KAPALONG COLLEGE OF AGRICULTURE,

SCIENCES AND TECHNOLOGY

BACHELOR OF SCIENCE IN BUSINESS ADMINISTRATION

COURSEPACK FOR

COOPERATIVE
MANAGEMENT
ELECTIVE 102: COOPERATIVE MANAGEMENT

TABLE OF CONTENTS

Title Page 1
Table of Contents 2
Course Overview 3
Course Title
Course Description
Course Outcomes
Module 1: Fundamentals of Cooperative Thought and Practice 4
Lesson 1. Nature and Purpose of the Cooperative 5
Lesson 2. Origin of Cooperatives 20
Lesson 3. Cooperative Values and Principles 28
Lesson 4. Cooperative as a Movement 42
Module 2. Legal Foundation of Cooperatives 53
Lesson 1. What is Republic Act (RA) 9520? 54
Module 3: Organization, Registration and
Administration of Cooperative 68
Lesson 1. Organizing a Cooperative 68
Lesson 2. Administration of a cooperative 79
Module 4: Cooperative Plans, Programs and Policies 95
Lesson 1. What are Cooperative Plans and Policies? 96
Lesson 2. What are Cooperative Policies 97

KAPALONG COLLEGE OF AGRICULTURE, SCIENCES AND TECHNOLOGY 2

ELECTIVE 102: COOPERATIVE MANAGEMENT

COURSE OVERVIEW
Course Title
Cooperative Management

Course Description
It’s been said that, “There is no secret formula to success in business
because everything is changing.” This subject is designed to adequately prepare
students to face the real challenge in life in the business world including
cooperative management in terms of general concepts & principle. It is also an
attempt to harmonize common understanding of students on the moral foundation
of cooperative as social organization as well as information culled from legal
documents as framework in the cooperative organization & registration;
membership; administration; responsibilities, rights & privileges of cooperative.

Course Outcomes
At the end of this course, the students should be able to:

1. Apply the theoretical knowledge on business administration in the

cooperative’s operations;
2. Manage cooperative in accordance to general concepts and principles;
3. Define the responsibilities of its members in the cooperative;
4. Define the rights and privileges of the cooperative;
5. Administer the insolvency and dissolution of the cooperatives; and
6. Foster the creation and growth of cooperative for the attainment of economic
development.

KAPALONG COLLEGE OF AGRICULTURE, SCIENCES AND TECHNOLOGY 3

ELECTIVE 102: COOPERATIVE MANAGEMENT

MODULE 1: FUNDAMENTALS OF
COOPERATIVE THOUGHT AND PRACTICE

MODULE OVERVIEW
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 end, 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.
The first Module, the FUNDAMENTALS OF CO-OP THOUGHT & PRACTICE, aims
to make clear the nature and purpose of co-operatives as a socio-economic
enterprise. It is divided into three (3) Lessons. Lesson 1 Discusses the nature and
purpose of the cooperatives. Lesson 2 discusses about the origin of the
cooperatives and Lesson 3 is anchored on the discussion about cooperative values
and principles.

MODULE OBJECTIVES
At the end of this module, the student will be able to:
1. Explain the true nature and purpose of the cooperative as a socio-economic
enterprise.

2. Draw important lessons from the history of co-operatives that are applicable to the
experience of co-operatives in the Philippines.

3. Assess present practices of the co-operative vis-à-vis the Co-operative Values and
principles.

LESSONS IN THE MODULE

In this module, you will be able to learn from the following lessons:
Lesson 1. Nature and Purpose of the Cooperative
Lesson 2. Origin of Cooperatives
Lesson 3. Cooperative Values and Principles
Lesson 4. Cooperative as a Movement

KAPALONG COLLEGE OF AGRICULTURE, SCIENCES AND TECHNOLOGY 4

ELECTIVE 102: COOPERATIVE MANAGEMENT

MODULE 1: FUNDAMENTALS OF
COOPERATIVE THOUGHT AND PRACTICE

Lesson 1: Nature and Purpose of the

Cooperative
LEARNING OUTCOMES

At the end of the module, you should be able to:

1. Explain the true nature and purpose of the co-operative as a socio-economic

enterprise.
2. Draw important lessons from the history of co-operatives that are
applicable to the experience of co-operatives in the Philippines.
3. Assess present practices of the co-operative vis-à-vis the Co-operative
Values and principles.

TIME FRAME:
This lesson will be completed by the students at the end of week 2.

INTRODUCTION

In Lesson 1, the cooperative’s unique identity, why members of

the cooperative are essential, and the purpose of the cooperative will be
discussed. Though some students may have an idea what cooperative
is, it is important that they shall have deeper understanding how does
cooperative movement influence social and economic development
among its members. In lesson one, students will also be given a glimpse
of the important role that members of coops portray and what
philosophies cooperative are being anchored to.
At the end of the lesson, the students will learn about:
 Explain the Role of members in the Cooperative
 Differentiate between social capital and financial capital
 Discuss the purpose and philosophy of the cooperative

KAPALONG COLLEGE OF AGRICULTURE, SCIENCES AND TECHNOLOGY 5

ELECTIVE 102: COOPERATIVE MANAGEMENT

ACTIVITY

Task 1: Venn Diagram

Directions: Complete the Venn Diagram below. Provide words or terms that tell the
topics are different in the outer circles and write five details that tell how the topics
are alike where the circles overlap. You may base your answers from your previous
knowledge and readings about the given topic.

Financial Capital Social Capital

Ways they
are alike

Task 2: What I want to be

Directions: Do you want to become a member of a cooperative or not? Explain your
answer (100-200 words). You may use another sheet (A4 size bond paper) should
the space provided will not be enough.
______________________________________________
______________________________________________
______________________________________________
______________________________________________
______________________________________________
______________________________________________
______________________________________________
______________________________________________
______________________________________________
_______________________________________
_______________________________________
_______________________________________ RUBRICS
_______________________________________ Content 6
_______________________________________ Organization 4
_______________________________________ Total 10

KAPALONG COLLEGE OF AGRICULTURE, SCIENCES AND TECHNOLOGY 6

ELECTIVE 102: COOPERATIVE MANAGEMENT

Analysis
Directions: Answer the following questions below base on the discussion starter
presented. Limit your answers to not more than 100 words. You may use extra
bond paper (A4 size) should the space provided will not be sufficient for your
answers.

Gary is a member of a cooperative. He is granted a loan to help him with a start-up

capital for his small business. Gary pays his loan amortizations on time. He, however, does
not attend membership meetings because he is busy with his business.

1. Which responsibility Gary has met? Which one

has he not fulfilled?

2. What could be the possible consequence if

members only join a cooperative with single aim of
applying a loan with a cooperative?

KAPALONG COLLEGE OF AGRICULTURE, SCIENCES AND TECHNOLOGY 7

ELECTIVE 102: COOPERATIVE MANAGEMENT

Abstraction
THE COOPERATIVE’S UNIQUE IDENTITY

A co-operative has a unique identity: it is both an association of

people and a business enterprise. It is not one or the other; it is both. This dual
nature of the co-operative is important in preserving its essence. When a
cooperative move away from this essence, to that extent it moves away from being
a cooperative.
The nature of the co-operative is analogous to a coin. A coin has two
sides but it is one. So is the cooperative.

As Business Enterprise As an Association of people

A coin is made up of key elements like bronze, cooper, zinc, nickel, silver
and gold, usually a combination of these elements. These elements define the
identity of the coin and make it one and whole. They also define the value of the
coin. Without these elements, there is no value.

The same can be said of the cooperative: MEMBERS are its key elements
that make it one and whole. Without them, there is no co-operative. MEMBERS
also give value to the co-operative.

Why are MEMBERS essentials?

1. The members are the “reason for being” of the co-operative;
2. They are the true measure of its success;
3. They come together to associate to achieve a common goal:

KAPALONG COLLEGE OF AGRICULTURE, SCIENCES AND TECHNOLOGY 8

ELECTIVE 102: COOPERATIVE MANAGEMENT

- That common goal is to help them acquire a product or service to

satisfy an economic need;

- They do this in order to get the product or service at better terms

(price, conditions, etc.);
- Sometimes this may be the only way for them to get that product
or service at all.
4. To achieve these goals, they go into business themselves;
5. They contribute towards capitalizing that business and patronize it.

Farmers form a producers’ co-operative so that they acquire inputs,

technology, information, etc. and market their produce to get the best price.
Consumers form a consumers’ co-operative to make available commodities
to members at lower cost. People form a savings and credit co-operative to
provide financial services to members at better terms and conditions
compared to those available in the market. Other types of co-operative are
workers’ co-operatives, like transport, electric, health services co-operative,
etc.
They cannot meet and satisfy this economic need if they acted alone.
This is why they come together and form a group (association). Their means
to satisfy that need is by capitalizing (owning) a business enterprise and patronizing
(using) it at the same time: this way members derive benefit from the business as
owners and as users.
Members of the co-operative are both owners and users at the same time.
This is one of the distinguishing marks of a co-operative, which makes them
different from a private or public corporation, a non-government organization, or
other forms of business or organization.
What is the purpose of the cooperative?
A cooperative always starts with an economic objective because it is meant to
address an economic need. However, it does not stop there. People do not decide
to work together in the co-operative only to acquire goods and services. By
identifying with a group, real members gradually develop a sense of community. By
participating in the affairs of the co-operative, they create conditions for greater
social consciousness. One indication the co-operative has reached this stage is
when it undertakes program that promote the well-being of all members and
eventually programs that contribute to the development of the larger community.

KAPALONG COLLEGE OF AGRICULTURE, SCIENCES AND TECHNOLOGY 9

ELECTIVE 102: COOPERATIVE MANAGEMENT

Example of programs that benefit the community are:

 Collective undertaking to protect and preserve the environment;

 Health programs;
 Education program to benefit the poor in the community like scholarship;
 Entrepreneurial training;
 Advocacy programs to promote social causes important to members.
 Voter education for meaningful participation in the democratic exercise during
elections;
 Financial literacy programs;

These programs contribute to helping members improve their economic and social
situation and achieve better quality of life.

Financial Literacy
Advocacy Training

KAPALONG COLLEGE OF AGRICULTURE, SCIENCES AND TECHNOLOGY 10

ELECTIVE 102: COOPERATIVE MANAGEMENT

Entrepreneurship Training Environment

Health Education

Through this program, the co-operative achieves a social purpose. Historically in

fact, cooperatives are formed for a higher purpose, which was to provide otherwise
disadvantaged people with the means to overcome economic deprivation, social
exclusion, and restore human dignity to people in an economy that was driven
mainly by individual interests and profits.
Brett Fairbairn, the Canadian co-operative and writer once wrote: “The
Rochdale Pioneers commenced business with the purpose of pioneering the way to
a new and better social order…Without an ideal there would have been no co-
operative movement.”

KAPALONG COLLEGE OF AGRICULTURE, SCIENCES AND TECHNOLOGY 11

ELECTIVE 102: COOPERATIVE MANAGEMENT

The association side of the co-operative is, therefore, as important as its enterprise side.
The co-operative has to succeed in both. As an enterprise, it has to earn enough to cover
all costs, including costs of operations and capital, and to fund its growth. As an
association, it has to engage members in the affairs of the co-operative and ensure that
they remain committed to the ideals of the organization. As Daniel Cote, a writer who writes
on co-operative issues, said: “If a co-op neglects its associational needs, the consuming
public can no longer distinguish it from any other business.”

This is another distinguishing mark of a co-operative – it has both economic

and social purpose. The co-operative has to achieve both if it is to preserve its true
nature as a socio-economic enterprise.

When members are not

engaged as owners, they will not
develop a real sense of ownership
and will not feel responsible, will
be disinterested in the affairs of
the co-operative. When members
are treated as mere clients, they
will patronize the business only
when it suits them.

Without member support the

co-operative becomes a profit-
oriented
KAPALONG enterprise
COLLEGE seeking its SCIENCES AND TECHNOLOGY
OF AGRICULTURE, 12
own survival in the open market.
ELECTIVE 102: COOPERATIVE MANAGEMENT

What are Financial Capital and Social Capital?

On the enterprise side, we already know that members supply financial capital to
the co-operative in the form of shares, deposit or other forms of borrowing. Borrowings or
other such funds are also sourced from outside.

On the association side, there is the social capital, which is seldom talked about but is
equally important.
Social capital was defined by Dr. Robert D. Putnam of Harvard University as
“networks, norms and trust that enable participants to act together more effectively tpo
pursue shared objectives.” He said this “can be measured by the amount of trust and
reciprocity in a community or between individuals.” The World Bank in turn defines social
capital as the “norms that shape the quality and quantity of a society’s social interactions…
It is the glue that holds them together.”

In the co-operative, social capital comes in the form of group identity, shared
values, mutual trust, helping attitude and volunteerism. These are particularly evident in the
early stages of the co-operative organization. In fact, this is the kind of capital that big co-
operative we see now mostly had in the beginning or at the time when they had very little
financial capital. In fact, without this social capital these co-operatives would not have
prospered.
In contrast, consider what happened to those co-operative that depended on outside
capital and had practically no social capital at the beginning. These co-operative are mostly
gone now or have otherwise failed to develop.

KAPALONG COLLEGE OF AGRICULTURE, SCIENCES AND TECHNOLOGY 13

ELECTIVE 102: COOPERATIVE MANAGEMENT

Unfortunately, this social capital gradually diminished as co-operatives grew their

financial capital. In fact, very little of it is now left especially among many of the bigger co-
operative. This is mistake. This can also help explain the organizational problems besetting
co-operatives right now and the weakness of the co-operative movement as a whole.

What is the Cooperative Philosophy?

You might have heard different people explain this philosophy in different ways,
depending on what the co-operative means to them. Nevertheless, perhaps the best way to
understand the co-operative philosophy is to see it from the perspective of a member.
Here is one real-life story of a member.

GROWING WITH MY CO-OP

The Story of Felimon Fuentes

KAPALONG COLLEGE OF AGRICULTURE, SCIENCES AND TECHNOLOGY 14

ELECTIVE 102: COOPERATIVE MANAGEMENT

FELIMON S. FUENTES was born in Bicol. He moved to Parañaque in 1976 in

search of a job armed with only a high school diploma. He was hired as autility-driver at the
Sucat branch of Mercury Drug and retired in 2009. Felimon and wife Lilia are members of
the San Dionisio Credit Co-operative (SDCC). They are blessed with three daughters and
two son, three of whom are members of the co-operative.
Here is their story as told by Felimon Fuentes.
“A friend of mine who is a member of SDCC encouraged me to join. I became a co-op
member in 1980 after attending the pre-membership seminar for three days. I wanted to go
into business to augment my small income from my job and support my family. I knew that
the co-operative could help me.

“I decided to go into the tricycle business because there was an opportunity in our area.
The cost of a brand-new tricycle at that time was P12,000. I got my first loan of P5,000 from
the co-operative based on my deposits. The rest of the amount I got as salary loan from
Mercury Drug. That is how I got my first tricycle unit.

“I hired a driver who paid me daily ‘boundary’, which I deposited in the co-operative every
week. Every month, I would pay my installment due to the co-operative. Things went well
so much that I was able to borrow another P6,000 after six months to buy another [ tricycle]
unit. Again, with additional loan from Mercury Drug, I got my second tricycle. This was how
it progressed. Every six months I would borrow money to buy another unit until such time
that I was able to buy three units a year. I maintained a clean record in the co-operative so I
was able to borrow more and add more tricycle units within a span of over twenty years.

KAPALONG COLLEGE OF AGRICULTURE, SCIENCES AND TECHNOLOGY 15

ELECTIVE 102: COOPERATIVE MANAGEMENT

‘It was out of my income from this business that I was able to send my children to school.
Of course, I had to be thrifty. I saved as much as I can. It helped that my wife, who is also a
member of the co-operative, had a small sari-sari store. I studied our expenses well and I
learned to budget. I taught my children to be thrifty as well. With the grace of God, my
children are all professionals now: one is a medical doctor, one is lawyer, and the other two
are computer engineers working in Makati. Three of my children are now members of the
co-operative. The youngest also wants to join.
“By the way, I saw to it that after when I recovered my investment in one unit, I would
transfer ownership of 60 of these to the drivers. Therefore, I have helped many drivers
acquire their own tricycle. Right now, I still have forty units under my name. most of these
will be owned by the drivers eventually.

“In the meantime, I have stopped borrowing from the co-operative for my business. My
family wants to buy the lots beside ours in the subdivision. I would like my children to have
their own property and live near us. For this, we plan to get a loan from the co-operative
again.
“The co-operative has really been a blessing to us. I have been encouraging people I know,
especially those in our subdivision to join the co-operative. I tell them ‘You will always have
money when you are a member of the co-operative. You will be taught how to earn a living.
It will support you when you decide to go into business.’ There is great value in being part
of this organization.”
Reprinted from WILL TO SERVE: The story of San Dionisio Credit Co-operative, pp 101-
103. Written by Romulo M. Villamin, June 2011.
This may be a simple story but it illustrate what the cooperative philosophy is.
Consider what Felimon Fuentes did. First, he wanted to augment his income not only to
meet his and his family’s immediate economic needs but also to improve their life in the
long run. His means to achieve this was to go into business. He was determined to do that
so he decided to borrow money to raise capital.
In the cooperative parlance, this is what we call SELF-HELP – that life attitude
that comes from the belief that one should help one self and not depend on others. It

KAPALONG COLLEGE OF AGRICULTURE, SCIENCES AND TECHNOLOGY 16

ELECTIVE 102: COOPERATIVE MANAGEMENT

comes from a realq determination to improve one’s life and not be constrained by the
circumstances of daily living.
Mr. Fuentes found out that he can raise capital by going to the cooperative. That’s
what he did. And that’s what we want people joining the cooperative to realize – join the
cooperative to achieve your purpose in life. In other words:

HELP ONESELF, through the cooperative.

Alone he or she cannot do it. But with the cooperative he or she can achieve
what one wanys to achieve. This is the first part of the cooperative philosophy. Here is the
other side.
Mr. Fuentes did not stop at himself. He made sure that after recovering his
investments, he gave his drivers the opportunity to own the tricycle they drove. In other
words, after being helped by the cooperative, he helped others as well. So the other side of
the cooperative philosophy is this:

Through the cooperative, HELP OTHERS.

This is the real essence of cooperation – helping one another in order to
improve one’s life and others as well. This is the meaning of the Cooperative
Pledge when we say: “Alone I am weak but with others I am strong.”

Help Oneself, through the cooperative

and through
KAPALONG COLLEGE OF theSCIENCES
AGRICULTURE, cooperative, Help Others.
AND TECHNOLOGY 17
ELECTIVE 102: COOPERATIVE MANAGEMENT

So the Cooperative can be stated simply:

This is the philosophy that every member, every officer, every manager,
every staff of the cooperative should understand and live. Otherwise, the
cooperative is just another undertaking, just another organization, just another
business.

Application

Task 3: The Cooperative Around Me

Directions: Recall five cooperatives of any type you see around your
barangay/municipality. Then, fill up the matrix below.

Name of Product/Service Impressions and Remarks

Cooperative Specialties (regarding their cooperative
and location (Lending, General philosophy)
Merchandise, etc.)

Follow-Up Question: From the cooperatives listed above, select one and explain the
manner cooperative philosophy is being manifested. (Limit your answer to 100-150 words)
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________ RUBRICS
_______________________________________________
_______________________________________________ Content 3
_______________________________________________ Organization 2
Total 5

KAPALONG COLLEGE OF AGRICULTURE, SCIENCES AND TECHNOLOGY 18

ELECTIVE 102: COOPERATIVE MANAGEMENT

_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________
_______________________________________________

Task 4: Reflection
Directions: Fill in the spaces below. Answers should not be 100 words. Use
another sheet (A4) if necessary.

Cooperative is important because

_________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_____________________________________________________
_______________________________________________________________________
___________________________________________________________

I realized that the role of cooperative in socio-economic development

includes__________________________________________________________
_______________________________________________________________________
___________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_____________________________________________________

Closure
Congratulations! You have completed the Lesson 1: Nature and Purpose of
the cooperative for Module 1 of this course pack. You may now proceed to Lesson
the next lesson. Keep up the good work.

KAPALONG COLLEGE OF AGRICULTURE, SCIENCES AND TECHNOLOGY 19

ELECTIVE 102: COOPERATIVE MANAGEMENT

KAPALONG COLLEGE OF AGRICULTURE, SCIENCES AND TECHNOLOGY 20