Allocation of net surplus

In accordance with provisions of R.A. 9520 (the Cooperative Code of the

Philippines), net surplus of the cooperative is allocated as follows:

At least 10% to General Reserve Funds; provided however, that 50% of the
net surplus to be allocated to General Reserve Funds during the first five(5)
years of operations;
Not more than 10% allocated to Cooperative Education and Training Fund, of
which 50% is appropriated for Local CETF and the other 50% to Apex
Organization;
Not more than 7% to Optional Fund or Building Funds;
Not less than 3% to Community Development Fund;
The remaining net surplus shall be distributable as interest on share capital
and patronage refund.
The cooperative allocates net surplus, as follows;

10% to General Reserve Funds

5% to CETF due to Apex
5% to CETF-local
7% to Optional Fund
3% to Community Development Fund
70% to Patronage Refund and Interest on share Capital

Statutory Funds
Statutory Funds are accumulated allocations from the annual net surplus of the
cooperative. These funds consist of General Reserve Funds, Cooperative Education
and Training Funds Local, Optional Funds, and Community Development Fund.
Cooperative Development Authority regulations require that General Reserve Fund
is to be funded and cannot be used in operations.
Key Personnel
The Board of Directors, committees, and other officers receives honoraria for
services during their term of office.
Trainings & Seminars
In compliance with training requirements in implementing Rule 7 of R.A. 9520,
functions, responsibilities and training requirements of director, officers and
committee members.
Share Capital and Continuing Capital Build-Up
Share Capital
Members regular monthly contributions to share capital to fully pay subscribed
shares are paid through voluntary payments or payroll deductions.
Capital Build-Up
Members continuing capital build-up in excess of the subscribed share capital fully
paid shall be credited to Deposit for Share Capital subscriptions and reclassified to
share capital upon approval of the members additional shares subscriptions but not
to exceed 10% of the cooperatives total subscribed shares. Members of the
cooperative have not fully paid their subscribed shares per articles of incorporation.
Withdrawals from Membership
Members share capital withdrawn due to withdrawal of membership, are deducted
from Paid-up Share Capital outstanding instead of charging the accounts to Treasury
Shares. The Cooperative in the process of reclassifying the withdrawals to treasury
shares after complying with the requirements to subscribed shares paid.
Tax Regulations
Section 60 and 61 of Republic Act No. 9520 or Philippine Cooperative Code of 2008,
and the Joint Rules and Regulations Implementing Articles 60, 61 and 144 of
Republic Act No. 9520 in relation to Republic Act No. 8424 or the National Revenue
Code, as amended, dated February 5, 2010 explicitly provided for the tax treatment
of cooperatives, particularly, with respect to taxes imposed by the National Revenue
Code (NIRC) in this manner:
a) Duly registered cooperatives which do not transact any business with non-
members of the general public shall not be subject to any taxes and fees
imposed under the Internal Revenue Laws and other tax laws; and
b) Cooperatives transacting business with both members and non-members
shall not be subject to tax on their transactions with members. In relation to
this, the transaction of members with the cooperatives shall not be subject to
any tax and fees, including but not limited to final taxes on members
deposits and documentary tax.
However, the Bureau of Local Government Finance, Department of Finance, in its
BLGF Memorandum Circular No. 31-2009 dated October 7, 2009, pointed out that,
cooperatives transacting business with both members and non-members are still
required to:
a) Obtain or secure a Mayors Permit and pay the commensurate cost of
regulations, inspection and surveillance of the operation of its business but
not exceeding One Thousand Pesos (P1,000.00);
b) Secure a Community Tax Certificate, as a judicial entity and pay the basic tax
of Five Hundred Peso (P500.00); and
c) Pay service charges or rentals for the use of property and equipment or public
utilities owned by the local government such as charges for actual water
consumption, electric power, toll fees for the use of public roads and bridges,
and the like.
Tax Exemption
The cooperative has filled with BIR for tax exemption or ruling under R.A. 9520 per
certificate of tax exemption, the ruling includes the following:
a) Exemption from income tax on income from CDA-registered operations;
b) Exemption from value-added tax on CDA-registered transaction;
c) Exemption from other percentage tax;
d) Exemption from donors tax on donations to duly accredited charitable,
research and educational institutions, and reinvestment to socio-economic
projects with the area of operations of the cooperative;
e) Exemption from excise tax for which it is directly liable;
f) Exemption from documentary stamp tax: Provided, however, that the other
party to the taxable document/transaction who is not except shall be the one
directly liable for the tax;
g) Exemption from payment of Annual Registration fee of Five Hundred Pesos
(P500.00);
h) Exemption from all taxes on transaction with insurance companies and banks,
including but not limited to 20% final tax on interest deposits and 7.5% final
income tax derive from a depository bank under the expanded foreign
currency deposit system.