DOJ Opinion No. 101, s. 1996

DOJ OPINION NO. 101 , s. 1996 November 15, 1996 Mr. Teodorico P. Sanchez Administrator National Electrification Administration 1050 CDC Building, Quezon Avenue Quezon City Sir : This has reference to your request for clarification of this Department's Opinion No. 41, s. 1996, in relation to the tax exemption of electric cooperatives which fail to qualify for registration, opt not to register, with the Cooperative Development Authority (CDA) pursuant to R.A. No. 6938, the "Cooperative Code of the Philippines". You state that this issue "has been clearly discussed" in said Opinion No. 41, s. 1996. Pertinent portions of said Opinion are hereunder quoted as follows: "Relatedly, the transitory provision of Section 128, also supra , provides that ECs created under P.D. No. 269, as amended, shall be given three (3) years within which to qualify and register with the CDA. If such ECs do not qualify for registration or opt not to register with the CDA within the said three-year period, they do not lose their status as NEA-registered electric cooperatives but remain as such, and subject still to all the provisions of P.D. No. 269, as amended . Unlike other existing cooperatives which "shall be deemed registered" with the CDA but whose "registration shall be cancelled" if they fail to submit their certificate of registration, copies of articles of cooperation and by laws and their latest duly audited financial statements within one year from the effectivity of the Act, ECs are not considered registered outright but must apply and qualify for permanent registration with the CDA within the given three-year period. However, failure to such ECs to apply and/or qualify for permanent registration with the CDA will not mean cancellation or forfeiture of their registration with the NEA. They shall remain as NEA-registered ECs entitled to all the benefits and incentives granted under P.D. No. 269, as amended, but of course not to the benefits and incentives granted under R.A. No. 6938 . Moreover, if such ECs should decide to register under R.A. 6938 after the lapse of the prescribed three years, such ECs "shall undergo the required procedures for registration of new cooperatives, including the submission of an economic survey." (see Sec. 1 Rule VIII, ORR). Based on these premises, it is believed that registration with the CDA under R.A. No. 6938 is optional insofar as ECs are concerned. Hence, some ECs may opt not to register with the CDA, or if they do choose to register with the CDA, may fail to qualify for registration under R.A. No. 6938. In either case, the ECs shall not lose their status as registered ECs under P.D. No. 269, as amended, and shall continue to be governed by said P.D. No. 269. however, they shall not be entitled to the other privileges granted to CDA-registered electric cooperatives under R.A. No. 6938 ." (Emphasis supplied.) It is clear therefrom that electric cooperatives (of course, referring to existing electric cooperatives registered under P.D. NO. 269, as amended) which fail, or opt not, to register under R.A. No. 6938 are still covered by P.D. No. 269, and being so, are "entitled to all the benefits and incentives granted under P.D. No. 269, as amended." Among the benefits and incentives granted to electric cooperatives under P.D. No. 269, as amended, are those tax and duty exemption privileges mentioned in Section 39 thereof which, although withdrawn by P.D. No. 1955, were, as you state, later restored by the Fiscal Incentives Review Board (FIRB) under its Resolution No. 24-87 dated July 14, 1987 pursuant to Executive Order No. 93. 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 30 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 entitled to the other benefits granted to CDA-registered electric cooperatives under R.A. NO. 6938 (please see underscored portions, supra ). Please be guided accordingly. Very truly yours, (SGD.) TEOFISTO T. GUINGONA, JR. Secretary