3. Cooperative

It is an autonomous and duly registered association of persons, with a common bond of interest, who have voluntarily joined together to achieve their social, economic, and cultural needs and aspirations by making equitable contributions to the capital required, patronizing their products and services and accepting a fair share of the risks and benefits of the undertaking in accordance with universally accepted cooperative principles

• A. Corporation

• 1. B. Joint Venture

• C. Association

• D. Cooperative

Answer explanation

ART. 3. General Concepts. – A cooperative is an autonomous and duly registered association of persons, with a common bond of interest, who have voluntarily joined together to achieve their social, economic, and cultural needs and aspirations by making equitable contributions to the capital required, patronizing their products and services and accepting a fair share of the risks and benefits of the undertaking in accordance with universally accepted cooperative principles.

 It refers to the government agency created by Cooperative Code entrusted with the supervision and regulation of cooperatives in the Philippines

• 1. A. Securities and Exchange Commission (SEC) 

• 1. B. Bangko Sentral ng Pilipinas (BSP)  

• 1. C. Cooperative Development Authority (CDA) 

• 1. D. Insurance Commission (IC) 

Answer explanation

ART. 5. Definition of Terms. The following terms shall mean:

(8) Cooperative Development Authority refers to the government agency in charge of the registration and regulation of cooperatives as such hereinafter referred to as the Authority

Statement I: Member economic participation refers to the cooperative principle which means that members contribute equitably to, and democratically control, the capital of their cooperatives. At least part of that capital is the common property of the cooperative 

Statement II:Members of a cooperative shall receive limited compensation or limited interest, if any, on capital subscribed and paid as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing the cooperative by setting up reserves, part of which should at least be indivisible; benefitting members in proportion to their patronage of the cooperative's business; and, supporting other activities approved by the membership

• 1. A. Only Statement I is true

• 1. B. Only Statement II is true 

• 1. C. Both statements are true 

• 1. D. Both statements are false 

Answer explanation

Statement I: ART. 4. Cooperative Principles.

(3) Member Economic Participation – Members contribute equitably to, and democratically control, the capital of their cooperatives. At least part of that capital is the common property of the cooperative. 

Statement II: (3) Member Economic Participation [third sentence]  – They shall receive limited compensation or limited interest, if any, on capital subscribed and paid as a condition of membership. Members allocate surpluses for any or all of the following purposes: developing the cooperative by setting up reserves, part of which should at least be indivisible; benefitting members in proportion to their patronage of the cooperative’s business; and, supporting other activities approved by the membership.

Which of the following is an objective of a cooperative?

• 1. A. To teach members of inefficient ways of doing things in a cooperative manner 

• 1. B. To allow the higher income and more privileged groups to increase their ownership in the wealth of the nation 

• 1. C. To provide minimal social and economic benefits to its members 

• 1. D. To 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 

Answer explanation

ART. 7. Objectives and Goals of a Cooperative.

“(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.

What is the maximum foreign investment or ownership in a cooperative?

• 1. A. 100%

• 1. B. 50%

• 1. C. 20%

• 1. D. 0%

Answer explanation

Art. 72 of Philippine Cooperative Code of 2008 (R.A. 9520) enumerates the capital sources of cooperatives, which reads:

“(1) Member’s share capital;

Which means there is no foreign investment allowed because one of the qualifications in organizing a primary cooperative is Filipino Citizenship.

It refers to the document signed and acknowledged before a notary public by the organizers of a cooperative that will be filed to CDA in order for the prospective cooperative to be created

• 1. A. Articles of Co-Partnership

• 1. B. Articles of Cooperation 

• 1. C. Articles of Incorporation 

• 1. D. Articles of Association 

Answer explanation

ART. 14. Articles of Cooperation. (1) All cooperatives applying for registration shall file with the Authority the articles of cooperation 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.

When shall the amendments of Articles of Cooperation and By-Laws of the Cooperative take effect?

• 1. A. Upon its approval by the CDA or 

• 1. B. Upon the lapse of 30 days from law of the date of filing amendment of articles or cooperation or bylaws if not acted upon by the CDA for a cause not attributable to the cooperative. 

• 1. C. Either A or B 

• 1. D. Neither A nor B 

Answer explanation

ART. 18. Amendment of Articles of Cooperation and Bylaws. The amendments shall take effect upon its approval by the authority or within thirty (30) days from the date of filing thereof if not acted upon by the Authority for a cause not attributable to the cooperative.

Statement I: The minimum subscribed shares before a prospective cooperative be registered with CDA is at least 25% of authorized share capital 

    

Statement II: The minimum paid-up capital before a prospective cooperative be registered with CDA is at least 25% of the actual total subscription or P15,000, whichever is higher

• 1. A. Only Statement I is true

• 1. B. Only Statement II is true

• 1. C. Both statements are true 

• 1. D. Both statements are false

Answer explanation

Statement I and II: ART. 14. Articles of Cooperation. (5) 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 paid: Provided, That in no case shall the paid-up share capital be less than Fifteen thousand pesos (P15,000.00).

Statement I: The nature of liability of Cooperative duly registered under CDA is unlimited liability.

Statement II: The extent or nature of liability of a member of a cooperative for the latter's debts to third persons up to the extent of his contribution to the share capital of the cooperative.

• 1. A. Only Statement I is true

• 1. B. Only Statement II is true

• 1. C. Both statements are true

• 1. D. Both statements are false

Answer explanation

Statement 1: 

ART. 12. Liability.

A cooperative duly registered under this Code shall have limited liability.

Statement 2: 

ART. 29. Liability of Members. 

A member shall be liable for the debts of the cooperative to the extent of his contribution to the share capital of the cooperative.

What is the capital structure of a cooperative before a refund be given to a withdrawing member?

• 1. A. The value of the assets of the cooperative must be equal its liabilities before the refunding

• 1. B. The value of the assets of the cooperative must be equal or exceed its liabilities after the refunding.

• 1. C. The value of the assets of the cooperative must be less than its liabilities before the refunding

• 1. D. The value of the assets of the cooperative must be less than its liabilities after the refunding

Answer explanation

ART. 30. Termination of Membership. 

Subject to the bylaws of the cooperative, the withdrawing member shall be entitled to a refund of his share capital contribution and all other interests in the cooperative:

 Provided, That such fund shall not be made if upon such payment the value of the assets of the cooperative would be less than the aggregate amount of its debts and liabilities exclusive of his share capital contribution.