1) Why this topic matters in cooperatives

Many disputes in Philippine cooperatives arise from two expectations that often collide:

“My money is my money, so I can withdraw anytime.”
“I’m a member, so the coop must approve my loan.”

Both are only partly true, because a member’s “money in the coop” can take different legal forms—deposit, share capital, capital build-up, revolving capital, patronage refund, or other payables—and each form carries different rights, limits, and remedies.

This article explains, in Philippine cooperative practice and law (primarily the Philippine Cooperative Code of 2008, R.A. No. 9520, its implementing rules, and the cooperative’s Articles of Cooperation and By-Laws), what members can demand, what cooperatives may lawfully restrict, and how disputes are typically resolved.

2) Core legal framework and governing documents

A. The “hierarchy” of rules that control member rights

When a member asks, “Can I withdraw?” or “Why was my loan denied?” the answer depends on a layered set of rules, usually in this order:

R.A. No. 9520 (Philippine Cooperative Code of 2008) and related regulations/issuances
The cooperative’s Articles of Cooperation and By-Laws (often the most decisive for timing and procedure)
Board-approved policies (e.g., deposit products, loan policies, credit manual)
The specific contract/instrument (deposit slips, passbooks, time deposit certificates, loan application forms, promissory notes)
General civil law principles (Civil Code concepts like obligations, set-off/compensation, and damages)

B. Cooperative principle that shapes the legal treatment

A cooperative is member-owned and democratically controlled, but it is also a going concern with fiduciary duties to all members collectively. Because of that, the law and bylaws often permit cooperatives to protect liquidity and solvency, even if it delays or conditions payouts.

3) The critical distinction: Deposits vs. Share Capital (and why people get surprised)

A. Deposits (liability; creditor-like right)

When a cooperative accepts savings deposits, time deposits, or similar member deposit products, the cooperative generally becomes a debtor, and the member becomes a creditor for that amount—subject to the terms of the deposit (e.g., withdrawal rules, maturity, notice requirements, penalties).

Key consequence: Deposits are generally withdrawable according to contract terms, and in liquidation depositors are typically paid ahead of share capital.

B. Share capital (equity; ownership interest)

Share capital represents the member’s ownership stake. Withdrawal of share capital (especially upon resignation/termination) is typically treated as a refund of capital contribution, not a demand deposit.

Key consequence: Refund of share capital is usually subject to conditions, including:

compliance with bylaws and procedure,
possible waiting period,
availability of funds and/or audit,
offset of the member’s obligations,
and, in extreme cases, cooperative financial condition.

C. Other “amounts due” that are neither simple deposits nor shares

Members may also have:

capital build-up / retained capital (often restricted by program rules/bylaws),
revolving capital (amounts “credited” but payable later under a revolving fund scheme),
patronage refunds (which may be declared and distributed on a schedule),
dividends/interest on share capital (subject to declaration and conditions),
payments/advances (payables depending on their nature).

Practical rule: Before asserting a right to withdraw, identify what bucket the money belongs to.

4) Member rights to withdraw deposits

A. General right: withdrawal consistent with deposit terms

If the cooperative offers deposit products, a member generally has the right to withdraw according to the product’s terms and policies, such as:

over-the-counter withdrawal limits,
cut-off times,
required presentation of passbook/ID,
notice requirements for large withdrawals,
penalties for pre-termination of time deposits.

A cooperative may impose reasonable operational safeguards. What becomes problematic is when restrictions become arbitrary, undisclosed, discriminatory, or used as leverage unrelated to legitimate set-off or policy.

B. Time deposits: withdrawal is usually conditional

A time deposit is designed to be held until maturity. The member’s rights typically include:

payment at maturity, or
pre-termination subject to agreed penalties or conditions.

Denial of early withdrawal is often lawful if it matches the instrument’s terms, provided those terms were disclosed and agreed.

C. Savings deposits: usually withdrawable, but may be subject to rules

Savings are typically withdrawable on demand, but cooperatives commonly use policies for:

maintaining minimum balance,
limiting daily withdrawals,
requiring notice for unusually large amounts to manage liquidity.

Such rules are usually defensible if properly adopted, communicated, and applied uniformly.

D. Common lawful grounds for delaying/denying deposit withdrawal

A cooperative may have legitimate grounds to delay or deny a requested withdrawal in situations such as:

The account is subject to a hold (e.g., pledged as loan security, garnishment, legal hold).
Set-off/compensation for matured obligations (see below).
Defective documentation/verification issues (identity mismatch, missing passbook, suspected fraud).
Time deposit not yet matured (or pre-termination rules not satisfied).
Account restrictions agreed to by the member (e.g., special savings product with lock-in).

Liquidity alone can justify operational measures (like notice for large withdrawals), but it becomes legally risky if the cooperative effectively imposes an indefinite freeze without a contractual or lawful basis.

E. Set-off (compensation) and the cooperative’s “lien” practice

A very common flashpoint is when a member tries to withdraw deposits but has an unpaid or matured obligation to the cooperative.

Under general civil law concepts, set-off/compensation can apply when parties are mutually debtor and creditor under certain conditions.
Cooperative bylaws and loan documents often also provide that the cooperative has a right to apply a member’s deposits or other amounts to the member’s obligations (especially if in default).

Practical effect: A member who is delinquent may find withdrawals blocked or reduced, because the cooperative applies the deposit against the loan.

Limits:

The cooperative’s authority to set-off is strongest when the member’s obligation is due and demandable and when there is a clear contractual/bylaw basis.
Overreaching can occur if the cooperative applies set-off to obligations that are not yet due, disputed, or not properly established.

F. Transparency rights connected to deposits

Members generally have the right to:

know the cooperative’s deposit policies,
receive statements/passbook entries reflecting transactions,
obtain an accounting of how any withheld amount was applied (e.g., if offset against a loan).

Opaque withholding without documentation is a frequent marker of governance failure.

5) Withdrawal/refund of share capital (often confused with “withdrawing deposits”)

A. Withdrawal of share capital is not the same as withdrawal of deposits

Share capital is an ownership interest. Many cooperatives allow:

partial withdrawal (subject to maintaining minimum share capital requirements), or
refund upon termination of membership (resignation/expulsion/withdrawal from membership).

B. Typical bylaw conditions for refunding share capital

While exact procedures vary, bylaws commonly require:

Written notice of withdrawal/resignation (or request for partial withdrawal, if allowed).
Board/committee action confirming membership status and capital balance.
Offsetting the member’s obligations (loans, accounts payable, unreturned property).
Payment within a stated period and subject to cooperative financial conditions/policies.

C. Why cooperatives often delay share capital refunds

Refunding share capital reduces equity and can harm solvency. Delays are often justified by:

need to complete audit/reconciliation,
ensuring the member has no outstanding liabilities,
maintaining statutory/bylaw-required capitalization levels,
preventing a “run” that harms remaining members.

D. Priority in liquidation (important for “Can I get my money back?”)

If a cooperative is under liquidation/insolvency:

Deposit balances are typically treated as liabilities payable to creditors.
Share capital refunds are typically last in line (paid after external creditors and liabilities, depending on the liquidation structure and applicable rules).

This is why members with large share capital may recover less (or later) than depositors if the cooperative fails.

6) Loan denials: what rights members have—and what they generally do not have

A. Membership does not equal entitlement to a loan

Even in credit or multipurpose cooperatives, membership usually provides:

access to apply for credit under cooperative programs,
potential preferential terms compared to non-members (if allowed),
democratic influence over policies (via general assembly).

But it rarely creates an absolute right to receive a loan. Credit decisions are normally discretionary within policy and prudential bounds.

B. Minimum member protections in the loan process

A member generally has the right to:

A fair and policy-based evaluation Decisions should follow written credit policies, applied consistently.
Disclosure of loan terms (if approved) Loan terms, charges, and schedules must be clear and documented. (Philippine consumer/credit disclosure norms strongly favor transparency.)
Proper handling of personal data and documents Loan applications involve sensitive information, which must be handled consistent with privacy principles (e.g., lawful purpose, proportionality, safeguards).
Access to internal remedies Most cooperatives have grievance/mediation mechanisms or committees under the bylaws for member complaints.

C. Common legitimate grounds to deny a cooperative loan

Cooperatives may lawfully deny loans for reasons such as:

inadequate repayment capacity (cash flow, income stability),
poor credit history or delinquency within the cooperative,
insufficient collateral/guarantors (if required),
failure to meet membership tenure requirements (some coops require minimum membership period),
failure to meet minimum share capital/capital build-up requirements tied to borrowing capacity,
incomplete documentation,
internal exposure limits (concentration risk per borrower/sector),
policy restrictions (e.g., specific purposes not financed).

D. When a denial can be challengeable

A loan denial becomes more legally vulnerable when it appears:

Arbitrary or in bad faith Example: denial with shifting reasons, or denial that contradicts the cooperative’s own written policy without explanation.
Discriminatory Example: denial based on impermissible personal characteristics rather than creditworthiness/policy, or selective application of rules.
Retaliatory Example: denial used to punish a member for voting, whistleblowing, or raising governance concerns.
Tied to unrelated coercion Example: “We will approve your loan only if you withdraw a complaint,” or “only if you buy unrelated products,” unless clearly part of legitimate cooperative requirements.

E. Right to reasons for denial: what is realistic

Philippine cooperative practice varies. Many cooperatives do not provide detailed written reasons unless policies require it. However:

Good governance strongly supports giving at least a general reason category (capacity, documentation, delinquency, policy restrictions).
Providing reasons also reduces disputes and aligns with transparency principles.

Even when the cooperative is not legally compelled to provide a granular rationale, refusal to explain anything can support an inference of arbitrariness in disputes.

7) Internal governance structures that typically control deposits and loans

A. Board of Directors (policy oversight)

The board generally approves:

deposit products and rules,
credit policies,
delegations of authority,
risk limits and collection policies.

B. Credit Committee / Loans Committee (evaluation and approval)

Many cooperatives use a credit/loans committee to:

evaluate applications,
recommend approvals/denials,
ensure adherence to policy,
document credit decisions.

C. Management (operations)

Management implements:

account verification,
release of funds,
documentation,
enforcement of holds and set-offs per policy and contracts.

Disputes often arise when management imposes restrictions that are not clearly authorized by bylaws/policy or not properly documented.

8) Dispute resolution and remedies in cooperative settings

A. Start with the cooperative’s internal remedies (often required)

Bylaws frequently require disputes to go through internal processes first, such as:

grievance committee,
mediation/conciliation committee,
ethics committee,
appeal to the board or general assembly structures (depending on issue).

Internal dispute processes matter because many cooperative regulatory frameworks favor alternative dispute resolution within the cooperative structure before going to external forums.

B. Escalation outside the cooperative

Depending on the issue, members may pursue:

regulatory/administrative complaints (especially for cooperative governance violations),
civil claims (e.g., collection of a sum of money for deposit obligations),
actions related to fraud or criminal conduct (if present),
remedies under privacy/data protection regimes for mishandling personal information.

The correct forum depends heavily on whether the issue is:

an intra-cooperative dispute (membership/governance/internal rights), or
a pure contractual money claim (e.g., deposit withdrawal contrary to terms).

C. What outcomes are commonly realistic

For deposit disputes, outcomes often include payment, accounting, correction of records, or damages if bad faith is proven.
For share capital refunds, outcomes often involve ordering the cooperative to follow bylaw procedure and account for the member’s equity—timing may still track lawful conditions.
For loan denials, forcing approval is uncommon unless the denial violates a specific enforceable right; more realistic outcomes include reconsideration under policy, correction of discriminatory practice, or governance sanctions if misconduct is shown.

9) Special situations that change the analysis

A. Member has existing loan obligations

Deposit withdrawals may be curtailed by valid set-off.
Share capital refunds may be withheld until obligations are settled.
Loan re-application may be denied due to delinquency or restructuring status.

B. Cooperative is under financial distress

Cooperatives may impose stricter withdrawal management consistent with policy and law.
Share capital refunds are particularly likely to be delayed.
Members should distinguish between liquidity management and improper freezing.

C. Deposits pledged as collateral

If deposit accounts are pledged, assigned, or otherwise used as loan security, withdrawal may be restricted until release conditions are met.

D. Death of a member

Payments to heirs/estate depend on:

bylaws,
estate settlement requirements,
documentary compliance (authority of heirs, extrajudicial settlement, etc.). Deposits and share capital are handled differently, and timing often depends on proper legal documentation.

10) Practical checklist: what to examine when asserting rights

For deposit withdrawals

Identify the type of deposit (savings vs time deposit vs special product).
Check the instrument/terms (maturity, penalties, notice requirements).
Check for holds (pledge, legal hold, garnishment, policy-based freeze).
Check for offset basis (is there a due and demandable obligation?).
Demand an accounting if any amount was applied to obligations.
Document communications (requests, responses, dates, amounts).

For share capital refunds

Confirm membership status (resigned/terminated, in good standing).
Check bylaws on refund timing and conditions.
Confirm all obligations are cleared (loans, accounts payable).
Request a written computation (shares, par value, adjustments, deductions).
Track board/committee action required by bylaws.

For loan denials

Ask what policy basis applies (documentation, capacity, delinquency, limits).
Check if similarly situated members were treated differently (consistency).
Request reconsideration through the proper committee if allowed.
Use grievance/mediation channels if denial appears retaliatory or discriminatory.
Ensure your personal data and documents are properly handled/returned consistent with cooperative practice.

11) Key takeaways

“Withdrawal of deposits” is usually a contract right governed by deposit terms and policies; “withdrawal of share capital” is an equity refund governed tightly by bylaws and cooperative financial safeguards.
A cooperative may restrict withdrawals and deny loans for legitimate reasons, especially time deposit terms, verification, pledges/holds, and set-off for matured obligations.
Membership generally gives access to credit programs, not an absolute entitlement to a loan; the enforceable right is to fair, policy-based, non-retaliatory treatment and access to internal remedies.
The cooperative’s By-Laws and written policies are often decisive; disputes typically turn on documentation, consistency, and whether the cooperative can point to a valid basis for its action.