Bureau of Local Government Finance Opinion

August 17, 2001 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Mr. Pedro A. Plaza Vice-President Administration Philippine Army Finance Center Producers Integrated Cooperative (PAFCPIC) Col. Abuan Building, Fort Bonifacio, Taguig, Metro Manila S i r : This refers to your letter dated May 21, 2001, for and in behalf of the Philippine Army Finance Center Producers Integrated Cooperative (PAFCPIC), requesting exemption from the payment of real property taxes on the two (2) adjoining lots allegedly owned by the said cooperative. In this connection, enclosed is a copy of the 2nd Indorsement of the same date of this Bureau addressed to the Municipal Assessor of Taguig, which ruled that PAFCPIC is exempt from the payment of real property taxes and other taxes, fees or charges pursuant to Article 62(1); R.A. No. 6938; and Sections 234(d) and 133(n), respectively, of the Code, provided that the said Cooperative is registered with the Cooperative Development Authority (CDA), and, provided further, that the maximum accumulated reserves and undivided net savings of the said Cooperative does not exceed Ten Million Pesos (P10,000,000.00). Very truly yours, (SGD.) BENJAMIN A. GERONIMO Executive Director 2nd Indorsement August 17, 2001 Respectfully returned to the Municipal Assessor, Taguig, Metro Manila, his within preceding Indorsement dated May 23, 2001, relative to the letter dated May 21, 2001 of Mr. Pedro A. Plaza, Vice-President for Administration, Philippine Army Finance Center Producers Integrated Cooperative (PAFCPIC), requesting exemption from the payment of real property taxes on the two adjoining lots owned by the said Cooperative located at AFPOVAI Taguig. PAFCPIC made representations that it paid under protest its real property taxes to the Municipality of Taguig last February 28, 2001 in the amount of P7,488.00 as evidenced by the attached Official Receipt No. 2040689 on the said two adjoining lots. However, Mr. Plaza believes that inasmuch as the other real properties owned by the PAFCPIC located at Tarlac, Isabela and Zamboanga City are declared exempt from the payment of real property taxes, the subject properties located at Taguig should likewise be declared exempt, citing Section 234(d) of R.A. No. 7160; and the Cooperative Development Authority (CDA) Circular No. 93-005 dated March 25, 1993. In this regard, attention is invited to Article 61(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, otherwise known as the Local Government Code of 1991, which provide as follows: Article 62 RA 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 cooperative dealing with non-members shall enjoy following tax exemptions: (1) Cooperative 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, municipality 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. 69 38." It is worthwhile mentioning however that, in addition to the exemption from the payment of real property taxes, cooperatives are exempt from the payment of local taxes, fees or charges as provided for under Section 133 (n) of the same code. However, subject cooperatives are still liable to the payment of service charges or rentals for the use of property and equipment or public utilities owned by local government such as charges for public roads and bridges and the like (BLGF Memorandum Circular No 02-97 dated March 18, 1997). Attached is a copy of the 1st Indorsement dated December 23, 1999 of this Bureau which made clarification on a similar subject matter, for your information. Viewed in this light, PAFCPIC is exempt from the payment of real property taxes and other taxes, fees or charges pursuant to Article 62(1) R.A. No. 6938 and Sections 234 (d) and 133 (n), respectively of the Local Government Code of 1991 (R.A. No. 7160), provided, that the said Cooperative is registered with the Cooperative Development Authority (CDA); and provided further, that the maximum accumulated reserves and undivided net savings of the said Cooperative does not exceed Ten Million Pesos (P10,000,000.00). EHSIcT Please be guided accordingly. (SGD.) BENJAMIN A. GERONIMO Executive Director