Making It Known…
LO2 : IDENTIFY THE LEGAL UNDERPINNINGS OF COOPERATIVES
CONTENTS:
• Cooperative Code of 2008 (RA 9520)
• Implementing Rules & Regulations
• Articles of Cooperation & Bylaws
THE PHILIPPINE COOPERATIVE CODE OF 2008 (RA 9520)
Introductory Notes
Definition of Law
In its broadest sense, "Law" refers to any rule of action or norm of conduct applicable to all kinds of action and to all objects of creation. In a strict legal sense, "Law" is defined as a rule of conduct, just and obligatory, laid down by legitimate authority for the common observance and benefit (Sanchez Roman).
Code - The whole body of law, whether of a complete system of law; e.g. The Roman Code of Justinian, Code of Napoleon of France; or relating to a particular subject or branch of law, such as the sales of Goods Act 1893, or Bills of Exchange Act 1882, which were statutes collecting and stating the whole of the law, as it stood at the time they were passed.
Essential Elements of Law
1. It is a rule of conduct - Laws serve as guides of an individual in relation to his fellowmen and to his community.
2. Laws must be just - Laws as guides for human conduct, "should run as golden threads through society, to the end that law may approach its supreme ideal which is the sway and dominance of justice" (Report of the Code Commission, quoted by Roland A. Suarez, Introduction to Law, 1989)
3. It must be obligatory - If laws are not enforced, the purpose for which they are intended will not be served.
4. Laws must be prescribed by legitimate authority - If laws are not prescribed by legitimate authority, the people could not be expected to observe them.
5. Laws must be ordained for the common benefit - This recognizes the famous Latin Maxim : "Salus populi est suprema lex" (the welfare of the people is the supreme law)
Sources of Law
1. Legislation - The power to legislate laws is vested in the Congress of the Philippines which consists of the Senate and the House of Representatives
2. Precedent - This means that the decisions or principles enunciated by a court of competent jurisdiction on a question of law do not only serve as guides but also as authority to be followed by all other courts of equal or inferior jurisdiction in all cases involving the same question until the same is overruled or reversed by a superior court. "Judicial decisions applying or interpreting the laws or the Constitution shall form a part of the legal system of the Philippines (Art. 8, New Civil Code)
3. Custom - Customs have the force of law only when they are acknowledged and approved by society through long and uninterrupted usage
4. Court Decisions - Judicial decisions which apply or interpret the constitution and the laws are part of the legal system in the Philippines but they are not laws. However, although judicial decisions are not laws, they are evidence of the meaning and interpretations of the laws.
Application of Laws
In applying the law, the court should discover the real intent and purpose of the legislature. If that intent and purpose can be discovered within the law, it is the duty of the court to carry out that intention. If the same cannot be discovered within the law, the court shall be guided by extrinsic aids.
Interpretations of the Law
It is the duty of the judge to apply the law without fear or favor. In case of doubt in the interpretation or application of the laws, it is presumed that the lawmaking body intended right and justice to prevail (Art. 8, New Civil Code).
Statutory Construction
Statutory Construction is the art of seeking intention of the legislature in enacting a statute and of applying it to a given state of facts.
Statutory construction is the act or process of discovering and expounding the meaning and intention of the authors of the law with respect to its application to a given case, where that intention is rendered doubtful, among others, by reason of the fact that the given case is not explicitly provided for in the law (Caltex Philippines vs Palomar, L-19650, 1966, 18 SCRA 247).
Interpretation and Construction, distinguished
Interpretation and construction have the same purpose and that is to ascertain and give effect to the legislative intent. A distinction, however, has been drawn between them. One who interprets makes use of intrinsic aids or those found in the statute itself, while one who constructs makes use of extrinsic or those found outside of the written language of the law. The basic rule is : One must interpret first before he constructs.
Interpretation is the act of finding the true sense and meaning of words, whereas construction is the drawing of conclusions respecting subjects that lie beyond the direct expressions of the text (Bloomer vs. Todd, 1 L.R.A. 111; Bouvier’s Law Dictionary 8th Ed.)
One who interprets does not get outside of the context of the statute, while one who “construes” has to go outside of the language of the statute and seek the help of extrinsic aids.
Intrinsic Aids and Extrinsic Aids, distinguished
Intrinsic aids are any of the following: title, preamble, words, phrases and sentences, context, punctuation, headings and marginal notes, and legislative definitions and interpretation clauses.
1. Title – That which expresses the subject matter of the law.
2. Preamble – That part of the statute following the title and preceding the enacting clause which states the reasons or the objective of enactment.
3. Words, Phrases and Sentences – The intention of the legislature must primarily be determined from the language of the statute and such language consists of the words, phrases and sentences used therein. The meaning of the law should, however, be taken from the general consideration of the act as a whole and not from any single part , portion or section or from isolated words and phrases, clauses or sentences used.
4. Punctuation – It is an aid of low degree in interpreting the language of a statute and can never have control against the intelligible meaning of the written word. However, if the punctuation of the statute gives it a meaning which is reasonable and in apparent accord with the legislative will, it may be used as an additional argument for adopting the literal meaning of the words thus punctuated.
5. Headings and Marginal Notes – If the meaning of the statute is clear or if the text of the statute is clear the will prevail as against the headings, especially if the headings have been prepared by compilers and not by the legislature.
6. Legislative Definition and Interpretation – If the legislature has defined the words used in the statute and has declared the construction to be placed thereon, such definition or construction should be followed by the courts.
a. If a law provides that in case of doubt it should be construed or interpreted in a certain manner, the courts should follow such construction.
b. In case of conflict between the interpretation clauses and the legislative meaning, as revealed by the statute considered in its totality, the latter shall prevail.
c. A term is used throughout the statute in the same sense in which it is first defined.
d. Legislative definitions of similar terms in other statutes may be resorted to except where a particular law expressly declares that its definition therein is limited to application to the statutes in which they appear.
Extrinsic Aids may consist of contemporaneous circumstances, policy, legislative history of the statute, contemporaneous or practical construction, executive construction, legislative construction, judicial construction, and construction by the bar and legal commentators. Extrinsic aids can be resorted to only after the intrinsic aids have been used and exhausted.
1. Contemporaneous Circumstances – These are the conditions existing at the time the law was enacted such as the following :
a. History of the times and conditions existing at the time the law was enacted
b. Previous state of the law
c. The evils sought to be remedied or corrected by the law
d. The customs and usages of the people
2. Policy – The general policy of the law or the settled policy of the state may enlighten the interpreter of the law as to the intention of the legislature in enacting the same. Hence, if a new agrarian law is enacted today and few years from now, there will arise the need to find out why such a law is enacted, the conditions, the prevailing sentiment of the people, the policy of the state and the executive order issued by the Office of the President preceding the legislative enactment will throw light upon the intention of the legislature in enacting said law.
3. Legislative History of the Statute – Such history may be found in reports of legislative committee, in the transcript of stenographic notes taken during a hearing, legislative investigation, or legislative debates.
4. Contemporaneous and Practical Construction – Those who lived at or near the time when the law was passed were more acquainted with the conditions and the reasons why that law was enacted. Their understanding and application of the law, especially if the same has been continued and acquiesced by the judicial tribunals and the legal profession, deserve to be considered by the courts.
5. Executive Construction – The construction given by the executive department deserves great weight and should be respected if said construction has been formed and observed for a long period of time.
a. Congress is deemed to have been aware of the contemporaneous and practical construction made by the officers charged with the administration of the law.
b. The courts should respect that contemporaneous construction except if it is clearly erroneous.
c. Executive construction has more weight if it is rendered by the Chief Legal adviser of the government who can issue opinions to assist various departments of the government charged with the duty to administer the law.
d. The opinion, however, of the Chief Legal adviser is subservient to the ruling of the judiciary which is in charge of applying and interpreting laws.
6. Legislative Construction – Legislative construction is entitled to consideration and great weight but it cannot have control as against the court’s prerogative to decide on what is the right or wrong interpretation.
7. Judicial Construction - It is presumed that the legislature was acquainted with and had in mind the judicial construction of former statutes on the subject. It is also presumed that the statute was enacted in the light of the judicial construction that the prior enactment had received. With respect to a statute adopted from another state, it is presumed that it was adopted with the construction placed upon it by courts of that state.
8. Construction by the Bar and Legal Commentators – It is presumed that the meaning publicly given a statute by the members of the legal profession is a true one and regarded as one that should not be lightly changed. The opinion and commentaries of text writers and legal commentators, whether they are Filipinos or foreigners, may also be consulted as, in fact, they are oftentimes cited or made as references in court decisions.
It is necessary to interpret or construct statute when any of the following exists:
1. When the language of the statute is ambiguous, doubtful or obscure when taken in relation to a set of facts.
2. When reasonable minds disagree as to meaning of the language used in the statute.
It is not necessary to interpret or construct when the law speaks in clear and categorical language. The duty of the court, in such a case, is to apply the law, not to interpret it.
What is the guiding principle of interpretation and construction of the Cooperative Code? –
In case of doubt as to the meaning of any provision of the Code or any regulation issued pursuant to the Code, the same shall be resolved liberally in favor of the cooperatives and their members (R.A. 6938, Art. 126).
Notes on Cooperative Laws and Related Social Legislations (CO 200) by
Ricardo L. Saclayan, BSC/LLB & Alex L. Saclayan, BSC/MEM, 2007
Republic of the Philippines
Congress of the Philippines
Fourteenth Congress
Second Regular Session
Republic Act No. 9520
AN ACT AMENDING THE COOPERATIVE CODE OF THE PHILIPPINES TO BE KNOWN AS THE
"PHILIPPINE COOPERATIVE CODE OF 2008"
CHAPTER I
GENERAL CONCEPTS AND PRINCIPLES
ARTICLE 1. Title. - This Act shall be known as the "Philippine Cooperative Code of 2008.
ART. 2. Declaration of Policy.- It is the declared policy of the State to foster the creation and growth of cooperatives as a practical vehicle for promoting self-reliance and harnessing people power towards the attainment of economic development and social justice. The State shall encourage the private sector to undertake the actual formation and organization of cooperatives and shall create an atmosphere that is conducive to the growth and development of these cooperatives.
Toward this end, the Government and all its branches, subdivisions, instrumentalities and agencies shall ensure the provision of technical guidance, financial assistance and other services to enable said cooperatives to develop into viable and responsive economic enterprises and thereby bring about a strong cooperative movement that is free from any conditions that might infringe upon the autonomy or organizational integrity of cooperatives.
Further, the State recognizes the principle of subsidiarity under which the cooperative sector will initiate and regulate within its own ranks the promotion and organization, training and reserach, audit and support services relative to cooperatives with government assistance where necessary.
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.
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) Democrative 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 setting up reserves, part of which should at least be indivisible; benefitting members in proportion to their partonage of the cooperative's bubsiness; 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 aggreements 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.
CHAPTER II
ORGANIZATION AND REGISTRATION
ART. 10. 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 this Code: Provided, That a prospective member of a primary cooperative must have completed a Pre-Membership Education Seminar (PMES).
ART. 14. Articles of Cooperation. (1) 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.
ART. 15. Bylaws. (1) Each cooperative to be registered under this Code shall adopt bylaws not inconsistent with the provisions of this Code. The bylaws shall be filed at the same time as the articles of cooperation.
ART. 16. Registration. A cooperative formed and organized under this 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.
ART. 17. Certificate of Registration. A certificate of registration issued by the Authority under its official seal shall be conclusive evidence that the cooperative therein mentioned is duly registered unless it is proved that the registration thereof has been cancelled.
CHAPTER III
MEMBERSHIP
ART. 26. Kinds of Membership. A cooperative may have two (2) kinds of members, to wit: (1) regular members and (2) associate members.
A regular member is one who has complied with all the membership requirements and entitled to all the rights and privileges of membership. An 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.
CHAPTER IV
ADMINISTRATION
ART. 32. Composition of the General Assembly. The general assembly shall be composed of such members who are entitled to vote under the articles of cooperation and bylaws of the cooperative.
ART. 33. Powers of the General Assembly. The general assembly shall be the highest policy-making body of the cooperative and shall exercise such powers as are stated in this Code, in the articles of cooperation and in the bylaws of the cooperative. The general assembly shall have the following exclusive powers which cannot be delegate
1. To determine and approve amendments to the articles of cooperation and bylaws;
2. To elect or appoint the members of the board of directors, and to remove them for cause.
However, in the case of the electric cooperatives registered under this Code, election of the members of
the board shall be held in accordance with its bylaws or election guideline of such electric cooperative;
and
.
3. To approve developmental plans of the cooperative
CHAPTER V
RESPONSIBILITIES, RIGHTS AND PRIVILEGES OF COOPERATIVE
ART. 51. Address. Every cooperative shall have an official postal address to which all notices and communications shall be sent. Such address and every change thereof shall be registered with the Authority.
ART. 52. Books to be Kept Open. (1) Every cooperative shall have the following documents ready and accessible to its members and representatives of the Authority for inspection during reasonable office hours at its official address:
(a) A copy of this Code and all other laws pertaining to cooperatives;
(b) A copy of the regulations of the Authority;
(c) A copy of the articles of cooperation and bylaws of the cooperative;
(d) A register of members;
(e) The books of the minutes of the meetings of the general assembly, board of directors and committee;
(f) Share books, where applicable;
(g) Financial statement; and
(h) Such other documents as may be prescribed by laws or the bylaws.
CHAPTER VI
INSOLVENCY OF COOPERATIVES
ART. 63. Proceeding Upon Insolvency.- In case a cooperative is unable to fulfill its obligations to creditors due to insolvency, such cooperative may apply for such remedies as it may deem fit under the provisions of Act No. 1956, as amended, otherwise known as the Insolvency Law.
Nothing in this Article, however, precludes creditors from seeking protection from said insolvency law.
CHAPTER VII
DISSOLUTION OF COOPERATIVES
ART. 64. Voluntary Dissolution Where no Creditors are Affected.
ART. 65. Voluntary Dissolution Where Creditors Are Affected
ART. 66. Involuntary Dissolution.
ART. 67. Dissolution by Order of the Authority
ART. 68. Dissolution by Failure to Organize and Operate.
ART. 69. Liquidation of a Cooperative.
ART. 70. Rules and Regulations on Liquidation.
CHAPTER VIII
CAPITAL, PROPERTY, AND FUNDS
ART. 71. Capital. - The capitalization of cooperatives and the accounting procedures shall be governed by the provisions of this Code and the regulations which shall be issued.
ART. 73. Limitation on Share Capital Holdings.- No member of primary cooperative other than cooperative itself shall own or hold more than ten per centum (10%) of the share capital of the cooperative.
ART.75. Capital Build-Up.- The bylaws of every cooperative shall provide for a reasonable and realistic member capital build-up program to allow the continuing growth of the member’s investment in their cooperative as their economic conditions continue to improve.
CHAPTER X
ALLOCATION AND DISTRIBUTION OF NET SURPLUS
ART. 85. Net Surplus. Notwithstanding the provisions of existing laws, the net surplus of cooperatives shall be determined in accordance with its bylaws. Every cooperative shall determine its net surplus at the close of every fiscal year and at such other times as may be prescribed by the bylaws.
CHAPTER XI
AGRARIAN REFORM COOPERATIVE
ART. 88. Definition and Purpose. An 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.
CHAPTER XII
COOPERATIVE BANKS
ART. 95. Governing Law. The provisions of this Chapter shall primarily govern cooperative banks registered under this Code and the other provisions of this Code shall apply to them only insofar as they are not inconsistent with the provisions contained in this Chapter.
CHAPTER XIII
INSURANCE COOPERATIVE
ART. 105. Cooperative Insurance Societies. Existing cooperatives may organize themselves into a cooperative insurance entity for the purpose of engaging in the business of insuring life and property of cooperatives and their members.
CHAPTER XIV
PUBLIC SERVICE COOPERATIVES
ART. 109. Definition and Coverage. A public service cooperative, within the meaning of this Code, is one organized to render public services as authorized under a franchise or certificate of public convenience and necessity duly issued by the appropriate government agency.
CHAPTER XV
CREDIT COOPERATIVES
ART. 115. Definition and Objectives. A credit cooperative is a financial organization owned and operated by its members with the following objectives:
(1) To encourage savings among its members;
(2) To create a pool of such savings for which loans for productive or provident purpose may be granted to its members; and
(3) To provide related services to enable its members to maximize the benefit from such loans.
CHAPTER XVI
FINANCIAL SERVICE COOPERATIVES
ART. 119. Definition and Functions of Financial Services Cooperatives. A financial service cooperative is a financial organization owned and operated by its members and authorized to provide the following service, exclusively to its members:
(a) The functions of credit cooperatives and other cooperatives, including multipurpose cooperatives, that provide savings and credit to their members, and
(b) Other financial services subject to regulation by the BSP.
CHAPTER XVII
ELECTRIC COOPERATIVE
ART. 126. Coverage. The provisions of this Code shall apply to all electric cooperatives registered with the Authority. This shall also cover new distribution utilities that will register with the Authority.
Electric cooperatives may undertake power generation utilizing renewable energy sources, including hybrid systems, acquisition and operation of subtransmission or distribution as its primary purposes.
ART. 127. Registration of Electric Cooperatives. The registration of an electric cooperative with the Authority under this Code shall be submitted for approval to the members through a referendum, called for the purpose as provided for under Articles 183 and 129 of this Code.
ART. 128. Voting Requirement for Registration. In compliance with the referendum as a voting procedure, the required number of votes for registration with the Authority shall be twenty percent (20%) of all members in good standing.
CHAPTER XVIII
MISCELLANEOUS PROVISIONS
ART. 135. Compliance With Other Laws. The Labor Code and all other labor laws, the Social Security Act, the Medical Care Act, and all other social legislations, and all other laws and executive orders shall apply to cooperatives duly registered under this Code.
CHAPTER XIX
FINAL PROVISIONS
ART. 139. Implementing Rules and Regulations. The Authority shall issue rules and regulations to implement those provisions of this Code which expressly call for the issuance thereof. This paragraph shall not apply to those cases wherein a specific provision of this Code expressly designates particular government agencies which shall issue the regulations called for by any provision of this Code.
ART. 140. Penal Provisions. The following acts or omissions affecting cooperatives are hereby prohibited:
(1) The use of the word cooperative by any person or of persons or organizations, unless duly registered as a cooperative under this Code except as provided for under Article 130 hereof. In case of violation, the individual or individuals concerned, or in the case of an organization, its officers and directors shall, upon conviction, each suffer the penalty of imprisonment of not less than two (2) years nor more than five (5) years and a fine not exceeding Twenty thousand pesos (P20,000.00) or both at the discretion of the court;
The Authority may motu proprio, initiate complaints for violations of this provision.
(2) Any person who willfully attempts in any manner to evade or defeat tax in violation of the provisions of Articles 60 and 61 of this Code shall in addition thereof, be punished by a fine of not less than Thirty thousand pesos (P30,000.00) but not more than One hundred thousand pesos (P100,000.00) and suffer imprisonment of not less than two (2) years but not more than four (4) years: Provided, That the conviction or acquittal obtained under this Article shall not be a bar to the filing of a civil suit for the collection of taxes;
(3) Direct or indirect violation or circumvention of the provisions of Articles 60 and 61 of this Code committee by any public official or employee of any bureau, office or agency of the government that deprives, diminishes or in any manner hinders or restricts any duly registered cooperative from the full enjoyment of the exemption from the payment of the taxes, fees and charges enumerated therein, shall upon conviction, suffer a penalty of not less that one (1) year but not more than five (5) years imprisonment or a fine in the amount of not less than Five thousand pesos (P5,000.00) or both at the discretion of the court and shall further be disqualified to hold any other office;
(4) Direct or indirect interference or intervention by any public official or employee into the internal affairs of a cooperative of which he is not a member, such as, but not limited to, the following:
(a) Influencing the election or appointment of officers, directors, committee members and employees through public or private endorsement or campaign for or against any person or group of persons;
(b) Requiring prior clearances for any policy or decision within the cooperative;
(c) Requesting or demanding for the creation of positions or organizational units, or recommending any person for appointment, transfer, or removal from his position; or
(d) Any other acts inimical or adverse to the autonomy and independence of cooperatives.
(5) A director, officer or committee member who violated the provisions of Article 45 on the Liability of Directors, Officers and Committee Members, Article 48 on the Disloyalty of a Director, and Article 49 on the Illegal Use of Confidential Information shall upon conviction suffer a fine of not less than Five hundred thousand pesos (P500,000.00) nor more than Five hundred thousand pesos (P500,000.00) or imprisonment of not less than five (5) years but not more than ten (10) years or both at the court's discretion;
(6) The following are considered offenses punishable by a penalty of imprisonment of not less than one (1) year nor more than five (5) years or a fine of not more than Fifty thousand pesos (P50,000.00) or both at the discretion of the court:
(a) Omission or refusal to furnish any information, report or other document that is required under this Code;
(b) Providing information, reports or other documents to the Authority that are required under this Code which the person knows to be false or misleading;
(c) Omission or refusal to keep a book or register under this Code or to make the required entry therein;
(d) Making an entry required under this Code in a book or register, which the person knows to be false or misleading;
(e) Hindering an authorized person from making an inspection, audit, examination or investigation required under this Code;
"(f) Failure to comply with an order or written instructions issued or given by the Authority;
(g) Violation of the provisions regarding transactions with a restricted party; and
(h) Abetting, counseling, allowing, authorizing or commanding another person to commit an offense punishable by this Code: Provided, That in case the violator is a cooperative or juridical person, the penalty shall be imposed on its directors and officers.
(7) Any violation of any provision of this Code for which no penalty is imposed shall be punished by imprisonment of not less than six (6) months nor more than one (1) year and a fine of not less than One thousand pesos (P1,000.00), or both at the discretion of the court.
In case of violation of any provision of this Code, the individual or individuals, and in the case of organizations or government agencies, its officers, and directors shall, upon conviction by a Court, each suffer a penalty of not less than two (2) years but not more than five (5) years imprisonment or a fine in the amount of not less than Twenty thousand pesos (P20,000.00), or both at the discretion of the court. In the case of a public official or employee, the offender shall upon conviction, suffer the accessory penalty of temporary absolute disqualification.
ART. 141. Printing and Distribution. (1) The National Printing Office shall publish this Code in the Official Gazette in full within sixty (60) days from the date of approval thereof. Copies of this Code shall be given to every department, agency and instrumentality of the National Government, including regional, provincial offices and local governments including government-owned and controlled corporations.
(2) All duly registered cooperatives and their federations, unions and associations, and cooperative corporations shall be given one (1) copy each at cost. Thereafter, every newly registered cooperative shall be issued at cost a copy of this Code and the regulations promulgated thereon together with its certificate of registration.
ART. 142. Interpretation and Construction. In case of doubt as to the meaning of any provision of his Code or the regulations issued in pursuance thereof, the same shall be resolved liberally in favor of the cooperatives and their members.
ART. 143. Repealing Clause. Except as expressly provided by this Code, Presidential Decree No. 175 and all other laws, or parts thereof, inconsistent with any provision of this Code shall be deemed repealed: Provided, That the provisions of Sec.s 3, 5, and 7 of Presidential Decree No. 1645, Executive Order No. 623, series of 2007. Revenue Regulation No. 20-2001, and all laws, decrees, executive orders, implementing rules and regulations, BIR circulars, memorandum orders, letters of instruction, local government ordinances, or parts thereof inconsistent with any of the provisions of this Act are hereby repealed, amended or modified accordingly.
ART.144. Transitory Provisions. (1) All cooperatives registered and confirmed with the Authority under Republic Act No. 6938 and Republic Act No. 6939, are hereby deemed registered under this code, and a new certificate of registration shall be issued by the authority: Provided, That such cooperative shall submit to the nearest office of the authority a copy of their certificate of registration or certificate of confirmation, the articles of cooperation, their bylaws, and their latest audited financial statement within one (1) year from the effectivity of this code, otherwise the shall be deemed cancelled motu proprio.
(2) Following the issuance of the new certificate of registration, the registered cooperatives shall secured their certificate of tax exemption from the nearest office of the Bureau of Internal Revenue (BIR): Provided, That such exemptions shall be valid of five (5) years from the date of issue: Provided, further, That all unpaid assessments of previously registered cooperative shall be the subject of compromise settlement on terms favorable to such cooperative; and: Provided, finally, That the BIR and the authority shall be jointly issue the necessary regulations on this exemption and compromise within ninety (90) days from the effectivity from this Code.
(3) Registration of electric cooperatives with the Authority shall not be considered as a transferred of ownership of its assets and liabilities nor shall it constitute a change in the nature, structure, and status of the cooperative. Said registration shall not result in the revocation of the condoned loans under Republic Act No. 9136, otherwise known as the Electric Power Industry Reform Act: Provided, That electric cooperatives with existing loans shall not be subject to the control and supervisions of its creditors and shall only be limited to the fulfillment of each civil obligations.
ART.145. Separabilty Clause. - Should any part of this code be declared unconstitutional, the validity of remaining provision hereof shall remain in full and effect.
ART.146. Effectivity Clause. - This code shall take effect fifteen (15) days from its publication in a newspaper of general circulation.
Making It Known…(CONTINUED)
LO2 : IDENTIFY THE LEGAL UNDERPINNINGS OF COOPERATIVES
CONTENTS:
• Cooperative Code of 2008 (RA 9520)
• Implementing Rules & Regulations
• Articles of Cooperation & Bylaws
Learning Outcome No. 2 referencing legal basis : Implementing Rules and Regulation may be accessed through the official CDA website, www.cda.gov.ph
A Digital Software prepared by Professor Ellen S. Mantalaba, former Dirtector of the College of Cooperatives-Polytechnic University of the Philippines and member of the Technical Working Group that drafted the House of Representatives and Senate Bills into RA 9520 may be accessed through cooperativeunionofcavite.com
Salient Features of
Implementing Rules and Regulations of RA 9520
Phil. Cooperative Code of 2008
Presented by
Prof. Elenita S. Mantalaba, CPA
College of Cooperatives and Social Development
Polytechnic University of the Philippines
Learning Outcome No. 2 regarding Articles of Cooperation and Bylaws includes the Articles and Bylaws of Partner/Client Cooperative and will be the subject of discussion of the training session.
Making It Work…
LO3: EXPLAIN THE PLANS, PROGRAMS AND POLICIES OF THE COOPERATIVE
CONTENTS:
• Coop Vision
• Coop Mission
• Coop Strategic Plan
• Policies and Programs of the Cooperative
Learning Outcome No. 3 refers to the plans, programs and policies of Partner/Client Cooperative and will necessarily include the Coop’s vision, mission, strategic plan, and policies and programs as subjects of discussion of the training session.
We adopt here the International Co-operative Alliance (ICA) vision-mission-goal statement for an introduction
ICA Statutes and By-Laws
INTERNATIONAL CO-OPERATIVE ALLIANCE
The International Co-operative Alliance is an independent, non-governmental organisation that unites, represents and serves co-operatives worldwide. It exists to provide an effective and efficient global voice and forum for knowledge, expertise and co-ordinated action for and about co-operatives.
ICA members are international and national co-operative organisations from all sectors of the economy including agriculture, banking, fisheries, health, housing, industry, insurance and tourism. Currently, the ICA has over 250 member organisations from almost 100 countries, representing approximately 1 billion individuals worldwide. Around 100 million people work for a co-op globally.
ICA Vision
To be prized as the organisation of reference which provides an effective and efficient global voice and forum for knowledge, expertise and co-ordinated action for and about co-operatives.
ICA Mission
The International Co-operative Alliance unites co-operatives worldwide.
It is the custodian of co-operative values and principles and makes the case for their distinctive values-based economic business model which also provides individuals and communities with an instrument of self-help and influence over their development. The ICA advocates the interests and success of co-operatives, disseminates best practices and know-how, strengthens their capacity building and monitors their performance and progress over time.
ICA Strategic Objectives
1. Membership : Consolidate and increase membership – (1) retain existing members (2) add new members.
2. Influence : Increase global influence to promote co-operatives as a specific values-based business model -
(1) Improve ICA’s effectiveness as a lobbyist and advocate for the c-operative model and values.
(2) Maintain and further develop effective communications.
(3) Build the credibility of the ICA as the center of excellence for knowledge, expertise and coordinate
action about co-operatives.
3. Development : Develop strong co-operative enterprises for local and economic progress – (1) Improve capacity building. (2) Strengthen inter-co-operation. (3) Consolidate and build strategic alliances/networks.
4. Governance : Strengthen ICA’s sustainability through financial capacity, good governance and committed people base –
(1) Seek significant funding from alternative sources.
(2) Maximize effectiveness and good governance of all ICA.
(3) Build skills appropriate to roles and responsibilities. strengthen the organizational development of
ICA.
ICA Statutes & Bylaws
INTERNATIONAL CO-OPERATIVE ALLIANCE
BY-LAWS
As adopted by the General Assembly, 6 June 2008 for enactment 1 January 2009
and revised by the General Assembly, 20 November 2009.
I. Membership Application and Admission Requirements
1. The ICA Board establishes membership evaluation criteria for applications for ICA membership in conformity to Article 7 of the ICA Statutes.
2. Organisations apply for the status of Member or Associate Member on the official form to be supplied by ICA, and send their applications and all required supporting documentation including membership data to the ICA Central Office. If the language in which the documents are available is not one of the official languages of ICA, a translation in one of the official languages will be provided.
3. ICA will calculate the subscription fee of the applying organisation as per the ICA subscription formula.
4. Before any application is submitted to the ICA Board, the Director-General will in coordination with Regional Directors make appropriate inquiries as to the suitability of the organisation concerned to be admitted to membership of the ICA, including consultation with existing member organisations from the same country and with the Regional Authorities and Sectoral Organisations.
5. New members (Members and Associate Members) of ICA pay their subscriptions during the first year on the basis of a pro rata amount determined by their month of admittance.
6. In truly exceptional circumstances, Members and Associate Members having difficulty in paying subscriptions may apply for special treatment to the Director-General. Such requests, accompanied by supporting documentation, must be received by 31 March each year for final decision by the ICA Board. The Director-General, in co-ordination with Regional Directors, will make appropriate inquiries as to the situation of the organisation concerned including consultation with existing members from the same country and with ICA Regional Authorities and Sectoral Organisations prior to submitting the request to the ICA Board.
II. Subscription Formula
1. All subscriptions are paid in Swiss Francs (CHF) and may be paid in US Dollars or Euros on the decision of the Board according to the modalities defined by the Board.
2. ICA calculates the subscriptions of its Members and Associate Members on a four-year cycle based on membership data provided two years prior to year one of the subscription cycle. All member organisations are nonetheless required to provide the Central Office annually with updated membership data including the number of members that they have or represent as well as an update on affiliations with other ICA members.
3. Subscription fees remain at the same level during the four-year subscription cycle, but may be indexed for inflation. The General Assembly provides the ICA Board with the power to add an annual percentage to cover inflation.
4. The subscription formula for Members (full members) is calculated as follows:
ICA Subscription Fee for Members = Base Fee (CHF 3,000) x Membership Tier Multiplier (TABLE 1) x World Bank Country Income Index (WBCII) Multiplier
However, if the amount does not reach the minimum dues based on the WBCII category of the member, the appropriate minimum dues apply.
5. ICA calculates Member dues on the basis of the number of individual members that they have or represent, as well as affiliations to other ICA members (“members of members”) two years previous to the year of payment. Failing to obtain the required membership data, the ICA will use the data it can find or evaluate the organisation to the best of its knowledge.
6.The subscription formula for Associate Members are based on World Bank Country Income Index as below:
ICA Subscription Fee for Associate Members = WBCII Low = 500 CHF
WBCII Lower middle, Upper middle and High = 3,000 CHF
For Associate Members with international or supra-national status, the subscription fee is 7,000 CHF.
7. ICA uses the World Bank Country Income Index (WBCII) one year preceding the year of payment.
8. In countries where there is more than one member organisation, the affiliations between ICA members in that country will be established. The formula is then first applied to the primary co-operative/s that are direct members of ICA to avoid any double counting of individual members. Their respective membership is thereafter subtracted from that of the other direct members of ICA in that country to which they are affiliated. The dues for other organisations in ICA membership are thereafter calculated on the remainder of members they represent.
9. Members of a given country may enter into an institutional arrangement with the ICA under which they determine how the aggregate subscription fees will be paid in accordance with ICA Statutes Article 12.
10. 275,000 Swiss francs (CHF) is the maximum dues paid by country. In cases where the sum of the individual dues of all members in a country exceeds the maximum dues limit, the contribution from members in that country is proportionally allocated or redefined on the basis of a particular institutional arrangement as described in paragraph 8 above.
11. The General Assembly provides the ICA Board, through its Membership Committee, with discretionary power to modify a specific dues’ contribution (reduced or increased) to take into account circumstantial elements that are of an exceptional nature – i.e. special treatment. (Article I, para. 6 of the Bye-Laws).
12. Subscriptions will be redistributed between Central Office, the Regions and Sectoral Organisations according to modalities established by the ICA Board.
III. Representation at the General Assembly
1. The basis for calculating the number of representatives that each Member may send to the General Assembly is based on the number of individual members or individual members represented and in accordance with the following scales:
Tiers of membership Number of individual members Votes
1 Less than or equal to 2,500 1
2 Greater than 2,500 and lower than 50,000 2
3 Equal to or greater than 50,000 and lower than 100,000 3
4 Equal to or greater than 100,000 and lower than 500,000 4
5 Equal to or greater than 500,000 and lower than 1,000,000 5
6 Equal to or greater than 1,000,000 and lower than 1,500,000 6
7 Equal to or greater than 1,500,000 and lower than 2,000,000 7
8 Equal to or greater than 2,000,000 and lower than 3,000,000 8
9 Equal to or greater than 3,000,000 and lower than 5,000,000 9
10 Equal to or greater than 5,000,000 and lower than 10,000,000 10
11 Equal to or greater than 10,000,000 and lower than 30,000,000 11
12 Equal to or greater than 30,000,000 12
2. Each Member, or a group of Members, from one country is entitled to at least one voting representative for each complete payment of their total subscription with a maximum of 25 representatives per country, excluding the President of ICA, as laid down in Article 15 of the Statutes.
3. In countries where there is more than one Member, the number of representatives and votes are divided proportionally among Members. ICA also permits Members in a given country to voluntarily agree to distribute votes among themselves on condition that no representative holds more than twelve votes. Any cases of dispute will be decided by the Board, subject to appeal to the General Assembly.
4. Individual Member organisations have the right to entrust votes to one or more representatives from the same country, provided that no representative holds more than twelve votes.
5. Members have the right to send observers to the meeting.
6. Observers from non-member organisations, unless invited by ICA, are only admitted by a decision of the Director-General.
7. A registration fee, as determined by the Board, will be paid for each representative, associate and observer.
IV. Standing Orders for the General Assembly Procedures
Sessions of the General Assembly
1. Provision normally is made for the proceedings of the General Assembly to extend over two days.
2. No meetings of ICA regional, sectoral or thematic entities may take place during the sittings of the General Assembly, and all social functions which would in any way hinder the work of the General Assembly are strictly limited.
3. The President of ICA presides over all sessions of the General Assembly but may be substituted when necessary by one of the Vice-Presidents. The President is a member of all special committees appointed by the General Assembly.
4. A timetable will be prepared for the discussion of each subject, which shall be strictly adhered to, subject only to such modifications as the Board may find necessary for the admission of emergency motions under Paragraph 17.
5. The business of the General Assembly is carried on in such of the official languages - English, French, German, Russian, and Spanish - as the Board decides. Any representative who is unable to use one of the official languages of ICA may be assisted by a delegation interpreter.
6. No representative, except the President in the chair, is permitted to speak in more than one language during an intervention.
7. General Assembly documentation is issued one month before the date of the meeting.
8. All motions are submitted to the Director-General two months before the date of the meeting for consideration by the Board, which determines their admissibility.
9. Amendments to a motion must be submitted in writing to the Director-General seven (7) days before the discussion upon the motion begins. At the close of the discussion, each amendment is put to the vote before the original motion.
Order of Debate
10. Members’ representatives desiring to speak on any subject must indicate their wishes to the President, who calls upon them in the order in which their requests are received.
11. All speeches must be addressed to the President and directed to the subject under discussion, or to a question of procedure.
12. Members’ representatives may speak more than once on any matter under discussion, but may make a second speech only after all those inscribed have had an opportunity of speaking.
13. Questions of order or personal explanations may be raised at the end of any speech, or translation thereof, but may not interrupt either the speaker or the interpreter, or the President in the act of taking a vote.
14. Proposers of motions or substantive motions have the right to reply to the discussion before the motions are put to the vote. Not more than one motion, or amendment to it, will be discussed at any one time unless the President decides otherwise.
15. As a general rule, speakers are asked by the President to adhere to specific time limitations.
16. Discussion on any question may be closed by a motion, “That the question be now put”. Such motion may only be proposed by a representative who has not already spoken on the subject under discussion. If the closure is seconded, the President puts it to the vote. The proposer of the original motion has the right to reply before the vote is taken.
17. Dilatory motions - i.e. “That the discussion be adjourned” or “That the matter be dropped” - are formally moved and seconded and put to the vote without discussion.
18. Emergency motions which any Member may desire to submit to the General Assembly must be handed in by noon, on the first day of the meeting, to the President, who reports on them to the General Assembly on the second day, following decision by the Board.
19. No motion is put to the vote unless it has been presented in accordance with the General Assembly Standing Orders and has been seconded.
20. Amendments to a motion must be submitted in writing to the Director-General seven (7) days before the discussion upon the motion begins, and are considered in the order in which they occur. At the close of the discussion, each amendment is put to the vote before the original motion.
Voting
21. All motions shall in the first instance be submitted to the vote by a show of voting cards of accredited representatives. Any representative may demand a count, which is taken by the Director-General calling aloud the name of each country in alphabetical order and at the same time announcing the number of votes to which it is entitled, and recording the responses of the respective Members.
22. The President has only one vote. In the case of an equality of votes being given on any question, the President declares the proposition “Not carried”.
23. Voting is certified by the Director-General under the supervision of the President.
Suspension of Standing Orders
24. No motion to suspend a Standing Order for any purpose will be accepted unless notice in writing is given to the Director-General by not less than 10 representatives, stating the reason for the motion. The motion to suspend Standing Orders is put to the vote after it has been moved and formally seconded and not more than one speech made in opposition. To suspend Standing Orders the motion must be approved by a three-fourths majority. If defeated, no second motion for the same purpose is permitted.
V. Standing Orders for Board Election
1. ICA Members have the right to nominate directly candidates for election as President and to the ICA Board, with the exception of Vice-Presidents, representatives of the sectoral organisations and the youth representative. All nominations must be received by the ICA Director-General not less than two months before the General Assembly in accordance with a timetable set by the Board in order to be included in the final agenda and documentation issued one month before the meeting.
2. Each ICA Regional Assembly nominates a person to serve as ICA Vice-President. The nominations are submitted in accordance with Paragraph 1 of the Standing Orders for Board Election.
3. ICA sectoral organisations nominate their representatives to the Board based on the criteria and terms of reference established by the ICA Elections Committee. The nominations are submitted in accordance with Paragraph 1 of the Standing Orders for Board Election.
4. ICA youth co-operators nominate their representative to the Board. The nominations are submitted in accordance with Paragraph 1 of Standing Orders for Board Election.
5. The ICA Board appoints an Elections Committee. The Committee is composed of at least five persons including retiring Board members supplemented as needed by members as decided by the Board, and will be gender-balanced. The Committee:
a. seeks out and encourages the nomination of candidates, as needed;
b. supervises the conduct of elections at the General Assembly;
c. rules upon the eligibility of candidates;
d. ensures that elections are conducted in accordance with established procedures;
e. advises the Board as required on election issues.
6. Emergency nominations may be accepted at the discretion of the Elections Committee, for justifiable technical reasons, up to 24 hours prior to the voting.
7. The members of the Board, after serving a four-year term of office, are eligible for re-election.
8. The Board election, as a rule, is conducted by secret ballot.
9. The voting is certified by the Elections Committee.
10. Board members may be removed during their term of office, in the case of action contrary to the interests of ICA, by non-compliance with the ICA Board Standing Orders and Code of Governance or by a vote of two-thirds of the Members’ representatives to the General Assembly in attendance.
VI. ICA Sectoral Organisations and Thematic Committees
In accordance with Articles 29 and 30 of ICA Statutes, the ICA General Assembly recognises the following bodies as ICA Sectoral Organisations and Thematic Committees:
ICA Sectoral Organisations
International Co-operative Agricultural Organisation (ICAO)
International Co-operative Banking Association (ICBA)
Consumer Co-operatives Worldwide (CCW)
International Co-operative Fisheries Organisation (ICFO)
International Health Co-operative Organisation (IHCO)
International Co-operative Housing Organisation (ICA Housing)
International Co-operative and Mutual Insurance Federation (ICMIF)
International Organisation of Industrial, Artisanal and Service Producers’ Cooperatives(CICOPA)
ICA Thematic Committees
Committee on Co-operative Research (ICACCR)
Communications Committee (ICACC)
Human Resource Development Committee (ICAHRD)
Gender Equality Committee (ICAGEC)
2012 has been recognised as the International Year of Co-operatives by the United Nations. This is an acknowledgement by the international community that co-operatives drive the economy, respond to social change, are resilient to the global economic crisis and are serious, successful businesses creating jobs in all sectors.
Co-operatives are a reminder to the international community that it is possible to pursue both economic viability and social responsibility.
1
Point of Departure
NOTES ON BASIC COOPERATIVE COURSE
Knowing The Co-op Idea…Making it known…and Making it Work
Point of Departure is the first module in this proposed study corresponding to the first course listed in the CDA Standard Curricula. The title suggests a crossroads scenario, even, a crossover move to leave behind that which one once treasured most. This must be The Co-op Idea’s takeoff point. In the words of Franklin D. Roosevelt, “Competition has been shown to be useful up to a certain point and no further, but co-operation, which is the thing we must strive for today, begins where competition leaves off” (Brainy Quotes, www.brainyquotes.com.)
Other famous leaders share the same idea -
It is literally true that you can succeed best and quickest by helping others to succeed (Napoleon Hill)... Interdependent people combine their own efforts with the efforts of others to achieve their greatest success (Stephen Covey)... In the long history of humankind (and animal kind, too) those who learned to collaborate and improvise most effectively have prevailed (Charles Darwin)... Alone we can do so little. Together we can do so much (Helen Keller)... People have been known to achieve more as a result of working with others than against them (Dr. Allan Fromme)... Two heads are better than one (Polish proverb)... The key elements in the art of working together are how to deal with change, how to deal with conflict, and how to reach our potential...the needs of the team are best met when we meet the needs of individual persons (Max DePree)... Synergy is the bonus that is achieved when things work together harmoniously (Mark Twain)... If you can laugh together, you can work together (Robert Orben)... SOURCE : Brainy Quotes, ibid.
As a synonym to Point of Departure, ‘turning point’ adds a most dramatic and realistic emphasis, ie.,
The most creative turn of events in man’s long history occurred when man gave up his stone ax and began to cooperate with his neighbour. That seemingly elementary decision set into motion what we know now as civilization. At the heart of all that civilization has meant and developed is community – the mutually cooperative and voluntary venture of man to assume a semblance of responsibility for his neighbour.
(Martin Luther King, Jr., The Beloved Community, 1968).
Point of Departure also signifies disagreement or dissent, as in a dissenting opinion. From the Co-op literature reviewed, we excerpted thus,
The value of dissent – Let’s begin by acknowledging the value of dissent, disagreement, and divergent opinions. To dissent is “to hold or express opinions that are at variance with those previously, commonly, or officially expressed"…
Within a healthy society, the ability to dissent is related to the importance of freedom of thought and expression. Organizational studies provide evidence that discouraging dissent can lead to productivity loss, poor morale, and poor decision-making. Finally, within a group that uses participatory decision-making, such as a board of directors, successful collaboration requires the productive expression of dissenting or differing viewpoints. In other words, diverse opinions make creative, generative, inclusive solutions possible, when the group is able to hear and process them effectively. (SOURCE : Healthy Board Dissent, www.cooperativegrocer.coop. 7 August 2012)
Clearly, dissent here means creative dissent. In the tradition of the Co-op pioneers, ”The moral miracle performed by our Co-operators at Rochdale is that they had the good sense to differ without disagreeing; to dissent with each other without separating; to hate at times, and yet always to hold together” (George Jacob Holyoake, quoted in David J. Thompson, Weavers of Dreams, 1994).
Any Basic Cooperative Course should therefore strive to revisit that point of departure taken by the Pioneers to discover The Co-op Idea’s uniqueness – The Co-op Idea was born in a revolutionary era, but the dour Pioneers mounted a unique ‘counter revolution’. When members exchanged money over the counter for the cooperative’s goods, an empire was born, an empire meant to equalize not to exploit. The pioneers believed that trading could build a better world, one without conflict…While others urged armed revolt, strikes, and mass action on the streets, the cooperators quietly built the people’s business (David J. Thompson, ibid.)
From the local Co-op literature reviewed, we quote a new-comer in the field, by his own admission, but a Pioneer in his own right in the area of Co-op Investment and Risk Management, CODIS President, Lanny Naniagas –
“Several years ago when I was in private corporations as a professional finance practitioner, it did not occur to me that I would be part and a volunteer of a movement that is entirely different from the corporate world where decisions would center on bottom line, earnings per share, book value per share, return on investments or return on assets. Today I am here with the decision makers of top cooperatives in the country with whom I now share the same vision – long term sustainability of cooperatives through a workable financial system that will protect the interest of every share holder no matter how insignificant it is…My personal commitment to this federation is to enhance sustainability and promote continuing service of member cooperatives by providing management and financial advisory services through liquidity fund management. Cooperatives is the only way to achieve economic growth and reduce poverty.” (Vitaliano N. Nañagas II, Address to the 5th Century Cooperatives Conference, University of Asia and the Pacific, 2009).
In the succeeding sections, citations from selected and critically reviewed literature will be presented to address the first set of learning outcomes prescribed by CDA for the Basic Cooperative Course.
Knowing The Co-op Idea…
LO1 EXPLAIN THE FUNDAMENTALS OF COOPERATIVE THOUGHT & PRACTICE
CONTENTS:
• Fundamentals of Cooperatives: Why, What & How
• Cooperative Values, Principles & Practice
• The ‘Coop Difference’
WHY?
Co-operative : is the best democratic economic option available to the Filipino nation!
– Vitaliano Naniagas III, CODIS Validators’ Assessment Workshop, 2012
WHAT?
Co-operative : The people’s organization and the people’s enterprise as defined by
the people themselves
The concentration of wealth in a minority rich and social exclusion of the majority poor constitute the greatest threats in the history of democracy and peace in industrialized countries as well as in the developing countries…Co-operativism is the only capable movement to counter these threats – (Roberto Rodriguez, quoted in Roberto ‘Obet’ Pagdanganan, An Urgernt Call for Cooperative Revolution, 2008)
The “haves and the have-nots,” the “rich and the poor,” the “elite and the masa” are terms of social description that remain in circulation too long. Meanwhile, the much sought for terms of social transformation remain elusive, even as some groups would stubbornly insist that they have found it in their own dream projects, ie., social agenda or even armed struggle. We in the Co-operative movement are as bull-headed as the others in proposing our own terms – community and commerce! Our basic argument of course is the historical success achieved by the Rochdale Pioneers in harmonizing the “twin virtues of community and commerce” and unifying these into what is now known as the Co-operative character –
I have often revisited the sensibilities of the Rochdale Pioneers as they created the first modern co-operative. Their philosophy and practice set in motion standards that apply today. The Rochdale Pioneers tapped into the twin virtues of community and commerce, which, when successfully combined, led to progress and equitable environment for all. Without that harmony, the world is cast into the haves and the have-nots and an unceasing struggle for domination (David J. Thompson, Weavers of Dreams, 1994).
Co-operative…Its Nature
As we set out to pursue our task of Introducing The Co-operative Idea (Knowing the Cooperative Identity, and making it known and making it work,) let us constantly be reminded of the historical character of the Co-operative. In the words of a well respected and highly regarded Co-operative advocate : A usual way has been to consider the co-operative society as characterized by a double (dual) nature: an association of persons and its economic enterprises for the needs of those persons. Sometimes it is also referred to as the “social character” and the “economic character” of the co-operative society. On the other hand, it has been emphasized that the co-operative society has an “integrated nature” : the association of persons and its economic enterprises constitute an integrated wholeness, a unity.” (Sven Ake Book Cooperative Values in a Changing World, 1992)
Co-operative…Its Philosophy
The Co-operative philosophy is commonly stated as follows – The members are fellow-owners of capital, fellow-users of its goods and services and fellow-managers of its resources.
Sama-samang saping-kapital, sama-samang pagtangkilik ng kanyang serbisyo at kalakal, sama-samang pangangasiwa ng kanyang negosyo at ari-arian.
As the research team of the International Joint Project on Co-operative Democracy would put it –
The logic of co-operatives is simple and straight forward. The user of the services should be the owners and the organization should run to meet the needs of the users. (Making Membership Meaningful, Saskatchewan, Canada, 1995)
Co-operative…Its History
“Cooperatives exist in nearly all industrialized and developing countries. Distinctions are often made between modern cooperative organizations and traditional forms of cooperation or historic cooperative institutions, which have existed in the past and are still active in many regions…Sociological and socio-political approaches have been referring to social systems, communities or groups as cooperatively structured if the relationships between the individuals are characterized by solidarity and cooperation and if the socio-political and economic power is more or less equally distributed among the members. Such cooperatively structured communities and groups are then distinguished from other more hierarchically organized ones, in which power-structures are more or less concentrated on some individual or sub-groups…
In Europe, for instance, the early land tenure system of Germanic tribes has been defined as a cooperative agrarian system in contrast to feudal land tenure systems. Furthermore, the guilds of artisans and traders in the Middle Ages as well as various forms of communal maintenance of forests, dams etc., have been characterized as being cooperative in nature.
The same is true for developing regions, where tribal systems, extended families, local communities and in particular various forms of mutual help and indigenous cooperation have been analyzed in this regard. The autochthonous gotong-royong in Indonesia may be mentioned here as an example…
The first modern cooperatives were established in Europe in the last century primarily as a response to social problems which arose during the early phases of the industrial revolution...The people who suffered particularly during these early phases of rapid transformation of the pre-industrial economic structures, belonged to different segments of the population…the rapidly growing class of labourers in the cities had to cope with problems of unemployment, extremely low wages, bad labour relations and working conditions and no social security. The small craftsmen and artisans suffered seriously from the competition of the rapidly growing industrial enterprises, and, last but not least, the small still subsistence-oriented farmers faced serious problems during the processes of their integration into the developing market economies.”
Alfred Hanel, Basic Aspects of Cooperative Organizations and
Cooperative Self-Help Promotion in Developing Countries, Marburg, 1992
A similar account of the historical evolution of The Co-op Idea from traditional form to institutional form or modern cooperation was reported by Johnston Birchall –
“Co-operation is as old as the human species. Without it, there would probably not be a human species, since in the harsh conditions of the Stone Age even the fittest individuals could only survive if they learned to hunt together, to build their homes and defend their territory together...Until about two hundred years ago, such co-operation seems to have been taken for granted; most humans lived in village communities, tribes, clans or large extended families, and even in cities there were 'urban villages' in which people felt at home, both as citizens and as members of different trades organized in guilds. But something fundamental happened during what we call the industrial revolution, which first happened in Britain, and then spread to encompass the world. This was the progressive development of a market society in which more and more products from human labor were turned into commodities to be bought and sold rather than produced for oneself. Even labor became a commodity, to be bought and sold at whatever price market would bear, and more and more people became dependent on selling their labor just to survive. The old forms of co-operation (with small "c") were weakened or destroyed. Yet for those who were the losers in this new market society, new forms had to be designed and manufactured from scratch; some of them worked, others did not, and the penalty for failure was renewed poverty and despair. Those that survived became part of a movement for 'Co-operation' (with large "C"). Suddenly, people were part of a conscious and deliberate co-operative movement; they had learned to become co-operators.”
Johnston Birchall, Co-op : The People’s Business, 1994
The Co-operative Pioneers and the People Called Methodists - The Co-operative Pioneers and the People called Methodists have a common kindred ancestor in John Wesley, an Anglican priest who inspired the people of his time with his spiritual and practical ideas. According to another dedicated Co-operative historian –
“In 1844, twenty-eight working people founded the Rochdale Equitable Pioneers Society…From the mutual efforts of those humble workers grew an idea that today serves the needs of over 720 million members world-wide. The year 1844 represents the birth of the modern co-operative movement…Rochdale, although historically a small town, holds an important role in the development of the Industrial Age in Britain…John Wesley visited the town in 1749 and spoke at the Wesleyan Chapel on Toad Lane. To the seekers of heavenly salvation Wesley urged such earthly practices as “buying one of another-helping each other in business,” and to “gain all they can, and to save all they can.” The Methodists and the Rochdale Pioneers later mastered both practices.”
David J. Thompson, Weavers of Dreams, 1994
Co-operative…Its Success Story
The once formidable law of the jungle, “survival of the fittest” faded out and gave way to an idea that has finally found its time – Co-operation! After Rodhdale 1844, the soul-less exploiters of the industrial revolution lost their mythical strength. The wealthiest are not necessarily the fittest after all.
Let three Co-operatives scholars describe this phenomenal success story –
1
What could the Rochdale weavers do about the situation? There were among them many self-educated people who were quite capable of working out a strategy; they belonged to communities with a continuous history of three or four hundred years…They had been brought up on a deep sense of social equality, and placed a high value on independence, but the solutions they sought for their plight were communal ones, not those of self-help for a few individuals. It was as a whole community that they demanded betterment, and utopian notions of redesigning society anew at a stroke—Owenite communities, the universal strike, the Chartist Land Plan—swept through them like fire on the common. There were several alternatives…They turned instead to the idea of Co-operation – Johnston Birchall
2
The Co-op Idea was born in a revolutionary era, but the dour Pioneers mounted a unique ‘counter revolution’. When members exchanged money over the counter for the cooperative’s goods, an empire was born, an empire meant to equalize not to exploit. The pioneers believed that trading could build a better world, one without conflict…While others urged armed revolt, strikes, and mass action on the streets, the cooperators quietly built the people’s business. – David J. Thompson.
3
Since the Rochdale Pioneers were neither educated nor experienced in the establishment and running of commercial business, they had to think a lot and work out a detailed plan. Accordingly they formulated their own rules…These rules became later on the principles of cooperation…For the Rochdale Pioneers, cooperation was not a matter of mere pious wishes and sentiments. It was a practical method of organizing and running a store…When these rules were adopted on 24 October 1844, the pioneers gave the first successful demonstration of the management of a cooperative enterprise. Once the workers knew that the store was successful, its membership increased rapidly and in a few years’ time it ceased to be a harebrained idea or an experiment and became an established mode of successful business – P. R. Dubhasi
Co-operative…Its Difference and the Difference it Makes
Co-operatives are enterprises that put people at the center 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 enterprises are all three interests vested in the hands of the user.
Co-operatives put people at the heart of all their business. They follow a broader set of values than those associated purely with making a profit. Because co-operatives are owned and democratically-controlled by their members (individual and groups) the decision taken by co-operatives balance the need for their profitability with the needs of their members and the wider interest of the community.
Co-operatives are also enterprises that follow a set of principles and values…The Cooperative Identity Statement elaborated in 1995 by the ICA is the internationally recognized definition of co-operative, its values and principles.
International Co-operative Alliance, www.ica.coop
HOW?
UN proclaims 2012 International Year of Co-operatives :
The UN has recognised that the co-operative business model is a major factor in realising economic and social development. It has recently released the theme or slogan for the Year reflecting the impact of co-operatives worldwide –
"Co-operative enterprises build a better world.“
International Co-operative Alliance
Uniting, serving and representing co-operatives worldwide
The International Co-operative Alliance (ICA), at its Manchester Congress in September, 1995, adopted a Statement on The Co-operative Identity. The Statement included a definition of co-operative, a listing of the movement's key values, and a revised set of principles intended to guide co-operative organizations at the beginning of the twenty-first century.
Since its creation in 1895, the ICA has been the final authority for defining co-operatives and for elaborating the principles upon which co-operatives should be based. Previously the Alliance had made two formal declarations on co-operative principles, the first in 1937, the second in 1966. These two earlier versions, like the 1995 reformulation, were attempts to explain how co-operative principles should be interpreted in the contemporary world.
Statement on the Co-operative Identity
http://www.ica.coop
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.
Values
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.
Principles
The co-operative principles are guidelines by which co-operatives put their values into practice.
1st Principle: Voluntary and Open Membership
Co-operatives are voluntary organisations, 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.
2nd Principle: Democratic Member Control
Co-operatives are democratic organisations 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 co-operatives members have equal voting rights (one member, one vote) and co-operatives at other levels are also organised in a democratic manner.
3rd Principle: Member Economic Participation
Members contribute equitably to, and democratically control, the capital of their co-operative. At least part of that capital is usually the common property of the co-operative. 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 co-operative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the co-operative; and supporting other activities approved by the membership.
4th Principle: Autonomy and Independence
Co-operatives are autonomous, self-help organisations controlled by their members. If they enter to agreements with other organisations, including governments, or raise capital from external sources, they do so on terms that ensure democratic control by their members and maintain their co-operative autonomy.
5th Principle: Education, Training and Information
Co-operatives 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.
6th Principle: Co-operation among Co-operatives
Co-operatives serve their members most effectively and strengthen the co-operative movement by working together through local, national, regional and international structures.
7th Principle: Concern for Community
Co-operatives work for the sustainable development of their communities through policies approved by their members.
Conclusion
The co-operative principles cumulatively are the life blood of the movement. Derived from the values that have infused the movement from its beginnings, they shape the structures and determine the attitudes that provide the movement's distinctive perspectives. They are the guidelines through which co-operators strive to develop their co-operative organisations. They are inherently practical principles, fashioned as much by generations of experience as by philosophical thought. They are, consequently, elastic, applicable with different degrees of detail to different kinds of co-operatives in different kinds of situations. Above all, they require co-operators to make decisions: for example, as to the nature of the democracy of their institutions, the roles of different stakeholders, and the allocation of surpluses that are created. They are the essential qualities that make co-operators effective, co-operatives distinct, and the co-operative movement valuable.
A Review of the ICA Statement on The Cooperative Identity was conducted 10 Years after its promulgation in the 1995 Centennial Congress of the International Cooperative Alliance. We cite here the conclusion made –
If the task of the last ten years has been to make the values and principles known, in the next ten years the emphasis should be firmly on operationalizing them, making them count in co-operative business practice.
(Johnston Birchall, Co-operative Principles Ten Years On, www.ica.coop)
Hence,
Point of Departure
Knowing The Co-op Idea…Making It Known...and Making it Work!