Chapter 2: Organization and Registration

Question 1

Purposes of Cooperatives (14)

Answer 1

“(1) To encourage thrift and savings mobilization among the members;

“(2) To generate funds and extend credit to the members for productive and provident purposes;

“(3) To encourage among members systematic production and marketing;

“(4) To provide goods and services and other requirements to the members;

“(5) To develop expertise and skills among its members;

“(6) To acquire lands and provide housing benefits for the members;

“(7) To insure against losses of the members;

“(8) To promote and advance the economic, social and educational status of the members;

“(9) To establish, own, lease or operate cooperative banks, cooperative wholesale and retail complexes, insurance and agricultural/industrial processing enterprises, and public markets;

“(10) To coordinate and facilitate the activities of cooperatives;

“(11) To advocate for the cause of the cooperative movements;

“(12) To ensure the viability of cooperatives through the utilization of new technologies;

“(13) To encourage and promote self-help or self-employment as an engine for economic growth and poverty alleviation; and

“(14) To undertake any and all other activities for the effective and efficient implementation of the provisions of this Code.

Question 2

True or False

The primary objective of every cooperative is to help improve the quality of life of its members.

Answer 2

True

Question 3

Objectives and Goals of a Cooperative (6)

Answer 3

“(a) Provide goods and services to its members to enable them to attain increased income, savings, investments, productivity, and purchasing power, and promote among themselves equitable distribution of net surplus through maximum utilization of economies of scale, cost-sharing and risk-sharing;

“(b) Provide optimum social and economic benefits to its members;

“(c) Teach them efficient ways of doing things in a cooperative manner;

“(d) Propagate cooperative practices and new ideas in business and management;

“(e) Allow the lower income and less privileged groups to increase their ownership in the wealth of the nation; and

“(f) Cooperate with the government, other cooperatives and people-oriented organizations to further the attainment of any of the foregoing objectives

Question 4

True or False

Cooperatives Not in Restraint of Trade. No cooperative or method or act thereof which complies with this Code 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 laws of the Philippines.

Answer 4

True

Question 5

Cooperative Powers and Capacities (11)

Answer 5

“(1) To the exclusive use of its registered name, to sue and be sued;

“(2) Of succession;

“(3) To amend its articles of cooperation in accordance with the provisions of this Code;

“(4) To adopt bylaws not contrary to law, morals or public policy, and to amend and repeal the same in accordance with this Code;

“(5) To purchase, receive, take or grant, hold, convey, sell, lease, pledge, mortgage, and otherwise deal with such real and personal property as the transaction of the lawful affairs of the cooperative may reasonably and necessarily require, subject to the limitations prescribed by law and the Constitution;

“(6) To enter into division, merger or consolidation, as provided in this Code;

“(7) To form subsidiary cooperatives and join federations or unions, as provided in this Code;

“(8) To avail of loans, be entitled to credit and to accept and receive grants, donations and assistance from foreign and domestic sources, subject to the conditions of said loans, credits, grants, donations or assistance that will not undermine the autonomy of the cooperative. The Authority, upon written request, shall provide necessary assistance in the documentary requirements for the loans, credit, grants, donations and other financial support;

“(9) To avail of preferential rights granted to cooperatives under Republic Act No. 7160, otherwise known as the Local Government Code, and other laws, particularly those in the grant of franchises to establish, construct, operate and maintain ferries, wharves, markets or slaughterhouses and to lease public utilities, including access to extension and on-site research services and facilities related to agriculture and fishery activities;

“(10) To organize and operate schools in accordance with Republic Act No. 9155, Governance of Basic Education Act of 2001 and other pertinent laws; and

“(11) To exercise such other powers granted by this Code or necessary to carry out its purpose or purposes as stated in its Articles of cooperation.

Question 6

RA 7160 is known as the….

Answer 6

Local Government Code

Question 7

RA 9155 is known as the…

Answer 7

Governance of Basic Education Act of 2001

Question 8

True or False

Organizing a Primary Cooperative. Twenty (20) or more natural persons who are Filipino citizens, of legal age, having a common bond of interest and are actually residing or working in the intended area of operation, may organize a primary cooperative under this Code:

Answer 8

False; Fifteen (15) or more natural persons

Question 9

A prospective member of a primary cooperative must have completed a ________.

Answer 9

Pre-Membership Education Seminar (PMES)

Question 10

“Any newly organized primary cooperative may be registered as __________ only after compliance with the minimum requirements to be set by the Authority.

Answer 10

Multipurpose Cooperative

Question 11

True or False

A single-purpose cooperative may transform into a multipurpose or may create subsidiaries only after at least five (5) years of operations.

Answer 11

False; Two (2) years of operations

Question 12

“ART. 11. Economic Survey. – Every group of individuals or cooperatives intending to form a cooperative under this Code shall submit to the Authority a _________ describing, among others the structure and purposes of the proposed cooperative

Answer 12

General Statement

Question 13

The structure and actual staffing pattern of the cooperative shall include a _______; Provided, further, That they shall not be allowed to operate without the necessary personnel and shall also submit an economic survey, indicating therein the area of operation, the size of membership, and other pertinent data in a format provided by the Authority.

Answer 13

bookkeeper

Question 14

“ART. 12. Liability. A cooperative duly registered under this Code shall have ________

Answer 14

Limited Liability

Question 15

“ART. 13. Term. A cooperative shall exist for a period not exceeding _________ from the date of registration unless sooner dissolve or unless said period is extended.

Answer 15

Fifty (50) years

Question 16

True or False

The cooperative term, as originally stated in the articles of cooperation, may be extended for periods exceeding fifty (50) years in any single instance by an amendment of the articles of cooperation, in accordance with this Code:

Answer 16

False; NOT excceeding ffifty (50) years

Question 17

The term of cooperative: No extension can be made earlier than _______ prior to the original or subsequent expiry date/dates unless there are justifiable reasons for an earlier extension as may be determined by the Authority.

Answer 17

Five (5) years

Question 18

“ART. 14. Articles of Cooperation.
(1) All cooperatives applying for registration shall file with the Authority the __________ which shall be signed by each of the organizers and acknowledged by them if natural persons, and by the chairpersons or secretaries, if juridical persons, before a notary public.

Answer 18

Articles of Cooperation

Question 19

The Articles of Cooperation Shall Set Forth: (8)

Answer 19

a. Name of Cooperative
b. Purpose and Scope of Business of Cooperative
c. Term of Existence
d. Area of Operation and Postal Addresses of its Principal Office
e. Names, nationality, and the postal addresses of the registrants
f. Common bond of membership
g. List of names of directors who will manage the cooperative
h. Amount of its share capital, names and residences of its contributors, and a statement whether the cooperative is primary, secondary, or tertiary

Question 20

True or False

The articles of cooperation may also contain any other provisions not inconsistent with this Code or any related law.

Answer 20

True

Question 21

True or False

Three (3) copies each of the proposed articles of cooperation, bylaws, and the general statement required under Article 11 of this Code shall be submitted to the Authority.

Answer 21

False; Four (4) copies each

Question 22

No cooperative, other than a _________ as described under Article 25 hereof, shall be registered unless the articles of cooperation is accompanied with the bonds of the accountable officers and a sworn statements of the treasurer elected by the subscribers showing that at least twenty-five per centum (25%) of the authorized share capital has been subscribed and at least twenty-five per centum (25%) of the total subscription has been paid

Answer 22

Cooperative union

Question 23

True or False

No cooperative, other than a cooperative union as described under Article 25 hereof, shall be registered unless the articles of cooperation is accompanied with the bonds of the accountable officers and a sworn statements of the treasurer elected by the subscribers showing that at least twenty-five per centum (25%) of the authorized share capital has been subscribed and at least twenty-five per centum (25%) of the total subscription has been paidProvided, That in no case shall the paid-up share capital be more than Fifteen thousand pesos (P15,000.00).

Answer 23

False; LESS than Fifteen thousand pesosn (Php15,000)

Question 24

“The Authority shall periodically assess the required paid-up share capital and may increase it every ________ when necessary upon consultation with the cooperative sector and the National Economic and Development Authority (NEDA).

Answer 24

Five (5) years

Question 25

Art. 15. Bylaws of Each Cooperative shall provide: (15)

Answer 25

“(a) The qualifications for admission to membership and the payment to be made or interest to be acquired as a conditions for the exercise of the right of membership;

“(b) The rights and liabilities of membership;

“(c) The circumstances under which membership is acquired, maintained and lost;

“(d) The procedure to be followed in cases of termination of membership;

“(e) The conditions under which the transfer of a share or interest of the members shall be permitted;

“(f) The rules and procedures on the agenda, time, place and manner of calling, convening, conducting meetings, quorum requirements, voting systems, and other matters relative to the business affairs of the general assembly, board of directors, and committees;

“(g) The general conduct of the affairs of the cooperative, including the powers and duties of the general assembly, the board of directors, committees and the officers, and their qualifications and disqualifications;

“(h) The manner in which the capital, may be raised and the purposes for which it can be utilized;

“(i) The mode of custody and of investment of net surplus;

“(j) The accounting and auditing systems;

“(k) The manner of loaning and borrowing including the limitations thereof;

“(l) The method of distribution of net surplus;

“(m) The manner of adopting, amending, repealing, and abrogating bylaws;

“(n) A conciliation or mediation mechanism for the amicable settlement of disputes among members, directors, officers and committee members of the cooperative; and

“(o) Other matters incident to the purposes and activities of the cooperative.

Question 26

True or False

“ART. 16. Registration. A cooperative formed and organized under this Code acquires juridical personality from the date the Authority issues a certificate of registration under its official seal.

Answer 26

True

Question 27

All applications for registration shall be finally disposed of by the Authority within a period of __________ from the filing thereof, otherwise the application is deemed approved, unless the cause of the delay is attributable to the applicant:

Answer 27

Sixty (60) days

Question 28

Provided, That in case of a denial of the application for registration, an appeal shall lie with the Office of the President within ________ from receipt of notice of such denial:

Answer 28

Ninety (90) days

Question 29

True or False

Provided, further, That failure of the Office of the President to act on the appeal within ninety (90) days from the filing thereof shall mean rejection of said application.

Answer 29

False; approval

Question 30

“ART. 17. A ________ issued by the Authority under its official seal shall be conclusive evidence that the cooperative therein mentioned is duly registered unless it is proved that the registration thereof has been cancelled.

Answer 30

Certificate of Registration

Question 31

“ART. 18. Amendment of Articles of Cooperation and Bylaws. Unless otherwise prescribed by this Code and for legitimate purposes, any provision or matter stated in the articles of cooperation and by laws may be amended by __________ vote of all the members with voting rights, without prejudice to the right of the dissenting members to exercise their right to withdraw their membership under Article 30.

Answer 31

two-thirds (2/3)

Question 32

All amendments to the article of cooperation and/or bylaws shall be submitted to the Authority. The amendments shall take effect upon its approval by the authority or within _______ from the date of filing thereof if not acted upon by the Authority for a cause not attributable to the cooperative.

Answer 32

Thirty (30) days

Question 33

Contracts executed between private persons and cooperatives prior to the registration of the cooperative shall remain ______ and ______ between the parties and upon registration of the cooperative.

Answer 33

valid and binding

Question 34

“ART. 19. Contracts Executed Prior to Registration and Effects Thereof. A _________ shall be adopted and made in the cooperative’s name or on its behalf prior to its registration.

Answer 34

Formal Written Contract

Question 35

“ART. 20. Division of Cooperatives. Any registered cooperative may, by a resolution approved by a vote of _________ of all the members with voting rights, present and constituting a quorum, resolve to divide itself into the two (2) or more cooperatives. The procedure for such division shall be prescribed in the regulations of the Authority: Provided, That all the requirements set forth in this Code have been complied with by the new cooperatives: Provided, further, That no division of a cooperative in fraud of creditors shall be valid.

Answer 35

Three-fourths (3/4)

Question 36

“ART. 21. Merger and Consolidation of Cooperatives. (1) Two (2) or more cooperatives may merge into a single cooperative which shall either be one of the __________ or the ___________.

Answer 36

constituent cooperatives or the consolidated cooperative

Question 37

True or False

No merger or consolidation shall be valid unless approved by a three-fourths (3/4) vote of all the members with voting rights, present and constituting a quorum of each of the constituent cooperatives at separate general assembly meetings.

Answer 37

True

Question 38

The ______members shall have the right to exercise their right to withdraw their membership pursuant to Article 30

Answer 38

dissenting members

Question 39

The _______ shall issue the guidelines governing the procedure of merger or consolidation of cooperatives. In any case, the merger or consolidation of cooperatives.

Answer 39

Authority

Question 40

In any case, the merger or consolidation shall be effective upon the issuance of the _____________ by the Authority.

Answer 40

Certificate of Merger and Consolidation

Question 41

“ART. 22. Effects of Merger and Consolidation. The merger or consolidation of cooperatives shall have the following effects:

Answer 41

“(1) The constituent cooperatives shall become a single cooperative which, in case of merger, shall be the surviving cooperative, and, in case of consolidation, shall be the consolidated cooperative;

“(2) The separate existence of the constituent cooperatives shall cease, except that of the surviving or the consolidated cooperative;

“(3) The surviving or the consolidated cooperative shall possess al the assets, rights, privileges, immunities and franchises of each of the constituent cooperatives;

“(4) The surviving or the consolidated cooperative shall possess all the assets, rights, privileges, immunities and franchises of each of the constituent cooperatives; and

“(5) The surviving or the consolidated cooperative shall be responsible for all the liabilities and obligation of each of the constituent cooperatives in the same manner as if such surviving or consolidated cooperative had itself incurred such liabilities or obligations. Any claim, action or proceeding pending by or against any such constituent cooperatives may be prosecuted by or against the surviving or consolidated cooperative, as the case may be. Neither the rights of creditors nor any lien upon the property of any such constituent cooperatives shall be impaired by such merger or consolidation.

Question 42

ART. 23. Type and Categories of Cooperatives

Answer 42

1. Credit Cooperative
2. Consumers Cooperative
3. Producers Cooperative
4. Marketing Cooperative
5. Service Cooperative
6. Multipurpose Cooperative
7. Advocacy Cooperative
8. Agrarian Reform Cooperative
9. Cooperative Bank
10. Dairy Cooperative
11. Education Cooperative
    12.Electric Cooperative
12. Financial Service Cooperative
13. Fishermen Cooperative
14. Health Services Cooperative
15. Housing Cooperative
16. Insurance Cooperative
17. Transport Cooperative
18. Water Service Cooperative
19. Workers Cooperative

Question 43

is one that promotes and undertakes savings and lending services among its members. It generates a common pool of funds in order to provide financial assistance to its members for productive and provident purposes;

Answer 43

Credit Cooperative

Question 44

is one of the primary purpose of which is to procure and distribute commodities to members and non-members;

Answer 44

Consumers Cooperative

Question 45

is one that undertakes joint production whether agricultural or industrial. It is formed and operated by its members to undertake the production and processing of raw materials or goods produced by its members into finished or processed products for sale by the cooperative to its members and non-members.

Answer 45

Producers Cooperative

Question 46

is one which engages in the supply of production inputs to members and markets their products;

Answer 46

Marketing Cooperative

Question 47

is one which engages in medical and dental care, hospitalization, transportation, insurance, housing, labor, electric light and power, communication, professional and other services;

Answer 47

Service Cooperative

Question 48

is one which combines two (2) or more of the business activities of these different types of cooperatives;

Answer 48

Multipurpose Cooperative

Question 49

is a primary cooperative which promotes and advocates cooperativism among its members and the public through socially-oriented projects, education and training, research and communication, and other similar activities to reach out to its intended beneficiaries;

Answer 49

Advocacy Cooperative

Question 50

is one organized by marginal farmers majority of which are agrarian reform beneficiaries for the purpose of developing an appropriate system of land tenure, land development, land consolidation or land management in areas covered by agrarian reform;

Answer 50

Agrarian Reform Cooperative

Question 51

is one organized for the primary purpose of providing a wide range of financial services to cooperatives and their members;

Answer 51

Cooperative Bank

Question 52

is one whose members are engaged in the production of fresh milk which may be processed and/or marketed as dairy products;

Answer 52

Dairy Cooperative

Question 53

is one organized for the primary purpose of owning and operating licensed educational institutions notwithstanding the provisions of Republic Act No. 9155, otherwise known as the Governance of Basic Education Act of 2001;

Answer 53

Education Cooperative

Question 54

is one organized for the primary purposed of undertaking power generations, utilizing renewable energy sources, including hybrid systems, acquisition and operation of subtransmission or distribution to its household members;

Answer 54

Electric Cooperative

Question 55

is one organized for the primary purpose of engaging in savings and credit services and other financial services;

Answer 55

Financial Service Cooperative

Question 56

is one organized by marginalized fishermen in localities whose products are marketed either as fresh or processed products;

Answer 56

Fishermen Cooperative

Question 57

is one organized for the primary purpose of providing medical, dental and other health services;

Answer 57

Health Services Cooperative

Question 58

is one organized to assist or provide access to housing for the benefit of its regular members who actively participate in the savings program for housing. It is co-owned and controlled by its members;

Answer 58

Housing Cooperative

Question 59

is one engaged in the business of insuring life and poverty of cooperatives and their members;

Answer 59

Insurance Cooperative

Question 60

is one which includes land and sea transportation, limited to small vessels, as defined or classified under the Philippine maritime laws, organized under the provisions of this Code;

Answer 60

Transport Cooperative

Question 61

is one organized to own, operate and manage waters systems for the provision and distribution of potable water for its members and their households;

Answer 61

Water Service Cooperative

Question 62

is one organized by workers, including the self-employed, who are at same time the members and owners of the enterprise. Its principal purpose is to provide employment and business opportunities to its members and manage it in accordance with cooperative principles; and

Answer 62

Workers Cooperative

Question 63

In terms of membership, cooperative shall be categorized into:

Answer 63

“(i) Primary The members of which are natural persons;

“(ii) Secondary The members of which are primaries; and

“(iii) Tertiary The members of which are secondary cooperatives;

Question 64

True or False

In terms of territory, cooperatives shall be categorized according to areas of operations which may or may not coincide with the political subdivisions of the country.

Answer 64

True