BIR Ruling

April 28, 1969 Mr. Isidro T. Lopez Director Cooperatives Administration Office Manila S i r : This is in reply to your letter of April 13, 1969 requesting information on whether or not non-agricultural cooperatives may continue to enjoy income tax exemption under Republic Act No. 2023, inspite of the provisions of Section 24(d) of the Tax Code, as amended by Republic Act No. 5431. cdt You pointed out in your letter that inasmuch as Section 24(d) speaks of corporate taxpayers" its provision applies only to corporations registered under the Corporation Law and does not include non-agricultural cooperatives registered under Republic Act No. 2023. It is a fundamental principle in the statutory construction that in interpreting the meaning and scope of a term used in the law, a careful review of the whole law involved must be made, looking likewise into the intendment of the law. Section 24(a) of the Tax Code, as amended by Republic Act No. 5431 specifically provides that: "Section 24. Rates of tax on corporations . (a) Tax on domestic corporations . A tax is hereby imposed upon the taxable net income received during each taxable year from all sources by every corporation organized in, or existing under the laws of the Phil ., no matter how created or organized . . . ." (Emphasis supplied). It is very clear from the aforecited provision of law that it was the intention of Congress to tax all corporations organized, or existing under the laws, of the Philippine, no matter how created or organized; it is with this view that the phrase "corporate taxpayers" was used in Section 24(d). By virtue of this subsection (d), the provisions of existing special or general laws to the contrary notwithstanding, all corporate taxpayers not specifically exempt under Sections 24(c)(1) and 27 of the Tax Code are subject to tax. It even went further as to include all corporations, agencies or instrumentalities owned or controlled by the government, except educational institutions. If it were the intention of Congress to exclude from this provision corporations and associations presently enjoying tax exemption under various special laws, such as Republic Act No. 2023, wouldn't it be assuming an awkward position if it continues to exempt these corporations from the payment of income tax while subjecting government owned or controlled corporations and its agencies or instrumentalities to the same. The long-range objectives of all tax measures is the accomplishment of good social order. Although the variant forms of taxation may sometimes produce individual hardships, a too stilted interpretation of tax laws for the benefit of the taxpayer may result in the loss of revenue at the expense of the government and operate to the disadvantage of others contributing to its support. And no other field of legislation has the necessity and occasion for amending and revising statutes been more common. (Sutherland Statutory Construction, Vol. 3, par. 6703, p. 297). . . . thus, it has been stated, "If a reason can be discovered for a particular construction of a statute and especially of a revenue statute, which construction would deprive the treasury of revenue, such construction will be discarded in favor of one that will apply uniformly to all persons engaged in the same calling or business and so as to raise revenue. (Ibid, p. 298, citing: Commonwealth v. Numan, 126. Ky. 698, 104 S.W. 731 (1907). In the light of the foregoing, it is the position of this Office that the exemption of non-agricultural cooperatives had been repealed by Republic Act No. 5431. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue