The 1968 Ramon Magsaysay Award for Community Leadership

BIOGRAPHIES of Silvino and Rosario Encarnacion

Silvino and ROSARIO ENCARNACION knew each other from childhood. SILVINO was born on February 17, 1913 in Poblacion Munoz, in the province of Nueva Ecija, Luzon, the Philippines, and ROSARIO three years his senior, on January 15, 1910 in the nearby town of Aliaga.

Although SILVINO's father had sufficient education to become a grade school teacher, he left teaching and, after working as a timekeeper for a government road project, applied for 11 acres-of public land to farm in Barrio Bantug. Like so many other farmers, he soon had to mortgage his land in order to provide for his family and to send his children to school. He died when SILVINO, his fourth child, was three years old.

SILVINO completed only four years of Bantug Elementary School before he had to go to work to help his mother support her six children. However his curiosity and determination had been awakened, and with the help of an American correspondence school course he taught himself to be a tailor. "It was a business that needed little capital," he recalls, and "service to people was important."

ROSARIO’s father also died when she was young—just two years of age. He, too, was a farmer. Her widowed mother supported the family of two girls and two boys as a dressmaker until her own death eight years later. ROSARIO then went to live in Barrio Bantug with an aunt and uncle of very modest means who were childless. Her aunt sold rice cakes for a living. ROSARIO finished Cabanatuan High School in 1930 and taught in that town's elementary school from graduation until 1933 when she transferred to Bantug Elementary School where she is still teaching.

The ENCARNACION and ROSARIO's aunt and uncle were neighbors and good friends, so SILVINO and ROSARIO became acquainted as children. They did not marry, however, until ROSARIO returned to Bantug to teach. She was a mature 35 at the time of her wedding, and dedicated to her career. The couple had no children of their own, but later adopted two. ROSARIO continued to teach during the years the children were growing up. In 1955, to further her training, she began taking summer courses at Philippine Normal School and San Jose College in Nueva Ecija, to earn a degree in education. She completed her degree requirements in 1968.

Barrio Bantug lies near the foothills of the Sierra Madre mountains in the northeastern corner of central Luzon's great plain. The land is naturally fertile, growing some of the Republic's best rice crops in the rainy season from June through December. The village itself differs little from some 28,000 other barrios (villages). The great majority of its 4,000 residents are of Ilocano stock, and most are share-tenants, cultivating plots of two or three hectares on large estates. With 30 to 50 per cent of their crop due as rent, and the yield dependent upon rainfall which sometimes fails, a great majority of these tenant farmers were perennially in debt to merchants, landlords and moneylenders. They borrowed for medical bills and funeral expenses; for school costs; for buying draft animals; for food before the harvest, and for repaying overdue loans. Only rarely did they utilize loans to increase production, for they were oriented toward trying to get by "until their luck changed." Indebtedness for a family varied from 500 to several thousand pesos (a peso ranged in value from 50 U.S. cents in 1960 to 25 cents in 1968) and interest rates on loans were exorbitant. When a family could offer collateral—farm animals, house, a sewing machine—they might be able to borrow at an annual interest rate of 30 per cent; otherwise the standard interest rate was 10 per cent a month. If not paid on time, the interest was added to their indebtedness.

The catalyst for change in Barrio Bantug after 1960 was the Philippine Rural Reconstruction Movement (PRRM), a private non-profit, nonsectarian movement which had been organized in 1952 for community development in rural areas. The PRRM was modeled on the Mass Education Movement developed in China by Dr. James Y.C. Yen (recipient of the 1960 Ramon Magsaysay Award for International Understanding "for sharing the wealth of his experience and creative leadership in rural reconstruction and bringing to the East and West an awareness of the urgency for meeting the aspiration of the Asian farmer for a fuller life"). The Movement did pioneer work in awakening, teaching and organizing Chinese peasants for self-help during the 1920's, 30's and 40's. Following World War II and the Communist takeover of China, Yen, with the encouragement and support of American friends, established the International Committee of the Mass Education Movement in New York City. In 1951, after surveying the countries of the developing world, Yen recommended that the Committee offer its assistance to the Philippines because it was an open society where private organizations were free to operate, where civic leaders were ready to help raise funds locally, and where rural problems were similar to those met in China. As a result the Philippine Rural Reconstruction Movement was established to help the rural people of the Philippines discover their talents and their capabilities in order to help themselves. Its motto is "Release, not relief."

The PRRM program is based on the premise that the problems of poverty, disease, illiteracy and civic indifference are interrelated and must be met with an integrated four-pronged approach: better livelihood, improved health, enlightened education, and training for self-government. Criteria for projects undertaken in any of these four categories are that they must be simple, practical, economical and duplicable. An important emphasis in PRRM's Livelihood Program is on the establishment of credit unions and consumer cooperatives.

The early history of credit cooperatives in the Philippines, as in many other countries of South and Southeast Asia, was disappointing and disillusioning. Successive efforts flourished briefly, then failed. The first attempt to introduce cooperatives was made in 1907 when a bill on Rural Credit Cooperatives was approved by the Philippine Assembly, but failed to gain approval by the Philippine Commission. A similar bill was presented in 1914 and this time it was passed by both houses of the legislature and enacted in 1915 as the Rural Credit Law. By 1939 there had been 571 agricultural credit cooperatives established, of which a good number continued for only a short time and others remained dormant as practically all capital had been lent. Following the end of World War II cooperatives were again set up, primarily for the distribution of relief goods. Again these were short-lived. Because of the lack of government personnel the cooperatives were registered as soon as they were organized, without prior investigation of sponsors or officers, and without a subsequent effort to train officers in management and members in fiscal responsibility. Bantug, like other barrios, had had bitter experience with mismanaged cooperatives.

The PRRM had found that illiterate rural folk made poor cooperative members. Since they lacked the ability to read records of decisions and to understand accounts, they had little sense of involvement. The PRRM, with its integrated approach, sought to teach the skills of local self-government which in turn related directly to sharing in cooperative decision making. Health education was proving effective as a means of awakening an awareness among farm families of the new insights afforded by science; their willingness to accept new ideas in one field carried over into others.

The PRRM began work in Bantug in 1958, assigning a Rural Reconstruction Worker to the area. His approach to forming a credit union, however, proved faulty. Using PRRM funds, he matched the modest contributions of newly enlisting members. Since the money lent was not all theirs, many who joined felt it unnecessary to repay loans, at least not on time. At this point SILVINO and ROSARIO ENCARNACION were not involved, although they had invited the PRRM worker to live in their house. "I absolutely did not want to have anything to do with any association or activity where money was involved, SILVINO later said. "From long experience, I have observed that there is no association in the barrio where money is involved which lasts more than two months. For one reason or another, after one or two meetings the association dies and there is a lot of recrimination. It causes a lot of ill feelings in the barrio." Moreover, SILVINO was too busy as a tailor and as Barrio Lieutenant (chairman of the popularly chosen governing council) to become involved in credit union activities at this time.

"It was Angel Mandac who really got our Coop started on the right path, and we are so grateful to PRRM for sending him," SILVINO has since said. Mandac, formerly with the Philippine government's Cooperatives Administration Office, had recently joined PRRM and was sent to Barrio Bantug as a Rural Reconstruction Worker in 1960. He, too, was eager to organize a credit union but, unlike his predecessor, he chose the initially more difficult method of requiring members of the new union to contribute all the funds: each member had to subscribe a minimum of two pesos plus what he could save each succeeding month. Of equal importance to the growth and vitality of the new credit union, was Mandac's success in enlisting the interest and support of SILVINO ENCARNACION and his wife ROSARIO.

Both SILVINO and ROSARIO were active in community affairs, she through the school and he in village politics. SILVINO had served as community coordinator in political campaigns, as Head of Barangay 1951 to 1952, and as President of the Parent Teachers Association 1951 to 1959. In 1958 he was persuaded to run for Barrio Lieutenant and was elected. Moreover, both were hospitable and their hospitality often involved them in village affairs. "When I see some strangers in the barrio who appear to be looking for someone," SILVINO has commented, "I immediately befriend them and ask them how I can help them. Usually, they are minor government people who do not know where to stay, or where to start their work. So, I ask them to stay in the house and introduce them to the neighbors. Because of this, I often have people in the house and I am always asked to be a member of a committee or of a council."

"I am very lucky," he adds, "in that my wife never objected to this hospitality or to my being absent from the house to attend to some community work. According to my wife, and I guess it is because she is a teacher, she believes that when we work we should not work only for ourselves but for others because we have an obligation to the community. So with that attitude I was free to follow this inclination of mine to help in community activities."

Initially SILVINO "turned a deaf ear" to Mandac's talk about credit unions, just as he had to his predecessor's. Then one Sunday Mandac came to a meeting SILVINO was holding as Barrio Lieutenant and requested permission to talk for a few minutes as he was having difficulty getting people to attend his own meetings. I knew, SILVINO says, "that he was going to talk again about credit unions so I tried to discourage him by saying that he could talk only after our business was finished. It was already late when we finished but Mr. Mandac was still waiting. In order to get the people interested and to discourage them from leaving, I organized a small program where there was a lot of singing. I even asked Mr. Mandac to sing. Finally, he was allowed to speak, and I think it was his opening sentence which caught the attention of those assembled."

The barrio, SILVINO points out, was in financial straits, "incomes were really very limited. So when Mr. Mandac started by saying, 'I am here to help you if you will allow me,' it made everybody sit up and pay attention. Then he started talking about how to pool our resources so that we will have money to use as capital in the same way as others go to a bank to get capital for their businesses. The barrio people could not believe their ears, as in our way of life banks are only for rich people. Mr. Mandac continued to explain that the rural bank in Munoz is actually capitalized by the money of the people in the different barrios of Munoz. However, the people were still not really interested because in their appreciation of banks their money will be taken somewhere else, away from the barrio. So when Mr. Mandac assured them that their money will remain in the barrio and that it will be there for the barrio people to use and that whatever interest they pay will be returned to them, this was something very new to them."

It was new to SILVINO ENCARNACION, too, and he remembers talking about it long after the meeting was over, asking questions of Mandac until late into the night. "I could hardly wait for the next morning," he recalls, "as I felt that this might be the answer to the conditions of the barrio people. So, the next day I went to those I considered as my close friends, and they were also very much intrigued by this credit union. Others promised to come in only because then I was their friend and while they may believe in this thing, they were positive that any activity in the barrio would surely fail."

"Mr. Mandac helped us organize," SILVINO continues, "but in one of the meetings when I was absent, they elected me treasurer. I was all set to refuse as I did not want to hold any money, and keeping and writing figures scare me. But the others in the group refused to come in if I did not accept and Mr. Mandac challenged my concern for the barrio. I cannot forget that challenge."

On April 11 1960 the Bantug Cooperative Credit Union was established with SILVINO ENCARNACION as Treasurer-Manager, and ROSARIO ENCARNACION as Chairman of the Credit Committee. Its office was located in the house of the ENCARNACIONS. On May 6th, with 17 members and an initial deposit of P73, it was officially registered under Republic Act No. 2023, the Philippine Non-Agriculture Cooperative Act.

A recent study of PRRM barrio credit unions notes that the first two essentials for success are that "good leaders must be selected" and "these leaders must be well trained." Of the more than 100 credit unions and consumers' cooperatives which have been established under auspices of the PRRM, 40 were included in this survey, and Barrio Bantug was considered the most outstanding. "The successful operations and stability of the Bantug Credit Union," the report states, "are mainly due to the zealous dedication, the sustained leadership and the diligent management of its Treasurer-Manager, SILVINO ENCARNACION, and the effective support of his wife ROSARIO, who is also the Chairman of its Credit Committee."

Mandac, who is now the PRRM staff member in charge of all cooperatives, refers to the Bantug Credit Union as his model union and the most successful union in terms of acceptance by the barrio people, the faithfulness of its treasurer-manager and its length of operation.

A rural cooperative, Mandac acknowledges, is very difficult to organize and maintain because it is hard to gain the confidence and change the attitudes of village people. Aside from share-tenancy, "they have no livelihood or fixed income to speak of, their level of education is low, their appreciation of organized effort for a non-social or non-religious activity is practically nil, and they are distrustful of outsiders coming in to teach them." The treasurer-manager is, therefore, of utmost importance. Mandac always emphasizes that this officer must be a man whose honesty is unquestioned, who has the welfare of the barrio really at heart and who is hardworking.

Resigning in 1960 as Barrio Lieutenant in order to accept election as Treasurer-Manager of the credit union, SILVINO, who had only four years of elementary education and knew nothing about keeping books, taught himself to use the Chinese abacus for rapid calculation. Between tending his few poultry and earning his living as a tailor, SILVINO at first had little time to go out and meet active and potential members. But his eyesight began to fail and he had to give up tailoring. He bought a motorcycle with a sidecar and began a "taxi" service. "Now I could get around making collections," he recalls, "and also spread the word."

A requirement which helped strengthen the newly fledged credit union was that each member was obligated to bring in five new members, and these in turn were to bring in an additional five. SILVINO stresses that having each member responsible for trying to persuade his friends and neighbors join the union was important: "He is in the best position to tell them about the advantages of the credit union. He is also in the best position to know whether his friends and neighbors will be assets to the credit union."

Through such organizing efforts and the members' own experiences with the benefits of the union, the skeptics in the barrio were gradually convinced of its viability. "I remember a particular friend," SILVINO recalls, "who deposited P5 and announced to me that as far as he was concerned it was lost money which he was willing to spare because we were friends. Then one day I received the news that his son was very ill of El Tor (cholera) and that he was in dire need of P15 (P10 for the doctor and P5 for medicine) and he had already sent his wife to the moneylender to borrow but was not successful. I happened to pass him sitting dejectedly in the street. I asked him what was the matter and he told me his problem. I reminded him that he was a credit union member . . . and that he could borrow. In fact, he could get P20 in five minutes after he filled out the application. He could not believe this as he had considered his P5 lost. In fact, he had gotten a scolding from his wife for wasting the P5. He was so happy that as soon as he had repaid the sum, he again borrowed, this time to buy a carabao (water buffalo) and then resold it, making a profit of P80. Now even his wife is a member. They now have more than a P1,000 capital which they use as a revolving fund for their many small businesses."

Another incident widely talked of throughout the barrio occurred at the end of the first year's operations when the credit union declared and paid its first dividend. "The members were so delighted receiving their certificates for 50 or 80 centavos (100 centavos to a peso) which we made out in the form of a check," SILVINO relates. "To them checks were only for rich people."

SILVINO always reminds members to let their families know that the money they are using—whether to buy books, medicine, repair their houses or engage in business—is coming from the credit union so that the other family members will want to join as well. "And that is exactly what is happening now as it is not only the husband who is a member, but also the wife. And then we started to get the children interested, and we also have savings for the children."

From its 17 members and P73 in deposits in 1960, Bantug Cooperative Credit Union has grown to 181 members with P26,447 in assets. As a recent PRRM report notes: "Considering that this capital came entirely from the small deposits of the members out of savings from their meager incomes from farming and other sources, this amount really has great significance. It represents the product of toil of village people who have learned the value of thrift and saving that they may share the common fund thus accumulated."

Far from their original attitude of skepticism, many villagers now want to join. But, as SILVINO explains: We are selecting only the responsible ones and trying to educate those others. We refuse admission to any known gambler and also to others with bad reputations. In a community like this, we know each other's habits so well—after all, neighbors can see and hear each other every day."

All officials of the credit union meet at the ENCARNACION home on the second Sunday of each month at three o'clock in the afternoon and discuss its affairs for two or three hours. The directors screen membership applications, set loan priorities and fix the maximum amount that can be lent for specific purposes. These policies are reviewed regularly. The Supervisory Committee audits union accounts, while the Credit Committee screens applications for loans. Every January all members of the union gather for their "assembly meeting" to check the books, voice questions, make suggestions and choose officers. At the end of each year members are paid a dividend ranging from 12 to 18 per cent of the interest that has been paid on loans.

As is the PRRM's practice, officers of the Bantug Credit Union are all local people. The Board of Directors, with its president, vice president and treasurer, and the members of the Supervisory, Credit and Information and Education committees are all farmers. Officers undergo a week's training on the practical management of their society. The PRRM also conducts short-term training in simplified bookkeeping and other aspects of credit union affairs.

"The most significant aspect of the training," states Dr. Juan M. Flavier, Executive Assistant of PRRM, "is that the ability of the barrio folk to manage their own affairs becomes a legacy that continues on even after PRRM has phased out the barrio. True, in the beginning, much guidance and personal supervision are necessary. But gradually, the barrio people develop self-confidence and self-sufficiency, and eventually, they are able to stand on their own feet. This is, of course, premised on good and carefully trained cooperative leaders."

A research study of the progress of the Bantug Cooperative Credit Union and its impact on the socioeconomic life of the barrio people gives some encouraging comparisons. In its first year of operation, 1960, the total amount of loans issued to members was only P1, 995. By the end of 1967 the cumulative amount of loans issued was P118, 076. About 25 per cent of this cumulative total was lent for farming purposes—purchasing improved seeds, fertilizer, farm implements and work animals; paying wages of farm laborers; financing small-scale piggery and poultry projects, and developing small fishponds and home gardens. The improvements these loans made possible have resulted in a sizeable income differential between credit union members and non-members. For example, in spite of extensive damage to crops by a typhoon in 1967, the members' average income from rice that year was P472.80 and from secondary crops, P729.67; non-members' income from rice averaged P429.00 and from secondary crops P307.36. Twenty per cent of all loans made during the 1960-1967 period were used to finance small business ventures—sari-sari stores (which sell food and other daily necessities), "trishaw" transportation services, and produce marketing. That these loans served to improve the living standards of the borrowers is indicated by the 162 per cent increase in the average value of household furniture of members from 1959 to 1967.

Nearly 17 per cent of the loans issued were to finance the education of children—pay fees and buy books. The comparative data show that the children of members of the credit union have a better chance of attending both high school and college than the children of nonmembers. In 1967 a surprising 72.4 per cent of the children of members interviewed attended high school, and 52.9 per cent attended college, compared to only 38.4 and 26.3 per cent, respectively, for children of non-members.

About five per cent of the loans were used to purchase medicine or defray the hospital expenses of members or their families. Noting this relatively small amount, the data study concludes that "there has been considerable improvement in the health and sanitary conditions in Barrio Bantug during the eight-year period. . . .evidence that the people have been following the health practices introduced there by the PRRM. . . ."

Eleven and a half per cent of the loans were taken by members to repay old debts, thus freeing themselves from the clutches of moneylenders and their usurious rates of interest. Another 11.9 per cent was used to finance the construction of new houses and the repair of old ones. "When people actually go into the improvement of their living conditions," the study states, "this is a sign of progress not only in their material possessions, but also in their mental attitude."

In addition to compiling specific data on the operations of the credit union, the researchers looked at its impact upon the barrio and its residents. They found that the successful operation of the Bantug Credit Union has improved not only the economic life of its members, but also the general appearance of the barrio. With new houses constructed every year through loans obtained for this purpose, Barrio Bantug exhibits an image of prosperity seldom seen in other areas of Nueva Ecija.

The credit union has taught people the value of thrift and saving, the wise use of credit and an increasing reliance on their own resources. It has given them an opportunity to obtain up-to-date information that has helped them improve their well-being. Through the regular committee meetings members obtain much useful information which is in turn passed on to other barrio residents.

Finally, the study found that the union policy of removing substandard officers and undesirable members has helped promote among those remaining a sense of responsibility, commitment and a respect for the rights of others. Since members come from all over the barrio, these qualities have influenced the behavior of other villagers. Thus the community spirit engendered by the credit union has contributed to the implementation of other PRRM projects that promote the progress of the barrio as a whole.

The development of the Bantug Credit Union and its effective service to members has also had an impact outside Bantug as news of its success has spread. People in neighboring areas became curious about the way it was operated. PRRM workers assigned to other communities encouraged village leaders to visit this exemplary credit society. Mot satisfied with a visit to Bantug, these leaders invited Treasurer-Manager ENCARNACION to their barrios to explain how the Bantug Credit Union developed and was managed. Later many barrios organized their own credit unions using the Bantug society as a model. Several of these are now outstanding. PRRM President Manuel P. Manahan attributes the growth of credit unions in Nueva Ecija in large part to "the favorable atmosphere engendered by SILVINO and ROSARIO ENCARNACION who by their performance have brought about a situation where people no longer have to be told what a credit union is, but rather ask—how do we get started?"

Today SILVINO ENCARNACION calls himself "a contented man." He and his wife ROSARIO—"my sweetheart," as he affectionately refers to her—live in a simple, well-built wooden house, whose only unusual piece of furniture is a steel filing cabinet for the records of the credit union.

He raises turkeys and Australian ducks in his backyard, and earns another three or four pesos a day carrying passengers in his Honda sidecar. He now owns a second vehicle which is operated by the young man who married his adopted daughter. SILVINO’s only income from the credit union is the bonus he is voted annually for his services as treasurer, bookkeeper and collector, which last year was P400.

As he travels about the barrio, making his collections and continuing to educate members, SILVINO sees daily the changes the union has brought—deflecting members from chronic habits of dependence and borrowing toward saving and planning ahead, and instilling in them a sense of pride and confidence as they develop their own resources and share in helping others. As the people discover that they can improve their lot by mutual effort, they are ready to consider other projects. They are now discussing the establishment of a consumers' cooperative store which would allow members to buy food and other supplies at prices competitive with those charged in the larger cities.

Of this significant development Dr. Flavier has said: "When a farmer starts to save, he starts to look ahead. He has begun to look beyond his walls, beyond his nipa (thatch) hut. As long as a man looks at the future, there is hope and confidence in his heart. And when he has this, then we have reconstructed a new farmer. In the final analysis, rural reconstruction is not an end but only a means. For the real end is human reconstruction. A reconstructed individual is capable of all possibilities for a better tomorrow."

As to his own work, SlLVINO himself says simply: "This is my mission. . . .I know God loves me and every day I have friends."

August 1968 Manila

REFERENCES

Adelmans, H. The Philosophy of Cooperation. N.d. 5 p. Mimeographed.

Annual Report of the Cooperatives Administration Office. Manila. Fiscal Years 1962-63.

______.1965-66.

The Bantug Story. Manila: Philippine Rural Reconstruction Movement. N.d.

The Consumers Coop is Your Business. Manila: Central Cooperative Educational Board. 1965.

The Coop. Manila: Central Cooperative Educational Board. Vol. 3, May 6, 20; June 17; July 1, 15, 29; August 12, 1968.

The Credit Union: Bayanihan in Action. Manila: National Media Production Center. N.d.

The Credit Union and You. Manila: Central Cooperative Educational Board. 1968.

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Father of Credit Union Movement-Almost. N.d. 2 p. Mimeographed

Flavier, Juan M. "Rural Cooperative Credit Union", Impact. Manila. Vol. 3, no. 6, August 1968.

Garriz, M.D. "Cooperative Santa Maria", Social Action. Manila. September 1960.

Industrial Cooperative. Manila: Central Cooperative Educational Board. 1968.

Laidlaw, A.F. Cooperatives in Community Development. N.d. 4. p. Mimeographed.

Mandac, A.P. "Rural Credit Union", Church and Community. Manila. March-April 1964.

Mendoza, Angel A. "The Philosophy of the Credit Union Movement", Impact. Manila. Vol. 3, No. 5, July 1968.

O'Connell, J. The Role of the Credit Union in Developing People. N.d. 8 p. Mimeographed.

"The PRRM: Release, Not Relief', Impact. Manila. Vol. 3, no. 3, May 1968.

Ravenholt, Albert. "Rural Reconstruction with Cooperatives", American Universities Field Staff Reports Service. New York. Southeast Asia Series. Vol. 15, no. 1, 1967.

What is a Credit Union? Manila: Central Cooperative Educational Board. N.d

Interviews with persons acquainted with Silvino and Rosario Encarnacion and their work. Visits by RMAF Trustees to Barrio Bantug.