Daunting prospects for co-ops

By: Malou Guanzon Apalisok February 06,2017 - 08:55 PM



Cooperatives are once again up in arms over moves in Congress to lift the tax exemption privileges enjoyed by the sector, but unlike in the previous administration when the movement overcame the test through protests waged in social media and lobbying with lawmakers who were then seeking reelection or running for some public office, this time around, co-ops may not be as lucky as they were last year.

This was the observation shared by Chairman Orlando Ravanera of the Cooperative Development Authority when he talked about the challenges that co-ops are currently facing during a forum held in Cebu City last Saturday.

Ravanera was one of resource speakers in the National Cooperative Forum organized by the Northern Luzon Federation of Cooperatives and Development Center NORLU CEDEC, Baguio Benguet Credit Cooperative in collaboration with Cebu CFI Community Cooperative.

As we know, CDA is now directly under the Office of the President, and there are concrete efforts to make CDA into a department not just an adjunct of the office of the Chief Executive. That should be enough to make Ravanera feel upbeat nowadays, but he looked worried at the daunting prospects for the PH cooperatives in the short and long term.

He sees that fresh moves in Congress to lift the tax exemption privileges granted to co-ops, removal of VAT exemptions, difficulties in the issuance of Certificate Tax Exemption by the BIR, issues plaguing the electric and labor service cooperatives and the Credit Information Service Act (CISA) as major challenges confronting co-ops.

Foremost among the slew of issues is CISA, and the reason why some 114 Coop leaders from all over the country descended at the Cebu CFI Penthouse was to listen to former Cebu Governor and Deputy House Speaker Pablo “Pabling” Garcia expound on his opposition to the law.

About forty co-op leaders came all the way from the Cordillera Autonomous Region, home of NORLU CEDEC, to hear noted constitutionalist and current chairman of Cebu CFI Cooperative expound on his position against the controversial measure. As one of principal authors of RA 9520 or the Cooperative Code of 2008, Noy Pabling understands the legal framework of co-ops.

Garcia has been attacking the measure since July last year during a forum organized by CDA. This was followed by his appearance three months later during the Visayas-wide consultative convergence which saw him confront a pro-CISA co-op executive. To this day, CIC Chairman Jaime Garchitorena has not appeared in any forum to debate with Garcia on the legal issues surrounding the implementation of CISA and the operation of its offspring, the Credit Information Corporation.

Last Saturday was the third forum and as I surveyed the conference hall, it seemed co-op leaders and especially the lawyers in the group were holding on to every word he said. At the end of his presentation, Marciano Inso, lawyer for NORLU CEDEC, said he was amazed at the “sharpness and clarity” with which Garcia discussed RA 9510.

Before coming to Cebu, the federation already manifested its opposition to CISA in a position paper released sometime last year. Atty. Inso said federation lawyers burned the midnight oil for months in order to hammer a proper response ahead of the June 30 deadline set by CIC for submission of credit information of individual co-op borrowers.

Challenging the validity of RA 9510 would need a cause of action, which is an administrative remedy before a case can be brought to court. The first step in this instance would be to dialogue with CIC and push the exclusion of coops from RA 9510. Filing a civil case for declaratory relief becomes the next move if the goal cannot be achieved in an open discourse to be held this month through the office of CDA Chairman Orlando Ravanera. The two-pronged approach was unanimously adopted by the attendees present.

The fallout from RA 9510 cannot be overstated. In the open forum that followed, a co-op leader from Consolacion town stood up to inform the body that Consolacion Multi-Purpose Cooperative will not comply with the requirements set by CIC. Mr. Bonifacio Tibon said Cong. Garcia’s presentation enlightened him and members of the board who were also present such that they are “withdrawing” their CIC registration effective immediately. I heard from NORLU CEDEC Chief Executive Officer Rafael Gayaso that a co-op from Luzon has notified CIC withdrawing its investments from the GOCC.

The dialogue will allow for CIC to adjust its position because it cannot adopt a hardline stance without inviting the ire of co-ops in many parts of the country, who are raring to file cases in court. In which case, CIC will have its hands full putting out fires, so to speak, if the action for declaratory relief will be filed in different places.

Excluding co-ops from the list of submitting entities looks like a win-win solution. CIC can still look forward to operate as a private corporation by 2019 with P300 million in state investments and P200 million invested by private associations like banks and co-ops. The price to pay is the loss of 14 million data subjects affiliated with 24,000 co-op enterprises.

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TAGS: Cebu, Cebu City, co-op, cooperatives, exemption, tax

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