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The Cooperative Movement in the Philippines


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Lecture Presentation
Cooperative Development Authority
Dagupan Extension Office
Region I

Published in: Business

The Cooperative Movement in the Philippines

  1. 1. 20117,290,848members
  2. 2. Dr. Jose Rizal, hadorganized Agriculturalmarketing cooperativein Dapitan while onexile in 1896.
  3. 3. Cooperative Efforts (1906-1940) 1907 1915 Rural Rural Credit CreditGovernment Bill ActInitiated 1938 1927 1919 CoopStrengthen Marketing Grant loansCooperatives Laws to Credit PA 3425 AssociationP.A. 3872 sPA 3425 was Common Wealth Act 565amended by PA Gen, Basic3872 provided Cooperative Lawincorporation ofFACOMA 1940
  4. 4. Cooperative Efforts (1906-1940) 1938 1940 Credit Union in CommonChurch Government Vigan Wealth Act 585Initiated Initiated Cooperative Act 1941 National Cooperative Administratio n
  5. 5. Expansion of Cooperativism in the Philippines (1950-1969) 1952 1952 1952 RA No. 821 known as RA 821 RA 2023 the Agricultural Credit and Credit Non Farmers Cooperative AgriculturalGovernment Cooperative Financing Act CooperativInitiated Marketing e law 1967 1963 PhilippinePhilippinesthe Code In 1969 (R.A National6389) Code of of Agrarian Reform CooperativAgrarian Reform Church e Bank Sponsored(Rep Act No. 6389 d
  6. 6. Cooperative Under the 1973 Constitution (1973-1986) n April 14, 1973 the President issued a decree on "Strengthening the Cooperative Movement PD 175GovernmentInitiated On July 9, 1973 Implementation No. 23 by President Marcos which set forth the regulations for implementing the decree on Strengthening the Cooperative Movement Electric Cooperatives Under PD 269 Presidential Decree was issued in August 1973 creating the National Electrification Administration giving responsibility for administering a nationwide program of rural electrification thru non stock cooperatives and granting the power to "organize, register, supervise, and finance electric cooperatives."
  7. 7. Cooperative Under the 1973 Constitution 1973-1986 Presidential Decree No. 775 On August 24, 1975 decreed that sugar planters and or producers cooperatives shall be developed by the Philippines Sugar Commission.GovernmentInitiated Transport Cooperatives under Executive Order No. 893 on October 19, 1973, A Commission on Transport Cooperatives to promote and supervise the development of transport cooperative to serve drivers of public vehicles
  8. 8. RA. No. 6938 The bill was passed and signed as law by President Aquino on March 10, 1990. A companion law was also passed creatingGovernment the Cooperative Development AuthorityInitiated (Rep. Act No. 6939) which provided for the abolition of BACOD and the transfer of its functions, qualified personnel and budget to the CDA.
  9. 9. RA 9520 • Amended the Coop Code promulgated in 1990; • Discussed in four (4) Congresses (starting the 11thGovernment Congress up to the 14th)Initiated spanning over ten (10) years; • Approved by the Bicameral Committee on November 18,2008; • Signed into law last February 17,2009
  10. 10. RA 9520• The Philippine Cooperative Code of 2008 (Article1)• Signed on February 17, 2009• Published on March 7, 2009• Effective March 22, 2009
  11. 11. the first cooperatives in the Philippines were the product of aseries of legislative measures. Cooperatives did not begin aspeople’s movement. Neither did they evolve from people’sinitiatives at mutual self-help and cooperation. There is,however, one instant in Philippine history where a cooperativewas formed ahead of the passage of the cooperative laws.That was the agriculturalmarketing cooperative which thenational hero, Dr. Jose Rizal, hadorganized in Dapitan while onexile in 1896. Nothing much isrecorded about the cooperative. Inmay be safe to assume that with theexecution of Dr. Rizal in the sameyear, the cooperative must havedied with him.
  12. 12. The law, patterned after the Raiffeinsen experience in Germany,The first legislation to attempted in promoted the organization of ruralthe country was the “Rural Credit credit cooperatives. Some 591 ruralCooperative Bill”. It was credit associations were organized inintroduced in 1907 develop the amended in the same year and itsagricultural interest of small farmers. administration was given to theThe bill was passed by the Philippine Bureau of Agriculture. Thus beganlegislature in 1908. Unfortunately it the more active involvement of thewas disapproved by Philippine government in cooperative organizingCommission. It took another seven and supervision.years before the first cooperative lawin the Philippines; the “Rural CreditAct” (Act No. 2508) was passed in1915.
  13. 13. Three years after, in 1919, Act No. 2818 was enactedprimarily to grant loans to members of rural creditassociation. The P1 million fund appropriated for riceand corn production under the law spurred theorganization at the end of 1926 of 544 rural creditcooperatives in 42 provinces. Because the membersand the leaders have these cooperatives had notadequately imbibed the principles of cooperativism andbecause government wanted to short-circuit thecooperative principle of autonomy self-reliance andvoluntarism, not surprisingly, the cooperatives failedand the loans were never paid.
  14. 14. Thereafter, other legislative measures were enacted toaddress the particular needs of farmers. For instance, tosupport the marketing of farmer’s production, the“Cooperative Marketing Law” (Act No. 3425) waspassed in 1927. The law gave the Bureau of Commerceand Industry the responsibility of organizing farmers intomarketing cooperative. Another law, Commonwealth ActNo.116, was enacted to provide loans to marketingcooperatives. By 1938, there were some 560 cooperativemarketing associations. Unfortunately, the cooperativesultimately turned out to be dismal failures due mainly tothe lack of education in cooperative principles not only ofthe members and leaders of the cooperatives themselvesbut also of the government which had impatiently pushedfor the adoption of cooperatives prematurely.
  15. 15. 1n 1938, an American minister of theChurch of Christ, Rev. Allen R.Huber, organized church membersin Vigan, Ilocos Sur into thecountry’s first privately-initiatedcredit union. Significantly, thecooperative generate savingsinternally from among its members.The internally-generated savingsshowed that cooperatives need not bedependent upon government financialsupport to get started.
  16. 16. Inspired by the success of Vigancooperative, the Protestant Church inthe Ilocos region organized othercooperatives. Because of theachievements of church initiatedcooperatives, the government passedCommonwealth Act No. 287 in 1938to strengthen the cooperatives. Alsoin the same year, the privatelyorganized consumer’s cooperativeswere forged into the Consumers Leagueof the Philippines under government-sponsorship.
  17. 17. The government’s active involvement inthe cooperative movement continuedunabated into the early 1940’s. For,instance, in 1940, Commonwealth ActNo. 585, the “Cooperative Act”, waspassed. It provided for the organization ofall types of cooperatives; authorized theNational Trading Corporation (NTC) topromote and supervise cooperatives;establish the National Cooperative Fund(NCF) ; gave permission for theorganization of a cooperative of not lessthan 15 members; and grantedcooperatives exemption from governmenttaxes and fees for the first 5 years of theiroperation.
  18. 18. In 1941, the National CooperativeAdministration (NCA) wasestablished. The functions of NTCand the management of the NCF weretransferred to it. Cooperativesmultiplied under the NCA. Unfortunatelythe Second World War intervened inDecember of that year. There is, thus,no way to assess objectively how thosecooperatives qua cooperativesperformed
  19. 19. During the war, the cooperativemovement ceased to functioneffectively. Many cooperativesbecame inoperative. But after the war,cooperatives were once againorganized or reorganized to help inthe distribution of relief goods underthe supervision of the EmergencyControl Administration (ECA).More than 1,500 cooperatives wereenlisted in the relief distribution effortbut they folded up when there wereno more relief goods to distribute.
  20. 20. By 1947, the government revved up attempts toconsolidate its hold on the cooperative movement. Forinstance, the merchandising functions of the NCA overcooperatives were transferred to the PhilippineRelief and Trade Rehabilitation Administration(PRATRA). From that year up to the 1960’s variousregulation shunted the responsibility to promote,organize an supervise cooperatives from one agencyto other. matters.
  21. 21. Executive Order No. 95, forexample, transferred thosepowers to the NationalCooperative and Small BusinessCorporation (NCSBC). Then, in1950, the NCSBC was abolished.In its place, the CooperativeAdministration Office (CAO)under the Department ofCommerce of Industry was createdto take change of cooperativematters
  22. 22. Thereafter, several other measures andcooperatives were enacted by government. Thegovernment, for instance, created the AgriculturalCredit and Cooperative Financing Administration(ACCFA) in Rep. Act No. 821, otherwise knownas the Agricultural Cooperative Law, the FarmersCooperative Marketing (FACOMA) wasorganized, financed by ACCFA and task toorganize, supervise and support the agriculturalcooperatives. Non-agricultural cooperativeshowever continued to be under supervision ofCAO.
  23. 23. The FACOMA law offered to farmers large scalegovernment financing with counterpart funding comingfrom the United States Agency for InternationalDevelopment (USAID) through various types of loanswithout any collateral. At the end of five years, 455FACOMAs had been organized with aggregate paid upcapital of over P5, 125,077 representing 259,029 farmers inabout 10,700 barangays in 50 provinces.The FACOMAs however, suffered fromthe problems of low repayment of loansand poor loan administration. About P500million FACOMA loans were not paid.Thus, the FACOMA experiment endedingloriously. The FACOMAs areconsidered a monumental failure of thecooperative movement in the country.
  24. 24. The FACOMA debacle taught cooperators that therewas a need to amend the existing laws on non-agricultural cooperatives and adopt a new law thatwould define more clearly the thrust of governmentinvolvement in cooperatives in general. Thus, in1957 with the support of cooperators, the PhilippineNon-Agricultural Cooperative Law (Rep Act No.2023) was passed. It separated the administration ofagricultural cooperatives (farming, fishing, forestry)from the non-agricultural cooperatives (creditunions, consumers, industrial, services and multi-purpose cooperatives).
  25. 25. In the 1960’s, the Catholic Church, which has a membershipof more than 85% of the Filipino people, proclaimed aninterest in the cooperative movement as a matter of Churchteaching. The Philippine Church was responding to the callof the Second Vatican Council for direct participation in thesolution of the problems in the poverty and social in justice.Thus, in 1967, the Church sponsored a National RuralCongress which passed resolution officially recognizing theneed to organize cooperative in the parishes.This became a major plank in the program ofaction of the diocesan social action centers.The cooperatives organized under this programand those organized by the private sector withthe help of church leaders laid great stress oneducation as a tool for economic liberation andon voluntarism and self-reliance as themotivating force for leadership andmembership in cooperatives.
  26. 26. By 1963, there were approximately 750 non-agricultural cooperatives registered withCooperative Administration Office withmembership of more than 200,000. Of thesecooperatives, credit unions and consumerscooperatives were the predominant types. Inthe most successful ones. Under the provisionof the same law, the Philippine NationalCooperative Bank (PNCB) was established toprovide credit to non-agriculturalcooperatives. After 10 years of operation,however, it was closed due to insolvencyresulting from mismanagement.
  27. 27. The Church efforts resulted in theorganization of thousandscooperatives. Primary cooperativesof various types linked up with oneanother to form secondary levelorganizations called federations andthese were in turn integrated into thetertiary level organizations, thenational cooperative networks.
  28. 28. In 1969 the Code of AgrarianReform (Rep Act No. 6389) waspassed. The Code Mandated thatcooperatives be utilized as theprimary conduits for credit, supplyand marketing services to agrarianreform beneficiaries
  29. 29. During the martial law regime,President Marcos issued severaldecrees that dealt with cooperatives.Lamentably, Marcos also wanted thecooperatives to be instruments forthe propagation of his New Societyor Bagong Lipunan. Thus, thecooperatives could not exercise anyfreedom to achieve the economicwellbeing of their members throughvoluntarism and self-reliance.
  30. 30. For instance, Marcos issued PresidentDecree No. 1 which recognized the executivebranch of the government. The decreeabolished the CAO and organized the bureauof Cooperative Development (BCOD) underthe Department of Local Government andCommunity Development (DLGCD). A monthlater, P.D. No. 27, the Agrarian Reformdecree, declared the entire country as anagrarian reform area. To support the agrarianreform program, Marcos issued a new decreeon cooperatives, P.D. No. 175 and Letter ofInstruction No. 23.
  31. 31. Under these decrees, thecooperatives were directed to preparethe tenant farmers for their new roleas landowners and to provide themwith the basic economic and socialservices previously given to them bythe landlords. With governmentsponsorship, many cooperatives wereorganized overnight.
  32. 32. Pre-cooperatives called Samahang Nayon (SNs)were organized at the barrio level. Groups of tenSNs were formed into the Kilusang Bayan (KBs),which were supposedly full-pledgedcooperatives. Marketing support for the produceof the KBs was to be provide by the AreaMarketing Cooperatives (AMCs) at the provinciallevel. Their financial requirements were to beserviced by the Cooperative Rural Banks (CRBs).The government also set up the CooperativeDevelopment Loan Fund (CDLF) to extendfunding assistance where needed.
  33. 33. Corazon C. Aquino, was catapulted to poweras the new president. With the recreation ofdemocratic space, cooperative leaders seizedthe opportunity to push again for a meaningfullegislation – a law that would definegovernment’s role as a regulator ofcooperatives to prevent abuse and as a providerof incentives to enhance their growth. Thecooperative leaders saw to the chance toredirect the government’s cooperativeinvolvement away from direct organizing andmanaging to one of support for and promotionof cooperatives.
  34. 34. Hence, in 1988, cooperative leader all over thecountry lobbied aggressively for the adoptionof cooperative-friendly legislation. In thiseffort, they got all out support form co-author(Aquilino Q. Pimentel Jr.) who was, then,serving as Senator. He authored and co-sponsored the bill that sought to enact aCooperative Code. Sen. Agapito Aquino in hiscapacity as chair of the Committee onAgriculture was the main sponsor.
  35. 35. Selected Statistics Source:
  36. 36. 7,290,848 Membership Number Total membership under RA 9520 7196097 Total membership of newly registered cooperatives 94751 Total 7290848 2011 Membership NumberTotal membershipunder RA 9520 7,196,097Total membership of Source:newly registered 94,751Total 7,290,848
  37. 37. Selected StatisticsSource: 2010 2011
  38. 38. 2010 COOPERATIVE REGIONAL DOMESTIC PRODUCTREGION At Constant 2000 Prices (In Thousand Pesos) I 5,844,069,063 II 6,852,736,673 CAR 3,723,002,219 III 25,250,930,927 NCR 28,948,699,349 IV 39,561,978,042 V 5,120,219,889 VI 54,085,393,226 VII 21,672,533,939 VIII 2,822,362,731 IX 5,043,835,834 X 26,054,642,104 XI 37,821,645,490 XII 6,233,920,984CARAGA 4,748,640,369 ARMM 7,080,600,003TOTAL 280,865,210,840.29 Source:
  39. 39. References:Rural Development, Workshop Report, see Article by Anselmo B. Mercado, pp.71-84, Bangkok, Thailand, December 1986.•ACCU, A Glimpse into the Asia Credit Union Movement, 1981.•Countinho, Boadiva, Cooperation, the Key to Progress. Rome, 1972.•Cua, Mordino and Pimentel, Aquilino Jr., Cooperative Code of the Philippines:Theory, Law and Practice, White Orchids Printing and Publishing Co., Manila,Philippines, 1994.•Mercado, Anselmo B., Group-Leading Manualfor Credit Union Organizers, Xavier UniversityCollege of Agriculture, Cagayan de Oro City,Philippines, 1973.
  40. 40. References: COOPERATIVES IN THE PHILIPPINES A STUDY Of Past Performance, Current Status And Future Trends Prepared For U.S.A.I.D./PHILIPPINES Under Contract No. AID 492-0249-C-00-6098-00 With AGRICULTURAL COOPERATIVE DEVELOPMENT INTERNATIONAL 50 F Street, N.W. -Suite 900 Washington, D.C. 20001 U.S.A.