Purposes.
SEC. 9. Purposes.—A co-operative may be registered for the mutual benefit of the members thereof, who have for their common objective any lawful purpose or purposes, on a co-operative basis, more particularly those noted hereunder—To encourage thrift among the members;
To create funds and extend credit to the members for productive and provident purposes;
To encourage scientific production and marketing among the members;
To provide goods, services and other requirements to the members;
To build houses or to acquire lands for the members;
To insure against losses of the members;
To promote and advance the economic, social and educational condition of the members;
To undertake such other activities calculated to help the members to solve their problems on a co-operative basis; and
To co-ordinate and facilitate the activities of co-operatives.
Service motive.
SEC. 10. Service motive.—The object of every co-operative shall be to provide maximum service to its members, not to earn the most profit for its members nor to operate the business for charitable purposes.
Legality declared; not in restraint of trade.
SEC. 11. Legality declared; not in restraint of trade.—No co-operative or method or act thereof which complies with this Act shall be deemed a conspiracy or combination in restraint of trade or an illegal monopoly, or an attempt to lessen competition or fix prices arbitrarily in violation of any of the laws of the Philippines.
Who may organize.
SEC. 12. Who may organize.—Fifteen or more persons, citizens of the Philippines who are either ultimate consumers or primary producers and residing in the proposed area of operation of a co-operative, may organize a cooperative under this Act: Provided, That two or more co-operatives may unite to organize a federation of cooperatives.
Survey and application.
SEC. 13. Survey and application.—Every group of persons or co-operatives contemplating the organization of a co-operative under this Act, shall undertake a survey to draw up a program of activities, indicating the area of operation, the field of membership—initial and potential—and other data as may be required by the Administrator to enable him to determine the economic need and the advisability for registering the proposed co-operative. Such group of persons or cooperatives may thereupon apply to the Administrator for the registration of the co-operative.
Co-operatives which may be registered.
SEC. 14. Co-operatives which may be registered.—Subject to the provisions of this Act and of regulations issued pursuant hereunder, a co-operative which has as its purposes one or more of those specified in section nine may be registered under this Act, with or without limited liability: Provided, That the liability of a co-operative which has a co-operative as a member shall be limited.
Administrator to decide certain questions.
SEC. 15. Administrator to decide certain questions.—The Administrator shall decide all questions as to whether the articles of incorporation and the by-laws comply with the provisions of this Act and the regulations and whether the purposes of the proposed co-operatives are in accordance with section nine.
Articles of incorporation.
SEC. 16. Articles of incorporation.—
Articles of incorporation of a proposed co-operative shall be signed by each of the subscribers and acknowledged by them if natural persons, and by the presidents or secretaries if cooperatives, before a notary public or other officers authorized to take acknowledgments.
The articles of incorporation shall, within the limitations of this Act, set forth:
The name of the co-operative which shall include the word "co-operative"; the co-operative registered under this Act with unlimited liability shall also include at the end of its name the word "unlimited";
The purpose or purposes for which the co-operatives is to be registered;
The term of existence of the co-operative which may be perpetual;
The area of operation and the postal address of its principal office;
The names, nationality and the postal addresses of the subscribers;
The field of membership;
The names and postal addresses of the directors who shall manage the co-operative for the first term;
A statement of whether the co-operative is to be registered with or without capital stock and the number of shares of stock or membership subscribed for;
If with capital stock, a statement of the amount of authorized capital, the number and types of shares and the par value thereof which may be placed at any figure, and the rights, preferences and restrictions of each type of shares; and the number and amount of capital stock subscribed for and the amount paid thereon by each member, indicating their names and postal addresses;
If without capital stock, a statement of whether the property rights of members shall be equal or unequal, and, if unequal, the general rule or rules by which the rights and interests of each member shall be determined and fixed;
The articles of incorporation may also contain any other provisions not inconsistent with this Act or any other law, for the conduct of the business affairs of the co-operative.
Four copies each of the articles of incorporation, proposed by-laws and the result of the survey required under section thirteen together with the bond of the accountable officers in such amount as may be prescribed in regulations, shall be submitted to the Administrator for registration.
The Administrator shall not register a co-operative unless the articles of incorporation is accompanied by a sworn statement of the treasurer elected by the subscribers showing:
In the case of a co-operative with capital stock, that at least twenty per centum of the number of authorized shares of capital stock has been subscribed and that at least twenty per centum of the subscription has been either paid to him in cash or that there has been transferred to him in trust and received by him property the fair valuation of which is equal to twenty per centum of the subscriptions; or
In the case of a co-operative without capital stock, the number of members and the amount of their capital contribution either paid to him in cash or that there has been transferred to him in trust and received by him property the fair valuation of which is equal to the capital contribution of the members; under both clauses (a) and (b) of this subsection, for the benefit and to the credit of the co-operative, and further, that the Administrator shall satisfy himself that the capital contribution of members under this subsection is sufficient for the initial operation of the cooperative.
Adoption of by-laws; contents.
SEC. 17. Adoption of by-laws; contents.—
Each co-operative to be registered under this Act shall adopt for its management a code of by-laws not inconsistent with the powers granted by this Act. The by-laws shall be filed with the Administrator at the time of filing the articles of incorporation and shall take effect upon registration and issuance of a certificate of registration by the Administrator.
The by-laws of each co-operative shall provide for—
The qualifications for admission to membership and the payment to be made or interest to be acquired as a condition to the exercise of the right of membership;
The rights and liabilities of membership;
The circumstances under which the withdrawal and the expulsion of members shall be permitted;
The procedure to be followed in cases of withdrawal, ineligibility and/or death of members;
The conditions under which the transfer of a share or interest of the member shall be permitted;
The time, place and manner of calling and conducting assemblies and meetings and the right of voting;
The general conduct of the business of the co-operative, including the powers and duties of directors, officers and committee members;
The manner in which the capital may be raised and the purposes for which it can be utilized;
The mode of custody and of investment of surplus funds;
The manner of keeping accounts;
The method of distribution of net savings;
The manner of adopting, amending, repealing and abrogating by-laws;
In case of co-operatives loaning funds;
the conditions governing the granting of loans, the determination of the maximum and normal credit of members and the maximum loan which may be granted to a member,
the rate of interest on loans,
the purposes for which the loans may be granted,
the security for payment of loans,
the period of repayment of loans, and
the extension of the period of payment and renewal of loans, and
Other matters incident to the purposes and activities of the co-operative.
Registration.
SEC. 18. Registration.—
If the Administrator is satisfied that a co-operative has complied with the provisions cf this Act and the regulations, and that its proposed articles of incorporation and by-laws are not contrary thereto, he may register the co-operative. The articles of incorporation and by-laws shall become operative only upon registration and issuance of a certificate to that effect by the Administrator.
If the Administrator refuses to register a co-operative, he shall record the reasons for his refusal. An appeal shall lie to the Secretary of Commerce and Industry from an order of the Administrator refusing to register a cooperative within two months from the date of the receipt of such order by the secretary of the proposed co-operative, and the decision of the Secretary of Commerce and Industry on the matter shall be final.
Evidence of registration.
SEC. 19. Evidence of registration.—A certificate of registration signed by the Administrator under his official seal shall be conclusive evidence that the co-operative therein mentioned is duly registered unless it is proven that the registration of the co-operative has been cancelled.
Amendment of articles of incorporation and by-laws.
SEC. 20. Amendment of articles of incorporation and by-laws.—
The articles of incorporation and by-laws made under this Act and the regulations may be amended, repealed or abrogated by general assemblies of members and shall take effect upon registration thereof and the issuance of the corresponding certificate by the Administrator.
If the Administrator refuses to register an amendment, repeal or abrogation under subsection (1), he shall record the reasons for his refusal. An appeal shall lie to the Secretary of Commerce and Industry from an order of the Administrator refusing to register the amendment, repeal or abrogation within two months from the date of the receipt of such order by the secretary of the cooperative and the decision of the Secretary of Commerce and Industry on the matter shall be final.
Change of liability.
SEC. 21. Change of liability.—A co-operative may, subject to the provisions of this Act and to any regulations made in this behalf, change its liability by amending its articles of incorporation and by-laws, provided that:—
The co-operative shall give notice, both by publication in a newspaper of general circulation and by posting in a conspicuous place in the locality where the co-operative has its principal office, of its intention to change its liability to all its members and creditors;
Any member or creditor shall, notwithstanding any by-laws or contract to the contrary, have the option of withdrawing his interest in the co-operative within three months of the service of such notice on him and the change shall not take effect until all such claims have been satisfied ; and
Any member or creditor, who does not exercise his option within the period aforesaid, shall be deemed to have assented to the change: Provided, That the change shall take effect at once if all the members and creditors assent thereto.
Power of federation of co-operatives to direct amendment of by-laws.
SEC. 22. Power of federation of co-operatives to direct amendment of by-laws.—
Subject to the regulations, whenever it appears to a federation of co-operatives that an amendment of the by-laws of a co-operative which is a member and a debtor of such federation is necessary or desirable in the interest of such co-operative, it may in the prescribed manner, call upon the co-operative to make the amendment within such time as it may specify.
If the co-operative fails to make the amendment or repay the loan within the time specified, the federation may expel the co-operative from membership and take action to collect the loan.
Division of co-operatives.
SEC. 23. Division of co-operatives.—Any co-operative registered under this Act may, by a resolution approved by a vote of three-fourths of the members present and eligible to vote at a general assembly specifically convened for the purpose, resolve to divide itself into two or more co-operatives. The procedure for such division shall be prescribed in the regulations. The new co-operatives shall become legally established upon registration by the Administrator.
Transfer of assets and liabilities of co-operatives.
SEC. 24. Transfer of assets and liabilities of co-operatives.—
Any co-operative registered under this Act may, by a resolution approved by a vote of three-fourths of the members present and eligible to vote a general assembly held for the purpose, resolve to transfer its assets and liabilities to any other co-operative which has expressed willingness to accept them by resolution of its general assembly. The resolution shall become effective upon approval by the Administrator and cancellation of the registration of the co-operative transferring its assets and liabilities.
Any two or more co-operatives registered under this Act may, by a resolution approved by a vote of three-fourths of the members present and eligible to vote at a general assembly of each such co-operative held for the purpose, resolve to join together as a single co-operative.The resolution shall become effective upon the approval and registration of the new co-operative and the cancellation of the registration of the co-operation which have ceased to exit.
The procedure to be followed under this section shall be prescribed in the regulations.
Federation of co-operatives.
SEC. 25. Federation of co-operatives.—
A federation of co-operatives may be registered under this Act for any or all for the following purpose:
To carry on any co-operative enterprise authorized under section nine;
To carry on, encourage and assist education and advisory work relating to co-operation;
To render service designed to insure efficiency and uniformity in the conduct of the business of its member co-operatives and to standardized their bookkeeping, accounting and other procedures;
To print, publish and circulate any newspaper or other publication in the interest of co-operative enterprises, principles and practices;
To co-ordinate and facilitate the activities of its member co –operatives and do all other things incidental and conducive to the attainment of its object; and
To discharge other duties prescribed by the regulations. A federation of co-operatives may be registered by carrying out the formalities provided under this Chapter for registration of a co-operative. No federation of co-operatives shall be registered without the previous approval of the Secretary of Commerce and Industry.
The Secretary of Commerce and Industry, upon recommendation of the Administrator, shall have the power to issue regulations regarding the organization, registration, administration, operation and supervision of federations of co-operatives, and in particular on the duties of federations pf co-operatives; the procedure and conditions for the affiliation of co-operative, the condition under which natural persons may become members of federation of co-operatives, the representation of members and the composition of its board of directors and committees; and the manner of holding general assemblies, voting and other matters as may be prescribed.
Co-operatives registered under this Act within a province may unite to register as a provincial federation of co-operatives according to the type of business carried on. There shall not be more than one federation of co-operatives of a type within a province. A provincial federation of co-operatives may, with the approval of the Administrator and the central federation of co-operatives of which it is a member, extend its operation to neighboring provinces until such time as its operation can be taken over by a similar federation of co-operatives registered in each one of the province. Large cities shall, with the approval of Administrator, be treated as a province in so far as the registration of provincial federations of co-operatives are concerned.
Each type of provincial federations of co-operatives may unite to register only one central federation of co-operatives at the national level, to which shall be affiliated all federations of co-operatives and co-operatives having common economic, social and administrative objectives.
There shall be registered only one national co-operative union at the national level to which all types of cooperatives, provincial and central federations of co-operatives, shall affiliate. The co-operative union shall have the following duties:
To represent all the co-operatives in the Philippines at home and abroad;
To acquire, analyze and disseminate economic, statistical and other information regarding co-operatives;
To conduct studies in the economic, legal, financial, social and other phases of co-operation, and publish the results thereof;
To promote the knowledge of co-operative principles and practices;
To develop the co-operative movement in the Philippines within the framework of the economic plan of the Government;
To supervise federations of co-operatives; and
To advise the appropriate authorities on all questions relating to co-operatives.
Source: Supreme Court E-Library, Republic of the Philippines. Philippine laws are public documents (works of the government).
