BIR Ruling No. 417-2020

REPUBLICOF THE PHILIPPINES

DEPARTMENT OF FINANCE BUREAU OF INTERNAL REVENUE

Quezon City

Republic Act No.8371

BIR Ruling No. 156-15 Republic Act No. 9520 01-0417-2020

JUL2_42020

Cubao, Quezon City 2nd Floor, Room 8, 678 Maya Arcade, Edsa, TRIBAL TRANSPORT MULTI-PURPOSE COOPERATIVE

Attention: BAE PRINSESA FATIMA/JOTELYN E.ADIL

Chairwoman

Madam:

and trading, buy and sell and/or distribution of prime commodities. allegedly granted the Tribal Transport and Multi-Purpose Cooperative (TTMPC) granted under Section 13 of Republic Act No. 8371 and the 1987 Constitution, which exemption from government registrations and other fees, involving agriculture activities This refers to your letter dated December 8, 2017 asserting the economic right

business lines: (1) Transportation -- Bus/Van/SUV/Trucks for the purpose of transporting to all Tribal Tourist Destination Nationwide; and (2) trading, buy and sell, marketing, distribution of basic and prime commodities such as but not limited to rice, corn, flour, sugar, fertilizer, lumber, steel, cements, garments, etc. It is represented that TTMPC is an indigenous cooperative engaged in the following

known as "The Indigenous Peoples Rights Act of 19971, provides the following In reply, please be informed that Sec. 13 of Republic Act (RA) No. 8371, otherwise

shall guarantee the right of ICCs/IPs to freely pursue their economic, social and cultural development. right of ICCs/IPs to self-governance and self-determination and respects the integrity of their values, practices and institutions. Consequently, the State "Section 13. Self-Governance. - The State recognizes the inherent

domains and ancestral lands, and defines the extent of these lands and domains. The ownership given is the indigenous concept of ownershipunder custmary lw whichtraces is rigin tonative titleCruz vs.Secretary of Environment andNatura Resources.dated Dec. 6, 2000 1 As an obiter dictun. Justice Puno stated that "The IPRA recognizes the existence of the indigenous cultural communities or indigenous peoples (ICCs/IPs) as a distinct sector in Philippine society. It grants these people the ownership and possession of their ancestral

OT-0417-2020 JUL 2 4 2020

Page 2 of 4 Tribal Transport, and Multi-Purpose Cooperative

exemption 'must expressly be granted in a statute stated in a language too clear to be and unmistakable from the language of the law on which it is based. Thus, the claimed mistakent." exemptions.3Furthermore, a claim of statutory exemption from taxation should be manifest October 14, 1998, the Supreme Court stated that, "Because taxes are the lifeblood of the nation, the Court has always applied the doctrine of strict interpretation in construing tax In the case of Commissioner of Internal Revenue vs. Court of Appeals2 dated

However, it does not grant tax exemptions in the pursuit of such economic right. The ambiguity, it must be given its literal meaning and applied without attempted interpretation.Therefore, your claim for tax exemption under RA No. 8371 is denied for elementary rule in statutory construction is that if a statute is clear, plain and free from Iack of legal basis. that the ICCs/IPs shall freely pursue their economic, social and cultural development. The economic rights mentioned in the above section is the recognition of the law

as the "Philippine Cooperative Code of 2008, provides the following pertinent provisions, Viz: On the other hand, RA No. 6938, as amended by RA No. 95206, otherwise known

under this Code which do not transact any business with non-members or the general public shall not be subject to any taxes and fees imposed under the internal revenue laws and other tax laws. Cooperatives not falling under this article shall be governed by the succeeding section. "ART. 60. Tax Treatment of Cooperative. - Duly registered cooperatives

cooperatives dealing with nonmembers shall enjoy the following tax transactions with members. In relation to this, the transactions of members limited to final. taxes on members' deposits and documentary tax. with the cooperative shall not be subject to any taxes and fees, including not Notwithstanding the provisions of any law or regulation to the contrary, such exemptions: "ART. 61. Tax and Other Exemptions. - Cooperatives transacting business with both members and non-members shall not be subjected to tax on their

xxx xxx xxx"

implementing Articles 60, 61 and 144 of the Republic Act No. 9520, otherwise known as In relation to the above provision, Section 13 of Joint Rules and Regulations

4 Davao Gulf Lumber Corporation v.Commiioner of Internal Revenue and Court of Appeals. GRNo.17359,.15. July 23, 1998. 5 Camp John Hay Development Corp. vs. Central Board of Assessment Appeals, G.R. No. 169234 dated October 2, 2013. 6 DatedFebruary 17, 2009 2 G.R.No. 124043. per Panganiban, J Gy o oner of Internal Revenue v. Court of Appeals, 271 SCRA 605, 613, April 18, 1997.

0-0417-2020 JUL 2 4 2020

Tribal Transport, and Multi-Purpose Cooperative Page 3 of 4

the Philippine Cooperative Code of 2008 in relation to RA No. 8424 or the National Internal Revenue Code of 1997, as amended, provides that:

FOR THE ISSUANCE OF A CERTIFICATE OF TAX EXEMPTION/RULING "Section 13.Documents to be Attached to the Letter. - APPLICATION

XXX XXX XXX

cooperative has complied with all the necessary documentary requirements for The application for exemption by a qualified cooperative is a pre-requisite for Exemption/Ruling shall be issued only after determination by the BIR that the entitlement under RA 9520. availment of tax exemption by said cooperative. The Certificate of Tax

XXX XXX XXX "

Certificate of Tax Exemption/Ruling within sixty (60) days counted from the date of issuance of certificate of registration. All duly registered cooperatives under RA 9520 shall apply for a

Exemption from taxes herein stated shall apply to the duly-registered cooperatives on the year the certificate of tax exemption/ruling was issued.

under RA 9520, the effectivity of such Certificate of Tax Exemption/Ruling However, for the initial issuance of the Certificate of Tax Exemption/Ruling

issued shall commence from the year RA 9520 took effect: Provided, That the cooperative has registered with the CDA as provided for under Article 144 of RA 520.

period, the late applicants shall be subjected to internal revenue taxes prior For applications for tax exemption not filed within the prescribed

to the issuance of the Certificate of Tax Exemption/Ruling; however, they can apply for tax credit/refund of taxes previously paid from the date of registration with the CDA up to the issuance of the Certificate of Tax

Exemption/Ruling, subject to the rules and procedures for processing tax credit/refund. The BIR shall act on the request for tax refund of taxes previously paid within one hundred twenty (120) days from submission of the complete documents in support of the application filed. " (Emphasis supplied)

The foregoing provisions clearly provide that cooperatives without Certificate of Tax Exemption are subject to internal revenue taxes. However, cooperatives may apply for

tax credit/refund of taxes previously paid from the date of registration with the CDA up to the issuance of the Certificate of Tax Exemption/Ruling, subject to the rules and procedures for processing tax credit/refund. For the processing of the application and issuance of

Certificate of Tax Exemption under RA No. 9520, please see Revenue Memorandum Order

No. 076-2010 which can be found at www.bir.gov.ph.

OT-0417-2020 JUL 2 4 2020

Tribal Transport, and Multi-Purpose Cooperative Page 4 of 4

ruling shall be considered null and void. However, if upon investigation it will be disclosed that the facts are different, then this This ruling is being issued on the basis of the foregoing facts as represented.

Very truly yours,

K1-FR-18-0796 Commissioner of Internal Revenue 1eaa CAESAR R. DULAY 036575

Copy furnished:

Revenue District Office No. 40- Cubao City Revenue Region (RR) No. 07- Quezon City Regional Director Revenue District Officer