2.

Democrative Member Control - Cooperatives are democratic organizations that

Cooperative
are controlled by their members who actively participate in setting their policies and
making decisions. Men and women serving as elected representatives, directors or
officers are accountable to the membership. In primary cooperatives, members have
(Republic Act No. 9520) equal voting rights of one-member, one-vote. Cooperatives at other levels are
organized in the same democratic manner.

3. Participation - Members contribute equitably to, and democratically control, the

capital of their cooperatives. At least part of that capital is the common property of
Chapter 1 the cooperative. They shall receive limited compensation or limited interest, if any,
on capital subscribed and paid as a condition of membership.
(GENERAL CONCEPTS AND PRINCIPLES)
Members allocate surpluses for any or all of the following purposes: developing the
cooperative by setting up reserves, part of which should at least be indivisible;
benefitting members in proportion to their partonage of the cooperative's
Article 1. Title
bubsiness; and, supporting other activities approved by the membership.

"4. Autonomy and Independence - Cooperatives are autonomous, self-help

This Act shall be known as the "Philippine Cooperative Code of 2008". organizations controlled by their members. If they enter into agreements with other
organizations, including government, or raise capital from external sources, they
Article 2. declaration of policy shall do so on terms that ensure democratic control of their members and maintain
their cooperative autonomy.

1. To foster the creation and growth of cooperatives as a practical 5. Education, Training and Information - Cooperatives shall provide education and
vehicle for promoting self-reliance and training for their members, elected and appointed representatives, managers, and
employees, so that they can contribute effectively and efficiently to the
2. harnessing people power towards the attainment of economic development of their cooperatives.
development and social justice
"6. Cooperation Among Cooperatives - Cooperatives serve their members most
3. The state shall Encourage the private sector to undertake the effectively and strengthen the cooperative movement by working together through
actual formation and organization of cooperatives and shall create an local, national, regional and international structures.
atmosphere that is conductive to the growth of these cooperatives
7. Concern for Community - Cooperatives work for the sustainable development of
their communities through policies approved by their members.
Principle of Subsidiarity
Article 5. Definition of Terms
the cooperative sector will initiate and regulate within its own ranks a. Member - includes a person either natural or juridical (artificial
the promotion and organization, training and research, audit and persons; sole proprietorship, partnership, corporation, or any other
support services relative to cooperatives with government assistance cooperative) any who adhering to the principles set forth in this Code and
where necessary. in the Articles of Cooperative, has been admitted by the cooperative as
member;
Article 3. General Concepts
b. General Assembly shall mean the full membership of the cooperative
duly assembled for the purpose of exercising all the rights and performing
Definition of Cooperative/Requisites all the obligations pertaining to cooperatives, as provided by this Code, its
1. An autonomous and duly registered association of persons, articles of cooperation and bylaws: Provided, That for cooperatives with
2. With a common bond of interest, who (ex. residency, occupational numerous and dispersed membership, the general assembly may be
(farmers cooperative) institutional composed of delegates elected by each sector, chapter or district of the
3. Voluntarily joined together to achieve their social. economic, and cooperative in accordance with the rules and regulations of the
cultural needs and aspirations by Cooperative Development Authority;
4. Making equitable contributions to the capital required.
5. Patronizing their products and services and "c. Board of Directors shall mean that body entrusted with the
6. Accepting a fair share of the risks and benefits of the undertaking in management of the affairs of the cooperative under its articles of
accordance with universally accepted cooperative principles. cooperation and bylaws;
Article 4. Cooperative Principles
"(4) Committee shall refer to any body entrusted with specific functions
- Every cooperative shall conduct its affairs in accordance and responsibilities under the bylaws or resolution of the general
with Filipino culture, good values and experience and the universally assembly or the board of directors;
accepted principles of cooperation which include, but are not limited
"(5) Articles of Cooperation means the articles of cooperation registered
to, the following:
under this Code and includes a registered amendment thereof;
1. Voluntary and Open Membership - Cooperatives are voluntary organizations,
open to all persons able to use their services and willing to accept the "(6) Bylaws means the bylaws registered under this Code and includes any
responsibilities of membership, without gender, social, racial, cultural, political or registered amendment thereof;
religious discrimination.
"(7) Registration means the operative act granting juridical "(16) Subsidiary Cooperative refers to three or more
personality to a proposed cooperative and is evidenced by primary cooperatives, doing the same line of business,
a certificate of registration; organized at the municipal, provincial, city, special
metropolitan political subdivision, or economic zones
"(8) Cooperative Development Authority refers to the created by law, registered with the Authority to undertake
government agency in charge of the registration and business activities in support of its member-cooperatives."
regulation of cooperatives as such hereinafter referred to s
the Authority;
"(9) Universally Accepted Principles means that body of
cooperative principles adhered to worldwide by Chapter 2
cooperatives;
(Organization and Registration)
"(10) Representative Assembly means the full membership
of a body of representatives elected by each of the sectors,
chapter or district to the cooperative duly assembled for
the purpose of exercising such powers lawfully delegated Article 6.purpose of cooperatives
unto them by the general assembly in accordance with its
bylaws;
"(1) To encourage thrift and savings mobilization among the
"(11) Officers of the Cooperative shall include the members members;
of the board of directors, members of the different
committee created by the general assembly, general "(2) To generate funds and extend credit to the members for
manager or chief executive officer, secretary, treasurer and productive and provident purposes;
members holding other positions as may be provided for in
their bylaws; "(3) To encourage among members systematic production
and marketing;
"(12) Social Audit is a procedure wherein the cooperative
assesses its social impact and ethical performance vis-à-vis "(3) To encourage among members systematic production
its stated mission, vision, goals and code of social and marketing;
responsibility for cooperatives to be established by the
"(4) To provide goods and services and other requirements
Authority in consultation with the cooperative sector. It
to the members;
enables the cooperative to develop a process whereby it
can account for its social performance and evaluate its "(5) To develop expertise and skills among its members;
impact in the community and be accountable for its
decisions and actions to its regular members; "(6) To acquire lands and provide housing benefits for the
members;
"(13) Performance Audit shall refer to an audit on the
"(7) To insure against losses of the members;
efficiency and effectiveness of the cooperative as a whole;
its management and officers; and its various responsibility "(8) To promote and advance the economic, social and
centers as basis for improving individual team or overall educational status of the members;
performance and for objectively informing the general
membership on such performance; "(9) To establish, own, lease or operate cooperative banks,
cooperative wholesale and retail complexes, insurance and
"(14) A Single-Line or Single-Purpose Cooperative shall agricultural/industrial processing enterprises,
include cooperative undertaking activities which are and public markets;
related to its main line of business or purpose;
"(10) To coordinate and facilitate the activities of
"(15) Service Cooperatives are those which provide any type cooperatives;
of service to its members, including but not limited to,
transport, information and communication, insurance, "(11) To advocate for the cause of the cooperative
housing, electric, health services, education, banking, and movements;
savings and credit;
"(12) To ensure the viability of cooperatives through the Article 9. Cooperative Powers
utilization of new technologies; and Capacities.

(13) To encourage and promote self-help or self- – A cooperative registered under this Code
employment as an engine for economic growth and
shall have the following powers, rights and
poverty alleviation; and
capacities:
"(14) To undertake any and all other activities for the
effective and efficient "(1) To the exclusive use of its registered name, to sue and
implementation of the provisions of this Code. be sued;
"
(2) Of succession;
Article 7.objectives and goals of
cooperatives "(3) To amend its articles of cooperation in accordance with
the provisions of this Code;

The primary objective of every cooperative is to help "(4) To adopt bylaws not contrary to law, morals or public
improve the quality of life of its members. Towards policy, and to amend and repeal the same in accordance
this end, the cooperative shall aim to: with this Code;

"(5) To purchase, receive, take or grant, hold, convey, sell,

"(a) Provide goods and services to its members to enable lease, pledge, mortgage, and otherwise deal with such real
them to attain increased income, savings, investments, and personal property as the transaction of the lawful
productivity, and purchasing power, and promote affairs of the cooperative may reasonably and necessarily
among themselves equitable distribution of net surplus require, subject to the limitations prescribed by law and
through maximum utilization of economies of scale, cost- the Constitution;
sharing and risk-sharing;
"(6) To enter into division, merger or consolidation, as
"(b) Provide optimum social and economic benefits to its provided in this Code;
members;

"(c) Teach them efficient ways of doing things in a "(7) To form subsidiary cooperatives and join federations or
cooperative manner; unions, as provided in
this Code;
"(d) Propagate cooperative practices and new ideas in
business and management; "(8) To avail of loans, be entitled to credit and to accept and
receive grants, donations and assistance from foreign and
"(e) Allow the lower income and less privileged groups to domestic sources, subject to the conditions of said loans,
increase their ownership in the wealth of the nation; and credits, grants, donations or assistance that will not
undermine the autonomy of the cooperative. TheAuthority,
"(f) Cooperate with the government, other cooperatives and upon written request, shall provide necessary assistance in
people-oriented the documentary requirements for the loans,
credit, grants, donations and other financial support;

"(9) To avail of preferential rights granted to cooperatives

Article 8. Cooperatives Not in under Republic Act No.7160, otherwise known as the Local
Restraint of Trade. Government Code, and other laws, particularly those in the
– No cooperative or method or act thereof which complies with grant of franchises to establish, onstruct, operate and
this Code shall be deemed a conspiracy or combination in maintain ferries, wharves, markets or slaughterhouses and
restraint of trade or an illegal monopoly, or an attempt to to lease public utilities, including access to extension and
lessen competition or fix prices arbitrarily inviolation of any
laws of the Philippines.
 on-site research services and facilities related to Article 12. Liability.
agriculture and fishery activities;
" A cooperative duly registered under this Code shall
(10) To organize and operate schools in accordance with have limited liability.
Republic Act No. 9155, Governance of Basic Education Act
of 2001 and other pertinent laws; and
Article 13. term
"(11) To exercise such other powers granted by this Code or
necessary to carry out GR: A cooperative shall exist for a period not
its purpose or purposes as stated in its Articles of
exceeding fifty (50) years from the date of
cooperation.
registration

Article 10.Organizing a Primary

unless: sooner dissolve or said period is extended.
Cooperative.

(1) Fifteen (15) or more natural persons (2) who The cooperative term, as originally stated in the
are Filipino citizens, (3) of legal age, (4)having a articles of cooperation, may be extended for
common bond of interest and are (5) actually periods not exceeding fifty (50) years in any single
residing or working in the intended area of instance by an amendment of the articles
operation, of cooperation, in accordance with this Code:
may organize a primary cooperative under this
Code: Provided, That a prospective member of a Provided, That no extension can be made
primary cooperative must have completed a Pre- earlier than five (5) years prior to the original or
Membership Education Seminar (PMES). subsequent expiry date/dates unless there
are justifiable reasons for an earlier extension as
Any newly organized primary cooperative may be may be determined by the Authority.
registered as multipurpose cooperative
only after compliance with the minimum
Article 14. Articles of Cooperation.
requirements for multipurpose cooperatives to be
set by the Authority.
(1) All cooperatives applying for registration shall file
A single-purpose cooperative may transform into with the Authority the articles of cooperation which shall
a multipurpose or may create subsidiaries only be signed by each of the organizers and acknowledged by
after at least two (2) years of operations. them if natural persons, and by the chairpersons or
secretaries, if juridical persons, before a notary public.

Article 11. Economic Survey. "(2) The articles of cooperation shall set forth:
Every group of individuals or cooperatives intending to form a "The name of the cooperative which shall include
cooperative under this Code shall submit to the Authority a
the word cooperative;
* general statement describing, among others the structure and The purpose or purposes and scope of business
purposes of the proposed cooperative: Provided, That the for which the cooperative is to be registered;
structure and actual staffing pattern of the cooperative shall include
"(c) The term of existence of the cooperative;
a bookkeeper;
"(d) The area of operation and the postal
* Provided, further, That they shall not be allowed to operate addresses of its principal office;
without the necessary personnel and shall also submit an economic The names, nationality, and the postal addresses
survey, indicating therein the(1) area of operation, (2) the size of
membership, and other pertinent data in a format provided by the
of the registrants;
Authority.
 "(2) The bylaws of each cooperative shall provide:
The common bond of membership;
The list of names of the directors who shall
The qualifications for admission to membership
manage the cooperative; and
and the payment to be made or interest to be
The amount of its share capital, the names and
acquired as a conditions for the exercise of the
residences of its contributors and a statement of
right of membership;
whether the cooperative is primary, secondary or
"(b) The rights and liabilities of membership;
tertiary in accordance with Article 23 hereof.
The circumstances under which membership is
acquired, maintained and lost;
"(3) The articles of cooperation may also contain any other
provisions not inconsistent with this Code or any related The procedure to be followed in cases of
law. termination of membership;
The conditions under which the transfer of a
"(4) Four (4) copies each of the proposed articles of share or interest of the members shall be
cooperation, bylaws, and the general statement required permitted;
under Article 11 of this Code shall be submitted to the
The rules and procedures on the agenda, time,
Authority.
place and manner of calling, convening,
"(5) No cooperative, other than a cooperative union as conducting meetings, quorum requirements,
described under Article 25 hereof, shall be registered voting systems, and other matters relative to the
Unless: the articles of cooperation is accompanied with the
business affairs of the general assembly, board
bonds of the accountable officers and a sworn statements of directors, and committees;
of the treasurer elected by the subscribers showing that at The general conduct of the affairs of the
least twenty-five per centum (25%) of the authorized share cooperative, including the powers and duties of
capital has been subscribed and at least twenty-five per
the general assembly, the board of directors,
centum (25%) of the total subscription has been
paid: committees and the officers, and their
qualifications and disqualifications;
Provided, That in no case shall the paid-up share capital be "(h) The manner in which the capital, may be raised
less than Fifteen thousand and the purposes for which it can be utilized;
pesos (P15,000.00).
The mode of custody and of investment of net
surplus;
"The Authority shall periodically assess the required The accounting and auditing systems;
paid-up share capital and may increase it every five (5) The manner of loaning and borrowing including
years when necessary upon consultation with the the limitations thereof;
cooperative sector and the National Economic and The method of distribution of net surplus;
Development Authority (NEDA). The manner of adopting, amending, repealing, and
abrogating bylaws;
Article 15. by-laws A conciliation or mediation mechanism for the
amicable settlement of disputes
(1) Each cooperative to be registered under this Code among members, directors, officers and committee
shall adopt bylaws not inconsistent with the members of the cooperative; and
provisions of this Code. The bylaws shall be filed at Other matters incident to the purposes and
the same time as the articles of cooperation. activities of the cooperative.
 Article 16. registration
Both the original and amended articles and/or bylaws
shall contain all provisions required by law to be set
GR: – A cooperative formed and organized under this
out in the articles of cooperation and by laws.
Code acquires juridical personality from the date the
Authority issues a certificate of registration under
Amendments shall be indicated by underscoring or
its official seal.
otherwise appropriately indicating the change or
- All applications for registration shall be
changes made and a copy of the amended articles or
finally disposed of by the Authority within a period of
amended bylaws duly certified under oath by the
sixty (60) days from the filing thereof, otherwise the
cooperative secretary and a majority of the directors
application is deemed approved
stating the fact that said amendment or
amendments to the articles of cooperation and/or
unless: the cause of the delay is attributable to the
bylaws have been duly approved by the
applicant: Provided, That in case of a denial of the
required vote of the members.
application for registration, an appeal shall lie with
the Office of the President within ninety (90) days
All amendments to the article of cooperation and/or
from receipt of notice of such denial:
bylaws shall be submitted to the Authority. The
amendments shall take effect upon its approval by
- failure of the Office of the President to act
the authority or within thirty (30) days from the date
on the appeal within ninety (90) days from the
of filing thereof if not acted upon by the
filing thereof shall mean approval of said application.
Authority for a cause not attributable to the
cooperative.

Article 17. Certificate of Article 19. Contracts Executed Prior

registration to Registration and Effects Thereof.
A certificate of registration issued by the Authority
under its official seal shall be conclusive evidence Contracts executed between private persons and
that the cooperative therein mentioned is duly cooperatives prior to the registration of the
registered unless it is proved that the registration cooperative shall remain valid and binding between
thereof has been cancelled. the parties and upon registration of the cooperative.
A formal written contract shall be adopted and made
Article 18. Amendment of Articles of in the cooperative’s name or on its behalf prior to its
Cooperation and Bylaws registration.

Article 20. Division of Cooperatives.

Unless otherwise prescribed by this Code and for
legitimate purposes, any provision or matter stated in GR: Any registered cooperative may, by a resolution
the articles of cooperation and by laws may be approved by a vote of three-fourths (3/4) of all the
amended by - members with voting rights, present and constituting
two-thirds (2/3) vote of all the members with a quorum, resolve to divide itself into the two (2) or
voting rights, without prejudice to the right of the more cooperatives.
dissenting members to exercise their right to
withdraw their membership under Article 30.
The procedure for such division shall be prescribed in
The separate existence of the constituent
the regulations of the Authority: Provided, That all
cooperatives shall cease, except that of the
the requirements set forth in this Code have been
surviving or the consolidated cooperative;
complied with by the new cooperatives: Provided,
The surviving or the consolidated cooperative
further, That no division of a cooperative in fraud of
shall possess all the assets, rights, privileges,
creditors shall be valid
immunities and franchises of each of the
Article 21. Merger and Consolidation constituent cooperatives;
of Cooperatives.
The surviving or the consolidated cooperative
Two (2) or more cooperatives may merge into a single shall be responsible for all th liabilities and
cooperative which shall either be one of the obligation of each of the constituent cooperatives
constituent cooperatives or the consolidated in the same manner as if such surviving or
cooperative. consolidated cooperative had itself incurred such
liabilities or obligations. Any claim, action or
No merger or consolidation shall be valid unless proceeding pending by or against any such
approved by a three-fourths (3/4) vote of all the constituent cooperatives may be prosecuted by or
members with voting rights, present and constituting against the surviving or consolidated
a quorum of each of the constituent cooperatives at cooperative, as the case may be. Neither the rights
separate general assembly meetings. The dissenting of creditors nor any lien upon the property of any
members shall have the right to exercise their right such constituent cooperatives shall be impaired
to withdraw their membership pursuant to Article by such merger or consolidation.

The Authority shall issue the guidelines governing the Article 23. Type and Categories
of Cooperatives.
procedure of merger or consolidation of
cooperatives. In any case, the merger or consolidation
Cooperatives may fall under any of the following
of cooperatives. In any case, the merger or
types:
consolidation shall be effective upon the issuance of
the certificate of merger or consolidation by the Credit Cooperative is one that promotes and
Authority. undertakes savings and lending services among its
members. It generates a common pool of funds in
Article 22. Effects of Merger
order to provide financial assistance to its
and Consolidation. members for productive and provident purposes;

Consumers Cooperative is one of the primary

– The merger or consolidation of cooperatives shall purpose of which is to procure and distribute
have the following effects: commodities to members and non-members;

Producers Cooperative is one that undertakes

The constituent cooperatives shall become a
joint production whether agricultural or
single cooperative which, in case of merger, shall
industrial. It is formed and operated by its
be the surviving cooperative, and, in case of
members to undertake the Production and
consolidation, shall be the consolidated
processing of raw materials or goods produced by
cooperative;
its members into
 Electric Cooperative is one organized for the
Marketing Cooperative is one which engages in the
primary purposed of undertaking power
supply of production inputs to members and
generations, utilizing renewable energy sources,
markets their products;
including hybrid systems, acquisition and
Service Cooperative is one which engages in operation of subtransmission or distribution to
medical and dental care, hospitalization, its household members;
transportation, insurance, housing, labor,
electric light and power, communication, Financial Service Cooperative is one organized for
professional and other services; the primary purpose of engaging in savings and
credit services and other financial services;
Multipurpose Cooperative is one which combines
two (2) or more of the business activities of these Fishermen Cooperative is one organized by
different types of cooperatives; marginalized fishermen in localities whose
products are marketed either as fresh or
Advocacy Cooperative is a primary cooperative processed products;
which promotes and advocates cooperativism
among its members and the public through Health Services Cooperative is one organized for
socially-oriented projects, education and the primary purpose of providing medical, dental
training, research and communication, and other and other health services;
similar activities to reach out to its intended
beneficiaries; Housing Cooperative is one organized to assist or
provide access to housing for the benefit of its
Agrarian Reform Cooperative is one organized by regular members who actively participate in the
marginal farmers majority of which are agrarian savings program for housing. It is co-owned and
reform beneficiaries for the purpose of controlled by its members;
developing an appropriate system of land tenure,
land development, land consolidation or land Insurance Cooperative is one engaged in the
management in areas covered by agrarian reform; business of insuring life and poverty of
cooperatives and their members;
Cooperative Bank is one organized for the primary
purpose of providing a wide range of financial Transport Cooperative is one which includes land
services to cooperatives and their members; and sea transportation, limited to small vessels,
as defined or classified under the Philippine
Dairy Cooperative is one whose members are maritime laws, organized under the provisions of
engaged in the production of fresh milk which may this Code;
be processed and/or marketed as dairy products;
Water Service Cooperative is one organized to
Education Cooperative is one organized for the own, operate and manage waters systems for the
primary purpose of owning and operating licensed provision and distribution of potable water for
educational institutions notwithstanding the its members and their households;
provisions of Republic
Workers Cooperative is one organized by workers,
including the self-employed, who are at same time
 time the members and owners of the enterprise. "(b) To carry on, encourage, and assist
Its principal purpose is to provide employment and educational and advisory work relating to its
business opportunities to its members and manage member cooperatives;
it in accordance with cooperative principles; and
(c) To render services designed to encourage
Other types of cooperative as may be determined simplicity, efficiency, and economy in the conduct
by the Authority. of the business of its member cooperatives and to
facilitate the implementation of their
(2) Categories of Cooperative bookkeeping, accounting, and other systems and
procedures;
– Cooperatives shall be categorized according
tomembership and territorial considerations as (d) To print, publish, and circulate any newspaper
follows: or other publication in the interest of its member
cooperatives and enterprises;
(a) In terms of membership, cooperative shall be
categorized into: "(e) To coordinate and facilitate the activities of
its member cooperatives;
(i) Primary – The members of which are natural
persons; "(f) To enter into joint ventures with national or
(ii) Secondary – The members of which are international cooperatives of other countries in
primaries; and the manufacture and sale of products and/or
(iii) Tertiary – The members of which are secondary services in the Philippines and abroad; and
cooperatives; and
"(g) To perform such other functions as may be
(b) In terms of territory, cooperatives shall be necessary to attain its objectives.
categorized according to areas of operations which
may or may not coincide with the political subdivisions "A federation of cooperatives may be registered by
of the country. carrying out the formalities for registration
of a cooperative. "Registered cooperatives may
organize a a federation according to the type of
Article 24. Functions of a
business activity engaged in by the cooperatives.
Federation of Cooperatives.

A federation of cooperatives shall undertake the "ART. 25. Cooperative Unions.

following functions:
– Registered cooperatives and federations at the
"(a) To carry on any cooperative enterprise appropriate levels may organize or join cooperative
authorized under Article 6 that unions to represent the interest and welfare of all
complements augments, or supplements but does not types of cooperatives at the provincial, city, regional,
conflict, complete with, nor and national levels. Cooperative unions
supplant the business or economic activities of its may have the following purposes:
members;
 be voted upon and shall be entitled only to
"(a) To represent its member organizations; such rights and privileges as the bylaws may
"(b) To acquire, analyze, and disseminate, economic, provide: Provided, That an associate who meets
statistical, and other the minimum requirements of regular
information relating to its members and to all types membership, continues to patronize the
of cooperatives within its area of cooperative for two (2) years, and signifies
operation; his/her intention to remain a member shall be
"(c) To sponsor studies in the economic, legal, considered a regular member.
financial, social and other phases of A cooperative organized by minors shall be
cooperation, and publish the results thereof; considered a laboratory cooperative and must
"(d) To promote the knowledge of cooperative be affiliated with a registered cooperative. A
principles and practices; laboratory cooperative shall be governed by
"(e) To develop the cooperative movement in their special guidelines to be promulgated by the
respective jurisdictions; Authority.
"(f) To advise the appropriate authorities on all
questions relating to cooperatives;
"(g) To raise funds through membership fees, dues and "ART. 27. Government Officers and
contributions, donations, and Employees.
subsidies from local and foreign sources whether
private or government; and Any officer or employee of the Authority shall be
"(h) To do and perform such other non-business disqualified to be elected or appointed to any position
activities as may be necessary to in a cooperative: Provided, That the disqualification
attain the foregoing objectives. does not extend to a cooperative organized
"Cooperative unions may assist the national and local
governments in the latter’s All elective officials of the Government shall be
development activities in their respective ineligible to become officers and
jurisdictions." directors of cooperatives: Provided, That the
disqualification does not extend to a party list
Chapter 3 representative being an officer of a cooperative he or
she represents; and
(Membership)

Any government employee or official may, in the

"ART. 26. Kinds of Membership. discharge of is duties as a member in
the cooperative, be allowed by the end of office
concerned to use official time for attendance
A cooperative may have two (2) kinds of members, to at the general assembly, board and committee
wit: meetings of cooperatives as well as
(1) regular members and (2) associate members. cooperative seminars, conferences, workshops,
"A regular member is one who has complied with all technical meetings, and training courses
the membership requirements and entitled to all the locally or abroad: Provided, That the operations of
rights and privileges of membership. An associate the office concerned are not adversely
member is one who has no right to vote nor be affected.
 "ART. 28. Application.
be less than the aggregate amount of its debts and
liabilities exclusive of his share capital
– An applicant for membership shall be deemed a contribution.
member after approval of his membership by the i
board of directors and shall exercise the rights of The death or insanity of a member in a primary
member cooperative, and the insolvency or
after having made such payments to the cooperative dissolution of a member in a secondary or tertiary
in respect to membership or acquired interest in the cooperative may be considered valid
cooperative as may be prescribed in the bylaws. In grounds for termination of membership: Provided,
case membership is refused or denied by the board of That in case of death or insanity of an
directors, an appeal may be made to the general agrarian reform beneficiary-member of a
assembly and the latter’s decision shall be final. cooperative, the next-of-kin may assume the duties
and responsibilities of the original member
For this purpose, the general assembly may opt to
create an appeal and grievance committee, the Membership in the cooperative may be terminated by a
members of which shall serve for a period of vote of the majority of all the
one (1) year and shall decide appeals on membership members of the board of directors for any of the
application within thirty (30) days upon following causes:
receipt thereof. If the committee fails to decide "(a) When a member has not patronized any of the
within the prescribed period, the appeal isdeemed services of the cooperative for an
approved in favor of the applicant. unreasonable period of time as may be previously
determined by the board of
directors;
"ART. 29. Liability of Members.
"(b) When a member has continuously failed to
comply with his obligations;
– A member shall be liable for the debts of the "(c) When a member has acted in violation of the
cooperative to the extent of his contribution to the bylaws and the rules of the
share capital of the cooperative. cooperative; and
"(d) For any act or omission injurious or prejudicial
to the interest or the welfare of the
"ART. 30. Termination of Membership.
cooperative.

A member of a cooperative may, for any valid

"A member whose membership the board of directors
reason, withdraw his membership from the
may wish to terminate shall be
cooperative by giving a sixty (60) day notice to
informed of such intended action in writing and shall
the board of directors. Subject to the bylaws of the
be given an opportunity to be heard
cooperative, the withdrawing member shall be
before the said board makes its decision. The decision
entitled to a refund of his share capital contribution
of the board shall be in writing and
and all other interests in the cooperative: Provided,
shall be communicated in person or by registered
That such fund shall not be made if upon such
mail to said member and shall be
payment the value of the assets of the cooperative
appealable within thirty (30) days from receipt
thereof to the general assembly whose
 The general assembly shall be the highest
policy-making body of the cooperative and shall
decision shall be final. The general assembly may
exercise such powers as are stated in this Code, in
create an appeal and grievance committee whose
the articles of cooperation and in the bylaws of the
members shall serve for a period of one (1) year and
cooperative. The general assembly shall have the
shall decide appeals on membership termination. The
following exclusive powers which cannot be
committee is given thirty (30) days from receipt
delegate:
thereof todecide on the appeal. Failure to decide
within the prescribed period, the appeal is deemed
"(1) To determine and approve amendments to the
approved in favor of the member. Pending a decision
articles of cooperation and for cause. However, in
by the general assembly, the
the case of the electric cooperatives registered
membership remains in force.
under this Code, election of the members of the
board shall be held in accordance with its
"ART. 31. Refund of Interests. bylaws or election guideline of such electric
cooperative; and
All sums computed in accordance with the bylaws to
be due from a cooperative to a former member shall (2) To elect or appoint the members of the board of
be paid to him either by the cooperative or by directors, and to remove them for cause. However, in
the approved transferee, as the case may be, in the case of the electric cooperatives registered
accordance with this Code." under this
Code, election of the members of the board shall be
held in accordance with its
Chapter 4 bylaws or election guideline of such electric
(Administration) cooperative; and

"(3) To approve developmental plans of the

"ART. 32. Composition of the
cooperative.
general Assembly.

"Subject to such other provisions of this Code and

The general assembly shall be composed of such
only for purposes of prompt and intelligent
members who are entitled to vote under the articles
decision-making, the general assembly may be a
of cooperation and bylaws of the cooperative.
three-fourths (3/4) vote of all its members with
voting rights, present and constituting a quorum,
delegate some of its powers to a smaller body of the
cooperative. These powers shall be enumerated
The general assembly shall be composed of such under the bylaws of the cooperative.
members who are entitled to vote under the articles
of cooperation and bylaws of the cooperative. "ART. 34. Meetings.

"ART. 33. Powers of the A regular meeting shall be held annually by the
general Assembly. general assembly on a date fixed in the bylaws, or if
not so fixed, on any dated within ninety (90) days
after the close of each fiscal year:
 "ART. 35. Quorum.
Provided, That notice of regular meetings shall be
sent in writing, by posting or publication, or – A quorum shall consist of at least twenty-five per
through other electronic means to all members of centum (25%) of all the members entitled to vote. In
record. the case of cooperative banks, the quorum shall be as
provided in Article 99 of this Code. In the case of
"(2) Whenever necessary, a special meeting of the electric cooperatives registered under this
general assembly may be called at any Code, a quorum, unless otherwise provided in the
time by a majority vote of the board of directors or bylaws, shall consist of five per centum (5%) of all
as provided for in the bylaws: Provided, the members entitled to vote.
That a notice in writing shall be sent one (1) week
prior to the meeting to all members who "ART. 36. Voting System.
are entitled to vote. However, a special meeting shall Each member of a primary cooperative shall have
be called by the board of directors after only one (1) vote. In the case of members of
compliance with the required notice within from at secondary or tertiary cooperatives, they shall have
least ten per centum (10%) of the total one (1) basic vote and as many incentive votes as
members who re entitled to vote to transact specific provided for in the bylaws but not exceed five (5)
business covered by the call. votes. The votes cast by the delegates shall be
deemed as votes cast by the members
"If the board fails to call a regular or a special
meeting within the given period, the Authority, "However, the bylaws of a cooperative other than a
upon petition of ten per centum (10%) of all the primary may provide for voting by proxy.
members of the cooperative who are entitled Voting by proxy means allowing a delegate of a
to vote, and for good cause shown, shall issue an cooperative to represent or vote in behalf of
order to the petitioners directing them to another delegate of the same cooperative.
call a meeting of the general assembly by giving
proper notice as required in this Code or in
"ART. 37. Composition and
the bylaws; Term of the Board of Directors.

"(3) In the case of a newly approved cooperative, a Unless otherwise provided in the bylaws, the
special general assembly shall be called, direction and management of the affairs of a
as far as practicable, within ninety (90) days from cooperative shall be vested in a board of directors
such approval; which shall be composed of not less that five (5) nor
more than fifteen (15) members elected by the
"(4) The Authority may call a special meeting of the general assembly for a term of two (2) years and
cooperative for the purpose of reporting shall hold office until their successors are duly
to the members the result of any examination or elected an qualified, or until duly removed for
other investigation of the cooperative affairs; caused.
and
"(5) Notice of any meeting may be waived, expressly "ART. 38. Powers of the Board
or impliedly, by any member. of Directors.
 "ART. 39. Directors.
"(3) A majority of the members of the Board shall
– (1) Any member of a cooperative who under the constitute a quorum or the conduct of
bylaws of the cooperative, has the right to vote and business, unless the bylaws proved otherwise.
who possesses all the qualifications and none of the "
disqualifications provided in the laws or bylaws (4) Directors cannot attend or vote by proxy at
shall be eligible for election as director. board meetings.

"(2) The cooperative may, by resolution of its board

"ART. 41. Vacancy in the Board of
of directors, admit as directors, or committee
Directors.
member one appointed by any financing institution
from which the cooperative received financial
assistance solely to provide technical knowledge not Any vacancy in the board of directors, other
available within its membership. Such director or than by expiration of term, may be filled by the vote
committee member not be a member of the of at least a majority of the remaining directors, if
cooperative and shall have no powers, rights, nor still constituting a quorum; otherwise, the vacancy
responsibilities except to provided technical must be filled by the general assembly in a regular
assistance as required by the cooperative. or special meeting called for the purpose. A director
so elected to fill a vacancy shall serve only the
"(3) The members of the board of directors shall not unexpired term of his predecessor in office.
hold any other position directly involved
in the day to day operation and management of the
cooperative. "ART. 42. Officers of the
Cooperative.
"(4) Any person engaged in a business similar to that The board of directors shall elect from among
of the cooperative or who in any way themselves the chairperson and vice-chairperson,
has a conflict of interest with it, is disqualified from and elect or appoint other officers of the
election as a director of said cooperative. cooperative from outside of the board in accordance
with their bylaws. All officers shall serve during
"ART. 40. Meeting of the Board good behavior and shall not be removed except for
and Quorum Requirement. cause after due hearing. Loss of confidence shall not
be a valid ground for removal unless evidenced by
– (1) In the case of primary cooperatives, regular acts or omission causing loss of confidence in the
meetings of the board of directors shall be held at honesty and integrity of such officer. No two (2) or
least once a month. more persons with relationships up to the third civil
"(2) Special meetings of the board of directors may degree of consanguinity or affinity nor shall any
be held at any time upon the call of the person engaged in a business similar to that of the
chairperson or a majority of the members of the cooperative nor who in any other manner
board: Provided, That written notices of the has interests in conflict with the cooperative shall
meeting specifying the agenda of the special meeting serve as an appointive officer.
shall be given to all members of the board at least
one (1) week before the said meeting.
"ART. 43. Committees of Cooperatives.
"ART. 45. Liability of Directors,
(1) The bylaws may create an executive Officers and Committee Members.
committee to be appointed by the board of directors
with such powers and duties as may be – Directors, officers and committee members, who
delegated to it in the bylaws or by a majority vote of are willfully and knowingly vote for or assent to
all the members of the board of patently unlawful acts or who are guilty of gross
directors. negligence or bad faith in directing the affairs of
" the cooperative or acquire any personal or pecuniary
(2) The bylaws shall provide for the creation of an interest in conflict with their duty as such
audit, election, mediation and conciliation, directors, officers or committee members shall be
ethics, and such other committees as may be liable jointly and severally for all damages or
necessary for the conduct of the affairs of the profits resulting therefrom to the cooperative,
cooperative. The members of both the audit and members, and other persons.
election committee shall be elected by the general
assembly and the rest shall be appointed by the "When a director, officer or committee member
board. The audit committee shall be directly attempts to acquire or acquires, in violation of
accountable and responsible to the general his duty, any interest or equity adverse to the
assembly. It shall have the power and duty to cooperative in respect to any matter which has
continuously monitor the adequacy and effectiveness been reposed in him in confidence, he shall, as a
of the cooperative’s management control system and trustee for the cooperative, be liable for
audit the performance of the cooperative and its damages and shall be accountable for double the
various responsibility centers. profits which otherwise would have
accrued to the cooperative.
"Unless otherwise provided in the bylaws, the board,
in case of a vacancy in the committees,
"ART. 46. Compensation.
may call an election to fill the vacancy or appoint a
person to fill the same subject to the (1) In the absence of any provisions in the bylaws
provision that the person elected or appointed shall fixing their compensation, the directors shall not
serve only for the unexpired portion of receive any compensation except for reasonable per
the term. diems: Provided however, That the directors and
officers shall not be entitled to any per diem when,
"ART. 44. Functions, Responsibilities in the preceding calendar year, the cooperative
and Training Requirements of reported a net loss or had a dividend rate less than
Directors, Officers and Committee the official inflation rate for the same year. Any
Members. compensation other than per diems may be granted to
directors by a majority vote of the members with
the functions and responsibilities of directors, voting rights at a regular or special general
officers and committee members, as well as their assembly meeting specifically called for the
training requirements, shall be in accordance with purpose: Provided, That no additional compensation
the rules and regulations issued by the Authority. other than per diems shall be paid during the first
year of existence of any cooperative.
 Provided, That full disclosure of the adverse
"(2) The compensation of officers of the cooperative interest of the directors involved is made at such
as well as the members of the meeting, and that the contract is fair and reasonable
committee as well as the members of the committees under the circumstances.
created pursuant to this Code or its
bylaws may be fixed in the bylaws. "ART. 48. Disloyalty of a Director.

"(3) Unless already fixed in the bylaws, the

– A director who, by virtue of his office, acquires
compensation of all other employee shall be
for himself an opportunity which should belong to
determined by the board of directors.
the cooperative shall be liable for damages
and must account for double the profits that
"ART. 47. Dealings of Directors, otherwise would have accrued to the cooperative by
Officers, refunding the same, unless his act ha s been ratified
or Committee Members.
by a three-fourths (3/4)vote of all the members with
voting rights, present and constituting a quorum.
A contract entered into by the cooperative wvith one This provision shall be applicable, notwithstanding
(1) or more of its directors, officers, and committee the fact that the director used his own funds in the
members is voidable, at the option of the cooperative, venture.
unless all the following conditions are present.

"ART. 49. Illegal Use of Confidential

"(1) That the presence of such director in the board
Information.
meeting wherein contract was approved
was not necessary to constitute a quorum for such
– (1) A director or officer, or an associate of a
meeting;
director or officer, who, for his benefit or
advantage or that of an associate, makes use of
"(2) That the vote of such director was not necessary
confidential information that, if generally known,
for the approval of the contract;
might reasonably be expected to adversely affect the
operation and viability of the cooperative, shall be
"(3) That the contract is fair and reasonable under
held:
the circumstances; and

"(a) Liable to compensate the cooperative for the

"(4) That in the case of an officer or committee
direct losses suffered by the
member, the contract with the officer or
cooperative as a result of the illegal use of
committee member has been previously authorized by
information; and
the general assembly or by the board
"(b) Accountable to the cooperative for any direct
of directors. "Where any of the first two conditions
benefit or advantage received or
set forth in the preceding paragraph is absent, in the
yet to be received by him or his associate, as a result
case of a contract with a director, such contract may
of the transaction.
be ratified by a three-fourths (3/4) vote of all the
"(2) The cooperative shall take the necessary steps
members with voting rights, present and constituting
to enforce the liabilities described in
a quorum in a meeting called for the purpose: