Bureau of Local Government Finance Opinion

May 3, 1993 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 5th Indorsement Respectfully returned to the Regional Director, Bureau of Local Government Finance, Region VII, 3rd Floor, MSK Building, Juan Luna Street corner Lapu-Lapu Street, Cebu City, the herein preceding indorsement. This refers to the query of the City Treasurer of Dumaguete City on whether cooperatives are exempt from the payment of community tax pursuant to the provisions of Article 62 of R.A. No. 6938, otherwise known as the Cooperative Code of the Philippines and Sec. 133 of R.A. No. 7160 also known as the Local Government Code of 1991 quoted as follows: "Art. 62. Tax and Other Exemptions . Cooperatives transacting business with both members and non-members shall not be subject to tax on their transactions to members. Notwithstanding the provision of any law or regulation to the contrary of any law or regulation to the contrary such cooperatives dealing with non-members shall enjoy the following tax exemptions: "(1) Cooperatives with accumulated reserves and undivided net savings of not more than Ten million pesos (P10,000,000.00) shall be exempt from all national, city, provincial, municipal or barangay taxes of whatever name and nature. "xxx xxx xxx "Sec. 133. Common Limitations on the Taxing Powers of Local Government Units . Unless, otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities, and barangays shall not extend to the levy of the following: "xxx xxx xxx "(n) Taxes, fees or charges, on Countryside and Barangay Business Enterprises and cooperatives duly registered under R.A. 6810 and Republic Act Numbered Sixty-nine hundred thirty-eight (R.A. No. 6938) otherwise known as the 'Cooperative Code of the Philippines' respectively; "xxx xxx xxx" The above query was made in view of the request of Silliman University Cooperative for exemption from payment of said tax. acd In this connection, it is informed that local tax ordinances are no longer subject to review by this Department effective January 1, 1992, the effectivity date of the Local Government Code of 1991. This Department, however, may still extend technical assistance to local government units in the preparation of tax ordinances and in the clarification of issues and controversies arising from the imposition and/or collection of taxes and fees under the provisions of the Local Tax Code (PD 231), as amended, or of the Local Government Code of 1991. In the instant case, that Office holds the view that cooperatives, whether registered under R.A. No. 6938 or not, are not exempt from the payment of community tax on the ground that the exemption granted to cooperatives under Article 62 of R.A. No. 6938 refers to business taxes but not the community tax. It is further argued that in order that said cooperatives may be exempt from a particular tax, fee or charge, the law authorizing the imposition of the tax, fee or charge should categorically state that said cooperatives are exempt from the payment of such tax, fee or charge. It is contended further by that Office that cooperatives are not among those exempted from payment of the community tax under Sec. 159 of the Local Government Code, quoted as follows: "Sec. 159. Exemptions . The following are exempt from the community tax: "(1) Diplomatic and consular representatives; and consular representatives; and "(2) Transient visitors when their stay in the Philippines does not exceed three (3) months." This Department holds a contrary view. While it is true that the "Cooperatives" are not specifically mentioned under Section 159 of the Local Government Code of 1991 as among those exempt from the payment of the Community Tax, it is also clear that Section 133 of the Local Government Code expressly prohibits local government units from imposing any tax, fee or charge on cooperatives duly registered under R.A. Nos. 6810 and 6938. On the basis of the foregoing, this Department concurs in the opinion rendered by the City Prosecutor of Dumaguete that Silliman University Cooperative is not subject to the community tax. However, upon request, said entity may be issued a community tax certificate upon payment of One peso (1.00), pursuant to Section 162 of the Local Government Code. cdt By authority of the Secretary: JUANITA D. AMATONG Undersecretary