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PRESIDENTIAL DECREE NO. 175
PRESIDENTIAL DECREE NO. 175
- STRENGTHENING THE COOPERATIVE MOVEMENT
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chanroblesvirtualawlibrary
WHEREAS, a
parallel measure to the emancipation of tenant-farmers from feudal
bondage, as provided for in Presidential Decree No. 27 dated October
21, 1972, is a provision for a strong social and economic organization
and system to ensure that they will enjoy on a lasting basis the
benefits of agrarian reform;chanroblesvirtualawlibrary
WHEREAS, there are equally less fortunate segments of our society who
are in need of social and economic amelioration and should have the
right to enjoy the privilege of self-development, social growth and
economic independence under a truly just and democratic society;chanroblesvirtualawlibrary
WHEREAS, there is a need to increase income and purchasing power of the
low-income sector of the population in order to attain a more equitable
distribution of income and wealth; chanroblesvirtualawlibrary
WHEREAS, the cooperative institution is a means of attaining a more
equitable distribution of income and wealth and providing the common
man a dignified level of existence;chanroblesvirtualawlibrary
WHEREAS, the Bayanihan Spirit is an inborn trait of the Filipino people
which if properly guided can serve as a strong foundation of
cooperative institutions;chanroblesvirtualawlibrary
NOW, THEREFORE, in order to effect the desired changes and reform in
the economic, social and political structure of our society, I,
FERDINAND E. MARCOS, President of the Philippines, by virtue of the
powers in me vested by the Constitution as Commander-in-Chief of the
Armed Forces of the Philippines, and pursuant to Proclamation 1081
dated September 21, 1972, and General Order No. 1 dated September 22,
1972, do hereby order and decree the following:cralaw:red
Section 1. Declaration of Policy. — It is hereby
declared the policy of the State to foster the creation and growth of
cooperatives as a means of increasing income and purchasing power of
the low-income sector of the population in order to attain a more
equitable distribution of income and wealth.
Section 2. Cooperative Defined. — Cooperative shall
mean only organizations composed primarily of small producers and of
consumers who voluntarily join together to form business enterprises
which they themselves own, control and patronize.
A small producer shall mean a self-employed individual who, by himself
or with this family provides the primary labor requirements of his
business enterprise or one who earns at least fifty percent of his
gross income from the payment proceeds or income of the labor he
provides.
Section 3. Cooperative Principles. — A cooperative
shall be governed by the following principles:cralaw:red
(a) Open membership — Membership in a cooperative
should be voluntary and available without artificial restriction or any
social, political, racial or religious discrimination, to all persons
who can make use of its services and are willing to accept the
responsibilities of membership.
(b) Democratic control — In primary cooperatives
irrespective of the number of shares owned, each member can only cast
one vote in deciding upon the affairs of the cooperative. The affairs
of the cooperative shall be administered by persons elected or
appointed in a manner agreed by the members and accountable to them. In
other than primary cooperatives, administration shall be conducted in a
suitable democratic form. chanroblesvirtualawlibrary
(c) Limited interests to capital — Share capital
shall earn only limited interests, the maximum rate of interests to be
established by the Department of Local Government and Community
Development from time to time.
(d) Patronage refund — Net income after the interest
on capital has been paid shall be redistributed among the members in
proportion to their patronage.
Section 4. Powers of Cooperatives. — Cooperatives
shall have the following powers:cralaw:red
(a) To exercise the same rights and privileges given
to persons, partnerships and corporations provided under existing laws;chanroblesvirtualawlibrary
(b) To establish and operate business enterprises of
all kinds as their needs dictate and their capabilities allow subject
to the provisions of existing laws;chanroblesvirtualawlibrary
(c) To establish rural banks under the Rural Bank Act
and/or to purchase government held preferred shares of rural banks
which may be converted to voting common stocks, under the rules and
regulations to be promulgated by the Monetary Board of the Central Bank
and The Agrarian Reform Fund Commission;chanroblesvirtualawlibrary
(d) To enjoy all the privileges and incentives
granted by the NACIDA Act and those granted by all government agencies
to business organizations under existing laws, provided that all
requirements are met;chanroblesvirtualawlibrary
(e) To petition the government to expropriate idle
urban or rural lands for agricultural production, cottage industry,
business or housing purposes; and
(f) To own and dispose of property, to enter into
contract, to sue or be sued, and to do and perform such other acts as
may be necessary in the pursuit of its objectives. chanroblesvirtualawlibrary
Section 5. Privileges of Cooperatives. — Cooperatives
shall enjoy the following privileges:cralaw:red
(a) Exemption from income taxes and sales taxes
provided that a substantial portion of the net income of the
cooperative is returned to members in the form of interests and/or
patronage refunds; Provided, further, That for income tax purposes,
non-agricultural cooperatives shall be exempt for a period of five (5)
years and agricultural cooperatives for a period of ten (10) years
reckoned from the date of registration with the Department of Local
Government and Community Development; Provided, finally, That the
taxable income shall mean that portion of the cooperative's income
after deducting the interest paid to members and patronage refunds;chanroblesvirtualawlibrary
(b) In areas where appropriate cooperatives exist,
the preferential right to supply rice, corn and other grains, fish and
other marine products, meat, eggs, milk, vegetables, tobacco and other
agricultural commodities produced by members of the cooperatives
concerned to State Agencies administering price stabilization programs;
and
(c) In appropriate cases, exemption from the
application of the Minimum Wage Law upon the recommendation of the
Bureau of Cooperatives Development subject to the approval of the
Secretary of Labor.
Section 6. Financial Assistance to Cooperatives. —
There is hereby created a Cooperative Development Loan Fund for the
development of the cooperative movement.
(a) Sources of funds — This Fund shall be financed
from the following sources:cralaw:red
1) General appropriations
2) Proceeds of sales of US Public Law 480 commodities
3) Foreign loans or proceeds of sales of commodity
loans
4) Grants and donations
5) Levies imposed by existing laws on agricultural
commodities for the development of cooperatives; and
6) Such other sources as are now provided by existing
laws or as may be provided for in the future. chanroblesvirtualawlibrary
(b) Uses — This Fund shall be utilized for the
following purposes:cralaw:red
1) Source of loanable funds to cooperatives;chanroblesvirtualawlibrary
2) Serve as a guarantee for loans granted to
cooperatives; and
3) Source of advances to cooperatives for the
purchase of equity of rural banks.
In no case shall any portion of this fund be utilized for direct loans
to farmer members. As far as practicable, funds shall be channelled
through existing government and private financial institutions.
(c) Administration of fund — For purposes of
administering the fund, there is hereby created a Management Committee
composed of:cralaw:red
1) A representative of the Department of Local
Government and Community Development who shall serve as Chairman;chanroblesvirtualawlibrary
2) A representative of the Central Bank of the
Philippines;chanroblesvirtualawlibrary
3) A representative of the Philippine National Bank;chanroblesvirtualawlibrary
4) A representative of the Department of Agriculture
and Natural Resources;chanroblesvirtualawlibrary
5) A representative of the Department of Agrarian
Reform; and
6) Two representatives of the Cooperative Movement
designated by the Secretary of the Department of Local Government and
Community Development.
The Management Committee shall have the power to administer this fund
and prescribe rules and regulations for its utilization.
(d) Other financial assistance — The Agrarian Reform
Fund Commission, Greater Manila Terminal Food Market, National
Development Corporation or their subsidiary institutions or the
subsidiary institutions of any government financial agency or any
government agency is authorized to establish or acquire fixed
facilities such as storage facilities, processing facilities, food
markets and other facilities, requiring large long-term investment
which shall be leased or sold to cooperatives. Likewise, cooperatives
shall have preferential right to purchase or lease existing facilities
as herein above specified belonging to other government institutions
and agencies.
Section 7. Management and Training Assistance. —
There is hereby established a Management and Training Assistance
Program. It shall create a Central Management and Training Pool to be
composed of top caliber managers, who may be assigned to actively
manage a cooperative or cooperatives for the prime purpose of training
an understudy or understudies to assume management thereafter. In this
connection, it may contract for and defray the cost of professional
managers and/or firms who shall actively manage cooperatives as part of
the training program. Cooperative managers contracted for this purpose
shall be exempt from WAPCO salary rates. Training programs to develop
cooperative managers may be undertaken by any existing educational or
other institutions on contract basis.
Suitable and practical management training materials and guides shall
be developed for the use of cooperative managers.
The Management and Training Assistance Program shall be administered by
an Advisory Board of five members to be appointed by the Secretary of
the Department of Local Government and Community Development, at least
two of whom shall come from the cooperative system, and one from the
Department of Agrarian Reform.
The Management Training Program shall be financed from the following
sources:cralaw:red
(a) General appropriations;chanroblesvirtualawlibrary
(b) Income from the Cooperative Development Loan
Fund;chanroblesvirtualawlibrary
(c) Grants and donations; and
(d) Contribution from cooperatives.
Section 8. Powers of Regulatory Agency. — The
Department of Local Government and Community Development through the
Bureau of Cooperatives Development is vested with full authority to
promulgate rules and regulations to govern the promotion, organization,
registration, regulation and supervision of all types of cooperatives.
Specifically, it shall have the following powers:cralaw:red
(a) To call on any office, agency, instrumentality or
individuals belonging to the government or private sector for such
assistance as may be needed.
(b) To register new cooperatives, re-register
existing cooperatives and regulate and supervise the following types of
cooperatives:cralaw:red
1) Barrio Associations which shall have the
provisional status of a cooperative and serve the requirements of
Presidential Decree No. 27 in the issuance of certificates of land
transfer;chanroblesvirtualawlibrary
2) Local or primary cooperatives which shall be
composed of natural persons and/or barrio associations; chanroblesvirtualawlibrary
3) Federations which shall be composed of
cooperatives which may or may not perform business activities; and
4) Unions of cooperatives which shall not perform any
business activities.
Provided, That in the case of re-registration, the cooperative shall
file its application or petition for re-registration within a period of
six (6) months from the date of promulgation of this Decree, and its
corporate existence shall be deemed to continue until the application
or petition is approved or denied; And provided, further, That for
purposes of re-registration, Sections 2 and 5 (a) hereof shall not be
applicable to existing cooperatives which do not meet the qualification
requirements provided for in this Decree.
(c) To determine the manner and extent by which
powers, privileges, assistance and support granted to cooperative
provided by this Decree shall be exercised or enjoyed by cooperatives.
(d) To suspend the operation or cancel the
registration of any cooperative after hearing and when in its judgment
and based on findings, such cooperative is operating in violation of
this Decree, rules and regulations, existing laws as well as the
by-laws of the cooperative itself;chanroblesvirtualawlibrary
(e) To liquidate and to determine disposal of assets
and settlement of liabilities of any cooperative which has been
inoperable, inactive or defunct or any cooperative violating the penal
provisions herein provided;chanroblesvirtualawlibrary
(f) To recommend charges to be filed against any
official of any cooperative who has committed crimes against the
cooperative or who has violated the penal provisions herein provided;
and to establish rules and regulations governing the suspension and/or
expulsion of any members of a cooperative; chanroblesvirtualawlibrary
(g) To condone the principal and/or accumulated
interest on past due production and/or farm improvement loans extended
by the Agricultural Credit and Cooperative Financing Administration and
the Agricultural Credit Administration to farmer members of
agricultural cooperatives, and to authorize writing off of bad debts or
bad accounts of agricultural cooperatives arising from loans granted by
the Agricultural Credit and Cooperative Financing Administration or the
Agricultural Credit Administration subject to the Rules and regulations
to be promulgated jointly by the Department of Local Government and
Community Development and the Department of Finance;chanroblesvirtualawlibrary
(h) To recommend charges to be filed against
non-farmers who through misrepresentation have secured loans from the
Agricultural Credit and Cooperative Financing Administration or the
Agricultural Credit Administration through agricultural cooperatives;chanroblesvirtualawlibrary
(i) To authorize the collection by barrio
associations and cooperatives past due loans granted by the
Agricultural Credit and Cooperative Financing Administration or the
Agricultural Credit Administration on a commission basis; and
(j) To authorize the cooperatives to collect
amortizations on lands under Presidential Decree No. 27.
Section 9. Penal Provisions. — (a) No person or group
of persons other than cooperatives registered pursuant to the
provisions of this decree shall use in its name the word cooperative or
its equivalent in the vernacular with intent to defraud. Violators
shall be fined Two Thousand (P2,000.00) pesos. In case of insolvency, a
subsidiary imprisonment of not more than six (6) months shall be
imposed. chanroblesvirtualawlibrary
(b) Any official of the cooperative, elected or
appointed, who commits crimes against the cooperative shall be
penalized in the same way as if such official were a civil servant,
with disqualification of holding any elective or appointive office.
(c) Any official of the State, elected or appointed
and not belonging to the Department of Local Government and Community
Development, who wilfully and unduly interferes with the business
activities and internal affairs of any cooperative shall be penalized
by a fine of not more than five thousand pesos (P5,000.00) and/or
imprisonment of not more than six (6) months.
(d) Individuals who are found to have organized
cooperatives for the evident purpose of taking advantage of the
privileges granted to cooperatives under this Decree and who operate
such organizations in clear violation of cooperatives principles herein
set forth as adjudged by a competent court shall be subject to
attachment of all their assets in such organizations and such
organizations shall summarily be stopped from operating, without
prejudice to other penalties as provided for by existing
laws. chanroblesvirtualawlibrary
Section 10. Separability Clause. — If any provision,
provisions, part or parts of this decree is declared unconstitutional,
such declaration shall not invalidate the other provisions hereof.
Section 11. Repealing Clause. — All past cooperative
laws are hereby repealed. Portions or parts of any other laws
inconsistent herewith are likewise repealed. The Department of Local
Government and Community Development through the Bureau of Cooperatives
Development shall promulgate within thirty (30) days from date hereof
the rules and regulations for the effective implementation of this
Decree and upon approval by the President of the Philippines shall have
the force and effect of law. These rules and regulations may be
amended, modified or abrogated as the circumstances may so demand.
Done in the City of Manila,
this 14th day of April, in the year of Our Lord, nineteen hundred and
seventy-three.
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