCERS COOPERATIVE

formed and operated by its members to

undertake the
• production and processing of raw
materials or
• goods produced by its members into
finished or processed products for
sale by the cooperative to its
members and non-members
 TYPES OF COOPERATIVE

3. PRODUCERS COOPERATIVE (cont.)

Any end product 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
product of the cooperative and its
members.
 TYPES OF COOPERATIVE

4. MARKETING COOPERATIVE

engages in the supply of

production inputs to
members and markets
their products.
 TYPES OF COOPERATIVE

5. SERVICE COOPERATIVE
engages in:
 medical and dental care
 hospitalization
 transportation
 insurance
 housing
 labor
 water distribution
 power generation
 communication
 other services
 TYPES OF COOPERATIVE

6. MULTI-PURPOSE COOPERATIVE
combines two (2) or more of the
business activities of these different
types of cooperatives.
 TYPES OF COOPERATIVE

7. ADVOCACY COOPERATIVE
promotes and advocates cooperativism
among its members and the public through
socially-oriented projects, education and
training, research and communication, and
other similar activities to reach
out to its intended beneficiaries.
 TYPES OF COOPERATIVE

8. AGRARIAN REFORM COOPERATIVE

Is one organized by marginal farmers majority of which are
agrarian reform beneficiaries for the purpose of:
• developing an appropriate
system of land tenure
• land development
• land consolidation or
• land management
in areas covered by
agrarian reform
 TYPES OF COOPERATIVE

9. COOPERATIVE BANK
organized
for the primary
purpose of providing
a wide range of
financial services to
cooperatives and their
members.
 TYPES OF COOPERATIVE

10. DAIRY COOPERATIVE

is one whose members
are engaged in the
production of fresh
milk which may be
processed and/or
marketed as dairy
products.
 TYPES OF COOPERATIVE

11.EDUCATION COOPERATIVE
Is one organized for the
primary purpose of owning and
operating licensed educational
institutions, notwithstanding the
provisions of Republic Act No.
9155, otherwise known as the
Governance of Basic Education
Act of 2001.
 TYPES OF COOPERATIVE

12. ELECTRIC COOPERATIVE

Is one organized for the primary purpose of
undertaking:
• power generation
• utilizing renewable energy sources
• including hybrid systems
• acquisition and operation of sub-transmission
or distribution to its household members.
 TYPES OF COOPERATIVE

13. FINANCIAL SERVICE COOPERATIVE

Is one organized for the primary
purpose of engaging in:
• savings and
• credit services and
• other financial services
 TYPES OF COOPERATIVE

14. FISHERMEN COOPERATIVE

Is one organized by
marginalized
fishermen in localities
whose products are
marketed either as
fresh or processed
products.
 TYPES OF COOPERATIVE

15. HEALTH SERVICES COOPERATIVE

Is one organized for the primary
purpose of providing medical,
dental and other health
services.
TYPES OF COOPERATIVE

16. HOUSING COOPERATIVE

is one organized to assist or provide
access to housing for the benefit of its
regular members who actively
participate in the savings program for
housing. It is co-owned and controlled
by its members.
 TYPES OF COOPERATIVE

17. INSURANCE COOPERATIVE

Is one engaged in the business in

insuring life and property of
cooperatives and their members.
 TYPES OF COOPERATIVE

18. TRANSPORT COOPERATIVE

Is one which includes land and sea
transportation, limited to small
vessels, as defined or classified
under the Philippine maritime
laws, organized under the
provisions of this Code.
TYPES OF COOPERATIVE

19. WATER SERVICES

COOPERATIVE
Is one organized to own,
operate and manage water systems
for the provision and distribution of
potable water for its members and
their households.
TYPES OF COOPERATIVE

20. WORKERS COOPERATIVE

Is one organized by workers, including the
self-employed, who are at the same time the
members and owners of the enterprise. Its
principal purpose is to provide employment
and business opportunities to its members
and manage it in accordance with
cooperative principle.
 TYPES OF COOPERATIVE

21. Other Types of

Cooperative
may be determined
by the COOPERATIVE
DEVELOPMENT
AUTHORITY (CDA)
IV
Organization and Management
Structure of Cooperatives
 GENERAL ASSEMBLY

Audit Board of Election

Committee Directors Committee

Secretary
Treasurer

Mediation and ETHICS Education & Other

Conciliation COMMITTEE Training committees
Committee Committee
MANAGEMENT
STAFF
 To fair and equitable access to co-op services, benefits and proceeds
or net surplus and risks
To vote and be voted upon (specifically for members in good
standing in accordance to its by-laws and RA 9520)

To be properly informed

To participate in cooperative activities

To be heard and seek redress

To due process and just punishment

To equal protection of law
1. To contribute share capital and participate in savings mobilization

2. To patronize cooperative products and services

3. Pay other financial obligations on time
4. To vote and be voted upon
5. To share their views and participate in decision-making (esp. during AGA)

6. To monitor performance for the betterment of the cooperative

7. To attend and be actively involved in all cooperative activities

8. Participate in the membership-education program

9. To help fellow members
ART.32
ART.5 Shall The
ART.33 mean general
The general
the full
assembly
membership shall
assembly of be
shall the
be
the
highest
composed
cooperativepolicy-making body
dulyof assembled
such
of the
for the cooperative
purpose who and shall
of exercising
members are
exercise
all such and
the rights powers as are
performing
entitled
all to votepertaining
the inobligations
stated this R.A.9520,
underin
the
to articles
thecooperative,
articles provided of
ofas cooperationby
cooperation
R.A.
and in9520, andArticles
its
the by-laws by-laws
of theof
Cooperation
of and By-laws.
the cooperative.
cooperative.
To determine & approve amendments to the articles of
cooperation & by-laws

To elect & remove the members of the Board of Directors,

and to remove them for cause

To approve developmental plans of the cooperative

To decide on issues brought to them

To hear and pass upon the reports of the Board of Directors,
Officers and committees

To hear & approve the annual work plan and budget

To determine & approve the hiring of the services on an

external auditor

To hear the result of any audit, examination or investigation

of cooperative affairs
 j.
e.g.
p. Review
Formulate
l.Appoint
r.
n. Act on &
Present
Report
Appoint and
the
to
to
the and
theapprove
reviewof
terminate,
recommendation
the general
general
members // the of
c.Evaluate
d.a. Review
Provide
the Ethics
the
based
the of
on the
vision,
just the annual
capability
over-all
representative
&Committee
assembly
mission
cause,
organizational
Mediation and &cases
on the
the
and
Conciliation
plan
policy
goals
General&ofdirection
involving budget
qualification
financial,
performance the
Manager
Committee,
operational and
violations
social
and
Ethics and
andofChief
the Code
achievements
cooperative
or
Committee,
structures
performance
Governance
recommend
recommend
of the
Education
Executive forreports
and
for
cooperative
and Ethical
thethe
Training
Officer (CEO)
Standards
Committee
approval
approval and
of of other
thethe Officers
General
General /
as
/ specified
h. in the
Establish
Representative
Representative Code and
risk
Assembly
k. Establish
q.f. Present to thepolicies
general &/
b. the
s. Formulate
Review,
By-lawssuch
Perform
Assembly
monitor
of
engagement
the
other
management &
cooperative
offunctions
system
the
o. as procedures
representative
Ensure compliance
evaluate the
may be prescribedforbythe
assemblythe
in the
development
services
policies of
which
effective
cooperative an external
require
operation
with the by &
By-laws or authorized
effectiveness of the
the under
plan
confirmation
auditor
regulations
m. i. Decide-election
Establish
ensure
general /
programs,
as
proper provided
ofperformance
the CDA and
related
representative
projects & by-
the
otherlaw, the
statutory
evaluation cooperative
requirements
involving system
implementation
assembly
cases
activities the ofatsuch all
laws, and regulations
oflevels
appropriate government
Election Committee and
agencies
its members
 ART.30 Termination of
ART.28 Application Membership - Terminate the
Approve or disapprove an membership by means of
applicant for membership Expulsion and Withdrawal

ART.56 Bonding of Accountable Officers -

Every director, officer and employee
ART.40 Meetings of handling funds, securities or property on
the Board - Hold behalf of the cooperative shall be covered
regular meetings by a surety bond to be issued by a duly
every month registered insurance or bonding company
for the faithful performance of their
respective duties and obligations.
V
Mandatory
Allocation and Distribution
of Net Surplus
Capital Sources of Funds
Capital Sources.- Cooperatives may derive their capital
from any or all of the following sources:
• Member’s share capital;
• Loans and borrowings including deposits;
• Revolving capital which consists of the deferred
payment of patronage refunds, or interest on share
capital; and
Capital Sources of Funds
• Subsidies, donations, legacies, grants, aids and such other
assistance from any local or foreign institution whether
public or private: Provided, That capital coming from such
subsidies, donations, legacies, grants, aids and other
assistance shall not be divided into individual share capital
holdings at any time but shall instead form part of the
donated capital or fund of the cooperative.
Upon dissolution, such donated capital shall be
subject to escheat.
Capital Sources of Funds

ART. 73. Limitation on Share Capital Holdings.

No member of primary cooperative other than

cooperative itself shall own or hold more than
ten per centum (10%) of the share capital of the
cooperative.
Capital Sources of Funds
ART.75. Capital Build-Up.
The bylaws of every cooperative shall be
provided for a reasonable and realistic member
capital build-up program to allow the continuing
growth of the members’ investment in their
cooperative as their economic conditions continue
to improve.
Manner of Distribution of
Net Surplus in the
Cooperative
 ALLOCATION AND DISTRIBUTION OF NET SURPLUS
Net Surplus. – Notwithstanding the provisions of existing
laws, the net surplus of cooperatives shall be determined in
accordance with its by-laws. Every cooperative shall determine its
net surplus at the close of every fiscal year and at such other times
as may be prescribed by the by-laws.

The net surplus shall not be construed as profit but as an

excess of payments made by the members for the loans borrowed,
or the goods and services availed by them from the cooperative or
the difference of the rightful amount due to the members for their
products sold or services rendered to the cooperative including
other inflows of assets resulting from its other operating activities
and which shall be deemed to have been returned to them if the
same is distributed as prescribed herein.
ALLOCATION AND DISTRIBUTION OF NET SURPLUS
Order of Distribution. – The net surplus of every
cooperative shall be distributed as follows:

(1) An amount for the reserve fund which shall be at

least ten per centum (10%) of net surplus: Provided,
That, in the first five (5) years of operation after
registration, this amount shall not be less than
fifty per centum (50%) of the net surplus:
ALLOCATION AND DISTRIBUTION OF NET SURPLUS
"(2) Not more than Ten percent for Education and Training
Fund (ETF). The fund shall provide for the training,
development and similar other cooperative activities
geared towards the growth of the cooperative movement:
(a) Half of the amounts transferred to the education and
training fund annually under this subsection shall be spent
by the cooperative for education and training purposes;
while the other half may be remitted to a union or
federation chosen by the cooperative or of which it is a
member.
ALLOCATION AND DISTRIBUTION OF NET SURPLUS
3. Not less than three percent (3%) for Community
Development Fund (CDF). The Community
Development Fund shall be used for projects or
activities that will benefit the community where
the cooperative operates.
4. Not more than seven per centum (7%) for
Optional Fund, the Optional Fund shall be used
for a land and building, and any other necessary
fund.
ALLOCATION AND DISTRIBUTION OF NET SURPLUS

5. Theremaining net surplus shall be made available

to the members in the form of Interest on Share
Capital (ISC)not to exceed the normal rate of
return of investments and Patronage Refunds:
Provided, That any amount remaining after the
allowable interest and the patronage refund have
been deducted shall be credited to the reserve
fund.
 CAPITALIZATION AND ACCOUNTING PROCEDURES OF COOPERATIVES

Sec. 9. Interest on Share Capital (ISC) - Interest on Share Capital shall not
exceed the Rate of Return on Investment. Unless otherwise provided for
in the By-laws of the cooperative, share capital shall earn interest; the
Rate of Interest shall be computed as follows:

Rate of ISC = X (Net Surplus less Statutory Reserves)

Total Average Share Month

Where: X shall be a percentage to be determined by the Board of Directors

allocated for interest on share capital.
CAPITALIZATION AND ACCOUNTING PROCEDURES OF COOPERATIVES

No allocation of interest on share capital shall be made

without the approval of the Board of Directors which may
increase or decrease any or both.

Payment of interest, unless otherwise provided for in the

By-laws, must be made on such date as may be determined
by the Board of Directors. The General/Representative
Assembly, however, upon the recommendation of the Board
of Directors, may defer the payment of such interest
including Patronage Refund to raise Revolving Capital.
CAPITALIZATION AND ACCOUNTING
PROCEDURES OF COOPERATIVES

• No cumulative interest shall be allowed for any kind

or class of share issued by the cooperative.

• Share Capital shall receive a strictly limited Rate of

Interest
CAPITALIZATION AND ACCOUNTING
PROCEDURES OF COOPERATIVES

Patronage Refund. The principle of

Patronage Refund is a principle of equity
wherein an equal right of members to
participate in the organization and to
equitably share in the benefits accruing is
established.
CAPITALIZATION AND ACCOUNTING PROCEDURES OF
COOPERATIVES
Under the principle, the Net Surplus shall not be construed as profit,
but as excess payments made by them from the cooperative and which
shall be deemed to have been returned to them if the same is
distributed as prescribed by the Code and by prescribed Implementing
Rules and Regulations . Provided that:
1. the amount allocated for patronage refund shall not be less than
thirty percent (30%) of the net surplus after deducting the
statutory reserves based on the principle of equity; and
2. in no case shall the rate of patronage refund be more than twice
the rate of interest on share capital.
 CAPITALIZATION AND ACCOUNTING PROCEDURES OF COOPERATIVES

Formula in Computing the Patronage Refund (PR):

Rate of PR = X (Net Surplus less Statutory Reserves)

Interest on Loans

Where: X shall be a percentage to be determined by the Board of Directors

allocated for interest on Patronage Refund
Sample Computation
Statement of Operation
December 31, 2014
Income:
Interest on Loan 100,000
Membership fee 5,000
Other Income 3,000
Total 108,000
Less Expenses:
Salaries and wages 12,000
Organizational expenses 20,000
Taxes and Licenses 1,000
bond of Account Officers 1,000
Total 34,000
Net Surplus 74,000
Sample Computation
Sample Computation
Assuming that the following percentages were determined by the
Board of Directors :

Assuming 70% of 22,200 is for ISC

15,540.00

Assuming 30% of 22,200 is for PR

6,660.00
Sample Computation
Computation of Interest on Share Capital
Sample Computation
VI
Organization and Registration
of Cooperatives
Organization and Registration
Organization of Primary Cooperative :

1. Fifteen (15) or more natural persons who are Filipino citizens, of

legal age, having a common bond of interest and are actually
residing or working in the intended area of operation; and

2. Prospective member of a primary cooperative must have

completed a Pre-Membership Education Seminar (PMES).

3. Any newly organized primary cooperative may be registered as

multipurpose cooperative only after compliance with the
minimum requirements for multipurpose cooperatives to be set
by the Authority. A single-purpose cooperative may transform
into a multipurpose or may create subsidiaries only after at least
two (2) years of operations.
Organization and Registration

4. Capital Requirements - All primary cooperatives

shall be organized with share capital. The authorized
share capital of a cooperative shall be provided for in
its Articles of Cooperation. At least twenty five percent
(25%) of the authorized share capital shall be
subscribed by the members and at least twenty five
percent (25%) of the subscribed share capital shall be
paid by the members prior to registration.
Organization and Registration

5. The paid up capitalization requirement for primary

cooperatives shall not be less than Fifteen
Thousand Pesos (P15,000.00) except for
multipurpose cooperative which should have at
least One Hundred Thousand (P100,000.00) or as
required by the feasibility study whichever is
higher.
Organization and Registration

In the case of Transport Cooperatives,

capital requirements shall be in accordance
with Rule V Section 5 of IRR, RA9520.
 Organization and Registration
TYPE OF TRANSPORTATION SERVICE MINIMUM MINIMUM NO.
COOPERATIVE CAPITALIZATION OF UNITS

A. LAND
Tricycle P 15,000.00 5
Jeepney P 30,000.00 5
Taxi P 30,000.00 5
AUV/FX/Van P 30,000.00 5
Mini Bus/Bus P P 50, 000.00 2
Trucks for Hire P 50, 000.00 2
B. WATER
Ship P 10,000,000.00 1
Ferry Boat P 5,000,000.00 1
Motorized Banca P 100,000.00 1
 Organization and Registration
Other Specific Requirements for each type of
cooperative
Type of Coop Additional Requirements
Agrarian Reform Beneficiaries a. Mother CLOA in case of plantation based ARBs; and
Cooperative b. Written verification from Department of Agrarian
Reform (DAR) to the effect that the cooperative
organization is needed and desired by the
beneficiaries, economically viable, at least majority of
the members are agrarian reform beneficiaries.

Housing Cooperatives Copy of the Pre-Feasibility Study of the housing projects

undertaking certified as reviewed by National Housing
Authority (NHA).

Transport Cooperatives Certification of Cooperative Education and Transport

Operation Seminar (CETOS) by Office of Transport
Cooperatives (OTC)
 Organization and Registration
Other Specific Requirements for each type of cooperative
Type of Coop Additional Requirements
Water Service Cooperative a. Proof of Land ownership
b. Well Drilling Data
Professional Service a. Undertaking to comply with the regulatory
Cooperative requirements prescribed by other regulatory
agency;
b. Favorable endorsement from the Governing Board
of the respective profession;
c. Tax Identification numbers of all cooperators; and
d. Photocopy of valid individual Professional License
of all members.
Labor Service Cooperative a. Undertaking to comply with the regulatory
requirements prescribed by other regulatory
agency;
b. Cooperators/Members’ Profile and
c. Tax Identification numbers of all cooperators;
 Organization and Registration
Other Specific Requirements for each type of cooperative

Type of Coop Additional Requirements

Health Service Cooperative a. Undertaking to comply with the regulatory requirements

prescribed by other regulatory agency;
b. Favorable endorsement/written certification from
Concerned health related professional regulatory Board
attesting to the fact that the concerned health related
profession is not prohibited from forming a cooperative for
the purpose of engaging in the subject undertaking;
c. Tax Identification numbers of all cooperators; and
d. Detailed Feasibility Study (expressly mentioning whether the
undertaking is primary, secondary or tertiary level hospital,
diagnostic center, spa, and wellness center, home for the
aged, lying in, drop-off center, etc. and specifying the
financial, technical including architectural, plans, etc.)
Registration of Secondary and Tertiary cooperatives
Membership
Category Federation Union
Secondary 10 primary 15 primary coops
coops
Tertiary 10 secondary 15 secondary
coops coops

Capitalization – minimum paid-up share capital

Category Federation Union
Secondary Php 500,000.00 Not Applicable

Tertiary Php 5 Million or Not Applicable

feasibility study
requirements
 Economic Survey (Art. 11 of RA9520) (Economic
Survey.rtf)

Articles of Cooperation (ARTICLES OF

COOPERATION.docx ) and By-laws (BY-laws.docx)

a. All original in four (4) copies

b. The Articles of Cooperation shall be signed by all

cooperators on each and every page

c. The By-laws shall be signed by majority members in the

adoption page
 Treasurer’s Affidavit (Treas Affidavit.doc)

Surety Bond of Accountable Officers

Certificate of Pre-Membership Seminar

(PMES) signed by CDA PMES TEAM

Registration Fee
 General Guidelines
Cooperative Name and Prohibition

1. The word "Cooperative" “Kooperatiba” or “Cooperativa” shall

be included in the name of the cooperative, which name shall
likewise specify the type of cooperative in accordance with
Article 23 of RA 9520.

2. No cooperative name shall be allowed by the Authority if the

proposed name is identical or deceptively or confusingly
similar to that of any existing cooperative, contrary to public
policy, moral and existing laws.

3. The use of the words “development” and “integrated” in the

cooperative name shall be discouraged.
 General Guidelines
Cooperative Name and Prohibition.
4. The use of “Incorporated”, “corporation”, “company”,
“incorporation”, partnership, or other similar connotation and
abbreviation shall not be allowed. In addition, the use of the
word “federation” and “union” in the name of the proposed
primary cooperative is likewise prohibited except if it is part of
the registered name of association or institution where the
members of the proposed cooperative come from.

5. Name shall not be written in all capital letters except if it is an

acronym. Acronym shall be written after the full name of
cooperative.
 General Guidelines
Submission of Documents.

1. The documents required for registration shall be submitted in

4 copies in all original print-out and signatures printed in an
8.5” x 13” or 8.5” x 14” and may be written in English or in
Filipino or other local dialect with appropriate English
translation. As far as practicable, the text should use
bookman old style 12. In case of confusion in the
interpretation of the provisions, the English translation shall
prevail.
2. The Articles of Cooperation shall be signed by all the
cooperators on each and every page; and
3. The By-Laws shall be signed by all the members on the
adoption page.
 General Guidelines
Common and Preferred Share.

1. The share capital of a cooperative may consist of

common share capital and preferred share capital
if the latter is provided for under the cooperatives’
articles of cooperation and by laws. Should the
cooperative wish to have common and preferred
shares, statements to that effect should appear in
the Articles of Cooperation specifying the amount
of shares to be offered for common shares and for
preferred share. However, it is recommended that
only the common share be offered.
 General Guidelines
2. Should preferred share capital be offered, the rights and
privileges of holders of preferred shares shall be provided
for in the By-laws of the cooperative.

3. Preferred share capital shall not exceed Twenty Five

(25%) percent or one-fourth (1/4) of the total authorized
share capital of the cooperative.

4. The paid up and subscription of the common share

capital contribution should strictly adhere to the twenty-
five percent (25%) requirement based on the authorized
capital share.

5. No member shall own more than Ten (10%) percent of

the subscribed share capital of the cooperative.
 General Guidelines
Bonding Requirements of Accountable Officers / Employees
of the Cooperative - accountable officers/employees of
cooperatives shall submit a surety bond for the faithful
performance of their functions in accordance with Articles
14(5) and (56) of the Code and the following persons shall
be bonded:
Chairperson Treasurer and Cashier
Manager Warehouseman;
Loan/deposit Collectors;
Signatories of checks and other financial instruments; and
Such other persons as may be authorized by the
cooperative to act as a custodian of funds merchandise,
inventories, securities and other assets of the cooperative.
 General Guidelines
Bonding Requirements of Accountable Officers /
Employees of the Cooperative

The board of directors shall determine the adequacy of

such bonds. For this purpose, the Board of Directors
shall be guided based on the initial networth of the
cooperative which shall include the paid-up capital,
the membership fees and the other assets of the
cooperative at the time of registration.
 General Guidelines
Submission of Documents.

Jurisdiction
All applications for registration of cooperative and
amendment thereto shall be filed and registered with
the CDA Extension Office (EO) having jurisdiction over
the principal office of the proposed cooperative.
In case of secondary or tertiary cooperative that shall
operate with municipal/city, provincial, regional or
inter-regional coverage shall be registered in the CDA
Extension Office where its principal office is located.
 General Guidelines
Submission of Documents.

The CDA Central Office shall register tertiary

cooperatives with national coverage and selected
types of cooperatives including amendments thereto
prescribed by law, rules and circular issued by the
Authority which are forwarded by concerned Extension
Office together with the validation report.

For this purpose, tertiary cooperatives with national

coverage shall refer to a cooperative whose area of
operation covers three or more regions in Luzon,
Visayas and Mindanao.
 General Guidelines
Registration Fee

The registration fee to be paid by the proposed

cooperatives shall be one tenth (1/10) of one (1%)
percent of the authorized share capital or the amounts
prescribed in the CDA schedule of fees, whichever is
higher. Payment of the registration fee shall be
collected on or before the issuance of the Certificate
of Registration.
 General Guidelines
Validation Requirement

The CDA Extension Office concerned shall ensure

that proposed cooperatives applying for registration
must have complied first with the basic requirements
for the organization and registration of the proposed
cooperative by conducting the requisite validation
procedure prescribed below.

1. Objective. The Authority recognizes the importance

of verification/validation as an essential pre-
registration function to ensure that the proposed
cooperative applying for registration with the
Authority has met the minimum requirement of the
law.
 General Guidelines
Validation Requirement

2. Rationale. While proposed cooperatives comply

with the documentary requirements, it has been
observed that others are not compliant with the
cooperative conceptual definition on common
bond of interest, voluntariness, and willingness to
undertake the business in accord with the generally
accepted cooperative principles.
 General Guidelines
Validation Requirement

3. Scope. All types and categories of cooperatives

shall be subjected to verification/validation before
registration. On-site validation of the proposed
cooperative’s principal office address and
gathering of relevant information including but not
limited to its adherence to the cooperative
principles, concept and values carried out by the
cooperators/officers necessary in the submission of
complete validation report.
 General Guidelines
Required Period for Approval of Registration.
An application for registration shall be finally disposed by
the Authority within the period of Sixty (60) days from the
filing of complete documentary requirements. Otherwise,
the application is deemed approved unless the cause of
the delay is attributable to the applicant.
In the case of denial by the Authority, appeal of such
denial may be sent to the Office of the President within
ninety (90) days from receipt of the notice of denial.
The failure of the Office of the President to act on the
appeal within ninety (90) days from the filing thereof shall
mean the approval of said application.
 Ang pag-unlad ng
Kooperatiba ay nasa
pagtutulungan ng bawat
kamay-ari.
Maraming salamat po

Hangad po namin ang inyong

kaunlaran…