Polytechnic University of the Philippines

M.H. Del Pilar Campus Sta. Mesa Manila

Graduate School

Report on DEM History of Cooperative

Development of the Philippines

By: Mr. Nereus V. Malinis

HISTORICAL DEVELOPMENT OF COOPERATIVE MOVEMENT IN

THE PHILIPPINES

‘Bayanihan,’ the Filipino word for cooperation, is as old as our Philippine culture.

The Banaue Rice Terraces is the most symbolic evidence of the cooperative movement in the Philippines.(Abasolo, Ruiz & Bertol, 1996)

 

Subsistence Agriculture

Feudal and Commercialized

Economy

Gremios (local crafts unions and guilds) were the forerunners of cooperatives during the Spanish period.

Philippine economy transformation

GREMIOS

Pre-Spanish Period

Spanish Period

1ST STAGE OF COOPERATIVE MOVEMENT IN THE PHILIPPINES (1895-1941)

Highlights:1.1 Pre-Formation Period – Spanish Period

-- Revolutionary illustrados like Jose Rizal, Emilio Jacinto and Isabelo delos Reyes recognized cooperatives as instruments for social justice and economic development.

-- “The initial germ of cooperativism during the Spanish colonial periods failed to take root due to the intense revolutionary struggles of the Filipinos against the Spaniards.”

(Muñoz & Battulayan, 1989)

Highlights: 1.2 Formation Period – The American Colonial Period

-- Raiffeisen-type of rural agricultural cooperatives implanted

-- In 1906, the Corporation Law (PA No. 1459) passed – legal framework for all private organizations

-- In 1907, the Sandiko Bill disapproved – first attempt for state assistance to rural cooperatives via legislation

-- In 1915, the Rural Credit Cooperative Association Act (PA No. 2508) passed – appropriation of P1 million state assistance for farmers’ credit

-- In 1916, the first rural credit cooperative association assisted by the government formed

-- By 1926, 541 credit cooperatives in 42 provinces

(Dr. Hans-Detlef Wulker, Member of the Board of Directors of the German Cooperative and Raiffeisen Confederation (DGRV))

RaiffeisenCooperative

Model

Self-Administration

Self-Help Self-Responsibility

Member’s Promotion

Voluntary Participation

Highlights: State-Initiated Cooperatives-- In 1927, the Cooperative Marketing Law (PA No. 3425)

passed – formation of state-initiated farmers’ marketing cooperatives

 -- In 1940, Commonwealth Act No. 565 created the National

Trading Corporation (NTC). Replaced by the National Cooperative Administration (NCA) in 1941

 Assessment:-- The state-initiated cooperatives introduced by American and

Filipino missionaries and teachers in 1927 “eventually failed due to corrupt and incompetent management” (Villasin, 1990).  

Highlights: Privately-Initiated Cooperatives-- In 1938, the Vigan Credit Union, Inc. founded – a church-

based credit union-- In 1938, the Consumers Cooperative League of the

Philippines organized - the first cooperative federation-- By 1939, there were 570 credit cooperatives, 150 farmers’

cooperatives and 48 consumers’ cooperatives.-- By 1941, there were already 30 privately-initiated credit

unions. Assessment:-- Privately-initiated cooperatives of Raiffeisen types

served as the stable foundation of the Philippine cooperative movement (Prof. Jorge V. Sibal, UP, Diliman, Quezon City).

2ND STAGE OF COOPERATIVE MOVEMENT IN THE PHILIPPINES (1941-1986)

Highlights: 2.1 Japanese Occupation-- Cooperatives increased tremendously - severe food

shortages in Manila and other urban areas -- Around 5,000 consumers’ and producers’ cooperatives

organized constituting 77% increase over 570 rural cooperatives in 1939.

 2.2 The Rehabilitation Period after WWII-- Many laws were passed to assist the organization and

reorganization of cooperatives during the rehabilitation period after WWII.

 

Highlights: 2.3 Resurgence Period of State-Initiated Cooperatives -- To counter revolutionary activities - the state became

very active in organizing farmers' cooperatives. -- In 1952, the Agricultural Credit Cooperative Financing

Administration (ACCFA) established -- Farmers' Cooperative Marketing Associations

(FACOMAs) and Producers Marketing Associations (PROCOMAs) provided collateral-free loans funded by the United States Agency for International Development (US AID).

 

Analysis:-- The state-initiated FACOMAs failed as in the past,

again due to corruption and incompetent management. Only 99 of the 255 FACOMAs survived and of the millions lent, only 28% remained collectible.

 NGO-Initiated Cooperatives:-- In 1952, the Philippine Rural Reconstruction

Movement (PRRM) organized - a non-government organization (NGO) and paved the way in the organization of the Federation of Free Farmers (FFF) in 1953.

Highlights: 2.4 The Introduction and Encouragement of Non-agricultural Cooperatives -- In 1957, the Philippine Non-Agricultural Credit Act (RA No. 2023) implemented.-- In 1957, the Roman Catholic Church called for the organization of credit cooperatives in all parishes -- In 1960, the Agricultural Credit Cooperative Institute (ACCI) in the University of the Philippines Los Baños established-- In 1969, the National Electrification Administration (NEA) created - rural electrification through rural electric cooperatives-- In 1969, the Philippine College of Commerce (now Polytechnic University of the Philippines) - designated training center of non-agricultural cooperatives. In 1989, the Institute of Cooperatives founded - offered Bachelor in Cooperatives.

Analysis:-- The failure of the Philippine National Coop Bank once again signaled the failures of state-initiated cooperatives and the continuing decline of coop membership since 1969.-- But the assets and capitalization of some privately-initiated non-agricultural cooperatives (especially those managed by the middle class and professionals) have increased. This means that the cooperatives have grown qualitatively and substantially.

Highlights: 2.5 The Martial Law Period Before Martial Law:-- no cooperation among cooperatives-- government disorganized in supervising and

coordinating cooperatives  During Martial Law:-- In 1972, the Bureau of Cooperative Development

(BCOD) created - to rationalize the cooperative movement

 -- the Cooperative Union of the Philippines (CUP) formed

- to centralize coordination of all education and training programs of all cooperatives

Highlights: 2.5 The Martial Law Period Analysis: -- Cooperatives were politicized. Bureaucracy locked up

coop capital. Majority of the cooperatives were fake.

-- Milestone – In 1973, PD No. 175 passed to “strengthen the coop movement” through tie-up with the Marcos Land Reform Program (PD No. 27) - compulsory for a tenant-farmer to join a cooperative or Samahang Nayon (SN)

The haphazard formation of SNs resulted in weak Area Marketing Coop (AMCs) and Coop Rural Banks (CRBs). Intended government funds re-coursed to rural banks. However, rural banks owned mostly by the elites - not necessarily pro-cooperatives and pro-land reform. Created a big crack both in coop development and land reform program.

-- Successful story - the rural electrification program paved the development of electric cooperatives-- The success of the electric cooperatives is due to the fact that its rational for their organization was not as politicized as the SNs. (Muñoz & Battulayan, 1989

3RD STAGE OF COOPERATIVE MOVEMENT IN THE PHILIPPINES (1941-1986)Highlights: Cooperative Movement as a Political Force-- One cause of Marcos regime downfall - the failure of land reform and cooperative programs in solving the widespread poverty -- The 1987 Constitution under the Aquino administration - cooperative-friendly and the mistake of the past in organizing state-initiated cooperatives for political and anti-insurgency purposes avoided. 

 

-- In 1990, the Constitution provision was operationalized with the enactment of RA No. 6938, also known as the Cooperative Code of the Philippines (which was later amended to RA No. 9520 known as the “Philippine Cooperative Code of 2008”), and RA No. 6939 (Cooperative Development Act Authority Act).

 -- The CDA took over the functions of the BCOD and was tasked to coordinate the efforts of other government branches, subdivisions, instrumentalities and agencies in providing technical guidance, financial assistance and other services to cooperatives.

Highlights: 

Cooperative Movement as a Political Force-- The Local Government Code of 1991 (RA No. 7160) gave

the cooperatives, NGOs and POs the opportunity to actively participate in local governance. The coop movement, together with the NGOs (Non-Governmental Organizations) and POs (People’s Organizations) emerged as the country's third sector (civil society), the government and the private enterprises being the first two. The coop movement is the "largest socio-economic institution” in the country.

 -- In the first party list elections in the country, five coop

and coop-based parties won 6 out of 13 sectoral representative seats for the marginalized and underrepresented sectors of society.

In the final analysis, the Cooperative Development Authority, in its banner article in its webpage , states

“Considering the experiences of similar societies in other countries, however, the fundamental cause of failure in a cooperative enterprise is the lack of proper understanding of the principles and true aims of cooperative associations, and the non-adherence to them in actual operation of cooperative enterprises.”

THANK YOU.