Rapista & Rubillar-Rapista Law Office

November 19, 2018 BIR RULING NO. 1388-18 Republic Act (RA) No. 9136; RA No. 9520; Section 236 (I) of the National Internal Revenue Code (NIRC) of 1997, as amended; BIR Ruling No. 573-2017 Rapista & Rubillar-Rapista Law Office 2nd Floor, Rubillar Bldg.,Manuel L. Quezon Blvd., Davao City Attention: Atty. Jeorge V. Rapista Legal Counsel Gentlemen : This refers to your letter dated June 21, 2017, opposing the application of Mr. Jerold M. Osorio and Noel O. Quedilla for the issuance of a new Tax Identification Number (TIN) and Authority to Print (ATP) in favor of Davao Del Norte Electric Cooperative, Inc. (DANECO). Background: DANECO was organized on September 24, 1971, by virtue of the enactment of Republic Act (RA) No. 6038, as amended by Presidential Decree (PD) No. 269, PD No. 1645, and Letter of Instruction No. 38. The cooperative was organized to provide electricity to the provinces of Davao del Norte and Compostela Valley, City of Tagum and Island Garden City of Samal. Subsequently, the National Electrification Commission, now the National Electrification Authority (NEA), was created with the mandate of implementing the rural electrification program of the government through the cooperation of existing electric cooperatives. DANECO was then issued Franchise Nos. 017 and 103 with a permit to operate for fifty (50) years. It was registered with the BIR on January 1, 1997 under Taxpayers Identification Number (TIN) 000-570-516-000 and with registered address at Km 100, San Jose, Montevista, Compostela Valley. Thereafter, Republic Act (RA) No. 9136, otherwise known as the "Electric Power Industry Reform Act of 2001" was passed. Pursuant to Section 57 of the said law, electric cooperatives had been given the option to convert into either stock cooperative under the Cooperatives Development Act or stock corporation under the Corporation Code. This resulted to the conversion of DANECO into a stock cooperative duly registered with the Cooperative Development Authority (CDA) on May 21, 2012, bearing Certificate of Registration No. 9520-11021778. AIDSTE By reason of the registration of DANECO with CDA, Engr. Jerold M. Osorio, Engr. Albert M. Omega, and Atty. Baltazar A. Sator requested on February 17, 2017, for the issuance of a new TIN and ATP, alleging that DANECO acquired a new juridical personality. Hence, your letter-protest. In reply, please be informed that the issues on the issuance of a new TIN and ATP in favor of DANECO were already resolved in BIR Ruling No. 573-2017 dated December 07, 2017, as follows: ". . . Article 132 of R A No. 95 20 otherwise known as the "Phili ppine Cooperative Code of 2 008," enumerates the effects of subsequent registration with the CDA, to wit: " ART. 132. Effects of Registration with the Authority. (1) Upon the effectivity of this Code, electric cooperatives that are duly registered with the Authority, and issued a certificate of registration, shall no longer be covered by Presi dential Decree No. 2 69, as amended by Pres idential Decree No. 16 45: Provided, That electric cooperatives registered with the Authority shall now be covered by the provisions of this Code as well as the future rules and issuances of the Authority: Provided, however, that the security of tenure and the collective bargaining agreement between the cooperative management and its employees shall be respected, with no diminution of their existing salaries, emoluments, ranks and other benefits; "(2) The electric cooperatives registered with the Authority with existing loans obtained from the NEA after June 26, 2001 shall continue to observe the terms of such loans until full payment or settlement thereof; "(3) Except as provided in the immediately preceding paragraph, the NEA shall no longer exercise regulatory or supervisory powers on electric cooperatives duly registered with the authority; "(4) Electric cooperatives registered with the Authority are entitled to congressional allocations, grants, subsidies and other financial assistance for rural electrification which can be coursed through the Department of Energy, the Authority and/or local government units. The electric cooperatives registered under this Code can avail of the financial services and technical assistance provided by the government financial institutions and technical development agencies on terms respecting their independence as autonomous cooperatives; "(5) All condoned loans, subsidies, grants and other assistance shall form part of the donated capital and funds of the electric cooperatives and as such, it shall not be sold, traded nor be divided into shareholdings at any time; these donated capital/fund shall be valuated for the sole purpose of determining the equity participation of the members; Provided, That in the case of dissolution of the cooperative, said donated capital shall be subject to escheat; and "(6) Electric cooperatives registered and confirmed with the Authority under Republic Act No. 6938 and Republic Act No. 6939 are hereby deemed registered under this Code." Under the above quoted provision, it is clear that the entity DANECO still exists. It was neither dissolved nor did it cease operations. Aside from this, R A No. 95 20 does not provide that subsequent registration with the CDA causes the dissolution or the cessation of the juridical personality of an electric cooperative formerly registered with the National Electrification Authority (NEA). Moreover, Section 236 (I) of the Natio nal Internal Revenue Co de of 1997, as amended, provides: AaCTcI "SEC. 236. Registration Requirements. xxx xxx xxx (I) Supplying of Taxpayer Identification Number (TIN). Any person required under the authority of this Code to make, render or file a return, statement or other document shall be supplied with or assigned a Taxpayer Identification Number (TIN) which he shall indicate in such return, statement or document filed with the Bureau of Internal Revenue for his proper identification for tax purposes, and which he shall indicate in certain documents, such as, but not limited to the following: xxx xxx xxx Only one Taxpayer Identification Number (TIN) shall be assigned to a taxpayer. Any person who shall secure more than one Taxpayer Identification Number shall be criminally liable under the provision of Section 275 on 'Violation of Other Provisions of this Code or Regulations in General.'" (Emphasis supplied) From the foregoing, it is clear that DANECO should not be allowed to have a new TIN. Otherwise, this violates Section 236 of the Nati onal Internal Revenue Cod e of 1997, as amended. It thus follows that it cannot also be allowed to apply for a new ATP. What DANECO can do is to update its registration by using BIR Form No. 1905 which must be done at the Revenue District Office (RDO) which has jurisdiction over DANECO's head office. This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different then the ruling shall be considered null and void. EcTCAD Very truly yours, (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue