Bureau of Local Government Finance Opinion

May 27, 1999 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 3rd Indorsement Respectfully returned to the Provincial Assessor of Tarlac, Tarlac City, her within preceding Indorsement dated October 27,1998 relative to the letter dated October 14, 1998 of Engr. Romeo C. Macalino, General Manager, Tarlac II Electric Cooperative, Inc. (TARELCO II),requesting a certification from this Bureau that TARELCO II is exempt from the payment of real property taxes. Engr. Macalino submitted a Court Order dated September 27, 1997 of the Regional Trial Court, 12th Judicial Region, Branch 23, Kidapawan, Cotabato, stating among others, that an electric cooperative, registered under PD 269, is exempt from the payment of real property taxes pursuant to Section 39 of PD 269 in relation to Fiscal Incentives Review Board Resolution No. 24-87 dated July 14, 1987, despite the promulgation of R.A. No. 7160, otherwise known as the Local Government Code of 1991. The foregoing Court Order appears to contradict the ruling issued by the Department of Finance embodied under its 1st Indorsement dated September 20, 1993, copy enclosed, which this Bureau had, in several occasions, maintained, declaring that: "Clearly, electric cooperatives previously enjoying real property tax exemption privileges under the terms and conditions of P.D. 269 had their abovementioned privileges restored effective July 1, 1987 by virtue of the abovementioned FIRB Resolution No. 24-87. "Finally, on the basis of the provisions of R.A. 6938, the Cooperative Code of the Philippines, and R.A. 7160, otherwise known as the Local Government Code of 1991, this Department clarified under its letter dated December 29, 1992, that: "Evidently, all real property owned by cooperatives are specifically covered by the provisions of Article 122 of R.A. 6938: "xxx xxx xxx. "Accordingly, electric cooperatives are exempt from the payment of real property tax when they are duly registered with the Cooperative Development Authority (CDA), pursuant to R.A. 6938 with certain limitations therein specified." TEAcCD It is worth mentioning that in a 2nd Indorsement dated January 4, 1999, this Bureau had manifested concurrence in the argument that: "...In the case of Miranda Imperial (77 Phil. 1066),the Supreme Tribunal categorically stated that only decisions of this Honorable Court establish jurisprudence or doctrines in this jurisdiction.' Consequently, decisions or subordinate courts are only persuasive in nature, and can have no mandatory effect . (Paras, Civil Code of the Philippines annotated)." Moreover, the Department of Justice (DOJ), under its letter dated April 23, 1996, copy attached, supports the stand that in order that a cooperative could enjoy the incentives granted by virtue of the exemption provisions of R.A. No. 6938, the registration with the CDA is required instead of that with the NEA. Accordingly, that Office should first determine whether or not TARELCO II is registered with the CDA; and ascertain if the accumulated reserves and undivided net savings of the same do not exceed P10M. In the affirmative, this Bureau finds no reason why the real properties of the said electric cooperative should not be declared exempt from the payment of real property taxes. Be guided accordingly. (SGD.) ANGELINA M. MAGSINO Deputy Executive Director Officer-in-Charge