Exemption from Energy Tax

February 8, 1980 BIR RULING NO. 026-80 Philippine Cities Service, Inc. Post Office Box No. 2283 MCC, Makati, Metro Manila Attention: Mr . Robert W . Parsons Vice President Administration & Finance Gentlemen : This refers to your letter dated October 25, 1979 informing this Office that you have under lease contract 18 residential houses plus offices and warehouse space which is affected by the energy tax imposed by Batas Pambansa Blg. 36. We take it that you are the lessee of certain buildings which are being used as residential houses of your executives and also as your office and warehouse space, and that you pay the bills covering, among others, the electric power consumed in said buildings. cdti You now request exemption from payment of the said energy tax on electric power consumption in view of the fact that as a service contractor engaged in petroleum exploration in the Philippines, you are exempt from all taxes, except income tax, pursuant to Presidential Decree No. 87. In reply, I have the honor to inform you that, under Batas Pambansa Blg. 36, the energy tax is imposed on the electric power consumption of every residential customer of electric power utilities. It applies "to every single family dwelling unit whose energy requirements are serviced and measured through only one electric meter issued and installed by an electric power utility company". The single family dwelling unit includes, among others, the residential house. (Sec. 2, Revenue Regulations No. 9-79, implementing Batas Pambansa Blg. 36). Accordingly, if the buildings leased by you house only your offices and warehouse, since the buildings are not considered family dwelling units, electric power consumption of said buildings, is not subject to the energy tax. If the buildings leased by you house your offices and warehouse together with the residential houses, considering the rationale behind the enactment of Batas Pambansa Blg. 36, i.e., promotion of energy conservation, electric power consumption in said buildings will be subject to the energy tax if such consumption falls within the schedule which is subject to tax. As regards the buildings which are used as residential houses, their electric power consumption is subject to the energy tax. It should be noted that the energy tax is imposed on the residential consumer and the electric utility merely collects and remits the same to this Office. (Sections 7 and 8, Revenue Regulations No. 9-79) In other words, in the instant case, the energy tax is imposed on the residential consumers dwelling in the residential houses leased by you. The fact that you pay the bills covering the electric power consumed in the residential houses by the consumers dwelling therein does not convert the energy tax as a tax for which you are liable. Consequently, the fact that you are exempt from all taxes, except income tax, under P.D. No. 87 will not render said electric power consumed in the residential houses leased by you, exempt from the energy tax imposed by Batas Pambansa Blg. 36. Very truly yours, RUBEN B. ANCHETA Acting Commissioner