The Philosophy and Practice of Cooperativism in the Philippines

by
Charles Avila
21August’09

Is it true that the spirit of cooperativism is so foreign to Philippine culture that it can never really become a dominant mode of doing business in this country? Let’s ride on our time machine and see.

Animism and Community: Pre-colonial Roots of Philippine Cooperative Values
The animistic world-view which to an extent persists among present-day Filipinos was the dominant world-view in our pre-colonial era. It articulated an idea that the world is alive, and that all things form a natural family or community: including the land, the specific group and place from which everyone derives a particular sustenance, as much spiritual as physical.
The animists’ common deep yearning was for a simple, cosmically harmonious life (katamtamang pamumuhay). This included a great capacity of responding to people and things alike with reverence and full attention rather than with instrumentalist design.

The world was alive and charged with grandeur, according to the animists’ point of view. The banana plant was not a mere static entity; the banana plant actively bananaed. The cows calved, the water oceaned and the universe peopled. All being was an act of being. Everyone and everything was fruit-of-the-earth and one-with-the-world.

In the awareness of Mystery Present, our indigenous ancestors looked at each other more realistically, as being necessarily united in mutual need, and essentially oriented for deeper communion and cooperative existence.

Consider awhile the Pilipino root word “sama”, of common significance even now among hundreds of millions in the Indo-Malay-Polynesian cultures. Does it not refer to the communion valued so highly in those cultures? It refers to the recognition that the human being is not a mere individual but a member of a historical race. “Pagsasama-sama” (being together) was natural. Humans live in togetherness as their natural habitat – be this a tribe, a family, a neighborhood, a kinship group, a “commune” or a “cooperative”.

The state of “pagsasama-sama’, a state of connectedness to everyone, led to the imperative “magtulungan” or mutual assistance patterns of work. The agrarian pyramids or rice terraces are living monuments to thousands of years of mutual aid achievement by our ancestors who treated the world around them with discerning reverence.

As H. de la Costa pointed out way back in the sixties, one of the worst things you can say about a Filipino is that, “Wala siyang pakikisama”. This is the charge that one has no sense of partnership. Ostracism becomes the lot of such a person who acts like one who has resigned from the human race.

Truly, in the depths of their consciousness the people of the Philippines regarded each other as “kasama” – partners in a common journey. They provided for each other not merely in life but also in death as evidenced by the northern Luzon mummies which were found with provisions afforded them by the community they were about to leave behind.

Cooperative ownership notions
Our pre-colonial ancestors had two distinct terms for “ours”- unlike Spanish or English which does not have this sophisticated distinction. One could use the term amin, meaning “exclusively ours”, and refer to village lands as collectively belonging to a given village to the exclusion of others; or one could use the term atin, meaning “ours” in an inclusive sense, comprehending literally everyone, both within and without that particular village or barangay.

Thus some lands were amin (“ours” exclusively) because we applied our exclusive labor for the productivity of those lands, while rivers and forests were atin (ours inclusively) because they were just “there” as nature’s gift to all for the use and enjoyment of all.

Our pre-colonial ancestors, like most other peoples on earth, knew the important implications of the truth that the human being is, quite inescapably, “a land animal”: without land the human being simply cannot live. All that one consumes, and every condition of one’s being, is ultimately referable to land. Mere space in which to extend a person’s being involves the occupation of land- again something just “there” as nature’s gift to all for the use and enjoyment of all.

Thus, the appropriation by some individuals of the land on which and from which all must live, as systematically came about during the colonial period of our history, inevitably condemned the non-owning producers – the conquered ones - to deprivation. While the many worked and tilled the land, non-producing owners – mainly foreign invaders and their local allies - would be pampered in luxury at the expense of the non-owning producers. These non-owning producers – the majority populace - would be denied the right to either a part or the whole of their own produce by the non-producing owners. They would be denied in whole or in part the fruits of their own labor. This would result in injustice not just on an individual but on a social scale: there would be social injustice as a necessary result of the destruction of the cooperative concept of ownership.

There would be, as what actually developed here and in many countries of South America, a plutocracy and an oligarchy. And social democracy would be impossible – unless or until a just cooperative notion of ownership were restored.

The Spanish occupation of the Philippines occasioned a significant change in the idea of land ownership that was disseminated among the various barangays of the archipelago. Under the foreign notion of legal title to the land, the heads of barangays were allowed and even encouraged to individually own the communal lands of the whole barangay and to lay de facto claims to the lands of those indebted to him. For the first time ever they would now appropriate for themselves as their exclusive property the lands that in their mind and in actual practice had always been cooperatively owned.

The Spaniards found a way (assisted by economically gaining local leaders) to grab as many lands as they could through the system of land titling later to be consolidated in the informacion posesoria. The notion, however, persisted among our indigenous ancestors that the earth is the common heritage of all and all people have natural and equal rights to the land of the planet. By the term "land" is meant all natural resources.

They argued that because the land and natural resources were provided by Providence and not by any human act, equity demanded that their fruits be cooperatively shared by all. To be sure, work and tools were required to grow crops or mine ore, and those who provide them should receive fair compensation. But the value provided by nature should not accrue to any individual but be cooperatively shared by all.

Today, modern socialists and capitalists alike focus on control of the means of production. But without access to land and its resources wealth and machinery would be worthless. No one can exist, let alone produce anything without a place to do it, and both materials and, increasingly, energy are needed for any serious production.

Because of its unique character, earlier “classical” economists (closer to the thinking of our indigenous ancestors’, unlike their “neo-classical” counterparts ) recognized Land, including all natural resources, as a distinct factor of production, together with Labor and Capital. Labor and Capital represent human effort and deserve fair recompense. Land, however, is another matter. It is produced by no person, and therefore its use must be regulated by the State in the clear context of its being cooperatively owned by all.

The Cooperative Idea
Traditionally, in a property-based economy, such as ours became, it became a dogma that in the interplay of “land” (natural resources) “capital” and “labor” toward the production, distribution, and consumption of goods and services, “capital” would normally hire “labor”.

In this traditional view, “labor”, of course, meant living labor. Workers are paid wages for their work. One referred to a “cost of labor”, meaning how much it cost to hire workers to do a certain work. And who was it, or which was it that did the hiring of living labor? None other than “capital”.

At the end of the day, therefore, because capital hired labor, all or most of the net surplus value of a given enterprise would be deemed “justly” to belong to capital. Thus, the more wealth was appropriated by “capital”, in relative terms, those who had, ended up getting more and more and those who only had their labor to sell would end up with a fixed wage. The landed rich would become richer and the rest would have a well-nigh impossible time catching up with those who already had the control over capital. In short, relatively speaking, they would necessarily become poorer.

Will the Dead Hire the Living?
Capital, however, is nothing else but the wealth accumulated by the work of past labor. It is stored-up labor.

If you want to be blunt about it, capital is dead labor – the accumulated result of the blood, sweat and tears of past workers now privately owned or controlled by the capitalist in a way of business that would ensure that capital would become rich while living labor would not.
Therefore, when we say that “capital” hires “labor” we really mean that “dead labor” hires “living labor”. Unmasked in that manner, it is clear that the principle does not make just sense. It would be more just to invert the principle and say that instead of capital hiring labor, labor should hire capital.

Is there a way of doing business wherein, instead of capital hiring labor, labor hires capital? Yes. And it is precisely the cooperative way. In a cooperative, capital does not hire living labor so much as living labor instrumentalizes capital. At the end of the day, the net surplus of the economic enterprises is socially and justly distributed to the actual members of the cooperative.
When people with a common bond of interest overcome their isolation, pool their resources together to achieve a certain social or economic end, making equitable contributions to the requirement of the enterprise and accepting a fair share of the risks and benefits of the undertaking, - when these people duly register their act of association, then, a formal cooperative exists.

Co-ops in the colonial period
Many scholars now report that nineteenth century revolutionaries like Rizal, Jacinto and de los Reyes already recognized cooperatives as instruments for social justice and economic development. Dr. Jose P. Rizal in 1896 initiated an agricultural marketing cooperative while in exile in Dapitan. Emilio Jacinto organized another failed commercial banking cooperative in San Pedro, Laguna. However, these initial efforts of cooperativism during the Spanish colonial period failed to take root due to the intense revolutionary struggles against Spain.
During the American colonial period, a credit cooperative organized at the University of the Philippines at Los Banos, Laguna in 1908 was reportedly one of the first coops in the country. Legislation was passed by the American government encouraging the formation of cooperatives among farmers. On October 1916, the first rural credit cooperative association assisted by the government was formed in Cabanatuan, Nueva Ecija.

1906, 1915, 1916, 1927 saw all kinds of legislation seeking state assistance to rural coops – but always as a peripheral rather than a central way of doing business. However, despite the tentative posturing on the part of the state to establish cooperativism, some churches went ahead full-blast in their support of the cooperative movement. Noteworthy is the credit union founded by the Protestant Allen R. Huber which formally became the Vigan Credit Union, Inc. in August 1938. Two months later, the first cooperative federation was organized under the name “Consumers’ Cooperative League of the Philippines”.

Tragically, many state-initiated coops became mere paper organizations due in great part to a top-down approach (“impositive”, not “cooperative”) that had “members” who had very little understanding what the whole enterprise was about. Privately initiated coops did not fare much better in large part because of poor management and technology, and ineffective or non-existent producer-consumer tie-ups.

During the Japanese occupation, because of necessity – the severe food shortages in town and city – thousands of both urban-based and rural cooperatives were organized and did not do so poorly. After the return of the Americans, however, all the Japanese-initiated coops were dissolved.

Co-ops Post-WWII
1945, 1947, 1950, 1952, 1957, 1960, 1963, 1969 saw more legislation “encouraging” coops. The state motive, however, was not so much people-empowerment as seeing if more effective “conveyor belts” could be organized for the state’s own deliverables – as through the electric “coops”, the sugar and rice “coops”, etc. The vulnerabilities of past top-down approaches returned with such stink that the very word cooperatives was often spelled “cooperathieves” or “coracotives”. In short, “co-op” had become such a bad word. At one time there were 14 different government agencies involved in supervising and coordinating the various co-ops in the country.

In 1957, the Catholic Church called for the organization of credit cooperatives in parishes all over the country as part of their social action projects. The Federation of Free Farmers organized its own successful multipurpose producers and consumers coops throughout the archipelago. Among the parishes, noteworthy was the San Dionisio Credit Cooperative, Inc. (SDCCI) in Paranaque which later grew into one of the biggest credit cooperatives in Southeast Asia. The Jesuits’ Institute of Social Order gave tremendous support to the San Dionisio enterprise as had the SVD’s to the Free Farmers Cooperative, Inc (FFCI).

In Mindanao, MASS-SPECC or the Mindanao Alliance of Self-Help Societies – Southern Philippines Educational Cooperative Center with their more than 10,000 mainly parish-based coops became such a phenomenal success, as did VICTO or the Visayas Cooperative Development Center with hundreds of coops in Regions 6, 7 and 8. By the mid-1990s VICTO’s multi-billion-peso assets got the Scarboro Fathers of southern Leyte saying: this was “saving souls the credit union way.” The Redemptorists of Tacloban City could boast, if they cared to, in much the same way.

Under the martial law regime, cooperativism got a big push from the state that wanted to replicate the co-op success during the Japanese occupation. This development reached its apex with the with the issuance of PD 175 that aimed to strengthen the cooperative movement with the organization of Kilusang Bayans (KB’s)/cooperatives and Samahang Nayons (SN’s)/barrio organizations that were tied up with the Land Reform Program (PD 27). This ideal design for the establishment of a rational cooperative constellation of related organizations became so highly and wrongly politicized – it had to fail ab initio. An exception, perhaps, because it was less politicized, was the electric cooperative movement that has somehow survived up to now, dubiously.

Gone are the FACOMAs of the 1950s and the KB’s and SN’s of the martial law years. Of course, one sees remnants here and there from the “impositives” of halcyon years of allegedly strong state efforts whose interior tended to be rotten from the beginning with wrong intentions and corrupt practices. Names like “Katipunan ng mga Kooperatibang Pansakayan ng Pilipinas – KKKPI”, “National Confederation of Cooperatives, Inc. – NATCCO”, “National Farmers’ Supreme Council-SANDUGUAN”, “National Market Vendors’ Cooperatives Federation, Inc – NAMVESCO”, and “Cooperative Union of the Philippines – CUP” are some of the remnants of the martial law years whose drive to survive has landed some of them with a few party list representatives in Congress.

Today the State favors Co-ops
Post-EDSA, then, a new Constitution explicitly gave a warm welcome to the notion of genuine cooperatives. Article XII, Section 15 provided for the promotion of growth and viability of cooperatives as instruments of social justice, equity and economic development using the principles of subsidiarity and self-help. Under the said principles, government recognized that cooperatives are self-governing entities which shall initiate and regulate their own affairs including education, training, research and other support services with the government giving assistance when necessary.

The Constitutional provisions on cooperatives were operationalized on March 10, 1990 with the enactment of R.A. 6983 (Cooperative Code of the Philippines) and RA No. 6939 (Cooperative Development Authority Act).

It is now State policy of the Philippines to bring the majority populace into the mainstream of its capital and financial system by means of legislation which clearly and seriously gives a corrective bias in favor of cooperatives. In any case, that’s how it is on paper.

For starters, cooperatives are not subject to any government taxes or fees imposed under the internal revenue laws and other laws. If their accumulated reserves and undivided net savings do not exceed ten [?]million pesos, they are “exempt from all national, city, provincial, municipal or barangay taxes of whatever name and nature…exempt from customs duties, advance sales or compensating taxes on their importation of machineries, equipment and spare parts used by them and which are not available locally.

When transacting business with the government, they are exempt from prequalification bidding requirements.

They enjoy the privilege of being served by judges, treasurers, registers of deeds, and fiscals free of charge. They enjoy preferential treatment in any dealings with government, under law.
Most of all, however, they are deemed “bankable” or credit-worthy by government banks such as the Land Bank, the Development Bank of the Philippines, etc.
In terms of opportunities, times do change. The present democratic space is an invitation to assertion of both economic and political democracy. For instance, forming Small Farmer’s Organizations and transforming these into co-ops gives the small farmers access to the nation’s financial capital, to commercializable technologies, and market assistance. It also establishes the needed interest group vehicle to further influence the society’s power-instrument (the government) in favor of the majority.

From project training to project funding, organized farmers’ groups can now be benefited by the State’s declared corrective bias in their favor. Moreover, through this process, the small farmers will finally have the chance to organize themselves on a national scale and with both a localized and a national scope. It will still be a struggle, no doubt, but a worthwhile one in which the majority populace will gather their resources together and gain the direct power at all levels to decide the present and the future of the Philippines. But there’s the rub. It will be a while taking this and working this out seriously enough.

The law which governs cooperatives, prior to the recent enactment of Republic Act No. 9520 (”Philippine Cooperative Code of 2008″), is Republic Act No. 6938 (”Cooperative Code of the Philippines”). The declared purpose of the law, among others, is 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 law formally defines a cooperative as an autonomous and duly registered association of persons, with a common bond of interest, who have voluntarily joined together to achieve their social, economic, and cultural needs and aspirations by making equitable contributions to the capital required, patronizing their products and services and accepting a fair share of the risks and benefits of the undertaking in accordance with universally accepted cooperative principles.
These principles are well-known: “Voluntary and open membership; Democratic member control; 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; Autonomy and independence; Cooperation among cooperatives - Cooperatives serve their members most effectively and strengthen the cooperative movement by working together through local, national, regional and international structures; Cooperative education; Concern for community- Cooperatives work for the sustainable development of their communities through policies approved by their members.”
The minimum paid-up share capital is now PhP15, 000 (the minimum under the old law was only PhP2,000), subject to increase by the CDA upon consultation with the cooperative sector and the NEDA. No member of primary cooperative other than cooperative itself shall own or hold more than 10% of the share capital of the cooperative.

There are three kinds of membership: in a Primary Coop– members are natural persons; in a Secondary – members are primaries; and in a Tertiary – members are secondary cooperatives.
The secret of success is no secret at all: the needed tenacity to organize from the bottom-up, from many small groups to town-wide cooperatives, to district-wide federations, all the way to a national confederation of kindred interests that seek the peace and prosperity and development so attainable now by persevering cooperation.

The “Kabisigs” of Cory, the People Power social reform agenda of Ramos, and, initially, the civil society reformers of GMA – they all come and go. For propaganda purposes, governments always play at revolutions – social revolutions – but only the people as self-organized can wage authentic campaigns. Many a player has fretted his hour on the cooperative stage and then is heard no more. In this country, cooperativism has been a tale told by an idiot, full of sound and fury, but to date signifies nothing, or next to nothing.