Week 2: Types and Classifications of Cooperatives
Overview:
This week covers the different types of cooperatives that exist, each serving distinct purposes and
sectors. Understanding the classifications helps students appreciate the diversity within the cooperative
movement and how each type impacts its members and the broader community.
Topics:
1. Credit Cooperatives
o Description: These cooperatives are formed to provide financial services like savings,
loans, and insurance to their members at affordable rates.
o Example: Philippine National Credit Union (PNCU) – A cooperative focused on offering
low-interest loans and savings accounts to members, especially for individuals in the
lower income bracket.
2. Consumer Cooperatives
o Description: Aimed at providing goods and services to members at lower prices. They
purchase products in bulk to reduce costs and pass on savings to the members.
o Example: Sanghan Cooperative – A grocery cooperative where members purchase
household items at discounted prices by pooling their resources to buy in bulk.
3. Producer Cooperatives
o Description: These cooperatives are made up of producers (farmers, artisans, etc.) who
join together to increase their bargaining power, share resources, and market their
products.
o Example: Benguet State University (BSU) Coffee Growers Cooperative – A cooperative of
coffee farmers in the Cordillera region, where farmers pool their resources for improved
processing, marketing, and distribution of locally grown coffee.
4. Marketing Cooperatives
o Description: These cooperatives enable producers to market their products collectively,
helping them get better prices and access to wider markets.
o Example: Maguindanao Farmers’ Cooperative – A cooperative formed by local farmers
to collectively market and sell their produce (e.g., rice, corn) to larger supermarkets and
local markets.
5. Multi-Purpose Cooperatives
o Description: These cooperatives offer a range of services to their members, including
financial services, consumer goods, and sometimes, even health services. They are
highly flexible and can serve a variety of needs in a community.
o Example: Cagayan de Oro Multi-Purpose Cooperative – A cooperative that provides
financial services, such as savings and loan products, while also running a retail store for
members, offering discounted goods and services.
Additional Topics:
6. Housing Cooperatives
o Description: Housing cooperatives are formed to provide affordable housing to
members. Members collectively own or manage residential properties, helping to
reduce the cost of living while promoting community and cooperative living.
o Example: Pag-IBIG Fund (Home Development Mutual Fund) – This government-linked
cooperative offers housing loans to low-income Filipino workers. The cooperative
manages the housing loan program and facilitates homeownership for millions of
members.
7. Agricultural Cooperatives
o Description: These cooperatives focus on the agriculture sector, where members come
together to improve their production, access to markets, and financial resources.
Agricultural cooperatives help farmers access better tools, technologies, and higher-
value markets.
o Example: The Mindanao Development Authority (MinDA) supports agricultural
cooperatives that provide small-scale farmers with access to farm inputs, equipment,
and training, increasing productivity and helping them meet market demands.
8. Worker Cooperatives
o Description: Worker cooperatives are owned and managed by the workers themselves.
The members (employees) are both the workers and the owners of the cooperative, and
they share profits based on their labor.
o Example: The Bay Area Workers’ Cooperative – This cooperative is composed of workers
in the construction industry, where employees own a share in the company and
collectively decide on the business direction, wages, and profit-sharing.
9. Social Cooperatives
o Description: These cooperatives are created with the goal of addressing social issues,
such as providing services to marginalized groups or improving environmental
sustainability. They are mission-driven rather than profit-driven.
o Example: Bayanihan Social Cooperative – This cooperative focuses on addressing the
needs of underprivileged communities, providing educational scholarships and health
programs for marginalized sectors.
10. Youth Cooperatives
o Description: These cooperatives are formed by young people to teach them the
principles of cooperation, entrepreneurship, and financial management. These
cooperatives allow young individuals to collaborate on business ventures while
developing leadership skills.
o Example: The Youth Empowerment Cooperative (YEC) – A cooperative that helps young
people in urban areas start small-scale businesses, from food stalls to tech startups,
while providing financial literacy training.
Week 3: Legal Framework of Cooperatives
Overview:
This week will focus on the legal structure that governs cooperatives, including the key legislation that
defines their operation. Students will learn about the Cooperative Development Authority (CDA) and
how cooperatives must comply with regulations to ensure that they operate effectively and ethically.
Topics:
1. Cooperative Laws in the Philippines (RA 9520)
o Description: Republic Act 9520, also known as the "Philippine Cooperative Code of
2008," is the fundamental law that regulates the operations of cooperatives in the
Philippines. It defines the types, governance, and operations of cooperatives, as well as
their rights and responsibilities.
o Example: Kauswagan Cooperative – A cooperative in Cagayan de Oro, established under
RA 9520, which provides financial services, including loans and savings, while also
complying with legal requirements such as submitting regular reports to the CDA.
2. Role of the Cooperative Development Authority (CDA)
o Description: The CDA is the government agency responsible for promoting and
developing cooperatives in the Philippines. It provides support through registration,
policy formulation, training programs, and monitoring the compliance of cooperatives
with national laws.
o Example: The CDA’s Assistance to Nueva Ecija Farmers Cooperative – The CDA played a
crucial role in helping a group of rice farmers establish a cooperative by providing
guidance on registration and compliance, enabling them to get access to loans for
purchasing machinery.
3. Cooperative Registration Process
o Description: For a cooperative to operate legally, it must be registered with the CDA,
which involves submitting required documents, outlining the cooperative’s purpose, and
ensuring that it meets all the legal criteria specified by law.
o Example: Sample Process for Registration – A cooperative in Davao City, composed of
small-scale retailers, went through the registration process with CDA by submitting the
cooperative’s by-laws, membership list, and financial plan. The cooperative was
approved after ensuring all legal requirements were met.
4. Taxation and Legal Responsibilities of Cooperatives
o Description: Cooperatives enjoy certain tax exemptions under RA 9520, but they are
also subject to specific legal obligations, such as regular financial reporting and
compliance with local laws regarding business operation and employee welfare.
o Example: Magsaysay Consumers’ Cooperative – This cooperative has benefited from tax
exemptions on earnings derived from its primary cooperative activities, but it ensures
compliance with tax reporting and employee welfare by submitting its annual financial
statements to the Bureau of Internal Revenue (BIR) and local government.
Additional Topics:
5. Cooperative By-laws and Articles of Cooperation
o Description: By-laws define how a cooperative is governed, including the rights and
obligations of its members, meetings, elections, and decision-making processes. Articles
of cooperation are the formal founding documents required for cooperative
registration.
o Example: Sample By-laws of a Local Cooperative – The by-laws of a local consumer
cooperative in Mindanao specify the election process for board members, membership
requirements, and profit-sharing mechanisms.
6. Cooperative Auditing and Financial Reporting Requirements
o Description: Cooperatives are required to maintain financial records and submit audited
reports annually to the CDA. This ensures transparency, accountability, and responsible
management of funds.
o Example: Annual Financial Audit of San Isidro Cooperative – This cooperative, after its
annual general assembly, submits an independent audit report to the CDA,
demonstrating compliance with financial transparency regulations.
7. Cooperative Tax Incentives and Exemptions
o Description: RA 9520 provides tax exemptions for cooperatives in certain circumstances,
such as exemptions from income tax on dividends, interest on savings, and patronage
refunds, depending on the nature of their business activities.
o Example: Tax Exemption for Davao Multi-Purpose Cooperative – This cooperative, by
following all the requirements under RA 9520, enjoys tax exemptions for income
derived from cooperative activities, such as loans to members and the operation of their
retail store.
8. Dispute Resolution in Cooperatives
o Description: Disputes within cooperatives can arise between members, board members,
and the management. Legal provisions exist for resolving these disputes through the
CDA or through internal mechanisms like mediation and arbitration.
o Example: Dispute Resolution at Lipa Farmers’ Cooperative – In case of disputes
regarding the allocation of funds, the cooperative resorted to mediation facilitated by
the CDA, ensuring that member grievances were addressed amicably.
9. Cooperative Amendments and Revisions
o Description: Cooperatives have the flexibility to amend their by-laws and articles of
cooperation as necessary, provided they follow legal processes. This allows cooperatives
to adapt to changing circumstances, such as growth, new legal requirements, or shifts in
business focus.
o Example: Amendment of Articles by Cebu Credit Cooperative – The cooperative revised
its articles of cooperation to expand its services from credit-lending to include insurance
products after its members requested more diversified services.
10. Cooperative Liquidation and Dissolution
o Description: This legal process applies when a cooperative is unable to continue its
operations. Liquidation involves settling debts and distributing assets among members.
Dissolution is the formal process of ending a cooperative’s existence.
o Example: Liquidation Process of an Underperforming Cooperative – In a cooperative in
Quezon City that faced financial mismanagement, the CDA assisted in the liquidation
process, ensuring that remaining assets were distributed according to member shares.
Week 4: Cooperative Governance
Overview:
Cooperative governance is critical to the success of cooperatives. This week focuses on the structure and
roles within a cooperative, examining the responsibilities of the general assembly, board of directors,
management, and committees. Students will also explore the importance of member participation,
transparency, accountability, and decision-making processes in cooperative management.
Topics:
1. General Assembly: The Highest Governing Body
o Description: The General Assembly (GA) is composed of all cooperative members and is
the highest decision-making body in a cooperative. It holds the power to approve the
cooperative’s budget, elect board members, amend the by-laws, and make significant
policy decisions. The GA is typically held annually or as needed.
o Example: Annual General Assembly of the Philippine Coconut Producers Cooperative –
During the annual assembly, members of this cooperative vote on the budget allocation,
discuss the cooperative's performance, and elect new members to the board of
directors.
2. Board of Directors: Leadership and Oversight
o Description: The Board of Directors (BOD) is elected by the General Assembly to
represent the members in managing the cooperative's affairs. The BOD is responsible
for setting strategic direction, overseeing the cooperative's management, and ensuring
that decisions align with the cooperative’s mission and values.
o Example: Board of Directors of the Cagayan de Oro Multi-Purpose Cooperative – The
BOD of this cooperative meets quarterly to review financial performance, approve
major operational changes, and oversee the management team. The board ensures that
the cooperative's activities are in line with its stated objectives and values.
3. Committees: Specialized Function and Oversight
o Description: In addition to the General Assembly and Board of Directors, cooperatives
often have various committees that handle specialized areas such as finance,
membership, audit, or education. These committees are created to focus on specific
aspects of the cooperative's operations and report to the board.
o Example: Audit Committee of the Mindanao Agricultural Cooperative – This committee
is tasked with reviewing financial statements, ensuring compliance with legal
regulations, and providing recommendations to improve the financial health of the
cooperative.
4. The Role and Responsibilities of Cooperative Members
o Description: Members of the cooperative are not just beneficiaries; they are also
responsible for actively participating in the cooperative’s activities. Their involvement
includes attending general assembly meetings, voting on key issues, and holding elected
officers accountable for their actions.
o Example: Active Member Participation in the Laguna Cooperative – In this cooperative,
members are encouraged to attend quarterly meetings and participate in cooperative
decisions such as setting the interest rates for loans or determining how profits are
allocated among members. Active participation ensures that the cooperative remains
democratic and responsive to the needs of its members.
5. Decision-Making Processes in Cooperatives
o Description: In cooperatives, decision-making is often based on the principle of "one
member, one vote," regardless of the amount of capital each member has contributed.
This democratic approach ensures that all members have an equal say in major
decisions. The decision-making process can be formal, as in general assemblies, or
informal, such as consultations with committees or management.
o Example: Democratic Decision-Making in the Cebu Workers’ Cooperative – Every
member of this worker cooperative, regardless of the amount of their capital share, is
allowed to vote during general meetings. Major decisions like profit-sharing ratios and
employee benefits are decided based on majority votes from all members.
6. Cooperative By-laws: Defining Governance
o Description: By-laws serve as the foundational rules for cooperative governance,
defining the rights and responsibilities of members, the structure of meetings, the roles
of elected officials, and the procedures for decision-making. The by-laws should align
with the cooperative's mission and the regulations set by national cooperative laws.
o Example: By-laws of the Batangas Rural Credit Cooperative – The by-laws of this credit
cooperative outline the election process for the board, the method for distributing
dividends, and procedures for resolving conflicts within the cooperative.
7. Accountability and Transparency in Governance
o Description: Accountability and transparency are essential in cooperative governance to
maintain trust among members and ensure ethical management. Regular reporting,
independent audits, and clear communication between the board and members help
ensure that decisions are made in the best interest of all members.
o Example: Transparency at the Quezon City Housing Cooperative – The cooperative holds
quarterly public forums where board members present financial reports, the status of
current projects, and any plans for future developments. This fosters transparency and
keeps members informed.
8. Cooperative Leadership Styles
o Description: Effective leadership in cooperatives is crucial for guiding the cooperative
towards its objectives while ensuring that it stays true to its principles. Leadership can
vary from more democratic (member-driven) styles to more formal hierarchical
approaches, depending on the size and complexity of the cooperative.
o Example: Transformational Leadership in the Davao Integrated Marketing Cooperative –
The leadership team of this cooperative focuses on empowering members, encouraging
their active participation, and ensuring that leadership decisions reflect the
cooperative’s values and social goals.
9. Conflict Resolution in Cooperative Governance
o Description: Conflict may arise within the cooperative due to differences in opinion,
mismanagement, or resource allocation issues. Cooperatives must have procedures in
place for resolving conflicts, either through mediation, arbitration, or voting
mechanisms.
o Example: Conflict Resolution Process at the Iloilo Farmers’ Cooperative – When a dispute
arose between members about the allocation of cooperative funds, the cooperative’s
board mediated the situation through a structured discussion, allowing members to
voice concerns and reach a consensus on the best course of action.
10. Ethical and Social Responsibility in Cooperative Governance
o Description: Cooperatives are often guided by values such as fairness, equity, and social
responsibility. Leaders and members are expected to operate in a way that benefits not
just the cooperative but also the community and society at large. This involves making
ethical decisions, ensuring environmental sustainability, and contributing to local
development.
o Example: Social Responsibility Program by the Iloilo Multi-Purpose Cooperative – This
cooperative has a program where a percentage of its profits is allocated to local
community development initiatives, such as building classrooms and providing
scholarships to underprivileged students in the area.
