BIR Ruling

January 17, 1975 The Leyte Electric Cooperative, Inc. Don Vicente "Orestes" Romualdez Memorial Compound San Roque, Tolosa, Leyte Attention: Mr . Eduardo A . Chambers Actg . General Manager Gentlemen : This refers to your letter dated October 24, 1974 to the Revenue District Officer, Revenue District No. 56, Tacloban City, which was referred to this Office for appropriate action on your request for information as to whether you are also exempt from the payment of all taxes on your fuel requirements pursuant to Section 39 of Presidential Decree No. 269, which is hereunder quoted for ready reference: "SEC. 39. Assistance to Cooperatives : Exemption from Taxes, Imposts, Duties, Fees; Assistance from the National Power Corporation . . . . "(a) Provided that it operates in conformity with the purposes and provisions of this Decree, a cooperative (1) shall be permanently exempt from paying income taxes, and (2) for a period ending on December 31; of the thirtieth full calendar year after the date of a cooperative's organization or conversion hereunder, or until it shall be become completely free of indebtedness incurred by borrowing, whichever event first occurs, shall be exempt from the payment (a) of all National Government, local government and municipal taxes and fees, including franchise, filing, recordation, license or permit fees or taxes and any fees, charges, or costs involved in any court or administrative proceeding in which it may be a party, and (b) of all duties or imposts on foreign goods acquired for its operations, the period of such exemption for a new cooperative formed by consolidation, as provided for in Section 29, to begin from as of the date of the beginning of such period for the constituent consolidating cooperative which was most recently organized or converted under this Decree: Provided , That the Board of Administrators shall, after consultation with the Bureau of Internal Revenue, promulgate rules and regulations for the proper implementation of the tax exemptions provided for in this Decree." In reply, I have the honor to inform you that pursuant to the aforequoted provision, you are exempt from the payment of only those taxes for which you are directly liable. Accordingly, you cannot claim tax exemption with respect to the fuel oil being consumed by you, the specific tax thereon being the direct liability of the manufacturers thereof and that the same was already passed on to you as part of the purchase price. Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue TAN-1601-593-5