What is 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 and making equitable contributions to the capital required
and accepting a fair share of the risks and benefits of the undertaking in
accordance with universally accepted cooperative principles.
Chapter I Art.2 Sec.8 of R.A. 6938

By forming a cooperative, you pool money, human
and talent to build capital, and work together to produce
more goods and raise incomes. Through cooperatives, you
can look for other sources of loans at low interest rates
instead of borrowing from informal lenders or usurers.
The cooperative can also be a mechanism for
marketing your produce.

Objectives of a Cooperative  

The primary objective of every Cooperative is to provide goods and services to its members and thus enable them to attain increased income and savings, investments, productivity and purchasing power and promote among them equitable distribution of net surplus through maximum utilization of economies of scale, cost-sharing and risk-sharing without however, conducting the affairs of the cooperative for eleemosynary or charitable purposes.

Objectives of a Cooperative  

Every Cooperative shall conduct its affairs in accordance with Filipino culture and experience and the universally accepted principles of cooperation such as:

Open and Voluntary membership- membership in a cooperative shall be voluntary and available to all individuals regardless of their political, racial or religious background or beliefs.

Democratic Control- cooperatives are democratic organizations. Its affairs shall be administered by persons elected or appointed in a manner agreed upon by members. Members of primary cooperatives shall have equal voting rights on an one-member-one vote principle, while a secondary or tertiary cooperative shall have voting rights as delegate of members-cooperatives, but such cooperatives shall have only five (5) votes. The votes cast by the delegates shall be deemed as votes cast the members thereof.

Member Economic Participation- members contribute equitably to and control the capital of their cooperative. At least part of that capital is usually the common property of the cooperative. Members usually receive limited compensation, if any, on capital subscribed as a condition of membership. Members allocate surpluses for any or all the following purposes: developing their cooperative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the cooperative; and supporting other activities as a approved by the membership.

Autonomy and Independence- cooperatives are autonomous, self-help organizations controlled by their members. If they enter into agreements with other organizations (including governments) or raise capital from external sources, they do so on terms that ensure democratic control by the members and maintain their cooperative independence.

Education, Training and Information- cooperatives provide education and training for their members, elected representatives, managers, and employees so they can contribute effectively to the development of their cooperatives. They inform the general public-particularly young people and opinion leaders about the nature and benefits of cooperation.

Cooperation among Cooperative - cooperatives serve their members more effectively and strengthen the cooperative movement by working together through local, national, regional, and international structures.

Concern for the Community- cooperatives work for the sustainable development of their communities through policies approved by their members.

Types of Cooperatives
Credit Cooperative promotes thrift and savings among its members and creates funds in order to grant loans for productive and provident purposes.
Consumer Cooperative The primary purpose is to procure and distribute commodities to members and non-members.
Producers Cooperative undertakes joint production whether agricultural or industrial.
Marketing Cooperative engages in the supply of production inputs to members, and markets their products;
Service Cooperative engages in medical and dental care, hospitalization, transportation, insurance, housing, labor, electric light and power, communication and other services
Multi-Purpose Cooperative combines two (2) or more of the business activities of these different types of cooperatives.

What are the Categories of Cooperatives  

Cooperative shall be categorized according to membership and territorial consideration as follows:
In terms of membership, cooperatives shall be categorized into:

Primary – The members of which are natural persons of legal age;
Secondary – The members of which are primaries;
Tertiary – the members of which are secondaries upward to one (1) or more apex organizations.

Those cooperatives the member of which are cooperatives shall be known as federation or unions, as the case may be; and in terms of territory, cooperative shall be categorized according to areas of operations which may or may not coincide with the political subdivisions of the country.

What are the kinds of Membership in a Cooperative  
A cooperative has two kinds of members: regular members and associate members.
A regular member is entitled to all the rights and privileges of membership as stated in the Cooperative Code and the coops’ by laws.
An associate member has no right to vote and be voted upon and is entitled only to such rights and privileges provided by the cooperative’s by laws.
A cooperative organized by minors shall be considered a laboratory cooperative and must be affiliated with a registered cooperative.
Cooperative Practices  
Cooperatives follow certain operational guidelines. These are practical response to local needs. Some are adopted from standard international practices, others are local innovations. But all these are aimed at perfecting cooperative operations. They are:

a. Capital Formation e. Constant Expansion
b. Cash Trading f. Quality Standardized Goods
c. Selling at Market Price g. Cooperative Wholesale or Inter-lending (cooperative bank)
d. Cooperatives can avoid Destructive Competition h. Minimize Expenditures

  What are the purposes in Organizing a Cooperative 
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 state 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; and
11. To undertake any and all other activities for the effective and efficient implementation of the
     provision of R.A.6939.

How do you organize a Primary Cooperative?
Organizing a cooperative can be complex and simple. It requires an understanding of the basic needs of the prospective cooperative members. It demands patience from the organizer who must make the cooperative’s long-term goals and objectives, and its visions a real part of the members’ lives.
But it can be too easy because the Cooperative Code of the Philippines (RA 6938) has devised very clear-cut steps for the cooperative organizer and members. The following are the basic information that the prospective members should understand before organizing a cooperative.

What are the general steps in forming a Cooperative ?
There are six steps suggested in setting up a cooperative.

        FIRST.  Get organized. You must have at least 15 members to do that.
At once determine the common problems you would want solved and the basic needs you would want provided for through a cooperative. You may want to include increasing your production, marketing your produce, credit assistance, power generation, banking or insurance and other similar needs.
Determining your problems and needs will also help you classify the kind of cooperative you will be organizing. Even before a cooperative is set up, a dedicated core group people who will do all the organizational and paper works is a must. From this core group, working communities may be formed to set things moving. These committees may include membership, finance, executive, secretariat to name a few.

     SECOND.  Prepare a general statement called an economic survey. This statement will help
                    you measure your cooperative’s chances of success.

        THIRD.   Draft the cooperative’s by-laws. The by-laws contain the rules and regulations
                    governing the operation of the cooperative.

     FOURTH.   Draft the articles of cooperation. Mandatory contents of the articles of
                    cooperation. The articles must contain the items mentioned in the article, namely:
                    (a) the name of the cooperative, which must include the word “cooperative”; (b) the
                    purpose or purposes and scope of business of the cooperative; (c) the term of
                    existence of the cooperative; (d) the area of operation and the postal addresses of
                    the registrant-cooperators; (f) the common bond of membership; (g) the names of
                    the directors who shall manage the cooperative; (h) the amount of share capital; (I)
                   the names and residences of its contributors, and (j) the type of cooperative,
                    whether it is primary, secondary or tertiary.

        FIFTH.   Secure bond of your accountable officer(s), normally the treasurer, or the
                        treasurer and the manager.
The amount of the bond is to be decided upon by the
                   Board of Directors, based on the initial net worth of the cooperative which includes
                   the paid-up capital, membership fees and other assets of the cooperative at the time
                   of registration.

        SIXTH.   Register your cooperative with the Cooperative Development Authority (CDA).
                    You must submit four (4 ) copies each of the Economic Survey, by-laws and Articles
                    of Cooperation, and Bond of Accountable Officer(s).

In every step, you may consult CDA. The CDA emphasizes education as a key to the success of cooperatives.

How to Register a Primary Cooperative

Once you have organized your cooperative, your work does not end there. The cooperative now needs a legal personality so that it can do all the acts that a cooperative is supposed to perform. With a legal personality, the cooperative can borrow money, sell its goods and services, deliver goods and enter into all sorts of business transactions. So that your cooperative can do all these, you must register your cooperative. Here is how you do it.
Where to Register your Cooperative

The Cooperative Development Authority (CDA) is the only government agency mandated to register all types of cooperatives. Its main office is located at 5th and 6th Floors, Ben-Lor Building, 1184 Quezon Avenue, Quezon City. To facilitate the flow of its services, extension offices have been set up. These are located in (a) Dagupan City; (b) Tuguegarao, Cagayan; (c) Baguio City; (d) San Fernando, Pampanga; (e) NCR-Quezon City; (f) Calamba, Laguna; (g) Naga City; (h) Iloilo City; (I) Cebu City’ (k) Kidapawan; (l) Tacloban City; (m) Davao City; (n) Zamboanga City; and (o) Butuan City.
What are the general requirements for Registering a Cooperative
You will need four copies each of the Economic Survey, By-laws and Articles of Cooperation.

The Articles of Cooperation should be duly notarized and accompanied by the following:

Bonds of the accountable officers (any directors, officer and employee) handling funds,      securities or properties on behalf of the cooperative. The board of directors determine the amount of bonds required based on the initial net worth which shall include the paid-up      
capital, membership fees and other assets of the cooperative at the time                       
Sworn statement of the treasurer duly notarized showing that at least 25% of the authorized share capital has been subscribed, and at least 25% of the total subscription has been paid.   The paid-up capital must not be less than PhP 2,000.00.                                                   

It must be noted that no member may own more than 20% of the subscribed share capital; and each share must not be less than PhP 1.00.00

CDA Memorandum Circular No. 02-03, Series of 2002 thereby amending Memorandum Circular No. 92-004, Series of 1992 provides the schedule of fees as follows:

Laboratory Cooperatives   No Registration Fees

Primary Cooperatives P 2,000.00 – P 500,000.00
P 500,001.00- up
P 500.00
1/10 of 1% of the paid-up share capital

Secondary Cooperatives P 2,000.00 – P 500,000.00
P 500,001.00- up
P 1,000.00
1/10 of 1% of the paid-up share capital

Tertiary Cooperatives   P 3,000.00