I.

THE AGRARIAN REFORM PROGRAM OF THE PHILIPPINES

A. The Meaning, Nature and History of Land Reform: Overview
1) PROBLEM:
a) Why are there landless farmers?
b) Why they remain as tenants of big landlords?
c) Civilizations emerged, the natives developed a system of production and trading that later led to the
idea of wealth and other properties.
a. Individual property, state property, corporate property
b. The accumulation of wealth became the determining factor of social status.
c. Monopolies left the marginalized sector with little or no opportunity to access capital
resources including land.

2) Land Reform versus Agrarian Reform

a) LAND REFORM
a. A process of redistributing land from the landlords to tenant-farmers in order that they will be
given a chance to own a piece of land to improve their plight.
b. It abolishes unfair land tenancy programs
c. Is part of agrarian reform
d. It is not just redistributing lands to landless tenant-farmers and farm-workers.
e. It also embraces other factors that will fully develop the new farmer-owner to become
productive and useful citizen of the country.
b) AGRARIAN REFORM
a. Goes beyond the question of land rights.
b. It is concerned with the total development of the farmers economic, social and political
transformation.
c. Can be defined as the rectification of the whole system of agriculture.
d. It is normally done by the government where they redistribute the agricultural land among the
farmers of the country.
e. The agrarian reform is concerned with the relation between production and distribution of
land among the farmers.
f. It covers the following elements:
i. Distribution of land to the cultivator
ii. Security of tenure and fair system of rental payments
iii. Improved methods of cultivation through the improvement of rural institutions
serving the farmers such as:
1. Adequate credit
2. Cooperative marketing
3. Agricultural investment
3) History of Agrarian Reform
a) Pre-Spanish Period
a. The tribal hunters and gatherers existed in their resource ranges, with no system of land-
ownership.
b. Land was not distributed during the pre-colonial period. The notion of private property was
unknown.
i. No formal procedures for recognizing private ownership such as documents, deeds or
titles.
ii. During these times, the land is communal the community or barangay commonly
owned the land.
iii. The pre-Spanish classes who lived in barangays determined the landownership
system.
1. A datu (headman) ruled the barangay and lead the other classes maharlika
(nobles), timawa (freeman), and the alipin (dependents).
c. When the Indo-Malayan race came, they introduced the Muslim system of land distribution in
Southern Philippines which was unique from the pagan system.
d. The different social classes were:
i. The Nobles (Maharlikas)
1. This social class could own their own land and were free from tribute
payment.
2. E.g. Datus
ii. The Freemen (Timawas)
1. They were entitled to cultivate certain lands, but were required to pay an
annual fee of one-half of the yield of their crops to the Datu.
iii. The Slaves (Namamahay & Saguiguilid)

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 1.They simply served the Datu or the Nobles and the Datu owned them. As a
result, they could be sold or traded.
e. Money was unknown, and rice served as the medium of exchange

b) Spanish Period (1521-1898)

a. Spain declared all lands in the Philippines as part of the public domain regardless of local
customs.
b. The Crown was at liberty to parcel out huge track of lands, including the resources and
inhabitants to loyal civilians and military servants as rewards.
c. The system of giving lands to these people was called Encomienda System.
i. Encomiendas were granted to Spanish officials and clerics, who were entrusted with
the responsibility to look after the spiritual and temporal developments of the natives
in a colonized territory.
1. In return for such duty, the encomienderos enjoyed the right to have a share
in the tribute (tribute) paid by the natives.
ii. The Spanish authorities began to consolidate several barangays into administrative
units.
1. They called these units pueblos or municipios
2. These units were governed by governadorcillos (town chief)
3. These governadorcillos came from the landed class known as the caciques.
4. The cacique class intermarried with the Spaniards.
a. This gave birth to a new class known as the mestizos. (inquilinos)
iii. The system resulted in the exploitation of the inhabitants.
1. Agrarian unrest at the time were not rooted on landlessness or unjust land
distribution
2. Land was available on the entire archipelago
3. The major sources of conflict and rebellion were really the harsh Spanish
impositions, such as:
a. Tribute (taxes)
b. Polo (forced labor)
c. Encomienda (land grant)
iv. The encomienderos were replaced by the cacique class.
v. Strategies of dispossessing peasants of their landholdings:
1. Maura Law (1894 decree): granted landholders to secure legal title to their
land or suffer its forfeiture
a. Filipino peasants, either because of ignorance of the processes of
the law or the inability to comprehend the Spanish-written
instructions, failed to respond immediately
b. Peasants were left without title
c. No option was left for those dispossessed because documented
titles to the land prevailed over verbal claims.
2. Mortgage System
a. The peasant mortgaged his land to loan money
b. During the loan period, the peasant-borrower paid his landlord-
creditor a rent for cultivating his land until he has repaid the loan.
c. If the peasant-borrower failed to repay the creditor, his land would
be forfeited.
d. To keep the mortgaged lands, high interests rates were imposed for
the loan.
vi. Spanish Land Laws and policies (encomienda system, etc.) was a contributory factor in
propelling the 1898 Philippine Revolution.
d. At the close of the Spanish Period, Gen. Emilio Aguinaldo confiscated the friar lands and gave
it to landless peasants.
i. This declaration was contained in the Malolos Constitution: all the lands, buildings,
and other properties belonging to the religious corporations in these islands shall be
understood to have been restored to the Filipino state.
1. The Republic was short-lived, Aguinaldos plan was never implemented.
ii. However, majority of the agriculturally productive lands were still in the hands of the
caciques and the friars and a small minority of the land in the legal possession of
peasants.

c) American Period (1898-1935)

a. The Treaty of Paris ended the Spanish-American War.

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 i. Because of this agreement, Spain ceded the Philippines, Guam, and Puerto Rico to US.
ii. US replaced Spain as the countrys new colonial master.
iii. At the onset of the American rule, Spanish land records was either destroyed or lost.
iv. A number of caciques were able to keep and even further strengthened their
positions
1. They did this by assuring the US that supplies of raw materials for their
industries will be provided continuously.
b. Torrens System of Land Registration
i. To resolve agrarian problems rooted in Spanish times and of the farmers ignorance of
various laws.
1. The situation was aggravated by the absence of records of issued titles and
accurate land surveys.
ii. Enforcing the registration of lands and issuance of certificates of land title granted by
the court after appropriate proceedings.
iii. Government-purchased titles were issued only after completing a survey and
establishing the land ownership.
iv. This system did not resolve the problem
1. Farmers did not understand the law and could not pay the survey cost

c. The Land Registration Act of 1902

i. Landlords expanded their landholdings by simply registering and acquiring Torrens
titles to untilled lands.
ii. The farmers, unaware of this law, were either expelled by the new landowners or
became their tenants.

d. The Public Land Act of 1903

i. Offered plots not in excess of 16 hectares to families who had occupied and cultivated
the land they were residing on since August 1, 1898.
ii. Plots of the same size were promised to those who would be willing to relocate on
lands of public domain in other less densely populated parts of the country.
iii. This law was supposed to favor the landless Filipinos, but in reality they did not take
advantage of it.
iv. It was their ignorance of the law that inhibited them from enjoying the benefits of this
law.
v. The caciques took advantage of this.

e. The Cadastral Act of 1903

i. Through cadastral survey, the government redefined the lands that will be classified
as private or public.
ii. Unschooled peasants lost their lands massively to those who are familiar with the
processes of this law.

f. The Friar Lands Act of 1904

i. The Treaty of Paris of 1898 bound the US Government to protect the property
interests of religious orders.
ii. Provided the terms and conditions on the sale and lease of purchased friar estates of
410,000 hectares
iii. Preference to buy or lease would be given to the actual settlers of the land acquired
by the government.
iv. Land estates were offered for sale to the actual tenant-tillers at an interest of 8% for a
25 year period.
v. By 1919, about 69% of all friar lands had been bought and disposed of by the US Civil
government in the Philippines.
1. In spite of this, the religious orders remained the biggest landholders in the
country until 1977.
vi. Realizing that the friar lands had been a major source of irritation and since they
occupied some of the best lands in the country, the United States negotiated the
purchase of 23 Friar Estates
1. The land was subdivided and offered for sale to the Filipinos residing on it.
2. The people could not understand why they should have to buy the land their
parents and forefathers had worked on and developed.

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 vii. Pedro Abad Santos, a socialist and peasant leader, espoused the idea of expropriation
of the religious and public estates and their subdivisions to the tenant-farmers as the
only answer to agrarian unrest.

d) THE COMMONWEALTH ERA (1935-1946)

a. Manuel Quezon implemented the Rice Share Tenancy Act of 1933 (RA 4054)
i. This is to regulate the share-tenancy contracts
ii. The Act provided for better tenant-landlord relationship, a 50-50 sharing of the crop,
regulation of interest to 10% per agricultural year, and a safeguard against arbitrary
dismissal by the landlord.
iii. The major loophole of this act was that it could be used only when the majority of the
municipal councils in a province petitioned for it.
1. Since landowners usually controlled such councils, no province ever asked
that the law be applied

e) SECOND PHILIPPINE REPUBLIC (Jose Laurel) : JAPANESE OCCUPATION (1941-45)

a. Hukbo ng Bayan Laban sa Hapon (HUKBALAHAP)
i. Took upon the cause of peasants against the landlords, who often collaborated with
the Japanese to maintain their position

f) ROXAS ADMINISTRATION (1946-48)

a. Also proclaimed the Rice Share Tenancy Act of 1933
b. Supplemented by the Tenancy Act
i. Provided a 70-30 sharing arrangements and regulated share-tenancy contracts
between tenant and landlord
1. It provided that whoever shouldered the expenses of planting and harvesting
and provided the work would be entitled to 70 percent of the harvest.
2. It also reduced the interest on landowner loans to tenant at no more than 6
percent instead of 10 percent.

g) QUIRINO ADMINISTRATION (1948-53)

a. Objectives of his administration: economic reconstruction and restoration of faith and
confidence of the people to the government
b. EO 355 replaced the National Land Settlement Administration with Land Settlement
Development Corporation (LASEDECO) which took over the responsibilities of the Agricultural
Machinery Equipment Corporation and the Rice and Corn Production Administration

h) MAGSAYSAY ADMINISTRATION (1953-57)

a. RA 1166 creation of National Resettlement and Rehabilitation Administration (NARRA)
i. it was particularly aimed at the peasant of the HUK movement and was successful in
attracting rebels to return back to a peaceful life by giving them home lots and farms
in NARRA settlement in Palawan and some parts of Mindanao.
b. The Agricultural Tenancy Act of 1954 (RA 1199)
i. Provided security of tenure for tenants
ii. Allowed tenants to shift from share tenancy to leasehold
iii. In the leasehold system, a tenant paid a fixed amount to the landlord instead of a
variable share.
iv. This act prohibited the ejection of tenants, unless the Court of Agrarian Relations
found a just cause.
c. The Land Reform Act of 1955 (RA 1400)
i. Provided for the expropriation (to take possession of for public use) of private
agricultural land over 300 hectares of contiguous areas, if owned by individuals.
ii. However, it allowed expropriation regardless of hectares in places where there was
justified agrarian unrest.
iii. Loophole: it prohibited the possession of lands less than the stated limits.
1. Exempted many landowners who had large but parceled out landholdings.
2. The law allowed only the possession of lands when the majority of tenants
petitioned for land purchase

i) GARCIA ADMINISTRATION (1957-61)

a. He did not make any law or major pronouncements on agrarian reform

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 b. It was then believed that at the rate of progress maintained under Magsaysay and Garcia, it
would have taken about 700 years to repurchase and redistribute the 1.8 million hectares of
tenanted agricultural land in the Philippines.

j) MACAPAGAL ADMINISTRATION (1961-65)

a. Agricultural Land Reform Code of 1963 (RA 3844)
i. This code provided for the purchase of private farmlands with the intention of
distributing them in small lots to the landless tenants on easy terms of payment.
ii. The law lowered the retention limit to 75 hectares
iii. It removed the term contagious, and established the leasehold system.
iv. The share-tenancy or the kasama system was prohibited.
v. It formulated a bill of rights that assured agricultural workers the right to self-
organization and to a minimum wage.
vi. At least P 200M was needed within a year from the enactment and implementation of
the code, and P300M in the next three years for the program to be successful.
1. By 1972, the code had benefited only 4500 peasants at the cost of P57
million to the government.
2. By the end of 1970s, the farmers ended up tilling less land.

k) MARCOS ADMINISTRATION
a. Pre-Martial Law (First Term, 1965-69)
i. Agricultural Land Reform Code of Macapagal was implemented
ii. Faster land purchase and redistribution compared to the Macapagal
iii. No Agrarian Law was made

b. Pre-Martial Law (Second Term, 1969-73)

i. Amendments to the Agricultural Land Reform Code of 1971 (RA 6389)
1. Conversion to residential subdivision as grounds for the ejectment of tenats
was abolished
2. Right of tenants to have a disturbance compensation on land converted to
residential subdivision which is equivalent to five times the average gross
harvest for the past three agricultural years
3. Creation of the Department of Agrarian Reform (DAR)

c. Martial Law (1972-81)

i. Martial Law: 21 September 1971
1. Five says later, Marcos issued Presidential Decree No. 2, declaring the entire
Philippines as a land reform area
ii. Tenant Emancipation Act
1. This launched the Operation Land Transfer, which transferred the ownership
of the land to the tenants who tilled it
iii. Earlier Presidential Decrees:
1. strengthened the cooperative movement
2. Provided incentives to affected landowners
3. Established the Land Bank of the Philippines as a financing arm
4. Prohibited and penalized the ejectment of tenant-tillers from landholdings

iv. Presidential Decree No. 27

1. Goal:
a. Emancipating farmers from the bondage of the soil
b. There is no more leasehold in tenanted rice and corn land
c. The tiller automatically becomes the amortizing owner of the land
he tills
2. 2 aspects of land distribution:
a. Determination of the land to be transferred rice and corn areas
were selected because they were the areas of urgent reforms
because of social unrest associated with rice tenancy.
b. Financing the decree solved the problem of financing by fixing the
value of land at a relatively modest rate, and directing the
compensation that may be paid directly by the tiller to the
landowner or converted into 3-way arrangement.
3. Beneficiaries:

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 a. Bonafide tenant farmer or private agricultural land devoted to rice
and corn are benefited with an economic size farm fixed at three
hectares of irrigated lands and maximum of five hectares of non-
irrigated lands
b. Beneficiaries of lands shall pay the total value of the land within 15
years at 6% interest per annum.
4. Retention Limit:
a. Landowners may retain an area not more than 7 hectares on
conditions that each landowner is cultivating such area
i. Letter of Instruction 143: compels landowner to transfer
to their tenant, if determined by DAR to be absentee-
farmer, with sources of income other than their holdings.
ii. Letter of instruction 474: provides that tenanted areas of 7
hectares or less could be placed under PD 27,
if the owner owns other agricultural lands not
devoted to rice and corn, or other lands used for
residential, industrial, or other urban purposes
from which they receive adequate income to
support themselves and their families.

b. Landlords who owned more than seven hectares of land had to sell
the excess to the DAR, which in turn sells these to the landless
farmers tilling the land
c. Loophole: it exempted all landholdings planted with export crops.

5. Stages of Land Transfer:

a. The Secretary of Agrarian Reform was empowered to sign and issue
Land Transfer Certificates
b. Issuance of Certificate of land Transfer (CLT) to the tenant-farmer as
soon as the landholding is transferred by the DAR to recognize him
as the deemed owner
c. Issuance of Emancipation Patent as proof of full ownership of
landholding upon complete payment of the annual amortization.

6. Nature of CLT
a. Certificate of Land Transfer (CLT) serves as the tenant farmers
provisional title of ownership pending the full payment of the value
of the land, or as long as he is the amortizing owner.
b. All financing institutions should accept as collateral for loans duly
registered Certificates of Land Transfer
i. Amount of loan shall not be less than 60% of the value of
the farm holding

7. Transferability of Title to land under PD 27:

a. Lands acquired under PD 27 cannot be disposed of freely except:
i. Transferred to the government
ii. By hereditary-succession to the heirs of the tenant-farmer
beneficiary
b. This is designed to avoid repetition of cases under past land tenure
programs where the lands were reverted back to the former
landowners or sold to land speculators
i. Any beneficiary who violates the above provision shall lose
ownership

v. The equitable distribution of property, especially among landless peasants, and

wealth never took place.
1. Marcoss family and its cronies allegedly exploited much of the wealth of the
country.

l) AQUINO ADMINISTRATION (1986-92)

a. Unveiled the Comprehensive Agrarian Reform Program (CARP) which is governed by the
Comprehensive Agrarian Reform Law of 1988 (RA 6657).

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 i. All matters involving the implementation of agrarian reform are now governed by the
said act
ii. Instrument which will correct landlordism and unjust land distribution in a span of ten
years
1. By: loan extensions, supply of agricultural infrastructures, legal assistance,
research and training services
2. To encourage landowners to shift their capital to other investments
3. Such an agrarian reform program will encourage the shift of capital from land
to industry
iii. There will be more economic activities that will encourage people to remain the
countryside instead of going to Manila or other Urban Centers

iv. Coverage of CARP:

1. Covers all lands (public and private) as long as they are fit for any agricultural
activity
2. Exemptions:
a. Wildlife, forest reserves, reforestation, fish sanctuaries and breeding
grounds, watersheds and mangroves, national defense, school sites
and campuses, experimental farm stations, seeds and seedling
research, pilot production centers, church sites and convents,
mosques sites and Islamic Centers, cemeteries, penal colonies, penal
farms, and government and private research and quarantine
centers.

v. Beneficiaries (Agrarian Reform Beneficiaries- ARB): - EO 228

1. Regular Farmer that is landless/ tenant and is employed by an agricultural
enterprise
2. Landless farmers who are able to make the soil productive

vi. Retention Limits of RA 6657

1. Landowners whose lands are covered by the Comprehensive Agrarian
Reform Program may own or retain five hectares and three hectares may be
awarded to each of his child, subject to the following conditions:
a. That the child is at least 15 years of age;
b. That the child must be actually tilling the land or directly managing
the farm

vii. Payment by the Beneficiaries:

1. lands awarded pursuant to RA 6657 shall be paid for by the beneficiaries to
the Land Bank of the Philippines (LBP) in 30 annual amortization at 6%
interest per annum
a. the LBP may reduce the interest rate or reduce the principal
obligation to make payment affordable
b. the LBP shall have prior right by way of mortgage on the land
awarded to the beneficiary
i. this mortgage may be foreclosed by the LBP, which shall
advice the DAR of such proceedings
ii. DAR shall subsequently award the forfeited landholding to
other qualified beneficiaries
iii. A beneficiary whose land has been foreclosed shall
thereafter be permanently disqualified from becoming a
beneficiary under the Act.

viii. Land Acquisition EO 129-A (expanded the power of DAR)

1. The DAR publishes its intent to acquire land in local newspapers, and notifies
the landowners of the amount which will be offered to him as compensation
for the land.
a. The amount shall be based on the owners declaration of the
current fair market value.
2. Computation of the value of the land:
a. TLV = MV + AMV + DV
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b. Where:

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 i. TLV: total land value
ii. MV: market value, which refers to the latest and
comparable transactions within the municipality/ province/
region, depending on the availability of the data
iii. AMV: assessors market value, which refers to the
assessment made by the government assessors
iv. DV: declared value, which refers to the landowners
declaration per EO 229 RA 6657
In no case this declaration shall not exceed 200%
of the average of the MV and AMV
c. Illustration:
i. MV = 15, 000
ii. AMV = 12, 000
iii. DV = 14, 400
iv. Total = 41, 400

3. Payment to landowners:
a. 25% cash and 75% government bonds for above 50 hectares
b. 30% cash and 70% government bonds for above 24 50 hectares
c. 35% cash and 65% government bonds for 24 hectares and below.
d. Payments are made in 10 years at 10% interest per annum.

4. If the landowner rejected the offer, the DAR will conduct a summary
administrative proceedings
a. This will assess the value for the land in question
b. The DAR collects evidence that will be useful for its evaluation from
the landowner
c. Should any party disagrees with the decision, he has an option to
approach the Special Agrarian Court to question the determination
of land valuation or just compensation
ix. Land Transfer
1. The land to be awarded should not be more than 3 hectares per ARB
2. The proof that a parcel of land has been physically distributed or transferred
to them is called the Certificate of Land Ownership Awards (CLOAs)
3. The beneficiaries are expected to pay the government, through the Land
Bank of the Philippines (LBP), in 30 annual amortization payments equivalent
to six percent interest per year.

m) RAMOS ADMINISTRATION (1992-98)

a. No new agrarian reform law was passed by Congress.
b. Ramos speeded up the implementation of CARP.
c. Agrarian Reform Communities (ARC)
i. This approach was to fast-track farm productivity and social infrastructure building

d. RA 7881- AN ACT INSTITUTING A COMPREHENSIVE AGRARIAN REFORM PROGRAM TO

PROMOTE SOCIAL JUSTICE AND INDUSTRIALIZATION, PROVIDING THE MECHANISM FOR ITS
IMPLEMENTATION, AND FOR OTHER PURPOSES"
i. Amending certain provisions of RA 6657
ii. Focused on the exemption of fish and prawn ponds from the coverage of CARP

e. RA 8435 The Agriculture and Fisheries Modernization Act (AFMA)

i. This is an act prescribing urgent related measures to modernize the agriculture and
fisheries sectors of the country in order to enhance their profitability
ii. This law plugged the legal loopholes in land use conversion

f. EO 363
i. Limits the type of lands that may be converted by setting conditions under which
specific categories of agricultural land are either absolutely non-negotiable for
conversion

g. In 1992, the government acquired and distributed 382 hectares of land with nearly a quarter of
a million farmer-beneficiaries.
i. This constituted 41% of all land titles distributed by DAR during the last 30 years.

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 ii. By the end of 1996, the DAR had distributed only 58.25% of the total area it was
supposed to cover.
iii. From January to December 1997, the DAR distributed 206, 612 hectares
1. That year, since 1987, the DAR had distributed a total of 2.66 million hectares
2. This benefited almost 1.8 million tenant-farmers.

h. Problem:
i. Lack of fund to support and implement the program
ii. The P50M allotted by the Comprehensive Agrarian Reform Law (CARL) of Aquino to
finance the CARP from 1988 to 1998, was no longer sufficient to support the program
iii. To address this problem, Ramos signed the REPUBLIC ACT NO. 8532- AN ACT
STRENGTHENING FURTHER THE COMPREHENSIVE AGRARIAN REFORM PROGRAM
(CARP) to amend the CARL.
1. This law further strengthened the CARP by extending the program to another
10 years.
2. Allotted P50B to finance the CARP

n) ESTARADA ADMINISTRATION (1998-01)

a. Launched the Magkabalikat para sa Kaunlarang Agraryo (MAGSASAKA)
i. It was introduced to encourage foreign and private investments to the agricultural
sector and help farmers to learn advanced technology in crop production.
b. Continued implementing the CARP

o) ARROYO ADMINISTARTION (01-10)

a. The agrarian reform program of this administration is based on the philosophy that inequitable
land distribution and poverty lead to social unrest while social justice and rural development
lead to peace.

b. CARP ended in 2008 without successfully completing all its goals.

i. 6 million out of the 8.1 million hectares of public lands targeted for distribution were
actually distributed.
1. 57.5% were parceled out and benefitted over 3.2 million families
ii. Of the 1.5 million hectares of private lands, only 17% were transferred to tenants.
iii. CARP was able to distribute 7.2 million hectares of agricultural lands to 4.5 million
farmer-beneficiaries.
1. This is, by far the highest land transfer recorded in the history of agrarian
reform worldwide.
iv. Infrastructures of CARP:
1. Farm-to-market roads
2. Irrigation system
3. Post-harvest facilities
4. Multi-purpose buildings
5. Flood-control projects
6. Bridges

c. Signing of the Comprehensive Agrarian Reform Program Extension and Reforms (CARPER)
i. Amended certain provisions of the 1988 CARL
ii. Extended the CARL to five more years and allocated more funds for the
implementation of the CARP.
iii. CARP will continue even when all landless farmers have owned a piece of agricultural
land
iv. CLEAR POLICY AGAINST CONVERSION OF AGRICULTURAL LANDS
1. This is for landowners who are avoiding the CARP coverage conversion of
their properties to non-agricultural uses.

B. Importance, Aspects, and Components of Agrarian Reform

1) Aspects of Agrarian Reform
a) Economic Aspect
a. Agrarian reform will help improve agricultural productivity to accelerate general economic
development.
b. Increased efficiency in food production means more and better food for everyone.
Unemployment is resolved.
b) Socio-cultural Aspect

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 a. Because of a sense of ownership, farmers are transformed to become leaders because they
enjoy the benefits of their own farm.
b. Farmers will become more active and productive in leadership roles and nation-building.
c) Religious Aspect
a. Everyone must enjoy the fruit of having a piece of land to till.
b. Land is given by God for everyone to enjoy.
d) Moral Aspect
a. Unequal distribution of wealth and power to only few persons.
b. The ignorant and poor farmers are abused
e) Legal & Political Aspect
a. Formulation of laws are enacted to regulate the abuse existing between landlords and tenant-
farmers

2) Components of Agrarian Reform

a) Land Distribution
a. The very foundation of agrarian reform
b. Farmers are given the chance to become owners of the land they are tilling
b) Support Services made by the Government to assist the farmers after the redistribution:
a. Irrigation facilities
b. Infrastructure development and public works projects
i. Suitable barangay sites
ii. Potable water and power resources
c. Price support of products
d. Collateral-free loans
e. Financial assistance to small scale industries
f. Research and development on low cost-technologies to minimize reliance on expensive and
imported agricultural inputs
g. Development of cooperative management skills through intensive training
h. Assistance in various aspects of marketing

II. THE COOPERATIVE PROGRAMS IN THE PHILIPPINES

A. Overview:
1) Cooperative:
a) The discovery of agriculture ended the nomadic activities of primitive tribes and started the formation
of formal economic, social, political and cultural organizations better known as cooperatives.
b) A system of economic action and business enterprise
c) Characterized by the absence of profit motive
a. If there should be profits, it should be divided equally among its members
d) Its primary function is the equal distribution of goods and services
e) It is a movement of consumers who unite on the basis of their mutual interest in reducing living
expenses and benefiting from the ownership and control of production facilities and of
accommodations shared by all.
2) Producers Cooperatives
a) Serve the interests of people functioning as producers not as consumers
b) Include associations of workers who cooperatively own and operate factories or farms.
c) Producers also form associations for the purposes of economically purchasing supplies and of
profitability marketing their products.
B. Meaning and History of Cooperatives: Overview
1) What is a Cooperative?
a) Derived from the Latin word cooperates (with work/ or working together)
a. A group of persons who pool their resources under the principle of equality and common
understanding for their mutual benefit.
b. It exists not to make profits but to render service and if there should be profits, it shall be
divided among members.
b) Cooperative is an institution or association of individuals in a mutually helpful undertaking to supply the
members with essential goods and services at cost
c) In cooperation, people go into business to promote common welfare, not individual welfare.
a. A cooperative is based on the saying that in union, there is strength.
d) The New Cooperative Code of the Philippines defines cooperatives as:
a. A duly registered association of persons with a common bond of interest, who have voluntarily
joined together to achieve a lawful common social or economic end

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 b. Contributions to the capital required are equitable
c. Accepting a fair share of the risks and benefits of the undertaking in accordance with
universally accepted cooperative principles.
e) A group of persons who pool their resources under the procedure and principle of equality and
common understanding for their mutual benefits.
a. A cooperative exists not to make profits as an entity
b. If there should be profits, it shall be divided among its members.

2) The Development of Cooperatives in the Philippines

a) Rural Credit Law (1915)
a. Paved the way for the establishment in the country of rural credit association
b) Cooperative Marketing Law (1927)
a. Its purpose is to organize the small farmers into cooperatives for the purpose of helping them
market their products
c) Consumers Cooperative League of the Philippines (1938)
a. Cooperative Law (Commonwealth Act 565) revived the Cooperative movement in the
Philippines
b. Cooperative Law exempted the cooperatives from payment of taxes and other government
fees for the first 5 years of its operation.
d) Agricultural Credit Cooperative Financing Administration (ACCFA)
a. Promotes the effective groupings of farmers cooperatives all over the country.
e) Farmers Cooperative Marketing Association (FACOMA)
a. To help farmers market their products at higher prices and free them from price dictations

f) The inability of the different cooperatives in the Philippines to pay their dues on the government
adversely affected the credit portfolios of the government with the Central Bank.

3) The Principles of Cooperatives

a) Open and Voluntary Membership
a. Membership is voluntary and available to all individuals regardless of their political, racial, or
religious beliefs.
b) Democratic Control
a. Its affairs shall be administered by persons elected or appointed in a manner agreed upon by
members.
c) Member Economic Participation (Limited Interest in Capital)
a. Members contributes equitably to and controls the capital of their cooperative
b. At least, part of the capital is usually the common property of the cooperative
c. Members usually receive limited compensation, if any, on capital subscribed as a condition of
membership.
d) Autonomy and Independence
a. If cooperatives enter into agreements with other organizations or raise capital from external
sources, they can do so on terms that ensure democratic control by the members and maintain
their cooperative independence.
e) Education, Training and Information
a. Members, elected representatives, managers, and employees are educated and trained so that
they can contribute to the development of their cooperatives.
f) Cooperation among Cooperatives
a. Cooperatives serve their members more effectively and strengthen the cooperative movement
by working together through local, national, regional, and international structures.
g) Concern for the Community
a. Cooperatives work for the sustainable development of their communities through policies
approved by their members.

4) Why Previous Cooperative Failed?

a) Incompetent Management
a. An organization will not succeed if its management is incompetent and ineffective.
b. Most of the people designated to man the cooperative do not have any technical knowledge
about cooperatives.
b) Inadequate Capital
a. Most members of the cooperatives are poor farmers having limited resources.
b. Because of this shortcoming, the organization cannot expand its operations for a more
profitable endeavor.
c) Lack of Knowledge on the Concept of Cooperativism

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 a. Lack of understanding on the objectives of the organization usually confuses the farmers.
b. Some of them not only refuse to become members but are also inclined not to patronize its
business.
c. In a community where ignorance or prejudice exists, a cooperative cannot prosper.

d) Inability to Meet Competition

a. Because of inadequate capital, many cooperatives could not compete with private business
establishment.
b. This situation can be remedied if members of cooperatives will pool together their resources
to meet market competition.

C. ORIGIN:
1) ROBERT OWEN
a) Father of the Cooperative Movement
b) Essay on Government
a. It is better to prevent than to punish crime
b. A government is best which in practice produces the greatest happiness to the greatest
number
c. By adopting the proper means, man may by degrees be trained to live in any part of the world
without poverty, without crime, and without punishment
i. For all these are the effects of error in the various systems of training and governing
error proceeding from very gross ignorance of human nature.
c) He launched the international cooperative movement

2) SAINT-SIMON
a) Returned to France and supported the French Revolution
b) His writings present arguments in favor of a social organization directed by men of science and industry
for the benefit of the whole society.

3) LOUIS BLANC
a) Workers could solve their problems only by revolutionary action (adopted Karl Marx)
a. Social principle: from each according to his abilities, to each according to his needs.
b. This principle could be realized through the creation of social workshops, associations of
workers financed by the state and controlled by the workers

4) CHARLES FOURIER
a) His Theory of the Four Movements and of General Destinies expounded his social system and his plans
for the cooperative organization of society.
a. The system, known as Fourierism, is based on his belief in a universal principle of harmony,
displayed four areas:
i. The material universe, organic life, animal life, and human society.
ii. This harmony can flourish only when the restraints that conventional social behavior
places upon the full gratification of desire have been abolished, allowing people to
live free and complete lives.

D. The Cooperative Development Program of the Philippines: Overview

1) Republic Act 6938 The New Cooperative Code of the Philippines
a) Fosters 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.
a. Toward this end, the government shall ensure the provision of technical guidance, financial
assistance and other services to enable said cooperatives to develop into viable and responsive
economic enterprise.
b) It encourages the private sector to undertake the actual formation and organization of cooperatives
and shall create an atmosphere that is conducive to the growth and development of the cooperatives.

2) Republic Act No. 6939 The Cooperative Development Authority

a) The agency task to implement the program of cooperatives in the Philippines.

3) Purpose of the Cooperative Development Program

a) To facilitate redistribution of income and wealth
b) To bridge community development

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 c) To systemize the developments of cooperatives
d) To give more opportunities to the poor

4) Objectives of Cooperatives
a) To provide goods and services to its members and thus enables them to attain increased income and
savings, investments, productivity, and purchasing power
a. To promote among them equitable distribution of net surplus through maximum utilization of
economies of scale, cost-sharing and risk-sharing without, however, conducting the affairs of
the cooperative for charitable purposes.
b) To provide maximum economic benefits to its members, teach them efficient ways of doing things in a
cooperative manner
a. To propagate cooperative practices and new ideas in business and management and allow the
lower income groups to increase their ownership in the wealth of the nation.

5) ORGANIZATION OF COOPERATIVES a cooperative may be organized and registered by at least 15 persons for
any of the following reasons:
a) To encourage thrift and savings mobilization among the members
b) To generate funds and extend credit to members for productive and provident purposes
c) To encourage systematic production and marketing among members
d) To provide goods and services and other requirements to members
e) To develop expertise and skills among its members
f) To acquire lands and provide housing benefits to members
g) To insure against losses to members
h) To promote and advance the economic, social and educational status of the members
i) To establish, own, lease or operate cooperative banks, cooperative wholesale and retail complexes,
insurance and agro-industrial processing enterprise and public markets.
j) To coordinate and facilitate the activities of the cooperatives
k) To undertake any and all other activities for the effective and efficient implementation of the provision
of this Code.

E. Types of Cooperatives in the Philippines: Overview

1) Types of Cooperatives
a) Credit Cooperatives
a. Composed of persons who are bounded by common interest in promoting the virtue of thrift
among its members by pooling their savings into a common fund.
b. Out of this fund, the members may secure loans for productive purposes at nominal interest.

b) Consumers Cooperatives
a. Composed of consumers residing in a particular community who have pooled their resources
together in order to procure and distribute commodities to members and non-members at low
prices.

c) Producers Cooperatives
a. Composed of skilled workers and craftsmen engaged in small-scale industry that have pooled
their economic resources in undertaking production, procuring raw materials and other
supplies indispensable in the production processes and marketing the products individually
produced by the members.

d) Marketing Cooperatives
a. Engaged in the sale of farm products produced individually by member-farmers in their
respective farms.
b. Its functions are processing, packing, storing, financing, grading, and distributing other than
the actual selling of farm products.

e) Service Cooperatives
a. Established by members to provide themselves with certain services which would help
improve their life such as medical care, hospitalization, transportation, insurance, electric light
and power, communication, housing, and the like.

f) Multi-purpose Cooperatives

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 a. A cooperative that combines two or more of the business activities of these different types of
cooperatives.

2) Factors Contributing to the Success of Cooperatives

a) Economic Needs
a. Mans economic and social problems can best be solved through cooperation.
b) Sound Business Policies
a. Refers to efficiency of operation, careful planning, foresight, and fair dealing with customers.
c) Honest and Competent Management
a. Persons who are to serve as members of the board of directors should have adequate business
experience and should be motivated by a desire to promote the interests of all the members of
the organization.
d) Exemption from Taxes
a. Since cooperatives enjoy certain tax exemptions, it has a decided edge or advantage over
private enterprises.
b. Such exemptions should only be temporary and must given just to help the business make a
good start.

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