Presented Date

A Presentation for

Basic Cooperative Course

Part 1 – Fundamentals of Coops
Abel C. Dawey
Fundamentals of Coops

 History of the Cooperative Movement

 Legal History Philippines
 International Cooperative Alliance (ICA)

Statement of Cooperative Identity

History of Cooperation
 From the Ancient
Civilization of Babylon,
China, Egypt, Greece
 To the Roman Empire,
Frankish area, medieval
Europe to the
Rennaisance
 In the Industrial
revolution of the 19th
century, the coop
movement began.
The Cooperative Movement

 The industrial revolution and the increasing mechanization

of the economy transformed society and threatened the
livelihoods of many workers.
 By 1830, there were several hundred cooperatives. Some
were initially successful, but most cooperatives founded in
the early 19th century had failed by 1840
 not until 1844 when the Rochdale Society of Equitable
Pioneers in Rochdale, Manchester, England established
the ‘Rochdale Principles’ on which they ran their
cooperative, that the basis for development and growth of
the modern cooperative movement was established.
Owen to Rochdale

 Robert Owen (1771-1858) A Welshman and entrepreneur who made his

fortune in the cotton trade conceptualize industrial cooperation and
communal living. He is considered the father of the cooperative movement.
 William King (1786-1865) Coops in social welfare, schools and similar
institutions. He took Owen’s ideas and made them more workable and
practical. King believed in starting small. He founded a monthly periodical
called The Cooperator
 The Rochdale Pioneers (1844): Manchester England, 28 elderly and
unschooled weavers practiced frugal living and the value of thrift to survive.
After a year, they managed to save 28 lbs to open their store in 1844 selling
food items they could not otherwise afford. Within three months, they
expanded their selection and soon were known for providing high quality,
unadulterated goods.
The Rochdale Rules & Principles
Rochdale Rules Rochdale Principles
1. Self provided capital
2. quality product 1. open membership
3. full weight and measure 2. Democratic control of one vote per person
4. at market price without 3. Payment of profits in proportion to
credit patronage share
5. division pro-rata to 4. Limited interest on capital
members 5. Cash trading
6. one member one vote 6. Political and religious neutrality
7. management in the hands of 7. Education for members and families
elected officers and
committees The cooperative movement began with
8. percent of profit to
the application of Rochdale Rules and
education
Principles of cooperation and enterprise
9. frequent report and financial
statements to members into organizations.
The Rochdale Pioneers
Today - Some Statistics
United States of America Canada
 In the United States, 4 in 10  Canadian maple sugar
individuals is a member of a cooperatives produce 35% of
cooperative. the world's maple sugar
 In the United States more than
production.
30 cooperatives have annual  In Canada, four of every ten
revenue in excess of USD 1
billion. In 2003 the top 100 US Canadians are members of
cooperatives had combined at least one cooperative. In
revenues of USD 117 billion. Quebec, approximately 70%
 In addition, approximately 30% of the population are coop
of farmers' products in the US members, while in
are marketed through 3,400 Saskatchewan 56% are
farmer-owned cooperatives. members.
Today - Some Statistics
Japan South Korea
 In Japan, the agricultural
 National Agricultural Coop
cooperatives report outputs of
USD 90 billion Federation
 With 91% of all Japanese  Total Deposits - 61,280 M
farmers in membership. US$
 In Japan, 1 out of every 3  Total Loans - 39,175 M US$
families is a member of a  In Korea, agricultural
cooperatives. cooperatives have a
membership of over 2
milliondevelopment
“ It is not possible to talk of the socio-economic farmers (90% of all
of Korea
without acknowledging the significant role farmers),
of coopsand annational
in our output of
development” – Kim Dae Jung USD 11 billion.
Today - Some Statistics
Finland Norway
 Finnish cooperative groups within  In Norway, dairy cooperatives are
Pellervo were responsible for responsible for 99% of the milk
 74% of the meat products, production;
 96% of dairy products;  Consumer cooperatives held
 50% of the egg production, 24.1% of the market (Source: Coop
 34% of forestry products and Norden AB annual report 2007);
 handled 34.2% of the total  Fisheries cooperatives were
deposits in Finnish banks. responsible for 8.7% of total
 Finland, S-Group has a Norwegian exports;
membership of 1,468,572  Forestry cooperatives were
individuals which represents 62% responsible for 76% of timber
 1.5 million people of the 4.5 million
of Finnish households. (Source:
SOK Corporation Annual Report Norwegians are member of
2004) cooperatives.
Today - Some Statistics

Singapore Malaysia
 consumer cooperatives  5.9 million people or 24% of
hold 55% of the market the total population are
in supermarket members of cooperatives.
 (Source: Ministry of
purchases and have a
turnover of USD 700 Entrepreneur and
million. Cooperative Development,
 50% of the population Department of Cooperative
(1.6 million people) are Development, Malaysia,
members of a December 2006)
cooperative.
Mondragon Worker’s
Cooperative-Spain

The Mondragón Cooperative Corporation (MCC), the largest consortium of

worker-owned companies, has developed a different way of doing business
—a way that puts workers, not shareholders, first.
Philippine Cooperative Laws
First Wave – 1906-1946 (American Regime)

 Sandico Bill (1907) -German Raiffeisen type coops not passed by congress
 Rural Credit Law (Corpus Bill 1914) – approved 1916 establishing Rural Credit
Associations.
 Agricultural Credit Association Act (Act No. 2508 American Colonial
Government) enabling the creation of Agricultural Credit Associations under
the Corporation Law. It took effect on 1915 and repealed by RA 2023 (1957)
 RA 364 created the Cooperative Administration Office (CAO) under the
Department of Commerce and Industry and
 RA 583 creating the Small Farmers Cooperative Loan Fund
 Cooperative Marketing Law (Act No. 3425) - registration under the
Corporation Law of farmers’ cooperative marketing associations (FACOMA).
It took effect on 1927 and repealed by P.D. 175 as amended (1973).
 General Basic Cooperative Law (Commonwealth Act No. 565) on 1940 as the
organic law for all types of cooperatives.
Philippine Cooperative Laws
Second Wave – 1950 to present
 RA No. 821 , Agricultural Credit and Cooperative Financing Administration Act
[ACCFA] 1952) and the complementary
 RA No. 2023 , Philippine Non-Agricultural Cooperative Act 1952) authorizing the
organization of cooperative banking system and cooperative wholesale systems.
 RA No. 3844 (Land Reform Law)
 RA No. 6038 (National Electrification Program); and
 RA No. 3470 (National Cottage Industry Development Act)
 PD No. 175 (General Law)
 PD No. 269 (Electric Cooperatives Law)
 PD No. 775 (Sugar Cooperatives Law)
 PD No. 898 (Transport Cooperative Law)
 RA 6938 (Cooperative Code of the Philippines 1987) was enacted codifying and
repealing previous laws and
 RA 6939 (CDA Act) providing for an administrative agency responsible for the
regulation and institutional development of cooperatives.
 RA 9520 (Cooperative Code of 2008) amending RA 6938
ACDI Multipurpose Cooperative
Consumer Services, Aviation, Agri-business, Property Management, Savings & Lending,

 2011 - ACDI MPC releases P42.8 Million

worth of Patronage Refund (PR) to a
total of 31,226 qualified members from
311 loans released.
 201 2 - it reaches its 30th year of service.

Active PAF, PN, PM military, civilian personnel, AFP pensioners and dependents
BBCC Cooperative
Savings and Loan, Grocery, Pre-School, Property Development
Cooperatives – ICA Definition
 A co-operative is an autonomous association of
persons
 united voluntarily to meet their common economic,
social, and cultural needs and aspirations
 through a jointly-owned and democratically-
controlled enterprise.

Plus Equals

Association Enterprise Cooperative

Important Elements
Common and felt needs
 There must be a felt need (affects the livelihood of the people if not
fulfilled) and/or a common need (that which is faced by many People in
the community). A cooperative therefore is a Platform for solving people's
problems. To some extend a cooperative is a business which attracts
members’ investments.
Cooperative formed by individuals
 A cooperative is not one man's show or controlled by founders, all
individuals are equal. A cooperative is a democratic institution controlled
by people. The members own the co-operative collectively on mutual
basis. Decisions are democratically made and not based on individual
status or wealth/capital.
Cooperative as an enterprise
 A cooperative is an enterprise, which means it is a business entity that
has a market focus and engages in the exchange of goods and services.
However, it is important to mention that cooperatives are formed out of
felt and common needs.
Coop as Enterprise is Different - ICA

The ICA states that “Cooperatives are enterprises that

put people at the centre of their business and not capital.
Co-operatives are business enterprises and thus can be
defined in terms of three basic interests: ownership,
control, and beneficiary. Only in the co-operative
enterprise are all three interests vested directly in the
hands of the user.”

The patrons/owners control the enterprise. The decisions in the

interest of owners is thus balanced by the interest of patrons
who are themselves owners. This is probably the basic
difference from purely commercial enterprise. (emphasis mine)
A Cooperative is not . . . .
 Not organized primarily for charity, The foundation for
religious, fraternal, social, civic or similar establishing a
cooperative is very
purposes.
important, if a
 Not an organization whose primary aim cooperative is formed
or source of funding is grant and based on a non-
donations only. sustainable grounds, it
will not stand. If a
 Not an organization whose primary cooperative is formed
intent is for project implementation only dubiously, that
– that is, ends after project completion. cooperative will face
 Not an enterprise whose primary aim is problems and eventually
it will collapse.
to profit from non-member patrons or
clients only.
COOP VALUES
ICA Statement of Coop Identity
Co-operatives are based on the values of self-help,
 self-responsibility,
 democracy,
 equality,
 equity and
 solidarity.
In the tradition of their founders, co-operative
members believe in the ethical values of
 honesty,
 openness,
 social responsibility and
 caring for others.
About Values
 Values are beliefs, states of mind, patterns of behavior, traits, attributes, virtues,
convictions or just ideas of what is right, desirable or worthwhile. They are
accordingly cherished and hold most dear or valuable and forms the basis for which
people analyze, interpret and judge behaviors and attitudes as well as implement
and make decisions.
 Values define how the coop internal community (officers, members, etc) want to
behave or relate with each other and to its suppliers and clients. There are values
thus that enhances cooperative growth, some of which were adopted by the ICA in
its Statement of Coop Identity.
 In organizations. these values are often shared and identified in a vision/mission
statement and when internalized by its leaders are a strong influence in the
decision-making process, consequently the organizational mindset, attitudes and
direction as whole.
 In accordance with a certain Dr. Antonio Roldan Jr. of OD Associates Internationale,
Inc. these values are (often) expressed in a philosophy called a creed. This creed
becomes the norms of conduct or a Code of Ethics. Eventually, when these are
practiced in deed, they become real values expressed as a culture or lifestyle.
COOP PRINCIPLES
ICA Statement of Coop Identity

(1) Voluntary and Open Membership

(2) Democratic Member Control
(3) Member Economic Participation
(4) Autonomy and Independence
(5) Education, Training and Information
(6) Cooperation Among Cooperatives
(7) Concern for Community
 1) no compulsory membership
2) no discrimination against any person
3) no artificial limitation for admission of new members
4) no artificial restriction on the right to withdraw membership

(1) Voluntary and Open Membership

Cooperatives are: SAMPLE PRACTICES

 no compulsory
• voluntary organizations, membership
• open to all persons able  no discrimination against
to use their services and any person
 no artificial limitation for
willing to accept the admission of new
responsibilities of members
membership, without  no artificial restriction on
gender, social, racial, the right to withdraw
membership
cultural, political or
religious discrimination.
(2) Democratic Member Control -
Cooperatives are democratic SAMPLE PRACTICES
organizations that are:
 controlled by their members who  one person, one vote
actively participate in setting their  no proxy voting
policies and making decisions.  general assembly as the
 Men and women serving as elected supreme authority
representatives,  decision making by majority
 directors or officers are vote
accountable to the membership.
 equal status of members
 In primary cooperatives, members
 direct or indirect
have equal voting rights of one- participation of members in
member, one-vote. Cooperatives the control of organization
at other levels are organized in the
same democratic manner.
(3) Member Economic Participation

 Members contribute equitably to, and SAMPLE PRACTICES

democratically control, the capital of their
cooperatives.  Limited interest or
 At least part of that capital is the common dividend on share capital
 equality of treatment
property of the cooperative.
regardless of one’s capital
 They shall receive limited compensation or contribution
limited interest, if any, on capital subscribed  limitation on one’s share
and paid as a condition of membership. capital contribution
 Members allocate surpluses for any or all of  provision of reserves for
the following purposes: developing the operations, facilities and
cooperative by setting up reserves, part of social functions
which should at least be indivisible;
 distribution of interest on
capital or dividends and
 benefiting members in proportion to their
patronage refund
patronage of the cooperative's business;
and, supporting other activities approved by
the membership.
(4) Autonomy and Independence

Cooperatives are: SAMPLE

 autonomous, self-help PRACTICES
organizations controlled by
their members.  general
 If they enter into agreements assembly is the
with other organizations, supreme
including government, or raise authority
capital from external sources,  leadership is
they shall do so on terms that only confined to
ensure democratic control of members
their members and maintain
their cooperative autonomy.
(5) Education Training and
Information
Cooperatives shall provide SAMPLE PRACTICES
education and training for
 their members,  appointment of an
 elected and appointed education committee
representatives,
 reserve for education
and training
 managers, and employees,  PMES before admission
so that they can contribute  ownership or
effectively and efficiently to the membership meeting
development of their  continuous training for
cooperatives. officers and staff
(6) Cooperation Among Cooperatives

Cooperatives serve their SAMPLE PRACTICES

members most
effectively and
 Membership in tertiary
and secondary coops
strengthen the  participation in
cooperative movement economic integration
by working together projects like central
through local, national, fund, inter-coop
regional and trading, coop
international structures. insurance, etc
(7) Concern for Community

Cooperatives work for SOME PRACTICES

the sustainable
development of their  Coops through the
communities through Union conduct clean
policies approved by and green drives
 Tree planting, etc
their members.
 TAMPCO donating a
garbage truck to the
city government
Comparison between organizations

 Legally, associations registered with SEC are non-stock corporations

 Rural Workers Association may also be registered with the DOLE
Philippine Corporation Law

Title 1 - General Provisions

 Sec 2. Corporation defined. - A corporation is 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.
 Sec. 3. Classes of corporations. - Corporations formed or organized
under this Code may be stock or non-stock corporations. Corporations
which have capital stock divided into shares and are authorized to
distribute to the holders of such shares dividends or allotments of the
surplus profits on the basis of the shares held are stock corporations. All
other corporations are non-stock corporations.
Philippine Corporation Law

Title 1 - General Provisions

 Sec 5. Corporators and incoporators, stockholders and members. -

Corporators are those who compose a corporation whether as
stockholders or as members. Incotporators are those stockholders or
members mentioned in the articles of incorporation as originally forming
and composing the corporation and who are signatories thereof.

 Corporators in a stock corporation are called stockholders or

shareholders. Corporators in a non-stock corporation are called
members.
Philippine Corporation Law

Title XI - Non stock corporations

 Sec. 87. Definition. - For the purposes of this Code, a non-stock

corporation is one where no part of its income is distributable as
dividends to its members. trustees, or officers. subject to the provisions
of this Code on dissolution: Provided. That any profit which a non-stock
corporation may obtain as all incident to its operations shall. whenever
necessary or proper. be used for the furtherance of the purpose or
purposes for which the corporation was organized. subject to the
provisions of this Title .

 The provisions governing stock corporation. when pertinent, shall be

applicable to non- stock corporations. except as may be covered by
specific provisions of this Title (n
Philippine Corporation Law

Title XI - Non stock corporations

 Sec. 88. Purposes. - Non-stock corporations may be formed or organized

for charitable. religious. educational. professional. cultural, fraternal.
literary, scientific. social. civic service. or similar purposes. like trade.
industry, agricultural and like chambers, or any combination thereof
subject to the special provisions of this Title governing particular classes
of non-stock corporations.

 Sec. 90. Non-transferability of membership. - Membership in a non-

stock corporation and all rights arising therefrom are personal and non-
transferable. unless the articles of incorporation or the by-laws otherwise
provide.
That’s all

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