Co-op members need not be taxed

SC cites social justice in rendering decision

By: Ronnel W. Domingo
Philippine Daily Inquirer
2:06 am | Monday, October 24th, 2011

Cooperatives are not required to withhold taxes on interest from their members’ savings and time deposits, according to the Bureau of Internal Revenue.

According to Revenue Commissioner Kim S. Henares, this ruling still has to be affirmed and publicized following a Supreme Court decision issued in January 2010.

In Revenue Memorandum Circular No. 47-2011, Henares explained that, based on the Supreme Court ruling, the savings and time deposits of members of a cooperative are not subject to the 20-percent withholding tax.

The high court decided in favor of the Dumaguete Cathedral Credit Cooperative, which the BIR in 2002 pursued for failing to withhold taxes of its members.

Based on the BIR’s assessment, the DCCC owes the government P2.95 million—P1.49 million for 1999 and P1.46 million for 2000—in withholding taxes on interest earnings.

Although the DCCC protested the revenue assessment, the BIR failed to act on the matter within the prescribed 180-day period. The cooperative then brought the issue to the Court of Tax Appeals.

In 2007, the CTA ruled in favor of the BIR, ordering DCCC to pay a total of P2.64 million, plus a 20-percent penalty for each year.

According to the Supreme Court, the tax code provides for the imposition of a 20-percent final (withholding) tax on interest from bank deposit as well as earnings from deposit substitutes, trust funds and similar arrangements.

But in its ruling, the high tribunal did not consider savings and time deposits in cooperatives as subject to withholding tax.

In fact, the high court said, this interpretation of the tax code is contained in a BIR ruling issued in 1998 and again in another ruling issued in 2006.

“Petitioner’s invocation [of these two BIR rulings] is proper,” the Supreme Court said.

“The Constitution states that the promotion of social justice shall include the commitment to create economic opportunities based on freedom of initiative and self-reliance. We find that an interpretation exempting members of cooperatives [from the withholding tax] is more in keeping with the letter and spirit of our Constitution.”

http://business.inquirer.net/26505/co-op-members-need-not-be-taxed

Co-ops to fuel economy

By Malou Guanzon-Apalisok
Cebu Daily News
8:42 am | Thursday, October 20th, 2011 

The 1st Central Visayas Co-op Solidarity Council conference reels off today at the Waterfront Cebu City Hotel and Casino in barangay Lahug, a three-day activity that brings together more than 700 coop leaders from all over the central islands.

The CVCSC meet will also kick off the 2012 International Year of Cooperatives, a United Nations-sponsored observance that aims to highlight the contribution of the sector to global socioeconomic development, particularly its impact on poverty reduction, employment generation and social integration. The International Cooperative Alliance is the main driver of this celebration and in the Philippines the Central Visayas co-ops are firing the opening salvo.

The business of cooperatives does not generate the kind of excitement that usually goes with corporate events that feature celebrities and loads of freebies, but if you happen to interact with the cooperative sector nowadays, you could sense an excitement that comes only with big and significant developments never before experienced by the movement in the Philippines.

I’m talking about the thrust of President Noynoy Aquino in turning to co-op concepts and experts in crafting and implementing his administration’s poverty reduction programs.

I recall that in the Asian Institute of Management policy conference “Pathways to High and Inclusive Growth” last Sept. 23, National Anti-Poverty Commission lead convenor Joel Rocamora mentioned the co-ops as a critical link in poverty reduction strategies because of its proven track record.

Early this week, President Aquino issued Administrative Order 21, which set specific criteria in the selection of sectoral representatives who could participate in the assemblies of NAPC. The National Sectoral Assembly (NSA) cuts across 1,300 basic sector organizations from all over the country.  Considered the most vulnerable to poverty are “artisans, fisher folk, children, farmers, indigenous peoples, nongovernment organizations, persons with disabilities, senior citizens, urban poor, victims of disasters, women, political parties, formal labor and migrant workers, workers in the informal sector, youth and students.”

I’m happy to report that one of those who made it to National Sectoral Assembly (NSA) is Mercedes “Ched” Castillo, chief executive officer of Victo National, a cooperative training and development center based in Cebu City.  In the NAPC’s perspective, the co-op has a mandate not just to further strengthen affiliates but to diffuse the benefits of the co-op system by bringing in it the poorest of the poor communities.

Political observers note that by issuing A.O. 21, the President returned to the people the power to select their representatives in the lead agency tasked to reduce if not purge poverty. It has been reported that in previous years, many civil society groups were excluded from joining the NAPC because of their critical stance to the previous administration. The disenfranchisement of the basic sectors from the process of looking for viable solutions to the problem of poverty has politicized the agency and further marginalized those who live in the fringes of society.

The synergy in this partnership fuels the excitement of co-ops nationwide. Government infrastructure coupled with resources to the tune of P39 billion in conditional cash transfers next year can be both daunting and exhilarating. However, if VICTO National was able to set up 50 co-ops in war-ravaged Afghanistan years back, why not in the Philippines?

As of June 10, 2010, there are 15,458 registered cooperatives nationwide with combined membership of 6,778,037, P163.01 billion in total assets and P186.07 billion in authorized capital. Of these, P58.25 billion is subscribed and P34.08 billion is paid, says the state regulatory body Cooperative Development Authority (CDA).

The work of the cooperatives and the logistical support of the government would look like a partnership made in heaven.  However, I heard that some co-ops are unhappy with too much regulation. There are reports that some elements in the CDA are making it difficult for co-ops to perform well, so some quarters are demanding self-regulation.

I think P-Noy should look closely at the workings of the CDA.  His centerpiece anti-poverty program cannot be compromised by government officials who persist in their wang-wang mentality.

By the way, part of the CVCSC activity today is a press conference at 2 p.m., at Waterfront Hotel in Lahug.  Co-op movers and shakers like former senator and congressman Agapito “Butz” Aquino, chairman of the Philippine Cooperative Center; Cebu Congressman Pablo Garcia; party-list representatives as well as CDA execs led by board chairman Emmanuel Santiaguel and many others are expected to attend.

http://bit.ly/pH1Ufu

CDA urges power coops to register

By Elias O. Baquero

Friday, October 21, 2011

FOR their power rates to be tax-free, consumers should register their electric cooperatives with the Cooperative Development Authority (CDA).

This way, they become the real owners of their cooperatives and receive annual dividends.


This was the advice of CDA Executive Director Orlando Ravanera in a press conference yesterday.

He said electric cooperatives are cooperatives only in name and do not operate in a way that empowers the consumers and members.

Instead of being managed by the members, which is the principle of cooperativism, electric cooperatives are controlled by a few influential people, he said.

Former senator Agapito Aquino of the Philippine Cooperative Center said that because power is a service sector, electric cooperatives should be owned by the members and should be supervised and guided by CDA.

The electric cooperatives are supervised by the National Electrification Administration (NEA).

The electric cooperatives in Cebu are the Cebu Electric Cooperative (Cebeco) 1, Cebeco 2, Cebeco 3, Bantayan Electric Cooperative (Banelco) and the Camotes Island Electric Cooperative.

In Bohol, power distribution is undertaken by the Bohol Electric Cooperative (Boheco) 1 and Boheco 2, which are also run by businessmen.

Aquino said electric cooperatives should register with the CDA because while consumers appear to own the power utilities, they do not manage them.

In a press conference for the First Visayas Cooperative Congress at the Waterfront Cebu City Hotel yesterday, Ravanera urged power consumers to decide not to operate their electric cooperatives as private corporations.

He also said electric cooperatives should open their books of accounts to their members who are power consumers.

CDA 7 Director Alexander Patac said Republic Act 9520 or the Philippine Cooperative Code of 2008 gives electric cooperatives the option to register with the CDA, or with the Securities and Exchange Commission (SEC) as a private corporation.

If they choose to register with SEC, Patac said the electric cooperatives will become profit-oriented. They will also be required by the Bureau of Internal Revenue (BIR) to pay taxes, including the value-added tax (VAT), and as a consequence, power rates will increase.

But Concor Quisaot, assistant general manager for Cebeco 1, 2 and 3, disagreed.

“If they refer to tax exemption, they must consider that if sales of electric cooperatives are without VAT while its purchases have, the electric coop will be unable to recoup as its rate is on cash flow. It is disastrous and could lead to unimaginable inefficiency,” he said of proposals to register with the CDA, in a text message sent to Sun.Star Cebu.

In the press conference, Patac said RA 9520 mandates NEA to conduct a forum with the power consumers and inform them of their rights under the law.


NEA is also mandated to inform the power consumers of the advantages and disadvantages of registering with CDA or with SEC as a private corporation, after which, a referendum should be conducted.

The deadline for the registration of electric cooperatives with CDA is June 30, 2012.

Ravanera advised the consumers to work on the registration soon because the process takes time.

http://bit.ly/mSAseC

Coop confab kicks off

By Niña G. Sumacot/LPM (The Freeman) Updated October 21, 2011 12:00 AM

CEBU, Philippines - The Central Visayas Coop Solidarity Council composed of coop federations and unions in the region kicked off the First Central Visayas Cooperative Congress at the Waterfront Lahug yesterday.

The three-day event is held in cooperation with the Cooperative Development Authority.

Over 200 primary cooperatives and 500 coop leaders gathered for the event.

Part of the event is the launching of 2012 as International Year of Cooperatives as declared by the United Nations to highlight the contribution of cooperatives to global socio-economic development.

With theme “Transformative cooperatives advancing the people, planet, prosperity and peace for sustainable development,” the event aims to increase public awareness about cooperatives and their contribution to development.

The event also aims to promote cooperatives and encourage government to establish policies conducive to their growth and stability.

Today, topics such as the conversion of electrical cooperatives, which are not registered under CDA, will be tackled.

Only cooperatives registered under CDA can enjoy tax exemption privileges.

CDA chairman Orlan Ravanera said members of the Cebu Electric Cooperative (CEBECO) I, II, and III, Bantayan Electric Cooperative (BANELCO), and Camotes Electric Cooperative (CENELCO) are at a loss on their part.

Ravanera said that under the Republic Act 9520, electrical cooperatives will be charged with an additional 12 percent value-added tax apart from the tax that they are paying to the government. (FREEMAN)

http://bit.ly/oqeWn8

Gov’t eyes expanded function for NEA

The government is moving to amend the charter of the National Electrification Administration so that it may be able to provide assistance to cooperatives that are independent of its supervision.

Energy Undersecretary Ina Magpale-Asirit told Malaya Business insight the charter amendment would allow NEA to provide technical and financial assistance even to cooperatives that are supervised by the Cooperative Development Authority (CDA).

"We want to establish a system where NEA can assist the cooperatives regardless of their nature," she said. "What we want to see is to enhance the capacity of NEA."

Electric cooperatives have the option to either be under the supervision of NEA or declare administrative independence by registering with the CDA.

Cooperatives must present evidence of financial and technical capacity to be independent before it can register with the CDA. CDA members are entitled to tax incentives, which could translate to lower power rates.
Out of the 119 electric cooperatives in the country, only nine are registered with the CDA and the rest are under the supervision of NEA.

http://bit.ly/ngtNpU

Let CDA request BIR for exemption paper: Pabling

By Rizel S. Adlawan

Monday, October 10, 2011

DEPUTY Speaker Pablo Garcia said the Cooperative Development Authority (CDA) should be the one to request a certificate of tax exemption (CPE) from the Bureau of Internal Revenue (BIR) as their service to the cooperatives.

The suggestion came after several cooperatives complained that they are having a hard time getting a certification from the BIR. This was the reason not all of the cooperatives got tax incentives despite the implementation of the law.

CDA 7 Director Alexander Patac said they are willing to do it and suggested that the implementing rules and regulations (IRR) be implemented.

Not subject to tax

Under the Cooperative Code, cooperatives dealing exclusively with members are not subject to any government taxes or fees imposed under the internal revenue laws and other tax laws. For national taxes, some of the tax exemptions cover income tax on earnings from operations and value-added tax.

BIR Commissioner Nelson Aspe said they have to review the IRR.

A forum conducted by the Senate and House Committees on Cooperatives was held last Oct. 6 at the Capitol Social Hall, which was attended by the various cooperatives from all over Central Visayas.

It was the ninth in a series of consultations organized all over the country. It was attended by Sen. Ferdinand Marcos, Jr., vice chairman of the committee on cooperatives, and Rep. Jose Ping-ay, chairman of the House committee of cooperatives.

Former senator Miguel Zubiri, who said the law was his brainchild, also attended the gathering as consultant of Sen. Manuel Lapid, the chairman of the Senate committee on cooperatives.

The discussion revolved around the difficulty of getting a CTE.

Lawyer Vivian Maquiling of the Dumaguete Private Cooperative said they have been “compliant and obedient” in complying with the requirements in getting a CTE but the BIR asked for documents beyond what are indicated in the law like a sworn statement from the cooperative.

She appealed to the BIR to stick to the documentary requirements in order to speed up processing of CTE.

Explanation

A BIR representative who facilitated Maquiling’s papers stood up and explained that she had asked for a sworn statement because the signatories of the cooperative differ.

Ping-ay interrupted and asked the BIR employee if she was aware that each year, officials of a cooperative change. He said this was the reason signatories vary.

Garcia said a simple exercise of common sense should have been done on the part of the BIR, which was to call and verify to the CDA where the cooperative of Maquiling belongs.

http://bit.ly/oKQeHI

Coop bloc party listers want electric coops to hold referedum to determine ownership of P55-billion member-consumers capital contributions

By Mike Baños


The cooperative bloc of party list representatives in the Lower House has asked the Department of Energy to compel rural electric cooperatives (RECs) to call a referendum among their members to determine if they wish to become real cooperatives and register with the Cooperative Development Authority (CDA) with their consumers as equity owners.

“We are asking DOE and the National Electrification Administration (NEA) to require all rural electric cooperatives under their supervision to call a referendum among their member-consumers for this purpose as provided by law,” said Rep. Isidro Q. Lico (ATING-KOOP party list) at a program and subsequent press conference Sunday to launch the Cooperative Month celebration in this city and Northern Mindanao (Region X).

Ating Koop Party List Rep. Isidro Q. Lico speaks during the Oct. 2 launching program of Coop Month in Region X.

The cooperative block of party list groups – Coop-NATCCO, Agricultural Sector Alliance of the Philippines, Inc. (AGAP), BUTIL Farmers’ Party, 1st Consumers Alliance for Rural Energy Partylist (1-CARE)); 1- United Transport Koalisyon / 1-UTAK and Adhikaing Tinataguyod ng Kooperatiba (ATING-KOOP) represent marginalized sectors of society which comprise the majority of the country’s population. Eight party list representatives and at least 20 other congressmen have declared their support for the initiative, Mr. Lico added.

However, he clarified that the coop bloc is not pressuring RECs to become "true cooperatives” but merely asking them to comply with the law by being transparent about the status of their members capital contributions. Crucial to the question of ownership are the rural electric cooperatives current manner of booking members’ capital contributions for capital expenditures (Capex) in their books.

“Instead of declaring members’ payments for such, most rural electric coops are booking these amounts as "donated capital accounts’ which is illegal,” Mr. Lico said.

The By-Laws of cooperatives under PD 269 define members as “joint-owners” of cooperatives with “equity in the assets” determined according to patronage. Upon registration with CDA, all members’ equity are computed as “share capital” covered by a Certificate of Share Capital specifying their respective amounts of investments and entitling them to dividends, interest and other benefits from net surplus. The coop bloc estimates equity contributions from some five million members to RECs now total around P55-billion.

Of the country’s present crop of 119 rural electric cooperatives, only 14 have so far registered with the CDA and complied with the law by registering their members’ equity contributions as capital and issuing stock certificates denoting ownership.

These include Negros Occidental Electric Coop.; Palawan Electric Coop; San Jose Electric Coop; Quirino Electric Coop; Pangasinan Electric Coops I and III; Isabela Electric Coop; Sorsogon Electric Coop; Nueva Vizcaya Electric Coop; Negros Oriental II Electric Coop; Abra Electric Coop and Agusan del Norte Electric Cooperative.

Member-consumers of RECs registered with the CDA are entitled to patronage refund and interest on share capital when a net surplus is realized. Mr. Lico cited the case of a member-consumer in Palawan where a single member-consumer received P60, 000 as his dividends for the energy consumption of his business from PALECO.

Mr. Lico said despite investing in the coops, member-consumers of many RECs have neither been receiving their share of the profits due them as shareholders nor been informed on the status of their equity contributions as coop member/consumers.

Unless the DOE and NEA compel rural electric cooperatives to disclose the true status of members equity contributions, Mr. Lico said the coop bloc of party-list congressmen and their allies in the Lower House would ask the Appropriations Committee to sit on the budgets of DOE and NEA  until coops are compelled to comply with this requirement.

Earlier this year, the Agusan del Norte Electric Cooperative (ANECO) opted to become the first Mindanao-based REC to register with the CDA, breaching the 20% membership threshold needed to qualify in a referendum last June 26 when 31, 000 or 28% of its 110,000 member-consumers voted affirmatively for CDA registration.

As such, it has since become eligible for tax exemptions and its member-consumers entitled to dividends and other benefits such as patronage refunds as a CDA-registered coop while keeping its eligibility for congressional allocations, grants, subsidies and other assistance as a rural electric service cooperative.

Many of the 14 RECs registered with the CDA have already managed to turn a profit since they are now exempt from payment of corporate tax franchise tax, business tax, real property tax and other taxes resulting in lower distribution rates.

In a news report, Luis Manuel C. Corral, secretary general of the  Association of Philippine Electric Cooperatives (APEC) party list said the reduction in the cost of power delivered by CDA registered RECs are lower by 25 to 40 centavos per kilowatt hour (kWh) due to their tax exemptions from  E-VAT and other local taxes .

Under Section 4 Article 132 of Republic Act 9520 or The New Cooperative Code of the Philippines, CDA registered RECs are also entitled to congressional allocations, grants, subsidies and other financial assistance for rural electrification coursed through the DOE, CDA or LGUs as well as to borrow directly from local banks on flexible terms.

 http://bit.ly/qGi7AB

Easier process for coop tax exemption certificates pushed

By Gregg M. Rubio and Garry B. Lao/ MIT (The Freeman) Updated October 07, 2011 12:00 AM

CEBU, Philippines - Thousands of cooperatives in the Visayas will soon get their Certificates of Tax Exemption from the nearest revenue district offices of the Bureau of Internal Revenue through a simpler and easier process.

Congress is set to amend the Implementing Rules and Regulations of the Republic Act 9520, also known as the Philippine Cooperative Code of 2008.

The Joint Congressional Oversight Committee on Cooperatives of the Senate and the House of Representatives conducted the ninth of a series of tax briefings on the “Awareness campaign and consultative meeting on the tax incentives for cooperatives” held at the Capitol Social Hall in Cebu City yesterday.

The forum is geared towards hearing issues and concerns relative to the implementation of RA 9520 and aims to institute the necessary corrective measures regarding the tax exemption of cooperatives.

Deputy Speaker Pablo Garcia (2nd District, Cebu) sees no problem in the implementation of the Code as it is very clear that cooperatives registered with the Cooperative Development Authority (CDA) are exempt from taxes, both local and national.

“To me really this is a non-issue but some sectors are making it difficult because the law is very clear,” Garcia said.

Garcia said that it is only a ministerial duty of the BIR to issue the CTE to registered cooperatives as provided by law.

“The CTE is only a certificate of the fact existing already. It is not what makes the fact,” Garcia said.

Former Senator Juan Miguel Zubiri, now consultant of Sen. Manuel “Lito” Lapid, who chairs the Senate Committee on Cooperatives, agreed to Garcia’s observation. Zubiri was the author of the law.

CDA-7 Regional Director Alexander Patac reported that of the 1,503 registered cooperatives in Central Visayas, only 201 have been issued CTEs as of September this year.

This prompted Senator Ferdinand Marcos, vice chairperson of the Senate Committee on Cooperatives, to question why the number of cooperatives with CTE is very low.

Marcos supports Garcia’s proposal for the CDA to submit to the BIR the list of registered cooperatives for the issuance of CTEs to the cooperatives.

“Ang nakalagay sa batas, basta’t kayo’y registered member sa CDA na cooperative kayo ay exempt,” Marcos said.

BIR Deputy Commissioner Nelson Aspe is open to the idea. However, he warned that the bureau and the CDA have existing joint internal revenue rules and regulation in implementing RA 9520.

Rep. Jose Ping-ay, chairman of the House Committee on Cooperatives, said that in a previous forum, the BIR already expressed willingness to sit down with the oversight committee and revisit the IRR to hasten and shorten the process in the issuance of CTEs.

Meanwhile, about 500 cooperative officers and management staff in the Visayas and other parts of the country are expected to participate in the First Central Visayas Cooperative Congress this month.

Elias Baquero, chairman of the Cebu News Workers Multi-Workers Multi-Purpose Cooperative or Newscoop, said the steering committee has already laid out a program of activities for the congress set on October 20-22, which will be held at the Waterfront Cebu Hotel.

Vice President Jejomar Binay will be the keynote speaker.

Among the topics lined up for the simultaneous workshop and breakaway sessions are the Credit Program for Agri-forestry; the plight of the Electric Cooperatives; the Social Development Issues which will focus on the Phil- Coop Educational System; the Coop and Youth Sectors; Transport & Housing Coops and Gender.

This year’s theme will be “Transformative Cooperatives advancing the People, Planet, Prosperity and Peace.” (FREEMAN)

http://bit.ly/orPRyj 

Electric coop consumers enjoy P0.78/kwh power

Published : Friday, October 07, 2011 00:00

WHILE MILLIONS of Filipinos have been suffering from the spiraling costs of electricity, more than half a million member-consumers of seven electric cooperatives in the country have actually been enjoying a monthly power rate cut of as much as 78 centavos per kilowatt hour since August this year.

This translates to a power rate reduction of P78 per month in the electricity bills of small households consuming 100 kilowatt-hours (kwH) or P780 per month for businesses consuming 1,000 kilowatt-hours.

This was revealed yesterday by Association of Philippine Electric Cooperatives (APEC) Partylist Congressman Ponciano Payuyo as he disclosed that an additional half a million member- consumers of five additional electric cooperatives will also soon enjoy lower electricity bills through similar power rate reductions before the end of this year after they secure their respective certificate of tax exemption from the Bureau of Internal Revenue (BIR).

Payuyo explained that the power rate cuts stem from the tax exemption privileges that are given to the 12 electric cooperatives which are registered with the Cooperative Development
Authority (CDA) under Republic Act 9520, otherwise known as the Philippine Cooperative Code of 2008.

“All tax exemption privileges enjoyed by CDA-registered electric cooperatives are passed on to our member-consumers in the form of power rate reductions,” explained Payuyo, an accountant by profession, who was General Manager of the Palawan Electric Cooperative (PALECO) prior to his assumption as APEC partylist representative.

Payuyo said that the 106 electric cooperatives that opted to stay with the National
Electrification Administration (NEA) are not entitled to the tax exemption privileges granted to CDA- registered electric cooperatives because they are not true cooperatives owned by their members.

He explained that Article 130 of RA 9520 states that, “Electric cooperatives registered with the NEA under Presidential Decree No. 269, as amended which opt not to register with the (CDA) are allowed to retain the word ‘cooperative’ in their registered names; Provided, that they shall not be entitled to the benefits and privileges under this Code.”

Payuyo said that the tax exemption privileges under RA 9520 cover all taxes and fees
including the 12 percent value-added tax (VAT), local business tax, income tax, real property tax, franchise tax, import tax, etc.

He also quoted Article 60 of RA 9520 on the Tax Treatment of Cooperatives which states that, “Duly registered cooperatives under this Code which do not transact any business with non-members or the general public shall not be subject to any taxes and fees imposed under the internal revenue laws and other tax laws.”

He said the tax exemption of the 12 CDA-registered electric coops give them savings that are passed on to their members as monthly power rate cuts, as follows:

Palawan Electric Cooperative (PALECO) - 40 centavos per kilowatt-hour
Pangasinan Electric Cooperative 1 (PANELCO-1) - 78 centavos per kilowatt-hour
Pangasinan Electric Cooperative 3 (PANELCO-3) - 4 centavos per kilowatt-hour
San Jose City (Nueva Ecija) Electric Cooperative (SAJELCO) - 27 centavos per kilowatt-hour
Sorsogon Electric Cooperative 2 (SORECO-2) - 65 centavos per kilowatt-hour
Nueva Vizcaya Electric Cooperative (NUVELCO) - 28 centavos per kilowatt-hour
Negros Occidental Electric Cooperative (NOCECO) - 70 centavos per kilowatt-hour
He said the member-consumers of the 106 electric cooperatives who opted to stay with NEA may enjoy similar electricity rate cuts and lower monthly electricity bills if they register with the CDA.

Because of this, Payuyo said he is encouraging all member-consumers of NEA-registered electric cooperatives as well as new distribution utilities to register with the CDA “in order for them to earn the right to avail of tax exemptions and other privileges under RA 9520 and thus, bring down their monthly electricity bills.”

He cited the case of the Agusan del Norte Electric Cooperative (ANECO) whose member- consumers recently voted to register with the CDA through a referendum in 15 districts as provided under Article 127 of RA 9520. “While RA 9520 only requires the affirmative votes of 20 percent of all members in good standing, 31,000 member-consumers, or nearly 30 percent ANECO’s 110,000 membership base, voted to register with CDA,” Payuyo said.

He said ANECO’s management and board of directors are now accountable to their members under the principle of democratic member control of RA 9520. “As proof of their ownership of ANECO, members will be issued share capital certificates reflecting their contributions to the coop,” Payuyo said.”

http://bit.ly/nDbcmf

Development authority gears up drive for ECs’ registration

By Loui S. Maliza

Wednesday, October 5, 2011

IN EFFORT to give justice to electric cooperatives (ECs) consumer-members, the Cooperative Development Authority (CDA) in Northern Mindanao, announced Tuesday of bringing its drive to the common concessionaires to help push for the registration of ECs to the cooperative department.

Edwin B. Pelosas, CDA-Northern Mindanao’s cooperative development specialist, said the electric cooperatives genuinely possess an accreditation with the CDA, the latter directly supervises the organizational structure of the ECs, of which the person with highest power to control over cooperatives is the general assembly.

“It’s the people now who will dominate…especially on the determination of salaries and allowances and other perks of the members of the board of directors (BODs). BODs just meet once in a while, but then they are the ones receiving the highest pay,” Pelosas said in an interview Tuesday.

“It should be the people in the management side and the employees who receive what these BODs are paying themselves,” Pelosas added.

He said once an EC is recognized as genuine cooperative, the member-consumers would have high chance of getting their returns of investments every end of the year in the form of dividends, “yet they (member-consumers) were required to pay.

Earlier, the CDA announced, that out of 199 ECs, only 14 ECs are registered with the cooperative department even as it actively advocating and campaigning for the registration and conversion of these ECs into genuine cooperatives.

Pelosas said ECs under the supervision of the CDA would promote social justice, equity and economic development.

“This is like an empowering path, a way to make life better for the poor and the struggling Filipino people,” he added.

http://bit.ly/r656f7

105 electric coops refuse registration with CDA

By Loui S. Maliza

Tuesday, October 4, 2011

OF THE 119 electric cooperatives in Northern Mindanao, only 14 are officially registered with the Cooperative Development Authority (CDA) enjoying tax exemptions, but the remaining 105 refused supervision “due to automatic end of perks and exorbitant salaries and allowances of board and management officers.”

Lawyer Isidro Lico, Ating-Koop representative, said the cooperative bloc in Congress is “fighting hard” for the inclusion of electric cooperatives in the list under the CDA’s watch, noting consumers should be recognized as one of the owners of the power utilities that should be entitled to investment returns.

CAGAYAN DE ORO. Ating-Koop partylist Representative Isidro Lico (third from left) leads cooperative leaders in Northern Mindanao in addressing queries from the press during a media briefing Sunday, inside the Misamis Oriental Cooperative Bank in Capitol Compound, Cagayan de Oro City. (Joey P. Nacalaban)

“We have already requested the Department of Energy (DOE) and the Energy Regulatory Commission (ERC) (to urge the electric cooperatives to register with the CDA). I hope they will stand by their promise,” Lico said over a called press conference during Sunday’s kick off of the Cooperative Month celebration this October.

Officials of the CDA in Northern Mindanao claimed the 105 “fake cooperatives don’t care about the welfare of the consumers and its officials are into filling only their own pockets with the consumers’ money and investment.”

Fake cooperatives, the CDA said, are those power utilities that embeds the name “cooperative” to the name of the power provider, “but did not follow the guidelines set by the CDA on organizational structure, which board and management officers could pay their services the amount as high as they want without consulting the general assembly.”

“This is the main reason why they do not want to be registered with the CDA, which charter observes the general assembly as the real owners of the cooperatives and has the control to determine the salaries and allowances of the board of directors and the management,” the CDA said.

The CDA even said higher-ups of electric cooperatives have nothing to worry about paying the taxes “because it is passed on to the consumers.”

Meanwhile, Lico explained, the people specifically the power consumers are “misinformed” of the benefits they could get as part owners of the electric cooperatives.

“Because they (board of directors) say that the National Electrification Administration’s (NEA) hand over the electric cooperatives would be wiped out when electric cooperatives register with the CDA. Actually, the NEA’s duty remains. What we want is that these electric cooperatives should recognize that the consumers are the real owners,” Lico said.

He cited that consumers are paying the capital expenditure (CAPEX) set by the electric cooperatives as form of investment “yet they are not receiving any investment returns.”

“We asked them (electric cooperatives) where did the CAPEX go, but they fail to present us the book of records (to justify the expenditures of CAPEX) and they said it went to ‘donated capital’. Donated capital, when you say donated capital, it was donated to a certain venture, but the recipient party of the donation did not know that there was actually a donation.


Now, it’s illegal. That’s why if they continue to do that, we will be forced to file a case against the electric cooperatives.”

With CDA registration, the people have nothing to worry on the power services by electric cooperatives, he added.

Lico further cited an electric cooperative in Palawan where a single consumer-businessman that largely depend on electricity, received not less than P60,000 investment return or dividend, “because he is recognized as part owner of the cooperative.”

He added that if a certain electric cooperative is CDA-registered, consumer-owners are given certificate of ownership as stock holders.

http://bit.ly/pgwufz

Gov’t asked to address power issues

Posted on September 23, 2011 06:47:14 PM

PRIVATE SECTOR groups on Friday urged the government to address continuing power rate hikes and an impending electricity shortage, claiming that existing laws and current policy have failed to serve consumer interests.

"There appears to be no specific and strong action program or roadmap coming from the Executive department and made known and shared with the private sector, that is specifically addressing the major concerns ... of escalating power rate increase and pending base load and reserve deficiency in Luzon and the crisis in Mindanao," Philippine Chamber of Commerce and Industry, Inc. (PCCI) President Francis C. Chua said at a press conference.

A joint statement issued during the briefing was signed by the PCCI, Philippine Exporters Confederation, Philippine Steelmakers Association, Foundation for Economic Freedom, and the Trade Union Congress of the Philippines.

As of 2009, they claimed, industrial and residential power rates in the Philippines were higher than in developed countries. The promise of cheaper power under the Electric Power Industry Reform Act (EPIRA), they added, has yet to be realized a decade since the law’s approval.

To address the issue of power rates going up, they urged the following:

• a halt to pending increases and a "strip and build" analysis of power costs where certain costs can be reassigned or deferred;

• put off charging the Power Sector Assets and Liabilities Management Corp.’s stranded costs and consider funding this via the national budget;

• create a "Government Single Power Purchaser" that will conduct auctions and resell electricity at a nominal two-centavo per kilowatt-hour markup;

• give the Energy Regulatory Commission (ERC) limited fiscal autonomy;

• review the performance-based rate-setting mechanism;

• review the design of the Wholesale Electricity Spot Market;

• defer high-costs renewable energy programs;

• focus the direction of the Renewable Energy Board to evaluating RE development;

• review the imposition of membership contributions to the capital component of tariffs charged by power cooperatives; and

• evaluate the benefit of registering the country’s 119 power cooperatives with the Cooperative Development Authority.

Officials particularly pointed to the feed-in tariff (FiT) policy under the renewable energy program, calling it misguided and claiming that it fails to address the fundamental issue of expensive electricity.

"We should be smart enough to wait for the technology to develop and be practical with our decisions. [Foreign groups] are pushing for this [FiT scheme] because of supplier-driven interests. Why are we looking into solar power, when biomass, for example, is so much cheaper?" said Ernest C. Leung, Foundation for Economic Freedom treasurer and a former Finance secretary.

To address supply issues, meanwhile, the private sector groups recommended:

• auctioning off the Agus and Pulangi hydropower plants and accelerating the transfer of two power barges from the Visayas to provide relief to Mindanao;

• accelerate the connection of some island grids to the national grid;

• create additional reserves via an "Anti-electric Power Line Disturbance Order" and imposing at least a 3% reduction in the allowable system loss; and

• that the Energy department use EPIRA provisions to conduct public supply auctions.

Malacañang, they said, should move to "achieve leadership integration" among key players such as the Energy and Finance departments, ERC and the Joint Congressional Power Commission. 

 

http://bit.ly/naV2MT

Single franchise tax proposed to cut electricity costs

Wednesday, September 21, 2011

A SENIOR legislator is urging Congress to act swiftly on the passage of a bill that will replace all taxes on electricity with just one tax, a move that is expected to reduce power rates.

The bill proposes to impose a uniform franchise tax on distribution utilities that, in turn, will replace all other taxes imposed on electric consumption, including the value added tax (VAT).

Power costs would be lessened through this system because a franchise tax is a direct tax that cannot be transferred to consumers, Isabela Representative Giorgidi Aggabao, author of the proposed legislation, explained.

"The tax incident lies exclusively on the distribution utilities that cannot be devolved," said Aggabao, vice-chairman of the House committee on ways and means.

Under the measure, distribution utilities shall pay a franchise tax equivalent to three percent of their gross receipt derived from the distribution business granted under the utility’s legislative franchise.

Aggabao said the tax rate of three percent of gross receipt is reasonable and should be adequate to compensate for the revenue loss of the government.

The bill provides that the sale of electricity to marginalized consumers whose monthly electric consumption does not exceed 100 kilowatt hours shall not form part of the gross receipts in the computation of the franchise tax, as well as the distribution charge of the sale of electricity by electric cooperatives duly registered with the Cooperative Development Authority or the National Electrification Administration.

The lawmaker noted that the Electric Power Industry Act of 2001 (Epira) has not served to lower the cost of electricity nationwide contrary to the expectations of the consumers.

Several of Aggabao’s colleagues in the House of Representatives have proposed for the review and or repeal of the Epira.

"Today, the Philippines has acquired the dubious distinction of having the highest power rate in the region, even surpassing Japan. One chief reason for this is the tax component of the power rate," he added.

The lawmaker also said that the value-added tax (VAT) collected pursuant to the Reformed VAT Law has demonstrably increased power rate by 12 percent with the tax being shouldered wholly by the consumer.(Kathrina Alvarez/Sunnex)

http://bit.ly/oCJku6

GSO Multi-purpose coop holds outreach mission

by City Hall PIO

Some 80 indigent families at the Great Sta. Cruz Island benefited from the community outreach program initiated by the City General Services Office Family and Friends Multi-Purpose Cooperative (GSOFFMPC), one of the most active multi-purpose coops in the city, recently.


The Great Sta. Cruz activity was the 6th community-related project for the GSO coop. It was undertaken in coordination with the Combat and Service Support Brigade headed by Col. Januario Caringal and community leader Hamid Julhani.

The families received rice, noodles, sardines, bread and used clothing.

The outreach activity is one of the declared visions of the GSOFFMPC in a bid to reach out to the different communities.

On September 12, 2011, the multi-purpose cooperative headed by Bernardita Chiong as Board Chairperson and Engr. Rene dela Cruz as Vice Chairperson also donated construction supplies to Guiwan Elementary School. On August 20,2011, the group distributed school supplies and fed 50 pre-school children at Tulungatung Day Care Center and on April 14, the coop distributed garden tools at the Mampang Resettlement Project in collaboration with the City’s Housing Division.

Aside from community-related undertakings, the GSOFFMPC also participated in environment-related activities such as the Earth Month Celebration last April and Arbor Day Celebration.

CGSOFFMPC is one of the fast-growing cooperatives in the City, where most of its members are City Government employees.

It officially registered with the Cooperative Development Authority last October 2, 1999 with 47 members with a capital of P47,000. At present, the capital has reached P16 million and a total asset of P53 million.
Aside from Chiong and de la Cruz, the multi-purpose cooperative also has Leonor Aizon as manager.

The cooperative vows to continue to share blessings to the society as it continues to grow in providing financial options to its members.

http://bit.ly/oE9UCv 

Pro co-op conversion reps may block DOE, ERC, NEA budgets

MALAYBALAY CITY (MindaNews/11 Sept) – Representatives supporting the conversion of electric cooperatives from the regulation of the National Electrification Administration (NEA) to the Cooperative Development Authority (CDA) might block the budgets of the Department of Energy (DOE), the NEA, and the Energy Regulatory Commission (ERC) if the agencies do not make the members’ contribution for capital expenditures (MCC) transparent.

Rep. Crecente Paez, of the Cooperative-National Confederation of Cooperatives (Coop-NATCO), said Saturday they wrote separate letters to the DOE and the ERC last week to let them know of their group’s position amid budget hearings in Congress.

“We want the MCC to be clearly accounted for and for the electric cooperatives to treat it as owned by the electric consumers,” Paez added after he and Atong Koop Rep. Isidro Lico spoke at the Bukidnon Power Consumers Forum here organized by the CDA, the Association of Consumers of Electricity, and the Provincial Cooperative Development Council.

He cited a core group of eight party-list representatives who backed the move and now being supported by at least 20 other congressmen.

“We want the ERC to issue a memorandum to electric cooperatives to account the MCC and for them to report about how the money was used,” Paez added.

Lico said the campaign for the conversion is snowballing in Congress with the 57-member party list block.
He said the electric cooperatives must be directed to disclose the details of their capex (capital expenditures), the account to which the MCC were supposed to be spent.

Rep. Nicanor Briones, of the Agricultural Sector Alliance of the Philippines (AGAP), and other party-list groups last month have announced their demand for an investigation on the alleged questionable electric charges being passed on to consumers by electric cooperatives.

AGAP has announced that around P55 billion from close to five million member-consumers is in question.
Briones sent a letter to Rep. Joseph Emilo Abaya, chairman of the Committee on Appropriations, asking the deferment of the approval of the budget of the DOE, (NEA) and ERC until the questionable electric charges are clarified.

Paez said the NEA should also allot funds for the education campaign en route to a referendum on the transfer of electric cooperatives to CDA.

“If they will not give this a chance, we will block the approval of their budget in Congress,” Paez said.
But he clarified that they are not compelling the ERC and the NEA to convert the electric cooperatives. He said they are only asking them to make the electric cooperatives use of the MCC more transparent.

The group admitted though that the campaign among the coop block among the partylist representatives is for the conversion of electric cooperatives as stock cooperatives under the CDA.

Orlando Ravanera, CDA 10 regional director and currently officer in charge of the CDA, has strongly campaigned for the conversion. He said the move would make power rates cheaper as electric cooperatives registered with the CDA are tax exempt and make consumers really become owners of the firms with dividends at the end of the year. (Walter I. Balane / MindaNews)

http://bit.ly/n6N6Do