SC grants oil firm P6-M tax refund

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THE Supreme Court (SC) has granted an administrative claim for tax refund of an oil company worth more than P6 million.

A July 15, 2015 ruling of the SC’s en banc that was released just recently allowed Chevron Philippines Inc.’s claim made through a motion for reconsideration.

The majority ruling (7-6) was penned by Associate Justice Lucas Bersamin.

The SC directed Bureau of Internal Revenue (BIR) Commissioner Kim Jacinto-Henares to refund excise taxes in the amount of P6,542,400.00 paid on the petroleum products sold to Clark Development Corp. (CDC) from August 2007 to December 2007 or to issue a tax credit certificate of that amount to Chevron.


The oil firm sold and delivered petroleum products to CDC but did not pass on to the latter the excise taxes paid on importation of the petroleum products sold to CDC in taxable year 2007, prompting Chevron to file an administrative claim for tax refund or issuance of tax credit certificate before the BIR until the case reached the High Court.

“Inasmuch as its liability for the payment of the excise taxes accrued immediately upon importation and prior to the removal of the petroleum products from the Customs house, Chevron was bound to pay, and actually paid such taxes,” the SC said.

“But the status of the petroleum products as exempt from the excise taxes would be confirmed only upon their sale to CDC in 2007 [or, for that matter, to any of the other entities or agencies listed in Section 135 of the NIRC (National Internal Revenue Code)].”
Before then, the SC said, Chevron did not have any legal basis to claim the tax refund or the tax credit for the petroleum products.

“Consequently, the payment of the excise taxes by Chevron upon its importation of the petroleum products was deemed illegal and erroneous upon the sale of the petroleum products to CDC.”

The SC explained that Section 204 of the NIRC explicitly allowed Chevron as the statutory taxpayer to claim the refund or the credit of the excise taxes thereby paid.

“In cases involving excise tax exemptions on petroleum products under NIRC, the court has consistently held that it is the statutory taxpayer, not the party who only bears the economic burden, who is entitled to claim the tax refund or tax credit,” the court ruling read.

“But the court has also made clear that this rule does not apply where the law grants the party to whom the economic burden of the tax is shifted by virtue of an exemption from both direct and indirect taxes. In which case, such party must be allowed to claim the tax refund or tax credit even if it is not considered as the statutory taxpayer under the law.”

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