Ticklish amendments to R.A. 6939

In a previous column, I wrote about sidelights to the public hearing/consultation held in the Capitol two weeks ago by the Joint Oversight Committee on Cooperatives (JOCC).

Congress seeks to amend R.A. 6939 or the Charter of the Cooperative Development Authority (CDA). The CDA is the national agency tasked to develop the country’s socioeconomic agenda and because the regulatory body is intertwined with the co-operative sector, leaders from all over Visayas came in force to listen and interact with Sen. Ferdinand Marcos Jr. and Co-op Nattco Party-List Rep. Cresente Paez.

The lawmakers jointly spearheaded the public hearing together with former Congressman Pablo Garcia and CDA Chairman of the Board of Administrators Emmanuel Santiaguel, Administrator Mercedes Castillo and CDA Central Visayas Regional Director Philip Deri as resource speakers.

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Before the public hearing, Victo National organized a pre-conference to discuss its position on the move of Congress to reorganize the CDA. As a member of the board of directors of Cebu NewsCoop, I got invited to join the pre-conference wherein one of the issues discussed was the rationale behind amending the CDA Charter.

Some colleagues speculated that there is a power struggle within the agency and from what I heard this is an all-too-familiar situation for co-op experts who are now sitting in Congress.

The conjecture was confirmed by Rep. Paez who told the public hearing that conflicts do arise between the board of administrators and executive directors because there are members of the board, supposedly tasked to craft policies, who would encroach on executive functions, resulting in turf battles and personal conflicts.

Currently, the CDA’s policy making function is vested in the Board of Administrators which is composed of six members who work full time. It is led by a Chairman who likewise works full time. All of them come from the Co-op sector, have at least five years of experience either as officer, manager and member of the board of directors of a primary or secondary co-op. The requirement practically limits the Board of Administrators to industry practitioners only.

In House Bill 276, Co-op Nattco Party-listers Cresente Paez and Anthony Bravo envision a policy-making body as made up of members coming from the sector but who will not work full time. Same with Senate Bill 426 authored by Sen. Marcos, who wants the Board of Directors composed of industry practitioners who will also work part time.

I’m glad the professional requirement for CDA policy makers is almost ironclad because cooperativism has its own set of principles, legal framework, culture and even jargon. Indeed, one has to be immersed in the industry to be able to craft policies.

That is why, making policy makers work part time, as suggested by Sen. Marcos and party list representatives, is impractical and not doable. For one thing, the policy of divestment needs to be carried out to prevent conflict of interest.

In my view, who is that co-op practitioner who will give up a secure job to become a part-time member of the CDA board of directors?

This was precisely the point raised by Butch Salera, chief executive officer of the Philippine Cooperative Central Fund (PCF), who asked Paez if such a setup would attract co-operators to serve the regulatory body. The lawmaker promised to study the matter.

Another thing, policy formulation is not a simple job. It needs focus especially because the co-operative standard has evolved into an alternative economic model. In fact, in some countries where co-ops are well-developed and very successful, they are seen to supplant the capitalist system.

In sum, the policy-making body has to be responsive not just to the domestic demands. It also needs to update itself continuously to help the sector adapt to applicable trends especially those recognized by apex organizations outside the country.

Having said that, I hope the JOCC would rethink its position of making the CDA policy making body as a part-time organization because the sector needs vibrant strategy makers who should be working 24/7.

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Another ticklish issue that cropped up during the public hearing was the matter of taxation.

R,A. 9520 guarantees the tax free status of co-operatives, but a leader from Dumaguete City told the assembly that she had some conflict with the Bureau of Internal Revenue (BIR) in the area because it does not want to recognize the co-op’s tax exempt status with respect to the collection of real estate taxes.

In response, former Rep. Pablo Garcia told the assembly that co-op enterprises should insist on their tax-free status. He likewise challenged the CDA to engage the BIR through seminars. Many co-op leaders nodded in approval of Garcia’s suggestion.

At the end of the public consultation, I interviewed Rep. Paez to get his reaction on the tax problems of co-operatives. The Cebuano lawmaker acknowledged that the problem exists in many areas. He revealed that the JOCC will invite BIR and CDA officials for a round-table discussion to address the tricky situation.