The Supreme Court (SC) has granted the claim for tax refund of an oil company worth P6.5 million.
Voting 7-6, the SC en banc paved the way for Chevron Philippines Inc.’s (Chevron) motion for reconsideration.
The majority ruling was written by Associate Justice Lucas P. Bersamin.
The SC ordered Internal Revenue Commissioner Kim S. Jacinto-Henares to refund excise tax amounting to P6,542,400 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.
Chevron sold and delivered petroleum products to CDC, but did not pass on to the latter the excise taxes paid on the importation of the petroleum products sold to CDC in taxable year 2007.
This prompted Chevron to file an administrative claim for tax refund or issuance of tax credit certificate before the Bureau of Internal Revenue until the case reached the SC.
“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 National Internal Revenue Code or NIRC],” it added.
Before then, the SC said, Chevron did not have any legal basis to claim the tax refund or the tax credit as to the petroleum products.
“Consequently, the payment of the excise taxes by Chevron upon its importation of petroleum products was deemed illegal and erroneous upon the sale of the petroleum products to CDC,” the SC said.
The SC explained that Section 204 of the NIRC of 1997 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 SC ruling said.
“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,” it said.
In which case, the SC said, 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.