ARTICLE X

ALLOCATIONS AND DISTRIBUTION OF NET SURPLUS

Section 58. ORDER OF THE DISTRIBUTION OF NET SURPLUS. The net surplus shall be
distributed as follows:

a) An amount of the reserve fund, which shall be ten per centum (10%) of the net
surplus:
a.1) The reserve fund shall be used for the stability of CLIMBS to meet the net
losses in its operations.
a.2) The General Assembly may decrease the amount allocated to the reserve
fund when reserve fund already exceeds the share capital.
a.3) The reserve fund shall not be utilized for investment, other than those
allowed in the Cooperative Code. Such sum of the reserve fund in excess of
the share capital may be used at anytime for any project that would expand
the operations of CLIMBS upon the resolution of the general assembly.
a.4) Upon the dissolution of CLIMBS, the reserve fund shall not be distributed
among the members. The general assembly may resolve:
a.5) To establish a usufructuary trust fund for the benefit of any federation or
union to which CLIMBS is affiliated; and
a.6) To donate, contribute, or otherwise dispose of the amount for the benefit of
the community where CLIMBS operates. If the members cannot decide upon
the disposal of the reserve fund, the same shall go to the federation or union
to which CLIMBS is affiliated.

b) An amount for the education and training fund, which shall be ten per centum
(10%)of net surplus which shall be distributed as follows:

b.1) Half of the amounts transferred to the education and training fund annually
under this subsection maybespent by CLIMBS for education and training
and other purposes; while the other half shall be credited to the cooperative
education and trainingfund of the respective apex organization of which
CLIMBS is a member. An apex organization may be a federation or union.
b.2) Upon the dissolution, the unexpended balance of the education and training
fundappertaining to CLIMBS shall be credited to the cooperative education
and training fund of the abovementioned apex organization.

A subsidiary ledger of the land and building fund must be maintained by the
cooperative to record the individual proportionate share contributed by the
member.

As soon as the purpose is achieved, the same fund shall be reverted to the
share capital of the individual contributors from the fund appearing in the
ledger.

c) An amount of the Community Development Fund, which shall be three per

centum(3%) of the net surplus. The Community Development Fund shall be
used for projects or activities that will benefit the community where the
cooperative operates.
d) An optional fund, a land and building, and anyother necessary fund the total of
which shall be seven per centum (7%).

d) The remaining net surplus shall be made available to the members in the form of
interest on share capital and patronage refund computed in accordance with
Rule 4 of the Implementing Rules and Regulations of R.A. 6938.

The sum allocated for patronage refund shall be made available at the same rate
to all patrons, including non-members of the cooperative in proportion to their
individual patronage; Provided that:

d.1) In case of member patron with paid-up share capital contribution, his/her
proportionate amount of patronage refund shall be paid to him/her unless
he/she agrees to credit the amount to his/her account as additional share
capital contribution.
d.2) In case a member patron with unpaid share capital contribution, his/her
proportionate amount of patronage refund shall be credited to his/her
account until his/her capital contribution has been fully paid.
d.3) In case of non-member patron, his/her proportionate amount of
proportionate refund shall be set aside in a general fund for such
patron and shall be allocated to individual non-member patrons only
upon request and presentation of evidence of the amount on his/her
patronage. The amount so allocated shall be credited to such patron
towards payment of the minimum capital contribution for membership.
When a sum equal to this amount has accumulated at anytime within a
period of two years such patron shall be deemed and become a member of
the cooperative if he/she so agrees or requests and complies the provisions
of these By-laws for admission to membership; and
d.4) If within the period of time specified in these By-laws any subscriber who
has not fully paid its/his/her subscribed share capital or any non-member
patron who has accumulated the sum necessary for membership but who
does not request nor agree to become a member, or so fails to comply
with the provisions of these By-laws from admission to membership the
amount so accumulated or credited to their account together with any part
of the general fund for non-member patrons shall be credited to the
reserve fund or to the cooperative education and training fund of CLIMBS
at the option of the general assembly.