Interpretation of BGLF MC No. 31 2009

1. Cooperative Development Authority
presentation on
Exemption of Cooperatives from the Payment
of Local Taxes, Fees and Charges per BGLF
Memorandum Circular no. 31-2009
Atty. PHILLIP RAYMUND S. RIVERA
ATTORNEY III, COOPERATIVE DEVELOPMENT AUTHORITY
DAGUPAN, EXTENSION OFFICE (CDA-DEO)

3. HIGHLIGHTING…
This is to draw your attention to an important issuance of the
Bureau of Local Government Finance (BLGF) concerning local
taxes, fees and charges that will be imposed against duly
registered cooperatives.
Cognizant of the fact that several cooperatives were being
taxed inappropriately by certain LGUs, the 14 November 2016
BLGF Memorandum Circular No. 11-001-2016 was issued to enjoin
those concerned to strictly observe BLGF Memorandum Circular
No. 31-2009. Attached to this memorandum is a copy of the
subject BLGF Memorandum Circular.
You are therefore directed to cause the dissemination of said
Memorandum Circular.
For the information and guidance of all concerned.

5. Highlighting…
“However, cooperatives transacting business with both
members and non-members are required to obtain or secure a
Mayor’s permit, which is implemented under the police power
of the local government unit to protect public interest and in
furtherance of the general welfare clause enshrined both in the
Constitution and the Local Government Code (Section 16-
General Welfare Clause), and pay the commensurate cost of
regulation, inspection and surveillance of the operation of its
business but not exceeding One Thousand Pesos
(Php1,000.00). Likewise, said cooperatives shall secure a
Community Tax Certificate (CTC) and pay the basic tax of Five
Hundred Pesos (Php500.00) as a juridical entity.”
(Underscoring Ours)
dated March 2018dated March 2018

6. Coop & the Issue
Some LGUs assess real
property and other
local taxes to
cooperatives and
refuse to issue Permit
unless settled
Issues and
concerns received
from various
interested parties
Some LGUs charge
fees for Permits
exceeding the limit
fixed
There are different
fees charged from
cooperatives aside from
the basic permit fee
such as Barangay
Clearance Fee, BFP
Clearance Fee, etc.

7. LEGAL BASIS
BLGF Opinion dated 25 Feb 2011
“accordingly, this Bureau
expresses the view that for as
long as a cooperative is duly
registered with the
Cooperative Development
Authority (CDA) under the
provisions of RA6938 &
RA9520, it shall remain
exempt from the payment of
local taxes. ” (Underscoring
ours)
Exemption
from Local
Taxes
ART. 61 Par. 3 of
RA9520
“All cooperatives,
regardless of the
amount of
accumulated reserves
and undivided net
savings shall be exempt
from payment of local
taxes…” (Underscoring
ours)
RA7160 Section 133
“Common Limitations on the
Taxing Powers of Local
Government Units…
Unless otherwise provided herein,
the exercise of the taxing power of
provinces, cities, municipalities and
barangays shall not extend to the
levy of the following:
(n) Taxes, fees or charges on xxx
and cooperatives duly registered
under RA No. 6810 and RA No.
6938 xxx” (Underscoring ours)

8. LEGAL BASIS
BLGF MC NO. 11-001-2016 (Reiterating
BLGF MC No. 31-2009)
“However, cooperatives transacting
business with both members and non-
members are required to obtain or secure
a Mayor’s Permit” xxx and pay the
commensurate cost of regulation,
inspection and surveillance of the
operation of its business not exceeding
P1,000.00 and pay the basic tax of
P500.00 as a juridical entity”
Limitation/s on
Fees and
Charges
DILG MC No. 2017-16 (Citing
DILG MC No. 2010-120)
“Emphasized the exemption of
duly registered cooperatives from
payment of applicable taxes, fees
and charges subject to
compliance with BLGF MC No. 31-
2009 (with penal provision)

9. INITIAL ACTION/S TAKEN BY CDA-DAGUPAN EXTENSION OFFICE
The CDA-DEO issued a formal letter to the different
government offices concerned and further asked for
the strict implementation of the pertinent legal
issuances regarding the Exemption of Cooperatives
Duly Registered with the Cooperative
Development Authority (CDA) from Payment of
Local Taxes, and Limiting the Amount of Local
Fees and Charges to PhP 1,500.00 (Mayor’s Permit
and Regulation Cost of PhP 1,000.00; and Community
Tax Certificate of PhP 500.00).

10. INITIAL ACTION/S TAKEN BY CDA-DAGUPAN EXTENSION OFFICE
The following are the addressees to the aforementioned letter:
1. Office of the Provincial Governor of Pangasinan;
2. Office of the Provincial Governor of La Union;
3. Office of the Provincial Governor of Ilocos Sur;
4. Office of the Provincial Governor of Ilocos Norte;
5. Office of the RD of DILG R1;
6. Office of the DILG Provincial Director of Pangasinan;
7. Office of the DILG Provincial Director of La Union;
8. Office of the DILG Provincial Director of Ilocos Sur;
9. Office of the DILG Provincial Director of Ilocos Norte;
10.Office of the RD of BLGF R1;

11. The following are the salient contents of the aforementioned letter:
Let it be respectfully recalled that the
1987 Constitution guarantees the
protection of cooperatives and considers
the same as instruments of social justice
and economic development.1 Corollary,
fostering the creation and growth of
cooperatives as practical vehicle towards
the attainment of economic development
and social justice was declared as a policy
of the State.2
________________
1 Article XII, Section 15, 1987 Philippine Constitution.
2 Article 2, RA 9520 (Philippine Cooperative Code of 2008)

12. The following are the salient contents of the aforementioned letter:
In relation to the foregoing legal pronouncements, Section
133(n) of the Local Government of 1991, explicitly and
unequivocally declared that the taxing powers of provinces,
cities, municipalities, and barangays shall not extend to
cooperatives. Sections 60 and 61 of RA 9520 (Philippine
Cooperative Code of 2008) and the Joint Rules and
Regulations Implementing Articles 60, 61 and 144 of RA 9520
in relation to RA 8424 (NIRC), as amended, further enshrined
the aforementioned tax exemption. In addition, Section 234(d)
of the Local Government of 1991 made a categorical
declaration that further exempted duly registered cooperatives
under RA No. 6938 from payment of real property tax.

13. The following are the salient contents of the aforementioned letter:
On the other hand, the Bureau of Local Government
Finance, declared and clarified in its BLGF MC No. 31-2009
dated 07 October 2009 that cooperatives transacting
business with both members and non-members are still
required to pay Local Fees and Charges amounting to PhP
1,500.00 (Mayor’s Permit and Regulation Cost of PhP
1,000.00; and Community Tax Certificate of PhP 500.00),
exclusive of payment for the use of public utilities owned by
the LGUs concerned. This matter was further stated under
BLGF MC No. 11-001-2016 dated 14 November 2016
reiterating BLGF MC No. 31-2009; DILG MC No. 2010-120
dated 20 October 2010; and DILG MC No. 2017-16 dated
01 February 2017.

14. The following are the salient contents of the aforementioned letter:
Corollary, several cooperatives within the region are being assessed
of the following local taxes, fees, charges and/or dues:
1.Garbage Fee;
2.Sanitary Inspection Fee;
3.Environmental Inspection fee;
4.Fire Inspection Fee;
5.Personnel Occupational Tax;
6.Personnel Police Clearance;
7.Personnel health Certificate;
8.Engineering Inspection Fees:
a. Building Inspection Fee;
b. Electrical Inspection Fee;
c. Plumbing Inspection Fee;
d. Mechanical Inspection;
9.City Zoning Fee
10.Billboards/Signboards Fee;
11.Sewerage Fee
12.Tax Clearance Fee;
13.Certificate Fee; and
14.Other Similar Fees.

15. The following are the salient contents of the aforementioned letter:
The foregoing enumeration of improperly imposed local taxes
and fees enormously exceeds the PhP 1,500.00 prescribed by
the abovementioned circular on the matter. Worse, cooperatives
are misguidedly imposed with local taxes under the label “fees
and charges” that are in essence part of the Mayor’s permit and
other regulatory fee, which is unmistakably prescribed at PhP
1,000.00 limit…..
________________
1 BLGF Opinion dated 25 February 2011, Re: Northern Luzon Federation of Cooperatives
and Development Center (NORLU CEDEC) Local Tax Imposition
2 BLGF Opinion dated 26 April 2010, Re: Coops for Christ Local Tax Imposition
3 BLGF Opinion dated 24 January 2011, Re: Municipal Treasurer of Tayabas, Quezon
Local Tax Imposition

16. CONCLUSION
Requesting
Regional
Development
Council 1
Assist CDA in mandating
LGUs to strictly observe the:
1. Absolute Exemption of
Cooperatives from the Payment of
Local Taxes
2. Limit to Php1,500.00 from the
Total Payment of Local Fees and
Charges
In compliance w/
BLGF MC NO. 11-001-2016
&
DILG MC No. 2017-16