ORDINANCE NO: 2021-487
Authored by: Honorable Fernando Y. Pameron
"AN ORDINANCE GRANTING EXEMPTION TO ALL DULY REGISTERED COOPERATIVES IN THE CITY OF PAGADIAN ON ALL LOCAL TAXES, FEES AND CHARGES AS MANDATED UNDER SECTION 60 & 61 OF REPUBLIC ACT (R.A.) 9520 OTHERWISE KNOWN AS THE PHILIPPINE COOPERATIVE CODE OF 2008"
WHEREAS, Section 16 of RA 7160 otherwise known as the Local Government Code of 1991, states that every Local Government Unit shall exercise the powers expressly granted those necessarily implied therefrom, as well as powers necessary, appropriate or incidental to its efficient and effective governance, and those which are essential to the promotion of general welfare. Within their respective territorial jurisdictions, local government units shall ensure and support, among other things, the preservation and enrichment of culture, promote health and safety, enhance the right of the people to a balanced ecology, encourage and support the development of appropriate and self-reliant scientific and technological capabilities, improve public morals, enhance economic prosperity and social justice, promote full employment among their residents, maintain peace and order, and preserve the comfort and convenience of their inhabitants;
WHEREAS, under Article 2 of the "Philippine Cooperative Code of 2008" states that it is the policy of the State to foster the creation and growth of cooperative as a practical vehicle for promoting self-reliance and harnessing people power towards the attainment of economic development and social justice;
WHEREAS, the Government and all its branches, subdivisions, instrumentalities and agencies shall ensure the provision of technical guidance, financial assistance and other services to enable said Cooperatives to develop into viable and responsive economic enterprises and thereby bring about a strong cooperative movement that is free from any conditions that might infringe upon the autonomy or organizational integrity of cooperatives;
WHEREAS, the State recognizes the principle of subsidiarity under which the Cooperative sector will initiate and regulate within its own ranks the promotion and organization, training, research, audit and support services relative to cooperatives with government assistance where necessary;
WHEREAS, Cooperatives have a vital role in the promotion of livelihood to their members which have contributed for the sustainable development of the community through policies approved by the members;
WHEREAS, the need to grant the exemption on payments of local taxes, fees and charges to all duly registered Cooperatives in the City of Pagadian as mandated under Section 60 & 61 of R.A. 9520 otherwise known as the Philippine Cooperative Code of 2008 and other Memorandum Circulars from various national agencies concerned reiterating its implementation are legal and substantial;
NOW, THEREFORE, be it ordained by the Sangguniang Panlungsod (13th City Council) of Pagadian in session assembled that:
SECTION 1. Title. - This Ordinance shall be known as "An Ordinance Granting Exemption to all duly registered Cooperatives in the City of Pagadian on all local taxes, fees and charges under Section 60 & 61 of Republic Act 9520 otherwise known as the Philippine Cooperative Code of 2008."
SECTION 2. Purpose. - The purpose of this Ordinance is to grant the exemption of duly registered cooperatives from payment of applicable local taxes, fees and charges as provided by law under RA 9520, BLGF, and DILG Circulars and Issuances.
SECTION 3. Policy Guidelines
3.1 Under RA 9520 or the Philippine Cooperative Code of 2008
Article 60. Tax Treatment of Cooperative- Duly registered cooperatives under this code which do not transact any business with non-members or the 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 subjected to tax on their transactions with members. In relation to this, the transactions of members with the cooperative shall not be subject to any taxes and fees, including but not limited to final taxes on member's deposits and documentary tax. Notwithstanding the provisions of any law or regulation to the contrary, such as cooperatives dealing with non-members shall enjoy the following tax exemptions:
Cooperatives 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, municipal or barangay taxes of whatever name and nature. Shall be exempt from customs, advance sale and compensating taxes on their importation of machineries, equipment and spare parts used by them and which are not available locally a certified by the Department of Trade and Industry (DTI). All tax free importations shall not be sold nor the beneficial ownership thereof be transferred to any person until five (5) years, otherwise, the cooperative and the transferee or assignee shall be solidarily liable to pay twice the amount of the imposed tax and/or duties.
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All cooperatives, regardless of the amount of accumulated reserves and undivided net savings, shall be exempt from payment of local taxes and taxes on transactions with banks and insurance companies: Provided, that all sales or services rendered for non-members shall be subject to the applicable percentage taxes sales made by producers, marketing or service cooperatives: Provided further, That nothing in this article shall preclude the examination of the books of accounts or other accounting records of the cooperative by duly authorized internal revenue officers for internal revenue tax purposes only, after previous authorization by the Authority.
3.2 BLGF Memorandum Circular 31-2009 and DILG MC No. 2010-120
The DILG MC No. 2010-120 emphasized the exemption of duly registered cooperatives from payment of applicable taxes, fees and charges subject to compliance with BLGF MC No. 31-2009, which requires cooperatives transacting with both members and non-members to perform the following;
Obtain or secure a Mayor's permit and pay the commensurate cost of regulation, inspection and surveillance of the operation of its business but not exceeding One Thousand Pesos (Php1,000.00);
SECTION 4. Definition of Terms. - For purposes of this Ordinance, the following words and phrases shall be construed to mean, as follows:
Accumulated Reserves - refers to the accumulated amount of money annually deducted from the net surplus, which shall be less than Fifty Percent (50%) for the first five years of operation after registration and at least Ten Percent (10%) of the net surplus thereafter, intended not for the allocation or distribution to the members but for the protection and stability of the cooperative, commonly referred to as the Reserve fund;
Non-compliance with the terms and conditions under this Ordinance shall negate the availment of all privileges to cooperative organization under existing laws.
SECTION 7. Separability Clause. - If any provision or portion of this Ordinance is declared illegal and/or found to be violative of the Constitution and declared invalid by a court of competent jurisdiction, the remainder of this Ordinance not so declared otherwise shall not be affected and shall remain in full force and effect.
SECTION 8. Repealing Clause. - All ordinances, executive orders and rules and regulations or parts thereof, which are inconsistent or in conflict with the provisions of this Ordinance are hereby repealed, amended or modified accordingly.
SECTION 9. Effectivity Clause. - This Ordinance shall take effect immediately after its publication in a newspaper of general publication for three (3) consecutive issues.
ENACTED AND APPROVED by the Sangguniang Panlungsod (13th City Council) during its 94TH Regular Session on 18 August 2021 conducted via Video Conferencing.