EN BANC
PHILIPPINE
RURAL
ELECTRIC COOPERATIVES ASSOCIATION, INC. (PHILRECA);AGUSAN DEL NORTE
ELECTRIC COOPERATIVE, INC. (ANECO); ILOILO I ELECTRICCOOPERATIVE, INC.
(ILECO I); AND ISABELA I ELECTRIC COOPERATIVE, INC. (ISELCO I),
Petitioners, |
G.R.
No.
143076
June 10, 2003
-versus-
THE
SECRETARY,
DEPARTMENT
OF INTERIOR AND LOCAL GOVERNMENT,AND THE SECRETARY,
DEPARTMENT OF FINANCE,
Respondents. |
D E C I S I
O N
PUNO,
J.:chanroblesvirtuallawlibrary
This is a Petition for
Prohibition under Rule 65 of the Rules of Court with prayer for the
issuance
of a Temporary Restraining Order seeking to annul as unconstitutional
Sections
193 and 234 of R. A. No. 7160 otherwise known as the Local
Government
Code.
On May 23, 2000, a class
suit was filed by petitioners in their own behalf and in behalf of
other
electric cooperatives organized and existing under P.D. No. 269 who are
members of petitioner Philippine Rural Electric Cooperatives
Association,
Inc. (PHILRECA). Petitioner PHILRECA is an association of 119 electric
cooperatives throughout the country. Petitioners Agusan del Norte
Electric
Cooperative, Inc. (ANECO), Iloilo I Electric Cooperative, Inc. (ILECO
I)
and Isabela I Electric Cooperative, Inc. (ISELCO I) are non-stock,
non-profit
electric cooperatives organized and existing under P.D. No. 269, as
amended,
and registered with the National Electrification Administration (NEA).cralaw:red
Under P.D. No. 269,
as amended, or the National Electrification Administration Decree, it
is
the declared policy of the State to provide "the total electrification
of the Philippines on an area coverage basis" the same "being vital to
the people and the sound development of the nation."[1]
Pursuant to this policy, P.D. No. 269 aims to "promote, encourage and
assist
all public service entities engaged in supplying electric service,
particularly
electric cooperatives" by "giving every tenable support and assistance"
to the electric cooperatives coming within the purview of the law.[2]
Accordingly, Section 39 of P.D. No. 269 provides for the following tax
incentives to electric cooperatives:
Section
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 to cooperative is necessary and appropriate:
(a)
Provided
that it operates in conformity with the purposes and provisions of this
Decree, cooperatives (1) shall be permanently exempt from paying income
taxes, and (2) for a period ending on 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 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 of 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.
x x x[3]
From 1971 to 1978, in
order
to finance the electrification projects envisioned by P.D. No. 269, as
amended, the Philippine Government, acting through the National
Economic
Council (now National Economic Development Authority) and the NEA,
entered
into six (6) loan agreements with the government of the United States
of
America through the United States Agency for International Development
(USAID) with electric cooperatives, including petitioners ANECO, ILECO
I and ISELCO I, as beneficiaries. The six (6) loan agreements involved
a total amount of approximately US$86,000,000.00. These loan agreements
are existing until today.chanrobles virtual law library
The loan agreements
contain similarly worded provisions on the tax application of the loan
and any property or commodity acquired through the proceeds of the
loan.
Thus, Section 6.5 of A.I.D. Loan No. 492-H-027 dated November 15, 1971
provides:
Section 6.5. Taxes and
Duties. The Borrower covenants and agrees that this Loan Agreement and
the Loan provided for herein shall be free from, and the Principal and
interest shall be paid to A.I.D. without deduction for and free from,
any
taxation or fees imposed under any laws or decrees in effect within the
Republic of the Philippines or any such taxes or fees so imposed or
payable
shall be reimbursed by the Borrower with funds other than those
provided
under the Loan. To the extent that (a) any contractor, including any
consulting
firm, any personnel of such contractor financed hereunder, and any
property
or transactions relating to such contracts and (b) any commodity
procurement
transactions financed hereunder, are not exempt from identifiable
taxes,
tariffs, duties and other levies imposed under laws in effect in the
country
of the Borrower, the Borrower and/or Beneficiary shall pay or reimburse
the same with funds other than those provided under the Loan.[4]
Petitioners contend
that pursuant to the provisions of P.D. No. 269, as amended, and the
above-mentioned
provision in the loan agreements, they are exempt from payment of local
taxes, including payment of real property tax. With the passage of the
Local Government Code, however, they allege that their tax exemptions
have
been invalidly withdrawn. In particular, petitioners assail Sections
193
and 234 of the Local Government Code on the ground that the said
provisions
discriminate against them, in violation of the equal protection clause.
Further, they submit that the said provisions are unconstitutional
because
they impair the obligation of contracts between the Philippine
Government
and the United States Government.chanrobles virtual law library
On July 25, 2000 we
issued a Temporary Restraining Order.[5]
We note that the instant
action was filed directly to this Court, in disregard of the rule on
hierarchy
of courts. However, we opt to take primary jurisdiction over the
present
petition and decide the same on its merits in view of the significant
constitutional
issues raised by the parties dealing with the tax treatment of
cooperatives
under existing laws and in the interest of speedy justice and prompt
disposition
of the matter.
I
There is No
Violation
of the Equal Protection Clause
The pertinent parts
of Sections 193 and 234 of the Local Government Code provide:
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
and
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.
x
x
x
Section 234.
Exemptions
from real property tax.—The following are exempted from payment of the
real property tax:
x
x
x
(d) All real
property
owned by duly registered cooperatives as provided for under R.A. No.
6938;
andchanrobles virtual law library
x
x
x
Except as provided
herein,
any exemption from payment of real property tax previously granted to,
or presently enjoyed by, all persons whether natural or juridical,
including
all government-owned and controlled corporations are hereby withdrawn
upon
effectivity of this Code.[6]
Petitioners argue that
the above provisions of the Local Government Code are unconstitutional
for violating the equal protection clause. Allegedly, said provisions
unduly
discriminate against petitioners who are duly registered cooperatives
under
P.D. No. 269, as amended, and not under R.A. No. 6938 or the
Cooperative
Code of the Philippines. They stress that cooperatives registered under
R.A. No. 6938 are singled out for tax exemption privileges under the
Local
Government Code. They maintain that electric cooperatives registered
with
the NEA under P.D. No. 269, as amended, and electric cooperatives
registered
with the Cooperative Development Authority (CDA) under R.A. No. 6938
are
similarly situated for the following reasons: a) petitioners are
registered
with the NEA which is a government agency like the CDA; b)
petitioners,
like CDA-registered cooperatives, operate for service to their
member-consumers;
and c) prior to the enactment of the Local Government Code,
petitioners,
like CDA-registered cooperatives, were already tax-exempt.[7]
Thus, petitioners contend that to grant tax exemptions from local
government
taxes, including real property tax under Sections 193 and 234 of the
Local
Government Code only to registered cooperatives under R.A. No. 6938 is
a violation of the equal protection clause.
We are not persuaded.
The equal protection clause under the Constitution means that "no
person
or class of persons shall be deprived of the same protection of laws
which
is enjoyed by other persons or other classes in the same place and in
like
circumstances."[8]
Thus, the guaranty of the equal protection of the laws is not violated
by a law based on reasonable classification. Classification, to be
reasonable,
must (1) rest on substantial distinctions; (2) be germane to the
purposes
of the law; (3) not be limited to existing conditions only; and (4)
apply
equally to all members of the same class.[9]
We hold that there is
reasonable classification under the Local Government Code to justify
the
different tax treatment between electric cooperatives covered by P.D.
No.
269, as amended, and electric cooperatives under R.A. No. 6938.cralaw:red
First, substantial distinctions
exist between cooperatives under P.D. No. 269, as amended, and
cooperatives
under R.A. No. 6938. These distinctions are manifest in at least two
material
respects which go into the nature of cooperatives envisioned by R.A.
No.
6938 and which characteristics are not present in the type of
cooperative
associations created under P.D. No. 269, as amended.cralaw:red
a. Capital
Contributions by Members
A cooperative under
R.A. No. 6938 is defined as:
[A] duly registered
association of persons with a common bond of interest, who have
voluntarily
joined together to achieve a lawful common or social economic
end,
making equitable contributions to the capital required and accepting a
fair share of the risks and benefits of the undertaking in accordance
with
universally accepted cooperative principles.[10]chanrobles virtual law library
The above definition
provides for the following elements of a cooperative: a) association of
persons; b) common bond of interest; c) voluntary association; d)
lawful
common social or economic end; e) capital contributions; f) fair share
of risks and benefits; g) adherence to cooperative values; and g)
registration
with the appropriate government authority.[11]
The importance of capital
contributions by members of a cooperative under R.A. No. 6938 was
emphasized
during the Senate deliberations as one of the key factors which
distinguished
electric cooperatives under P.D. No. 269, as amended, from electric
cooperatives
under the Cooperative Code. Thus:
Senator
Osmeña:
Will this Code, Mr. President, cover electric cooperatives as they
exist
in the country today and are administered by the National
Electrification
Administration?
Senator Aquino:
That
cannot be answered with a simple yes or no, Mr. President. The answer
will
depend on what provisions we will eventually come up with. Electric
cooperatives
as they exist today would not fall under the term "cooperative" as used
in this bill because the concept of a cooperative is that which adheres
and practices certain cooperative principles.
x
x
x
Senator Aquino: To
begin
with, one of the most important requirements, Mr. President, is the
principle
where members bind themselves to help themselves. It is because of
their
collectivity that they can have some economic benefits. In this
particular
case [cooperatives under P.D. No. 269], the government is the one that
funds these so-called electric cooperatives
x
x
x
Senator
Aquino:
That is why in Article III we have the following definition:
A cooperative is
an
association of persons with a common bond of interest who have
voluntarily
joined together to achieve a common social or economic end, making
equitable
contributions to the capital required.
In this particular
case
[cooperatives under P.D. No. 269], Mr. President, the members do not
make
substantial contribution to the capital required. It is the government
that puts in the capital, in most cases.chanrobles virtual law library
x
x
x
Senator
Osmeña:
Under line 6, Mr. President, making equitable contributions to the
capital
required would exclude electric cooperatives [under P.D. No. 269].
Because
the membership does not make equitable contributions.
Senator Aquino:
Yes,
Mr. President. This is precisely what I mean, that electric
cooperatives
[under P.D. No. 269] do not qualify in the spirit of cooperatives. That
is the reason why they should be eventually assessed whether they
intend
to comply with the cooperatives or not. Because, if after giving them a
second time, they do not comply, then, they should not be classified as
cooperatives.
Senator
Osmeña:
Mr. President, the measure of their qualifying as a cooperative would
be
the requirement that a member of the electric cooperative must
contribute
a pro rata share of the capital of the cooperative in cash to be a
cooperative.[12]
Nowhere in P.D. No.
269,
as amended, does it require cooperatives to make equitable
contributions
to capital. Petitioners themselves admit that to qualify as a member of
an electric cooperative under P.D. No. 269, only the payment of a P5.00
membership fee is required which is even refundable the moment the
member
is no longer interested in getting electric service from the
cooperative
or will transfer to another place outside the area covered by the
cooperative.[13]
However, under the Cooperative Code, the articles of cooperation of a
cooperative
applying for registration must be accompanied with the bonds of the
accountable
officers and a sworn statement of the treasurer elected by the
subscribers
showing that at least twenty-five per cent (25%) of the authorized
share
capital has been subscribed and at least twenty-five per cent (25%) of
the total subscription has been paid and in no case shall the paid-up
share
capital be less than Two thousand pesos (P2,000.00).[14]
b. Extent
of Government Control over Cooperatives
Another principle adhered
to by the Cooperative Code is the principle of subsidiarity. Pursuant
to
this principle, the government may only engage in development
activities
where cooperatives do not posses the capability nor the resources to do
so and only upon the request of such cooperatives.[15]
Thus, Article 2 of the Cooperative Code provides:
Article
2.
Declaration of Policy. - It is the declared policy of the State to
foster
the creation and growth of cooperatives as a practical vehicle for
prompting
self-reliance and harnessing people power towards the attainment of
economic
development and social justice. The State shall encourage the private
sector
to undertake the actual formation and organization to cooperatives and
shall create an atmosphere that is conducive to the growth and
development
of these cooperatives.
Towards this end,
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.chanrobles virtual law library
Further, 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
and research, audit and support services relating to cooperatives with
government assistance where necessary.[16]
Accordingly, under the
charter of the CDA, or the primary government agency tasked to promote
and regulate the institutional development of cooperatives, it is the
declared
policy of the State that:
Government
assistance to cooperatives shall be free from any restriction and
conditionality
that may in any manner infringe upon the objectives and character of
cooperatives
as provided in this Act. The State shall, except as provided in this
Act,
maintain the policy of noninterference in the management and operation
of cooperatives.[17]
In contrast, P.D. No.
269,
as amended by P.D. No. 1645, is replete with provisions which grant the
NEA, upon the happening of certain events, the power to control and
take
over the management and operations of cooperatives registered under it.
Thus:
(a) the NEA
Administrator has the power to designate, subject to the confirmation
of
the Board of Administrators, an Acting General Manager and/or Project
Supervisor
for a cooperative where vacancies in the said positions occur and/or
when
the interest of the cooperative or the program so requires, and to
prescribe
the functions of the said Acting General Manager and/or Project
Supervisor,
which powers shall not be nullified, altered or diminished by any
policy
or resolution of the Board of Directors of the cooperative concerned;[18]
(b) the NEA is
given
the power of supervision and control over electric cooperatives and
pursuant
to such powers, NEA may issue orders, rules and regulations motu propio
or upon petition of third parties to conduct referenda and other
similar
actions in all matters affecting electric cooperatives;[19]
(c) No
cooperative
shall borrow money from any source without the approval of the Board of
Administrators of the NEA;[20]
and
(d) The management
of
a cooperative shall be vested in its Board, subject to the supervision
and control of NEA which shall have the right to be represented and to
participate in all Board meetings and deliberations and to approve all
policies and resolutions.[21]chanrobles virtual law library
The extent of
government
control over electric cooperatives covered by P.D. No. 269, as amended,
is largely a function of the role of the NEA as a primary source of
funds
of these electric cooperatives. It is crystal clear that NEA incurred
loans
from various sources to finance the development and operations of the
electric
cooperatives. Consequently, amendments to P.D. No. 269 were primarily
geared
to expand the powers of the NEA over the electric cooperatives to
ensure
that loans granted to them would be repaid to the government. In
contrast,
cooperatives under R.A. No. 6938 are envisioned to be self-sufficient
and
independent organizations with minimal government intervention or
regulation.
To be sure, the transitory
provisions of R.A. No. 6938 are indicative of the recognition by
Congress
of the fundamental distinctions between electric cooperatives organized
under P.D No. 269, as amended, and cooperatives under the new
Cooperative
Code. Article 128 of the Cooperative Code provides that all
cooperatives
registered under previous laws shall be deemed registered with the CDA
upon submission of certain requirements within one year. However,
cooperatives
created under P.D. No. 269, as amended, are given three years within
which
to qualify and register with the CDA, after which, provisions of P.D.
No.
1645 which expand the powers of the NEA over electric cooperatives,
would
no longer apply.[22]
Second, the classification
of tax-exempt entities in the Local Government Code is germane to the
purpose
of the law. The Constitutional mandate that every local government unit
shall enjoy local autonomy, does not mean that the exercise of power by
local governments is beyond regulation by Congress. Thus, while each
government
unit is granted the power to create its own sources of revenue,
Congress,
in light of its broad power to tax, has the discretion to determine the
extent of the taxing powers of local government units consistent with
the
policy of local autonomy.[23]
Section 193 of the Local
Government Code is indicative of the legislative intent to vest broad
taxing
powers upon local government units and to limit exemptions from local
taxation
to entities specifically provided therein. Section 193 provides:
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
and
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.[24]
The above provision
effectively
withdraws exemptions from local taxation enjoyed by various entities
and
organizations upon effectivity of the Local Government Code except for
a) local water districts; b) cooperatives duly registered under R.A.
No.
6938; and c) non-stock and non-profit hospitals and educational
institutions.
Further, with respect to real property taxes, the Local Government Code
again specifically enumerates entities which are exempt therefrom and
withdraws
exemptions enjoyed by all other entities upon the effectivity of the
code.
Thus, Section 234 provides:
Section
234.
Exemptions from Real Property Tax. — The following are exempted from
payment
of the real property tax:
(a)
Real property owned by the Republic of the Philippines or any of its
political
subdivisions except when the beneficial use thereof had been granted
for
consideration or otherwise, to a taxable person;chanrobles virtual law library
(b)
Charitable institutions, churches, parsonages or convents appurtenant
thereto,
mosques, nonprofit or religious cemeteries and all lands, buildings and
improvements actually, directly, and exclusively used for religious,
charitable
or educational purposes;
(c)
All machineries and equipment that are actually, directly and
exclusively
used by local water districts and government-owned or controlled
corporations
engaged in the supply and distribution of water and/or generation and
transmission
of electric power;
(d)
All real property owned by duly registered cooperatives as provided for
under R.A. No. 6938; and
(e)
Machinery and equipment used for pollution control and environmental
protection.
Except as provided
herein,
any exemption from payment of real property tax previously granted to,
or presently enjoyed by, all persons, whether natural or juridical,
including
all government-owned or controlled corporations are hereby withdrawn
upon
the effectivity of this Code.[25]
In Mactan Cebu
International
Airport Authority v. Marcos,[26]
this Court held that the limited and restrictive nature of the tax
exemption
privileges under the Local Government Code is consistent with the State
policy to ensure autonomy of local governments and the objective of the
Local Government Code to grant genuine and meaningful autonomy to
enable
local government units to attain their fullest development as
self-reliant
communities and make them effective partners in the attainment of
national
goals. The obvious intention of the law is to broaden the tax base of
local
government units to assure them of substantial sources of revenue.chanrobles virtual law library
While we understand
petitioners’ predicament brought about by the withdrawal of their local
tax exemption privileges under the Local Government Code, it is not the
province of this Court to go into the wisdom of legislative enactments.
Courts can only interpret laws. The principle of separation of powers
prevents
them from re-inventing the laws.cralaw:red
Finally, Sections 193
and 234 of the Local Government Code permit reasonable classification
as
these exemptions are not limited to existing conditions and apply
equally
to all members of the same class. Exemptions from local taxation,
including
real property tax, are granted to all cooperatives covered by R.A. No.
6938 and such exemptions exist for as long as the Local Government Code
and the provisions therein on local taxation remain good law.
II
There is No
Violation
of the Non-Impairment Clause
It is ingrained in jurisprudence
that the constitutional prohibition on the impairment of the obligation
of contracts does not prohibit every change in existing laws. To
fall within the prohibition, the change must not only impair the
obligation
of the existing contract, but the impairment must be substantial.[27]
What constitutes substantial impairment was explained by this Court in
Clemons v. Nolting:[28]
A law which changes
the terms of a legal contract between parties, either in the time or
mode
of performance, or imposes new conditions, or dispenses with those
expressed,
or authorizes for its satisfaction something different from that
provided
in its terms, is law which impairs the obligation of a contract and is
therefore null and void.cralaw:red
Moreover, to constitute
impairment, the law must affect a change in the rights of the parties
with
reference to each other and not with respect to non-parties.[29]
Petitioners insist that
Sections 193 and 234 of the Local Government Code impair the
obligations
imposed under the six (6) loan agreements executed by the NEA as
borrower
and USAID as lender. All six agreements contain similarly worded
provisions
on the tax treatment of the proceeds of the loan and properties and
commodities
acquired through the loan. Thus:chanrobles virtual law library
Section
6.5.
Taxes and Duties. The Borrower covenants and agrees that this Loan
Agreement
and the Loan provided for herein shall be free from, and the Principal
and interest shall be paid to A.I.D. without deduction for and free
from,
any taxation or fees imposed under any laws or decrees in effect within
the Republic of the Philippines or any such taxes or fees so imposed or
payable shall be reimbursed by the Borrower with funds other than those
provided under the Loan. To the extent that (a) any contractor,
including
any consulting firm, any personnel of such contractor financed
hereunder,
and any property or transactions relating to such contracts and (b) any
commodity procurement transactions financed hereunder, are not exempt
from
identifiable taxes, tariffs, duties and other levies imposed under laws
in effect in the country of the Borrower, the Borrower and/or
Beneficiary
shall pay or reimburse the same with funds other than those provided
under
the Loan.[30]
Petitioners contend
that
the withdrawal by the Local Government Code of the tax exemptions of
cooperatives
under P.D. No. 269, as amended, is an impairment of the tax exemptions
provided under the loan agreements. Petitioners argue that as
beneficiaries
of the loan proceeds, pursuant to the above provision, "[a]ll the
assets
of petitioners, such as lands, buildings, distribution lines
acquired
through the proceeds of the Loan Agreements are tax exempt."[31]chanrobles virtual law library
We hold otherwise.cralaw:red
A plain reading of the
provision quoted above readily shows that it does not grant any tax
exemption
in favor of the borrower or the beneficiary either on the proceeds of
the
loan itself or the properties acquired through the said loan. It simply
states that the loan proceeds and the principal and interest of the
loan,
upon repayment by the borrower, shall be without deduction of any tax
or
fee that may be payable under Philippine law as such tax or fee will be
absorbed by the borrower with funds other than the loan proceeds.
Further,
the provision states that with respect to any payment made by the
borrower
to (1) any contractor or any personnel of such contractor or any
property
transaction and (2) any commodity transaction using the proceeds of the
loan, the tax to be paid, if any, on such transactions shall be
absorbed
by the borrower and/or beneficiary through funds other than the loan
proceeds.cralaw:red
Beyond doubt, the import
of the tax provision in the loan agreements cited by petitioners is
twofold:
(1) the borrower is entitled to receive from and is obliged to pay the
lender the principal amount of the loan and the interest thereon in
full,
without any deduction of the tax component thereof imposed under
applicable
Philippine law and any tax imposed shall be paid by the borrower with
funds
other than the loan proceeds and (2) with respect to payments made to
any
contractor, its personnel or any property or commodity transaction
entered
into pursuant to the loan agreement and with the use of the proceeds
thereof,
taxes payable under the said transactions shall be paid by the borrower
and/or beneficiary with the use of funds other than the loan proceeds.
The quoted provision does not purport to grant any tax exemption in
favor
of any party to the contract, including the beneficiaries thereof. The
provisions simply shift the tax burden, if any, on the transactions
under
the loan agreements to the borrower and/or beneficiary of the loan.
Thus,
the withdrawal by the Local Government Code under Sections 193 and 234
of the tax exemptions previously enjoyed by petitioners does not impair
the obligation of the borrower, the lender or the beneficiary under the
loan agreements as in fact, no tax exemption is granted therein.chanrobles virtual law library
III
Conclusion
Petitioners lament the
difficulties they face in complying with the implementing rules and
regulations
issued by the CDA for the conversion of electric cooperatives under
P.D.
No. 269, as amended, to cooperatives under R.A. No. 6938. They allege
that
because of the cumbersome legal and technical requirements imposed by
the
Omnibus Rules and Regulations on the Registration of Electric
Cooperatives
under R.A. No. 6938, petitioners cannot register and convert as stock
cooperatives
under the Cooperative Code.[32]
The Court understands
the plight of the petitioners. Their remedy, however, is not judicial.
Striking down Sections 193 and 234 of the Local Government Code as
unconstitutional
or declaring them inapplicable to petitioners is not the proper course
of action for them to obtain their previous tax exemptions. The
language
of the law and the intention of its framers are clear and unequivocal
and
courts have no other duty except to uphold the law. The task to
re-examine
the rules and guidelines on the conversion of electric cooperatives to
cooperatives under R.A. No. 6938 and provide every assistance available
to them should be addressed by the proper authorities of government.
This
is necessary to encourage the growth and viability of cooperatives as
instruments
of social justice and economic development.cralaw:red
WHEREFORE, the instant
petition is DENIED and the temporary restraining order heretofore
issued
is LIFTED.cralaw:red
SO ORDERED.cralaw:red
Davide, Jr., C.J., Bellosillo,
Vitug, Panganiban, Quisumbing, Ynares-Santiago, Sandoval-Gutierrez,
Carpio,
Austria-Martinez, Corona, Carpio-Morales, Callejo, Sr., and Azcuna,
JJ.,
concur.
____________________________
Endnotes:
[1]
Section 2, P.D. No. 269.
[2]
Id.
[3]
mphasis supplied.
[4]
Rollo, p. 38.
[5]
Id. at 262.
[6]
mphasis supplied.
[7]
Rollo, p. 11.chanrobles virtual law library
[8]
Tolentino v. Board of Accountancy, G.R. No. L-3062, September 28, 1951,
90 Phil 83, 90.
[9]
People v. Cayat, G.R. No. 45987, May 5, 1939, 68 Phil 12, 18.
[10]
Art. 3, R.A. No. 6938. mphasis supplied.
[11]
M. F. Verzosa, The Philippine Cooperative Law, Annotated: 28-30
(1991).
[12]
Record of the Senate, Third Regular Session 1989, Vol. 1, No. 13, pp.
378-379.
[13]
Rollo, p. 377.
[14]
Art. 14 (5), R.A. No. 6938.
[15]
Supra, note 11 at 27.
[16]
mphasis supplied.
[17]
Art. 2, R.A. No. 6939 or "An Act Creating the Cooperative Development
Authority
to Promote the Viability and Growth of Cooperatives as Instruments of
Equity,
Social Justice and Economic Development, defining its Powers, Functions
and Responsibilities, Rationalizing Government Policies and Agencies
with
Cooperative Functions, Supporting Cooperative Development, Transferring
the Registration and Regulation Functions of existing Government
Agencies
on Cooperatives as such and Consolidating the same with the Authority,
Appropriating Funds Therefor, and for other Purposes." mphasis
supplied.
[18]
Section 5 (a) (6), P.D. No. 269, as amended by P.D. No. 1645.chanrobles virtual law library
[19]
Section 10, P.D. No. 269, as amended by P.D. No. 1645.
[20]
Id.chanrobles virtual law library
[21]
Section 24, P.D. No. 269, as amended by P.D. No. 1645.chanrobles virtual law library
[22]
Article 128. Transitory Provisions. — All cooperatives registered under
Presidential Decree Nos. 175 and 775 and Executive Order No. 898, and
all
other laws shall be deemed registered with the Cooperative Development
Authority: Provided, however, That they shall submit to the nearest
Cooperative
Development Authority office their certificate of registration, copies
of the articles of cooperation and bylaws and their latest duly audited
financial statements within one (1) year from the effectivity of this
Act,
otherwise their registration shall be cancelled: Provided, further,
That
cooperatives created under Presidential Decree No. 269, as amended by
Presidential
Decree No. 1645, shall be given three (3) years within which to qualify
and register with the Authority: Provided, finally, That after these
cooperatives
shall have qualified and registered, the provisions of Sections 3 and 5
of Presidential Decree No. 1645 shall no longer be applicable to said
cooperatives.
[23]
Art. X, Sections 2, 3 and 5, 1987 Constitution.chanrobles virtual law library
[24]
Emphasis supplied.chanrobles virtual law library
[25]
Emphasis supplied.chanrobles virtual law library
[26]
G.R. No. 120082, September 11, 1996, 261 SCRA 667, 690.
[27]
Gaspar v. Molina, G.R. No. 2206, November 2, 1905, 5 Phil 197, 202-203.
[28]
G.R. No. 17959, January 24, 1922, 42 Phil 702, 717.chanrobles virtual law library
[29]
Bernas, The 1987 Constitution of the Republic of the Philippines: A
Commentary
390 (1996).
[30]
A.I.D. Loan No. 492-H-027 dated November 15, 1971. Rollo, p. 38.
Emphasis
supplied.
[31]
Rollo, p. 12.chanrobles virtual law library
[32]
Id. at 375-376. |