BIR Ruling

June 13, 1969 DBP Consumers' Cooperative, Inc. Makati, Rizal Attention: Mr . R . G . Isidro Vice-President and Project-In-Charge Gentlemen : This refers to your letter dated May 6, 1969 requesting exemption from the payment of specific tax on gasoline and other petroleum products purchased directly from the oil companies for resale to the members of the cooperative under Republic Act No. 2023, as amended by Republic Act No. 4362. In reply, I regret to inform you that your request cannot be granted for lack of legal basis. The tax exemption granted to non-agricultural cooperatives under Section 66 of Republic Act No. 2023, as amended applies only to such taxes for which the cooperative itself would otherwise be liable, and does not apply to taxes payable by persons or other entities doing business with the cooperative. Thus in the case of gasoline and other petroleum products purchased from the oil companies, the specific taxes due thereon are the direct and personal liabilities of said companies. Hence, the cooperative in making its purchases cannot invoke exemption, otherwise, that would be tantamount to a shifting of its privilege exemption to the oil companies which are, nevertheless, non-exempt. "Exemption from taxation are highly disfavored in law; and he who claims exemption must be able to justify his claim by the clearest grant of organic and statute law. An exemption from the common burden cannot be permitted to exist upon vague implications". (Collector of Internal Revenue v. Manila Jockey Club, G.R. L-8755, March 23, 1956; Asiatic Petroleum Co. v. Llanes, 49 Phil. 446). Accordingly, all direct and original sale of gasoline and other petroleum products by the oil companies to the cooperative are subject to specific taxes, and their payment as part of the purchase price does not convert it into a tax upon the cooperative, because the test deductible from the decision in the case of the 'Alhambra vs. King and Boozer, 86 L ed 3, 314 U.S. 1, 140 A.L.R. 613' is not whether or not the cooperative pays the tax, but whether the law imposes the tax on it. . . . (Op. Sec. of Justice, dated June 15, 1946). The cooperative for engaging in the resale of gasoline and other petroleum products to its members is exempt from the graduated annual fixed tax imposed in Section 182(A)(2) of the Tax Code provided that the net assets of the cooperative does not exceed P500,000.00 pursuant to Section 66 of Republic Act No. 2023, as amended. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue