BASIC

COOPERATIVE
COURSE
JANET T. MATUGUINAS, CPA, MBA
WHAT IS A COOPERATIVE?
• is an autonomous and registered
association of persons,
• with common bond of interest,
• who have voluntarily joined
together to achieve their social,
• economic,
WHAT IS A COOPERATIVE?
• And cultural needs and aspirations,
• By making equitable contributions
to the capital required,
• By patronizing their product and
services and,
• By accepting a fair share of the risk
and benefits of the undertaking in
accordance with the universally
accepted cooperative principles.
 •

• Coop Values
VALUES OF THE COOPERATIVE

–Self-help;
–Self-responsibility;
–Democracy;
–Equality;
–Equity; and
–Solidarity.
VALUES…(CONT.)
• Ethical Values
 Openness;

 Honesty;

 Social responsibility;

and
 Caring for others.
• 7 PRINCIPLES OF COOPERATIVE-
(ART. 4, R. A. 9520).
• Every cooperative shall conduct its
affairs in accordance with the
culture, good values and experience,
and the universally accepted
principles which include, but are not
limited to, the following:
1. Voluntary and open
membership;
2. Democratic Member Control;
PRINCIPLES OF…(CONT.)
3. Member Economic
Participation;
4. Autonomy and Independence;
5.Education, Training, and
Information;
6.Cooperation among
Cooperatives; and
7. Concern of the Community
•PHILOSOPHIES OF THE
COOPERATIVE
 Owned and democratically
controlled by their members:
 the people use their co-op’s
services or buy its goods – not by
outside investors; co-op members
elect their board of directors
from within the membership;
PHILOSOPHIES…(CONT.)
 Return surplus revenues
(income over expenses and
investment) to members
proportionate to their use of
the cooperative, not
proportionate to their
“investment” or ownership
share (Patronage Refund);
PHILOSOPHIES…(CONT.)
 Motivated by service, not
profit – to meet their
members' needs for
affordable and high quality
goods or services; and
 Exist solely to serve their
members.
II. LEGAL BASIS IN
FORMING A COOP
• Republic Act 9520 (The Philippine
Cooperative Code of 2008)
– Article 10. Organizing a Primary Cooperative
• Fifteen (15) or more natural persons, who are
Filipino citizens, of legal age, having common
bonds of interest and are actually residing or
working in the intended area of operation,
may organize a cooperative under this Code:
Provided, That a prospected member of a
primary cooperative must have completed a
Pre-Membership Education Seminar (PMES).
LEGAL BASIS…(CONT.)
Republic Act 9520 (The Philippine Cooperative
Code of 2008)
• Article 10. Organizing a Primary Cooperative
(Par 2)
– Any newly organized primary cooperative may be
registered as multipurpose cooperative only after
compliance with the minimum requirements for
multipurpose cooperative 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 operation.
LEGAL BASIS…(CONT.)
• Republic Act 9520 (The Philippine
Cooperative Code of 2008)
– Article 14. Article of Cooperation
• All cooperatives applying for registration
shall file with the authority the articles
of cooperation which shall be signed by
each of the organizers and acknowledged
by them if natural persons, and by the
chairpersons or secretaries, if juridical
persons, before a notary public.
LEGAL BASIS…(CONT.)
Republic Act 9520 (The Philippine Cooperative Code of
2008)
–Article 15. By-laws
• Each cooperative to be
registered under this Code shall
adopt by-laws not inconsistent
with this Code. The by-laws
shall be filed at the same time
with the articles of cooperation.
DEFINITION OF
TERMS
• Code-shall refer to R.A.
9520, The Philippine
Cooperative Code of
2008.
DEFINITION OF TERMS…(CONT.)
• General Assembly-
 shall mean the full membership of
the cooperative duly assembled
for the purpose of exercising all
the rights and performing all the
obligations pertaining to
cooperatives, as provided in this
Code, its articles of cooperation
and by-laws:
DEFINITION OF TERMS…(CONT.)
• General Assembly-
• Provided, that for cooperatives with
numerous and dispersed
membership, the general assembly
may be composed of delegates
elected by each sector, chapter or
district of the cooperative in
accordance with the rules and
regulations of the Cooperative
Development Authority.
DEFINITION OF TERMS…(CONT.)
• Member-includes a person
either natural or juridical, who,
adhering to the principles set
forth the Code and the articles
of cooperation and by-laws, has
been admitted by the
cooperative as member.
DEFINITION OF TERMS…(CONT.)
• Primary Cooperative-shall refer
to a cooperative, the members
of which are natural persons.
• Secondary Cooperative-shall
refer to a cooperative, the
members of which are primary
cooperatives.
DEFINITION OF TERMS…(CONT.)
• Tertiary Cooperatives-
shall refer to a
cooperative, the
members of which are
secondary cooperatives.
REPUBLIC ACT
9520
 Salient Points of R.A 9520
 Art. 4-Principles of Coop: Principle of
Concern of the Community is added (7TH).
 Art. 5 # 11-Officers of the coop is
defined. It includes the BOD, Committees
created by the assembly, Secretary,
Treasurer, General Manager/equivalent
and others holding key positions
REPUBLIC ACT 9520
•SalientPoints of R.A 9520 (cont)
–Art. 6 – Purposes of Cooperative: These
are spelled-out. (for any or all of the
following)
– Art. 7-Objectives/Goals of Coop:
Objectives are specified.
–Art. 9 # 7: The provision allowing coop to
form subsidiary cooperatives
REPUBLIC ACT 9520
 Salient Points of R.A 9520…
(cont…)
 Art. 9 # 10: The provision allowing the
coop to organize and operate schools.
 Art. 10: Organizing a Primary Coop
(par. # 2): Newly organized coop after
the effectivity of this law can convert
into multi-purpose only after two
years of successful operation.
REPUBLIC ACT 9520
• Salient Points of R.A 9520…(cont…)
– Art. 23-Types of Cooperative: There are 21
types of Coop
– Art. 27-Government Officers and Employees:
# (2) All elected government officials shall be
ineligible to become officers and director of
the cooperative: Provided, that the
disqualification does not extend to a partylist
representative being an officer of a
cooperative he or she represents: (ex.
NATCCO PARTYLIST)
REPUBLIC ACT 9520
• Interpretation of Art. 27
– For uniform interpretation of the provision
on Art. 27, the ineligibility of officers and
directors of cooperatives shall commence
upon their assumption of office.
– This interpretation is anchored on the fact
that an elective officer shall become an
elective official only upon commencement
of his official functions as public officer.
(Memorandum Circular No. 2011-03).
REPUBLIC ACT 9520
• Salient Points of R.A 9520…(cont…)
– Art. 33-Exclusive powers of the
General Assembly which cannot be
delegated is reduced to 3:
• To determine and approve amendments to
the articles of cooperation and by-laws;
• To elect or appoint the members of the
board of directors, and to remove them
for cause; and
• To approve development plans of the
cooperative.
REPUBLIC ACT 9520
 Salient Points of R.A 9520…
(cont…)
Art. 35-Quorum of Coop General
Assembly – at least 25% of all the
members entitled to vote.
Art. 37-Term of office: Term limit
of board of directors is deleted,
but it can be provided in the by-
laws.
REPUBLIC ACT 9520
 Salient Points of R.A 9520…(cont…)
 Art. 42-Officers of the coop: …No
two (2) persons with relationships up
to the third civil degree of
consanguinity or affinity nor shall any
person engaged in a business similar
to that of the cooperative nor who in
any other manner has interest in
conflict with the cooperative shall
serve as an appointive officer.
REPUBLIC ACT 9520
 Salient Points of R.A
9520…(cont…)
 Art. 43 # 2: Committees of the
Cooperative: Only AUDIT COMMITTEE
and ELECOM are to be elected by
the G. A., all the rest are to be
appointed by the Board of Directors.
REPUBLIC ACT 9520
• Salient Points of R.A 9520…(cont…)
• Art. 52 – Books to be Kept Open. (1)
Every cooperative shall have the
following documents ready and
accessible to its members and
representatives of the Authority for
inspection during reasonable office
hours at its official address:
– A copy of R.A. 9520, and all other
laws pertaining to cooperatives;
REPUBLIC ACT 9520
 Art. 52 (cont)
 Salient Points of R.A 9520…(cont…)
A copy of the regulations of the
Authority;
A copy of the articles of cooperation
and by-laws of the cooperative;
A register of members;
The books of minutes of the meetings
of the general assembly, the board of
directors and committees;
REPUBLIC ACT 9520
 Art. 52 (cont)
 Salient Points of R.A 9520…
(cont…)
Share books where applicable
Financial statement; and
Such other documents as may
be prescribed by laws or the
by-laws.
REPUBLIC ACT 9520
 Salient Points of R.A 9520…
(cont…)
 Art. 53-Reports: Submission
of reports is already within
120 days instead of 90.
 Art. 61-Clearer Provision of
Tax Exemption
REPUBLIC ACT
9520
Salient Points of R.A 9520…(cont…)
 Art. 62-Privileges of the Cooperative
# 12: Coops organized by faculty
members/employees of educational
institutions is given preference in
managing school canteen and other
related services provided such services
is operated within the premises of the
said educational institution.
REPUBLIC ACT 952
 Salient Points of R.A 9520…(cont…)
 Art. 73-Share Capital: limitation
of share capital holdings of a
member to a maximum of only
10% of the share capital of the
cooperative.
 Art. 80-paragraph 4: Inclusion of
social and performance audit in
the cooperative.
REPUBLIC ACT 9520
• Salient P`oints of R.A 9520…(cont…)
• Art. 83. Right to Examine. A member
shall have the right to examine the
records required to be kept by the
cooperative under Art. 52 of R.A. 9520
during reasonable hours on business
days and he may demand, in writing,
for a copy of the excerpt from said
records without charge except the cost
of reproduction.
 CAPITAL STRUCTURE OF A
COOPERATIVE
 OWNER’S EQUITY
 
 Capital. This account is used to record the original
and additional investments of the owner of the
business entity. It is increased by the amount of
net income earned during the year or is
decreased by a net loss.

1.      Owner’s Capital for single proprietorship.

2.      Partner’s Capital for partnership.
3.      Shareholders’ Equity for corporations.
4.      Members’ Share Capital for cooperatives.
 CAPITAL STRUCTURE OF A
COOPERATIVE
 ART.14 (5) No cooperative, other than a
cooperative union as described under Article 25
hereof, shall be registered unless the articles of
cooperation is accompanied with the bonds of
the accountable officers and a sworn statements
of the treasurer elected by the subscribers
showing that at least twenty-five per centum
(25%) of the authorized share capital has been
subscribed and at least twenty-five per centum
(25%) of the total subscription has been paid:
Provided, That in no case shall the paid-up share
capital be less than Fifteen thousand pesos
(P15,000.00).
  CAPITAL STRUCTURE OF A
COOPERATIVE
 OWNER’S EQUITY
 
 Statutory Reserves. Chapter X, Art. 85 of RA 9520 provides
for the allocation and distribution of Net surplus.

1. An amount of 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 (50%) per centum of the net
surplus:
 CAPITAL STRUCTURE OF A
COOPERATIVE
 OWNER’S EQUITY
 
 Statutory Reserves. Chapter X, Art. 85 of RA 9520 provides
for the allocation and distribution of Net surplus.

2. An amount for the education and training fund shall not

be more than ten per centum (10%) of the net surplus.
The by-laws may provide that certain fees or a portion
thereof maybe credited to such fund.

The fund shall provide for the training, development

and similar other cooperative activities geared towards
the growth of the cooperative movement:
 CAPITAL STRUCTURE OF A
COOPERATIVE
 OWNER’S EQUITY
 
 Statutory Reserves. Chapter X, Art. 85 of RA 9520 provides
for the allocation and distribution of Net surplus.

3. An amount for the community development fund,

which shall not be less than three (3) per centum
(3%) of the net surplus .

The community development fund shall be used

for projects or activities that will benefit the
community where the cooperative operates.
 CAPITAL STRUCTURE OF A
COOPERATIVE
 OWNER’S EQUITY
 
 Statutory Reserves. Chapter X, Art. 85 of RA 9520 provides
for the allocation and distribution of Net surplus.

4. An optional fund, a land and building and any

other necessary fund to total of which shall not
exceed seven per centum (7%)

An optional fund, a land and building and any

other necessary fund to total of which shall not
exceed seven per centum (7%)
 CAPITAL STRUCTURE OF A
COOPERATIVE
 OWNER’S EQUITY
 
 Statutory Reserves. Chapter X, Art. 85 of RA 9520 provides
for the allocation and distribution of Net surplus.

5. The remaining net surplus shall be made available

to the members in the form of interest on capital
not to exceed the normal rate of return on
investments and patronage refunds
 CAPITAL STRUCTURE OF A
COOPERATIVE
 OWNER’S EQUITY
 
 Statutory Reserves. Chapter X, Art. 85 of RA 9520 provides
for the allocation and distribution of Net surplus.

 General Reserve Fund

 CETF
 Community Development Fund
 Optional Fund
REPUBLIC ACT 9520
• Salient Points of R.A 9520…(cont…)
• The term Cooperative
Development Authority is no longer
used anywhere in the code. Only
the term AUTHORITY is used.
• gender sensitivity: -use the term
chairperson and vice chairperson
instead of chairman and vice
chairman.
REPUBLIC ACT 9520
• Cooperative powers and
capacities (Art. 9)
1. The exclusive use of its
registered name;
2. The right of succession;
3. To amend its articles of
cooperation and by-laws in
accordance with the
provisions of the code;
REPUBLIC ACT 9520

 Cooperative powers and capacities (Art. 9)

5. To purchase, receive, take or grant,
hold convey, sell lease, pledge, mortgage
and otherwise deal with such real and
personal property as the transaction of
lawful affairs of the cooperative may
reasonably and necessarily require, subject
to the limitations prescribed by law and
the Constitution,
REPUBLIC ACT 9520
 Cooperative powers and capacities
(Art. 9)
6. To enter into division, merger or
consolidation, as provided in the code,
7. To avail loans, be entitled to credit and to
accept and receive grants, donations and
assistance from foreign or domestic sources
subject to conditions…
8. To form subsidiary cooperatives and join
federations or unions ad provided in this
Code,
REPUBLIC ACT 9520
 Cooperative powers and capacities (Art. 9)
9. To avail preferential rights granted to
cooperatives under R. A. 7160 (Local Gov’t
Code)..
10. To organize and operate schools in
accordance with R. A. 9155 (Governance
of Basic Education Act of 2001),and other
pertinent laws,
11. To exercise such other powers granted
by this Code or necessary to carry out its
purpose.
ARTICLES OF COOPERATION
AND BY-LAWS
 Content of the by-laws:
 Qualifications for admission to
membership and the payment for
membership;
 Rights and liabilities of
membership;
 Circumstances which membership
is acquired, maintained, and lost;
ARTICLES OF COOPERATION
AND BY-LAWS
• Content of the by-laws:
– Procedure to be followed in case of
termination of membership;
– Conditions under which the transfer
of share shall be permitted;
– Powers and duties of the general
assembly, board of directors,
committees, and the officers and
their qualifications and
disqualifications;
CONTENT OF THE BY-LAWS…(CONT):
 Rules and procedures of the
agenda, time place and manner
of calling meetings, quorum
requirements, voting system and
other matters relative to the
business affairs of the general
assembly, board of directors and
committees;
CONTENT OF THE BY-LAWS…(CONT.):
 Mode of custody and of investment of
net surplus;
 Accounting and accounting system;
 Manner of loaning including its
limitations;
 Methods of distribution of net surplus;
 Manner and purposes of raising capital;
CONTENT OF THE BY-LAWS…(CONT.):
 Manner of adopting, repealing, and
amending of by-laws;
 Conciliation or mediation mechanism
for the amicable settlement of
disputes among members and officers
of the coop; and
 Other matters incident to the
purposes of the coop.
CONTENT OF THE ARTICLES OF
COOPERATION
 The name of the cooperative which
shall include the word cooperative;
 The purposes and the scope of
business for which the cooperative
is to be registered;
 The term of existence of all
cooperative;
 The area of operation and the postal
address of its principal office;
CONTENT OF THE ARTICLES OF
COOPERATION (CONT)
 The names, nationality, and
the postal addresses of the
registrants;
 The common bond of
membership;
 The list of names of directors
who shall manage the
cooperative; and
CONTENT OF THE ARTICLES OF
COOPERATION (CONT)
The amount of its share capital, the
names and residences of its
contributors and a statement of
whether the cooperative is primary,
secondary, or tertiary in accordance
with Article 23 of R. A. 9520
The articles of cooperation may also
contain any other provision not
contrary to R.A. 9520 or any related
laws.
FOOD FOR THOUGHT
 “Atrue Coop
leader
understands
that activity is
not necessarily
FOOD FOR
THOUGHT
“A good coop member is
one who doesn’t only
place his share capital
and leave it idle but is
one who does
patronize the services
of the cooperative”.
THANK YOU