Press Release
November 13, 2015

Cooperative International TEAMshop, Inc.
5th Philippine Cooperative TEAMshop

"Celebrating 10K Diamond of Cooperation"
La Carmela Hotel & Convention Center
Boracay Island
Malay, Aklan
13 November 2015

Magandang hapon sa inyong lahat!

It is indeed a rare but very opportune privilege to join all of you this afternoon, no less than here in the beautiful and world-renowned island of Boracay.

This opportunity could not have come in a more propitious time, because of what I perceive to be an urgent problem besetting Philippine cooperatives, and a consequent urgent need to rally all cooperatives in the country and other like-minded groups and citizens to effect significant change.

This is important especially if we really want to accomplish the 2020 Vision of International Cooperative Alliance (ICA)--a topic in your conference now--which aims that cooperatives become:

1) "The acknowledged leader in economic, social, and environmental sustainability";

2) "The model preferred by people"; and

3) "The fastest growing form of enterprise".

The first one is quite easy, especially if the industry is steered by very idealistic, innovative and socially conscious cooperative leaders, who excel in their respective fields and who also have a good vision not only for the welfare of their members but also for the whole country. Key here is a constant emphasis on continuing education and training of cooperatives, especially in the best and effective industry practices, environmental responsibility, and cooperative governance, of course, under the guidance of the Cooperative Development Authority (CDA).

Number 2 and 3 are the more daunting tasks. Considering the circumstances now, they seem to be "Mission Impossible".

To understand the problem, let us start with the State policy on our cooperatives. In essence, the will of the sovereign Filipino people is that we should "foster the creation and growth of cooperatives as a practical vehicle for promoting self-reliance and harnessing people power towards the attainment of economic development and social justice".

And in order to precisely accomplish this sovereign will, the law has granted tax exemptions and other fiscal incentives for cooperatives.

Under the Cooperative Act, registered cooperatives that transact and deal exclusively with their own members are not "subject to any taxes and fees imposed under the internal revenue laws and other tax laws". This is couched in very clear language, and there is no room for other interpretation.

Whereas, registered cooperatives that transact or deal with non-members or to the general public are granted limited tax exemption and other privileges, the extent of which is determined whether their "accumulated reserves and undivided net savings" go beyond P10,000,000.00 or not.

However, it is clear that the government itself is getting in the way, as evidenced by the policy and the acts of certain agencies of government that seem to ultimately defeat and frustrate this clear sovereign will. Government, particularly the BIR, is making it difficult for cooperatives to avail of these tax exemptions, by strewing discouraging and suffocating administrative procedures and requirements.

The current practice is that before cooperatives can avail of the tax exemptions under the law, they must first be issued a Certificate of Tax Exemption (CTE) by the BIR. But before that, they must first secure a Certificate of Good Standing (CGS) from the Cooperative Development Authority (CDA), subject of course to prior and faithful submission of certain documentary requirements by the cooperatives.

I am not in total agreement with the way our BIR administers these tax incentives; but, anyway, that is their current practice. However, I cannot help, but express my dismay, because not only does this serve to defeat the beneficial purpose of the law, it also serves to cause a regression of all our cooperative development efforts.

First of all, there are almost 25,000 cooperatives presently registered now with the CDA, with 13 million members. Of these cooperatives, 91% of which are from the micro, small and medium categories. Just 9% of them are large cooperatives. Those that have been issued Certificates of Good Standing by the CDA number about 11,600. And the most depressing of these statistics is that only some 6,295 of these cooperatives have been issued Certificates of Tax Exemption by the BIR.

This all means that cooperatives in the country get significantly reduced by 50% at every important milestone in their quest for tax-exempt status, from their registration all the way to their application for tax exemption.

Let us compare these with the figures of the Securities and Exchange Commission (SEC). There are currently more than 460,000 active corporations registered with the SEC; while there are 92,000 registered partnerships.

If you ask me, this is not a good sign if we take into account the social justice objectives mandated by the Constitution and the Cooperative Code. I simply cannot believe that despite the tax privileges under the law, the numbers of cooperatives still dismally lag behind the numbers of corporations and partnerships.

Ang pinakamasaklap dito ay ang makatindig-balahibong paniniwala ng atin mismong BIR Commissioner na masama ang epekto ng Cooperative Code! Noon lamang nakalipas na budget hearing ng DOF ay sinabi niya na kesyo raw "kailangang pag-aralan ulit" at "ayusin kasi may diperensiya ho iyong batas na iyan"! Worse, the BIR Chief blamed the phenomenon of"cooperatization" or "making use of the cooperative law to circumvent labor law, to circumvent tax laws".

Ano ang nangyari sa ating BIR?! Tila nagdiyo-diyos-diyosan na yata ang BIR Commissioner? SIya na ba ang sambayanang Pilipino, o ang boses ng Pilipino sa Kongreso?! Kung magsalita ay parang hawak niya ang kinabukasan ng buong bansa!

These were very telling yet disturbing statements from our tax collector! This is why I am of the belief that our cooperative movement is not being sufficiently nurtured and effectively developed, contrary to the intent of the law. In fact, no less than the CDA has made the stark observation that our cooperative sector remains "under-developed".

However, this "under-development" of our cooperative sector is not due to the nature of the cooperatives per se, but rather to our own regulatory system that tends to undermine and discourage the formation and operation of cooperatives as business organizations. For as long as we have government agencies going against the clear intent of the law, the cooperative sector will continue to be under-developed.

It is a basic legal principle that being a species of SOCIAL LEGISLATION, the Cooperative Code should always be interpreted LIBERALLY in favor of cooperatives, and STRICTLY against the government. This means that the Government should tip the balance in favor of its magnanimous policy of social justice, and temper its otherwise highly instinctual nature to tax its subjects. Let us remember that our Constitution clearly says that our rule of taxation should be EQUITABLE.

Our system of taxation should aid in the promotion and growth of our cooperatives, and should not stunt and arrest their development. In the cooperative sector, the power to tax should NOT be used as a "POWER TO DESTROY", and the government should NOT "kill the goose that lays the golden eggs", to borrow the familiar words of our Supreme Court.

The CDA says that the reason behind the tightening of incentive system is the observation that our law is susceptible to exploitation by unscrupulous cooperatives to enter through the "backdoor of the business of tax exemptions".

For everybody's information, in the Senate, we have uncovered the modus operandi of some criminal minds who have utilized farmers' cooperatives as disguised smuggling entities for foreign-sourced rice and other agricultural products. But then again, these are not sufficient reasons to altogether tighten our regulation of cooperatives, to the point of their asphyxiation or even total prohibition.

There is a familiar saying, there are only two things certain in life: death and taxes. Our cooperatives can definitely attest to the truth of this saying! Para bagang "lose-lose" situation; walang takas ang ating mga kooperatiba: "BUWIS" o "PAGKALUGI"!

Ang patakaran ngayon ay tila "TAX PA MORE!", TAX PA MORE!" Kulang-kulang naman at hindi nararamdaman ang serbisyo ng gobyerno! Kawawa naman ang ating mga kooperatiba! Kawawa ang taumbayan!

With illogical and strangulating fiscal measures threatening our cooperatives, how can we possibly make them the business model preferred by people and the fastest growing form of enterprise?

This poses as a continuing challenge to the CDA to be the staunch vanguard of cooperatives, and ensure the meaningful implementation of the law and the Constitution. Despite its meager budget, the CDA should be brave just like the shepherd David who was pitted against Goliath, and whose flock was always threatened by hungry and rapacious wolves.

This should also be a challenge to the leaders and managers of our cooperatives. You should be at the forefront and should never relent in the struggle to demand logical and commonsensical implementation by the government of our incentive scheme and to attain tax-exempt status of our cooperatives in the whole country!

Aside from focus on business operations, equal focus should be laid on learning the administrative procedures and establishing harmonious and professional ties with the CDA and the BIR, with a view to smoothening and streamlining what is popularly perceived to be a difficult and exasperating process of securing tax exemption certificates.

And I am hoping that we can count on the Cooperative International TEAMshop to be a strong, united and vocal advocacy group in making these tax incentives a reality on the ground, and ultimately to help strengthen and fortify our countrymen's belief in the socio-economic potential and viability of cooperatives.

Magkaisa po tayong lahat. Magbigayan, at magtulungan. I exhort all cooperatives to always be united even in diversity, all in the name of continued and productive operations that ultimately benefit the members. The disagreements and differences in opinions that put unity to the test can always be resolved through calm, sober, healthy and democratic exchange of views and dialogue amongst the organization.

Tulad po ninyo at ng buong sektor ng kooperatiba, pangarap ko rin pong maabot ang 2020 Vision para sa mga kooperatiba. Sana po ay samahan ninyo ako sa aking misyon na ito, upang ang ating pangarap ay ating maabot at gawing isang ganap na katotohanan. Umaasa po ako sa inyong suporta.

So without further ado, I send all my best wishes to the assembly. I hope that you all had a very productive and meaningful general assembly, full of fun under the sun here in Boracay island!

Once again, congratulations! Mabuhay ang Cooperative International TEAMshop! Mabuhay ang lahat ng mga kooperatiba sa buong bansa!

Maraming salamat po at magandang hapon sa lahat!

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