SECOND DIVISION

[G.R. No. 182722. January 22, 2010.]

DUMAGUETE CATHEDRAL CREDIT COOPERATIVE [DCCCO],

Represented by Felicidad L. Ruiz, its General Manager , petitioner, vs .
COMMISSIONER OF INTERNAL REVENUE , respondent.

DECISION

DEL CASTILLO , J : p

The clashing interests of the State and the taxpayers are again pitted against
each other. Two basic principles, the State's inherent power of taxation and its declared
policy of fostering the creation and growth of cooperatives come into play. However,
the one that embodies the spirit of the law and the true intent of the legislature prevails.
SacTAC

This Petition for Review on Certiorari under Section 11 of Republic Act (RA) No.
9282, 1 in relation to Rule 45 of the Rules of Court, seeks to set aside the December 18,
2007 Decision 2 of the Court of Tax Appeals (CTA), ordering petitioner to pay deficiency
withholding taxes on interest from savings and time deposits of its members for
taxable years 1999 and 2000, pursuant to Section 24 (B) (1) of the National Internal
Revenue Code of 1997 (NIRC), as well as the delinquency interest of 20% per annum
under Section 249 (C) of the same Code. It also assails the April 11, 2008 Resolution 3
denying petitioner's Motion for Reconsideration.
Factual Antecedents
Petitioner Dumaguete Cathedral Credit Cooperative (DCCCO) is a credit
cooperative duly registered with and regulated by the Cooperative Development
Authority (CDA). 4 It was established on February 17, 1968 5 with the following
objectives and purposes: (1) to increase the income and purchasing power of the
members; (2) to pool the resources of the members by encouraging savings and
promoting thrift to mobilize capital formation for development activities; and (3) to
extend loans to members for provident and productive purposes. 6 It has the power (1)
to draw, make, accept, endorse, guarantee, execute, and issue promissory notes,
mortgages, bills of exchange, drafts, warrants, certi cates and all kinds of obligations
and instruments in connection with and in furtherance of its business operations; and
(2) to issue bonds, debentures, and other obligations; to contract indebtedness; and to
secure the same with a mortgage or deed of trust, or pledge or lien on any or all of its
real and personal properties. 7
On November 27, 2001, the Bureau of Internal Revenue (BIR) Operations Group
Deputy Commissioner, Lilian B. Hefti, issued Letters of Authority Nos. 63222 and
63223, authorizing BIR Of cers Tomas Rambuyon and Tarcisio Cubillan of Revenue
Region No. 12, Bacolod City, to examine petitioner's books of accounts and other
accounting records for all internal revenue taxes for the taxable years 1999 and 2000. 8
Proceedings before the BIR Regional Office
On June 26, 2002, petitioner received two Pre-Assessment Notices for
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 de ciency withholding taxes for taxable years 1999 and 2000 which were protested by
petitioner on July 23, 2002. 9 Thereafter, on October 16, 2002, petitioner received two
other Pre-Assessment Notices for de ciency withholding taxes also for taxable years
1999 and 2000. 1 0 The de ciency withholding taxes cover the payments of the
honorarium of the Board of Directors, security and janitorial services, legal and
professional fees, and interest on savings and time deposits of its members.
On October 22, 2002, petitioner informed BIR Regional Director Sonia L. Flores
that it would only pay the deficiency withholding taxes corresponding to the honorarium
of the Board of Directors, security and janitorial services, legal and professional fees for
the year 1999 in the amount of P87,977.86, excluding penalties and interest. 1 1 cCSTHA

In another letter dated November 8, 2002, petitioner also informed the BIR
Assistant Regional Director, Rogelio B. Zambarrano, that it would pay the withholding
taxes due on the honorarium and per diems of the Board of Directors, security and
janitorial services, commissions and legal & professional fees for the year 2000 in the
amount of P119,889.37, excluding penalties and interest, and that it would avail of the
Voluntary Assessment and Abatement Program (VAAP) of the BIR under Revenue
Regulations No. 17-2002. 1 2
On November 29, 2002, petitioner availed of the VAAP and paid the amounts of
P105,574.62 and P143,867.24 1 3 corresponding to the withholding taxes on the
payments for the compensation, honorarium of the Board of Directors, security and
janitorial services, and legal and professional services, for the years 1999 and 2000,
respectively.
On April 24, 2003, petitioner received from the BIR Regional Director, Sonia L.
Flores, Letters of Demand Nos. 00027-2003 and 00026-2003, with attached
Transcripts of Assessment and Audit Results/Assessment Notices, ordering petitioner
to pay the de ciency withholding taxes, inclusive of penalties, for the years 1999 and
2000 in the amounts of P1,489,065.30 and P1,462,644.90, respectively. 1 4
Proceedings before the Commissioner of Internal Revenue
On May 9, 2003, petitioner protested the Letters of Demand and Assessment
Notices with the Commissioner of Internal Revenue (CIR). 1 5 However, the latter failed
to act on the protest within the prescribed 180-day period. Hence, on December 3,
2003, petitioner led a Petition for Review before the CTA, docketed as C.T.A. Case No.
6827. 1 6
Proceedings before the CTA First Division
The case was raf ed to the First Division of the CTA which rendered its Decision
on February 6, 2007, disposing of the case in this wise:
IN VIEW OF ALL THE FOREGOING, the Petition for Review is hereby PARTIALLY
GRANTED. Assessment Notice Nos. 00026-2003 and 00027-2003 are hereby
MODIFIED and the assessment for de ciency withholding taxes on the
honorarium and per diems of petitioner's Board of Directors, security and
janitorial services, commissions and legal and professional fees are hereby
CANCELLED. However, the assessments for de ciency withholding taxes on
interests are hereby AFFIRMED. cTIESa

Accordingly, petitioner is ORDERED TO PAY the respondent the respective

amounts of P1,280,145.89 and P1,357,881.14 representing de ciency
withholding taxes on interests from savings and time deposits of its members for
the taxable years 1999 and 2000. In addition, petitioner is ordered to pay the 20%
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 delinquency interest from May 26, 2003 until the amount of de ciency
withholding taxes are fully paid pursuant to Section 249 (C) of the Tax Code.
SO ORDERED. 1 7

Dissatis ed, petitioner moved for a partial reconsideration, but it was denied by
the First Division in its Resolution dated May 29, 2007. 1 8
Proceedings before the CTA En Banc
On July 3, 2007, petitioner led a Petition for Review with the CTA En Banc, 1 9
interposing the lone issue of whether or not petitioner is liable to pay the de ciency
withholding taxes on interest from savings and time deposits of its members for
taxable years 1999 and 2000, and the consequent delinquency interest of 20% per
annum. 2 0
Finding no reversible error in the Decision dated February 6, 2007 and the
Resolution dated May 29, 2007 of the CTA First Division, the CTA En Banc denied the
Petition for Review 2 1 as well as petitioner's Motion for Reconsideration. 2 2
The CTA En Banc held that Section 57 of the NIRC requires the withholding of tax
at source. Pursuant thereto, Revenue Regulations No. 2-98 was issued enumerating the
income payments subject to nal withholding tax, among which is "interest from any
peso bank deposit and yield, or any other monetary bene t from deposit substitutes
and from trust funds and similar arrangements . . .". According to the CTA En Banc,
petitioner's business falls under the phrase "similar arrangements;" as such, it should
have withheld the corresponding 20% nal tax on the interest from the deposits of its
members.
Issue
Hence, the present recourse, where petitioner raises the issue of whether or not it
is liable to pay the de ciency withholding taxes on interest from savings and time
deposits of its members for the taxable years 1999 and 2000, as well as the
delinquency interest of 20% per annum. DCHIAS

Petitioner's Arguments
Petitioner argues that Section 24 (B) (1) of the NIRC which reads in part, to wit:
SECTION 24. Income Tax Rates. —
xxx xxx xxx

(B) Rate of Tax on Certain Passive Income: —

(1) Interests, Royalties, Prizes, and Other Winnings. — A nal tax at the rate
of twenty percent (20%) is hereby imposed upon the amount of interest
from any currency bank deposit and yield or any other monetary bene t
from deposit substitutes and from trust funds and similar arrangements; . .
.

applies only to banks and not to cooperatives, since the phrase "similar arrangements"
is preceded by terms referring to banking transactions that have deposit peculiarities.
Petitioner thus posits that the savings and time deposits of members of cooperatives
are not included in the enumeration, and thus not subject to the 20% nal tax. To bolster
its position, petitioner cites BIR Ruling No. 551-888 2 3 and BIR Ruling [DA-591-2006] 2 4
where the BIR ruled that interests from deposits maintained by members of
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 cooperatives are not subject to withholding tax under Section 24 (B) (1) of the NIRC.
Petitioner further contends that pursuant to Article XII, Section 15 of the Constitution 2 5
and Article 2 of Republic Act No. 6938 (RA 6938) or the Cooperative Code of the
Philippines, 2 6 cooperatives enjoy a preferential tax treatment which exempts their
members from the application of Section 24 (B) (1) of the NIRC.
Respondent's Arguments
As a counter-argument, respondent invokes the legal maxim "Ubi lex non
distinguit nec nos distinguere debemos" (where the law does not distinguish, the courts
should not distinguish). Respondent maintains that Section 24 (B) (1) of the NIRC
applies to cooperatives as the phrase "similar arrangements" is not limited to banks,
but includes cooperatives that are depositaries of their members. Regarding the
exemption relied upon by petitioner, respondent adverts to the jurisprudential rule that
tax exemptions are highly disfavored and construed strictissimi juris against the
taxpayer and liberally in favor of the taxing power. In this connection, respondent
likewise points out that the de ciency tax assessments were issued against petitioner
not as a taxpayer but as a withholding agent.
Our Ruling
The petition has merit.
Petitioner's invocation of BIR
Ruling No. 551-888, reiterated in
BIR Ruling [DA-591-2006], is
proper.
On November 16, 1988, the BIR declared in BIR Ruling No. 551-888 that
cooperatives are not required to withhold taxes on interest from savings and time
deposits of their members. The pertinent BIR Ruling reads: cAaTED

November 16, 1988

BIR RULING NO. 551-888

24 369-88 551-888

Gentlemen:
This refers to your letter dated September 5, 1988 stating that you are a
corporation established under P.D. No. 175 and duly registered with the Bureau of
Cooperatives Development as full edged cooperative of good standing with
Certi cate of Registration No. FF 563-RR dated August 8, 1985; and that one of
your objectives is to provide and strengthen cooperative endeavor and extend
assistance to members and non-members through credit scheme both in cash
and in kind.
Based on the foregoing representations, you now request in effect a ruling as to
whether or not you are exempt from the following:
1. Payment of sales tax
2. Filing and payment of income tax

3. Withholding taxes from compensation of employees and savings account and

time deposits of members. (Underscoring ours)

In reply, please be informed that Executive Order No. 93 which took effect on
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 March 10, 1987 withdrew all tax exemptions and preferential privileges e.g.,
income tax and sales tax, granted to cooperatives under P.D. No. 175 which were
previously withdrawn by P.D. No. 1955 effective October 15, 1984 and restored by
P.D. No. 2008 effective January 8, 1986. However, implementation of said
Executive Order insofar as electric, agricultural, irrigation and waterworks
cooperatives are concerned was suspended until June 30, 1987. (Memorandum
Order No. 65 dated January 21, 1987 of the President) Accordingly, your tax
exemption privilege expired as of June 30, 1987. Such being the case, you are
now subject to income and sales taxes.

Moreover, under Section 72(a) of the Tax Code, as amended, every employer
making payment of wages shall deduct and withhold upon such wages a tax at
the rates prescribed by Section 21(a) in relation to section 71, Chapter X, Title II, of
the same Code as amended by Batas Pambansa Blg. 135 and implemented by
Revenue Regulations No. 6-82 as amended. Accordingly, as an employer you are
required to withhold the corresponding tax due from the compensation of your
employees. IcHTAa

Furthermore, under Section 50(a) of the Tax Code, as amended, the tax imposed
or prescribed by Section 21(c) of the same Code on speci ed items of income
shall be withheld by payor-corporation and/or person and paid in the same
manner and subject to the same conditions as provided in Section 51 of the Tax
Code, as amended. Such being the case, and since interest from any Philippine
currency bank deposit and yield or any other monetary bene t from deposit
substitutes are paid by banks, you are not the party required to withhold the
corresponding tax on the aforesaid savings account and time deposits of your
members. (Underscoring ours)

Very truly yours,

(SGD.) BIENVENIDO A. TAN, JR.
Commissioner

The CTA First Division, however, disregarded the above quoted ruling in
determining whether petitioner is liable to pay the de ciency withholding taxes on
interest from the deposits of its members. It ratiocinated in this wise:
This Court does not agree. As correctly pointed out by respondent in his
Memorandum, nothing in the above quoted resolution will give the conclusion
that savings account and time deposits of members of a cooperative are tax-
exempt. What is entirely clear is the opinion of the Commissioner that the proper
party to withhold the corresponding taxes on certain speci ed items of income is
the payor-corporation and/or person. In the same way, in the case of interests
earned from Philippine currency deposits made in a bank, then it is the bank
which is liable to withhold the corresponding taxes considering that the bank is
the payor-corporation. Thus, the ruling that a cooperative is not the proper party to
withhold the corresponding taxes on the aforementioned accounts is correct.
However, this ruling does not hold true if the savings and time deposits are being
maintained in the cooperative, for in this case, it is the cooperative which
becomes the payor-corporation, a separate entity acting no more than an agent of
the government for the collection of taxes, liable to withhold the corresponding
taxes on the interests earned. 2 7 (Underscoring ours)

The CTA En Banc af rmed the above-quoted Decision and found petitioner's
invocation of BIR Ruling No. 551-88 misplaced. According to the CTA En Banc, the BIR
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 Ruling was based on the premise that the savings and time deposits were placed by the
members of the cooperative in the bank. 2 8 Consequently, it ruled that the BIR Ruling
does not apply when the deposits are maintained in the cooperative such as the instant
case. SHTEaA

We disagree.
There is nothing in the ruling to suggest that it applies only when deposits are
maintained in a bank. Rather, the ruling clearly states, without any quali cation, that
since interest from any Philippine currency bank deposit and yield or any other
monetary bene t from deposit substitutes are paid by banks, cooperatives are not
required to withhold the corresponding tax on the interest from savings and time
deposits of their members. This interpretation was reiterated in BIR Ruling [DA-591-
2006] dated October 5, 2006, which was issued by Assistant Commissioner James H.
Roldan upon the request of the cooperatives for a con rmatory ruling on several issues,
among which is the alleged exemption of interest income on members' deposit (over
and above the share capital holdings) from the 20% nal withholding tax. In the said
ruling, the BIR opined that:
xxx xxx xxx
3. Exemption of interest income on members' deposit (over and above the share
capital holdings) from the 20% Final Withholding Tax.
The National Internal Revenue Code states that a " nal tax at the rate of twenty
percent (20%) is hereby imposed upon the amount of interest on currency bank
deposit and yield or any other monetary bene t from the deposit substitutes and
from trust funds and similar arrangement . . ." for individuals under Section 24(B)
(1) and for domestic corporations under Section 27(D)(1). Considering the
members' deposits with the cooperatives are not currency bank deposits nor
deposit substitutes, Section 24(B)(1) and Section 27(D)(1), therefore, do not apply
to members of cooperatives and to deposits of primaries with federations,
respectively.
It bears stressing that interpretations of administrative agencies in charge of
enforcing a law are entitled to great weight and consideration by the courts, unless
such interpretations are in a sharp con ict with the governing statute or the
Constitution and other laws. 2 9 In this case, BIR Ruling No. 551-888 and BIR Ruling [DA-
591-2006] are in perfect harmony with the Constitution and the laws they seek to
implement. Accordingly, the interpretation in BIR Ruling No. 551-888 that cooperatives
are not required to withhold the corresponding tax on the interest from savings and
time deposits of their members, which was reiterated in BIR Ruling [DA-591-2006],
applies to the instant case. ATCaDE

Members of cooperatives deserve

a preferential tax treatment
pursuant to RA 6938, as amended
by RA 9520.
Given that petitioner is a credit cooperative duly registered with the Cooperative
Development Authority (CDA), Section 24 (B) (1) of the NIRC must be read together
with RA 6938, as amended by RA 9520.
Under Article 2 of RA 6938, as amended by RA 9520, it is a declared policy of the
State to foster the creation and growth of cooperatives as a practical vehicle for
promoting self-reliance and harnessing people power towards the attainment of
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 economic development and social justice. Thus, to encourage the formation of
cooperatives and to create an atmosphere conducive to their growth and development,
the State extends all forms of assistance to them, one of which is providing
cooperatives a preferential tax treatment.
The legislative intent to give cooperatives a preferential tax treatment is apparent
in Articles 61 and 62 of RA 6938, which read:
ART. 61. Tax Treatment of Cooperatives . — 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 government taxes and fees imposed under the
Internal Revenue Laws and other tax laws. Cooperatives not falling under this
article shall be governed by the succeeding section.
ART. 62. Tax and Other Exemptions . — Cooperatives transacting business with
both members and nonmembers shall not be subject to tax on their transactions
to members. Notwithstanding the provision of any law or regulation to the
contrary, such cooperatives dealing with nonmembers shall enjoy the following
tax exemptions; . . . .

This exemption extends to members of cooperatives. It must be emphasized

that cooperatives exist for the bene t of their members. In fact, the primary objective
of every cooperative is to provide goods and services to its members to enable them
to attain increased income, savings, investments, and productivity. 3 0 Therefore, limiting
the application of the tax exemption to cooperatives would go against the very purpose
of a credit cooperative. Extending the exemption to members of cooperatives, on the
other hand, would be consistent with the intent of the legislature. Thus, although the tax
exemption only mentions cooperatives, this should be construed to include the
members, pursuant to Article 126 of RA 6938, which provides: ECAaTS

ART. 126. Interpretation and Construction. – In case of doubt as to the meaning

of any provision of this Code or the regulations issued in pursuance thereof, the
same shall be resolved liberally in favor of the cooperatives and their members.

We need not belabor that what is within the spirit is within the law even if it is not
within the letter of the law because the spirit prevails over the letter. 3 1 Apropos is the
ruling in the case of Alonzo v. Intermediate Appellate Court, 3 2 to wit:
But as has also been aptly observed, we test a law by its results; and likewise, we
may add, by its purposes. It is a cardinal rule that, in seeking the meaning of the
law, the rst concern of the judge should be to discover in its provisions the intent
of the lawmaker. Unquestionably, the law should never be interpreted in such a
way as to cause injustice as this is never within the legislative intent. An
indispensable part of that intent, in fact, for we presume the good motives of the
legislature, is to render justice.
Thus, we interpret and apply the law not independently of but in consonance with
justice. Law and justice are inseparable, and we must keep them so. To be sure,
there are some laws that, while generally valid, may seem arbitrary when applied
in a particular case because of its peculiar circumstances. In such a situation, we
are not bound, because only of our nature and functions, to apply them just the
same, [is] slavish obedience to their language. What we do instead is nd a
balance between the word and the will, that justice may be done even as the law
is obeyed.

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 As judges, we are not automatons. We do not and must not unfeelingly apply the
law as it is worded, yielding like robots to the literal command without regard to
its cause and consequence. "Courts are apt to err by sticking too closely to the
words of a law," so we are warned, by Justice Holmes again, "where these words
import a policy that goes beyond them." While we admittedly may not legislate,
we nevertheless have the power to interpret the law in such a way as to re ect the
will of the legislature. While we may not read into the law a purpose that is not
there, we nevertheless have the right to read out of it the reason for its enactment.
In doing so, we defer not to "the letter that killeth" but to "the spirit that vivifieth," to
give effect to the lawmaker's will.
The spirit, rather than the letter of a statute determines its construction,
hence, a statute must be read according to its spirit or intent. For what is
within the spirit is within the statute although it is not within the letter
thereof, and that which is within the letter but not within the spirit is not
within the statute. Stated differently, a thing which is within the intent of
the lawmaker is as much within the statute as if within the letter; and a
thing which is within the letter of the statute is not within the statute unless
within the intent of the lawmakers. (Underscoring ours)

It is also worthy to note that the tax exemption in RA 6938 was retained in RA
9520. The only difference is that Article 61 of RA 9520 (formerly Section 62 of RA
6938) now expressly states that transactions of members with the cooperatives are
not subject to any taxes and fees. Thus:
ART. 61. Tax and Other Exemptions . — Cooperatives transacting business with
both members and non-members shall not be subjected to tax on their
transactions with members. In relation to this, the transactions of members with
the cooperative shall not be subject to any taxes and fees, including but not
limited to nal taxes on members' deposits and documentary tax.
Notwithstanding the provisions of any law or regulation to the contrary, such
cooperatives dealing with nonmembers shall enjoy the following tax exemptions:
(Underscoring ours) EaCSHI

xxx xxx xxx

This amendment in Article 61 of RA 9520, speci cally providing that members of

cooperatives are not subject to nal taxes on their deposits, af rms the interpretation
of the BIR that Section 24 (B) (1) of the NIRC does not apply to cooperatives and
con rms that such ruling carries out the legislative intent. Under the principle of
legislative approval of administrative interpretation by reenactment, the reenactment of
a statute substantially unchanged is persuasive indication of the adoption by Congress
of a prior executive construction. 3 3
Moreover, no less than our Constitution guarantees the protection of
cooperatives. Section 15, Article XII of the Constitution considers cooperatives as
instruments for social justice and economic development. At the same time, Section 10
of Article II of the Constitution declares that it is a policy of the State to promote social
justice in all phases of national development. In relation thereto, Section 2 of Article XIII
of 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. Bearing in mind the foregoing provisions, we nd that an interpretation
exempting the members of cooperatives from the imposition of the nal tax under
Section 24 (B) (1) of the NIRC is more in keeping with the letter and spirit of our
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 Constitution.
All told, we hold that petitioner is not liable to pay the assessed de ciency
withholding taxes on interest from the savings and time deposits of its members, as
well as the delinquency interest of 20% per annum.
In closing, cooperatives, including their members, deserve a preferential tax
treatment because of the vital role they play in the attainment of economic
development and social justice. Thus, although taxes are the lifeblood of the
government, the State's power to tax must give way to foster the creation and growth
of cooperatives. To borrow the words of Justice Isagani A. Cruz: "The power of
taxation, while indispensable, is not absolute and may be subordinated to the demands
of social justice." 3 4
WHEREFORE , the Petition is hereby GRANTED . The assailed December 18,
2007 Decision of the Court of Tax Appeals and the April 11, 2008 Resolution are
REVERSED and SET ASIDE . Accordingly, the assessments for de ciency withholding
taxes on interest from the savings and time deposits of petitioner's members for the
taxable years 1999 and 2000 as well as the delinquency interest of 20% per annum are
hereby CANCELLED . aSATHE

SO ORDERED.
Carpio, Brion, Abad and Perez, JJ., concur.

Footnotes

1. An Act Expanding the Jurisdiction of the Court of Tax Appeals (CTA), Elevating its Rank to
the Level of a Collegiate Court with Special Jurisdiction and Enlarging its Membership,
Amending for the Purpose Certain Sections of Republic Act No. 1125, As Amended,
otherwise known as the Law Creating the Court of Tax Appeals, and for Other Purposes.
2. Rollo, pp. 45-64; penned by Associate Justice Olga Palanca-Enriquez and concurred in by
Presiding Justice Ernesto D. Acosta and Associate Justices Juanito C. Castañeda, Jr.,
Lovell R. Bautista, Erlinda P. Uy and Caesar A. Casanova.

3. Id. at 80-81.
4. Id. at 47.
5. Id. at 7.
6. Id. at 57.
7. Id.

8. Id. at 118.
9. Id. at 48.
10. Id.
11. Id. at 48-49.
12. Id. at 49.

13. Id. at 49-50.

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 14. Id. at 50-51.
15. Id. at 51.
16. Id.
17. Id. at 46-47.

18. Id. at 51.

19. Id. at 11.
20. Id. at 52.
21. Id. at 63.
22. Id. at 80-81.

23. Id. at 18-19.

24. Id. at 75-78.
25. SEC. 15. The Congress shall create an agency to promote the viability and growth of
cooperatives as instruments for social justice and economic development.
26. ART. 2. Declaration of Policy. — It is the declared policy of the State to 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. The State shall encourage the private sector to undertake the actual formation
and organization of cooperatives and shall create an atmosphere that is conducive to
the growth and development of these cooperatives.
Toward this end, the Government and all its branches, subdivisions, instrumentalities and
agencies shall ensure the provision of technical guidance, nancial assistance and other
services to enable said cooperatives to develop into viable and responsive economic
enterprises and thereby bring about a strong cooperative movement that is free from any
conditions that might infringe upon the autonomy or organizational integrity of
cooperatives.

Further, the State recognizes the principle of subsidiarity under which the cooperative sector
will initiate and regulate within its own ranks the promotion and organization, training
and research, audit and support services relative to cooperatives with government
assistance where necessary.
(Now amended by Republic Act No. 9520 or the Philippine Cooperative Code of 2008.)
27. Rollo, pp. 62-63.

28. Id. at 62.

29. Nestle Philippines, Inc. v. Court of Appeals, G.R. No. 86738, November 13, 1991, 203 SCRA
504, 510.

30. REPUBLIC ACT NO. 6938, Article 7.

31. Tañada and Macapagal v. Cuenco, et al., 103 Phil. 1051, 1086 (1957).
32. 234 Phil. 267, 272-273 (1987).
33. Commissioner of Internal Revenue v. American Express International, Inc. (Philippine
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 Branch), 500 Phil. 586 (2005).
34. Dissenting Opinion of Justice Isagani A. Cruz in Republic of the Philippines v. Judge
Peralta, 234 Phil. 40, 59 (1987).

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