Cooperative By-Laws (Philippines)

A Cooperative By-Laws in the Philippines establishes the terms governing the arrangement it covers, giving the parties a clear written record to rely on.

The Philippine Cooperative Code (RA 9520) defines a cooperative as a duly registered association of persons with a common bond of interest who voluntarily join 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. Philippine cooperatives are classified as primary (formed by individuals), secondary (formed by primary cooperatives), or tertiary (federation of secondaries and other cooperatives), and include types such as credit, consumers, producers, marketing, service, and multi-purpose cooperatives.

The CDA — an attached agency of the Office of the President under Executive Order 292 and RA 9520 — has jurisdiction over the registration, supervision, and regulation of all types of cooperatives in the Philippines. CDA Memorandum Circular No. 2015-06 prescribes the minimum content requirements for cooperative Articles of Cooperation and By-Laws. Cooperatives registered with the CDA are exempt from income tax under Section 24(B)(3) of the National Internal Revenue Code (NIRC) and from VAT under Section 109(L) of the NIRC, under certain conditions and for transactions between the cooperative and its members.

The By-Laws must be approved by a two-thirds vote of the founding members at the organizational meeting before being submitted to the CDA for registration, under Section 14 of RA 9520.

The legal framework governing the Cooperative By-Laws (Philippines) in Philippines draws on several key statutes and regulatory bodies. Under Philippine law, the Civil Code of the Philippines (Republic Act No. 386) governs contractual obligations. The Revised Corporation Code (Republic Act No. 11232) regulates corporate entities through the Securities and Exchange Commission (SEC). The Labor Code of the Philippines (Presidential Decree No. 442) and Department of Labor and Employment (DOLE) govern employment matters. The Data Privacy Act of 2012 (Republic Act No. 10173) and the National Privacy Commission (NPC) protect personal data. The Bureau of Internal Revenue (BIR) administers tax obligations under the National Internal Revenue Code. Parties executing a Cooperative By-Laws (Philippines) in Philippines should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Revised Corporation Code (RA 11232, 2019) sets the foundational requirements.

Cooperative By-Laws are required in the Philippines whenever a group of individuals seeks to form and register a cooperative with the Cooperative Development Authority (CDA) under RA 9520.

Cooperative By-Laws are required when at least 15 individuals with a common bond of interest — such as employees of the same employer, farmers in the same barangay, or members of the same professional association — wish to form a primary cooperative and benefit from the tax exemptions and legal entity status that CDA registration provides under RA 9520.

Cooperative By-Laws must be amended and resubmitted to the CDA whenever the cooperative wishes to change a fundamental governance provision — such as increasing membership requirements, modifying the Board composition, or altering the profit allocation (net surplus distribution) formula. Amendments require approval by a two-thirds vote of all members at the General Assembly under Section 16 of RA 9520.

Cooperative By-Laws are required when the cooperative applies for government financial assistance or loans from the Land Bank of the Philippines, Development Bank of the Philippines, or the People's Credit and Finance Corporation (PCFC). These institutions require a certified copy of the By-Laws as part of their loan application requirements for cooperatives.

Cooperative By-Laws are needed when a cooperative registers with the Bureau of Internal Revenue (BIR) to establish its tax-exempt status. The BIR requires the CDA Certificate of Registration, Articles of Cooperation, and By-Laws under BIR Revenue Memorandum Circular No. 18-2017 to issue the cooperative's BIR Certificate of Exemption or Certificate of Registration with the applicable tax type.

Cooperative By-Laws are required for the cooperative's annual compliance report submission to the CDA under Section 34 of RA 9520, which requires the cooperative to file an Annual Progress Report including its audited financial statements and a certification that the By-Laws continue to be in force.

Complete Philippine Cooperative By-Laws under RA 9520 and CDA Memorandum Circular No. 2015-06 must contain the following essential provisions.

Cooperative Name and Office: The official name of the cooperative (which must include the word 'Cooperative' in its name under CDA guidelines), the address of the principal office, and the geographic area of operations.

Membership: Eligibility requirements for membership (common bond of interest, minimum age, maximum member count if applicable), the application process, the membership fee and minimum share capital subscription, rights of members (voting, dividends, access to services), and grounds for expulsion under Section 29 of RA 9520.

General Assembly: Procedures for calling regular and special General Assemblies, quorum requirements (majority of all members for regular assemblies, two-thirds for special assemblies amending the By-Laws under Section 16 of RA 9520), voting rights (one member, one vote principle under Section 5 of RA 9520), and the powers reserved exclusively to the General Assembly.

Board of Directors: The number of directors (not less than five nor more than fifteen under Section 39 of RA 9520), election procedures, term of office (maximum of three consecutive terms of two years each under RA 9520), disqualifications, meetings, quorum, and the Board's powers and duties.

Officers: Roles and qualifications of the Chairperson, Vice Chairperson, Secretary, and Treasurer, and the General Manager or Chief Executive Officer if hired as a professional manager. Officers cannot simultaneously be members of the Audit Committee under Section 46 of RA 9520.

Funds and Net Surplus Distribution: The cooperative's fund structure — Statutory Reserve Fund (at least 10% of net surplus under Section 86), Optional Fund, Education and Training Fund (at least 2% under Section 87), Community Development Fund (at least 3% under Section 88), and the basis for distributing the remaining net surplus as patronage refunds and dividends.

Audit: The composition of the Audit Committee, mandatory internal audit requirements, and the appointment of an external auditor accredited by the CDA under Section 81 of RA 9520.

Additional compliance elements for a Cooperative By-Laws (Philippines) used in Philippines include: Under Philippine law, the Civil Code of the Philippines (Republic Act No. 386) governs contractual obligations. The Revised Corporation Code (Republic Act No. 11232) regulates corporate entities through the Securities and Exchange Commission (SEC). The Labor Code of the Philippines (Presidential Decree No. 442) and Department of Labor and Employment (DOLE) govern employment matters. The Data Privacy Act of 2012 (Republic Act No. 10173) and the National Privacy Commission (NPC) protect personal data. The Bureau of Internal Revenue (BIR) administers tax obligations under the National Internal Revenue Code. Forms-legal.com provides this template as a starting point for Philippines-compliant documentation.