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HOUSEOF REPRESENTATIVES 2
Quezon City {ae we YB 2019
EIGHTEENTH CONGRESS i
First Regular Session RS

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HOUSE BILLNO2369 YDEX

INTRODUCED BY HONORABLE CHERYL P. DELOSO-MONTALLA

AN ACT
GRANTING INCOME AND REAL PROPERTY TAX EXEMPTION
TO ELECTRIC COOPERATIVES

EXPLANATORY NOTE

The establishment of electric cooperatives during the early 60’s when the countryside was
in total darkness dramatically changed the lives of the people in the rural communities. Presidential
Decree 269 created the National Electrification Administration (NEA) to spearhead the
energization of the Philippine countryside.

More than half a century after its creation, the charter that gave life to NEA was amended
to keep it abreast with changing times and tides. Electric cooperatives registered under it, which
are by nature non-stock and non-profit were given additional incentives through the amended NEA
Charter (RA 10531) for their impeccable performance in spurring growth and development in the
rural communities.

Section 39 of PD 269 provides:

“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, cooperative

(1) shall be permanently exempt from paying income taxes, and
(2) xxx.”

The enactment of Republic Act 7160 or the Local Government Code of 1991, however,
supplanted the said provision of PD 269 and imposed taxes, income and real property taxes, to
electric cooperatives.

Considering the non-stock, non-profit nature of the electric cooperative, it is inconsistent
for the government to impose upon it income and real property taxes. It is short of saying that for
every peso spent by the electric cooperative for the purchase and distribution of electricity to
individual homes, it is charging one peso to its member-consumer-owners for it. Thus, charging
the electric cooperative with income and real property taxes is tantamount to extracting blood from


stone. And as a result of this imposition, electric cooperatives pass these taxes to the member-
consumer-owners of the electric cooperatives.

This bill seeks to address this problem besetting electric cooperative with the end in view
of reducing the cost of electricity in the country side.

It is in this light that this bill is being filed and immediate passage of this bill is earnestly
sought.

CHERYL P. DELOSO-MONTALLA

Representative
2™ District, Zambales


Republic of the Philippines
HOUSEOF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS
First Regular Session

HOUSE BILL NO. 2369

INTRODUCED BY HONORABLE CHERYL P. DELOSO-MONTALLA

AN ACT
iG INCOME AND REAL PROPERTY TAX EXEMPTION
TO ELECTRIC COOPERATIVES

GRA!

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:

SECTION 1. Title. - This Act shall be known as the "The Electric Cooperative Tax
Exemption Act of 2019".

SECTION 2. Coverage. - The coverage of the provisions of this Act shall be limited to
electric cooperatives registered under the National Electrification Administration.

SECTION 3. Tax Exemption to Electric Cooperatives. — All electric cooperatives
registered under the National Electrification Administration whose nature is non-stock and non-
profit are hereby exempted from paying income and real property taxes provided they operate in
conformity with the purposes and provisions of Presidential Decree 269, as amended.

SECTION 4. Implementing Rules and Regulations. - Immediately upon the approval of
this Act, the Department of Finance, Bureau of Internal Revenue and the National Electrification
Administration shall formulate such rules and regulations that will effectively implement the
provisions of this Act

SECTION 23. Repealing Clause. - All laws, decrees, executive orders and issuances,
resolutions, revenue regulations, ordinances or circulars inconsistent with the provisions of this
Act are hereby repealed or modified accordingly or declared null and void and inoperative.

SECTION 24. Separability Clause. — If any section, provision or part of this Act shall be
declared unconstitutional, the remaining portion thereof shall remain valid and in full force and
effect.

SECTION 24. Effectivity. - This Act shall take effect fifteen (15) days after its publication
in the Official Gazette or in two (2) newspapers of national circulation.

Approved,