First of two parts
THE Philippine Cooperative Movement is in a major crossroad as it strives to broaden social and constitutional duty to promote equity, social justice and economic development. Last year, the movement celebrated its centennial year amidst systematic attacks from certain sectors in government its privilege of tax exemption. No less than the Depertment of Finance (DOF) lobbied for the repeal of this tax exemption privilege mandated by sections 60 and 61 of the Cooperative Code of the Philippines (RA 9520.) The attempts to remove this privilege from cooperatives speak of the lack appreciation by key government agencies of the vital social role cooperatives play. It also speaks of a class standpoint of key functionaries like the DOF Secretary Cesar Purisima and Bureau of Internal Revenue Commissioner Kim Henares who fail to distinguish the nature of cooperatives as social enterprises from profit driven capital ventures. But the administration of President Aquino may not be faulted as grimly determined against cooperatives. It has also made several decisions that the cooperative movement consider as very progressive. In March last year, it appointed an activist, a visionary and passionate advocate of the poor as chairman of the Cooperative Development Authority (CDA) to a fixed six-year term--Orlando R. Ravanera. In no time, Ravanera reaffirmed the mandate of the agency created to fulfil the Constitution’s mandate “to promote the viability and growth of cooperatives as instruments of equity, social justice and economic development” (Art. XII, Section 15 of the PH Constitution). In fulfilment of this constitutional provision, Congress passed Republic Act 6938, creating the CDA on March 10, 1990. Also through the strong lobbying of the cooperative movement and solid representation from the cooperative bloc in Congress led by Rep. Cris “Mr. Coop” Paez of Coop-Natcco party list, the attempt to repeal the cooperative’s tax exemption privilege was stricken down from the Fiscal Incentives Bill at the Committee on Ways and Means last September. As an affirmation of the administration’s recognition of the role of cooperatives, Paez is now a guest Senate candidate of the Daang Matuwid coalition. In arguing its case to retain tax exemption privileges, the cooperative relied on the Constitutional basis of its tax exemption privileges. The Supreme Court ruled in Dumaguete Cathedral Credit Cooperative versus Commissioner of Internal Revenue (Jan. 22, 2010) that the privilege of tax exemption is a form State assistance “to encourage the formation of cooperatives and create an atmosphere conducive to the growth and development” as mandated by Article XII, Section 15 of the PH Constitution. In the same jurisprudence, the high court further ruled that Art. 12, Section 15 should be read with two other Constitutional provisions, namely: Article II, Section 10, that declares “it is a policy of the State to promote Social Justice in all phases of national development;” and Article XIII, Section 2, that says “the promotion of social justice shall include the commitment to create economic opportunities based on freedom and selfeliance.” Through Justice Mariano C. del Castillo, the landmark SC decision declared: “... cooperatives, including their members, deserve preferential tax treatment because of the vital role they play in the attainment of economic development and social justice. Thus although taxes are the lifeblood of government, the States power to tax must give way to foster the creation and growth of cooperatives. To borrow the words of Justice Isagani A. Cruz: “The power of taxation, while indispensable, is not absolute and may be subordinated to the demands of social justice.” Upon his assumption as chairman of the CDA last year, Ravanera rolled out a roadmap that would transform the CDA into an agency that (1) fosters development cooperatives, especially the micro and small; (2) be an effective regulator especially for the medium and large cooperatives; and (3) to synergize the cooperative movement so that, in partnership with government, the medium and large cooperatives assist and/or serve micro and small cooperatives. This roadmap has made the social contract of President Aquino as its yardstick. Under cooperative roadmap, cooperatives to be faithful to its historical, social and constitutional mandate must be instruments of (1) empowering the poor and the vulnerable to reduce poverty; (2) rapid, inclusive and sustained economic growth; (3) just and lasting peace and the rule of law; (4) transparent, accountable and participatory governance; and (5) integrity of the environment and climate change adaptation and mitigation. Exactly, the key result areas of President Aquino’s social contract with the Filipino people as contained in Executive Order 43, series of 2011. The cooperative roadmap has a long way to go. The cooperative movement and the CDA had lobbied hard to have at least a billion budget this year, but Congress only gave it exactly the same budget as last year, P349 million. This is barely enough to fulfill CDA’s regulatory mandate and not for its development functions. With a billion pesos budget, the CDA thought it would have effectively reached out, providing technical assistance, among others to micro and small cooperatives who comprise 83 percent of registered cooperatives nationwide. Data from the CDA reveal that as of Dec. 30, 2014, 57.6 percent of cooperatives are micro enterprises, or having an asset of below P3 million; 25.66 percent are small or those with assets of P3 million to P15 million. The CDA has in its registry 24,652 cooperatives at the close of 2014. In contrast, the remaining 17 percent of the country’s cooperatives are doing very well. Their enterprises are diverse: from agriculture, finance, insurance, labor service, health, transportation, housing, education, among others. CDA data reveal that 3.67 of cooperatives have assets of over P100 million; and another 13.10 percent are having assets of P15 million to P100 million. Medium and large cooperatives have the lion’s share of the cooperative movement’s assets – 90 percent. Under the CDA roadmap, government and the medium and large cooperatives should work together to help “graduate” the micro and small cooperatives into medium and large. Aside from increasing the budget of the CDA and protecting privileges like tax exemption, policies have to be in place to foster the growth of micro, small and medium enterprises (MSMEs). All this underscore the need for the cooperative movement to broaden its political engagement. (to be continued)
