This document provides an overview of cooperatives in the Philippines. It begins with definitions of cooperatives and discusses their history and evolution in the country. Cooperatives first emerged in the late 19th century through organizations like gremios. The modern cooperative movement developed in three stages from 1895 to the present, influenced by American and European models. Key figures and events that shaped cooperatives are described for each historical period. The document also outlines the seven cooperative principles, purposes, objectives, categories and types of cooperatives according to Philippine law.

1. Fundamentals of Cooperative
Thoughts & Practice
Mary Yole Apple Declaro-Ruedas
Associate Professor V/ Director for Extension

12. TOPICS
I. CONCEPT & HISTORY
-Definition and purpose (Why, What & How)
-History of Cooperatives in the Philippines
II. COOPERATIVE VALUES, PRINCIPLES & PRACTICES
III. THE “COOPERATIVE DIFFERENCE”

13. At the end of training period, the participants should:
1. Explain the fundamentals of cooperative thought and
practice.
2. Identify the important legal underpinnings of
cooperatives.
3. Explain the plans, programs and policies of the
cooperative.

14. What is a cooperative?
A cooperative is an autonomous and duly registered
association of persons, with a common bond of interest,
who have voluntarily joined together to achieve their social,
economic, and cultural needs and aspirations by making
equitable contributions to the capital required, patronizing
their products and services and accepting a fair share of
the risks and benefits of the undertaking in accordance
with universally accepted cooperative principles (Article 3,
Republic Act 9520).

15. Video presentation:
•Ano ang kooperatiba?

16. The Philippines, despite its positive prospects in economic development, is
seriously confronted with the continuing problems of poverty and income
inequality.
CONCEPT & HISTORY

17. Income inequality comes in
two dimensions - the
inequality among classes (or
the poor becoming poorer and
the rich becoming richer) and
inequality among regions (or
the poor regions are being left
behind by the fast paced
development of the richer
urbanized regions).

18. Cooperatives and other labor enterprises are among
the major pillars of the people empowerment
movement (Sibal, 1991).
This empowerment aspires for a strong pro-people
mixed economic society where the state, private and
civil society sectors are cooperatively harnessed in
the development efforts of the society.

19. Cooperatives are compatible to the Filipino culture whose concepts and practices
of "bayanihan" (cooperation) preceded the coming of the Spaniards.

20. After the colonization of the country by the Spaniards and the transformation of
the economy from subsistence agriculture to a feudal and commercialized
economy, middle class illustrados (professionals, merchants and artisans)
emerged. They organized the "gremios" (local crafts unions and guilds) which
were the forerunners of cooperatives.
Illustrados Gremios

21. THE HISTORY OF THE COOPERATIVE MOVEMENT IN
THE PHILIPPINES CAN BE DIVIDED INTO 3 STAGES:
The first stage, from 1895 to 1941, is characterized by the
aborted germination of coops by some revolutionary
illustrados (or the pre-formation period), the introduction and
endogenization of the Raiffeisen-type agri-based coops by
American missionaries and teachers and western-educated
Filipinos which featured the principles of self-help and self-
reliance (or the formation period), and the introduction of
state-initiated farmers coops by the American colonial
administrators.

22. The second stage is from 1941 to 1986. This stage can be
subdivided into 4 phases.
-The first phase is the period of Japanese occupation which featured a
rapid increase in cooperatives as a result of food shortages.
-The second phase is the period of rehabilitation period after the
2nd World War.
-The third phase is the resurgence of the state-initiated coops.
-The fourth phase is the introduction and rise of the non-agricultural
coops.
-The fifth and final phase is the martial law period and the politization of
the coop movement.

23. The third stage of the evolution of the Philippine coop movement is from 1986 to the present. This stage shows the emergence
of the coop movement as a potent political force as it allies with the NGO and trade union movements in pursuing the goals of
people empowerment and the strengthening the country's civil society sector.
During the 1998 party list elections, the cooperative movement was able elect 3 sectoral representatives which led all other sectors, groups
and non-dominant political parties in representing the marginalized and underrepresented masses of the Filipino people (APEC , Coop
Natcco Network Party, ABA (Alyansang Bayanihan ng mga Magsasaka, Manggagawang-bukid at Mangingisda), Luzon Farmers Party
(Butil) and NACUSIP (National Congress of Unions in the Sugar Industry of the Philippines).
.

24. A Filipinos traveling in Europe during the later part of the 19th
century must have been impressed with the success of a new
economic movement in effecting a gradual metamorphosis of the
economic and social life of the people ion those countries.
At the turn of the century, Filipinos, in increasing number, traveled
and studied abroad and brought home with them new ideas.
It was this group of Filipinos who were in close in contact with the
new economic movement in Europe. Two names worthy of note
were Dr. Jose P. Rizal and Teodoro Sandiko.

25. Rizal, after his side trip to Sandakan, Borneo in
1892, requested Governor Despudol that he and
some relatives and friends be permitted to move
to that place and found a colony under the
cooperative plan of Robert Owen.
Instead, he was arrested for treason and
banished to Dapitan, Zamboanga del Norte.
Gov. Despujol

26. Robert Owen (1771–1858) fathered the cooperative
movement. A Welshman who made his fortune in the
cotton trade, Owen believed in putting his workers in a
good environment with access to education for
themselves and their children.
These ideas were put into effect successfully in the cotton
mills of New Lanark, Scotland. It was here that the first
co-operative store was opened. Spurred on by the
success of this, he had the idea of forming "villages of co-
operation" where workers would drag themselves out of
poverty by growing their own food …
Who is Robert Owen?

27. "What ideas individuals may attach to the term "Millennium" I know not; but I know that
society may be formed so as to exist without crime, without poverty, with health greatly
improved, with little, if any misery, and with intelligence and happiness increased a
hundredfold; and no obstacle whatsoever intervenes at this moment except ignorance to
prevent such a state of society from becoming universal.”
Extract from Robert Owen’s "Address to the Inhabitants of New Lanark"
New Year’s Day, 1816

28. In Dapitan, Rizal had his ideas in cooperation partially fulfilled. He put up a
school for the poor community on a purely cooperative basis. He also
established a cooperative store with the help of his pupils. One noteworthy
group organized by Rizal was the La Sociedad de los Abacaleros (Society of
Abaca Producers). This functioned for only one year. Rizal returned the
members share capital without any loss.

29. Teodoro Sandiko, in his travels in Europe, must have had a
close contact with the cooperative movement in Germany
where he came across with the Raiffeisen movement. He
was very much impressed by this type of cooperative and
he looked forward for an opportunity to have it introduced
here in the Philippines.
As destiny might have its choice, Sandiko had his chance
when he was appointed one of the early governors when
Civil Government, under the Americans, was established.

30. Who is Raiffesien?
Friedrich Wilhelm Raiffeisen , 1818-88, German leader in the
cooperative movement. Between 1845 and 1865 he was
mayor of several German towns. After the agricultural crisis of
1846-47 Raiffeisen came to the conclusion that the chief need
of the people was for credit.
He used his own limited fortune to start a system of rural credit
cooperatives and banks; in 1872 he founded a regional
cooperative bank and in 1876 a national one; in 1877 he
unified the entire system. It was an early form of credit union .
The Raiffeisen banks continue to be successful in Germany
and the Netherlands.

31. In 1898, another national hero Emilio Jacinto organized
another failed commercial marketing cooperative in San
Pedro, Laguna.

32. In January 1, 1902, Isabelo de los Reyes was
asked to head a cooperative association of a
group of printers.
This organization of workers and gremios
became the Union Obrero Democrata in
February 2, 1902, the first Philippine labor
federation.
The initial germ of cooperativism during the
Spanish colonial period however failed to take
root due to the intense revolutionary struggles of
the Filipinos against the Spaniards.

33. The Formative Years- The American Colonial Period
After the Americans replaced the Spaniards as the new
colonial administrators (1900-1913), Raiffeisen-type
rural agricultural cooperatives were implanted in the
Philippines by Irish-American missionaries and
teachers with the help of local organizers.
A credit cooperative organized at the University of the
Philippines at Los Banos, Laguna in 1908 is reportedly
one of the first coops in the country.

34. In 1906, the Corporation Law (PA No. 1459) provided
the legal framework for all private organizations which
included cooperatives.
In 1907, Gov. Teodoro Sandiko of Bulacan and Rep.
Alberto Barreto of Zambales introduced a rural
cooperative bill which was the first attempt to make use
of the state in assisting rural cooperatives via
legislation.
The Sandiko bill was disapproved and it took 8 more
years to be able to pass a Rural Credit Cooperative
Association Act (PA No. 2508) in February 15, 1915
which was authored by Rep. Rafael Corpuz of
Zambales and Reps. Palma and Singson. PA 2508
appropriated P1 million for a fund for farmers' credit
through their associations and rural coops.

35. In 1916, PA No. 2508 was amended and the
administration of coops by the government was
transferred from the Bureau of Commerce and Industry
to the Bureau of Agriculture.
On October 19, 1916, the first rural credit cooperative
association assisted by the government was formed in
Cabanatuan, Nueva Ecija. It was reported that state
assistance to rural coops has speed up coop organizing.
On October 20, 1916, the UP Los Banos College
Cooperative was formally registered.
By 1926, there were already 541 credit cooperatives in
42 provinces nationwide.

36. State-initiated Cooperatives
The Americans introduced in 1927 the Cooperative
Marketing Law (PA No. 3425) which encouraged the
formation of state-initiated farmers' marketing
cooperatives.
This was reportedly prompted by political motives, that
is, to be able to control the rising unrest among the
peasantry. PA No. 3425 enforced government control
and intervention in operating coops and vested the
Bureau of Commerce and Industry the right to organize
farmers' marketing cooperatives.

37. On June 7, 1940, Commonwealth
Act No. 565 created the National
Trading Corporation (NTC) to
supervise coops and grant them a
5-year tax holiday.
In 1941, the National Cooperative
Administration (NCA) was created
and it assumed the functions of the
NTC. Its activities were disrupted
by the war.

38. Privately-initiated Cooperatives
Privately-initiated Raiffeisen-type coops
steadily grew. This was exemplified by
the formal organization of the Vigan
Credit Union, Inc. in August 1938 at
Vigan, Ilocos Sur.
This credit union was founded by Allen
R. Huber who first came to the
Philippines in 1926 and was exposed to
the credit problems of the Filipino
farmers.

39. The first cooperative federation was
organized in October 1938. It was called the
Consumers Cooperative League of the
Philippines.
By 1939, it was estimated that there were
570 credit coops, 150 farmers' coops and 48
consumers' coops. Of these coops, only
20% were said to be active.

40. By 1941, there were already 30 privately-initiated
credit unions with some 2,000 members in the
northern region. The most remarkable of which was
the Batac Christian Credit Union (BCCU) of Batac,
Ilocos Norte.
Within 2 years, its membership grew to 590 members
with a capitalization of P 2,000 and loans amounting to
P 38,000. Like other Raiffeisen-type credit unions,
BCCU relied on its own resources and none from the
state.

41. STUDY CONDUCTED BY PRIVATELY-INITIATED STATE INITIATED
Cooperative Foundation of
the Philippines (CFPI)
-Poor technology and
management
-Fragmented
-Too much government
intervention
-National federations are
paper organizations and
overlapping functions and
membership base
Local initiatives in Science
and Technology (LIST)
-Poor in monitoring,
evaluation, and audit
-Poor promotions
Ineffective or non-existent
tie-ups (or networking)
-Obsessed with top-down
systems
Two studies cited in Ibon, 1988 compared privately-initiated
coops (Raiffeisen) with state-initiated coops coops as follows:

42. COOPERATIVE PRINCIPLES
Every cooperative shall conduct its affairs
in accordance with Filipino culture, good
values, and experience and the
universally accepted principles of
cooperation.

43. Ang Pitong Prinsipyo ng Kooperatiba
1. Bukas at Kusang Loob na Pagsapi
2. Demokratikong Pamamahala ng mga Kasapi
3. Partisipasyon ng mga Kasapi sa Pagpapalago
ng Kooperatiba
4. Kasarinlan
5. Patuloy na Pag-aaral, Pagsasanay at Kaalaman
6. Pagtutulungan ng mga Kooperatiba
7. Kabutihan sa Sambayanan

45. Purposes of Cooperatives (Chapter II, Article 6- RA 9520)
1. To encourage thrift and savings mobilization among the members;
2. To generate funds and extend credit to the members for productive and
provident purposes;
3. To encourage among members systematic production and marketing;
4. To provide goods and services and other requirements to the members;
5. To develop expertise and skills among its members;
6. To acquire lands and provide housing benefits for the members;
7. To insure against losses of the members;

46. 8. To promote and advance the economic, social and educational status of the members;
9. To establish, own, lease or operate cooperative banks, cooperative wholesale and retail
complexes, insurance and agricultural/industrial processing enterprises, and public markets;
10. To coordinate and facilitate the activities of cooperatives;
11. To advocate for the cause of the cooperative movements;
12. To ensure the viability of cooperatives through the utilization of new technologies;
13. To encourage and promote self-help or self-employment as an engine for economic
growth and poverty alleviation; and
14. To undertake any and all other activities for the effective and efficient implementation of
the provisions of this Code.

47. Objectives and Goals of a Cooperative
The primary objective of every cooperative is to help improve the quality of life of its members.
Towards this end, the cooperative shall aim to:
1. Provide goods and services to its members to enable them to attain increased income,
savings, investments, productivity, and purchasing power, and promote among themselves
equitable distribution of net surplus through maximum utilization of economies of scale, cost-
sharing and risk-sharing;
2. Provide optimum social and economic benefits to its members;
3. Teach them efficient ways of doing things in a cooperative manner;
4. Propagate cooperative practices and new ideas in business and management;
5. Allow the lower income and less privileged groups to increase their ownership in the wealth of
the nation; and
6. Cooperate with the government, other cooperatives and people-oriented organizations to
further the attainment of any of the foregoing objectives.

48. 1. Credit Cooperative is one that promotes and undertakes savings and lending
services among its members. It generates a common pool of funds in order to provide
financial assistance to its members for productive and provident purposes;
2. Consumers Cooperative is one of the primary purpose of which is to procure and
distribute commodities to members and non-members;
3. Producers Cooperative is one that undertakes joint production whether
agricultural or industrial. It is formed and operated by its members to undertake the
production and processing of raw materials or goods produced by its members into
finished or processed products for sale by the cooperative to its members and non-
members;
4. Marketing Cooperative is one which engages in the supply of production inputs to
members and markets their products;
Type and Categories of Cooperatives (Chapter II, Article 20- RA 9520)

49. 5. Service Cooperative is one which engages in medical and dental care,
hospitalization, transportation, insurance, housing, labor, electric light and
power, communication, professional and other services;
6. Multipurpose Cooperative is one which combines two (2) or more of the
business activities of these different types of cooperatives;
7. Advocacy Cooperative is a primary cooperative which promotes and
advocates cooperativism among its members and the public through socially-
oriented projects, education and training, research and communication, and
other similar activities to reach out to its intended beneficiaries;
8. Agrarian Reform Cooperative is one organized by marginal farmers majority
of which are agrarian reform beneficiaries;
9. Cooperative Bank is one organized for the primary purpose of providing a
wide range of financial services to cooperatives and their members;

50. 10. Dairy Cooperative is one whose members are engaged in the production of
fresh milk which may be processed and/or marketed as dairy products;
11. Education Cooperative is one organized for the primary purpose of owning
and operating licensed educational institutions notwithstanding the provisions of
Republic Act No. 9155, otherwise known as the Governance of Basic Education
Act of 2001;
12. Electric Cooperative is one organized for the primary purposed of
undertaking power generations, utilizing renewable energy sources;
13. Financial Service Cooperative is one organized for the primary purpose of
engaging in savings and credit services and other financial services;
14. Fishermen Cooperative is one organized by marginalized fishermen in
localities whose products are marketed either as fresh or processed products;

51. 15. Health Services Cooperative is one organized for the primary purpose of
providing medical, dental and other health services;
16. Housing Cooperative is one organized to assist or provide access to
housing for the benefit of its regular members who actively participate in the
savings program for housing. It is co-owned and controlled by its members;
17. Insurance Cooperative is one engaged in the business of insuring life
and poverty of cooperatives and their members;
18.Transport Cooperative is one which includes land and sea transportation,
limited to small vessels, as defined or classified under the Philippine
maritime laws, organized under the provisions of this Code;

52. 19. Water Service Cooperative is one organized to own, operate and
manage waters systems for the provision and distribution of potable
water for its members and their households;
20. Workers Cooperative is one organized by workers, including the
self-employed, who are at same time the members and owners of the
enterprise. Its principal purpose is to provide employment and business
opportunities to its members and manage it in accordance with
cooperative principles; and
21. Other types of cooperative as may be determined by the Authority.

53. FILIPINO VALUES ORIENTATION
VALUES - comprise the things that
are most important to us.
- core of our responsibility; they
influence the choices we make, the
people we trust, the appeals we
respond to, and the way we invest
our time and energy;

54. Predominant Filipino Values
The primary goals of the Filipino, it seems, are centered around three values:
1. Social Acceptance-The Filipino wants to be accepted and treated by his family,
kin, friends, and others in accordance with his status, for what he is, or believes
he is.
2. Economic Security- This is a source of tremendous worry and anxiety of most
Filipinos after social acceptance. If possible, he does not want to borrow to
meet his ordinary material needs.
3. Social Mobility-It is concerned with the advancement up the social scale, to
another socio-economic level; to a higher position within his clans, family, kin-
system, neighborhood, village, or subdivision.

55. COOPERATIVE VALUES
• Self-help: Co-ops are geared towards creating a
community where every member benefits equitably.
To accomplish this ideal, members need to help
themselves while also helping each other.
• Self-responsibility: Members should be responsible
and play their part on their own, without the need
for external motivation or incentive.

56. • Equality: Each member of a cooperative should benefit from the same rights, based
on their level of contribution.
• Equity: Cooperative organizations should treat all members fairly, without any form
of discrimination.

57. • Democracy: Democratic structure is crucial to running
a successful cooperative. The organization exists so
that all members have control, and no one individual
holds more power than the others. Members choose
representatives by way of voting, and each individual
has one vote per election.
• Solidarity: The members within a cooperative form a
unified organization where all the individuals support
one another. Each organization also supports other
cooperatives to form a united network.

58. THE “COOPERATIVE DIFFERENCE”