DOJ Opinion No. 131, s. 1986

DOJ OPINION NO. 131 , s. 1986 November 14, 1986 Actg. Administrator Vicente T. Macapagal National Electrification Administration D & E Building, Quezon Avenue Quezon City, Metro Manila Sir : This refers to your request that loan and mortgage contracts executed between electric cooperatives and the National Electrification Administration be registered with the Registry of Deeds without the payment of the registration fees and taxes as provided for in Section 39 of P.D. No. 269, the "National Electrification Decree". The said provision reads in part: prcd "SEC. 39. Assistance to Cooperatives; Exemption from Taxes, Imposts, Duties, Fees; Assistance from the National Power Corporation. Pursuant to the national policy declared in Section 2, the Congress hereby finds and declares that the following assistance of cooperatives is necessary and appropriate: (a) Provided that it operates in conformity with the purposes and provisions of this Decree, a cooperative (1) shall be permanently exempt from paying income taxes, and (2) for a period ending of December 31; of the thirtieth full calendar year after the date of a cooperative's organization or conversion hereunder, or until it shall become completely free of indebtedness incurred by borrowing, whichever event first occurs, shall be exempt from the payment (A) of all National Government, local government and municipal taxes and fees, including any franchise, filing, recordation, license or permit fees or taxes and any fees, charges, or costs involved in any court or administrative proceeding in which it may be a party, and (B) of all duties or imposts on foreign goods acquired for its operations, the period on such exemption for a new cooperative formed by consolidation, as provided for in Section 29, to begin from as of the date of the beginning of such period for the constituent consolidating cooperative which was most recently organized or converted under this Decree, Provided , that the Board of Administrators shall, after consultation with the Bureau of Internal Revenue, promulgate rules and regulations for the proper implementation of the tax exemptions provided for in this Decree." You state that while the tax exemption privileges of electric cooperatives under the above-cited Decree were withdrawn by P.D. No. 1955, the same had been restored by two memoranda issued by the former President on January 1, 1986 and February 2, 1986. Pertinently, P.D. No. 1955 provides as follows: "SECTION 1. The provisions of any special law or general law to the contrary notwithstanding, all exemptions from or any preferential treatment in the payment of duties, taxes, fees, imposts and other charges heretofore granted to private business enterprises and/or persons engaged in any economic activity are hereby withdrawn, except those enjoyed by the following: (a) Those registered by the Board of Investments under Presidential Decree No. 1789, as amended by Batas Pambansa Blg. 391, and those registered by the Export Processing Zone Authority under Presidential Decree No. 66, as amended by Presidential Decree No. 66, as amended by Presidential Decree Nos. 1449, 1776, 1776-A, and 1786; (b) The copper mining industry in accordance with the provisions of LOI 1416; (c) Those covered by international agreements to which the Philippines is a signatory; (d) Those covered by the non-impairment clause of the Constitution; and (e) Those that will be approved by the President of the Philippines upon the recommendation of the Minister of Finance ." "SEC. 2. The Ministry of Finance shall promulgate the necessary rules and regulations to effectively implement the provisions of this Decree." In the aforesaid memorandum of January 7, 1986, the former President informed the officers and members of all electric cooperatives that he had "restored tax exemption privileges to all electric cooperatives". Whereas, the later Presidential Memorandum dated February 2, 1986, directed the Minister of Finance to "immediately implement" his "previous announcement that the tax exemption of all electric cooperative throughout the country be restored." We have considered this Memoranda in the light of the above-quoted provisions of P.D. No. 1955, under which the President of the Philippines, upon recommendation of the Minister of Finance, may approve exemptions from duties, taxes, fees, imposts and other charges, notwithstanding the withdrawal of such exemptions by the said Decree. We regret to inform you, however, that we are not in a position to implement the announced reinstatement of tax exemption to electric cooperatives, until definite guidelines are issued by the Ministry of Finance, which was directed to implement the Presidential Pronouncement. You are advised to inquire from the Ministry of Finance regarding the nature and scope of the "tax exemption" restored to electric cooperative as announced by the former President and whether or not said Ministry had complied with the directive contained in the aforementioned Memorandum dated February 2, 1986 of the former President. cdphil Very truly yours, (SGD.) NEPTALI A. GONZALES Minister of Justice