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Understanding Culture, Society and Politics (UCSP)

Quarter 2: Module 1: State and Non-state Institution
MELC: Explain the forms and functions of state and non-state institutions.

The lesson in this module focuses on the forms and functions of state and non- state institutions.

What is a State Institution?

 State institutions are those endorsed and supported by the government using public funds
collected from exercising its power to tax. There are different institutions created within the
state and are primarily concern with the welfare and interest of the whole community.
 Since a state has a government that manages its affairs, state institutions are also referred to as
government institutions or public institutions.

Forms and Functions of State Institutions

Donisthorpe (1889) has identified the functions of a state as ranging from administration of justice,
the maintenance of order, the defense of the country against external threat, and the collection and
management of revenue for these purposes. He also recognizes the idea that the state can carry out noble
means of improving the quality of life of its citizens. For instance, the state can allocate more budget to
disaster mitigation projects to lessen the impact of calamities especially to poor communities.

Here are some of the forms of state institutions, their functions and the government agencies created
for such.

Form Function Government Agencies

Education ensuring access to and improving the  Department of Education (DepEd)
quality of education  Commission on Higher Education (CHED)
 Technical Education and Skills
Development Authority
(TESDA)

Financial maintaining the stability of the  Department of Finance (DoF)

Regulation financial system in the country  Bangko Sentral ng Pilipinas (BSP)
 Insurance Commission (IC)
 Bureau of Treasury (BoT)

Health ensuring access to public  Department of Health (DOH)

health  Philippine Health Insurance
Corporation (PHIC)
 Food and Drug Administration (FDA)
 Commission on Population
(POPCOM)

National responsible for guarding against  Armed Forces of the Philippines (Philippine
Defense external and internal threats to peace Army, Philippine Navy, Philippine Air
and security Force)
in the country
Social responsible for the protection of the  Department of Social Welfare and
Welfare social welfare of rights of Filipinos Development (DSWD)
and to promote the social  National Anti-Poverty
development. Commission (NAPC)
 National Council on Indigenous People
(NCIP)
Non-state institutions
Non-state institutions are those owned by private individuals. Their concern is mostly that of
individual welfare or that of a group of individuals.
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1. Banks
Banks are financial institutions playing a great role in the economic growth of a nation. Banks serve
as intermediaries between those with excess funds and those who need funds. Banks accept deposits from
individuals who view these as their savings or investments. Meanwhile, businesspeople go to banks to
borrow money to grow their business.
While majority of banks in the country are privately owned, there are few which are owned by the
state. Apart from performing specialized functions, these government-owned banks serve as depository of
the state from which payment of salaries of public officials and other expenditures are drawn.
Government Banks
 Land Bank of the Philippines
 Development Bank of the Philippines
 United Coconut Planters Bank
 Al-Amanah Islamic Investment Bank of the Philippines

2. Corporations
The Corporation Code of the Philippines define a corporation as an artificial being created by
operation of law, having the right of succession and the powers, attributes and properties
expressly authorized by law or incident to its existence.
Corporations are organizations created by people known as shareholders or stockholders. A
corporation is an artificial person created by operation of law. It takes a personality that is distinct and
separate from the shareholders or stockholders. Having an artificial personality means that a corporation is
accorded certain rights and privileges similar to that of a natural person such as owning property in its name
and having the right to sue and be sued.
A corporation can be established for profit or non-profit purposes. The majority of corporations
you see around you were created for profit objectives. The businesses you see at the town proper selling
variety of goods and services are mostly owned and operated by corporations. The non-profit ones were
created for educational, religious or charitable purposes. Examples of this are schools, orphanages and home
for the aged and the homeless.
Corporations contribute to the development of economic activities through efficient and effective
production and distribution of goods and services.

3. Cooperatives
The Cooperative Development Authority (CDA) defines cooperative as 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 risks and benefits of the undertaking in accordance with the universally
accepted cooperative principles.
A cooperative is an enterprise established by members who contribute money to a common fund
called share capital. Members are joint owners of the cooperative. The members are also the primary clients
of the cooperative as they should be the first to patronize the products and services of their cooperative. At
the end of the year, the profit of the cooperative is distributed equitably among its members depending on
their capital. What are the common services of a cooperative? In farming communities, a farmer’s
cooperative is established to assist farmers plant, harvest, process and sell their products by providing needed
machinery and infrastructure. In cities, we commonly see credit cooperatives. Here, loans for productive and
providential purposes are extended to members.

Cooperatives are very similar to corporations in almost all aspects. Membership in both is voluntary.
Both organizations require members or shareholders to contribute money known as their share capital. The
amount contributed is basically the basis for profit distribution in an equitable manner.
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Both organizations have a Board of Directors in charge of policymaking. They are elected by popular
votes of all the members. The difference lies in the way members the Board of Directors are elected. For
cooperatives, one member is entitled to one vote only regardless of capital contribution. Meanwhile, for
corporations, the number of votes is proportionate to the number of shares a member has.
While corporations are created either for profit or non-profit objectives, cooperatives are for profit
only.

4. Trade Unions
Trade unions, labor unions or labor organizations are groups of workers within a particular
workplace. Their aim is to advance the interest of their members or the workers in general. They negotiate
with management or their employer for favorable benefits such as fair wage, additional benefits and good
working condition among others. Trade unions are common in large companies employing hundreds of
employees.

5. Transnational advocacy groups

These are self-organized groups undertaking voluntary actions in several countries. These groups
work within a global network to address global concerns ranging from environmental (e.g. pollution) to
political (e.g. corruption and human rights). Advocacy groups are limited to just serving as pressure groups
influencing the way policymakers and implementers craft and implement laws and policies.
There is one advocacy group operating in 55 countries. The group challenges governments and
corporations to take actions in safeguarding the environment. While another advocacy group reports and
publishes corruption perception index and gives recommendation to heads of countries for them to take
actions.

6. Development agencies
Development agencies are non-profit entities established to foster the cooperation between the public
sector, the private sector and civil society towards sustainable development.
Development agencies work mostly in depressed and underdeveloped areas or regions in the country.
For development works to be successful, there must be an engagement of the whole community and local
resources are utilized.
One private development agency in the Philippines partners with homeless people in the building and
construction of their houses.

7. International organizations
Mingst defined an international organization as an institution drawing membership from at least three
states, having activities in several states, and whose members are held together by a formal agreement or a
treaty.
International organizations serve many diverse functions, including collecting information and
monitoring trends, delivering services and aid (e.g., the World Health Organization), and providing forums
for bargaining (e.g., the Association of South East Asian Countries ASEAN) and settling disputes (e.g., the
World Trade Organization).
Our country has been a member of several international organizations such as the United Nations
(UN), the ASEAN, the World Trade Organizations and the Asia Pacific Economic Cooperation (APEC) to
name a few.

Source: Aliwana,Denver. State and Non-state Institution, Understanding Culture, Society and Politics, Grade 12, First Semester,
Quarter 2, Week 1. Deped, Division of Baguio City.