Taxability of FACOMA Performing Activities

November 24, 1959 BIR RULING NO. 615-59 The Regional Director B.I.R. Regional District No. 1 Baguio City S i r : Reference is made to your letter dated June 16, 1959 requesting information as to whether or not a FACOMA performing activities such as are described below would still benefit of the exemption granted under Act No. 3425. cdtech "X FACOMA, organized under Act No. 3425, is engaged in business activities authorized under said Act. It appears, however, that it buys considerable quantities of agricultural products from non-members and from members who are not qualified to be such for the reason that they are not producers of agricultural products. Its sales, therefore, consist of those from the products of members, non-members and/or non-qualified members." In reply thereto, your attention is invited to sections 6 and 7 of Act No. 3425, otherwise known as the Cooperative Marketing Law. Section 6 thereof enjoins every member of the FACOMA to transact the business enumerated therein with members of the Farmers' Cooperative Marketing Association and prohibits any member association from handling the agricultural products of any non-member except for storage. Section 7 thereof provides that an association shall admit as members, or issue common stock only to person engaged in the production of the agricultural products to be handled by or through the association. Section 48 of Act No. 3425 is a tax exemption provision. Every person or association claiming exemption under said provision must, therefore, bring himself clearly within its purview. Inasmuch as "X" FACOMA admitted members who are not planters, it is not an association organized in accordance with Act 3425. Under the circumstances, it cannot avail itself of the exempting provision of said Act. It is, therefore, subject to taxation like any other ordinary corporation. cdt Very truly yours, (SGD.) MELECIO R. DOMINGO Commissioner of Internal Revenue