DoJ clears power co-ops for tax exemptions without needing to register with regulator
The Department of Justice (DoJ) said all electric cooperatives may apply for tax exemptions without prior registration with the Cooperative Development Authority.
In a six-page legal opinion dated Dec. 13 addressed to Energy Secretary Raphael Perpetuo M. Lotilla, the DoJ said registration with the CDA is not specified as a requirement by the National Electrification Administration Reform Act (NEA) of 2013.
“Notably, no other requirement for the availment of these preferential rights, other than the compliance of electric cooperatives with the financial and operational standards set by the NEA, like the supposed CDA registration, is mentioned in the law,” Justice Secretary Jesus Crispin C. Remulla said in the opinion.
He added that the law does not conflict with the local government code (LGC).
Under the NEA law, electric cooperatives that comply with financial and operational standards enjoy preferential rights that include tax exemptions. Cooperatives are also given the option to remain non-stock and non-profit under the law.
Mr. Remulla said that incentives specified by the law should be made available to all cooperatives as long as they comply with the standards.
The DoJ overturned its 2014 opinion that said electric cooperatives are still liable to pay local taxes and real property taxes.
It previously said that non-stock cooperatives may not avail of preferential rights under the LGC since it said the NEA law had required them to register with the CDA.
The Dec. 13 opinion stemmed from separate requests of former Energy Secretary Alfonso G. Cusi, Philreca Party-List Rep. Presley C. De Jesus and APEC Party-List Rep. Sergio C. Dagooc to revisit the DoJ’s 2014 opinion.
Mr. Remulla said a review of the NEA law showed that only compliance with financial and operational standards was required to avail of the preferential rights.
The Justice secretary noted that the DoJ’s current position is in line with NEA’s goal of empowering electric cooperatives to deal with changes in the power industry.
“Thus, when Congress enacted the NEA Law, which extends preferential rights being enjoyed by cooperatives registered with CDA to electric cooperatives, there nothing to amend in the (LGC) there being no conflict between these laws,” he said.
“It must be emphasized that the opinion of the Secretary of Justice is merely advisory in nature, such that the same need not bind the requesting agencies or parties if it be their pleasure.” — John Victor D. Ordonez