Authorizing the Release of the Additional Cost of Living Allowance

March 19, 1997 BUREAU OF LOCAL GOVERNMENT FINANCE OPINION Ms. Priscila D. Celeste President, Operations Mater Dolorosa Parish Multi-Purpose Cooperative 19th Avenue, East Rembo Makati City M a d a m : This refers to your letter dated November 4, 1996 requesting availment of exemption from local taxes and fees of cooperatives registered with the Cooperative Development Authority (CDA). In this connection, the 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. 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 R.A. No. 6810 and' 'Republic Act Numbered Sixty-nine hundred thirty-eight (R.A. No. 6938) otherwise known 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duly registered under R.A. No. 6938, non-stock and non-profit hospitals and educational institutions, are hereby withdrawn upon the effectivity of this Code.'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 R.A. 6938 are not subject to any tax, fee or charge Imposed by any local government." It bears emphasis however, 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 charger for actual consumption of water, electric power, toll fees for use of public roads and bridges, and the like. In addition, the CDA, under a letter dated January 28, 1997 opined that cooperatives duly registered under R.A. 6938 that transact business solely with its members are exempt from obtaining the mayor's permit. However, duly registered cooperatives which transact business with non-members are required to obtain said mayor's permit but are exempt from paying the fee corresponding to such permit." Very truly yours, (SGD.) LORINDA M. CARLOS Executive Director