Bureau of Local Government Finance Opinion

March 30, 1995 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. Moises S. Tolentino, Jr. Officer-in-Charge Office of Transportation Cooperatives Ground Floor, Hanston Bldg. Emerald Avenue Pasig, Metro Manila S i r : This refers to the letter-complaint dated December 8, 1994 of Mr. Hercules G. Babatido, Jr., Chairman, Iligan-Initao-Cagayan Transport Service Cooperative against the Municipal Mayors of Manticao, Naawan, Initao, Libertad, Laguindingan, and Alubijid, all in the province of Misamis Oriental, on the alleged violation of Sec. 133 of the Local Government Code (LGC) of 1991 as prescribed by Memorandum Circular No. 93-005 of the Cooperative Development Authority, exempting registered cooperatives from paying local taxes, fees and other charges, which was referred to this Bureau, for appropriate action. In this connection, this Department has expressed a uniform view on previous similar queries concerning the tax exemption of cooperatives. For so long as a cooperative is duly-registered with the Cooperative Development Authority under the provisions of R.A. 6938, it shall remain exempt from local taxation. LibLex Reference therefore may be made to the letter of this Department dated July 24, 1992, to the North Cotabato Free Farmers Cooperative, Inc., copy enclosed, the pertinent portion of which is quoted hereunder: "It was noted from your abovestated letter that North Cotabato Free Farmers Cooperative, Inc. (NCFFCI) is actually protesting the legality of business taxes, fees or charges imposed by local government units in that area on cooperatives existing therein, notwithstanding the provisions on tax exemption of cooperatives under R.A. No. 6938, otherwise known as the Cooperative Code of the Philippines. Such being the case, your attention is invited to the provisions of Sections 133 (n) and 193 of the Code which read as follows: 'SECTION 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 RA No. 6810 and Republic Act Numbered Sixty-nine hundred thirty-eight (RA No. 6938) otherwise knows as the 'Cooperative Code of the Philippines' respectively: and xxx xxx xxx' SECTION 193. Withdrawal of Tax Exemption Privileges . Unless otherwise provided in this Code, tax exemptions or incentives granted to, or presently enjoyed by all persons, whether natural or juridical, including government-owned or controlled corporations, except local water districts, cooperatives duly registered under RA No. 6938, non-stock and non-profit hospitals and educational institutions, are hereby withdrawn upon the effectivity of this Code. "From the foregoing provisions of the Code, it appears that cooperatives duly registered under RA 6938 are not subject to any tax, fee or charge imposed by any local government." However, under a letter dated November 14, 1994, copy also enclosed, to the General Manager Cooperative Rural Bank of Misamis Occidental, it was 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, toll fees for use of public roads and bridges, and the like. As regards the alleged violation of the subject provision of law by the said Municipal Mayors as well as the complaint of alleged exhortation being made in the Municipality of Naawan, ascertaining the culpability of the participation of the Municipal Mayor and the Station Commander, we regret to inform you that this Department is not the proper forum to rule on said issues. In such cases, the Department of the Interior and Local Government should be consulted. Very truly yours, By authority of the Secretary: LORINDA M. CARLOS Executive Director Bureau of Local Government Finance