Latest Stories

SC junks Shell’s bid for P95-M tax refund


MANILA, Philippines—The Supreme Court has rejected Pilipinas Shell Petroleum Corp.’s claim for a refund of more than P95 million in excise taxes which it had paid to the Bureau of Internal Revenue (BIR).

The tribunal’s First Division granted the petition of the BIR for the reversal of the June 24, 2009, decision of the Court of Tax Appeals en banc which ordered the government to run the excise taxes paid by Shell on petroleum products sold to international carriers of foreign registry for their use or consumption outside the country.

Shell based its claim for refund on Section 135 (a) of the National Internal Revenue Code of 1997 which expressly grants excise tax exemption to international carriers for their purchases of locally manufactured petroleum products.

However, the court sided with the BIR’s stand that the Section 148 of the same law also expressly subjects petroleum products to an excise tax before they are removed from the place of production.

“Considering that the excise tax attaches to petroleum products ‘as soon as they are in existence as such,’ there can be no outright exemption from the payment of excise tax on petroleum products sold to international carriers,” the high court’s First Division said in a decision penned by Associate Justice Martin Villarama Jr.

Concurring with the ruling were Chief Justice Renato Corona and Associate Justices Teresita Leonardo-De Castro, Lucas Bersamin and Mariano Del Castillo.

The justices said that based on the 1967 Supreme Court case, Philippine Acetylene Co. v. Commissioner of Internal Revenue, a tax exemption being enjoyed by the buyer could not be the basis of a claim for tax exemption by the manufacturer or seller of the goods for any tax due to it as the manufacturer or seller.

“The excise tax imposed on petroleum products under Section 148 is the direct liability of the manufacturer who cannot invoke the excise tax exemption granted to its buyers who are international carriers,” the court explained.

Thus, it said, Shell’s locally manufactured petroleum products “are clearly subject to excise tax under Section 148.”

Shell filed three separate claims for tax refund in 2002 and 2003 worth more than P99 million. The CTA backed the claim but reduced the final amount to P95 million. When the court rejected the BIR’s motion for reconsideration, the latter elevated the case to the Supreme Court.

The BIR, through the Solicitor General, argued that the obvious intent of the NIRC was to grant excise tax exemption to international carriers and exempt entities as buyers of petroleum products and not the manufacturers or producers of said goods.

The court pointed out that under the law, the specific tax on petroleum products manufactured in the Philippines shall be paid by the producer, or person having possession of the same, and such tax shall be paid within 15 days from date of removal from the place of production.

Thus, the court said, if an airline company purchased jet fuel from an unregistered supplier who could not present proof of payment of specific tax, the company is liable to pay the specific tax on the date of purchase.

Follow Us

Follow us on Facebook Follow on Twitter Follow on Twitter

Recent Stories:

Complete stories on our Digital Edition newsstand for tablets, netbooks and mobile phones; 14-issue free trial. About to step out? Get breaking alerts on your mobile.phone. Text ON INQ BREAKING to 4467, for Globe, Smart and Sun subscribers in the Philippines.

Tags: Bureau of Internal Revenue , Pilipinas Shell Petroleum Corp. , supreme court , tax refund

Copyright © 2014, .
To subscribe to the Philippine Daily Inquirer newspaper in the Philippines, call +63 2 896-6000 for Metro Manila and Metro Cebu or email your subscription request here.
Factual errors? Contact the Philippine Daily Inquirer's day desk. Believe this article violates journalistic ethics? Contact the Inquirer's Reader's Advocate. Or write The Readers' Advocate:
c/o Philippine Daily Inquirer Chino Roces Avenue corner Yague and Mascardo Streets, Makati City, Metro Manila, Philippines Or fax nos. +63 2 8974793 to 94


  • Drunk passenger triggers Bali hijack alert
  • Businesswoman allegedly killed by husband, brother-in-law
  • Roxas suspended from golf club for outburst over P5,000 guest fee
  • SC reschedules oath-taking of new lawyers
  • Ex-COA chief seeks bail after arrest for plunder
  • Sports

  • Guiao fined P100,000 for ‘mongoloid’ comment vs Meralco forward
  • Hawks and Grizzlies revel in home wins
  • Floyd: Manny’s power gone
  • Michael Phelps loses to Lochte in comeback meet
  • Sharapova advances to Stuttgart quarterfinals
  • Lifestyle

  • ‘Recovered’ Banksy works on display ahead of sale
  • Marinduque: Visiting the ‘palm of the ocean’
  • First at Vatican in 60 years
  • How Jing Monis Salon gave Krissy the pixie
  • Want to be a supermodel? Work on your inner beauty, says Joey Espino
  • Entertainment

  • Paul McCartney to play at Candlestick concert
  • Kristoffer Martin: from thug to gay teen
  • Has Ai Ai fallen deeply with ‘sireno?’
  • California court won’t review Jackson doctor case
  • Cris Villonco on play adapted from different medium
  • Business

  • PAL hailed for ban on shark fin cargo
  • BSP to change tint of P100 bill
  • Nielsen sees car buying boom in the Philippines
  • How author of best-seller exposed ‘one percent’ economic elite
  • Bangko Sentral readies new bank lending rules
  • Technology

  • Cloud strength helps Microsoft earnings top Street
  • Vatican announces hashtag for April 27 canonizations
  • Enrile in Masters of the Universe, Lord of the Rings?
  • Top Traits of Digital Marketers
  • No truth to viral no-visa ‘chronicles’
  • Opinion

  • Corruption not invincible after all
  • Editorial Cartoon, April 25, 2014
  • No deal, Janet
  • Like making Al Capone a witness vs his gang
  • MERS-CoV and mothers
  • Global Nation

  • Plane lands at Bali airport in suspected hijacking—Indonesia air force
  • Obama lands in Seoul as N. Korea nuclear test fears grow
  • Militant protests vs Obama, US set
  • Filipinos second-shortest in Southeast Asia
  • China welcomes PH apology
  • Marketplace