historical perspective ii - philippines

Philippines

Jo B. BitonioPresenterCooperative Trainers Training, Lingayen, PangasinanAug. 29-31,2012)

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

Government Initiated

Church Initiated

Cooperative Efforts (1906-1940)

Rural Credit Bill

1907 1915Rural Credit ActGovernment

Initiated

1919

Grant loans to Credit Associations

1927Coop Marketing LawsPA 3425

1938

Strengthen Cooperatives

P.A. 3872

PA 3425 was amended by PA 3872 provided incorporation of FACOMA

Common Wealth Act 565

Gen, Basic Cooperative Law

1940

Cooperative Efforts (1906-1940)

Credit Union in Vigan

Church Initiated

1938


1940

Common Wealth Act 585Cooperative Act

National Cooperative

1941

Expansion of Cooperativism in the Philippines (1950-1969)

1952RA 2023Non AgriculturalCooperative law

In 1969 the Code of Agrarian Reform

(Rep Act No. 6389

1952RA 821 Farmers Cooperative Marketing


1963Philippine National Cooperative Bank

Church Sponsored

1967

RA No. 821 known as

the Agricultural Credit and Credit Cooperative Financing Act

RA No. 821 known as

the Agricultural Credit and Credit Cooperative Financing Act

1952

Philippines (R.A 6389) Code of Agrarian Reform

Cooperative Under the 1973 Constitution (1973-1986)

n April 14, 1973 the President issued a decree on "Strengthening the Cooperative Movement PD 175

n April 14, 1973 the President issued a decree on "Strengthening the Cooperative Movement PD 175

On July 9, 1973 Implementation No. 23 by President Marcos which set forth the regulations for implementing the decree on Strengthening the Cooperative Movement

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."

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."


Presidential Decree No. 775 On August 24, 1975 decreed that sugar planters and or producers' cooperatives shall be developed by the Philippines Sugar Commission.

Presidential Decree No. 775 On August 24, 1975 decreed that sugar planters and or producers' cooperatives shall be developed by the Philippines Sugar Commission.

Cooperative Under the 1973 Constitution 1973-1986


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

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

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.

The first legislation to attempted in

the country was the “Rural Credit Cooperative Bill”. It was introduced in 1907 develop the agricultural interest of small farmers. The bill was passed by the Philippine legislature in 1908. Unfortunately it was disapproved by Philippine Commission. It took another seven years before the first cooperative law in the Philippines; the “Rural Credit Act” (Act No. 2508) was passed in 1915.

The law, patterned after the Raiffeinsen experience in Germany, promoted the organization of rural credit cooperatives. Some 591 rural credit associations were organized in amended in the same year and its administration was given to the Bureau of Agriculture. Thus began the more active involvement of the government in cooperative organizing and supervision.

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.

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.

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.

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.

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.

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

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.

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.

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

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.

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.

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).

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.

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 cooperatives. After 10 years of operation, however, it was closed due to insolvency resulting from mismanagement.

Church Initiated

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.

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

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.

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.

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.

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.

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.

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.

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


• Amended the Coop Code promulgated in 1990;

• Discussed in four (4) Congresses (starting the 11th Congress up to the 14th) spanning over ten (10) years;

• Approved by the Bicameral Committee on November 18,2008;

• Signed into law last February 17,2009

RA 9520


• The Philippine Cooperative Code of 2008 (Article1)

• Signed on February 17, 2009• Published on March 7, 2009 • Effective March 22, 2009

RA 9520

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.

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.

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