Bureau of Local Government Finance Opinion

March 15, 1999 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION 1st Indorsement Respectfully referred to the City Assessor, City of Manila, the within letter dated January 25, 1999, requesting that the Central Market Development Corp. Inc. be declared exempt from the payment of real property taxes pursuant to DOF-CDA Joint Circular No. 1-90, providing procedural guidelines in the availment of tax exemption privileges under Article 62(1) of R.A. No. 6938 otherwise known as the "Cooperative Code of the Philippines." Representations are made that the Central Market Development Cooperative, Inc., is registered with the Cooperative Development Authority (CDA), per attached copies of BCOD Certificate of Registration No. FF-015 dated November 11, 1985 and CDA Certificate of Confirmation No. Mla-C-449 issued on March 27, 1991. Personal representation has likewise been made that the subject cooperative has been paying the real property tax to the City of Manila since the subject cooperative had been registered with the CDA. In this regard, please be informed that in a letter dated February 26, 1993 (copy enclosed), this Bureau reiterated the stand taken by the Department of Finance in its December 29, 1992 letter, which ruled that: "all real property owned by cooperatives duly registered with the Cooperative Development Authority (CDA), with a maximum accumulated reserves and undivided net savings of Ten Million Pesos (P10,000,000.00), are exempt from the payment of real property tax." Article 62(1) of Republic Act No. 6938, as implemented under DOF-CDA Joint Circular No. 1-90, dated November 7, 1990; and the provisions of Section 234(d) of Republic Act No. 7160, also known as the Local Government Code of 1991, provide as follows: Article 62, R.A. 6938 : "Article 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 provisions 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 tax of whatever name and nature." Section 234(d), R.A. 7160 : "Section 234. Exemptions from Real Property Tax . The following are exempted from payment of real property tax: "xxx xxx xxx. "(d) All real property owned by duly registered cooperatives as provided for under R.A. No. 6938." Viewed in this light, and inasmuch as the subject cooperative is duly registered with the CDA and that its accumulated reserves and undivided net savings do not exceed P10M Pesos, as appearing in its attached Financial Statement for CY 1997, this Bureau believes and so holds that the Central Market Development Corp., Inc., is likewise entitled to enjoy exemption from the payment of real property taxes, pursuant to the abovecited provisions of R.A. No. 6938, the DOF-CDA Joint Circular No. 1-90 and Section 234(d) of R.A. No. 7160; and in line with the abovementioned ruling of the DOF. The City Assessor of Manila is therefore, hereby instructed to make the necessary rectification of the real property assessments covering the subject real property of Central Market Development Corp., Inc., in accordance herewith. DaHcAS Thereupon, the City Treasurer, for his part, should likewise make the necessary corrections pertaining to the collection records covering the real properties of the said cooperative. It is worth mentioning hereon that, in addition to the exemption from the payment of real property taxes, cooperatives are likewise exempt from the payment of local taxes fees, or charges as provided for under Section 133(n) of the same Code. However, said cooperatives are still liable to the payment of service charges or rentals for the use of property and equipment or public utilities owned by the local government such as charges for actual consumption of water, electric power, toll fees for the use of public roads and bridges and the like. (BLGF Memorandum Circular No. 02-97 dated March 18, 1997, copy also attached). Very truly yours, (SGD.) ANGELINA M. MAGSINO Deputy Executive Director Officer-in-Charge