Responsibilities of

Cooperatives
Address
Every cooperative is required to have an official
postal address where all notices and
communications for and to the co-op may be
transmitted.
The address and every change made to it shall
be registered with the Cooperative Development
Authority(CDA).
Since the address is stated in the articles of
cooperation, it implies that any change of address
requires a corresponding amendments of the articles
of cooperation
Books are kept
Books are kept for the use of the members
and inspection by authorized representatives of
CDA during reasonable office hours during
business days. 3copies1register/2books/
These documents are: 1document
a. A copy of the Code and all other laws pertaining
to cooperatives
b. A copy of the regulations of the Cooperative
Development Authority
c. A copy of the articles of the cooperation and by-
laws of the cooperative
d. A register of members
 e. The books of the minutes of the meeting
of the General Assembly, board of directors
and committees
 f. Share books, where applicable
 g. Financial Statements
 h. Such other documents as may be
prescribed by laws or the by-laws [Art.53]
 Who is responsible for
the books and records
of account of the
cooperative?

Through the chairman of the audit committee

and the board of the cooperative, shall maintain
the books and records of accounts so that the true
and correct conditions and results of the
operations of the co-op may be determined from
the books when the need arises.
How long should a cooperative keep the
books of accounts?
Time limits in record keeping
• The financials statements are perpetual documents of
the co-op and should be archived; whereas receipts,
invoices or vouchers that support the financial statements
may be immediately destroyed as soon as the three-year
BIR limit expires.
Perpetual records of the co-op
• The are other documents in the cooperative that are
perpetual records and are not to be destroyed. The
original certificate of registration, articles of cooperation,
by-laws, audited financial statements, and ledgers are
considered perpetual documents.
•
 Ledgers and financial statements are
archived, while he certificate of registration,
articles of cooperation and by-laws are
always on the archive records file. The
financial statements are place on the
inactive file for the current year, the
following year they will have to be moved to
the archives and the current ledgers and
financial statements will move over to the
inactive files.
Ten year prescription limit on contracts
 Distinction should be made between to
receipts, vouchers and invoices on one hand, and
contracts on the other hand. Although receipts and
other sales documents may be destroyed in
accordance with BIR policies, contracts should not
be destroyed unless ten years old or older. Within
10 years, rights may be claimed from the contract
and within that period, contracts have evidentiary
value.
 After 10 years, no rights may be claimed from
a contract, and rights not claimed are said to have
prescribed and may no longer be rightfully claimed
in court, in accordance with the provisions of the
Statutes of Limitations stated in the Civil Code of
the Philippines.
Five years limits
 Unless prescribed by BIR rules, the co-op may
destroy its journals, deposit slips, withdrawal slips,
receipts, invoices and vouchers after 5 years, i.e., on
the year running to the sixth fiscal year after the
transactions were made. [Art.53(4)]

Inventory prior to destruction of records

 Before records may legitimately be destroyed,
they must be inventoried, and the co-op’s secretary
and the chairman of the audit committee must certify
the inventory drawn up. During the board meeting, the
inventory shall be presented and the board will
approve or disapprove the disposition of the records.
[Art.53(4)]
Annual Reports
Requirements for the annual report:
• All cooperatives are required to publish an
annual report that should showcase its affairs
within a fiscal year period.
• The cooperative shall furnish copies of the
annual report to all members of record. The co-
op shall also file a copy of the report with the
CDA within 60 days from the end of every fiscal
year.
• Prescribe the form and content requirements for
the annual report, the CDA may revoke the
authority of the cooperative to operate.
What happens if the cooperative fails to
make, publish and file the annual report,
omits matters required by the Code to be
reported?
Sanctions for failure to make of file the annual reports
The CDA shall, within 15days from the expiration of
the 60-day period, send the delinquent cooperative a
registered notice, addressed to its official postal address,
stating the delinquency and its possible consequences.
3 Possible omissions involved here:
a. Failure to make the annual report
b. Even if the annual report is made, failure to publish the
annual report, or
c. Even if made and published, failure to file a copy of
the annual report with the CDA.
Register of Members and Shares
Register of Member
contains the names of current members of
the cooperative, updated as of the last board
meeting that approved new members.
Register of Shares
the ownership of shares does not
frequently shift from one member to another.
Entries in the register of the members or
register of shares are prima facie
information
A register or list of members or shares of a
cooperative is a prima facie evidence of the
following particulars entered therein.
a) The date on which the name of any
person was entered in such register or list
as member and
b) The date on which any such person
ceased to be a member
Prima facie evidence
means that the entries in the register of
members or shares will hold unless superior
contradictory evidence is introduced and dislodges
the probative value of the prima facie evidence.
Certification of Book Entries
certified true copies of any entry in the books
or registers of the cooperative, if executed in
accordance with the rules of evidence, are
admissible as evidence of the existence of the entry
and are prima facie evidence of matters and
transaction recorded in the books of register.
Bonding of Accountable Officer
All member-officers and non member
employees handling funds, securities, or
property for a cooperative must execute and
deliver adequate bonds for the faithful
performance of their duties and obligations.
Any accountable person who absconds
with the money becomes liable to the
bonding company since the bonding
company pays the cooperative for any loss
incurred by it through misappropriation of
funds by the accountable officer.
 Rights of the Cooperative
Preference of Claims
When a member borrows money or obtains
credit from the cooperative to procure raw
materials, production inputs, products produced,
land, building, facilities, equipment, goods or
services, who has the preferential right to claim
the amount of their loans over the procured goods
and services If the member has several credits.
The Code in Art. 58(1), provides that the CDA has
prior claim, and any debt due a cooperative from
a member shall be first lien on procured goods
and services.
 Lien as applied to co-ops
Lien is a burden or encumbrance or claim
over a property. From the creditor’s point of view,
it is his claim against a property that secures
payment when the principal debt remains unpaid
at maturity.
Instrument for Salary or Wage
Deduction
Salary deduction from an employee’s
payroll in favor of the cooperative is one
strategy that ensures the growth and
stability of a cooperative.
No deduction from the salary of an
employee can be made without his express
authorization.
The salary deduction process..
Upon the execution of the authorization
instrument and as may be required by the
cooperative through a written request, the
employer shall make the deduction in
accordance with the agreement and remit
without delay the amount so deducted to the
cooperative.
Can the employee issue a countermand to
the authorization to deduct from his
salary/wage?
In purely labor cases, such a
countermand will always be given due effect,
but in cooperatives the Codes says “The
employer shall make the deduction for as long
as such debt or other demand or any part of a
remains unpaid by the employee.”
Any salary deduction agreement or
practice, entered more than fifteen years ago ,
and not renegotiated, derives authority from
this provision of the Code.
Employer
The term employer defined as used in
these instances includes all private firms,
national and local governments and government
owned or controlled corporations who have
under their employ a member of a cooperative
and have agreed to carry out the terms of the
deduction instrument earlier mentioned. [Art.
59 (3)]
Primary Lien

“Notwithstanding the provisions of any law

to the contrary, a cooperative shall have
primary lien upon the capital, deposit or
interest of a member for any debt due to
the cooperative from such a member.”
The constitution of a lien on a
member’s share capital, deposits, and
other interests in the co-op would appear
to be automatically constituted by law.
Taxation and Cooperatives
The main determination of the tax status
of a cooperative depends on whether the
cooperative transacts business solely with
members or extends its business even to
nonmembers.
CDA registered co-ops are not subject to
tax
General rules is that CDA-registered
cooperatives which do not transact any
business with nonmembers ot the general
public are not subject to any government taxes
or fees imposed under the internal revenue
laws and other tax laws
Taxes due from co-ops dealing with non
members shall pay with the following taxes at
the full rate;

a) Income tax on the amount allocated for

interest on capital
b) Sales tax on sales to nonmembers
c) All other taxes unless otherwise provided
by the Cooperative Code.
Donation as tax deductible items
In case of taxable cooperatives, their
donations to charitable, research and
educational institutions and reinvestment to
socioeconomic projects within the area of
operation of the cooperative maybe tax
deductible.
Exemption from local taxes on bank and
insurance transactions
All cooperatives, regardless of the amount
of accumulated reserves and undivided net
savings are exempt from payment of local taxes
on transactions with the banks and insurance
companies.
Right of BIR Officer to examine co-op books
Even if cooperatives are given tax
exemptions, nothing can prevent the
examination of the books of accounts or other
accounting records of the cooperative by duly
authorized internal revenue officers for internal
tax purposes only, after previous authorization
by the CDA.
Exemption from court and sheriff fees
Cooperatives are exempt from the payment
of all court and sheriffs fees payable to the
Philippine Government in connection with all
actions brought under the Code, or where such
action is brought by CDA before the court, to
enforce the payment of obligations contracted in
favor of the cooperative.
Exemptions from bond fees in appeals to
the court
Any security issued by cooperation
shall be exempt from the provision of the
Securities Act, provided such security
shall not be speculative.
 Privileges of Cooperatives
a. Depositing, free of charge, their scaled
cash boxes containers, documents or any
valuable papers in the sales of the
municipal or city treasures and other
government offices. The custodian of such
articles shall issue a receipt acknowledging
the articles received, duly witnessed by
another person.[Art. 63]
b. For cooperatives organized among government
employees, the free use of any available space in their
agency, whether owned of rented by the government. [Art.
63(2)]

c. ) A grant of franchise for cooperatives rendering special

types of services and facilities such as cold storage, ice
plant, electricity, transportation, and similar services and
facilities. Such cooperatives shall open their membership to
all persons qualified in their areas of operation [Art 63.(3)]

d. The preferential right to supple government institutions

and agencies rice, corn and other grains, fish and other
marine products, meat, eggs, milk, vegetables, tobacco
and other agricultural commodities produced by their
members, in areas where appropriate cooperatives exist;
[Art.63 (4)]
e. Preferential treatment by the appropriate
government agencies in the allocation of
fertilizers and in rice distribution; [Art.63 (5)]

f. Preferential and equitable treatment in the

allocation of control of bottomries of
commercial of commercial shipping vessels in
connection with the shipment of goods and
products of cooperatives. [Art.63 (6)]

g. Preferential rights in management of public

markets and/or lease of public market facilities,
stall or spaces for cooperatives and their
federations, such as market vendor
cooperatives;[Art.63 (7)]
h. Entitlement to loans, credit lines, rediscounting of their
loan notes, and other eligible papers with the Development
Bank of the Philippines, the Philippine National Bank, The
Land Bank of the Philippines, and other financial
institutions except the Central Bank of the Philippines, for
credit cooperatives and/ or federations; [Art.63(8)]

i. Exemption from prequalification bidding requirements, for

cooperatives transacting business with the Government of
the Philippines or any of its political subdivisions or any of
its agencies or instrumentalities, including government-
owned and controlled corporations; [Art.63(9)]

j. The privilege of being represented by the provincial or

city fiscal or the Office of the Solicitor General, free of
charge except when the adverse party is the Republic of
the Philippines [Art.63 (10)]