SC Stops Taxation of Electric Coops

Article excerpt

The Supreme Court stopped yesterday local government units (LGUs) from imposing and collecting taxes on the land, buildings, and facilities of the country's electric cooperatives.

In a temporary restraining order (TRO), the High Court directed the Department of Interior and Local Government (DILG) and the Department of Finance (DoF) to file a comment in 10 days on a petition filed by the Philippine Electric Cooperatives Association, Inc. (Philreca).

There are about 120 electric cooperatives that serve more than 35- million consumers in the country. Most of them are in far areas not served by electric firms owned by the private sector.

Philreca and several individual cooperatives went to the High Court and challenged the constitutionality of Sections 193 and 234 of Republic Act No. 7160, the Local Government Code.

Sections 193 and 234 removed the tax exemptions being enjoyed by electric cooperatives under RA 6038 that adopted as a national policy the total electrification of the country, and under Presidential Decree No. 269, known as the National Electrification Administration Decree.

RA 6038 established the National Electrification Administration (NEA) and the electric cooperatives as the lead agencies in implemening the total electrification of the country. The law also provided for tax exemptions to all electric cooperatives.

Sections 2 and 39 of PD 269, on the other hand, provided full assistance to electric cooperatives by way of exemptions from income and other taxes, imposts, duties, and fees.

The Philreca said that from 1971 to 1978, the NEA and the then National Economic Council now National Economicand Development Authority (NEDA) entered into six international loan agreements with the United States government involving $86 million for use by local electric cooperatives. …