Strengthening The Cooperative Movement

Case Overview and Summary

Summary of Presidential Decree No. 175

Declaration of Policy (Section 1):
- The State shall foster the creation and growth of cooperatives to increase income and purchasing power of the low-income sector for more equitable distribution of income and wealth.

Definition of Cooperative (Section 2):
- Cooperatives are organizations composed primarily of small producers and consumers who voluntarily join to form business enterprises they own, control and patronize.
- A small producer is a self-employed individual who provides primary labor or earns at least 50% of gross income from labor proceeds.

Cooperative Principles (Section 3):
- Open and voluntary membership without discrimination (Section 3a)
- Democratic control with one member, one vote (Section 3b)
- Limited interest on share capital (Section 3c)
- Net income redistributed to members in proportion to their patronage (Section 3d)

Powers of Cooperatives (Section 4):
- Exercise rights and privileges given to persons, partnerships and corporations (Section 4a)
- Establish and operate business enterprises (Section 4b)
- Establish rural banks or purchase government-held preferred shares (Section 4c)
- Enjoy privileges and incentives granted by NACIDA Act and other laws (Section 4d)
- Petition for expropriation of idle lands for their use (Section 4e)
- Own property, enter into contracts, sue or be sued (Section 4f)

Privileges of Cooperatives (Section 5):
- Exemption from income and sales taxes for 5 years (non-agricultural) or 10 years (agricultural) (Section 5a)
- Preferential right to supply agricultural commodities to state price stabilization programs (Section 5b)
- Exemption from Minimum Wage Law in appropriate cases (Section 5c)

Financial Assistance (Section 6):
- Cooperative Development Loan Fund created from various sources (Section 6a)
- Fund to be used for loans, guarantees and equity in rural banks for cooperatives (Section 6b)
- Management Committee to administer the fund (Section 6c)
- Government agencies to establish facilities for lease/sale to cooperatives (Section 6d)

Management and Training Assistance (Section 7):
- Central Management and Training Pool for cooperative managers
- Advisory Board to administer the program
- Funding sources: appropriations, loan fund income, grants, cooperative contributions

Powers of Regulatory Agency (Section 8):
- Department of Local Government and Community Development to regulate cooperatives
- Register new and existing cooperatives of various types (Section 8b)
- Determine manner of exercising powers, privileges and assistance (Section 8c)
- Suspend, cancel registration or liquidate cooperatives (Section 8d, 8e)
- Recommend charges against violating cooperative officials (Section 8f)
- Condone loans, write off bad debts of agricultural cooperatives (Section 8g)
- Recommend charges against non-farmers misrepresenting for loans (Section 8h)
- Authorize cooperatives to collect loans on commission basis (Section 8i)
- Authorize cooperatives to collect land amortizations under PD 27 (Section 8j)

Penal Provisions (Section 9):
- Penalty for unauthorized use of 'cooperative' name (Section 9a)
- Penalty for cooperative officials committing crimes (Section 9b)
- Penalty for government officials unduly interfering (Section 9c)
- Attachment of assets for taking advantage of privileges (Section 9d)