University of Wisconsin Center for Cooperatives
A Century of the Philippine Cooperative Movement
By: Prof. Jorge V. Sibal, UP SOLAIR, Diliman, Quezon City
The Philippines, despite its positive prospects in economic development, is seriously confronted with the continuing problems of poverty and income inequality. Income inequality comes in two dimensions - the inequality among classes (or the poor becoming poorer and the rich becoming richer)1 and inequality among regions (or the poor regions are being left behind by the fast paced development of the richer urbanized regions).2
People empowerment is indeed the correct approach in solving these twin problems of poverty and income inequity. Department of Agrarian Reform Secretary Horacio Morales who used to head the underground National Democratic Front (NDF), defined empowerment as "a long-term process of transferring economic and social power from one center to another and/or the creation of a new center of socio-economic power complementary to or in competition with the traditional center"3 Jo Anne C. Barce (1995) added that (people) empowerment enables the transfer of "social, economic as well as political power from one class to another or from one region to another which could result to reconfiguration of people and geography"4.
Cooperatives and other labor enterprises are among the major pillars of the people empowerment movement. (Sibal, 1991)5 This empowerment movement, which is now known as the civil society movement, 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.
The History and Assessment of the Philippine Cooperative Movement
Cooperatives are compatible to the Filipino culture whose concepts and practices of "bayanihan" (cooperation) preceded the coming of the Spaniards. 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. These illustrados were the organizers of the "gremios" (local crafts unions and guilds) which were the forerunners of cooperatives.
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.
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 while 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.
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.
Stage One of the Philippine Cooperative Movement (1896-1941)
The Pre-formation period- Spanish Period
As local "gremios" and other self-help associations emerged during the latter part of the Spanish colonial regime, Dr. Jose P. Rizal in 1896 initiated an agricultural marketing cooperative while in exile in Dapitan in Mindanao. Years later, in 1898, another national hero Emilio Jacinto organized another failed commercial marketing cooperative in San Pedro, Laguna.
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 federation6.
Munoz and Battulayan (1989) observed that Filipino national heroes like Rizal, Jacinto and de los Reyes have always recognized cooperatives as instruments for social justice and economic development7. 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.
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.
A personality named Prantel (or Prauter) was among the early rural credit coop organizers. He came in 1898 after many years of credit coop involvement in India. He supported the Sandiko bill in 1907 through various articles in Manila newspapers. In 1915, he became chief of the rural credit section of the Bureau of Agriculture.
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.
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.
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.
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.
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. Huber went back to the U.S. in 1931 to study at the University of Chicago and later served as a pastor of the First Christian Church in Frankfurt, Indiana, USA. He then organized the first Protestant church-based credit union in the United States. Huber returned to the Philippines in 1937 and collaborated with D. Howe, a coop technical adviser in training Filipinos in organizing and operating cooperatives.
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.
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.
Table 1 below illustrates the growth of Philippine cooperatives from 1939-1985.
Assessment of the First Stage of the Cooperative Movement
The Raiffeisen-type coops of rural West Germany are suitable to Philippine rural populace as answers to the poor farmers' capital needs. The efforts of middle class illustrados in coop development however failed due to the revolutionary situation during those years.
As the Americans were able to pacify the Filipinos, privately-initiated cooperatives of the Raiffeisen types were implanted in the country by American and Filipino missionaries and teachers in 1907. These coops served as the stable foundation of the Philippine cooperative movement.
The state-initiated coops introduced by American colonial administrators in 1927 "eventually failed, due to corrupt and incompetent management" (Villasin, 1990)8, and lack of expertise, education and training, money and technical knowhow.
Two studies9 cited in Ibon, 1988 compared privately-initiated coops (Raiffeisen) with state-initiated coops coops as follows:
Stage 2 of the Philippine Cooperative Movement (1941-1986)
The Japanese Occupation
Because of the severe food shortages in Manila and other urban areas during the Japanese occupation, the number of cooperatives increased tremendously. Agricultural coops were linked with urban-based coops due to the high demand for food in Manila and other urban centers, and the demand for exports to Japanese war outposts in other Asian countries.
From 1941 to 1945, the Japanese army and the collaboration government of Laurel, Aquino, Ramos and Recto organized around 5,000 consumers and producers cooperatives which constituted 77% increase over the 570 rural cooperatives in 1939. These initiatives (mostly in the greater Manila area) were initiated by Pedro Sabido, Minister of Economic Affairs of the wartime government. After the return of the Americans however, all these Japanese-initiated coops were dissolved.
The Rehabilitation Period after World War II
Many laws were passed to assist the organization and reorganization of cooperatives during the rehabilitation period after the Second World War. Among these laws were the following:
The Resurgence of State-initiated Cooperatives
The communist and socialist forces returned to underground revolutionary activities after their elected representatives from the Democratic Alliance were ousted in the landlord-dominated Congress. To counter this move by the rebels, the state became very active in organizing farmers' coops. In 1952, the Agricultural Credit Cooperative Financing Administration (ACCFA) was established by virtue of RA No. 821. The state organized Farmers' Cooperative Marketing Associations (FACOMAs) and Producers Marketing Associations (PROCOMAs) by providing collateral-free loans funded by the United States Agency for International Development (US AID) mostly in Central Luzon provinces of Nueva Ecija, Pampanga, Bulacan, Tarlac and Pangasinan.
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.
The Philippine Rural Reconstruction Movement (PRRM), a non-government organization (NGO), was organized in 1952 based on the rural reconstruction experiences in China during the early 1900s. It was a movement of middle and upper class people committed to the cause of Filipino peasants. The PRRM, which has assisted coop organizing in the rural areas after the war, has also inspired the organization of similar organizations in other countries like Colombia, Guatemala, India and Thailand. One positive effect of the PRRM was the organization of the Federation of Free Farmers (FFF) in 1953.
The Introduction and Encouragement of Non-agricultural Cooperatives
In 1957, the Philippine Non-agricultural Credit Act (RA No. 2023) was implemented. Non-agricultural coops in electricity, banking, transportation and institutions (offices and factories) were recognized. They were differentiated from cooperatives in the agriculture and fisheries sectors. To support this program, the UP Asian Labor Education Center (ALEC) was organized in 1954 to educate workers in collective bargaining and cooperativism.
Alongside RA No. 2023 was the issuance of the Roman Catholic Church of a resolution in 1957 calling for the organization of credit cooperatives in parishes all over the country as part of their social action projects. This was in compliance with the Second Vatican Council. Aside from the Catholics, Protestants and Aglipayans continued to be active in organizing coops. The different churches saw in coops the chance to help their constituencies, as well as to gain followers and spread their teachings. This resulted to the organization of private-initiated coops in the urbanized areas that were led by lay leaders who were mostly middle class and professionals.
The Bishops Businessmen's Conference Livelihood Foundation, Inc. is an example of a support mechanism of the church in improving the socio-economic status of the marginalized diocese through cooperative formation, community organizing and entrepreneurship development. Its specific goal is to provide access to financial and/or technical assistance to the Diocesan Social Action Centers in the formation of Parish-based coops or organizations that cater to the socio-economic needs of the poorest communities in the Diocese.
One example of a successful parish-based urban cooperative is the San Dionisio Credit Cooperative, Inc. (SDCCI) in San Dionisio, Paranaque. It was founded in 1961 by the parishioners of San Dionisio Catholic church which later grew into one of the biggest credit cooperatives in Southeast Asia. It was assisted by Institute of Social Order (ISO) of the Philippine Jesuit province.
The SDCCI imparted to the community the value of Christian charity of self-help. Instead of giving fish to the poor, they were instead taught how to fish for their daily livelihood. In fact, the SDCCI has been known for continuous education which has been the most important factor in their success. One of the coop organizers, Dr. Angel Mendoza, an active lay leader, put up an education center in the SDCCI. Their ultimate goal was community building. SDCCI loaned to members fishing nets and tricycles for livelihood which they paid religiously on installment.
Another example of a successful parish-based coop is the Sta. Ana Multipurpose Cooperative in Davao City which was initiated with the help of a Social Action Center organized within the church.
The 6,000 strong cooperatives in Mindanao (out of more than 10,000 registered in 1995) traced their resurgence from a strong cooperative federation called MASS-SPECC (or Mindanao Alliance of Self-help Societies - Southern Philippines Educational Cooperative Center). MASS-SPECC was organized in 1966 at Cagayan de Oro City as SPECC by leaders of successful coops in Mindanao which were mostly parish-based and institutional coops like those in National Steel Corporation in Lanao and the Paper Industries Corporation in the Philippines (PICOP) in the Surigao area. (Borja, 1996)10 MASS-SPECC programs in education and training have catered not only to Mindanao coops but also to Luzon, Visayas and some Asian coops. Today's coop development activities in Mindanao are eyeing not only the Philippine market but also the countries belonging to the East Asia Growth Area (EAGA) like Malaysia, Indonesia and Brunei.
In the Visayas, the founding of the Visayas Cooperative Development Center (VICTO) in 1970 was instrumental to the growth of 250 coops in Regions 6, 7 and 8. As the largest cooperative federation in the Visayas, VICTO was organized 26 years ago by the Scarboro fathers in Hinundayan, Southern Leyte thru a parish social action program called "Saving Souls the Credit Union Way". It has an aggregate asset of P 3.5 billion, maintains 10 offices with 100 full-time staff, and is engaged in trading, computer services aside from training and consultancy services. (VICTO, 1996)11
The other significant events in the coop movement before the martial law period were the following:
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 coops (especially those managed by the middle class and professionals) have increased. This means that the coops have grown qualitatively and substantially.
Table 2 below shows that from 1969-1977, coop membership lost about 95,000 members or a 17% decline. The assets of the cooperatives, on the other hand, increased by P 98.6 million, or a tremendous increase of 323%.
The Martial Law Period
The martial law period featured the height of state-initiation of cooperative organizing which was patterned after the Japanese-mode of cooperative development tied-up with the government-initiated land reform program.
Before martial law was declared by President Ferdinand Marcos in September 21, 1972, there was lack of cooperation among cooperatives. Each coop considered itself as independent of the others. The different private-initiated coops set-up their own respective education and training centers or federations which serviced only their own primaries.
The government, on the other hand, was also disorganized in supervising and coordinating the various cooperatives in the country. In fact, there were 14 different government agencies that were involved in cooperatives. Among them were:
In order to rationalize the coop movement, President Marcos, using martial law powers, created the Bureau of Cooperative Development (BCOD) through Letter of Instruction No. 7 on November 1, 1972. BCOD was placed under Ministry of Local Government and Community Development but later transferred to the Ministry of Agriculture. BCOD later formed the Cooperative Union of the Philippines (CUP) as the apex organization of the Philippine cooperative movement. Its aim was to centralize the coordination of all education and training programs of all cooperatives in the country.
The resulting national structure of the Philippine cooperative movement during martial law period is shown Figure 1:
The state of the coop movement during the martial law period was assessed in the Munoz and Battulayan study (1989):
Coops were politicized by paternalistic and competitive bureaucracies, e.g., National Food Authority (NFA) competed with Area Marketing Coops (AMCs) in palay procurement. Bureaucratic lock-ups of coop capital took several forms: SNAP-KKK and the Coop Loan Development Fund (CLDF) loan ceilings were too low; Barangay Service Fund (BSF) was not compulsary while Barangay Guarantee Fund (BGF) collections were ineffective. The BSF and BGF were limited to capitalizing AMCs and Coop Rural Banks (CRBs). The CRB had options not to release member Samahang Nayon's BSF, BGF and CRB funds to the SN's farmers coops. The National Irrigation Administration (NIA) and National Electrification Administration (NEA) were still amortizing huge foreign loans with poor collections. Coop capital base remained untapped due to the prevalent lack of capital build-up programs except in credit coops as manifested by the CRBs poor deposit generation and low capital shares. Only a few were genuine coops, the majority being fake coops - corporate coops seeking tax exemptions and government subsidies, government-organized primaries and conglomerates, controlled partner-coop unions, and foreign-funded coop federations.
Coop education, training and organization have been haphazardly carried out by poorly trained, underpaid and ill-motivated government technicians with the cooperation of poorly-funded but motivated NGO personnel. Hence, poor coop theory and practice and lack of professionalism pervaded the coop sector. Monitoring, evaluation and auditing especially project feasibility and viability studies have been haphazardly implemented by government agencies and coops themselves, hence poor accountability, unsound business practices and inaccurate statistics. For economies of scale, inter-coop tie-ups were needed such as: credit-production-marketing tie-up or CRB-SN-AMC; and marketing- wholesale and special market retail procurement tie-ups or AMC-NFA; hotels and restaurants, processors, institutional buyers (government especially institutional consumer coops) and even direct coop-foreign barter market.
The milestone in the coop movement during martial law was the issuance of Presidential Decree No. 175 on April 14, 1973 whose aim was to "strengthen the coop movement". PD No. 175 was tied-up to the Marcos land reform program (PD No. 27) which made it compulsary for a tenant-farmer to join a cooperative or Samahang Nayon (a pre-cooperative farmers' organization). Benefits would include the right to borrow funds from government banks through the Coop Rural Banks (CRBs) or the local rural banks, assurance of being supplied with farm inputs such as seeds, fertilizers and pesticides, etc.
SNs and farmers coops were encouraged to form Area Marketing Coops (AMCs) on a municipality-wide basis and SNs, coops and AMCs were encouraged to form CRBs on a province-wide basis. The idea is that the CRBs will facilitate the acquisition of the inputs of the farmers through their SNs, coops and AMCs via loans for machines, equipment, seeds, fertilizers, pesticides, etc. while the AMCs will take charge of selling the produce of the the SNs and coops of the farmers.
Because the formation of the SNs and primary coops of the farmers were haphazard, the resulting AMCs and CRBs formed were few and weak and thus the funds of the government intended for the land reform program were coursed through the rural banks if CRBs were not formed. This created a big crack in both the coop development and land reform programs under martial law. The rural bankers were owned mostly by the rural elites who were not necessarily pro-coops and pro-land reform.
The Samahang Nayons peaked at 200,000 involving at least 3 million farmers. Only 3%, however, survived. The 14-year program reportedly utilized billions of dollars in loans and grants from the World Bank and other international financial institutions.
In 1974, only 41% of the average 118 rice farmers per barrio in 512 barrios surveyed had joined the SNs. In all the regions, only 45% of all the respondents understood the coop principles. This record is way off the experiences of the Japanese coop development and land reform programs where the martial law programs were patterned. In Japan, almost 100% of Japanese farmers became coop members. By 1985, the loan repayment rate of the SNs was a low 58.3% for all 12 regions.
There were only 1,646 registered cooperatives in the country in 1985 or down from a previous 3,095 in 1904. SNs are different from farmers' cooperatives since they are only pre-coops or organizations of farmers. They do not have capital and savings programs like farmers cooperatives. Hence, out of the total 17,387 registered SNs, 10,239 or 58.92% were found to be inactive. In short, the cooperative thrust of the Marcos land reform program was not widely supported by the farmers who are supposed to be the beneficiaries.
As of 1985, there were 16,000 SNs, 29 CRBs, 64 AMCs, 1,456 credit coops, 300 marketing coops, 132 producers coops, 284 service coops, 50 coop federations, one super-palengke (under KKK which later failed), and one national coop insurance (CISP).
On January 25, 1974, the Cooperative Insurance System of the Philippines (CISP) was organized with a capitalization of PhP. 30 million. Organized at UP ALEC in Diliman, Quezon City, its membership included coops and their federations and unions, SNs, trade unions and their federations, and individual policy holders. CISP is affiliated with the Philippine Life Insurance Association (PLIA), Insurance Institute for Asia and the Pacific (IIAP), Cooperative Union of the Philippines, Inc. (CUP), CARP MRI Pool, DOLE OCW Life Insurers Group, International & Oceania Association (ADA) and ASEAN Cooperative Organization (ACO). Its services include group life yearly renewable term, 10 and 20-year endowment insurance, loan payment protection insurance, savings incentive insurance, and ordinary (whole life) insurance.
Other highlights of the coop movement during the martial law period were:
A national federation of transport of cooperatives called the Katipunan ng mga Kooperatibang Pansasakyan ng Pilipinas (KKPPI) was organized. It has active federations in Metro Manila, Northern Luzon, Central Luzon, Southern Luzon and Bicol, Viasayas and Mindanao. Among its projects is the "Boundary Hulog Program" under the KKPPI, CDA and Development Bank of the Philippines. Among its leaders are Orlando Lasay (deceased), Rufino Adriano, Nelon Alindogan and Anacleto de los Santos.
In April 1977, the National Confederation of Cooperatives, Inc. (NATCCO) was organized as a tertiary-level organization. From a national association of coop training centers, NATCCO has a membership base of 1,221 coops of various types nationwide as of 1993. Among its services are training and education, research and publication, auditing, etc. and programs such as coop financing for small-scale industries, extension work, women in development, coop insurance promotion, and the inter-coop trading. The NATCCO members include Northern Luzon Cooperative Development Center, Inc. (NORLU), Tagalog Development Center, Inc. (TAGCODEC), Bicol Cooperative Development Center, Inc. (BCDC), VICTO, MASS/SPEC, Credit-Life Mutual Benefit Services Association. Inc. (CLIMBS) and associate affiliate Cooperative Education Center, Inc. (CECI).
On May 12, 1977, the Cooperative Foundation of the Philippines, Inc. (CFPI), an independent NGO was organized as a science foundation whose goal was to conduct in-depth studies of coops in the country. CFPI is both a foundation and a resource center. As a foundation, it spawns new programs and alternatives for coop development. As a resource center, it renders services which include management consultancy, training, policy studies, data banking, research, publications and financial intermediation. CFPI is linked with the coop movement, NGO-PO coalitions and government agencies.
Another consolation from the Marcos regime was the organization of 29 coop banks (formerly CRBs) out of 75 provinces in the country. These coop banks have federated into the Bangkoop (Cooperative Rural Banks Federation of the Philippines, Inc.) with the defunct SNs being represented by the National Farmers Supreme Council (SANDUGUAN) headed by sectoral Rep. Ben Cruz and coop banker Leonila Chavez of Nueva Ecija. According to a Bangkoop report from 1978 to 1988, the individual farmer-investors increased from 295,000 to 336,000 and the loan accounts increased from 13,000 to 25,000. Land Bank of the Philippines has already infused P 1 million in each of the 29 coop banks and in 1988, another P 16 million was infused in the coop banking system.13
On August 29, 1979, Faith, Inc. of Assemblyman Luis Taruc initiated the organization of the National Market Vendors Cooperatives Federation, Inc. (NAMVESCO) by market vendors from Manila (Quinta, Baclaran, Paco-Soriano and Divisoria), Quezon City (Novaliches), Rizal (Malabon, Marikina and Tanay), Laguna (San Pedro), and Batangas (Lemery). By 1979, it has 65 member-primaries and its services included education and training, interlending and management consultancy and auditing. By 1991, NAMVESCO's assets were P 300 million and loans granted have reached P 700 million. (Dalangin, 1991)14
On July 1, 1979, the Philippine Rural Electric Cooperatives Association, Inc. (PHILRECA), previously known as Federation of Electric Cooperatives in the Philippines (FECOPHIL) was registered with the NEA as the umbrella organization of the 119 electric coops providing electricity in 73 provinces and 1,417 cities and municipalities as of 1993. The over-all accomplishments of the electric coops nationwide as of the year-end 1992 are the energizing of 3,471,803 households or 50% accomplishment, 1,337 towns and cities (94% accomplishment) 22,487 barangays (93% accomplishment) and the attainment of 94% collection efficiency from the consumers.
The Cooperative Union of the Philippines (CUP) became the national organization of all coops registered under PD No. 175. It was organized in 1979 and started operations in 1980. The CUP was recognized as a representative of Philippine cooperatives in 1981 by the International Cooperative Alliance (ICA) and the ASEAN Cooperative Organization and in 1984 by the International Labor Organization (ILO).
The structure of the Philippine coop movement after martial law is shown in Figure 2. The number and status of primary coops as of August 31, 1988, and the national statistical information of all types of coops as December 25, 1985 are exhibited in Tables 3 and 4.
Assessment of the Second Stage of the Cooperative Movement
History was repeated for the third time. The state-initiated coop development reached its height with the issuance of PD No. 175 whose aim was to strengthen the coop movement through the organization of the Kilusang Bayans (KBs)/cooperatives and Samahang Nayons (SNs)/barrio organizations that were tied up with the Marcos Land Reform Program (PD No. 27). Again, since the state-initiated coops were too politicized, the programs for the organization of KBs and SNs were both failures.
There was however one successful coop development program undertaken by the Marcos regime – the development of electric cooperatives in the implementation of the rural electrification program. Today, the majority of the 119 electric cooperatives nationwide remain viable and successful and they now comprise a major strength of the coop movement alongside with the stable privately-initiated cooperatives. One major factor for the success of the electric cooperatives is that the rational for their organization was not as politicized as the KBs and the SNs.
Stage 3 of the Philippine Cooperative Movement (1986 – present)
The Aquino Presidency
The 21-years of Marcos regime ended abruptly with a bloodless people-powered revolution in February 1986 which paved way to the revolutionary government of President Corazon C. Aquino. The downfall of the Marcos regime was caused by several factors. Among them were the massive graft and corruption in the government due to business cronyism and a very serious debt crisis, widespread human rights abuses, suppression of labor rights and the failure of the land reform and cooperative programs in solving the widespread poverty of the people. Instrumental to the defeat of the Marcos government were the numerous non-government organizations (NGOs) in addition to the cause-oriented organizations and the Reform the Armed Forces Movement (RAM) within the military establishment which tried to launch an aborted coup.
The NGOs have sprouted prior to and during the Aquino administration and their numbers reached to about 20,000 nationwide with 17,000 reportedly registered with the Securities and Exchange Commission (SEC). These NGOs include civic organizations, professional groups, foundations, political groups, cause-oriented groups, trade unions, government-initiated organizations and other groups that were non-profit and non-government agencies.
According to Araceli Gonzales15, the NGO bloc within the Aquino government has shown that neither the state sector nor the formal (private) sector of the economy was really genuinely concerned with the alleviation of mass poverty. The NGOs therefore have to address the poverty and powerlessness of the majority of the people as their principal mission.
The cooperative movement had established long relationship with the NGO and trade union movements. Both movements are listed as among the major pillars of the civil society movement. Ignacio Borja (1996) narrated his observations:
"The NGOs were established during the dark days of the dictatorship. While they emphasize education for the oppressed, they find the coop concept an inseparable component of sustainable development. They assisted groups which were popularly known as people's organizations (POs). POs were also asking for the knowledge and ways of cooperativism. The commitment to develop the POs as self-reliant future partners compelled the NGOs to develop them as coops despite the NGOs strong aberrations against anything that will lead POs to be materialistic, capitalistic and money-greedy which in many cases, undermined the socio-political orientation they initiated in the group".
A new constitution was framed under the Aquino administration. This new constitution, which was a product of the people power uprising, was cooperative-friendly but the mistake of the past in organizing state-initiated cooperatives for political and anti-insurgency purposes was avoided.
Article XII, Section 15 of the 1987 Constitution provided for the promotion of growth and viability of cooperatives as instruments of equity, social justice and economic development under the principles of subsidiarity and self-help. Under the said principles, the government recognized that cooperatives are self-governing entities which shall initiate and regulate their own affairs to include education, training, research and other support services with the government giving assistance when necessary.
The Constitutional provisions on cooperatives were operationalized on March 10, 1990 with the enactment of RA No. 6938 (Cooperative Code of the Philippines) and RA No. 6939 (Cooperative Development Authority Act). The CDA took over the functions of the BCOD of the Department of Agriculture. It was placed under the Office of the President and is headed by a chairman and 6 administrators. As the lead agency, the CDA 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.
President Aquino's cooperative development program learned from the past failures of excessive government loans or credit support to cooperatives as in the FACOMAs and the SNs. Through the KABISIG programs, government agencies which were prevented from organizing coops, channeled their development programs through the network of coops, NGOs and POs especially in food distribution, family planning, barrio facilities and livelihood projects. A coop, for example, was an effective instrument in bringing to more constituents the services of government as least cost.
Ramos' People Empowerment Goals and the Civil Society
The administration of Pres. Fidel V. Ramos formulated a vision of human development and global competitiveness based on the principle of people empowerment. It continued the cooperative development program of the Aquino administration. Executive Order Nos. 95 and 96 were issued by President Ramos on June 8, 1993 in order to enhance the coordination efforts in creating a conducive environment in cooperative development among all government agencies including the local government units (LGUs) and the establishment of cooperative development councils in national, regional, city or municipal levels.
Under the Local Government Code of 1991 (RA No. 7160), the local development councils at levels of LGUs were operationalized which gave the coops, NGOs and POs the opportunity to actively participate in local governance. This gave rise to the new concept of the partnership of the government, private and civil society sectors in the development efforts of society. It was observed that the coop movement, together with the NGOs and POs 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. It has a total membership of 3.2 million and 19.2 million family beneficiaries16
As of August 31, 1993, there were a total of 25,125 registered cooperatives which signified a tremendous increase of 7.5 times from 1985. The total number of cooperatives confirmed was 4,495 or 17.8% of the total registered. This signified that there were still a large number (more than 80%) of failed or unviable cooperatives. However, the confirmed coops which were viable coops grew rapidly since the total assets of the coop movement leaped from a measly P 1.05 billion in 1985 to P 118.4 billion in 1995.
As shown in Table 5, the increase in the number of confirmed and successful coops were in multi-purpose coops at 8,107.4%, credit coops at 750.0%, service at 514.2%, marketing at 183.9%, and producers at 181.5%. Coops that declined in numbers were in consumers at –4.9% and area marketing at –5.8%.
As to the type of coops, the top coops were the agricultural multi-purpose coops at 2,189 or 48.7% of the total number of confirmed coops, credit coops at 24.3%, non-agricultural multi-purpose coops at 7.4%, consumers at 6.4%, service at 4.0%, and producers at 3.6%. The above statistics imply that coops have shifted to more value added operations as the coops' businesses shifted from credit to the more high value added multi-purpose coops.
Teresita Coloma (1996)17 of CDA summed up the accomplishments of the cooperative movement after the EDSA Revolution:
If national development indicators mean among others that GDP and the assets acquired, then the cooperative sector has made its share to the national economy, maybe not of much significance yet, but definitely the fastest growing sector to contend with as indicated by its growth rate of 700% over the four years (4,000 to 35,000 registered from 1990 to 1994) and the GDP contribution from July 1994 to July 1995 in the amount of P 141.3 billion. In terms of individual taxes paid by the cooperative sector to the government less subsidies by way of tax exemptions, mid-1995 placed the figures as P 5.3 billion. As to the capital formation among cooperatives, 1995 saw a 9.0% or P 30.49 billion contribution while personal consumption also accounted 9.0% or P 97.14 billion contribution".
Assessment of the Third Stage of the Cooperative Movement
Among the causes of the downfall of the 21-year Marcos rule was the failure of the land reform and coop development programs of Martial Law in uplifting the widespread poverty of the people. The NGOs and the cause-oriented groups, together with the coop movement orchestrated the People-power revolution of EDSA in 1986 which ushered the regime of President Cory Aquino.
Through the KABISIG Peoples' Movement, the Aquino administration was able to harness the NGO, PO and coop organizations under the principles of subsidiarity and self-help enshrined in the 1987 Constitution. These principles prevented the government from organizing cooperatives for political and anti-insurgency goals. These principles were operationalized through RA No. 6938 (Cooperative Code of the Philippines) and RA No. 6939 (CDA Act) on March 10, 1990. The development programs of both administrations of Aquino and Fidel Ramos were channeled through the coops, NGOs and POs. This strong alliance of coops, NGOs and POs institutionalized the third sector of society called the civil society.
This resulted to the tremendous growth of the cooperative movement after the EDSA Revolution. By 1993, there were a total of 25,125 registered coops representing an increase of 7.5 times over 1975 figures. However, there was still a high rate of coop failures since more than 80% of the total registered coops were not confirmed. But those that were viable grew tremendously since the total assets of the coop movement grew from P 1.05 billion in 1985 to P 118.4 billion in 1995.
The main reason for coop failures was still the lack of education and training. This was revealed in more than 80 studies which assessed the growth and development of coops which included the studies of Emmanuel Velasco, the Cooperative Foundation of the Philippines, Inc. (CFPI) and Leandro Rola (1989).18 Lack of education and training correlates with the following causes of coop failures:
One recent positive move in trying to solve this perennial problem of lack of education was the founding of the National Association of Cooperative Education (NACE) in 1996. Through NACE, regional, provincial, municipal and even barangay chapters were targeted to be organized in order to promote coop education and training at the provincial and grassroots levels. At the core of the NACE is the CDA and all its regional branches, all state colleges and universities, coop and NGO training centers, coop federations, councils and unions, LGU provincial/municipal coop development offices and the various government organizations and agencies like the Departments of Agriculture, Agrarian Reform, Trade and Industry, Education, Culture and Sports, Environment and Natural Resources, Science and Technology, NEDA, TESDA, CHED, NHA, TLRC, PCUP and GFIs like the Land Bank of the Philippines, GSIS, SSS, PNB, etc.19
On August 12, 1996, DECS Order No. 55 was issued which contained the guidelines in converting all school canteens in all primary and secondary schools into teachers coops.
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. These include 2 seats for APEC (Association of Philippine Electric Cooperatives) and one each for Coop Natcco Network Party, ABA (Alyansang Bayanihan ng mga Magsasaka, Manggagawang-bukid at Mangingisda)20, Luzon Farmers Party (Butil)21 and NACUSIP (National Congress of Unions in the Sugar Industry of the Philippines).
Under the Estrada administration, the National Anti-Poverty Commission (NAPC) was created under RA No. 8425 (Social Reform and Poverty Alleviation Act). NAPC took over the functions of the Presidential Commission to Fight Poverty, the Social Reform Council and the Presidential Council for Countryside Development. NAPC's task is to prepare and implement an action plan to ensure the provision of houses, jobs and health assistance to the poor with the help of related government agencies. The main vehicle of the NAPC is expected to be the coop movement and the civil society sector.22
III. Problems and Prospects of the Philippine Cooperative Movement
Under the administration of President Joseph Estrada, the major problems and prospects of the cooperative movement are summarized as follows:
1 The latest data of the National Statistics Office (NSO) on poverty showed that the richest 10% of Filipino families is the only sector that increased its share of the total income. The NSO data showed that in general, the distribution of income has become less equitable. AFP, "Richest Filipinos Getting Richer", Philippine Daily Inquirer, July 15, 1998, pp. 1 and 20.
2 It is estimated that the "number of people living in urban areas in the Philippines increased from 18 million (37% of total population) in 1980 to approximately 32.93 million (48% of total population) in 1995". Jose Chua Ong, Market Projects Financed by Municipal Development Fund: An Evaluation, Philippine Women's University-Quezon City (PWU- QC), September 1997 (masteral thesis).
3 Horacio Morales, "Strategies and Mechanisms for Empowerment of People in the Rural Sector", Lambatlaya, ISWD, QC, p. 2.
4 Jo Anne Camba Barce, "The Effects of Education in Membership Participation in Cooperative Activities", UP SOLAIR, QC, March 1995 (unpublished paper).
5 Jorge V. Sibal, "The Self-managed Enterprises and the Vision of a Mixed Economy", paper read at the PEDF Seminar-Workshop on Issues in Community Enterprise Management, August 16-18, 1991, Pansol, Laguna sponsored by People's Enterprise Development Council.
6 William Henry Scott, The Union Obrera Democratica: The First Filipino Labor Union, New Day Publishers, QC, 1992.
7 Elrico Munoz and Lani Battulayan, "The Philippine Cooperative Movement", UP SOLAIR, QC, September 23, 1989 (unpublished paper).
8 Clarissa P. Villasin, "Can Cooperatives Cure Poverty in the Philippines?", Philippine Agenda, Vol. III, No. 10, July 1-15, 1990, Grassroots Publications, Inc., Manila, pp. 1-3.
9 Ibon Facts and Figures, Vol. XI, No. 21, November 15, 1988.
10 Ignacio P. Borja, "Cooperative Education: Problem or Answer", paper presented at the first National Convention of the National Association for Cooperative Education (NACE), August 8-9, 1996, Hotel Danarra and Resort, QC.
11 Visayas Cooperative Development Center, "Experiential Perspective of Cooperative Education and Training, the Visayas Experiment", July 1996, Cebu City, presented to the NACE National Convention, August 8-9, 1996, Hotel Danarra and Resort, QC.
12 Fajardo, F. B. and F. P. Fabella, Cooperative, Manila: Rex Book Store, 1986.
13 Bangkoop, "The cooperative Banking System: Towards a More Meaningful Presence in the Countryside", Cooperative Rural Banks Federations of the Philippines, Inc., QC, 1990.
14 Rudy Dalangin, "Market Vendors Cooperative, A Case Study", paper presented to the "Cooperative Education and Exhibits Fair", March 10, 1991, Philippine International Convention Center, Manila.
15 Araceli Gonzales, "The NGOs, their Impact to the IR Environment", UP SOLAIR, QC (unpublished paper).
16 __________, "Political Parties, Programs and Platforms for Cooperatives as a Third Sector", Sustainable Development Through Cooperatives, edited by F. Rosario-Braid, Asian Institute of Journalism, Manila, 1993, p. 136.
17 Teresita M. Coloma, "The Cooperative Development Framework: A Blueprint for People Empowerment and Global Competitiveness", paper presented at the National Conference Workshop on Strengthening Cooperative Banks, February 21-22, 1996 at Great Eastern Hotel, QC.
18 Leandro R. Rola, "Cooperative Education and Training Issues/Problems and Recommendations", The State of Cooperative Development in the Philippines, Cooperative Foundation of the Philippines, Inc. (CFPI), QC, 1989.
19 ___________, "Cooperative Education, Promotion and Development through Association of Cooperative Education", paper presented to the NACE National Conference, August 8-9, 1996, Hotel Danarra and Resort, QC.
20 Jeremeias Montemayor, "The ABA and What It Stands For", unpublished. Mr. Montemayor is the prtesident of ABA. His son Leonie Montemayor is the party list representative of ABA. Included as major affiliates of ABA are the Federation of Free Farmers (FFF), FFF Cooperative, Inc., Provincial Cooperative Union of Davao (PCV-D), Tarlac Federation of Agricultural Cooperatives (TFAC), Cooperative Union of Occidental Mindoro (COUMI), Provincial Cooperative Union of Occidental Mindoro (PCU-DO) and San Isidro Davao Oriental Development Cooperative (SIDODECO).
21 The major affiliates of BUTIL are Sanduguan of Rep. Ben Cruz and AMA-Sanduguan of Nicanor Mangiduyos.
22 Cathy Canares, "Anti-poverty Body Gets P 100 million from Malacanang", Philippine Daily Inquirer, August 17, 1998, p. 5.
23 The representatives of the Association of Philippine Electric Cooperatives (APEC) reportedly voted for Congressman Joker Arroyo of Makati who represented the smaller faction of the ruling LAMP party of Pres. Joseph Estrada. The report noted that the coop representatives from APEC neither belong to the majority nor the minority group in the Philippine Congress.
Bangkoop, "The cooperative Banking System: Towards a More Meaningful Presence in the Countryside", Cooperative Rural Banks Federations of the Philippines, Inc., QC, 1990.
___________, "Cooperative Education, Promotion and Development through Association of Cooperative Education", paper presented to the NACE National Conference, August 8-9, 1996, Hotel Danarra and Resort, QC. Jo Anne Camba Barce, "The Effects of Education in Membership Participation in Cooperative Activities", UP SOLAIR, QC, March 1995 (unpublished paper).
Ignacio P. Borja, "Cooperative Education: Problem or Answer", paper presented at the first National Convention of the National Association for Cooperative Education (NACE), August 8-9, 1996, Hotel Danarra and Resort, QC.
Rosario Braid (Ed), "Political Parties, Programs and Platforms for Cooperatives as a Third Sector", Sustainable Development Through Cooperatives, Asian Institute of Journalism, Manila, 1993, p. 136.
Teresita M. Coloma, "The Cooperative Development Framework: A Blueprint for People Empowerment and Global Competitiveness", paper presented at the National Conference Workshop on Strengthening Cooperative Banks, February 21-22, 1996 at Great Eastern Hotel, QC.
Rudy Dalangin, "Market Vendors Cooperative, A Case Study", paper presented to the "Cooperative Education and Exhibits Fair", March 10, 1991, Philippine International Convention Center, Manila.
Araceli Gonzales, "The NGOs, their Impact to the IR Environment", UP SOLAIR, QC (unpublished paper). Horacio Morales, "Strategies and Mechanisms for Empowerment of People in the Rural Sector", Lambatlaya, UP ISWD, QC, p. 2.
Ibon Facts and Figures, Vol. XI, No. 21, November 15, 1988. Elrico Munoz and Lani Battulayan, "The Philippine Cooperative Movement", UP SOLAIR, QC, September 23, 1989 (unpublished paper).
Jose Chua Ong, Market Projects Financed by Municipal Development Fund: An Evaluation, Philippine Women's University-Quezon City (PWU-QC), September 1997 (masteral thesis).
Leandro R. Rola, "Cooperative Education and Training Issues/Problems and Recommendations", The State of Cooperative Development in the Philippines, Cooperative Foundation of the Philippines, Inc. (CFPI), QC, 1989.
William Henry Scott, The Union Obrera Democratica: The First Filipino Labor Union, New Day Publishers, QC, 1992.
Jorge V. Sibal, "The Self-managed Enterprises and the Vision of a Mixed Economy", paper read at the PEDF Seminar-Workshop on Issues in Community Enterprise Management, August 16-18, 1991, Pansol, Laguna sponsored by People's Enterprise Development Council.
Clarissa P. Villasin, "Can Cooperatives Cure Poverty in the Philippines?", Philippine Agenda, Vol. III, No. 10, July 1-15, 1990, Grassroots Publications, Inc., Manila, pp. 1-3.
Visayas Cooperative Development Center, "Experiential Perspective of Cooperative Education and Training, the Visayas Experiment", July 1996, Cebu City, presented to the NACE National Convention, August 8-9, 1996, Hotel Danarra and Resort, QC.