January-June 2017 KASANAG Page 1 January - June 2017 Vol. 12. No. 1 DCCCO opens new satellite office at the Central Arcade by: Epifania D. Sonjaco DCCCO Multipurpose raffling off of DCCCO souvenir items, e.g. event’s guest of honor, Mayor Remollo, Cooperative (DCCCO) held a grand wall clock, umbrella, t-shirts, pouch, and in his Message to DCCCO. “I advise opening on Tuesday, April 18, 2017, for 3N1 Key Chain/Nail Clipper/Bottle Opener. DCCCO to invest in properties and build its new Satellite Office at Central Arcade, “We are excited about this opening establishments such as the Arcade where Cervantes Street, Dumaguete City. The of our new satellite office and we look it can invite lessees to lease its property, celebration started at 8:00 a.m. with a forward to the opening of other satellite instead of leasing spaces for its branch Thanksgiving Mass presided by Rev. Fr. offices in Valencia and Tanjay City. Our offices such as the satellite office,” he Gerry Truno, followed by the blessing and Central Arcade satellite office is another added. inauguration at 9:00 a.m. and ribbon- example of how DCCCO continues to The management deployed cutting ceremony led by the City Mayor work hard toward providing our members two (2) employees, one Teller and of Dumaguete, Hon. Felipe Antonio with convenience and the best products one Loans Processing Specialist and B. Remollo, as the guest of honor and and services,” said the Chair of the Board Member Specialist for member and loan speaker. The program ended at 10:00 a.m. of Directors, Dir. William E. Ablong, in his consultations/ application membership with a city motorcade led by the Traffic words of welcome. application/admission, loan applications Management Office (TMO) Team and “DCCCO has indeed greatly among others from the Dumaguete Main Banda Mangga. expanded through establishing eight After the ribbon-cutting ceremony, branches and recruited more than 80,000 Office for the operation of the newly opened DCCCO customers and the general public members; and it is wonderful to have Satellite Office. The satellite office is open were invited to partake of the free food and the coop broaden its reach in the city of every Monday through Friday from 8:00 refreshments. The opening featured a fun Dumaguete, decongest, and thereby make a.m. to 4 p.m., and on Saturday from 8:00 activity for transacting members, i.e., the itself accessible to the public,” said the a.m. to 12 noon. Page 2 KASANAG January-June 2017 in BIR Ruling 551-888 promulgated on Nov. 16, 1988. Editorial Likewise, the SC held that members of cooperatives – like DCCCO DCCCO and HB 4774 which is a credit cooperative duly registered tax exemption of cooperatives will defeat with the Cooperative Development the very intent of the 1987 Constitution. Authority – deserve a preferential tax House Bill 4774 or the proposed It must be remembered always that treatment pursuant to RA 6938 as amended Tax Reform for Acceleration and Inclusion cooperatives are voluntary organizations by RA 9520 (Cooperative Code of the Bill (or TRAIN Bill) threatens to repeal the of people who want to improve their Philippines). tax exemptions of cooperatives. As a result, economic lives using their own initiatives The SC noted that under Article Philippine cooperatives are enraged with and employing their own resources. 2 of RA 6938, “it is a declared policy of this proposed bill in Congress which aims As we all know, cooperatives are the State to foster the creation and growth to abolish their privilege of tax exemption. created mostly by poor Filipino individuals of cooperatives as practical vehicle for We at DCCCO and the other who contributed small amounts to the promoting self-reliance and harnessing cooperatives are not opposed to the entire organization on one collective purpose -- people power towards the attainment of TRAIN Bill. However, we are particularly to alleviate them from poverty. In short, economic development and social justice.” wary on the provisions of the proposed law cooperatives are government allies to “Thus, to encourage the which seeks to repeal section 60 and 61 of alleviate scarcity and financial insufficiency formation of cooperatives and to create the Cooperative Code of the Philippines (RA of people residing in this country. an atmosphere conducive to their growth 9520). These provisions give cooperatives and development, the State extends all tax exemption privileges, of which among A CLASSIC EXAMPLE forms of assistance to them, one of which the non-taxable income of cooperatives are Our legislators in Congress and is providing cooperatives a preferential tax those derived from transactions with its Senate should learn from the landmark treatment,” the High Court said. members. case of the Dumaguete Cathedral Credit The SC said cooperatives deserve Articles 61 and 62 of RA 6938, as Cooperative (DCCCO) vs. Commissioner a preferential tax treatment because of the amended by RA 9520, read: of Internal Revenue (CIR), G.R. No. vital role they play in the attainment of ART. 61. Tax Treatment of 182722, January 22, 2010 since the economic development and social justice. Cooperatives. Duly registered cooperatives arguments and ultimate decision of the “Thus, although taxes are the lifeblood of under this Code which do not transact any Supreme Court was based on social justice the government, the State’s power to tax business with non-members or the general in the Constitution. must give way to foster the creation and public shall not be subject to any taxes and The issue in this case was -- is growth of cooperatives,” the SC said. fees imposed under the Internal Revenue DCCCO liable to pay the deficiency The SC stressed that this Laws and other tax laws. Cooperatives not withholding taxes on interest from savings withholding tax exemption on cooperatives falling under this article shall be governed and time deposits of its members, as well under Article 126 of RA 6938 extends to by the succeeding section. as the delinquency interest of 20% per their members. ART. 62. Tax and Other annum? In a nutshell, cooperatives, Exemptions. Cooperatives transacting including their members, deserve a business with both members and non- THE SUPREME COUrt HELD preferential tax treatment because of the members shall not be subjected to tax on THat THE COOPEratIVE IS NOT vital role they play in the attainment of their transactions to members. In relation LIABLE. economic development and social justice. to this, the transactions of members with In a 16-page decision penned by Thus, although taxes are the lifeblood of the cooperative shall not be subject to any Associate Justice Mariano del Castillo, the government, the State’s power to tax taxes and fees, including but not limited the Second Division of the High Court must give way to foster the creation and to final taxes on members’ deposits and reversed a ruling of the Court of Tax growth of cooperatives. To borrow the documentary tax. Notwithstanding the Appeals in December 2007 ordering the words of Justice Isagani A. Cruz, “The provision of any law or regulation to the DCCCO to pay over P2.6 million in unpaid power of taxation, while indispensable, is contrary, such cooperatives dealing with withholding taxes on interest from savings not absolute and may be subordinated to non-members shall enjoy the following tax and time deposits of its members for the the demands of social justice.” exemptions: x x x. taxable years 1999 and 2000, as well as The repeal of the provisions is delinquency interest of 20 percent per MY CONTENTION ON THE ISSUE inappropriate and misdirected and defeats annum. The reason for the drafting of the very essence of why cooperatives exist. The SC also effectively nullified HB 4774 was for the government to have One reason why the repeal is the pre-assessment notice on tax deficiency access to additional funds to finance unsuitable is grounded on the creation of against DCCCO issued by the regional the 10-Point Socio-Economic Agenda the Cooperative Development Authority. office of the Bureau of Internal Revenue in of the Duterte administration. OK, I am The CDA is mandated in Section 15, Bacolod City. not opposed to the idea that government Article XII of the Constitution which says The High Court explained that should source out money to fund whatever that it is the policy of the state “to promote cooperatives are not required to withhold needs to be funded, however, they have to the viability and growth of cooperatives as taxes on interest from savings and time be completely circumspect on where they instruments of equity, social justice, and deposits of their members as declared by source out their funds. Government should economic development.” Hence, repealing the country’s major tax collecting agency Continue to page 3 January-June 2017 KASANAG Page 3 From page 2 - DCCCO and HB 4774.... not “kill the hen that lays the golden eggs,” so to speak and that is coops, electric coops and health service coops providing cheaper because cooperatives are allies of the government. alternative but quality services. The 6,770 multi-purpose cooperatives offer a wide range COOPEratIVES AS PartNERS OF GOVERNMENT of products and services. And as most people would say, co-ops Everyone has witnessed how cooperatives have become services range from womb to tomb. Co-ops run hospitals, schools, a partner of the government in combating insufficiency and cooperative banks, pharmacies and even funeral care services. economic imbalance. For over 100 years now since the first In 2015, cooperatives directly employed 520,758 Filipinos and cooperative decree was ratified, cooperatives have been operating generated indirect employment of 1,923,047.