A Lecture Presentation CDA Trainers' Training for Cooperatives Lingayen, Pangasinan Aug. 29-31, 2012

1. Philippines
Jo B. Bitonio
Presenter
Cooperative Trainers Training, Lingayen, Pangasinan
Aug. 29-31,2012)

2. Dr. Jose Rizal, had
organized Agricultural
marketing cooperative
in Dapitan while on
exile in 1896.

3. Government
Initiated
Church
Initiated

4. Cooperative Efforts (1906-1940)
1907 1915
Rural Rural
Credit Credit
Government Bill Act
Initiated
1938 1927 1919
Coop
Strengthen Marketing
Grant loans
Cooperatives Laws
to Credit
PA 3425
Association
P.A. 3872
s
PA 3425 was Common Wealth Act 565
amended by PA Gen, Basic
3872 provided
Cooperative Law
incorporation of
FACOMA 1940

5. Cooperative Efforts (1906-1940)
1938 1940
Credit
Union
in Common
Church Government
Vigan Wealth Act 585
Initiated Initiated Cooperative
Act
1941
National
Cooperative

6. 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
Agricultural
Government Cooperative Financing Act
Cooperativ
Initiated Marketing e
law
1967 1963
Philippine
Philippinesthe Code
In 1969 (R.A National
6389) Code of
of Agrarian Reform Cooperativ
Agrarian Reform Church
e Bank
Sponsored
(Rep Act No. 6389

7. Cooperative Under the 1973
Constitution (1973-1986)
n April 14, 1973 the President issued a
decree on "Strengthening the
Cooperative Movement PD 175
Government
Initiated 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."

8. Cooperative Under the 1973
Constitution 1973-1986
Presidential Decree No. 775 On August
24, 1975 decreed that sugar planters
and or producers' cooperatives shall
Government
Initiated
be developed by the Philippines Sugar
Commission.
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

10. the first cooperatives in the Philippines were the product of a
series of legislative measures. Cooperatives did not begin as
people’s movement. Neither did they evolve from people’s
initiatives at mutual self-help and cooperation. There is,
however, one instant in Philippine history where a cooperative
was formed ahead of the passage of the cooperative laws.
That was the agricultural
marketing cooperative which the
national hero, Dr. Jose Rizal, had
organized in Dapitan while on
exile in 1896. Nothing much is
recorded about the cooperative. In
may be safe to assume that with the
execution of Dr. Rizal in the same
year, the cooperative must have
died with him.

11. The law, patterned after the
Raiffeinsen experience in Germany,
The first legislation to attempted in
promoted the organization of rural
the country was the “Rural Credit credit cooperatives. Some 591 rural
Cooperative Bill”. It was credit associations were organized in
introduced in 1907 develop the amended in the same year and its
agricultural interest of small farmers. administration was given to the
The bill was passed by the Philippine Bureau of Agriculture. Thus began
legislature in 1908. Unfortunately it the more active involvement of the
was disapproved by Philippine government in cooperative organizing
Commission. It took another seven and supervision.
years before the first cooperative law
in the Philippines; the “Rural Credit
Act” (Act No. 2508) was passed in
1915.

12. Three years after,
in 1919, Act No. 2818 was enacted
primarily to grant loans to members of rural credit
association. The P1 million fund appropriated for rice
and corn production under the law spurred the
organization at the end of 1926 of 544 rural credit
cooperatives in 42 provinces. Because the members
and the leaders have these cooperatives had not
adequately imbibed the principles of cooperativism and
because government wanted to short-circuit the
cooperative principle of autonomy self-reliance and
voluntarism, not surprisingly, the cooperatives failed
and the loans were never paid.

13. Thereafter, other legislative measures were enacted to
address the particular needs of farmers. For instance, to
support the marketing of farmer’s production, the
“Cooperative Marketing Law” (Act No. 3425) was
passed in 1927. The law gave the Bureau of Commerce
and Industry the responsibility of organizing farmers into
marketing cooperative. Another law, Commonwealth Act
No.116, was enacted to provide loans to marketing
cooperatives. By 1938, there were some 560 cooperative
marketing associations. Unfortunately, the cooperatives
ultimately turned out to be dismal failures due mainly to
the lack of education in cooperative principles not only of
the members and leaders of the cooperatives themselves
but also of the government which had impatiently pushed
for the adoption of cooperatives prematurely.

14. 1n 1938, an American minister of the
Church of Christ, Rev. Allen R.
Huber, organized church members
in Vigan, Ilocos Sur into the
country’s first privately-initiated
credit union. Significantly, the
cooperative generate savings
internally from among its members.
The internally-generated savings
showed that cooperatives need not be
dependent upon government financial
support to get started.

15. Inspired by the success of Vigan
cooperative, the Protestant Church in
the Ilocos region organized other
cooperatives. Because of the
achievements of church initiated
cooperatives, the government passed
Commonwealth Act No. 287 in 1938
to strengthen the cooperatives. Also
in the same year, the privately
organized consumer’s cooperatives
were forged into the Consumers League
of the Philippines under government-
sponsorship.

16. The government’s active involvement in
the cooperative movement continued
unabated into the early 1940’s. For,
instance, in 1940, Commonwealth Act
No. 585, the “Cooperative Act”, was
passed. It provided for the organization of
all types of cooperatives; authorized the
National Trading Corporation (NTC) to
promote and supervise cooperatives;
establish the National Cooperative Fund
(NCF) ; gave permission for the
organization of a cooperative of not less
than 15 members; and granted
cooperatives exemption from government
taxes and fees for the first 5 years of their
operation.

17. In 1941, the National Cooperative
Administration (NCA) was
established. The functions of NTC
and the management of the NCF were
transferred to it. Cooperatives
multiplied under the NCA. Unfortunately
the Second World War intervened in
December of that year. There is, thus,
no way to assess objectively how those
cooperatives qua cooperatives
performed

18. During the war, the cooperative
movement ceased to function effectively.
Many cooperatives became inoperative. But
after the war, cooperatives were once again
organized or reorganized to help in the
distribution of relief goods under the
supervision of the Emergency Control
Administration (ECA). More than 1,500
cooperatives were enlisted in the relief
distribution effort but they folded
up when there were no more
relief goods to distribute.

19. By 1947, the government revved up attempts to
consolidate its hold on the cooperative movement. For
instance, the merchandising functions of the NCA over
cooperatives were transferred to the Philippine
Relief and Trade Rehabilitation Administration
(PRATRA). From that year up to the 1960’s various
regulation shunted the responsibility to promote,
organize an supervise cooperatives from one agency
to other. matters.

20. Executive Order No. 95, for
example, transferred those
powers to the National
Cooperative and Small Business
Corporation (NCSBC). Then, in
1950, the NCSBC was abolished.
In its place, the Cooperative
Administration Office (CAO)
under the Department of
Commerce of Industry was created
to take change of cooperative
matters

21. Thereafter, several other measures and
cooperatives were enacted by government. The
government, for instance, created the Agricultural
Credit and Cooperative Financing Administration
(ACCFA) in Rep. Act No. 821, otherwise known
as the Agricultural Cooperative Law, the Farmers
Cooperative Marketing (FACOMA) was
organized, financed by ACCFA and task to
organize, supervise and support the agricultural
cooperatives. Non-agricultural cooperatives
however continued to be under supervision of
CAO.

22. The FACOMA law offered to farmers large scale
government financing with counterpart funding coming
from the United States Agency for International
Development (USAID) through various types of loans
without any collateral. At the end of five years, 455
FACOMAs had been organized with aggregate paid up
capital of over P5, 125,077 representing 259,029 farmers in
about 10,700 barangays in 50 provinces.
The FACOMAs however, suffered from
the problems of low repayment of loans
and poor loan administration. About P500
million FACOMA loans were not paid.
Thus, the FACOMA experiment ended
ingloriously. The FACOMAs are
considered a monumental failure of the
cooperative movement in the country.

23. The FACOMA debacle taught cooperators that there
was a need to amend the existing laws on non-
agricultural cooperatives and adopt a new law that
would define more clearly the thrust of government
involvement in cooperatives in general. Thus, in
1957 with the support of cooperators, the Philippine
Non-Agricultural Cooperative Law (Rep Act No.
2023) was passed. It separated the administration of
agricultural cooperatives (farming, fishing, forestry)
from the non-agricultural cooperatives (credit
unions, consumers, industrial, services and multi-
purpose cooperatives).

24. In the 1960’s, the Catholic Church, which has a
membership of more than 85% of the Filipino people,
proclaimed an interest in the cooperative movement as a
matter of Church teaching. The Philippine Church was
responding to the call of the Second Vatican Council for
direct participation in the solution of the problems in the
poverty and social in justice. Thus, in 1967, the Church
sponsored a National Rural Congress which passed
resolution officially recognizing the need to organize
cooperative in the parishes.
This became a major plank in the program of
action of the diocesan social action centers.
The cooperatives organized under this program
and those organized by the private sector with
the help of church leaders laid great stress on
education as a tool for economic liberation and
on voluntarism and self-reliance as the
motivating force for leadership and
membership in cooperatives.

25. By 1963, there were approximately 750 non-
agricultural cooperatives registered with
Cooperative Administration Office with
membership of more than 200,000. Of these
cooperatives, credit unions and consumers
cooperatives were the predominant types. In
the most successful ones. Under the provision
of the same law, the Philippine National
Cooperative Bank (PNCB) was established to
provide credit to non-agricultural
Church
cooperatives. After 10 years of operation,
Initiated
however, it was closed due to insolvency
resulting from mismanagement.

26. The Church efforts resulted in the
organization of thousands
cooperatives. Primary cooperatives
of various types linked up with one
another to form secondary level
organizations called federations and
these were in turn integrated into the
tertiary level organizations, the
national cooperative networks.

27. In 1969 the Code of Agrarian
Reform (Rep Act No. 6389) was
passed. The Code Mandated that
cooperatives be utilized as the
primary conduits for credit, supply
and marketing services to agrarian
reform beneficiaries

28. During the martial law regime,
President Marcos issued several
decrees that dealt with cooperatives.
Lamentably, Marcos also wanted the
cooperatives to be instruments for
the propagation of his New Society
or Bagong Lipunan. Thus, the
cooperatives could not exercise any
freedom to achieve the economic
wellbeing of their members through
voluntarism and self-reliance.

29. For instance, Marcos issued President
Decree No. 1 which recognized the executive
branch of the government. The decree
abolished the CAO and organized the bureau
of Cooperative Development (BCOD) under
the Department of Local Government and
Community Development (DLGCD). A month
later, P.D. No. 27, the Agrarian Reform
decree, declared the entire country as an
agrarian reform area. To support the agrarian
reform program, Marcos issued a new decree
on cooperatives, P.D. No. 175 and Letter of
Instruction No. 23.

30. Under these decrees, the
cooperatives were directed to prepare
the tenant farmers for their new role
as landowners and to provide them
with the basic economic and social
services previously given to them by
the landlords. With government
sponsorship, many cooperatives were
organized overnight.

31. Pre-cooperatives called Samahang Nayon (SNs)
were organized at the barrio level. Groups of ten
SNs were formed into the Kilusang Bayan (KBs),
which were supposedly full-pledged
cooperatives. Marketing support for the produce
of the KBs was to be provide by the Area
Marketing Cooperatives (AMCs) at the provincial
level. Their financial requirements were to be
serviced by the Cooperative Rural Banks (CRBs).
The government also set up the Cooperative
Development Loan Fund (CDLF) to extend
funding assistance where needed.

32. Corazon C. Aquino, was catapulted to power
as the new president. With the recreation of
democratic space, cooperative leaders seized
the opportunity to push again for a meaningful
legislation – a law that would define
government’s role as a regulator of
cooperatives to prevent abuse and as a provider
of incentives to enhance their growth. The
cooperative leaders saw to the chance to
redirect the government’s cooperative
involvement away from direct organizing and
managing to one of support for and promotion
of cooperatives.

33. Hence, in 1988, cooperative leader all over the
country lobbied aggressively for the adoption
of cooperative-friendly legislation. In this
effort, 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 a
Cooperative Code. Sen. Agapito Aquino in his
capacity as chair of the Committee on
Agriculture was the main sponsor.

34. RA. No. 6938
The bill was passed and signed as law by
President Aquino on March 10, 1990. A
companion law was also passed creating
Government the Cooperative Development Authority
Initiated
(Rep. Act No. 6939) which provided for
the abolition of BACOD and the transfer
of its functions, qualified personnel and
budget to the CDA.

35. RA 9520
• Amended the Coop Code
promulgated in 1990;
• Discussed in four (4)
Congresses (starting the 11th
Government 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

36. RA 9520
• The Philippine
Cooperative
Code of 2008
(Article1)
• Signed on
February 17,
2009
• Published on
March 7, 2009
• Effective March

37. 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 Manual
for Credit Union Organizers, Xavier University
College of Agriculture, Cagayan de Oro City,
Philippines, 1973.

38. 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.