BIR Ruling

October 9, 1975 Cagayan Electric Cooperative, Inc. Tuguegarao, Cagayan Gentlemen : This refers to your resolution requesting that the Cagayan Electric Cooperative, Inc. be authorized to purchase oil and gas products which are needed in its operation, free from specific taxes. cdt In reply, I have the honor to inform you that the exemption provided by Section 3, Republic Act No. 5741 applies only to such taxes, duties and fees for which the Cagayan Electric Cooperative, Inc. itself would otherwise be directly liable. Consequently, the Cooperative cannot claim exemption from the specific taxes on petroleum products for the reason that the same are taxes directly payable by the manufacturers thereof. (Sec. 124, Tax Code; BIR Ruling No. 64-077 dated Dec. 23, 1964). The fact that the taxes may ultimately be shifted to or passed on the Cooperative as part of the cost of the petroleum products will not convert the same as taxes on the Cooperative for the purpose of the exemption (John Gotamco & Sons, Inc. vs. Commissioner, CTA Case No. 1625, May 21, 1969, citing Philippine Acetylene Co., Inc. vs. Commissioner of Internal Revenue, et. al., G. R. No. L-19707, August 17, 1967). (BIR Ruling No. 70-043 dated August 27, 1970). In view of the foregoing, your request has to be as it is hereby denied for lack of legal basis. Very truly yours, (SGD.) EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-1456-040-3