• Kim’s Dream
  • Orlando R. Ravanera

It is quite puzzling to note that again and again and again, there are continuing attempts to tax the cooperatives. The attempts come in so many ways: either there are requirements to submit this or that, asking for tax account numbers of members who are farmers, indigenous peoples or informal settlers and what have you, before the Certificate of Tax Exemption (CTE) can be issued.

The cooperatives’ stand on those requirements as manifested in their position papers goes something like this: Do you ask that from the Church? If you see that it is really a cooperative as shown by its Certificate of Registration, then the issuance of CTE must be automatic!

Perhaps it is about time to know the real essence of cooperativism – that it is a social justice measure and no less than the Supreme Court has ruled in the case entitled Dumaguete Cathedral Credit Cooperative (DCCCO) versus Commissioner of Internal Revenue, no less than the highest court of the land affirmed the tax exemption of cooperatives.  Yes the power to tax is very strong, taxes being the lifeblood of the government, but such must bow down to Social Justice, the essence of cooperativism.

The High Court’s ruling has reverberated through-out the land, much to the rejoice of all cooperatives especially those who are similarly situated and have been subjected to what we can only described as tax aggression of those who have the propensity to tax anything that moves.

No one can deny that death and taxes are two things in life that we cannot all escape from: death, the inevitable fate of us mortals, aptly described as our “marriage to eternity, eternity being the home of the souls,” and taxes as the “life-blood of the nation” without which the essence of the State will just be illusory.

That said, the State rarely relaxes its inherent power of taxation which is the most pervasive and persistent than its other two fundamental powers, that of police power and eminent domain.  And when the State gives tax exemption, it does so only for very important reasons that have great bearing on its reason for being as a nation.

Because of the vital role they play in society, cooperatives are given a distinct privilege as aptly manifested in the words of Associate Justice Mariano del Castillo, the one who penned the decision. He said, “Cooperatives, including their members, deserve a preferential tax treatment because of the vital role they play in the attainment of economic development and social justice.  Thus, although taxes are the lifeblood of the government, the State’s power to tax must give way to foster the creation and growth of cooperatives.  To borrow the words of Justice Isagani A. Cruz, ‘the power of taxation, while indispensable, is not absolute and may be subordinated to the demands of social justice.”

We in the cooperative movement firmly salute the Supreme Court for giving justice to the essence of cooperativism.  We cannot understand however why there are those who are stubbornly persisting to tax the cooperatives when the law is very clear and categorical.  The Philippine Cooperative Code (RA 9520) clearly states in Article 61 that “Cooperatives transacting business with both members and non-members shall not be subject 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 members’ deposits and documentary tax.”

Why are cooperatives so essential in the life of the nation?  It is my contention that cooperativism in this country is in itself an exercise of the most important power of the State which is the Police Power.  Its very essence is to rectify social ills and economic flaws by advancing “social justice, equity and sustainable development” as a declared State policy.  The framers of the 1987 Constitution must have fully realized the crucial role of cooperatives to democratize wealth and power in a highly skewed societal order with only a few elite in control at the expense of the many who are powerless and wallowing in poverty.

To sum it up, Justice Del Castillo said, “The clashing interests of the State and the taxpayers are again pitted against each other.  Two basic principles, the State’s inherent power of taxation and its declared policy of fostering the creation and growth of cooperatives come into play.  However, the one that embodies the spirit of the law and the true intent of legislature prevails.”

Let this landmark case serves notice to one and all that in the struggle to make better for our people who are fighting dehumanizing  poverty through their cooperatives and who have come together to work for social transformation through people empowerment, cooperativism prevails over the power to tax.