Definition of Cooperative
- A cooperative primarily consists of small producers and consumers who voluntarily form business enterprises.
- Small producers are self-employed individuals who provide the primary labor for their business or earn at least 50% of gross income from their labor.
Cooperative Principles
- Open Membership: Membership is voluntary, without artificial restrictions or discrimination.
- Democratic Control: Each member has one vote in primary cooperatives; management is accountable and elected.
- Limited Interest on Capital: Share capital earns limited interest rates as set by the Department of Local Government and Community Development.
- Patronage Refund: Net income after capital interest is distributed proportionally to members based on patronage.
Powers of Cooperatives
- Cooperatives enjoy the same rights as persons, partnerships, and corporations.
- They may establish and operate various business enterprises and rural banks.
- They qualify for privileges under NACIDA Act and other government incentives.
- Cooperatives can petition for expropriation of idle lands for productive use.
- They have legal capacity to own property, contract, sue, and be sued.
Privileges of Cooperatives
- Income and sales tax exemptions for a set period (5 years for non-agricultural, 10 years for agricultural cooperatives), conditional on substantial income distribution to members.
- Preferential rights to supply agricultural products to State price stabilization programs.
- Possible exemption from the Minimum Wage Law upon recommendation and approval.
Financial Assistance
- Creation of Cooperative Development Loan Fund funded by general appropriations, sales of commodities, loans, grants, levies, and other sources.
- Fund used for loans, loan guarantees, and advances to cooperatives for rural bank equity purchase; no direct loans to farmer members.
- Administered by a Management Committee representing government agencies and cooperative movement.
- Government agencies authorized to establish or lease facilities to cooperatives and offer preferential purchase rights.
Management and Training Assistance
- Establishment of a Management and Training Program with a Central Management and Training Pool of qualified managers.
- Program includes training of cooperative managers and development of management materials.
- Administered by an Advisory Board appointed by the Secretary of the Department of Local Government and Community Development.
- Funded by appropriations, Cooperative Development Loan Fund income, grants, donations, and cooperative contributions.
Powers of Regulatory Agency
- The Department of Local Government and Community Development via the Bureau of Cooperatives Development governs cooperative promotion, registration, and supervision.
- Authority includes calling for government or private sector assistance, registering and re-registering cooperatives, and regulating cooperative types (barrio associations, local cooperatives, federations, unions).
- It may suspend or cancel cooperative registrations, liquidate assets, recommend criminal charges against officials, and enforce cooperative rules.
- May condone certain loan debts and authorize collections on behalf of cooperatives concerning agricultural loans.
Penal Provisions
- Unauthorized use of "cooperative" in organizational names with intent to defraud incurs fines and possible imprisonment.
- Cooperative officials committing crimes face penalties and disqualification from public office.
- State officials who unduly interfere with cooperatives face fines and imprisonment.
- Organizing cooperatives to abuse privileges results in asset attachment and closure of operations.
Separability Clause
- If any part of the Decree is declared unconstitutional, such invalidity does not affect other provisions.
Repealing Clause
- All previous cooperative laws are repealed.
- Inconsistent parts of other laws are repealed.
- The Department of Local Government and Community Development will promulgate implementing rules within 30 days, with presidential approval.
- Rules may be amended, modified, or repealed as needed.