Bureau of Local Government Finance Opinion

April 1, 1997 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. Pedrito M. Nepomuceno Sr. Board Member Office of the Sangguniang Panlalawigan Boac, Marinduque S i r : This refers to your letter dated July 31, 1996 requesting clarification on whether the Marinduque Electric Cooperative (MARELCO) is entitled to the privileges under Articles 61, 62 and 63 of RA 6938, otherwise known as the Cooperative Code of the Philippines and whether it is exempt from local taxes and fees pursuant to Section 133(n) of the Local Government Code of 1991 (LGC). Under a letter dated July 3, 1996, the Executive Director of the Cooperative Development Authority (CDA) informed that MARELCO has been provisionally registered with the Authority on March 10, 1993 under Reg. No. T-037-93 and has been extended until May 4, 1997. Hence, it is contended that MARELCO is entitled to the privileges and exemptions granted under said Articles and Section of RA 6938 and the LGC, respectively. In this connection, please be informed that the Department of Finance has expressed a uniform view on previous similar cases that for so long as a cooperative is duly registered with the Cooperative Development Authority under the provisions of RA 6938, it shall remain exempt from local taxation. Such exemption, however, shall apply only upon presentation of an authenticated Certificate of Registration from the CDA. It was likewise emphasized that the exemption enjoyed by such cooperatives does not include payment of service charges or rentals for the use of property and equipment or public utilities owned by a local government such as charges for actual consumption of water, electric power, parking fees and toll fees for the use of public roads and bridges, and the like. HcSaAD In addition, the CDA, under a letter dated January 28, 1997 opined "that cooperatives duly registered under R.A. 6938 that transact business solely with its members are exempt from obtaining the mayor's permit. However, duly registered cooperatives which transact business with non-members are required to obtain said mayor's permit but are exempt from paying the fee corresponding to such permit." Accordingly, inasmuch as the issuance of Certificate of Registration is the sole concern of the CDA, this Bureau concurs in the view of the Authority that MARELCO, being provisionally registered with the CDA is entitled to the privileges and exemptions enjoyed by cooperatives. We hope that this will help clarify matters. Very truly yours, (SGD.) LORINDA M. CARLOS Executive Director