Cooperatives in the Philippines: An Introduction

[Refer to the updated Introduction to the Philippine Cooperative Code of 2008, taking into consideration the enactment of the new law, Republic Act No. 9520. See also How to Register a Cooperative] A cooperative is a duly registered association of persons with a common bond of interest, who have voluntarily joined together to achieve a lawful common social or economic end, making equitable to contribution to the capital required and accepting a fair share of the risks and benefits of the undertaking in accordance with universally accepted cooperative principle.

The declared purpose of the law governing cooperatives (Republic Act 6938, also known as the Cooperative Code of the Philippines) is to foster the creation and growth of cooperatives as a practical vehicle for promoting self-reliance and harnessing people power towards the attainment of economic development and social justice. The law provides important benefits to the cooperative and its empowered members, based on our experience in handling client-cooperatives.

The following are the declared principles of cooperativism:

Open and voluntary membership. Membership in a cooperative is voluntary and available to all individuals regardless of their social, political, racial or religious background or beliefs.

Democratic control. Cooperatives are democratic organizations. Their affairs are administered by persons elected or appointed in a manner agreed upon by the members. Members of primary cooperatives have equal voting rights on a one-member-one-vote principle.

Limited interest in capital. Share capital shall receive a strictly limited rate of interest.

Division of net surplus. Net surplus arising out of the operations of a cooperative belongs to its members and shall be equitably distributed for cooperative development common services, indivisible reserve fund, and for limited interest on capital and/or patronage refund in the manner provided by law.

Cooperative education. All cooperatives shall make provision for the education of their members, officers and employees and of the general public based on the principles of cooperation.

Cooperation among cooperatives. All cooperatives, in order to best serve the interest of their members and communities, shall actively cooperate with other cooperatives at local, national, and international levels.

There are different kinds of cooperatives. In general, these are: (1) Credit cooperative, which promotes thrift and savings among its members and creates funds in order to grant loans for productivity; (2) Consumer cooperative, the primary purpose of which is to procure and distribute commodities to member and non-members; (3) Producers cooperative, which undertakes joint production whether agricultural or industrial; (4) Service cooperative, which engages in medical, and dental care, hospitalization, transportation, insurance, housing, labor, electric light and power, communication and other services; and (5) Multi- purpose cooperative, which combines two or more of the business activities of these different types of cooperatives. In terms of membership, cooperatives are classified as: (a) Primary, wherein the members are natural persons of legal age; (2) Secondary, the members of which are primaries; and (3) Tertiary, the member of which are secondaries upward to one or more apex organizations. Cooperatives whose members are cooperatives are called federations or unions.

(Please refer to the amendments introduced by Republic Act No. 9520, also known as the “Philippine Cooperative Code of 2008”.)

Atty.Fred

10 thoughts on “Cooperatives in the Philippines: An Introduction

  1. Erick Soo

    Thank you for this article Atty. Fred! We are new in this industry and I find this very helpful for our artists cooperative.

    Our group is called Red Root Artists Cooperative. We are composed of young artists and creative professionals. Here is our company profile: http://www.redroot.coop

    Reply
  2. BELARMINO

    May I know the rights of a an electric cooperative consumer?Can an electric cooperative advise the consumer if seeks so on the type, kind, quality, brand and test results on the primary distribution transformers it is purchasing since these are not provided for by electric cooperative? Your prompt reply will be highly appreciated.

    Reply
  3. Leo A

    3 years ago, right after Typhoon Yolanda, a lineman from an electric co-operative approach me and ask if they could place a transformer on my post and I told him he could but under no circumstances is he to connect this transformer to my private power line. As I’m not an electrician I didn’t realize they had connected to my power line until there was a problem on my private line which affected well over 100 consumers. This electric refuses to compensate me for what i consider illegal tapping and illegally generating revenue though my line. What are my options on this matter?
    Thanks

    Reply
  4. Maria

    Hi, good day. May I know what are our remedies under the law for a lending company that disguised itself as a cooperative. Sad to say that we have been victimized by this group and they have been charging interest more than the legitimate lending companies.
    I am looking forward to your reply. Thank you.

    Reply
  5. Peter

    I have a friend in the Philippines who most urgently needs an operation for a tumour that is causing her great difficulty breathing. The family are tying to borrow the cash, about 38000p for the biopsy and the operation. She has already had a CT scan. I have been helping the family and can help them repay any loan but I don’t have the ready cash amount. I have heard of CO-OPs in the Philippine giving loans for medical treatment. Repayment is not a problem just the up front amount for the procedure. Can you give me any information about raising this amount.

    With thanks,

    Peter

    Reply
  6. Jean Mae Lloren

    I would like to know if what is the condition of cooperatives as an oragnization nowadays? Thank you.

    Reply

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