Cognizant of the importance of civil society groups especially cooperatives in nation-building, the need to recognize the laws that protect their existence must always be followed. When concerned units of the government fail to implement existing laws, questions on the integrity and moral ascendancy of the officials running such arm of the government structure is at stake. When laws are not followed, it can be interpreted as abuse of authority, blatant ignorance or disregard of the law, inefficiency or purely stupidity. It could also mean absence of “teeth” that it cannot bite the violators. This is the case when too much reiteration on certain issuances happens in our society.
Moreover, the situation can be illustrated in the case of the Bureau of Local Government Finance Memorandum Circular Number 31-2009 entitled “Exemption of Cooperatives from Payment of Local Taxes Fees and Charges issued by BLGF Executive Director Presentacion R. Montesa dated October 7, 2009. For clarity and reiteration purposes, here is a reprint of the said issuance. “ For information and guidance of all concerned, quoted hereunder are the provisions of RA 7160, otherwise known as the Local Government Code (LGC) of 1991, concerning the tax privileges of cooperatives duly registered with the Cooperative Development Authority:
Section 133. Common Limitations on the Taxing Powers of the Local Government Units. Unless otherwise provided herein, the exercise of the taxing powers of provinces, cities, municipalities and barangays shall not extend levy of the following: “xxx “(n) Taxes, fees or charges on Countryside and Barangay Business Enterprises and cooperatives duly registered under RA 6810 and Republic Act Numbered Sixty-Nine Hundred thirty eight (RA 6938) otherwise known as the Cooperative Code of the Philippines respectively;xxx.”
“Section 234. EXEMPTION FROM REAL PROPERTY TAX. The following are exempted from payment of real property tax: “xxx; “ (d)” All real property owned by duly registered cooperatives as provided under RA 6938;xxx.” The above provisions are supplemental to Article 60 and 61 of RA 9520 otherwise known as the Philippine Cooperative Code of 2008 which state that” ARTICLE 60. TAX TREATMENT OF COOPERATIVES. Duly registered cooperatives under this Code which DO NOT TRANSACT ANY BUSINESS WITH NON-MEMBERS or the general public shall not be subject to any taxes and fees imposed under the internal revenue laws and OTHER LAWS. Cooperatives not falling under this article shall be governed by the succeeding section.”
Article 61. TAX AND OTHER EXEMPTIONS. Cooperatives transacting business with both members and non-members shall not be subject to tax on their transaction with members. In relation to this, the transaction of members with the cooperative shall not be subject to any taxes and fees including not limited to final taxes on members’ deposits and documentary tax. Notwithstanding the provision of any law or regulations to the contrary, such cooperatives dealing with non-members shall enjoy the following tax exemptions: “(1) Cooperatives with accumulated reserves and undivided net savings of not more than Ten Million Pesos (10,000,000.00) shall be EXEMPT FROM ALL NATIONAL, CITY, PROVINCIAL, MUNICIPAL OR BARANGAY TAXES OF WHATEVER NAME AND NATURE xxx.”
On this qualification that a cooperative should be duly registered with the CDA to be exempt from the payment of local taxes, fees and charges under Section 133(n) and 234(d) of the LGC, Article 144 of RA No 9520 provides as follows: Article 144. TRANSITORY PROVISIONS. (1) All cooperatives registered and confirmed with the Authority under Republic Act 6938 and Republic Act 6939, are hereby deemed registered under this Code, and a new certificate of registration shall be issued by the Authority: Provided. That such cooperative shall submit to the nearest office of the Authority a copy of their certificate of registration or certificate of confirmation, the articles of cooperation, their by-laws and their latest audited financial statement within one (1) year from the effectivity of this Code, otherwise they shall be deemed cancelled motu propio.”xxx.” However, cooperatives transacting business with members and non-members, are required to obtain or secure a Mayor’s Permit which is implemented under the police power of the local government unit to protect public interest and in furtherance of the general welfare clause enshrined both in the Constitution and the Local Government Code (Section 16-General Welfare Clause), and pay the commensurate cost of regulation, inspection and surveillance of the operation of its business but not exceeding One Thousand Pesos (P1,000.00) Likewise, said cooperative shall secure a Community Tax Certificate (CTC) and pay the basic tax of Five Hundred Pesos (500.00) as a juridical entity.
In addition, said 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 actual water consumption, electric power, tool fees for the use of public roads and bridges and the like.
Strick observance of this Memorandum Circular is hereby enjoined.
The Regional Directors for Local Government Finance are hereby instructed to disseminate the content of this Circular to all Provincial, City, and Municipal Treasurers within their respective jurisdiction for their information and guidance.
This circular was reiterated by then DILG Secretary Jesse M. Robredo when he issued Memorandum Circular Number 2010-120 dated October 2010. Last November 14, 2016, OIC Executive Director Nino Raymond B. Alvina issued BLGF Memorandum Circular Number 11-001-2016 “ Reiterating BLGF Memorandum Circular No. 31-2009, dated October 7, 2009 Re: Exemption of Cooperatives from the Payment of Local Taxes Fees and Charges.
Having been officially reiterated twice, we hope that all local government units and the various offices of the Bureau of Internal Revenue in the country heed the call and implement the said circular. While the circular had been in existence almost 8 years from its issuance, series of queries had been received by CDA due to its non-implementation by the concerned units of the government. Maybe it’s high time for cooperatives to unite and come up with a position paper and bring to the attention of appropriate government agencies when tax exemption privileges are not honored. Refusal of any employee to implement such can be reported to the head of office, BLGF, DILG or to the Civil Service Commission. After all, what we need in the government service are people that have the heart to serve in accordance with the law. The Code of Conduct and Ethical Standards for Public Officials and Employees (RA 6713) guide every employee in the performance of functions. When issues are not acted upon, this can be used against erring employees. As they say, no one is above the law. In closing, allow me to borrow the phrase,” Bato-bato sa langit, ang tamaan huwag magalit.”
