INSTRUCTIONAL MATERIAL FOR

COOP 20013

PRINCIPLES AND PHILOSOPHIES OF

COOPERATIVISM

Compiled and enhanced by:

ASSOC.PROF. RIMANDO E. FELICIA & DR. HILDA F. SAN GABRIEL

Polytechnic University of the Philippines-College of Social Sciences and Development
Department of Cooperatives and Social Development

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 TABLE OF CONTENTS

Introduction 3
Course Outcomes 3
Part 1 Basic Concepts in Societal Development 4
Unit 1 Human and Work 4
Unit 2 Early Form of Cooperation 5
Unit 3 Stages of Societal Development 6
Part 2 World History of Cooperativism 9
Unit 1 The Earliest Form of Social Cooperation 11
Unit 2 Industrial Revolution and the Factory System 12
Unit 2 The Birth of the Cooperative Idea 13
Unit 3 The Rochdale Pioneers and the Birth of Modern Cooperation 14
Unit 4 The Early Practice and Growth of Cooperatives 19
Unit 5 Global Cooperative Movement and the International Cooperative Alliance 21
Part 3 History of the Philippine Cooperative Movement 27
Unit 1 Cooperatives During Colonial Era 25
Unit 2 Cooperatives in the Philippine Republic 28
Unit 3 Cooperatives in Contemporary Era 29
Part 4 Cooperative Law in the Philippines 37
Unit 1 Definition, Purposes and Objectives of Cooperatives 37
Unit 2 Cooperative Principles (based from RA 9520) 38
Unit 3 Type of Cooperatives 43
Unit 4 Choosing a Coop/Registering a Cooperative 43
Unit 4 Cooperative Development Authority and Its Functions 46
Part 5 Cooperatives and Social Transformation 49
Unit 1 Cooperatives and the Sustainable Development Goals 52
Unit 2 Cooperatives in Community Development 60
Unit 3 Cooperatives and Social Development 64
References 68
Student Final Assessment 70
Grading System 73

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 PRINCIPLES AND PHILOSOPHIES OF COOPERATIVISM

Course Code: COOP 20013

INTRODUCTION
The course – Principles and Philosophies of Cooperativism is designed to provide students of
BS Cooperatives and other social sciences and business students with foundational
knowledge on the human inherent nature of cooperation transfroming from a human being to a
social being, birth of cooperation and its early and current growth and development, economic
systems, Filipino traditional form of cooperation and the nature and characteristics, principles
and practices, organization, and the Philippine cooperative law, and role of cooperatives in the
social development and transformation.

It seeks to inculcate upon the students the spirit of equity, equality, understanding,
responsibility, self-reliance, self-help and mutual help. The students are introduced to
cooperativism and encourage to be social agents and catalysts of change and development in
the community and/or the countryside.

COURSE OUTCOMES
 Internalize an appreciation of the inherent nature of people to cooperate as a foundation
of societal formation and development.

 Appreciate the social context and factors that gave gave gave birth to cooperatives in
human and social history and how it affected to shape the principles and philosophy of
cooperativism.

 Contextualize cooperatives in the history and development of Philippine society looking

at the particular development of local cooperative movement.

 Understand the basic laws, definitions and processes of establishing cooperatives in the
Philippines through a familiarization on the basic laws on Philippine cooperatives.

 Realize the significant role that cooperatives play in the social transformation and
national development
__________________________________
Acknowledgement: Cover Art Work by Carlos“Botong”Francisco, National Artist of
the Philippines

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COURSE CONTENT/ DISCUSSIONS

Part 1

BASIC CONCEPTS IN SOCIETAL DEVELOPMENT

Human and Work

Early human beings can survive alone but they cannot live alone for a long time. Thus,
human beings eventually became social being. Unlike other species of animals whose
individual members can live equally in relative isolation, humans are not inherently equipped
with the physical capacity to provide themselves with the material requirements of life. Human
beings live with others and even succeed, as they have learned to subdivide tasks and use
resources by living in groups, tribes and communities.

It was this division of labor and the accumulation of more and better tools (or capital)
that made possible impressive increases in man's control of nature, or increases in our
potential to produce the material necessities of life.

Early Form of Cooperation

The primitive communal society is the first stage of societal development. In this period
of early form of cooperation, the natives, people in general loved communally. People owned
everything and the goods which are available from nature, are owned by everyone. People
helped each other, people work together as co-equals, they support each other, gave each
other protection, and made use of available communal resources around them.

Everybody seems to be happily living in balance with nature. The nature provides the
necessary materials that people need in order to survive. People used what they only need for
the day. The consumption is based on the fruits of their collective tasks. There was no special
privileges. Everybody needs to work in order to survive, most of the men do the hunting, while
the women would have to attend to the households.

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 Women working in farms of kibbutz cooperative-system in rural Israel

Tasks and division of labor was based on hunting, farming, breeding, leading a group of
tribe. These are the stage called “classless society.”

Kibbutz system of Israel is an example of a model of cooperative system founded in the

early 1900s by Jewish pioneers who came to rural areas in Israel and established communal
system as they managed their lands, farms, factoris, housing facilities for all the people in their
communities and farm areas.

The people worked and produced for for the system and cooperative-like Kibbutz
community provides for the needs of the everyone in the community. Everybody shared their
agriculture produce in the cooperative community.

The agriculture and industries of cooperative Kibbutz have progress over the years.

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Stages of Societal Development

The slave society followed the primitive communal stage. The slave societies first
emerged at the ancient civilizations. These societal stages happened as the seat of ancient
civilization from the Mediterranean regions up to China. Examples of this ancient civilizations
are Egypt (4th Millennium, B.C., Assyria, (3rd Millennium B.C.), China (2nd Millennium B.C.)
Greece and Rome (1st Millennium B.C.).

Master and slaves

The slave masters -- the kings and rulers of ancient empires and city states -- were the
rulers under the slave society. Laws were promulgated and the masters of slave had their
entire army to reinforce the law. Ancient Roman lawyer Florentinus said that although slavery
was a human institution that was against the natural law, it was accepted as legal.

One of the highlights of the slave society was the improvement in the methods of
farming and animal raising. Farm products were mainly for own consumption while handicrafts
were made for exchange. These improvement in farming has led to the formation of another
social layer, comprised of peasants, freemen, craftsmen and artisans.
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 These newly created societal layer were not owned by the slave masters, they are
better off than that of the slaves because their so-called capacities allowed them to own small
properties.

The major social divisions have emerged, it is called the “social classes”. The highest
level, or the one’s on top, they are called the masters of the slaves, and then in the middle, the
second layer, the freemen, artisans and craftsmen, and lastly at the bottom level, the slaves.

The feudal era succeeded the ancient slave system starting in the 6th century.
In Europe, feudalism is known as the manorial system. In the Philippines, it is known as the
hacienda system.

The features of the feudal system are: agriculture as main system of production,
ownership of large tracts of agricultural lands that gives the landowners the right to exact land
rents from the serfs or tenants and occupy dominant position in society; further advances in
handicrafts, trade and commerce; emergence of new social divisions such as the landowners at
the top of the social position: the nobles, freemen, craftsmen, artisans, and merchants at the
middle, and the landless serfs or tenants at the lowest.

Among the main forms of socio-economic cooperation from the lowest and middle
sectors of the feudal era, it was the guilds in Europe that were influential in almost all the lives
of people, covering their personal, sociocultural, economic concerns and even religious
concerns.

The guilds of the feudal or the middle ages were categorized as: a) Craftsmen and
artisans guilds who exercised their control over the standards and sales of goods produced or
services rendered. If a person wanted to produce anything or provide service for a fee, he had
to belong to a guild; b) Merchants guild, these are guilds that are well-organized and they
exercised monopoly control on supply and pricing of goods; c)Guild of the apprentice and of
the unemployed --- these guilds served as training ground for those who are not yet skilled
enough to become salaried members of the other guilds; and d) the Religious guilds and
peace guilds that exist in many places in European society.

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 In the Philippines, feudalism by the Spaniards started with the enforcement of the
encomienda system, a territorial area for tribute or the tax collection but not the usage of the
land. Later on the colonizers, the Spaniards strengthened their control over the Filipinos in
terms of control of ownership of land through the land titling and the hacienda systems.

The farmer-tenant and the heavy burden he carries under the tenancy system

The first feudal lords in the country were the encomienderos and the hacienderos were
mostly Spanish friars and soldiers. When the land titling and the hacienda systems were
implemented, tenancy become a social problem. Under the tenancy system, the farmer -tenant
paid rent to the landowner.

High rental of land, lack of technology and dependence on nature resulted to extreme
low income for the tenants-farmers. This system created heavy burden and indebtedness on
the part of the tenants-farmers to their landlord. Furthermore, this tenancy system created a
new level of enslavement, the tenants-farmers to the landowners.

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 Part 2

WORLD HISTORY OF COOPERATIVISM

Co-operatives have played a long and constructive role in most of the world's
economies. By completing this lesson, the participant will become familiar with the history of
cooperative movements and how and why organized cooperative organizations have arisen
around the world.

Learning Objectives:

1. The student will have a basic understanding of the history of the cooperative movement.

2. The student will understand the social context and some of the key people involved with
the development of co-ops.

3. The student will understand the importance of co-ops for community and personal
development – both some direct and indirect benefits that will result from the development of a
co-op.

Most sociologist believe that the earliest humans eventually realized the need to
“cooperate” with others. Thus, the transition from human beings to social beings. The need to
cooperate and belong to a particular group became imperative for them to survive the harsh
realities of wildlife. Starting basically from an economic and security relations, group/tribe
members developed other social relationships and created cultural and social practices.

Pre-modern examples of cooperative experiences include groups practicing

collaborative production and mutual aid, the economic life of the commons, and the social
organization of many indigenous communities.

This “cooperation” is an essential part of the human nature as a social being. Thus
COOPERATIVE is actually an organizational expression of this cooperation among people.
People in the course of the development of their productive capacity, knows that they have
more when they work together. They gain relative security when they belong to a particular
group and eventually communities and societies. But cooperatives as it is known and operated
now, actually took shape during the rise of the massive industrialization that has happened in
Europe. The massive transformation of production ways and forces change the social
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landscape of the whole Europe. There was an exodus of farmers leaving their feudal landlords
to work as paid workers in burgs or towns. The towns which as started as trading posts became
the center of the new mode of production now based on producing commodities through the
use of modern tools (and equipment) and cheap labor. But the new market-centered economic
relations created profit and prosperity to only the owners of capital and tools of production. The
vast majority of the productive forces were wallowing in extreme poverty even more than the
poverty when they were in feudal productions.

Early forms of Cooperative stores in Europe

This is the context where and when cooperatives were shaped, emerged and thrived. It
is no wonder that the earliest cooperatives were also established in the primary capitalist
centers of Europe – England, France and Germany which were then considered not just as the
center of the Industrial Revolution but also the core of the now expanding capitalist productions
and social system.

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A. The Earliest Forms of Social Cooperation

 In the 17th and 18th century, towns and factory centers in England experienced harsh
and miserable life especially for the working people. Social unrest and conflicts continue
to worsen compounded by religious conflicts and economic dislocations. This paved the
formations of guilds (such as religious guilds, peace guilds, merchant guilds among
others) where member not only sought protection but serves also as mutual aid
societies. Many consider this as the forerunners of what is now called as
“cooperatives.””

The guilds and merchants

 The guilds played a significant part in the community affairs of mercantilist societies. If
someone wanted any goods or services to be created or sold, they had to enter a guild.
The guild s were as concerned with social and religious matters as they were with
economic ones. They controlled the actions of their members in all of their activities:
personal, social, religious, and cultural life.

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B. The Industrial Revolution and the Factory System

 The latter part of 18th century saw the massive transformation of production into what
the historians call the “industrial revolution”. It means the massive transformation
primarily of the tools of production from hand tools to machineries and mechanical
production processes.

 The Industrial Revolution brought about increases in human productivity without

precedent in history. The widespread construction of factories and extensive use of
machinery represented the mechanical basis of this increase. In order to channel the
economy’s productive capacity into the creation of capital goods, however, it was
necessary to devote a relatively much smaller part of this capacity to the manufacture of
consumer goods. Capital goods had to be purchased at a social cost of mass
deprivation.

The Factory system

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 The working class lived below the subsistence level and their standard of living
(measured in terms of the purchasing power of wages) declined almost to the point of
being a hostage to the capital. Throughout the period of the Industrial Revolution, there
is no doubt that the promise of the modern and prosperous life as promise by the
modernization of the production system is no way reflected in the hardships that working
people struggled to live with selling their labor and living miserably.

 German economist and philosopher, Karl Marx (Das Capital) work on his understanding
capitalism as a social and economic system remains a valid critique. He argues that
society is composed of two main classes: Capitalists are the business owners who
organize the process of production and who own the means of production and who own
the means of production such as factories, tools, and raw material, and who are also
entitled to any and all profits. The other, much larger class is composed of labor (which
Marx termed the "proletariat").

 Laborers do not own or have any claim to the means of production, the finished
products they work on, or any of the profits generated from sales of those products.
Rather, labor works only in return for a money wage. Marx argued that because of this
uneven arrangement, capitalists exploit workers.

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 The proletariat in their workplace

 Under industrial capitalism, society is ordered with capitalists organizing labor in

factories or offices where they work for wages.

 Prior to capitalism, feudalism existed as a specific set of social relations between lord
and peasant classes related to the hand-powered or animal-powered means of
production prevalent at the time. society at any given point in time is ordered by the type
of technology used in the process of production.

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 The factory workers

 The standard of living of the poor fell precipitously in relative terms. The new factory
system completely destroyed the laborers’ traditional way of life, throwing them into a
nightmare world with which they were completely unprepared to cope.

 The workers lost the pride of workmanship and close personal relationships that had
existed in handicraft industries.

C. The Birth of the Cooperative Idea

 Cooperatives formed in synchrony with other workers' groups, such as friendly societies,
cooperative associations and unions, as bottom-up responses to the callous exploitation
of new industrial capitalism.

 Cooperative experiments which were developed primarily because of the sharp

inequalities of the new economic order include the Fenwick Weaver Society of Scotland
in 1761, Robert Owen’s worker-centered revival of the New Lanark mills in the first

15
 decades of the 19th century, the London Cooperative Society of 1824, the promising but
short-lived Equitable Labor Exchange of 1832-1833, and the Rochdale Society of
Equitable Pioneers in the 1840s. Already by the early 19th century, utopian socialists like
Owen and Charles Fourier were campaigning for a more equitable society for workers in
the midst of a rapidly industrializing Europe via a socialized economy of cooperative
communities.

The founding members of the Rochdale Pioneers Society

 Considered to be the pioneers in the cooperative movement were the names of Robert
Owen and William King, both of which contributed immensely in building the ideas of
cooperativism in their search of finding solutions to the ever worsening situation of the
people in the modern society.

 Both Owen and King condemned the individualist competition that prevails in the society
and believes that only a few will ever benefit from the market dominated system. They
believed that people’s will be able to defeat poverty when:

o They collectively work together

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 o equality is observed in their organization
o Collectively owned and be responsible to the properties of the organization
o Fruits of their labor and production is shared
o Prioritize service and people over profit
o Continuously educate their members

D. The Rochdale Pioneers and the Birth of Modern Cooperation

 Recognized to be the first formal group to form a cooperative were the Rochdale
Society. Inspired by the principles forwarded by Owen, King and other socialists, the
Rochdale Pioneers Society were composed of twenty-eight (28) workers, most of
them were mat weavers.

 The Rochdale Pioneers were the authors of cooperation in Manchester, Engalnd.

They were the first group who crafted cooperative history. That is why they are
regarded as the pioneers of cooperative principles, or even of the cooperative
movement itself.

 One of the highlights of the campaigns by the Pioneers Society was when they did not
get the raise they had hoped for, the Rochdale Pioneers without knowing exactly what
they were going to do, decided to set up a fighting fund to raise start-up capital for an as
yet undetermined plan.

 The members of the Rochdale Pioneers Society who were mostly flannel weavers,
hatmakers and consumers collectively decided to contribute one pound each for the
seed capital of an enterprise -- “cooperative social enterprise”.

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 The Rochdale Coop Store and building

 After series of reflection and collective discussions of the members, they opted for the
cooperative solution. On October 24th 1844, they registered the Rochdale Equitable
Pioneers Society, a cooperative retail society. This meant that its members could get
supplies of food like oatmeal, butter and other goods at the lowest cost.

 The Rochdale cooperative thus became a model not only for all consumer cooperatives
but also for all cooperatives around the world.

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 Rules and principles of the Rochdale Pioneers’Society

To this day, the Rochdale Pioneers Society principles continues to be the starting point for
all cooperatives in the world. These principles are the following:

• Open and voluntary membership;

• Democratic control;

• Interest on share capital limited to 6%;

• Distribution of surplus to members in proportion to their transactions;

• Cash trading;

• Education and training for members;

• Political and religious neutrality; and

• Charitable distribution of assets in the event of dissolution.

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E. The Early Practice and the Growth of Cooperatives

 Cooperatives were soon established in most town centers where working people
converge. The news about the Rochdale Pioneers were soon the talk like wildfire of
people from all walks of life. Discussion about unions, cooperatives, socialism starts
heated discussions in town meetings as well as drinking sessions among working
people.

 While Germany as being ravaged by the famine until 1848, workers led Franz Herman
Schulze Delitze established cooperative credit unions in the urban centers which came
to be known as People’s Banks. In rural Germany, a local leader by the name of
Friedrich Wilhelm Raiffeisen spearheaded the establishment of “loan associations”
with the explicit role of rural cooperatives providing a means to directly respond to the
needs of the rural population.

 The Raiffeisen credit cooperatives were said to be the earliest form of credit
cooperatives and gained some success in minimizing the exploitative loan interest by
the landlord- usurers.

Raiffeisen Bank in Germany

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 Soon, cooperatives in its various forms were being established in the whole Europe
even during the world war. In Russia, cooperatives called kolkhoz were established as
part of the socialist construction under the leadership of Lenin.

 The cooperatives were soon being established in the United States of America and
sprouted as “self-help organizations” and housing cooperatives during the Great
Depression in 1930s. Soon, variations of cooperatives were being formed as in the case
of kibbutz and moshav in Israel. The first housing co-operatives were organized in New
York City in the late 1800s. Historically, the development of cooperatives housing in the
United States has two paths: market rate and limited equity. Coop housing
development happened after World War I in San Francisco, Chicago and New York.
More than 10,000 dwelling units of limited equity co-operatives were sponsored by
unions and built in New York City during the 1920s. Most of the union sponsored
cooperatives survived the Great Depression of the 1930s, while most of the market rate
housing co-operatives did not. Affordable housing co-operative development grew a
great deal during the 1950s with unsubsidised federal government mortgage insurance
program, and into the 1960s and 1970s with federal government subsidy programs.
State agencies also spurred development of affordable housing, the most notable being
the Mitchell-Lama Housing Program in New York.

Housing Cooperatives in the United States of America

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F. The Global Cooperative Movement and the International Cooperative Alliance

The ICA old logo

 The International Cooperative Alliance unites all the cooperative all over the world under
their respective member countries. It promotes, advocates and develops cooperatives
all over the world.

 There exist no precise estimates on the number of cooperatives and members in the
new millennium. But the United Nations guesstimates that the “cooperative movement”
had over 800 million members at the beginning of the new millennium and provided for
about 100 million jobs. In addition, over the last 150 years cooperatives have spread to
over 100 countries. Cooperatives are of importance in both developed and less
developed economies.

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 The new ICA marquee logo

 About half of the world’s agricultural output is marketed by cooperatives, which speaks
to the significance of marketing cooperatives. Overall, it is in the agricultural sector that
cooperatives of various types remain dominant. In the financial sector, credit unions
encompass about 120 million members in 87 countries.

 Especially in poor countries, cooperatives provide important micro-credit services.

Consumer cooperatives continue to play an important role worldwide, with its
importance varying across countries. Health care cooperatives service about 100 million
people in over 50 countries.

 Electricity provisioning cooperatives have become important. For example, in the United
States, such cooperatives service over 30 million people. Least important in terms of
quantitative significance are workers’ cooperatives. Only a small percentage of the 100
million individuals employed by cooperatives are controlled by the workers themselves.
Thus, consumer, producer, or financial cooperatives need not be managed in a manner
that benefits employees where the latter’s (nonmembers’) interest conflicts with that of
cooperative member-owners.

 The International Co-operative Alliance (ICA), the formal governing body of

cooperatives, referring to the United Nations, also maintains that cooperatives made
secure the livelihood of approximately three billion people across the globe or about half
of the world’s population. But this reference is quite nebulous in meaning, but suggests
indirect economic importance of cooperatives through its multiple linkages.

 Survey evidence strongly supports the view that cooperatives serve to reduce poverty
amongst cooperative members as well as amongst nonmembers and the same can be
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 said with regard to reducing gender inequality. The evidence also suggests that
cooperatives can provide a means of generating income and wealth well above any
particular measures of poverty. (Cooperatives, History and Theories of Morris Altman,
School of Economics and Finance, Victoria University of Wellington, Wellington,
NewZealand).

 In 1995, the ICA adopted the revised Statement on the Cooperative Identity which
contains the definition of a cooperative, the values of cooperatives, and the seven
cooperative principles as described below.

Global Cooperative Values

Cooperatives are based on the values of self-help, self-responsibility, democracy,

equality, equity, and solidarity. In the tradition of their founders, cooperative members
believe in the ethical values of honesty, openness, social responsibility and caring for
others.

Seven Universally Accepted Coop Principles

The cooperative principles are guidelines by which cooperatives put their values into
practice.

1. Voluntary and Open Membership

Cooperatives are voluntary organizations, open to all persons able to use their services
and willing to accept the responsibilities of membership, without gender, social, racial,
political or religious discrimination.

2. Democratic Member Control

Cooperatives are democratic organizations controlled by their members, who actively

participate in setting their policies and making decisions. Men and women serving as
elected representatives are accountable to the membership. In primary cooperatives
members have equal voting rights (one member, one vote) and cooperatives at other
levels are also organized in a democratic manner.

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3. Member Economic Participation

Members contribute equitably to, and democratically control, the capital of their
cooperative. At least part of that capital is usually the common property of the
cooperative. Members usually receive limited compensation, if any, on capital
subscribed as a condition of membership. Members allocate surpluses for any or all of
the following purposes: developing their cooperative, possibly by setting up reserves,
part of which at least would be indivisible; benefiting members in proportion to their
transactions with the cooperative; and supporting other activities approved by the
membership.

4. Autonomy and Independence

Cooperatives are autonomous, self-help organizations controlled by their members. If

they enter into agreements with other organizations, including governments, or raise
capital from external sources, they do so on terms that ensure democratic control by
their members and maintain their cooperative autonomy.

5. Education, Training, and Information

Cooperatives provide education and training for their members, elected representatives,
managers, and employees so they can contribute effectively to the development of their
co-operatives. They inform the general public - particularly young people and opinion
leaders - about the nature and benefits of co-operation.

6. Cooperation among Cooperatives

Cooperatives serve their members most effectively and strengthen the cooperative
movement by working together through local, national, regional and international
structures.

7. Concern for Community

Cooperatives work for the sustainable development of their communities through

policies approved by their members.

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STUDENT ASSESSMENT/ ACTIVITIES:

1) Student Activities

Locate on the world map the countries where the center of the industrial revolution
happened. Trace the growth of the establishment of cooperatives in its many forms.
What countries where the first cooperatives were established? What do you think were
the factors that paved the way for the growth of cooperative worldwide?

2) Research on the biographical sketches on the following names considered to be the the
pioneers in the cooperative ideas and organizations.

a. Robert Owen
b. William King
c. Friedrich Wilhelm Raiffeisen

3) Student Assessment

Enumeration:
European countries considered to be the center of the industrial revolution:
1. ________________________________________
2. ________________________________________
3. ________________________________________

Early cooperative organizations in the 17th and 18th century:

4. ________________________________________
5. ________________________________________
6. ________________________________________
7. ________________________________________

Forms of Israeli agricultural cooperatives

8. ________________________________________
9. ________________________________________

Enumerate and explain the six (6) International cooperative values.

10. ________________________________________
11. ________________________________________
12. ________________________________________
13. ________________________________________
14. ________________________________________
15. ________________________________________

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4) Additional Readings

Thompson, David J., Weavers of Dream: The Founders of Modern Cooperative Moment,
Center of Cooperatives, USA, 1994

Frederick Engels. Socialism: Utopian and Scientific. Written: Between January and
March of 1880; Source: Marx/Engels Selected Works,

CWD-KMU, Batayang Kurso sa Kooperatiba, 1991

International Cooperative Alliance (ICA). (2006). Peace-building through

cooperatives. Geneva: International Cooperative Alliance

Manimtim, Herminia. Workbook on Principles of Cooperatives and Social Development,

2010

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 Part 3

THE HISTORY OF THE COOPERATIVE MOVEMENT

IN THE PHILIPPINES

Cooperativism is not a new thing for most Filipinos. The reason for this is because the
practice and principles of cooperatives are ingrained the culture and Filipino psyche.

Long before the first cooperatives were formed, cooperative practice such as palusong,
bayanihan, paluwagan, dagyaw, alayon and many traditional practices shows how people put
premium on working together and collective enjoying the fruits of their labor. Even before
foreign colonialist repeatedly tried to invade the islands, the cooperative ways were already part
of the social practice of the native in every barangay.

Filipino culture of cooperation “bayahinan”

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At the end of this module, the student-learner is expected to:

1) Appreciate the inherent cooperative traits and characters of the Filipino as can be
deduced from the historical evolution of cooperatives in the Philippines

2) Understand the social factors and the particular context of nodal points in the country’s
history that helped shape the cooperative tradition in the Philippines.

3) Know the important people and organizations who pioneered and waved the banner of
cooperativism in the Philippines.

A. Cooperatives During Colonial Era

 Some historians even claimed that after many attempts, foreign colonialists finally
succeeded in conquering the Philippine islands only after systematically dividing the
people and destroying the cooperative ways of the natives.

 The colonialist pitted tribes against other tribe by offering bribes to some or if not forcing
them to be the puppet soldiers in conquering resisting tribes. The colonialists forbid the
practice of bayanihan, palusong and other collective and cooperative practices by
forcing them to work for free under the polo system.

 The earliest recorded uprisings by the native against the colonialist were parochial and
pocket sized rebellions. It is only at the time of the founding of Bonifacio’s Katipunan
that a national character of the rebellion took shape.

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 The members of the Katipunan, the Katipuneros

 In the latter part of the Spanish colonial rule, organizations with cooperative practices
were popular especially among the emerging working class. Among this type of
organizations were the gremios (guilds) which were recorded as early as 1860s and
primarily functioned as mutual aid societies. Sometimes, they were organizations to
celebrate the feast day of their patron saints but primarily, they were organizations
where members contribute to set up mutual funds for their emergency and collective
use. Most of this guilds were mutual aid societies of workers and by the end of the 19th
century, among the more prominent gremios were Gremio de Obreros de Sampaloc,
Gremio de Escultor del Barrio de Sta. Cruz, Gremio de Carpinteros and Gremio de
Impresores y Litograficos which will later on instrumental in forming the first labor
unions.

 Cooperative principles can also be traced in the writings and documents of the rising
nationalist movement against the Spanish colonialism. An example of this is the
reference of cooperative principles in the La Liga Filipina founding documents in 1892.
Among its ideals were the protection of the poor and providing the members with
needed resources in putting up industry as well as services like loans, capital and stores
for affordable priced commodities. Dr. Jose Rizal even concretized this ideals when he
was exiled in Dapitan, Mindanao in 1895. In exile, Rizal organized the farmers to

30
 establish cooperative practices such as communal irrigation systems, farm equipment
and input and later on, led the farmers in marketing their produce as a cooperative. It
was said that Rizal also helped established a consumer cooperative in Dapitan.
Another national hero who was credited for pioneering cooperative was Emilio Jacinto,
the young Brains of Katipunan who founded and wrote about the Samahan ng Bayan sa
Pangangalakal in Sta. Cruz, Laguna.

 In 1907, Bulacan Governor and later Senator Teodoro Sandiko submitted a bill in the
American-controlled Philippine Assembly proposing the formation of Raiffeisen type of
rural credit cooperatives. But it was disapproved and was only materialized years after
as the Rural Credit Law (Commonwealth Act 2508) . This law was the first cooperative
law in the Philippines. The rural credit cooperatives were followed with laws establishing
marketing cooperatives as stated in the Commonwealth Act No. 116 and still later the
Cooperative Marketing Law of 1935. The Bureau of Commerce and Industry of the
Commonwealth Government was tasked to oversee the formation of this cooperatives.

 Credit unions were also established by non-government entities and considered the first
credit union was the Vigan Community Credit Union which was established in 1938.
Consumer Cooperatives were established much earlier like the Consumers Cooperative
Association of the UP College of Agriculture in Los Banos, Laguna which was formed in
October 20, 1916.

 On the eve of the Second World War, specialized cooperative laws were enacted to
establish a National Cooperative Fund, allowing 15 or more people to form cooperatives,
tax exemptions for cooperatives for at least 5 years. In 1941, the National Trading
Corporation was reorganized and became the National Cooperative Administration as
the government agency for the cooperatives in the country. But all this was put in limbo
when the war broke out in December 1941.

 During the Japanese Occupation, there were initiatives to revive the cooperatives but it
proves to be difficult due to the confusion of the war conditions. The responsibility fall
into the hands of Hon. Pedro Sabido, Minister for Economic Affairs of the Japan-
sponsored Philippine government who correctly understood the importance of the
cooperatives in the midst of the war economy. Steps were taken to lay the foundations
of cooperative organizing but all this were again halted by the American forces being
back to reclaim their colony.

31
 Post war rehabilitation included the effort of the government agency Emergency Control
Administration by rebuilding the more than 1,500 cooperatives although the main
intention then was to utilized the cooperatives in distributing relief goods. When the
relief distribution was through, most of the cooperatives became inactive.

B. Cooperatives on the Independent Philippine Republic

 The 1950’s was a decade of the economic rebuilding of most war devastated countries
like the Philippines where official aid, loans and development grants pored in. Both the
government and the private sectors including the Church implemented development
programs and promoted cooperative organizing. Once again, cooperatives grow by leap
and bounds with Farmers’ Cooperative Marketing Association (FACOMAs) in 10,700
barrios in the country.

 The 1960s, the Credit Union Movement in the Philippines and the Philippine Credit
Union League which later became the Philippine Federation of Credit Cooperatives
were organized. The decade of 60s closed with the passage of the Agrarian Reform
Code that mandated cooperatives as channels for agricultural credit, supplies and
marketing.

 Cooperatives in the urban areas also started to flourish with the Philippine College of
Commerce, now called as the Polytechnic University of the Philippines (PUP) being
designated as the training center for non-agricultural cooperatives.

 In 1972, the martial law government of then President Marcos came out with its
Integrated Reorganization Plan envisioning a rural transformation process declaring
land reform and made cooperative formation an important component.

32
 Federation of Samahang Nayon Cooperatives in SOCSARGEN

 Farmers was required to join farmers cooperatives called Samahang Nayon for them to
be included as beneficiaries of the land reform program. In the urban areas, consumer
cooperatives were to be organized as outlets of farm produce.

 The EDSA Revolution in 1986 marked not only the downfall of the Marcos dictatorial
rule also exposed further the failure of the fake land reform and the Samahang Nayon
which were not products of farmers voluntarism and was imposed on the people by the
dictatorship.

33
 People were empowered and appreciated the power of collective action and were open
to learn from the past. The search for more meaningful and people oriented
cooperatives led to the passage of new laws on cooperatives – RA 6938 and RA 6939
in March 1990 and the landmark Philippine Cooperative Code of 2008 (RA 9520). It also
paved the way for the establishment of the Cooperative Development Authority as the
sole regulatory and registration agency for cooperatives in the Philippines.

 In 1997, the Philippines Cooperative Center (PCC) was also established as a

coordinating network of national, regional and even primary cooperatives and
organizations.

 Cooperative education flourished as never before. The Augustinian sisters for example
initiated a Cooperative education Center at the congregation run Our lady of
Consolacion College in Iloilo. The Philippine College of Commerce, now Polytechnic
University of the Philippines (PUP) offered Cooperatives as a field of specialization of
business courses. Two decades later, PUP established the Institute of Cooperatives
and rationalized the Cooperatives program as a separate four year degree course which
is among the first to offer this degree.

C. Cooperatives in the Contemporary Era

 In the National Research Forum on Co-operatives and Launching of Call for Papers on
Studies in Co-operatives conducted and held at the Polytechnic University of the
Philippines in October 30, 2019, co sponsored by the Department of Cooperatives and
Social Development in partnership with the Cooperative Development Authority, CDA
through its Executive Director reported that as of December 2018, there were a total
operating cooperatives of 18,065. Breaking it down, around 11,138 (62%) were actively
reporting.

 There were 1,152 (6%) newly formed cooperatives while the remaining were
unaccounted or non-reporting cooperatives numbering 5,770 which is around 32% of
the total operating cooperatives. The CDA estimates the total cooperative membership
at 10.7 million.

34
 Recently, a new law was passed by the Duterte Administration, reorganizing the
Cooperative Development Agency as wee as major changes in the Cooperative Code.
In August 8, 2019, President Rodrigo Duterte signed into law RA 11364 or the
“Cooperative Development Authority Charter of 2019 amending all the past cooperative
laws.

President Rodrigo R. Duterte signed RA 11364

 Currently, an inter-agency led by the CDA was tasked to come up with the implementing
rules and regulations (IRR) of the new law. The new law reorganizing and strengthening
the Cooperative Development Authority (CDA) while reiterating the State recognition to
cooperatives as associations organized for the economic and social betterment of their
members, operating business enterprises based on mutual aid, and founded upon
internationally accepted cooperatives principles and practices,

35
ACTIVITIES/ RESEARCH WORK FOR STUDENTS

For ONLINE Student Activities

Online interview with a local cooperative leader on the history or the circumstances of
their cooperatives establishment. Submit via online the transcript of the interview.

FOR OFFLINE Students/ CORRESPONDENCE Mode

Search for a cooperative on your locality and interview leaders and members on the
a. history and the community context that has gave birth to the cooperative
b. description of the cooperative and its relationship to the community

Research on the following names and events in Philippine history and

d. Gremios in the latter part of the Spanish Colonial era

e. Rizal in Dapitan
f. Teodoro Sandiko and the the first Philippine laws on Cooperative/s

36
STUDENT ASSESSMENT

Identify the following:

________________________________
________________________________
________________________________
________________________________
________________________________
________________________________
________________________________
_________________________________
________________________________
________________________________
1. Author of the first bill on Philippine Cooperatives
2. Rizal’s cooperative in Dapitan
3. organizations where members contribute to set
up mutual funds for their emergency and collective
use
4. The young Brains of Katipunan who founded
and wrote about the pioneer cooperative in Sta
Cruz, Laguna
5. Former name of PUP who was among the first
to offer Cooperatives as a field of specialization
6. During Martial Law, farmers were required to
join this cooperatives to be beneficiaries of land
reform.
7. Considered the first credit union which was
established in 1938
8. This law was the first cooperative law in the
Philippines
9. The newest law on Cooperatives signed in 2019
10. The sole regulatory and registration agency for
cooperatives in the Philippines

5) Additional Readings

Pagdanganan, Roberto . An Urgent Call for Cooperative Revolution, Quezon City, 2002

Sibal, Jorge V. The Philippine Cooperative Movement: Problems and Prospects (1986 –
present), NEPA Papers

CWD-KMU, Batayang Kurso sa Kooperatiba, 1991

Manimtim, Herminia. Workbook on Principles of Cooperatives and Social Development,

2010

37
 Part 4

SELECTED PROVISIONS ON BASIC PHILIPPINE LAWS

ON COOPERATIVES

The Philippine government in its many laws and programs invokes the policy of the
State to promote the viability and growth of cooperatives as instruments of equity, social justice
and economic development and to create an agency, in fulfillment of the mandate in Sec. 15,
Article XII of the Constitution. Toward this end, the State shall recognize cooperatives as
associations organized for the economic and social betterment of their members, operating
business enterprises based on mutual aid, and founded upon internationally accepted
cooperative principles and practices.

Cooperatives and its functions and operation is well defined in a series of cooperative
laws most notably the twin laws that was passed after the Edsa revolution such as RA 6938
and RA 6939 in March 1990 and the landmark Philippine Cooperative Code of 2008 (RA 9520).
This module is a discussion from selected provision of basic cooperative laws in the Philippines.

After completing the module, the student is expected to:

1. have a basic understanding of the laws and legal provisions governing cooperatives in
the Philippines.
2. be able to know the basic steps and requirements in establishing a cooperative.
3. appreciate the purposes and principles of cooperative and be able to to relate this with
the direct and indirect benefits that will result from the formation of a cooperative.

A. Cooperative Definiton, Principles and Purposes

Definition of Cooperative
"ART. 3. General Concepts. - 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.

38
Cooperative Principles based from Republic Act 9520
"ART. 4. Cooperative Principles. - Every cooperative shall conduct its affairs in accordance with
Filipino culture, good values and experience and the universally accepted principles of
cooperation which include, but are not limited to, the following:

 "(1) Voluntary and Open Membership - Cooperatives are voluntary organizations, open
to all persons able to use their services and willing to accept the responsibilities of
membership, without gender, social, racial, cultural, political or religious discrimination.

 "(2) Democratic Member Control - Cooperatives are democratic organizations that are
controlled by their members who actively participate in setting their policies and making
decisions. Men and women serving as elected representatives, directors or officers are
accountable to the membership. In primary cooperatives, members have equal voting
rights of one-member, one-vote. Cooperatives at other levels are organized in the same
democratic manner.

 "(3) Member Economic Participation - Members contribute equitably to, and

democratically control, the capital of their cooperatives. At least part of that capital is the
common property of the cooperative. They shall receive limited compensation or limited
interest, if any, on capital subscribed and paid as a condition of membership. Members
allocate surpluses for any or all of the following purposes: developing the cooperative by
esetting up reserves, part of which should at least be indivisible; benefiting members in
proportion to their patronage of the cooperative's business; and, supporting other
activities approved by the membership.

 "(4) Autonomy and Independence - Cooperatives are autonomous, self-help

organizations controlled by their members. If they enter into agreements with other
organizations, including government, or raise capital from external sources, they shall
do so on terms that ensure democratic control of their members and maintain their
cooperative autonomy.

 "(5) Education, Training and Information - Cooperatives shall provide education and
training for their members, elected and appointed representatives, managers, and
employees, so that they can contribute effectively and efficiently to the development of
their cooperatives.

 "(6) Cooperation Among Cooperatives - Cooperatives serve their members most

effectively and strengthen the cooperative movement by working together through local,
national, regional and international structures.

 (7) Concern for Community - Cooperatives work for the sustainable development of their
communities through policies approved by their members.

39
Purposes of Cooperatives
A cooperative may be organized and registered for any or all of the following purposes:

 "(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;

 "(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 the Cooperative Code.
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:

 "(a) 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;

 "(b) Provide optimum social and economic benefits to its members;

 "(c) Teach them efficient ways of doing things in a cooperative manner;

 "(d) Propagate cooperative practices and new ideas in business and management;

40
  "(e) Allow the lower income and less privileged groups to increase their ownership in the
wealth of the nation; and

 "(f) Cooperate with the government, other cooperatives and people-oriented

organizations to further the attainment of any of the foregoing objectives.

Cooperative Powers and Capacities.

A cooperative registered under the Cooperative Code shall have the following powers, rights
and capacities:

 "(1) To the exclusive use of its registered name, to sue and be sued;

 "(2) Of succession;

 "(3) To amend its articles of cooperation in accordance with the provisions of the
Cooperative Code;

 "(4) To adopt bylaws not contrary to law, morals or public policy, and to amend and
repeal the same in accordance with the Cooperative Code;

 "(5) To purchase, receive, take or grant, hold, convey, sell, lease, pledge, mortgage,
and otherwise deal with such real and personal property as the transaction of the lawful
affairs of the cooperative may reasonably and necessarily require, subject to the
limitations prescribed by law and the Constitution;

 "(6) To enter into division, merger or consolidation, as provided in the Cooperative Code;

 "(7) To form subsidiary cooperatives and join federations or unions, as provided in the
Cooperative Code;

 "(8) To avail of loans, be entitled to credit and to accept and receive grants, donations
and assistance from foreign and domestic sources, subject to the conditions of said
loans, credits, grants, donations or assistance that will not undermine the autonomy of
the cooperative. The Authority, upon written request, shall provide necessary assistance
in the documentary requirements for the loans, credit, grants, donations and other
financial support;

 "(9) To avail of preferential rights granted to cooperatives under Republic Act No. 7160,
otherwise known as the Local Government Code, and other laws, particularly those in
the grant of franchises to establish, construct, operate and maintain ferries, wharves,
markets or slaughterhouses and to lease public utilities, including access to extension
and on-site research services and facilities related to agriculture and fishery activities;

 "(10) To organize and operate schools in accordance with Republic Act No. 9155,
Governance of Basic Education Act of 2001 and other pertinent laws; and

 "(11) To exercise such other powers granted by the Cooperative Code or necessary to
carry out its purpose or purposes as stated in its Articles of cooperation.

41
 B. Establishing a Cooperative

Organizing a Primary Cooperative.

Fifteen (15) or more natural persons who are Filipino citizens, of legal age, having a common
bond of interest and are actually residing or working in the intended area of operation, may
organize a primary cooperative under the Cooperative Code: Provided, that a prospective
member of a primary cooperative must have completed a Pre-Membership Education
Seminar (PMES).
"Any newly organized primary cooperative may be registered as multipurpose cooperative only
after compliance with the minimum requirements for multipurpose cooperatives to be set by the
Authority. A single-purpose cooperative may transform into a multipurpose or may create
subsidiaries only after at least two (2) years of operations.

Economic Survey. –
Every group of individuals or cooperatives intending to form a cooperative under the
Cooperative Code shall submit to the Authority a general statement describing, among others
the structure and purposes of the proposed cooperative: Provided, That the structure and
actual staffing pattern of the cooperative shall include a bookkeeper; Provided, further, That
they shall not be allowed to operate without the necessary personnel and shall also submit an
economic survey, indicating therein the area of operation, the size of membership, and other
pertinent data in a format provided by the Authority.
Articles of Cooperation.
All cooperatives applying for registration shall file with the Authority the articles of cooperation
which shall be signed by each of the organizers and acknowledged by them if natural persons,
and by the chairpersons or secretaries, if juridical persons, before a notary public.
The articles of cooperation shall set forth:

 "(a) The name of the cooperative which shall include the word cooperative;

 "(b) The purpose or purposes and scope of business for which the cooperative is to be
registered;

 "(c) The term of existence of the cooperative;

 "(d) The area of operation and the postal addresses of its principal office;

 "(e) The names, nationality, and the postal addresses of the registrants;

 "(f) The common bond of membership;

 "(g) The list of names of the directors who shall manage the cooperative; and

 "(h) The amount of its share capital, the names and residences of its contributors and a
statement of whether the cooperative is primary, secondary or tertiary

42
 The articles of cooperation may also contain any other provisions not inconsistent with the
Cooperative Code or any related law.
Four (4) copies each of the proposed articles of cooperation, bylaws, and the general
statement required under Article 11 of the Cooperative Code shall be submitted to the Authority.

Bylaws of the Cooperative.

Each cooperative to be registered under the Cooperative Code shall adopt bylaws not
inconsistent with the provisions of the Cooperative Code. The bylaws shall be filed at the same
time as the articles of cooperation.
The bylaws of each cooperative shall provide:

 The qualifications for admission to membership and the payment to be made or

interest to be acquired as a conditions for the exercise of the right of membership;

 The rights and liabilities of membership;

 The circumstances under which membership is acquired, maintained and lost;

 The procedure to be followed in cases of termination of membership;

 The conditions under which the transfer of a share or interest of the members shall
be permitted;

 The rules and procedures on the agenda, time, place and manner of calling,
convening, conducting meetings, quorum requirements, voting systems, and other
matters relative to the business affairs of the general assembly, board of directors,
and committees;

 The general conduct of the affairs of the cooperative, including the powers and
duties of the general assembly, the board of directors, committees and the officers,
and their qualifications and disqualifications;

 The manner in which the capital, may be raised and the purposes for which it can be
utilized;

 The mode of custody and of investment of net surplus;

 The accounting and auditing systems;

 The manner of loaning and borrowing including the limitations thereof;

 The method of distribution of net surplus;

 The manner of adopting, amending, repealing, and abrogating bylaws;

 A conciliation or mediation mechanism for the amicable settlement of disputes

among members, directors, officers and committee members of the cooperative; and

 Other matters incident to the purposes and activities of the cooperative.

43
Registering a Cooperative
A cooperative formed and organized under the Cooperative Code acquires juridical
personality from the date the Authority issues a certificate of registration under its official seal.
All applications for registration shall be finally disposed of by the Authority within a period of
sixty (60) days from the filing thereof, otherwise the application is deemed approved, unless the
cause of the delay is attributable to the applicant: Provided, That in case of a denial of the
application for registration, an appeal shall lie with the Office of the President within ninety (90)
days from receipt of notice of such denial: Provided, further, That failure of the Office of the
President to act on the appeal within ninety (90) days from the filing thereof shall mean
approval of said application.

C. Choosing a Cooperative to Establish

Type and Categories of Cooperatives
a) 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;

b) Consumers Cooperative is one of the primary purpose of which is to procure and

distribute commodities to members and non-members;

c) 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. Any end product or
its derivative arising from the raw materials produced by its members, sold in the name and
for the account of the cooperative, shall be deemed a product of the cooperative and its
members;

d) Marketing Cooperative is one which engages in the supply of production inputs to

members and markets their products;

e) 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;

44
f) Multipurpose Cooperative is one which combines two (2) or more of the business
activities of these different types of cooperatives;

g) 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;

h) Agrarian Reform Cooperative is one organized by marginal farmers majority of which are
agrarian reform beneficiaries for the purpose of developing an appropriate system of land
tenure, land development, land consolidation or land management in areas covered by
agrarian reform;

i) Cooperative Bank is one organized for the primary purpose of providing a wide range of
financial services to cooperatives and their members;

j) Dairy Cooperative is one whose members are engaged in the production of fresh milk
which may be processed and/or marketed as dairy products;

k) 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;

l) Electric Cooperative is one organized for the primary purposed of undertaking power
generations, utilizing renewable energy sources, including hybrid systems, acquisition and
operation of subtransmission or distribution to its household members;

m) Financial Service Cooperative is one organized for the primary purpose of engaging in
savings and credit services and other financial services;

n) Fishermen Cooperative is one organized by marginalized fishermen in localities whose

products are marketed either as fresh or processed products;

o) Health Services Cooperative is one organized for the primary purpose of providing
medical, dental and other health services;

45
 p) 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;

q) Insurance Cooperative is one engaged in the business of insuring life and poverty of
cooperatives and their members;

r) 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 the Cooperative Code;

s) 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;

t) 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

u) Other types of cooperative as may be determined by the Authority.

Categories of Cooperative

Cooperatives shall be categorized according to membership and territorial considerations as

follows:

a) In terms of membership, cooperative shall be categorized into:

 Primary; the members of which are natural persons;

 Secondary; the members of which are primaries; and

 Tertiary; the members of which are secondary cooperatives.

b) In terms of territory, cooperatives shall be categorized according to areas of operations

which may or may not coincide with the political subdivisions of the country.

46
Kinds of Membership in Cooperatives

A cooperative may have two (2) kinds of members, namely:

 Regular member is one who has complied with all the membership
requirements and entitled to all the rights and privileges of membership

 and Associate member is one who has no right to vote nor be voted upon and
shall be entitled only to such rights and privileges as the bylaws may provide:
Provided, That an associate who meets the minimum requirements of regular
membership, continues to patronize the cooperative for two (2) years, and
signifies his/her intention to remain a member shall be considered a regular
member

A cooperative organized by minors shall be considered a laboratory cooperative and must be

affiliated with a registered cooperative. A laboratory cooperative shall be governed by special
guidelines to be promulgated by the Authority.

The Cooperative Development Authority

The CDA was created by virtue of Republic Act 6939 to promote the viability and
growth of cooperatives as instruments of equity, social justice and economic
development. Section 1 of the RA 6939 declares that the policy of the government
which include among others in recognition of cooperatives as engines for economic and
social growth, working for the alleviation of members from their present condition, be
forming business enterprises.

The CDA powers and functions include formulation and implementation of

comprehensive plan for cooperative. Conduct trainings and extend professional
assistance to cooperative whenever necessary. Registration of all cooperatives and
their federations and unions, as well as issue certificate of registration or cancellation of
cooperatives. It also requires the coops to submit their annual financial statements and
administer all grants and donations coursed through the government for cooperative
development, without prejudice to the right of cooperative to directly receive and
administer such donations and grants.

47
STUDENTS ACTIVITIES

A. For ONLINE STUDENTS:

Read the salient provisions of the whole Philippine Cooperative Code which can be
downloaded in the website of Cooperative Development Authority

https://www.cda.gov.ph/resources/issuances/philippine-cooperative-code-of-
2008/republic-act-9520

B. For OFFLINE STUDENTS/ For CORRESPONDENCE MODE:

Study and familiarized with the following cooperative terms

1) Member in a cooperative, includes a person either natural or juridical who adhering to

the principles set forth in the Cooperative Code and in the Articles of Cooperative, has been
admitted by the cooperative as member;

2) General Assembly shall mean the full membership of the cooperative duly assembled
for the purpose of exercising all the rights and performing all the obligations pertaining to
cooperatives, as provided by the Cooperative Code, its articles of cooperation and bylaws:
Provided, That for cooperatives with numerous and dispersed membership, the general
assembly may be composed of delegates elected by each sector, chapter or district of the
cooperative in accordance with the rules and regulations of the Cooperative Development
Authority;

3) Board of Directors shall mean that body entrusted with the management of the affairs of
the cooperative under its articles of cooperation and bylaws;

4) Committee shall refer to any body entrusted with specific functions and responsibilities
under the bylaws or resolution of the general assembly or the board of directors;

5) Articles of Cooperation means the articles of cooperation registered under the

Cooperative Code and includes a registered amendment thereof;

48
6) Bylaws means the bylaws registered under the Cooperative Code and includes any
registered amendment thereof;

7) Registration means the operative act granting juridical personality to a proposed

cooperative and is evidenced by a certificate of registration;

8) Cooperative Development Authority refers to the government agency in charge of the

registration and regulation of cooperatives as such hereinafter referred to s the Authority;

9) Universally Accepted Principles means that body of cooperative principles adhered to

worldwide by cooperatives;

10) Representative Assembly means the full membership of a body of representatives

elected by each of the sectors, chapter or district o the cooperative duly assembled for the
purpose of exercising such powers lawfully delegated unto them by the general assembly in
accordance with its bylaws;

11) Officers of the Cooperative shall include the members of the board of directors,
members of the different committee created by the general assembly, general manager or
chief executive officer, secretary, treasurer and members holding other positions as may be
provided for in their bylaws;

12) Social Audit is a procedure wherein the cooperative assesses its social impact and
ethical performance vis-a-vis its stated mission, vision, goals and code of social
responsibility for cooperatives to be established by the Authority in consultation with the
cooperative sector. It enables the cooperative to develop a process whereby it can account
for its social performance and evaluate its impact in the community and be accountable for
its decisions and actions to its regular members;

13) Performance Audit shall refer to an audit on the efficiency and effectiveness of the
cooperative as a whole; its management and officers; and its various responsibility centers
as basis for improving individual team or overall performance and for objectively informing
the general membership on such performance;

49
14) A Single-Line or Single-Purpose Cooperative shall include cooperative undertaking
activities which are related to its main line of business or purpose;

15) Service Cooperatives are those which provide any type of service to its members,
including but not limited to, transport, information and communication, insurance, housing,
electric, health services, education, banking, and savings and credit;

16) Subsidiary Cooperative refers to any organization all or majority of whose

membership or shareholders come from a cooperative, organized for any other purpose
different from that of, and receives technical, managerial and financial assistance from, a
cooperative, in accordance with the rules and regulations of the Authority;" and

17) Federation of Cooperatives refers to three or more primary cooperatives, doing the
same line of business, organized at the municipal, provincial, city, special metropolitan
political subdivision, or economic zones created by law, registered with the Authority to
undertake business activities in support of its member-cooperatives.

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 STUDENT ACTIVITY/ASSESSMENT
Name _______________________________________
Year and Section _____________________________
Complete the following matrix by giving the information under each column:

Type of Purpose for organizing it / Examples of business

Cooperative Problems addressed by this activities of services
s type of cooperative engaged in

1. Credit or
financial
service
cooperative

2. Producers
Cooperative

3. Agrarian
Reform
Cooperative

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 Type of Purpose for organizing it / Examples of business
Cooperative Problems addressed by this activities of services
s type of cooperative engaged in

4. Insurance
Cooperative

5. Housing
Cooperative

6. Education
Cooperative

C. Additional Readings
Cataluna, Bernardo M.. Entrepreneur Worker Co-operative: A Social Solution.
Manila Victor Prints, Manila. 2000.
The Philippine Cooperative Code, Cooperative Development Authority

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 Part 5

COOPERATIVES AND SOCIAL TRANSFORMATION

Nations around the world through the United Nations has consistently called for the
promotion and development of cooperatives as inclusive and socially responsible enterprises
with a huge potential for growth. In its resolution titled Cooperatives in Social Development,
adopted in December 2017, the UN General Assembly recognized that cooperatives, in their
various forms, promote the fullest possible participation in the economic and social
development of local communities and all people, including women, youth, older persons,
persons with disabilities and indigenous peoples, and are becoming a significant factor of
economic and social development and contribute to the eradication of poverty and hunger; and
further recognized the important contribution and potential of all forms of cooperatives to the
follow-up to the World Summit for Social Development.

At the end of this module, the student-learner is expected to

1) Appreciate the importance, potential and the significant role that cooperatives play in the
development not only of the worlds’ economy but also the prgress of humankind
towards people-based social development.
2) Recognize how cooperatives can help advance and realized the sustainable
development goals aspired by the world today.
3) Understand the reciprocal relationship of cooperatives and community development in
attaining the full human potentials and genuine progress.

A. COOPERATIVES AND THE SUSTAINABLE DEVELOPMENT GOALS

Cooperatives are highly relevant and important in the realization of the sustainable
development goals. This brief highlights the actual contribution of co-operatives to the twelve
Sustainable Development Goals (SDGs) proposed by the High-Level Panel of Eminent Persons
in the Post-2015 Development Agenda in their report of 2013. Though the specific goals,
targets and indicators will not be agreed upon until September 2015 as part of the ongoing
process, these twelve proposed goals reflect the range of themes that will likely be covered by
the SDGs.

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 On Poverty Reduction

On poverty reduction, there is a widely held consensus among many actors, including
the United Nations, the International Labour Organization, and the International Co-operative
Alliance, that the cooperative enterprise is the type of organization that is most suited to
addressing all dimensions of reducing poverty and exclusion.

Mother and child in extreme poverty

The way cooperatives help reduce poverty is important - they identify economic
opportunities for their members; empower the disadvantaged to defend their interests; provide
security to the poor by allowing them to convert individual risks into collective risks; and
mediate member access to assets that they utilize to earn a living.

For instance, while savings and credit cooperatives (SACCOs) facilitate their members’
access to financial capital, agricultural cooperatives help farmers access the inputs required to
grow crops and keep livestock, and help them process, transport and market their produce.

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 Similarly, consumer cooperatives make it possible for their members and the society at
large to access good quality household supplies like food, clothing, and other products at
affordable prices. Such services help pull members out of poverty.

Modern Cooperative consumers stores

Agricultural cooperatives are well recognized for their poverty reduction efforts: In
Tanzania, improved cooperative marketing of agricultural products like milk and coffee has
meant that cooperative members can afford fees for education of their children; in Egypt,
million farmers derive income from selling agricultural produce through agricultural marketing
cooperatives; and in Ethiopia, 900,000 people in the agricultural sector are estimated to
generate most of their income through their cooperatives.

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The Sustainable Development Goals 2030

The Sustainable Development Goals other wise known as the SDGs are known globally
as the “blueprint to achieve a better and more sustainable future for all.” These SDGs address
the global challenges that people all over the world face, including those related to poverty,
inequality, climate change, environmental degradation, peace and justice.

The seventeen (17) Sustainable Development Goals are all interconnected, and in
order to leave no one behind, it is important to see the connections of these goals.

The target year for SDGs to be achieved is by year 2030. Countries all over the world have
pledged to support and implement SGDs in theri respective locality.
There are 17 SDGs, these goals are as follows:
1. End poverty
2. Empower girls and women and achieve gender equality
3. Provide quality education and lifelong learning
4. Ensure healthy lives
5. Ensure food security and good nutrition
6. Achieve universal access to water and sanitation
7. Secure sustainable energy

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 8. Create jobs, sustainable livelihoods and equitable growth
9. Manage natural resource assets sustainably
10. Ensure good governance and effective institutions
11. Ensure stable and peaceful societies
12. Create a global enabling environment and catalyse long-term finance

Source: CONTRIBUTION OF COOPERATIVES

TO SUSTAINABLE DEVELOPMENT:

A joint International Labour Organization (ILO) and

International Cooperative Alliance (ICA) initiative

Cooperatives are already present in all the areas that the proposed Sustainable
Development Goals envisage the direction the world will take in its journey to make
sustainable development the reality.

Cooperatives are central to the realization of sustainable development around the world,
but with their focus on members and local needs, they have not always been proactive in
national and international debates.

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With little visibility at national and international levels, the potential and importance of the
contribution that cooperatives can make to the design and realization of SDGs seems to have
been missed by policy makers at respective levels. This explains the relatively limited visibility
and attention that cooperatives are enjoying in the debate on the post-2015 development
agenda.

This debate on SDGs and cooperatives should not just build on cooperative
experiences, but should also accommodate the voices of the cooperative movement. This is
particularly important because, as was the case in the implementation of the MDGs, the
realization of the proposed SDGs will most likely require the active participation of cooperatives
and such participation needs to be elicited right at the point of formulating the goals.

There is a widely held consensus among many actors, including the United Nations, the
International Labour Organization, and the International Co-operative Alliance, that the
cooperative enterprise is the type of organization that best meets all dimensions of reducing
poverty and exclusion. This is because the way cooperatives help to reduce poverty is
important - they identify economic opportunities for their members; empower the disadvantaged
to defend their interests; provide security to the poor by allowing them to convert individual risks
into collective risks; and mediate member access to assets that they utilize to earn a living.

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 Cooperatives are contributing towards gender equality, not just by increasing female
membership, but by expanding opportunities for women in local economies and societies in
many parts of the world.

Cooperatives societies support access to quality education and life-long learning

opportunities by providing the means for financing education; supporting schools; establishing
their own schools to provide quality education to both the youth and adults; and by serving as
centres for lifelong learning. Cooperatives ensure healthy lives by creating the infrastructure for
delivering healthcare services; financing healthcare and providing home-based healthcare
services to people living with HIV/AIDS, among others.

Cooperatives social enterprises contribute to food security by helping small farmers,

fisher folk, livestock keepers, forest holders and other producers to solve numerous challenges
that confront them in their endeavors to produce food. They are increasingly becoming major
actors in facilitating access to clean water and sanitation services to make up for the failures of
both the public and private sectors.

Energy cooperatives are contributing to the achievement of the sustainable energy

goals of energy access, energy efficiency, and reduced emissions. Cooperatives play a
significant role in employment creation and income generation, with more than 100 million jobs
worldwide.

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 Recent evidence has found that cooperatives are more resilient and perform better
during financial and economic crises.

Whereas environmental cooperatives are spearheading the sustainable management of

natural resources for posterity, the cooperative governance model can easily provide the
framework for equitable participatory processes that guarantee transparency and accountability
in cooperation with communities, governments, businesses and other stakeholders to realize
sustainable development.

In the aftermath of violent conflict in many places around the world, cooperatives have
often emerged as sources of ‘positive social capital’, fostering a strong sense of community,
participation, empowerment and inclusion among its members and restoring interpersonal
relationships and peace.

Women’s cooperatives have been especially active as brokers of peace and

development. Finally, cooperatives are also contributing to the creation of a global enabling
environment to chaperone sustainable development by bridging the trading divide between the
developed and developing world; stabilizing financial systems during crises; and providing the
base for financial deepening around the world.

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B. THE POTENTIAL CONTRIBUTION OF COOPERATIVES TO COMMUNITY
DEVELOPMENT
(excerpts from Cooperatives as a Community Development Strategy: Linking Theory and
Practice by Kimberly Zeuli and Jamie Radel, University of Wisconsin – Madison USA)

In this section we more explicitly examine the ways cooperatives can be used as a strategy to
develop communities under these three contemporary community development paradigms:
first) self-help community development
second) asset-based community development and
third) self-development.

Self-help Community Development

The self-help model places community members at the core of a development process
with two goals: to improve the quality of life within the community and to increase the
community’s internal capacity to create further change by institutionalizing the community
development process (Christenson 1989; Flora, Flora, and Fey 2004; Green and Haines 2002;
Littrall and Hobbs 1989).

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 Self-help community development advocates creating enterprises that have a broad-
base of community support and serve the interest of many in the community (in contrast to
projects that serve the interest of a small sector of the community).

Perhaps the most well known example of such a cooperative is Mondragon in the
Basque region of Spain. The Mondragon “experiment” in community economic reform has
grown into a complex of cooperatives that comprise over 100 individual businesses (MacLeod
1997).

Other notable cases include the Evangeline region in Prince Edward Island, Cheti-camp
in Nova Scotia, Emilia Romagna in Italy, and the kibbutz of Israel.9 The more recent innovation
of “social cooperatives,” first founded in northern Italy in the early 1980s, is also receiving a lot
of attention, especially in Canada.

The three cooperative development processes (bottom-up, top-down, and peripheral)

described in the previous section have different impacts on community efficacy, the ability of
community members to engage in collective action to pursue a common objective (Parisi et al.
2002).

The first of these three processes (bottom-up) has the greatest potential for community
residents to learn a development process that could be replicated for other enterprises because
it requires the greatest degree of individual involvement.

The impact of the second process depends on the extent of the involvement of the
external agent. If the agent is primarily acting as a facilitator and guiding a group through the
process, the impact would be similar to the group acting on their own. If the external agent is
acting as the sole or primary cooperative organizer, the opportunity for the community to gain
additional internal capacity decreases.

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 The third process, which involves a cooperative development process outside of the
community in which it is eventually located, generally falls outside of the self-help model.
Instead, it reflects a more traditional community development strategy (business attraction or
recruitment).

Asset-based Community Development

Asset-based development starts from an assessment of a community’s resources and

thinking about how to mobilize those resources for the benefit of the community (Green and
Haines 2002; Shaffer, Deller, and Marcouiller 2004). A community’s assets include the human,
social, physical, financial, and environmental, or taken together what Green and Haines (2002)
call “community capital.”

By virtue of being locally-developed, locally-owned and locally-controlled social

enterprises, cooperatives clearly build on a community’s human capital, social capital, and
financial capital.

The cooperative contribution to human capital development (education, skills, and

experience) may be its most substantial community development impact. According to
Richardson (2000), the value of leadership training cannot be overestimated: “If I were pressed
to select only one from a list of the ten most important components needed for sustainable rural
community development, it would have to be leadership training”).

Cooperatives build local human capital through member education and leadership
opportunities on the board of directors. Educational opportunities are often extended to
directors, employees, and members who do not serve on the board, and are provided in areas
beyond the core business (Torgerson 1990); a duty to educate members is a traditional co-
operative principle.

For example, some cooperatives pay for members to attend leadership conferences or
industry meetings or they organize their own work-shops. Annual meetings are another
educational opportunity and often cooperatives invite speakers who will discuss national
policies and trends or leadership issues.

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 Other types of businesses may provide similar opportunities for their employees but not
for their entire customer base, like that of the cooperative enterprises.

Self-development

Perhaps the most radical of the three approaches, self-development opposes the notion
that local development is predetermined by resource endowments or exogenous factors
(Shaffer, Deller, and Marcouiller 2004).

In contrast to the other two approaches, it specifically calls on community residents to

use local financial resources to create businesses that are locally owned and controlled
(Blakely 1994; Green et al. 1990; Sharp and Flora 1999).

It seeks to completely internalize community development by diminishing and ultimately

eliminating the role of external agents: “The objective of self-development efforts is to gain
control of the local economy by the community…Self development efforts operate for the
benefit of the whole community while promoting the collective management and ownership of
the enterprises”.

Conceptually, self development it is closely related to the social economy model, which
advances collectively-owned enterprises: “…actors in the social economy endeavor to organize
citizens to become agents of their own development, primarily through enterprises that embed
social goals in their business operations”

C.COOPERATIVES AND SOCIAL DEVELOPMENT

The population of the Philippines as of December 2019 is 109.5 million Filipinos. The
county has been dubbed as with one of the highest population growth in the Asia. The socio

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economic development in the Philippines is uneven. Poverty exists in urban areas, and heavy
toll on the rural areas.

Poverty and uneven distribution of wealth persists in the country. Although the
government advocated for a debt-for-MDGs conversion in terms of complying with developing
global partnership for development, the effort still is short.

The global cooperative movement through the International Cooperative Alliance

Congress passed a resolution for the continuation of the joint work that traditionally marks the

ICA and International Labour Organization partnership and for the joint implementation of ILO
Recommendation 193 which is now also called the Common Cooperative Agenda.

The Common Agenda is another step for the international community’s greater
recognition of cooperatives in social development, as cooperatives become the solution to the
world’s problems (Birchall, 2004). In Europe, there are 300,000 cooperatives that employ 2.3
million people and provide services to 83.5 million members. In the Philippines, the active
cooperatives have an estimated assets of more than 42 billion which are used in various types
of operations that providing 1.6 million full time and part time employment opportunities (Zubiri,
2008). There is also a flourishing of workers cooperatives in the country (San Gabriel, Nito
and Parma, 2005).

The adoption of the Common Agenda resulted to having greater participation of the
cooperative sector and coop leaders in the formulation of development programs by the
governments. There is also greater attention given to cooperative development agencies that
provide help to cooperative sectors in developing countries.

The Common Cooperative Agenda aims to contribute to solving the problems of

unemployment affecting many youth today on a global scale. Both ICA and ILO pledge to
support and implement the Common Cooperative Agenda as well as to promote decent work,
social cohesion and sup port cooperatives values-based social enterprises that have the
potential for improving and socioeconomic well being of their members.

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STUDENT ACTIVITIES/PROJECT

For ONLINE Students:

Watch the 10 minute You Tube Video entitiled “Cooperatives, Sustainable Development and
Decent Work”
https://www.youtube.com/watch?v=H0fOX97Isg0&index=26&list=PL8itJ-
8CfpczuDsgPkgSU7MWTeUXcptUt&t=13s

FOR ONLINE Students:

Prepare a 2 minute video of your reflection on how cooperatives are helping in the
achievement and concretization of the Sustainable Development Goals.
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STUDENT ACTIVITIES

FOR OFFLINE/CORRESPONDENCE MODE Students:

Write a short reflection on how cooperatives are helping in the achievement and concretization
of the Sustainable Development Goals.
Name __________________________________
Year and Section _________________________
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 REFERENCES

1987 Philippine Constitution

Birchall, J. (2003). Rediscovering the cooperative advantage: poverty reduction

through self-help. Geneva: International Cooperative Alliance. www.ica.coop

Cooperative Development Authority, Memorandum Circulars Issuances 2012-2016

www.cda.gov.ph

Garten, K. (2012). Bibliography of Cooperatives and Cooperative Development.

Published by Illinois Institute for Rural Affairs Stipes Hall 518 Western Illinois University
1 University Circle Macomb, IL 61455-1390 iira@wiu.edu www.IIRA.org
Third Printing: June 2012

International Cooperative Alliance (2004). Co-operative principles and values –

revisions. http://www.ica.coop/coop/principles-revisions.html

Hunt, EK (2002) History of Economic Thought, A Critical Perspective. New York: ME

Sharpe, Inc.

Nito, Bienvenido and Felipe, Hilda; (1998) Cooperatives: An Introduction,

Mary Jo Publishing House

Nito, B.; San Gabriel HF., Parma, L.(2005) “On Workers Cooperative Confererence”
University of Asia and the Pacific, Ortigas, Pasig City

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 REFERENCES

Manimtim, H. E. (2012). Cooperative principles & social development module.

Department of Cooperatives & Social Development, Polytechnic University of the
Philippines.

Marx, K. Das Capital (1867) English version, Capital, a Critique of the Political
Economy, Publisher, Verlag von Otto Meisner, Germany.

Republic Act 11364 New CDA Charter (2019)

Robert Owen Memorial Museum Association. The life of Robert Owen (1771-1858):
industrialist and social reformer. Newtown, UK: Robert Owen Memorial Museum.

Roxas, C. & Adeva, A., Eds. (2002). Profiles of success: stories of Gawad Pitak
winners. Manila: Corporate Communication Services, Landbank of the Philippines

Thompson, D. (1995). Weavers of dreams. California: Center for Cooperatives,

University of California

Union of Metro Manila Cooperatives. (2003). Cooperative principles alive. Manila,

Philippines: UMMC.

Wright, E. (2003). Social class. Encyclopedia of Social Theory. London: Sage

Yermanikova, A. & Ratnikov, V. (1979). What are Classes and the Class Struggle;
Moscow: Progress Publishers

Zubiri, JMF. (2015) The Cooperative Code of 2008 with Revised Implementing Rules &
Regulations of RA 9520, Cooperative Development Authority, House of
Representatives compiled by the College of Cooperatives
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 STUDENT FINAL ASSESSMENT

NAME ________________________________ Date ___________________

Student Number _________________________ Year and Section _________
Name of Faculty Adviser _______________________ Rating _________________

Part 1. The cooperative contribution to human capital development (in terms of

education, skills, and experience) may be its most substantial community
development impact.
Identify and cite at least one type of cooperative that you know, when was it
established and what are the main reasons why this cooperative was
established?

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Part 2.
What are the cooperative products, or its services to its members in particular
and to the community in general? Do you think that this cooperative is serving
the people in the community where it is operating? Will there be other areas
or line of activities where the cooperative should have played an important role?
What are these? Justify your answer.

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Goodluck and Stay Safe!

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GRADING SYSTEM:

70 % Based on student’s Class Performance

Reaction Paper, Assignments Activities, Project
30 % Based on Examinations (MT/Final Exam)
100% Final Grade

FACULTY MEMBERS CONTACT DETAILS:

ASSOC. PROF. RIMANDO E. FELICIA

Email address: mandyfel@gmail.com

DR. HILDA F. SAN GABRIEL

Email address: dcsdpup@gmail.com

Contact Address: Department of Cooperatives and Social Development

College of Social Sciences and Development,
Polytechnic University of the Philippines
Anonas Street, Sta.Mesa,1108 Manila

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