Bureau of Local Government Finance Opinion

March 1, 2000 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. Virgilio D. Antig OIC-SP Secretary Sangguniang Panlungsod Ormoc City S i r : This refers to Resolution No. 99-173, series of 1999 of that Body, which was referred to this Bureau for appropriate action, requesting the Department of the Interior and Local Government (DILG), for an opinion on whether or not LEYECO V, an electric cooperative created under P.D. No. 269, as amended, but not registered under R.A. No. 6938, is exempt from the payment of real property taxes. It appears that the City Legal Officer of Ormoc rendered an opinion that LEYECO V is exempt from the payment of real property taxes as contained in his 2nd Indorsement dated August 23, 1999. On the contrary, the Chairman, Committee on Ways and Means of that Body, is of the position that LEYECO V is liable to pay realty taxes. In this connection, attention is invited to the ruling issued by the Department of Finance embodied under its 1st Indorsement dated September 20, 1993, copy enclosed, which resolved that: "Clearly, electric cooperatives previously enjoying real property tax exemption privileges under the terms and conditions of P.D. No. 269 had their abovementioned privileges restored effective July 1, 1987 by virtue of the FIRB Resolution No. 24-87. TEIHDa "Finally, on the basis of the provisions of R.A. 6938, the Cooperative Code of the Philippines, and R.A. No. 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." It is also important to note hereon that real property tax exemption previously granted to, or presently enjoyed by, electric cooperatives registered solely under P.D. No. 269 has been withdrawn by virtue of Section 234 of R.A. No. 7160, otherwise known as the Local Government Code of 1991, the pertinent portion of which provides: "Section 234. Exemption from Real Property Tax . The following are exempted from payment of the real property tax: xxx xxx xxx "Except as provided herein, any exemption from payment of real property tax previously granted to, or presently enjoyed by, all persons, whether natural or juridical, including all government-owned or controlled corporations are hereby withdrawn upon the effectivity of this Code." TaCDIc Moreover, the Department of Justice (DOJ) issued Opinion No. 101, series of 1996, which supports the stand that in order that a cooperative could enjoy 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, the dispositive portion of which is quoted hereunder: "Accordingly, NEA-registered cooperatives which shall remain to be registered under P.D. No. 269, as amended, for their failure to register under R.A. No. 6938, shall continue to enjoy their tax and duty exemption privileges under Section 39 of P.D. No. 269, as amended, and as restored by FIRB Resolution No. 24-87. "It goes without saying that since such electric cooperatives are not registered cooperatives under R.A. No. 6938, 'they shall not be entitled to the outer benefits granted to CDA-registered electric cooperatives under R.A. No. 6938.'" Apparently, electric cooperatives solely registered under P.D. No. 269 can only enjoy realty tax exemption pursuant to Section 29 thereat, and as restored by FIRB Resolution No. 24-83. Such exemption privileges, however, were already withdrawn by the abovequoted Section 234 of R.A. No. 7160. In view thereof, and considering, that LEYECO V is solely registered under P.D. No. 269 (since as earlier stated, the same is not registered under R.A. No. 6938), its exemption privileges under Section 39 were similarly withdrawn pursuant to Section 234 of R.A. No. 7160. Hence, this Bureau is of the opinion that LEYECO V is liable to pay real property taxes due on its real properties beginning January 1, 1992, the effectivity of R.A. No. 7160. We trust that the above discussions answer your abovementioned request for opinion. aCATSI Very truly yours, (SGD.) ANGELINA M. MAGSINO Deputy Executive Director Officer-in-Charge