THIRD DIVISION

[G.R. No. 158085. October 14, 2005.]

REPUBLIC OF THE PHILIPPINES, Represented by the

COMMISSIONER OF INTERNAL REVENUE, petitioner, vs.
SUNLIFE ASSURANCE COMPANY OF CANADA, respondent.

DECISION

PANGANIBAN, J : p

Having satisfactorily proven to the Court of Tax Appeals, to the Court of

Appeals and to this Court that it is a bona fide cooperative, respondent is
entitled to exemption from the payment of taxes on life insurance premiums
and documentary stamps. Not being governed by the Cooperative Code of
the Philippines, it is not required to be registered with the Cooperative
Development Authority in order to avail itself of the tax exemptions.
Significantly, neither the Tax Code nor the Insurance Code mandates this
administrative registration. acCDSH

The Case
Before us is a Petition for Review 1 under Rule 45 of the Rules of Court,
seeking to nullify the January 23, 2003 Decision 2 and the April 21, 2003
Resolution 3 of the Court of Appeals (CA) in CA-GR SP No. 69125. The
dispositive portion of the Decision reads as follows:
"WHEREFORE, the petition for review is hereby DENIED." 4

The Facts
The antecedents, as narrated by the CA, are as follows:
"Sun Life is a mutual life insurance company organized and existing
under the laws of Canada. It is registered and authorized by the
Securities and Exchange Commission and the Insurance Commission to
engage in business in the Philippines as a mutual life insurance
company with principal office at Paseo de Roxas, Legaspi Village,
Makati City.

"On October 20, 1997, Sun Life filed with the [Commissioner of Internal
Revenue] (CIR) its insurance premium tax return for the third quarter
of 1997 and paid the premium tax in the amount of P31,485,834.51.
For the period covering August 21 to December 18, 1997, petitioner
filed with the CIR its [documentary stamp tax (DST)] declaration
returns and paid the total amount of P30,000,000.00.
"On December 29, 1997, the [Court of Tax Appeals] (CTA) rendered its
decision in Insular Life Assurance Co. Ltd. v. [CIR], which held that
mutual life insurance companies are purely cooperative companies and
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 are exempt from the payment of premium tax and DST. This
pronouncement was later affirmed by this court in [CIR] v. Insular Life
Assurance Company, Ltd . Sun Life surmised that[,] being a mutual life
insurance company, it was likewise exempt from the payment of
premium tax and DST. Hence, on August 20, 1999, Sun Life filed with
the CIR an administrative claim for tax credit of its alleged erroneously
paid premium tax and DST for the aforestated tax periods.
"For failure of the CIR to act upon the administrative claim for tax
credit and with the 2-year period to file a claim for tax credit or refund
dwindling away and about to expire, Sun Life filed with the CTA a
petition for review on August 23, 1999. In its petition, it prayed for the
issuance of a tax credit certificate in the amount of P61,485,834.51
representing P31,485,834.51 of erroneously paid premium tax for the
third quarter of 1997 and P30,000[,000].00 of DST on policies of
insurance from August 21 to December 18, 1997. Sun Life stood firm
on its contention that it is a mutual life insurance company vested with
all the characteristic features and elements of a cooperative company
or association as defined in [S]ection 121 of the Tax Code. Primarily,
the management and affairs of Sun Life were conducted by its
members; secondly, it is operated with money collected from its
members; and, lastly, it has for its purpose the mutual protection of its
members and not for profit or gain. cAEaSC

"In its answer, the CIR, then respondent, raised as special and
affirmative defenses the following:

'7.Petitioner's (Sun Life's) alleged claim for refund is subject to

administrative routinary investigation/examination by
respondent's (CIR's) Bureau.

'8.Petitioner must prove that it falls under the exception provided

for under Section 121 (now 123) of the Tax Code to be exempted
from premium tax and be entitled to the refund sought.

'9.Claims for tax refund/credit are construed strictly against the

claimants thereof as they are in the nature of exemption from
payment of tax.

'10.In an action for tax credit/refund, the burden is upon the

taxpayer to establish its right thereto, and failure to sustain this
burden is fatal to said claim. . . . .

'11.It is incumbent upon petitioner to show that it has complied

with the provisions of Section 204[,] in relation to Section 229,
both in the 1997 Tax Code.'

"On November 12, 2002, the CTA found in favor of Sun Life. Quoting
largely from its earlier findings in Insular Life Assurance Company, Ltd.
v. [CIR], which it found to be on all fours with the present action, the
CTA ruled:

'The [CA] has already spoken. It ruled that a mutual life insurance
company is a purely cooperative company[;] thus, exempted
from the payment of premium and documentary stamp taxes.
Petitioner Sun Life is without doubt a mutual life insurance
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 company. . . . .

xxx xxx xxx

'Being similarly situated with Insular, Petitioner at bar is entitled
to the same interpretation given by this Court in the earlier cases
of The Insular Life Assurance Company, Ltd. vs. [CIR] (CTA Case
Nos. 5336 and 5601) and by the [CA] in the case entitled [CIR]
vs. The Insular Life Assurance Company, Ltd., C.A. G.R. SP No.
46516, September 29, 1998. Petitioner Sun Life as a mutual life
insurance company is[,] therefore[,] a cooperative company or
association and is exempted from the payment of premium tax
and [DST] on policies of insurance pursuant to Section 121 (now
Section 123) and Section 199[1]) (now Section 199[a]) of the Tax
Code.'

"Seeking reconsideration of the decision of the CTA, the CIR argued

that Sun Life ought to have registered, foremost, with the Cooperative
Development Authority before it could enjoy the exemptions from
premium tax and DST extended to purely cooperative companies or
associations under [S]ections 121 and 199 of the Tax Code. For its
failure to register, it could not avail of the exemptions prayed for.
Moreover, the CIR alleged that Sun Life failed to prove that ownership
of the company was vested in its members who are entitled to vote and
elect the Board of Trustees among [them]. The CIR further claimed that
change in the 1997 Tax Code subjecting mutual life insurance
companies to the regular corporate income tax rate reflected the
legislature's recognition that these companies must be earning profits.

"Notwithstanding these arguments, the CTA denied the CIR's motion

for reconsideration.
"Thwarted anew but nonetheless undaunted, the CIR comes to this
court via this petition on the sole ground that:

'The Tax Court erred in granting the refund[,] because

respondent does not fall under the exception provided for under
Section 121 (now 123) of the Tax Code to be exempted from
premium tax and DST and be entitled to the refund.'

"The CIR repleads the arguments it raised with the CTA and proposes
further that the [CA] decision in [CIR] v. Insular Life Assurance
Company, Ltd. is not controlling and cannot constitute res judicata in
the present action. At best, the pronouncements are merely persuasive
as the decisions of the Supreme Court alone have a universal and
mandatory effect." 5

Ruling of the Court of Appeals

In upholding the CTA, the CA reasoned that respondent was a purely
cooperative corporation duly licensed to engage in mutual life insurance
business in the Philippines. Thus, respondent was deemed exempt from
premium and documentary stamp taxes, because its affairs are managed
and conducted by its members with money collected from among
themselves, solely for their own protection, and not for profit. Its members or
policyholders constituted both insurer and insured who contribute, by a
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 system of premiums or assessments, to the creation of a fund from which all
losses and liabilities were paid. The dividends it distributed to them were not
profits, but returns of amounts that had been overcharged them for
insurance.
For having satisfactorily shown with substantial evidence that it had
erroneously paid and seasonably filed its claim for premium and
documentary stamp taxes, respondent was entitled to a refund, the CA
ruled.
Hence, this Petition. 6
The Issues
Petitioner raises the following issues for our consideration:
"I.
"Whether or not respondent is a purely cooperative company or
association under Section 121 of the National Internal Revenue Code
and a fraternal or beneficiary society, order or cooperative company on
the lodge system or local cooperation plan and organized and
conducted solely by the members thereof for the exclusive benefit of
each member and not for profit under Section 199 of the National
Internal Revenue Code. aATHIE

"II.

"Whether or not registration with the Cooperative Development

Authority is a sine qua non requirement to be entitled to tax
exemption.
"III.

"Whether or not respondent is exempted from payment of tax on life

insurance premiums and documentary stamp tax." 7

We shall tackle the issues seriatim.

The Court's Ruling
The Petition has no merit.
First Issue:
Whether Respondent Is a Cooperative
The Tax Code defines a cooperative as an association "conducted by
the members thereof with the money collected from among themselves and
solely for their own protection and not for profit." 8 Without a doubt,
respondent is a cooperative engaged in a mutual life insurance business. aHcDEC

First, it is managed by its members. Both the CA and the CTA found
that the management and affairs of respondent were conducted by its
member-policyholders. 9
A stock insurance company doing business in the Philippines may "alter
its organization and transform itself into a mutual insurance company." 10
Respondent has been mutualized or converted from a stock life insurance
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 company to a nonstock mutual life insurance corporation 11 pursuant to
Section 266 of the Insurance Code of 1978. 12 On the basis of its bylaws, its
ownership has been vested in its member-policyholders who are each
entitled to one vote; 13 and who, in turn, elect from among themselves the
members of its board of trustees. 14 Being the governing body of a nonstock
corporation, the board exercises corporate powers, lays down all corporate
business policies, and assumes responsibility for the efficiency of
management. 15

Second , it is operated with money collected from its members. Since

respondent is composed entirely of members who are also its policyholders,
all premiums collected obviously come only from them. 16
The member-policyholders constitute "both insurer and insured " 17
who "contribute, by a system of premiums or assessments, to the creation of
a fund from which all losses and liabilities are paid." 18 The premiums 19
pooled into this fund are earmarked for the payment of their indemnity and
benefit claims.
Third, it is licensed for the mutual protection of its members, not for
the profit of anyone.
As early as October 30, 1947, the director of commerce had already
issued a license to respondent — a corporation organized and existing under
the laws of Canada — to engage in business in the Philippines. 20 Pursuant to
Section 225 of Canada's Insurance Companies Act, the Canadian minister of
state (for finance and privatization) also declared in its Amending Letters
Patent that respondent would be a mutual company effective June 1, 1992.
21 In the Philippines, the insurance commissioner also granted it annual

Certificates of Authority to transact life insurance business, the most

relevant of which were dated July 1, 1997 and July 1, 1998. 22
A mutual life insurance company is conducted for the benefit of its
member-policyholders, 23 who pay into its capital by way of premiums. To
that extent, they are responsible for the payment of all its losses. 24 "The
cash paid in for premiums and the premium notes constitute their assets . . .
. " 25 In the event that the company itself fails before the terms of the
policies expire, the member-policyholders do not acquire the status of
creditors. 26 Rather, they simply become debtors for whatever premiums that
they have originally agreed to pay the company, if they have not yet paid
those amounts in full, for "[m]utual companies . . . depend solely upon . . .
premiums." 27 Only when the premiums will have accumulated to a sum
larger than that required to pay for company losses will the member-
policyholders be entitled to a "pro rata division thereof as profits." 28
Contributing to its capital, the member-policyholders of a mutual
company are obviously also its owners. 29 Sustaining a dual relationship inter
se, they not only contribute to the payment of its losses, but are also entitled
to a proportionate share 30 and participate alike 31 in its profits and surplus.
DaTEIc

Where the insurance is taken at cost, it is important that the rates of

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 premium charged by a mutual company be larger than might reasonably be
expected to carry the insurance, in order to constitute a margin of safety.
The table of mortality used will show an admittedly higher death rate than
will probably prevail; the assumed interest rate on the investments of the
company is made lower than is expected to be realized; and the provision for
contingencies and expenses, made greater than would ordinarily be
necessary. 32 This course of action is taken, because a mutual company has
no capital stock and relies solely upon its premiums to meet unexpected
losses, contingencies and expenses.
Certainly, many factors are considered in calculating the insurance
premium. Since they vary with the kind of insurance taken and with the
group of policyholders insured, any excess in the amount anticipated by a
mutual company to cover the cost of providing for the insurance over its
actual realized cost will also vary. If a member-policyholder receives an
excess payment, then the apportionment must have been based upon a
calculation of the actual cost of insurance that the company has provided for
that particular member-policyholder. Accordingly, in apportioning divisible
surpluses, any mutual company uses a contribution method that aims to
distribute those surpluses among its member-policyholders, in the same
proportion as they have contributed to the surpluses by their payments. 33
Sharing in the common fund, any member-policyholder may choose to
withdraw dividends in cash or to apply them in order to reduce a subsequent
premium, purchase additional insurance, or accelerate the payment period.
Although the premium made at the beginning of a year is more than
necessary to provide for the cost of carrying the insurance, the member-
policyholder will nevertheless receive the benefit of the overcharge by way
of dividends, at the end of the year when the cost is actually ascertained.
"The declaration of a dividend upon a policy reduces pro tanto the cost of
insurance to the holder of the policy. That is its purpose and effect." 34
A stipulated insurance premium "cannot be increased, but may be
lessened annually by so much as the experience of the preceding year has
determined it to have been greater than the cost of carrying the insurance . .
. ." 35 The difference between that premium and the cost of carrying the risk
of loss constitutes the so-called "dividend" which, however, "is not in any
real sense a dividend." 36 It is a technical term that is well understood in the
insurance business to be widely different from that to which it is ordinarily
attached.
The so-called "dividend" that is received by member-policyholders is
not a portion of profits set aside for distribution to the stockholders in
proportion to their subscription to the capital stock of a corporation. 37 One, a
mutual company has no capital stock to which subscription is necessary;
there are no stockholders to speak of, but only members. And, two, the
amount they receive does not partake of the nature of a profit or income.
The quasi-appearance of profit will not change its character. It remains an
overpayment, a benefit to which the member-policyholder is equitably
entitled. 38

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 Verily, a mutual life insurance corporation is a cooperative that
promotes the welfare of its own members. It does not operate for profit, but
for the mutual benefit of its member-policyholders. They receive their
insurance at cost, while reasonably and properly guarding and maintaining
the stability and solvency of the company. 39 "The economic benefits filter to
the cooperative members. Either equally or proportionally, they are
distributed among members in correlation with the resources of the
association utilized." 40
It does not follow that because respondent is registered as a nonstock
corporation and thus exists for a purpose other than profit, the company can
no longer make any profits. 41 Earning profits is merely its secondary, not
primary, purpose. In fact, it may not lawfully engage in any business activity
for profit, for to do so would change or contradict its nature 42 as a non-profit
entity. 43 It may, however, invest its corporate funds in order to earn
additional income for paying its operating expenses and meeting benefit
claims. Any excess profit it obtains as an incident to its operations can only
be used, whenever necessary or proper, for the furtherance of the purpose
for which it was organized. 44
Second Issue:
Whether CDA Registration Is Necessary
Under the Tax Code although respondent is a cooperative, registration
with the Cooperative Development Authority (CDA) 45 is not necessary in
order for it to be exempt from the payment of both percentage taxes on
insurance premiums, under Section 121; and documentary stamp taxes on
policies of insurance or annuities it grants, under Section 199. aCSTDc

First, the Tax Code does not require registration with the CDA. No tax
provision requires a mutual life insurance company to register with that
agency in order to enjoy exemption from both percentage and documentary
stamp taxes.
A provision of Section 8 of Revenue Memorandum Circular (RMC) No.
48-91 requires the submission of the Certificate of Registration with the CDA,
46 before the issuance of a tax exemption certificate. That provision cannot
prevail over the clear absence of an equivalent requirement under the Tax
C o d e . One, as we will explain below, the Circular does not apply to
respondent, but only to cooperatives that need to be registered under the
Cooperative Code. Two, it is a mere issuance directing all internal revenue
officers to publicize a new tax legislation. Although the Circular does not
derogate from their authority to implement the law, it cannot add a
registration requirement, 47 when there is none under the law to begin with.
Second , the provisions of the Cooperative Code of the Philippines48 do
not apply. Let us trace the Code's development in our history.
As early as 1917, a cooperative company or association was already
defined as one "conducted by the members thereof with money collected
from among themselves and solely for their own protection and not profit."
49 In 1990, it was further defined by the Cooperative Code as a "duly

registered association of persons, with a common bond of interest, who have

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 voluntarily joined together to achieve a lawful common social or economic
end, making equitable contributions to the capital required and accepting a
fair share of the risks and benefits of the undertaking in accordance with
universally accepted cooperative principles." 50
The Cooperative Code was actually an offshoot of the old law on
cooperatives. In 1973, Presidential Decree (PD) No. 175 was signed into law
by then President Ferdinand E. Marcos in order to strengthen the
cooperative movement. 51 The promotion of cooperative development was
one of the major programs of the "New Society" under his administration. It
sought to improve the country's trade and commerce by enhancing
agricultural production, cottage industries, community development, and
agrarian reform through cooperatives. 52
The whole cooperative system, with its vertical and horizontal linkages
— from the market cooperative of agricultural products to cooperative rural
banks, consumer cooperatives and cooperative insurance — was envisioned
to offer considerable economic opportunities to people who joined
cooperatives. 53 As an effective instrument in redistributing income and
wealth, 54 cooperatives were promoted primarily to support the agrarian
reform program of the government. 55

Notably, the cooperative under PD 175 referred only to an organization

composed primarily of small producers and consumers who voluntarily
joined to form a business enterprise that they themselves owned, controlled,
and patronized. 56 The Bureau of Cooperatives Development — under the
Department of Local Government and Community Development (later
Ministry of Agriculture) 57 — had the authority to register, regulate and
supervise only the following cooperatives: (1) barrio associations involved in
the issuance of certificates of land transfer; (2) local or primary cooperatives
composed of natural persons and/or barrio associations; (3) federations
composed of cooperatives that may or may not perform business activities;
and (4) unions of cooperatives that did not perform any business activities.
58 Respondent does not fall under any of the above-mentioned types of

cooperatives required to be registered under PD 175.

When the Cooperative Code was enacted years later, all cooperatives
that were registered under PD 175 and previous laws were also deemed
registered with the CDA. 59 Since respondent was not required to be
registered under the old law on cooperatives, it followed that it was not
required to be registered even under the new law.
Furthermore, only cooperatives to be formed or organized under the
Cooperative Code needed registration with the CDA. 60 Respondent already
existed before the passage of the new law on cooperatives. It was not even
required to organize under the Cooperative Code, not only because it
performed a different set of functions, but also because it did not operate to
serve the same objectives under the new law — particularly on productivity,
marketing and credit extension. 61
The insurance against losses of the members of a cooperative referred
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 to in Article 6(7) of the Cooperative Code is not the same as the life
insurance provided by respondent to member-policyholders. The former is a
function of a service cooperative, 62 the latter is not. Cooperative insurance
under the Code is limited in scope and local in character. It is not the same
as mutual life insurance.
We have already determined that respondent is a cooperative. The
distinguishing feature of a cooperative enterprise 63 is the mutuality of
cooperation among its member-policyholders united for that purpose. 64 So
long as respondent meets this essential feature, it does not even have to use
65 and carry the name of a cooperative to operate its mutual life insurance

business. Gratia argumenti that registration is mandatory, it cannot deprive

respondent of its tax exemption privilege merely because it failed to
register. The nature of its operations is clear; its purpose well-defined.
Exemption when granted cannot prevail over administrative convenience. EAcTDH

Third, not even the Insurance Code requires registration with the CDA.
The provisions of this Code primarily govern insurance contracts; only if a
particular matter in question is not specifically provided for shall the
provisions of the Civil Code on contracts and special laws govern. 66
True, the provisions of the Insurance Code relative to the organization
and operation of an insurance company also apply to cooperative insurance
entities organized under the Cooperative Code. 67 The latter law, however,
does not apply to respondent, which already existed as a cooperative
company engaged in mutual life insurance prior to the passage of that law.
The statutes prevailing at the time of its organization and mutualization
were the Insurance Code and the Corporation Code, which imposed no
registration requirement with the CDA.
Third Issue:
Whether Respondent Is Exempted
from Premium Taxes and DST
Having determined that respondent is a cooperative that does not
have to be registered with the CDA, we hold that it is entitled to exemption
from both premium taxes and documentary stamp taxes (DST).
The Tax Code is clear. On the one hand, Section 121 of the Code
exempts cooperative companies from the 5 percent percentage tax on
insurance premiums. On the other hand, Section 199 also exempts from the
DST, policies of insurance or annuities made or granted by cooperative
companies. Being a cooperative, respondent is thus exempt from both types
of taxes.
It is worthy to note that while RA 8424 amending the Tax Code has
deleted the income tax of 10 percent imposed upon the gross investment
income of mutual life insurance companies — domestic 68 and foreign 69 —
the provisions of Section 121 and 199 remain unchanged. 70
Having been seasonably filed and amply substantiated, the claim for
exemption in the amount of P61,485,834.51, representing percentage taxes
on insurance premiums and documentary stamp taxes on policies of
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 insurance or annuities that were paid by respondent in 1997, is in order.
Thus, the grant of a tax credit certificate to respondent as ordered by the
appellate court was correct. aHCSTD

WHEREFORE, the Petition is hereby DENIED, and the assailed Decision

and Resolution are AFFIRMED. No pronouncement as to costs.
SO ORDERED.
Sandoval-Gutierrez, Corona, Carpio Morales and Garcia, JJ., concur.

Footnotes
1.Rollo , pp. 7-32.
2.Id., pp. 37-44. Thirteenth Division. Penned by Justice Oswaldo D. Agcaoili (chair)
and concurred in by Justices Eliezer R. de los Santos and Regalado E.
Maambong (members).
3.Id., p. 46.
4.CA Decision, p. 8; rollo, p. 44.
5.Id., pp. 1-4 & 37-40. Italics in the original.

6.This case was deemed submitted for decision on April 1, 2005, upon this Court's
receipt of petitioner's Memorandum, signed by Assistant Solicitor General
Nestor J. Ballacillo and Associate Solicitor Raymond Joseph G. Javier.
Respondent's Memorandum, signed by Atty. Ma. Emeren V. Vallente, was
received by this Court on December 6, 2004.

7.Petitioner's Memorandum, p. 11; rollo, p. 384. Original in uppercase.

8.§121 of the National Internal Revenue Code prior to its amendment by RA 8424.
9.CA Decision, p. 6; rollo, p. 42; and CTA Decision, p. 7; rollo, p. 57.
The affairs of mutual companies "are managed by the policyholders." Ohio Farmers
Indemnity Co. v. Commissioner of Internal Revenue , 108 F 2d 665, 667,
January 15, 1940, per Hamilton, Circuit J.
10.Last paragraph of §188 of the Insurance Code of 1978.
11.Art. 7 of respondent's Amended Articles of Incorporation.
12.Presidential Decree (PD) No. 1460.

13."Unless so limited, broadened or denied, each member, regardless of class,

shall be entitled to one vote." 1st paragraph of §89 of Batas Pambansa (BP)
Blg. 68, otherwise known as "The Corporation Code of the Philippines."
14."No person shall be elected as trustee unless he is a member of the
corporation." 2nd paragraph of §92 of BP 68.
15.Campos Jr. & Campos, The Corporation Code: Comments, Notes and Selected
Cases, Vol. I (1990), p. 340.
16.CA Decision, p. 6; rollo, p. 42; and CTA Decision, p. 7; rollo, p. 57.
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 17.Keehn v. Hodge Drive-It-Yourself, Inc., 53 NE 2d 69, 71, July 19, 1943, per
Hildebrant, J.
18.Minnick v. State Farm Mutual Automobile Insurance Co., 174 A 2d 706, 709,
October 9, 1961, per Storey, J.
19.A premium is the agreed price for assuming and carrying the risk of insurance.
De Leon, The Law on Insurance (with Insolvency Law), 10th ed. (2003), p.
114.
20.Rollo , p. 97.
21.Id., p. 210.

22.Id., pp. 98-99.

23.Public Housing Administration v. Housing Authority of Bogalusa, 137 So. 2d 315,
321, February 19, 1962.

24.Ibid.
25.Gleason v. Prudential Fire Insurance Co., 151 SW 1030, 1033, December 19,
1912, per Green, J.
26.Public Housing Administration v. Housing Authority of Bogalusa, supra.
27.Ohio Farmers Indemnity Co. v. Commissioner of Internal Revenue, supra.

28.Public Housing Administration v. Housing Authority of Bogalusa, supra, per

McCaleb, J.

29.Ibid.

30.Keehn v. Hodge Drive-It-Yourself, Inc., supra.

31.Ohio Farmers Indemnity Co. v. Commissioner of Internal Revenue, supra.

32.Mutual Benefit Life Insurance Co. v. Herold, 198 F 199, 204, July 29, 1912.

33.Rhine v. New York Life Insurance Co., 6 NE 2d 74, 76-77, December 31, 1936.
34.Id., p. 78, December 31, 1936, per Lehman, J.

35.Mutual Benefit Life Insurance Co. v. Herold, id., 204-205, per Cross, District J.
36.Ibid.

37.Campos Jr. & Campos, The Corporation Code: Comments, Notes and Selected
Cases, Vol. II (1990), p. 209.
38.Mutual Benefit Life Insurance Co. v. Herold, supra.

39.Ibid.

40.Nueva Ecija I Electric Cooperative, Inc. v. NLRC, 380 Phil. 44, 58, January 24,
2000, per Quisumbing, J.

41.Campos Jr. & Campos, The Corporation Code: Comments, Notes and Selected
Cases, Vol. I (1990), p. 44.
42.§14(2) of BP 68.
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 43.De Leon, The Law on Partnerships and Private Corporations (1985), p. 401.

44.1st paragraph of §87 of BP 68.

45.The Cooperative Development Authority (CDA) is created under RA 6939.
Camarines Norte Electric Cooperative, Inc. v. Torres, 350 Phil. 315, 318,
February 27, 1998.

46.§8.1.b of Revenue Memorandum Circular (RMC) No. 48-91.

47.De Leon, The Fundamentals of Taxation (12th ed., 1998), pp. 81-82.

48.On 10 March 1990, then President Corazon C. Aquino has signed into law
Republic Act (RA) No. 6938, otherwise known as "The Cooperative Code of
the Philippines. Camarines Norte Electric Cooperative, Inc. v. Torres, supra.
49.La Compañia General de Tabacos de Filipinas v. Collector of Internal Revenue,
48 Phil. 35, 44, September 26, 1925, per Johns, J. (citing §1505 of the
Administrative Code of 1917).

50.Art. 3 of Republic Act (RA) No. 6938.

51.Cooperative Rural Bank of Davao City, Inc. v. Ferrer-Calleja, 165 SCRA 725, 732,
September 26, 1988, per Gancayco, J.

52.Fajardo & Abella, Cooperative (Kilusang Bayan), 1981, p. 211.

53.Id., p. 213.

54.§1 of Presidential Decree (PD) No. 175.

55.Fajardo & Abella, Cooperative (Kilusang Bayan); id ., pp. 27 & 212; and 1st
paragraph of the Foreword of Clemente E. Terso Jr., CESO II, director of the
Bureau of Cooperatives Development.

56.§2 of PD 175.
57.Effective May 1, 1980. Fajardo & Abella, Cooperative (Kilusang Bayan); id., p.
27.

58.Items 1 to 4 of §8(b) of PD 175.

59.Art. 128 of RA 6938.

60.Art. 16 of RA 6938.

61.Art. 7 of RA 6938.
62.Art. 23(e) of RA 6938.

63.Minnick v. State Farm Mutual Automobile Insurance Co., supra.

64.Ohio Farmers Indemnity Co. v. Commissioner of Internal Revenue, supra.

65.Art. 124(1) of RA 6938.

66.De Leon, The Law on Insurance (with Insolvency Law); id ., p. 1.

67.Art. 117 of RA 6938.

68.§24(d) of the Tax Code.

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 69.§25(a)(3) of the Tax Code.
70.In fact, §9 of RA 9243, signed into law by President Gloria Macapagal-Arroyo
only on February 17, 2004, retains §199(a) of the Tax Code.

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