Tax Liability of New Agrix

July 24, 1981 BIR RULING NO. 125-81 199-00 10-80 125-81 NDC-AGRIX Rehabilitation Committee 190 P. Tuason Cor. 10th Avenue Cubao, Quezon City Attention: Mr . Sidrito V . Ramiro Consultant Gentlemen : This refers to your letter dated September 12, 1980 requesting that all purchase of New Agrix, Inc. be exempted from the payment of all indirect taxes, pursuant to Section 6 of Presidential Decree No. 1717, which provides: "Sec. 6. Exemption from taxes . As a further assistance from the National Government and in order to accelerate the rehabilitation program, New Agrix, Inc. shall be exempt from all taxes under the National Internal Revenue Code, as amended for a period of five years from date hereof." It is represented that New Agrix will engage in the business undertaken by the old Agrix companies like supermarkets, films productions, trading and agricultural endeavors; and that when it buys from manufacturer, the latter pass on the sales tax to New Agrix as part of the purchase price. In reply, I have the honor to inform you that under the foregoing tax exemption provision, New Agrix is only exempt from taxes for which it is directly liable. The sales tax on the manufactured articles purchased by New Agrix is a tax directly payable by the manufacturer. The fact that said tax may ultimately be shifted to or passed on to New Agrix will not constitute the same as tax payable by it for purposes of the exemption. (Philippine Acetylene Co., Inc. vs. Commissioner of Internal Revenue, G.R. No. L-19707, August 17, 1967.) In view thereof, your request cannot be granted for lack of legal basis. Very truly yours, RUBEN B. ANCHETA Acting Commissioner