Philippine Cooperative Code of 2008 PDF

CHAPTER 1: PHILIPPINE A cooperative enjoys a lot of  A consumer cooperative procures land management in areas covered COOPERATIVE CODE OF 2008 power.3 It has the power to exclusively and di...

CHAPTER 1: PHILIPPINE A cooperative enjoys a lot of  A consumer cooperative procures land management in areas covered COOPERATIVE CODE OF 2008 power.3 It has the power to exclusively and distributes commodities to by agrarian reform. (REPUBLIC ACT NO. 9520) use its registered name, to sue and be members and non-members.  A cooperative bank is organized for sued, and the power of succession. It has  A producer cooperative undertakes the primary purpose of providing a INTRODUCTION the power to amend its articles of joint production, whether wide range of financial services to cooperation, to adopt bylaws, which is agricultural or industrial, and is cooperatives and their members. A cooperative is an autonomous not contrary to law, morals or public formed and operated by its  A dairy cooperative has members and duly registered association of policy, and to amend and repeal the members to undertake the engaged in the production of fresh persons, with a common bond of interest, same. It has the power to deal with real production and processing of raw milk, which may be processed who have voluntarily joined together to and personal property, and to enter into materials or goods produced by its and/or marketed as dairy products. achieve their social, economic, and division, merger, or consolidation. It has members into finished or processed  An education cooperative is cultural needs and aspirations by making the power to form subsidiary products for sale by the cooperative organized for the primary purpose equitable contributions to the capital cooperatives and join federations and to its members and non-members. of owning and operating licensed required, patronizing their products and unions. It has the power to avail of loans,  A marketing cooperative engages in educational institutions services and accepting a fair share of the credits, grants, donations from domestic the supply of production inputs to notwithstanding the provisions of risks and benefits of the undertaking in and foreign sources, and to avail of members and markets their Republic Act No. 9155. accordance with universally accepted preferential rights under RA 7160 (Local products.  An electric cooperative is organized cooperative principles.1 The law on Government Code of 1991). It has the  A service cooperative engages in for the primary purpose of cooperative is found in Republic Act No. power to organize and operate schools in medical and dental care, undertaking power generations, 9520, otherwise known as the Philippine accordance with R.A. 9155 (Governance hospitalization, transportation, utilizing renewable energy sources, Cooperative Code of 2008, which was of Basic Education Act of 2001), and to insurance, housing, labor, electric including hybrid systems, passed on February 17, 2009, and exercise such other powers granted by light and power, communication, acquisition, and operation of sub- amended Republic Act No. 6939 (the the Philippine Cooperative Code or professional and other services. transmission or distribution to its Cooperative Code of the Philippines)2 necessary to carry out its purpose or  A multipurpose cooperative household members. purposes as stated in its articles of combine two or more of the  A financial service cooperative is Powers cooperation. business activities of the different organized for the primary purpose types of cooperatives. of engaging in savings, credit, and Types of Cooperatives  An advocacy cooperative promotes other financial services. and advocates cooperativism among  A fisherman cooperative is 1 Article 1 of R.A. No. 9520 (Philippine Cooperative Code Cooperatives are of different types:4 its members and the public through organized by marginalized fishers in of 2008). socially-oriented projects, education localities whose products are 2 Republic Act No. 6939 (the Cooperative Code of the Philippines), which was passed on March 10, 1990,  A credit cooperative promotes and and training, research and marketed either as fresh or created the Cooperative Development Authority, undertakes savings and lending communication, and other similar processed products. transferred the registration and regulation functions of services among its members, existing government agencies on cooperatives and activities to reach out to its intended  A health services cooperative is consolidated the same with the Cooperative generating a common pool of funds beneficiaries. organized for the primary purpose Development Authority. The law was more than to provide financial assistance and  An agrarian reform cooperative is of providing medical, dental, and substantially amended on February 17, 2009 by the passage of Republic Act No. 9520 (the Philippine related services to its members for organized by marginal farmers other health services. Cooperative Code of 2008. On August 8, 2019, Republic productive and provident purposes. majority of which are agrarian  A housing cooperative assists or Act No. 11364 (the Cooperative Development Authority reform beneficiaries for the purpose provides access to housing for the Charter of 2019) was passed to reorganize and of developing an appropriate benefit of its regular members who 1 strengthen the Cooperative Development Authority (CDA)so it can carry out the provisions of Republic Act 3 Article 9, R.A. No. 9520. system of land tenure, land actively participate in the savings Page No. 9520, repealing for said purpose Republic Act No. 4 Article 23, R.A. No. 9520. development, land consolidation, or 6939.  program for housing, co-owned and and purposes of the proposed the extent of their contribution to the may be called at any time by a majority controlled by its members. cooperative, as well as an economic share capital of the cooperative.9 vote of the board of directors or as  An insurance cooperative is survey, indicating therein the area of Membership in the cooperative maybe provided for in the bylaws. engaged in the business of insuring operation, the size of membership, and terminated by the withdrawal of the life and property of cooperatives other pertinent data.6 member, death or insanity of member in The CDA may call for a special and their members. primary cooperatives, insolvency and meeting for the purpose of reporting to  A transport cooperative includes A cooperative shall have limited dissolution of a member in secondary the members the result of any land and sea transportation, limited liability and shall exist for a period not and tertiary representatives, and examination or other investigation of the to small vessels defined or classified exceeding 50 years from the date of termination by a vote of the majority of cooperative affairs.12 A quorum shall under the Philippine maritime laws, registration unless sooner dissolved or all the members of the board of directors consist of at least 25% of all the members and organized under Republic Act unless said period is extended. All for any of the following causes:(1) when entitled to vote but in the case of No.9520. cooperatives applying for registration a member has not patronized any of the cooperative banks, the quorum shall be  A water service cooperative is shall file with the CDA the notarized services of the cooperative for an one-half plus one of the numbers of organized to own, operate, and articles of cooperation, the bylaws, and unreasonable period of time;(2) when a voting shares of all the members in good manage waters systems for the the general statement together with the member has continuously failed to standing in accordance with Article 99 of provision and distribution of economic Survey. comply with his obligations; (3) when a the law. In the case of electric potable water for its members and member has acted in violation of the cooperatives, a quorum shall consist of their households. Membership in a Cooperative bylaws and the rules of the cooperative; 5% of all the members entitled to vote,  A worker’s cooperative is organized and(4) for any act or omission injurious unless otherwise provided in the by workers, including the self- There are two kinds of members or prejudicial to the interest or the bylaws.13 As to the voting system, each employed, who are at the same time in a cooperative:(1) regular member who welfare of the cooperative.10 member of a primary cooperative shall the members and owners of the has complied with all the membership have only one vote, while members of enterprise, to provide employment requirements and entitled to all rights General Assembly secondary or tertiary cooperatives shall and business opportunities to its and privileges of membership; and (2) have one basic vote and as many members and manage it in associate member who has no voting The general assembly is the incentive votes as provided for in the accordance with cooperative rights and is entitled only to such rights highest policy-making body of the bylaws but not to exceed five votes.14 principles. and privileges as the bylaws may cooperative, composed of such members provide.7 To become a member, an who are entitled to vote under the Board of Directors Registration of Cooperatives individual must be of legal age, Filipino articles of cooperation and bylaws of the citizen, capable, and willing to perform cooperative.11 Its powers include: (1) Unless otherwise provided in the Fifteen or more Filipinos of legal the responsibilities of a member. determination and approval of bylaws, the direction and management of age, having a common bond of interest amendments to the articles of the affairs of a cooperative shall be and are actually residing or working in Associate members need to cooperation and bylaws;(2) election or vested in a board of directors which shall the intended area of operation, may qualify for regular membership within appointment of the members of the be composed of 5 to 15 members elected organize a primary cooperative, the two years. Elective officials are ineligible board of directors and their removal for by the general assembly for a term of two prospective members of which must to be officers or directors of cooperatives cause; and (3) approval of developmental years unless removed for cause.15 The have completed a Pre-Membership except for party list representatives.8 The plans of the cooperative. Regular members of the board of directors shall Education Seminar (PMES).5 They shall members of the cooperative shall be meetings of the general assembly shall be not hold any other position directly submit to CDA a general statement liable for the debts of the cooperative to held annually, while special meetings describing, among others the structure 2 12 Article 34, R.A. No. 9520. 6 Article 11, R.A. No. 9520. 9 Article 29, R.A. No. 9520. 13 Article 35, R.A. No. 9520. Page 7 10 14 Article 26, R.A. No. 9520. Article 30, R.A. No. 9520. Article 36, R.A. No. 9520. 5 Article 10, R.A. No. 9520. 8 Article 27, R.A. No. 9520. 11 8Articles 32 and 33, RA. No. 9520. 15 Article 37, R.A. No. 9520. involved in the day-to-day operation and cooperative who shall not be members of Philippine Cooperative Code or its management of the cooperative. Any the board and shall not be removed Liability for Damages and Secret bylaws, may be fixed in the bylaws. member of a cooperative who has the except for cause after due hearing. Loss Profits21 Unless already fixed in the bylaws, the right to vote and who possesses all the of confidence is not a valid ground for compensation of all other employees qualifications and none of the removal unless there is proof of acts or Directors, officers, and shall be determined by the board of disqualifications provided in the laws or omission causing loss of confidence in committee members, who willfully and directors. bylaws shall be eligible for election as a the honesty and integrity of such officer. knowingly vote for or assent to patently director. Any person engaged in a Relatives within the third civil degree of unlawful acts or who are guilty of gross Self-dealing Directors, Officers, or business similar to that of the consanguinity or affinity and those negligence or bad faith in directing the Committee Members23 cooperative or who in any way has a persons engaged in a business similar to affairs of the cooperative or acquire any conflict of interest with it is disqualified that of the cooperative or who have personal or pecuniary interest in conflict A contract entered into by the from election as a director of the said interests in conflict with the cooperative with their duty as such directors, officers cooperative with one or more of its cooperative.16 shall not be appointed as officers.19 or committee members shall be liable directors, officers, and committee jointly and severally for all damages or members is voidable, at the option of the Regular meetings of the board of Committees of the Cooperative20 profits resulting there from to the cooperative, unless all the following directors of primary cooperatives shall cooperative, members, and other persons. conditions are present: (1) that the be held at least once a month, while The bylaws may create an When they attempt to acquire or acquire, presence of such director in the board special meetings may be called at any executive committee to be appointed by in violation of their duty, any interest or meeting wherein contract was approved time by the chairperson or a majority of the board of directors with such powers equity adverse to the cooperative in was not necessary to constitute a quorum the members of the board. Unless the and duties as may be delegated to it in respect to any matter which has been for such meeting: (2) that the vote of such bylaws provide otherwise, a majority of the bylaws or by a majority vote of all the reposed in him in confidence, they shall, director was not necessary for the the members of the board shall constitute members of the board of directors. The as trustees for the cooperative, be liable approval of the contract; (3) that the a quorum for the conduct of business, bylaws shall provide for the creation of for damages and shall be accountable for contract is fair and reasonable under the and directors cannot attend or vote by an audit, election, mediation and double the profits which otherwise circumstances; and (4) that in the case of proxy at board meetings.17 Any vacancy conciliation, ethics, and such other would have accrued to the cooperative. an officer or committee member, the in the board of directors may be filled by committees as may be necessary for the contract with the officer or committee the vote of at least a majority of the conduct of the affairs of the cooperative. Compensation22 member has been previously authorized remaining directors, if still constituting a The members of both the audit and by the general assembly or by the board quorum but the vacancy must be filled election committee shall be elected by the In the absence of any provisions of directors. If any of the first two by the general assembly in a regular or general assembly and the members of the in the bylaws fixing their compensation, conditions is absent, in the case of a special meeting called for the purpose if other committees shall be appointed by the directors shall not receive any contract with a director, such contract there is no longer a quorum and if the the board. The audit committee shall be compensation except for reasonable per may be ratified by a three-fourths vote of vacancy is due to expiration of the term directly accountable and responsible to diems, but they shall not be entitled to all the members with voting rights, of the director.18 the general assembly and shall any per diem when, in the preceding present and constituting a quorum in a continuously monitor the adequacy and calendar year, the cooperative reported a meeting called for the purpose, provided The chairperson and vice- effectiveness of the cooperative's net loss or had a dividend rate less than full disclosure of the adverse interest of chairperson shall be elected by the board management control system and audit the official inflation rate for the same the directors involved is made at such of directors from among themselves. the performance of the cooperative and year. The compensation of officers of the meeting, and that the contract is fair and They shall appoint the officers of the its various responsibility centers. cooperative as well as the members of reasonable under the circumstances. the committees created pursuant to the 3 16 Article 39, R.A. No. 9520. Page 17 19 21 Article 40, R.A. No. 9520. Article 42, R.A. No. 9520. Article 45, R.A. No. 9520. 18 Article 41, R.A. No. 9520. 20 Article 43, R.A. No. 9520. 22 Article 46, R.A. No. 9520. 23 Article 47, R.A. No. 9520. Disloyalty of a Director24 of the general public are not subject to through a petition signed by a majority Liquidation of a Cooperative30 any taxes and fees imposed under the of its board of directors or other officers A director who, by virtue of his internal revenue laws and other tax laws. managing its affairs, verified by its Every cooperative whose term office, acquires for himself an Business transactions of members with chairperson or board secretary or one of has expired or was voluntary dissolved opportunity which should belong to the the cooperative are not subject to any its directors. The petition shall state all or was dissolved through an appropriate cooperative shall be liable for damages taxes and fees. Cooperatives transacting claims and demands against it and that judicial proceeding shall continue to exist and must account for double the profits business with both members and non- its dissolution was resolved upon by the for three years after the time it is that otherwise would have accrued to the members are subjected only to tax on affirmative vote of at least three-fourths dissolved for the purpose of prosecuting cooperative by refunding the same, even their transactions with non-members, but of all the members with voting rights, and defending suits by or against it, if he used his own funds in the venture the cooperatives continue to enjoy present and constituting a quorum at a settlement and closure of its affairs, and unless his act has been ratified by a certain tax exemptions. meeting called for that purpose. disposition, conveyance, and distribution three-fourths vote of all the members of its properties and assets. with voting rights, present, and Insolvency27 Involuntary dissolution, on the constituting a quorum. other hand, is done by order of a A cooperative, which is unable competent court after a due hearing on Removal of Officers25 to fulfill its obligations to creditors due to the grounds of violation of any law, insolvency, may apply for such remedies regulation, or provisions of its bylaws, or Complaints about the removal of under Act No. 1956 (the Insolvency insolvency. Dissolution may also be done any elected officer shall be filed with the Law).28 by order of the Cooperative board of directors. Such officer shall be Development Authority (CDA. The CDA given the opportunity to be heard, and Dissolution29 may suspend or revoke, after due notice the majority of the board of directors and hearing, the certificate of registration may place him under preventive The dissolution of a cooperative of a cooperative on any of the following suspension pending the resolution of the may be done in different ways. If there grounds: (1) having obtained its investigation. Upon finding of a prima are no creditors affected, voluntary registration by fraud; (2) existing for an facie evidence of guilt, the board shall dissolution may be done by a majority illegal purpose; (3) willful violation, present its recommendation for removal vote of the board of directors, and by a despite notice by the CDA, of the to the general assembly. Thereafter he resolution duly adopted by the provisions of the Philippine Cooperative may be removed by three-fourths votes affirmative vote of at least three-fourths Code or its bylaws; (4) willful failure to of the regular members present and of all the members with voting rights, operate on a cooperative basis; and (5) constituting a quorum, in a regular or present and constituting a quorum at a failure to meet the required minimum special general assembly meeting called meeting to be held upon call of the number of members in the cooperative. for the purpose, after he is given an directors. If there are creditors affected, Lastly, a cooperative may be dissolved opportunity to be heard at said assembly. the voluntary dissolution may be done for its failure to organize and operate within two years after the issuance of its Tax Treatment of Cooperatives26 27 Article 63, R.A. No. 9250. certificate of registration or has not 28 The Code provides that a cooperative, which is unable to fulfill its obligations to creditors due to insolvency, carried on its business for two Cooperatives which do not may apply for such remedies under Act No. 1956 (he consecutive years, without justifiable transact any business with non-members Insolvency Law) but Act No, 1956, however; was already cause. repealed by Republic Act No.10142(Financial 4 Rehabilitation and Insolvency Act of2010). The latter 24 Article 48, R.A. No. 9520. law however, does not include cooperatives in defining Page 25 Article 50, R.A. No. 9520. the term "debtor." 26 Articles 60 and 61, R.A. No. 9520. 29 Articles 64 to 68, R.A. No. 9520. 30 Article 69, R.A. No.9250.