EN BANC
[ G.R. No. 210836, September 01, 2015 ]
CHEVRON PHILIPPINES INC. v. CIR +
CHEVRON PHILIPPINES INC., PETITIONER, VS. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
R E S O L U T I O N
BERSAMIN, J.:
Excise tax on petroleum products is essentially a tax on property, the direct liability for which pertains to the statutory taxpayer (i.e., manufacturer, producer or importer). Any excise tax paid by the statutory taxpayer on petroleum products sold
to any of the entities or agencies named in Section 135 of the National Internal Revenue Code (NIRC) exempt from excise tax is deemed illegal or erroneous, and should be credited or refunded to the payor pursuant to Section 204 of the NIRC. This is because the exemption
granted under Section 135 of the NIRC must be construed in favor of the property itself, that is, the petroleum products.
The Case
Before the Court is the Motion for Reconsideration filed by petitioner Chevron Philippines, Inc. (Chevron)[1] vis-a-vis the resolution promulgated on March 19, 2014,[2] whereby the Court's Second Division denied its petition for review on certiorari for failure to show any reversible error on the part of the Court of Tax Appeals (CTA) En Banc. The CTA En Banc had denied Chevron's claim for tax refund or tax credit for the excise taxes paid on its importation of petroleum products that it had sold to the Clark Development Corporation (CDC), an entity exempt from direct and indirect taxes.
The Motion for Reconsideration was later on referred to the Court En Banc after the Second Division noted that the CTA En Banc had denied Chevron's claim for the tax refund or tax credit based on the ruling promulgated in Commissioner of Internal Revenue v. Pilipinas Shell Petroleum Corporation (Pilipinas Shell) on April 25, 2012,[3] but which ruling was meanwhile reversed upon reconsideration by the First Division through the resolution promulgated on February 19, 2014.[4] The Court En Banc accepted the referral last June 16, 2015.
Antecedents
Chevron sold and delivered petroleum products to CDC in the period from August 2007 to December 2007.[5] Chevron did not pass on to CDC the excise taxes paid on the importation of the petroleum products sold to CDC in taxable year 2007;[6] hence, on June 26, 2009, it filed an administrative claim for tax refund or issuance of tax credit certificate in the amount of P6,542,400.00.[7] Considering that respondent Commissioner of Internal Revenue (CIR) did not act on the administrative claim for tax refund or tax credit, Chevron elevated its claim to the CTA by petition for review on June 29, 2009.[8] The case, docketed as CTA Case No. 7939, was raffled to the CTA's First Division.
The CTA First Division denied Chevron's judicial claim for tax refund or tax credit through its decision dated July 31, 2012,[9] and later on also denied Chevron's Motion for Reconsideration on November 20, 2012.[10]
In due course, Chevron appealed to the CTA En Banc (CTA EB No. 964), which, in the decision dated September 30, 2013,[11] affirmed the ruling of the CTA First Division, stating that there was nothing in Section 135(c) of the NIRC that explicitly exempted Chevron as the seller of the imported petroleum products from the payment of the excise taxes; and holding that because it did not fall under any of the categories exempted from paying excise tax, Chevron was not entitled to the tax refund or tax credit.
The CTA En Banc noted that:
Chevron sought reconsideration, but the CTA En Banc denied its motion for that purpose in the resolution dated January 7, 2014.[13]
Chevron appealed to the Court,[14] but the Court (Second Division) denied the petition for review on certiorari through the resolution promulgated on March 19, 2014 for failure to show any reversible error on the part of the CTA En Banc.
Hence, Chevron has filed the Motion for Reconsideration, submitting that it was entitled to the tax refund or tax credit because ruling promulgated on April 25, 2012 in Pilipinas Shell,[15] on which the CTA En Banc had based its denial of the claim of Chevron, was meanwhile reconsidered by the Court's First Division on February 19, 2014.[16]
Issue
The lone issue for resolution is whether Chevron was entitled to the tax refund or the tax credit for the excise taxes paid on the importation of petroleum products that it had sold to CDC in 2007.
Ruling of the Court
Chevron's Motion for Reconsideration is meritorious.
Pilipinas Shell concerns the manufacturer's entitlement to refund or credit of the excise taxes paid on the petroleum products sold to international carriers exempt from excise taxes under Section 135(a) of the NIRC. However, the issue raised here is whether the importer (i.e., Chevron) was entitled to the refund or credit of the excise taxes it paid on petroleum products sold to CDC, a tax-exempt entity under Section 135(c) of the NIRC. Notwithstanding that the claims for refund or credit of excise taxes were premised on different subsections of Section 135 of the NIRC, the basic tax principle applicable was the same in both cases - that excise tax is a tax on property; hence, the exemption from the excise tax expressly granted under Section 135 of the NIRC must be construed in favor of the petroleum products on which the excise tax was initially imposed.
Accordingly, the excise taxes that Chevron paid on its importation of petroleum products subsequently sold to CDC were illegal and erroneous, and should be credited or refunded to Chevron in accordance with Section 204 of the NIRC.
We explain.
Under Section 129[17] of the NIRC, as amended, excise taxes are imposed on two kinds of goods, namely: (a) goods manufactured or produced in the Philippines for domestic sales or consumption or for any other disposition; and (b) things imported. Undoubtedly, the excise tax imposed under Section 129 of the NIRC is a tax on property.[18]
With respect to imported things, Section 131 of the NIRC declares that excise taxes on imported things shall be paid by the owner or importer to the Customs officers, conformably with the regulations of the Department of Finance and before the release of such articles from the customs house, unless the imported things are exempt from excise taxes and the person found to be in possession of the same is other than those legally entitled to such tax exemption. For this purpose, the statutory taxpayer is the importer of the things subject to excise tax.
Chevron, being the statutory taxpayer, paid the excise taxes on its importation of the petroleum products.[19]
Section 135 of the NIRC states:
Pursuant to Section 135(c), supra, petroleum products sold to entities that are by law exempt from direct and indirect taxes are exempt from excise tax. The phrase which are by law exempt from direct and indirect taxes describes the entities to whom the petroleum products must be sold in order to render the exemption operative. Section 135(c) should thus be construed as an exemption in favor of the petroleum products on which the excise tax was levied in the first place. The exemption cannot be granted to the buyers - that is, the entities that are by law exempt from direct and indirect taxes - because they are not under any legal duty to pay the excise tax.
CDC was created to be the implementing and operating arm of the Bases Conversion and Development Authority to manage the Clark Special Economic Zone (CSEZ).[20] As a duly-registered enterprise in the CSEZ, CDC has been exempt from paying direct and indirect taxes pursuant to Section 24[21] of Republic Act No. 7916 (The Special Economic Zone Act of 1995), in relation to Section 15 of Republic Act No. 9400 (Amending Republic Act No. 7227, otherwise known as the Bases Conversion Development Act of 1992).[22]
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 customshouse, Chevron was bound to pay, and actually paid such taxes. 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). Before then, 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. 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, viz.:
It is noteworthy that excise taxes are considered as a kind of indirect tax, the liability for the payment of which may fall on a person other than whoever actually bears the burden of the tax.[23] Simply put, the statutory taxpayer may shift the economic burden of the excise tax payment to another - usually the buyer.
In cases involving excise tax exemptions on petroleum products under Section 135 of the 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.[24] 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.[25]
The general rule applies here because Chevron did not pass on to CDC the excise taxes paid on the importation of the petroleum products, the latter being exempt from indirect taxes by virtue of Section 24 of Republic Act No. 7916, in relation to Section 15 of Republic Act No. 9400, not because Section 135(c) of the NIRC exempted CDC from the payment of excise tax.
Accordingly, conformably with Section 204(C) of the NIRC, supra, and pertinent jurisprudence, Chevron was entitled to the refund or credit of the excise taxes erroneously paid on the importation of the petroleum products sold to CDC.
WHEREFORE, the Court GRANTS petitioner Chevron Philippines, Inc.'s Motion for Reconsideration; DIRECTS respondent Commissioner of Internal Revenue to refund the excise taxes in the amount of P6,542,400.00 paid on the petroleum products sold to Clark Development Corporation in the period from August 2007 to December 2007, or to issue a tax credit certificate of that amount to Chevron Philippines, Inc.
No pronouncement on costs of suit.
Velasco, Jr., Leonardo-De Castro, Brion, Peralta, and Perez, JJ., concur.
Sereno, C.J., Carpio, Mendoza, Perlas-Bernabe, and Leonen, JJ., joins the dissent of J. Del Castillo.
Del Castillo, J., please see dissenting opinion.
Villarama, Jr., J., pls. see separate concurring opinion.
Reyes, J., on leave.
Jardeleza, J., no part.
NOTICE OF JUDGMENT
Sirs/Mesdames:
Please take notice that on September 1, 2015 a Decision/Resolution, copy attached herewith, was rendered by the Supreme Court in the above-entitled case, the original of which was received by this Office on September 21, 2015 at 10:30 a.m.
Very truly yours,
(SGD)
FELIPA G. BORLONGAN-ANAMA
Clerk of Court
[1] Rollo, pp. 519-531.
[2] Id. at 518.
[3] G.R. No. 188497, 671 SCRA 241.
[4] G.R. No. 188497, 717 SCRA 53.
[5] Rollo, pp. 154-155.
[6] Id. at 155-156.
[7] Id. at 153.
[8] Id. at 119-152.
[9] Id. at 98-118.
[10] Id. at 90-96.
[11] Id. at 76-88.
[12] Id. at 84-87.
[13] Id. at 69-74.
[14] Id. at 26-65.
[15] Supra note 3.
[16] Supra note 4.
[17] SEC. 129. Goods Subject to Excise Taxes. - Excise taxes apply to goods manufactured or produced in the Philippines for domestic sale or consumption or for any other disposition and to things imported. The excise tax imposed herein shall be in addition to the value-added tax imposed under Title IV.
For purposes of this Title, excise taxes herein imposed and based on weight or volume capacity or any other physical unit of measurement shall be referred to as "specific tax" and an excise tax herein imposed and based on selling price or other specified value of the good shall be referred to as "advalorem tax. " (as amended, Executive Order No. 273).
[18] Vitug and Acosta, Tax Law and Jurisprudence, Third Edition (2006), p. 26.
[19] Rollo, pp. 155-156.
[20] See Executive Order No. 80 (April 3, 1993).
[21] SECTION 24. Exemption from Taxes Under the National Internal Revenue Code. — Any provision of existing laws, rules and regulations to the contrary notwithstanding, no taxes, local and national, shall be imposed on business establishments operating within the ECOZONE. In lieu of paying taxes, five percent (5%) of the gross income earned by all businesses and enterprises within the ECOZONE shall be remitted to the national government, x x x
[22] Sec. 15. Clark Special Economic Zone (CSEZ) and Clark Freeport Zone (CFZ). x x x
x x x x
The provisions of existing laws, rules and regulations to the contrary notwithstanding, no national and local taxes shall be imposed on registered business enterprises within the CFZ. In lieu of said taxes, a five percent (5%) tax on gross income earned shall be paid by all registered business enterprises within the CFZ and shall be directly remitted as follows: three percent (3%) to the National Government, and two percent (2%) to the treasurer's office of the municipality or city where they are located.
[23] Exxonmobil Petroleum and Chemical Holdings, Inc. - Philippine Branch v. Commissioner of Internal Revenue, G.R. No. 180909, January 19, 2011, 640 SCRA 203, 219.
[24] Philippine Airlines, Inc. v. Commissioner of Internal Revenue, G.R. No. 198759, July 1, 2013, 700 SCRA 322, 332.
[25] Id. at 334.
DISSENTING OPINION
DEL CASTILLO, J.:
Tax refunds and exemptions derogate the State's power of taxation; thus, they must be construed strictly against the taxpayer and liberally in favor of the State.[1] Consequently, a taxpayer must justify its claim for refund or exemption by words too plain to be mistaken and too categorical to be misinterpreted.[2]
Factual Antecedents
Petitioner Chevron Philippines, Inc. is engaged in the importation, distribution, marketing, and sale of petroleum products in the Philippines.[3] For the period August to December 2007, petitioner sold and delivered to Clark Development Corporation (CDC)[4] petroleum products, to wit:
However, since Section 135(c)[6] of the 1997 National Internal Revenue Code (NIRC) exempts CDC from paying excise taxes on petroleum products, peitioner did not pass on to CDC the excise taxes it paid under Section 131(A)[7] of the NIRC.[8] Instead, it filed on June 26, 2009 with the Bureau of Internal Revenue (BIR) Large Taxpayers Services - National Office, an administrative claim for tax refund or credit in the amount of P6,542,400.00,[9] allegedly representing the excise taxes it paid on the importation of the petroleum products it sold to CDC for taxable year 2007.[10]
Respondent Commissioner of Internal Revenue (CIR) did not act on petitioner's claim for tax refund hence, it elevated its claim to the Court of Tax Appeals (CTA) via a Petition for Review.[11] The case was docketed as CTA Case No. 7939 and raffled to the CTA First (1st) Division.
Respondent opposed the claim for tax refund or credit on the ground that there is no provision in the NIRC that expressly exempts the owners or importers of petroleum products from paying excise taxes on the imported products.[12] Respondent opined that Section 135 of the NIRC is a tax exemption in favor of international carriers and tax-exempt entities as buyers of petroleum products, and not in favor of owners or importers of petroleum products, who are the statutory taxpayers of excise taxes under Section 131 of the same Code.[13]
Ruling of the CTA Division
On July 31, 2012, the CTA 1st Division rendered a Decision[14] denying petitioner's claim for refund or credit of excise taxes. Citing Philippine Acetylene Company v. Commissioner of Internal Revenue,[15] the CTA 1st Division underscored that the tax exemption enjoyed by the buyer cannot be the basis of a claim for tax exemption by the manufacturer, seller, or importer of the goods for any tax due to it as the manufacturer, seller, or importer.[16] Corollarily, it ruled that petitioner, as seller of imported petroleum products to tax-exempt entities, cannot claim the exemption granted to its buyers.[17] Besides, the only claim for refund of excise taxes authorized by the NIRC is found in Section 130(D)[18] of the same Code, which petitioner cannot invoke as the petroleum products in this case were not locally produced or manufactured, but were imported.[19] Moreover, in the case of Commissioner of Internal Revenue v. Pilipinas Shell Petroleum Corporation,[20] the Supreme Court already declared that Section 135(a) of the NIRC "merely allows the international carriers to purchase petroleum products without the excise tax component as an added cost in the price fixed by the manufacturers or distributors/sellers. Consequently, the oil companies which sold such petroleum products to international earners are not entitled to a refund of excise taxes previously paid on the goods,"[21] In other words, petitioner, as a seller of imported petroleum products to tax-exempt entities, is not exempt from the payment of excise taxes thereon nor is it entitled to a refund or credit on the excise taxes it paid on the petroleum products.[22]
Aggrieved, petitioner filed a Motion for Reconsideration,[23] which the CTA 1st Division denied in its Resolution dated November 20, 2012.[24]
This prompted petitioner to elevate the case to the CTA En Banc via a Petition for Review,[25] which was docketed as CTA EB No. 964.
Ruling of the CTA En Banc
In a Decision[26] dated September 30, 2013, the CTA En Banc affirmed the ruling of the CTA 1st Division that there is nothing in Section 135(c) of the NIRC that explicitly exempts petitioner, as seller of imported petroleum products, from payment of excise taxes thereon.[27] And since petitioner does not fall in any of the categories exempted from paying excise tax, it is not entitled to a tax refund or credit.[28]
Petitioner sought reconsideration[29] but the CTA En Banc denied the same in a Resolution[30] dated January 7, 2014.
Unfazed, petitioner filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court, which we denied in a Resolution dated March 19, 2014 for failure to show any reversible error in the assailed judgment to warrant the exercise of this Court's discretionary appellate jurisdiction.
Hence, petitioner filed the instant Motion for Reconsideration arguing that it is entitled to a tax refund or credit because the Court's April 25, 2012 Decision in Pilipinas Shell[31] which was the basis for the denial of its claim for refund or credit of excise taxes, was reversed on reconsideration per the Court's February 19, 2014 Resolution.
Petitioner's Arguments
In light of the February 19, 2014 Resolution of the Court in Pilipinas Shell[32] petitioner contends that its claim for tax refund or credit must be granted. It posits that the justification used by the Court in that case similarly applies to the instant case as the denial of the tax refund or credit would likewise result to serious adverse consequences on the supply of fuel to tax-exempt entities under Section 135(c) of the NIRC.[33] Petitioner anchors its theory on the premise that major oil companies would be unwilling to sell petroleum products to tax-exempt entities as they would be unduly burdened by the excise taxes paid upon production or importation.[34]
Petitioner likewise points out that the exemption in Section 135 of the NIRC aims to promote economic growth as investors, both foreign and local, would be encouraged to invest in special economic zones, creating employment opportunities within their localities.[35] However, in order to attain this objective, manufacturers, sellers, and importers should be allowed to claim a refund or credit of the excise taxes paid on the petroleum products sold to tax-exempt entities.[36]
In addition, petitioner argues that following the ruling of the Court in Exxonmobil Petroleum and Chemical Holdings, Inc. - Philippine Branch v. Commissioner of Internal Revenue,[37] petitioner is not liable to pay excise taxes on the petroleum products it sold to CDC. In that case, the Supreme Court ruled that excise taxes are imposed when two conditions concur: first, that the articles subject to tax belong to any of the categories of goods enumerated in Title VI of the NIRC; and second, that said articles are for domestic sale or consumption, excluding those that are actually exported.[38] In this case, the second condition was not met because the petroleum products were not for domestic sale or consumption as these were sold to CDC, which is deemed a separate customs territory and is regarded in law as foreign soil.[39] Thus, petitioner asserts that it is not liable to pay excise taxes on the petroleum products sold to CDC.
To further bolster its claim, petitioner cites Revenue Memorandum Order (RMO) No. 19-06,[40] which prescribes the guidelines and procedures for the processing of pending claims for tax credit/refund of excise tax paid on petroleum products, and two BIR Rulings,[41] which acknowledge that sellers are entitled to a refund of excise taxes paid on petroleum products sold to tax-exempt entities.[42]
Respondent's Arguments
Respondent, on the other hand, maintains that the CTA did not err in denying the claim as there is nothing in Section 135 of the NIRC that grants petitioner exemption from the payment of excise taxes.[43] It insists that the only claim for refund of excise taxes authorized by the NIRC is the payment of excise taxes on exported goods under Section 130(D) of the same Code, which does not apply in this case.[44]
I vote to deny the Motion for Reconsideration.
On April 25, 2012, the Court in the case of Pilipinas Shell[45] rendered a Decision denying Pilipinas Shell's claim for refund on the ground that Section 135(a)[46] of the NIRC does not exempt oil companies selling petroleum products international carriers from the payment of excise tax under Section 148[47] of the NIRC. However, two years after, the Court reversed its April 25, 2012 Decision. Thus, in a Resolution[48] dated February 19, 2014, the Court granted Pilipinas Shell's motion for reconsideration and allowed its claim for refund. In reversing its earlier Decision, the Court ratiocinated that:
Upon close examination, I find it imperative to abandon our February 19, 2014 ruling in Pilipinas Shell[50]
The NIRC does not distinguish between
petroleum products sold to international
carriers and those sold to tax-exempt
entities.
To begin with, the ratiocination adopted therein applies only to international carriers under Section 135(a) of the NIRC, and not to tax-exempt entities under paragraphs (b)[51] and (c) of the same provision. Also, said ruling creates an unreasonable classification or distinction between petroleum products sold to international carriers, and those sold to tax-exempt entities, because manufacturers, sellers, and importers would be allowed to claim a tax refund or credit only under Section 135(a) of the NIRC but not under paragraphs (b) and (c) of the same provision. This is unfair considering that the NIRC does not make a distinction between them.
More important, the prospect of declining sales of aviation jet fuel sold to international carriers on account of the unwillingness of major domestic oil companies to shoulder the burden of excise tax, which in a way encourages "tankering," hinges on speculation. Neither is it a legal justification to grant manufacturers a refund or credit of the excise taxes paid on petroleum products sold to international carriers.
Granting the tax refund or credit
would constitute judicial legislation.
In the same vein, I cannot subscribe to petitioner's postulation that the denial of its claim would result in serious adverse consequences on the supply of fuel to tax-exempt entities under Section 135(c) of the NIRC as oil companies would be unwilling to sell petroleum products to customers operating within the special economic zone. This is not only unsubstantiated but is also not a legal ground to grant petitioner's claim for tax refund or credit. It bears stressing that tax refunds, just like tax exemptions must not rest on vague, uncertain or indefinite inference but should be granted only by a clear and unequivocal provision of law on the basis of language too plain to be mistaken, as taxes are the lifeblood of the government.[52] Thus, unless there is a clear grant of tax exemption or refund in the law, the Court cannot grant petitioner's claim for tax refund or credit as this would constitute judicial legislation, which is not allowed.
Section 135 of the NIRC is not a refund
provision.
Notably, Section 135 of the NIRC is not a refund provision as it does not provide for a tax refund in favor of the buyers, i.e., international carriers and tax-exempt entities, and the sellers of petroleum products. Thus, there is no legal basis to grant petitioner's claim for tax refund or credit.
Besides, if the lawmakers intended to allow manufacturers, sellers, and importers to claim a refund of excise taxes paid on petroleum products sold to international carriers and tax-exempt entities under Section 135 of the NIRC, they would have expressly provided for it, just like in Section 130(D) of the same Code, which categorically allows the refund or credit of excise taxes paid on goods which are locally produced or manufactured and subsequently exported. Obviously, the absence of a tax refund provision in the NIRC in favor of these manufacturers, sellers, and importers of petroleum products only proves that the lawmakers never intended to grant such kind of refund.
In addition, since the excise taxes on the petroleum products were paid pursuant to the NIRC, in this case, Section 131 (A) of the NIRC, these cannot be considered as illegally or erroneously collected taxes. Thus, a claim for tax refund under Section 229[53] of the NIRC will also not prosper.
Section 135 of the NIRC is not a tax
exemption in favor of manufacturers,
sellers, and importers of petroleum
products.
Neither can Section 135 of the NIRC be construed as a tax exemption in favor of manufacturers, sellers, and importers, which would allow them to claim a refund or credit of the excise taxes paid on the petroleum products sold to international carriers and tax-exempt entities. In fact, a simple reading of the provision clearly shows that it is a tax exemption in favor of the buyers, the international carriers and tax-exempt entities under Section 135 of the NIRC. And as the Court in its April 25, 2012 Decision in Pilipinas Shell[54] has previously said, "the tax exemption being enjoyed by the buyer cannot be the basis of a claim for exemption by the manufacturer, seller, or importer."[55] Thus, petitioner cannot use this provision to claim an exemption from the payment of excise tax.
However, while Section 135 of the NIRC is construed as a tax exemption in favor of the buyers, we have consistently ruled that they are not entitled to a refund or credit of the excise taxes paid on the petroleum products because they are not the statutory taxpayers.[56] If so, how could the international carriers and the tax-exempt entities under Section 135 of the NIRC, as buyers, benefit from such exemption? The answer is simple. Section 135 of the NIRC exempts them from paying excise taxes passed on by manufacturers, sellers, and importers to buyers of petroleum products. An excise tax, as we have often said, is an indirect tax wherein the tax liability falls on one person but the burden thereof can be shifted or passed on to another person, such as the consumer.[57] Thus, pursuant to Section 135 of the NIRC, manufacturers, sellers, and importers have no choice but to shoulder the burden of the excise tax as their buyers, the international carriers and the tax-exempt entities under the said provision, are exempt from paying excise tax on petroleum products.
Section 135 of the NIRC merely
prohibits the shifting or passing
on of the burden of excise tax.
As I see it then, Section 135 of the NIRC should simply be construed as prohibition on the shifting or passing on of the burden of excise tax to international carriers and tax-exempt entities, which purchase petroleum products from manufacturers, sellers, and importers. As aptly explained in the Decision dated April 25, 2012 in Pilipinas Shell,[58] Section 135 of the NIRC merely allows international carriers or, in this case, tax-exempt entities, to purchase petroleum products without the excise tax component as an added cost in the price fixed by the manufacturers, sellers, or importers.[59] In other words, while generally excise taxes paid by manufacturers, sellers, and importers may be shifted or passed on to their buyers, Section 135 of the NIRC provides for an exception as it prohibits manufacturers, sellers, and importers from shifting or passing on the excise taxes they paid on the petroleum products sold to international carriers and tax-exempt entities under the said provision.
The BIR Rulings and RMO cited by
petitioner should not override, supplant,
or modify the law.
As to the RMO and BIR Rulings cited by petitioner, the Court is not bound by these administrative interpretations or rulings. As we have consistently ruled, interpretations placed upon a statute by the executive officers, whose duty is to enforce it, are not conclusive and will be ignored if judicially found to be erroneous as the courts will not countenance administrative issuances that override, instead of remaining consistent and in harmony with, the law they seek to apply and implement.[60]
All told, I find that the CTA in this case, did not err in denying petitioner's claim for tax refund or credit. To be clear, Section 135 of the NIRC, upon which petitioner anchors its claim, is not a tax refund provision nor is it a tax exemption in favor of manufacturers, sellers, and importers of petroleum products. Rather, it is a tax exemption for excise tax on petroleum products in favor of the international carriers and the tax-exempt entities under the said provision. It is a prohibition preventing manufacturers, sellers, and importers from shifting or passing on the excise taxes paid on the petroleum products they sold to their buyers, the entities enumerated in the said provision.
In view of the foregoing, I submit that the doctrine laid down in the Resolution dated February 19, 2014 in Pilipinas Shell[61] should be abandoned. It is my opinion that manufacturers, sellers, and importers are not entitled to claim a refund or credit of excise taxes paid on petroleum products sold to, international carriers and tax-exempt entities under Section 135 of the NIRC.
ACCORDINGLY, I vote that petitioner's Motion for Reconsideration be DENIED WITH FINALITY for lack of merit.
[1] Gulf Air Company, Philippine Branch (GF) v. Commissioner of Internal Revenue, G.R. No. 182045, September 19, 2012, 681 SCRA 377, 389.
[2] Id.
[3] Rollo, p. 28.
[4] "CDC is a government-owned and controlled corporation established under Executive Order (EO) No. 80, Series of 1993 as the operating and implementing arm of the Bases Conversion and Development Authority (BCDA). It manages the Clark Special Economic Zone (CSEZ) and Clark Freeport Zone (CFZ). It is a duly registered CSEZ enterprise operating within the CFZ, thus it enjoys, under Section 5 of EO No. 80, all the applicable incentives in the Subic Special Economic and Free Port Zone under Republic Act (RA) No. 7227 as well as those applicable incentives granted in the Export Processing Zones, the Omnibus Investments Code of 1987, the Foreign Investments Act of 1991 and new investments laws which may thereafter be enacted." (Id. at 103.)
[5] Id. at 99.
[6] SEC. 135. Petroleum Products Sold to International Carriers and Exempt Entities or Agencies. - Petroleum products sold to the following are exempt from excise tax:
x x x x
(c) Entities which are by law exempt from direct and indirect taxes.
[7] SEC. 131. Payment of Excise Taxes on Imported Articles. -
(A) Persons Liable. - Excise taxes on imported articles shall be paid by the owner or importer to the Customs Officers, conformably with the regulations of the Department of Finance and before the release of such articles from the customs house, or by the person who is found in possession of articles which are exempt from excise taxes other than those legally entitled to exemption, x x x
[8] Rollo, p. 100.
[9] Total Volume of Gold Products: 570,000 + Total Volume of Silver products: 934,000 = 1,504,000 x P4.35 (excise tax rate under Section 148 (f) of the NIRC = P6,542,400.00; (Id. at 125.)
[10] Id. at 100.
[11] Id. at 119-152.
[12] Id. at 100.
[13] Id. at 100-101.
[14] Id. at 98-118; penned by Associate Justice Esperanza R. Fabon-Victorino and concurred in by Presiding Justice Ernesto D. Acosta and Associate Justice Erlinda P. Uy.
[15] 127 Phil. 461 (1967).
[16] Rollo, p. 112.
[17] Id
[18] SEC. 130. Filing of Return and Payment of Excise Tax on Domestic Products. —
x x x x
(D) Credit for Excise tax on Goods Actually Exported. — When goods locally produced or manufactured are removed and actually exported without returning to the Philippines, whether so exported in their original state or as ingredients or parts of any manufactured goods or products, any excise tax paid thereon shall be credited or refunded upon submission of the proof of actual exportation and upon receipt of the corresponding foreign exchange payment: Provided, That the excise tax on mineral products, except coal and coke, imposed under Section 151 shall not be creditable or refundable even if the mineral products are actually exported.
[19] Rollo, pp. 113-116.
[20] G.R. No. 188497, April 25,2012, 671 SCRA241.
[21] Rollo, p. 113, citing Commissioner of Internal Revenue v. Pilipinas Shell Petroleum Corporation, supra.
[22] Id. at 109-117.
[23] Id. at 394-418.
[24] Id. at 90-96.
[25] Id. at 419-453.
[26] Id. at 76-88; penned by Associate Justice Amelia R. Cotangco-Manalastas and concurred in by Presiding Justice Roman G. Del Rosario and Associate Justices Juanito C. Castaneda, Jr., Lovell R. Bautista, Erlinda P. Uy, Caesar A. Casanova, Esperanza R. Fabon-Victorino, Cielito N. Mindaro-Grulla, and Ma. Belen M. Ringis-Liban.
[27] Id. at 83.
[28] Id.
[29] Id. at 454-478.
[30] Id. at 69-74. Supra note 20.
[31] Commissioner of Internal Revenue v. Pilipinas Shell Petroleum Corporation, G.R. No. 188497, February 19, 2014, 717 SCRA 53 (Resolution).
[33] Rollo, pp. 520-526.
[34] Id. at 526.
[35] Id. at 524.
[36] Id. at 524-526.
[37] 655 Phil. 199(2011).
[38] Id. at 212.
[39] Rollo, pp. 526-529.
[40] Issued on August 10, 2006.
[41] BIR Ruling No. 036-99, dated March 29,1999 and BIR Ruling No. 051-99, dated April 19, 1999.
[42] Rollo, p. 524.
[43] Id. at 536.
[44] Id.
[45] Supra note 20.
[46] SEC. 135. Petroleum Products Sold to International Carriers and Exempt Entities or Agencies. - Petroleum products sold to the following are exempt from excise tax:
(a) International carriers of Philippine or foreign registry on their use or consumption outside the Philippines: Provided, That the petroleum products sold to these international carriers shall be stored in a bonded storage tank and may be disposed of only in accordance with the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner; xxxx
[47] SEC. 148. Manufactured Oils and Other Fuels. - There shall be collected on refined and manufactured mineral oils and motor fuels, the following excise taxes which shall attach to the goods hereunder enumerated as soon as they are in existence as such:
(a) Lubricating oils and greases, including but not limited to, base stock for lube oils and greases, high vacuum distillates, aromatic extracts, and other similar preparations, and additives for lubricating oils and greases, whether such additives are petroleum based or not, per liter and kilogram respectively, of volume capacity or weight, Four pesos and fifty centavos (P4.50): Provided, however, That the excise taxes paid on the purchased feedstock (bunker) used in the manufacture of excisable articles and forming part thereof shall be credited against the excise tax due therefrom: Provided, further, That lubricating oils and greases produced from basestocks and additives on which the excise tax has already been paid shall no longer be subject to excise tax: Provided, finally, That locally produced or imported oils previously taxed as such but are subsequently reprocessed, rerefined or recycled shall likewise be subject to the tax imposed under this Section.
(b) Processed gas, per liter of volume capacity, Five centavos (P0.05);
(c) Waxes and petrolatum, per kilogram, Three pesos and fifty centavos (P3.50);
(d) On denatured alcohol to be used for motive power, per liter of volume capacity, Five centavos (P0.05): Provided, That unless otherwise provided by special laws, if the denatured alcohol is mixed with gasoline, the excise tax on which has already been paid, only the alcohol content shall be subject to the tax herein prescribed. For purposes of this Subsection, the removal of denatured alcohol of not less than one hundred eighty degrees (180°) proof (ninety percent (90%) absolute alcohol) shall be deemed to have been removed for motive power, unless shown otherwise;
(e) Naphtha, regular gasoline and other similar products of distillation, per liter of volume capacity, Four pesos and eighty centavos (P4.80): Provided, however, That naphtha, when used as a raw material in the production of petrochemical products or as replacement fuel for natural-gas-fired-combined cycle power plant, in lieu of locally-extracted natural gas during the non-availability thereof, subject to the rules and regulations to be promulgated by the Secretary of Energy, in consultation with the Secretary of Finance, per liter of volume capacity, Zero (P0.00): Provided, further, That the by-product including fuel oil, diesel fuel, kerosene, pyrolysis gasoline, liquefied petroleum gases and similar oils having more or less the same generating power, which are produced in the processing of naphtha into petrochemical products shall be subject to the applicable excise tax specified in this Section, except when such by-products are transferred to any of the local oil refineries through sale, barter or exchange, for the purpose of further processing or blending into finished products which are subject to excise tax under this Section;
(f) Leaded premium gasoline, per liter of volume capacity, Five pesos and thirty-five centavos (P5.35); unleaded premium gasoline, per liter of volume capacity, Four pesos and thirty-five centavos (P4.35);
(g) Aviation turbojet fuel, per liter of volume capacity, Three pesos and sixty-seven centavos (P3.67);
(h) Kerosene, per liter of volume capacity, Sixty centavos (P0.60): Provided, That kerosene, when used as aviation fuel, shall be subject to the same tax on aviation turbo jet fuel under the preceding paragraph (g), such tax to be assessed on the user thereof;
(i) Diesel fuel oil, and on similar fuel oils having more or less the same generating power, per liter of volume capacity, One peso and sixty-three centavos (P1.63);
(j) Liquefied petroleum gas, per liter, Zero (P0.00): Provided, That liquefied petroleum gas used for motive power shall be taxed at the equivalent rate as the excise tax on diesel fuel oil;
(k) Asphalts, per kilogram, Fifty-six centavos (P0.56); and
(l) Bunker fuel oil, and on similar fuel oils having more or less the same generating power, per liter of volume capacity, Thirty centavos (P0.30).
[48] Commissioner of Internal Revenue v. Pilipinas Shell Petroleum Corporation, Resolution, supra note 32.
[49] Id. at 72-73.
[50] Id.
[51] SEC. 135. Petroleum Products Sold to International Carriers and Exempt Entities or Agencies. - Petroleum products sold to the following are exempt from excise tax:
(b) Exempt entities or agencies covered by tax treaties, conventions and other international agreements for their use or consumption; x x x
[52] Silkair (Singapore) PTE., LTD. v. Commissioner of Internal Revenue, 627 Phil. 453,472 (2010).
[53] SEC. 229. Recovery of Tax Erroneously or Illegally Collected. —No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, of any sum alleged to have been excessively or in any manner wrongfully collected without authority, or of any sum alleged to have been excessively or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress.
In any case, no such suit or proceeding shall be filed after the expiration of two (2) years from the date of payment of the tax or penalty regardless of any supervening cause that may arise after payment: Provided, however, That the Commissioner may, even without a written claim therefor, refund or credit any tax, where on the face of the return upon which payment was made, such payment appears clearly to have been erroneously paid.
[54] Supra note 20.
[55] Id. at 259; citing Philippine Acetylene Co., Inc. v. Commissioner of Internal Revenue, supra note 15.
[56] Silkair (Singapore) Pte. Ltd. v. Commissioner of Internal Revenue, 591 Phil. 754, 767 (2008).
[57] Id. at 765-766.
[58] Supra note 20.
[59] Id. at 263.
[60] Philippine Bank of Communications v. Commissioner of Internal Revenue, 361 Phil. 916, 929 (1999).
[61] Supra note 32.
Before the Court is the Motion for Reconsideration filed by petitioner Chevron Philippines, Inc. (Chevron)[1] vis-a-vis the resolution promulgated on March 19, 2014,[2] whereby the Court's Second Division denied its petition for review on certiorari for failure to show any reversible error on the part of the Court of Tax Appeals (CTA) En Banc. The CTA En Banc had denied Chevron's claim for tax refund or tax credit for the excise taxes paid on its importation of petroleum products that it had sold to the Clark Development Corporation (CDC), an entity exempt from direct and indirect taxes.
The Motion for Reconsideration was later on referred to the Court En Banc after the Second Division noted that the CTA En Banc had denied Chevron's claim for the tax refund or tax credit based on the ruling promulgated in Commissioner of Internal Revenue v. Pilipinas Shell Petroleum Corporation (Pilipinas Shell) on April 25, 2012,[3] but which ruling was meanwhile reversed upon reconsideration by the First Division through the resolution promulgated on February 19, 2014.[4] The Court En Banc accepted the referral last June 16, 2015.
Chevron sold and delivered petroleum products to CDC in the period from August 2007 to December 2007.[5] Chevron did not pass on to CDC the excise taxes paid on the importation of the petroleum products sold to CDC in taxable year 2007;[6] hence, on June 26, 2009, it filed an administrative claim for tax refund or issuance of tax credit certificate in the amount of P6,542,400.00.[7] Considering that respondent Commissioner of Internal Revenue (CIR) did not act on the administrative claim for tax refund or tax credit, Chevron elevated its claim to the CTA by petition for review on June 29, 2009.[8] The case, docketed as CTA Case No. 7939, was raffled to the CTA's First Division.
The CTA First Division denied Chevron's judicial claim for tax refund or tax credit through its decision dated July 31, 2012,[9] and later on also denied Chevron's Motion for Reconsideration on November 20, 2012.[10]
In due course, Chevron appealed to the CTA En Banc (CTA EB No. 964), which, in the decision dated September 30, 2013,[11] affirmed the ruling of the CTA First Division, stating that there was nothing in Section 135(c) of the NIRC that explicitly exempted Chevron as the seller of the imported petroleum products from the payment of the excise taxes; and holding that because it did not fall under any of the categories exempted from paying excise tax, Chevron was not entitled to the tax refund or tax credit.
The CTA En Banc noted that:
Considering that an excise tax is in the nature of an indirect tax where the tax burden can be shifted, Section 135(c) of the NIRC of 1997, as amended, should be construed as prohibiting the shifting of the burden of the excise tax to tax-exempt entities who buys petroleum products from the manufacturer/seller by incorporating the excise tax component as an added cost in the price fixed by the manufacturer/seller.
x x x x
The above discussion is in line with the pronouncement made by the Supreme Court in the case of Commissioner of Internal Revenue v. Pilipinas Shell Petroleum Corporation (Shell case), involving Shell's claim for excise tax refund for petroleum products sold to international carriers. The Supreme Court held that the exemption from excise tax payment on petroleum products under Section 135(a) of the NIRC of 1997, as amended, is conferred on international carriers who purchased the same for their use or consumption outside the Philippines. The oil companies which sold such petroleum products to international carriers are not entitled to a refund of excise taxes previously paid on the petroleum products sold, x x x
x x x x
Accordingly, petitioner is not entitled to any refund or issuance of tax credit certificate on excise taxes paid on its importation of petroleum products sold to CDC pursuant to the doctrine laid down by the Supreme Court in the Shell case.[12]
Chevron sought reconsideration, but the CTA En Banc denied its motion for that purpose in the resolution dated January 7, 2014.[13]
Chevron appealed to the Court,[14] but the Court (Second Division) denied the petition for review on certiorari through the resolution promulgated on March 19, 2014 for failure to show any reversible error on the part of the CTA En Banc.
Hence, Chevron has filed the Motion for Reconsideration, submitting that it was entitled to the tax refund or tax credit because ruling promulgated on April 25, 2012 in Pilipinas Shell,[15] on which the CTA En Banc had based its denial of the claim of Chevron, was meanwhile reconsidered by the Court's First Division on February 19, 2014.[16]
The lone issue for resolution is whether Chevron was entitled to the tax refund or the tax credit for the excise taxes paid on the importation of petroleum products that it had sold to CDC in 2007.
Chevron's Motion for Reconsideration is meritorious.
Pilipinas Shell concerns the manufacturer's entitlement to refund or credit of the excise taxes paid on the petroleum products sold to international carriers exempt from excise taxes under Section 135(a) of the NIRC. However, the issue raised here is whether the importer (i.e., Chevron) was entitled to the refund or credit of the excise taxes it paid on petroleum products sold to CDC, a tax-exempt entity under Section 135(c) of the NIRC. Notwithstanding that the claims for refund or credit of excise taxes were premised on different subsections of Section 135 of the NIRC, the basic tax principle applicable was the same in both cases - that excise tax is a tax on property; hence, the exemption from the excise tax expressly granted under Section 135 of the NIRC must be construed in favor of the petroleum products on which the excise tax was initially imposed.
Accordingly, the excise taxes that Chevron paid on its importation of petroleum products subsequently sold to CDC were illegal and erroneous, and should be credited or refunded to Chevron in accordance with Section 204 of the NIRC.
We explain.
Under Section 129[17] of the NIRC, as amended, excise taxes are imposed on two kinds of goods, namely: (a) goods manufactured or produced in the Philippines for domestic sales or consumption or for any other disposition; and (b) things imported. Undoubtedly, the excise tax imposed under Section 129 of the NIRC is a tax on property.[18]
With respect to imported things, Section 131 of the NIRC declares that excise taxes on imported things shall be paid by the owner or importer to the Customs officers, conformably with the regulations of the Department of Finance and before the release of such articles from the customs house, unless the imported things are exempt from excise taxes and the person found to be in possession of the same is other than those legally entitled to such tax exemption. For this purpose, the statutory taxpayer is the importer of the things subject to excise tax.
Chevron, being the statutory taxpayer, paid the excise taxes on its importation of the petroleum products.[19]
Section 135 of the NIRC states:
SEC. 135. Petroleum Products Sold to International Carriers and Exempt Entities or Agencies. - Petroleum products sold to the following are exempt from excise tax:
(a) International carriers of Philippine or foreign registry on their use or consumption outside the Philippines: Provided, That the petroleum products sold to these international carriers shall be stored in a bonded storage tank and may be disposed of only in accordance with the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner;
(b) Exempt entities or agencies covered by tax treaties, conventions and other international agreement for their use or consumption: Provided, however, That the country of said foreign international carrier or exempt entities or agencies exempts from similar taxes petroleum products sold to Philippine carriers, entities or agencies; and
(c) Entities which are by law exempt from direct and indirect taxes. (Emphasis supplied.)
Pursuant to Section 135(c), supra, petroleum products sold to entities that are by law exempt from direct and indirect taxes are exempt from excise tax. The phrase which are by law exempt from direct and indirect taxes describes the entities to whom the petroleum products must be sold in order to render the exemption operative. Section 135(c) should thus be construed as an exemption in favor of the petroleum products on which the excise tax was levied in the first place. The exemption cannot be granted to the buyers - that is, the entities that are by law exempt from direct and indirect taxes - because they are not under any legal duty to pay the excise tax.
CDC was created to be the implementing and operating arm of the Bases Conversion and Development Authority to manage the Clark Special Economic Zone (CSEZ).[20] As a duly-registered enterprise in the CSEZ, CDC has been exempt from paying direct and indirect taxes pursuant to Section 24[21] of Republic Act No. 7916 (The Special Economic Zone Act of 1995), in relation to Section 15 of Republic Act No. 9400 (Amending Republic Act No. 7227, otherwise known as the Bases Conversion Development Act of 1992).[22]
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 customshouse, Chevron was bound to pay, and actually paid such taxes. 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). Before then, 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. 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, viz.:
SEC 204. Authority of the Commissioner to Compromise, Abate and Refund or Credit Taxes. - The Commissioner may -
x x x x
(C) Credit or refund taxes erroneously or illegally received or penalties imposed without authority, refund the value of internal revenue stamps when they are returned in good condition by the purchaser, and, in his discretion, redeem or change unused stamps that have been rendered unfit for use and refund their value upon proof of destruction. No credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing with the Commissioner a claim for credit or refund within two (2) years after payment of the tax or penalty: Provided, however, That a return filed showing an overpayment shall be considered as a written claim for credit or refund.
It is noteworthy that excise taxes are considered as a kind of indirect tax, the liability for the payment of which may fall on a person other than whoever actually bears the burden of the tax.[23] Simply put, the statutory taxpayer may shift the economic burden of the excise tax payment to another - usually the buyer.
In cases involving excise tax exemptions on petroleum products under Section 135 of the 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.[24] 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.[25]
The general rule applies here because Chevron did not pass on to CDC the excise taxes paid on the importation of the petroleum products, the latter being exempt from indirect taxes by virtue of Section 24 of Republic Act No. 7916, in relation to Section 15 of Republic Act No. 9400, not because Section 135(c) of the NIRC exempted CDC from the payment of excise tax.
Accordingly, conformably with Section 204(C) of the NIRC, supra, and pertinent jurisprudence, Chevron was entitled to the refund or credit of the excise taxes erroneously paid on the importation of the petroleum products sold to CDC.
WHEREFORE, the Court GRANTS petitioner Chevron Philippines, Inc.'s Motion for Reconsideration; DIRECTS respondent Commissioner of Internal Revenue to refund the excise taxes in the amount of P6,542,400.00 paid on the petroleum products sold to Clark Development Corporation in the period from August 2007 to December 2007, or to issue a tax credit certificate of that amount to Chevron Philippines, Inc.
No pronouncement on costs of suit.
Velasco, Jr., Leonardo-De Castro, Brion, Peralta, and Perez, JJ., concur.
Sereno, C.J., Carpio, Mendoza, Perlas-Bernabe, and Leonen, JJ., joins the dissent of J. Del Castillo.
Del Castillo, J., please see dissenting opinion.
Villarama, Jr., J., pls. see separate concurring opinion.
Reyes, J., on leave.
Jardeleza, J., no part.
Sirs/Mesdames:
Please take notice that on September 1, 2015 a Decision/Resolution, copy attached herewith, was rendered by the Supreme Court in the above-entitled case, the original of which was received by this Office on September 21, 2015 at 10:30 a.m.
(SGD)
FELIPA G. BORLONGAN-ANAMA
Clerk of Court
[1] Rollo, pp. 519-531.
[2] Id. at 518.
[3] G.R. No. 188497, 671 SCRA 241.
[4] G.R. No. 188497, 717 SCRA 53.
[5] Rollo, pp. 154-155.
[6] Id. at 155-156.
[7] Id. at 153.
[8] Id. at 119-152.
[9] Id. at 98-118.
[10] Id. at 90-96.
[11] Id. at 76-88.
[12] Id. at 84-87.
[13] Id. at 69-74.
[14] Id. at 26-65.
[15] Supra note 3.
[16] Supra note 4.
[17] SEC. 129. Goods Subject to Excise Taxes. - Excise taxes apply to goods manufactured or produced in the Philippines for domestic sale or consumption or for any other disposition and to things imported. The excise tax imposed herein shall be in addition to the value-added tax imposed under Title IV.
For purposes of this Title, excise taxes herein imposed and based on weight or volume capacity or any other physical unit of measurement shall be referred to as "specific tax" and an excise tax herein imposed and based on selling price or other specified value of the good shall be referred to as "advalorem tax. " (as amended, Executive Order No. 273).
[18] Vitug and Acosta, Tax Law and Jurisprudence, Third Edition (2006), p. 26.
[19] Rollo, pp. 155-156.
[20] See Executive Order No. 80 (April 3, 1993).
[21] SECTION 24. Exemption from Taxes Under the National Internal Revenue Code. — Any provision of existing laws, rules and regulations to the contrary notwithstanding, no taxes, local and national, shall be imposed on business establishments operating within the ECOZONE. In lieu of paying taxes, five percent (5%) of the gross income earned by all businesses and enterprises within the ECOZONE shall be remitted to the national government, x x x
[22] Sec. 15. Clark Special Economic Zone (CSEZ) and Clark Freeport Zone (CFZ). x x x
x x x x
The provisions of existing laws, rules and regulations to the contrary notwithstanding, no national and local taxes shall be imposed on registered business enterprises within the CFZ. In lieu of said taxes, a five percent (5%) tax on gross income earned shall be paid by all registered business enterprises within the CFZ and shall be directly remitted as follows: three percent (3%) to the National Government, and two percent (2%) to the treasurer's office of the municipality or city where they are located.
[23] Exxonmobil Petroleum and Chemical Holdings, Inc. - Philippine Branch v. Commissioner of Internal Revenue, G.R. No. 180909, January 19, 2011, 640 SCRA 203, 219.
[24] Philippine Airlines, Inc. v. Commissioner of Internal Revenue, G.R. No. 198759, July 1, 2013, 700 SCRA 322, 332.
[25] Id. at 334.
DEL CASTILLO, J.:
Tax refunds and exemptions derogate the State's power of taxation; thus, they must be construed strictly against the taxpayer and liberally in favor of the State.[1] Consequently, a taxpayer must justify its claim for refund or exemption by words too plain to be mistaken and too categorical to be misinterpreted.[2]
Factual Antecedents
Petitioner Chevron Philippines, Inc. is engaged in the importation, distribution, marketing, and sale of petroleum products in the Philippines.[3] For the period August to December 2007, petitioner sold and delivered to Clark Development Corporation (CDC)[4] petroleum products, to wit:
However, since Section 135(c)[6] of the 1997 National Internal Revenue Code (NIRC) exempts CDC from paying excise taxes on petroleum products, peitioner did not pass on to CDC the excise taxes it paid under Section 131(A)[7] of the NIRC.[8] Instead, it filed on June 26, 2009 with the Bureau of Internal Revenue (BIR) Large Taxpayers Services - National Office, an administrative claim for tax refund or credit in the amount of P6,542,400.00,[9] allegedly representing the excise taxes it paid on the importation of the petroleum products it sold to CDC for taxable year 2007.[10]
Respondent Commissioner of Internal Revenue (CIR) did not act on petitioner's claim for tax refund hence, it elevated its claim to the Court of Tax Appeals (CTA) via a Petition for Review.[11] The case was docketed as CTA Case No. 7939 and raffled to the CTA First (1st) Division.
Respondent opposed the claim for tax refund or credit on the ground that there is no provision in the NIRC that expressly exempts the owners or importers of petroleum products from paying excise taxes on the imported products.[12] Respondent opined that Section 135 of the NIRC is a tax exemption in favor of international carriers and tax-exempt entities as buyers of petroleum products, and not in favor of owners or importers of petroleum products, who are the statutory taxpayers of excise taxes under Section 131 of the same Code.[13]
Ruling of the CTA Division
On July 31, 2012, the CTA 1st Division rendered a Decision[14] denying petitioner's claim for refund or credit of excise taxes. Citing Philippine Acetylene Company v. Commissioner of Internal Revenue,[15] the CTA 1st Division underscored that the tax exemption enjoyed by the buyer cannot be the basis of a claim for tax exemption by the manufacturer, seller, or importer of the goods for any tax due to it as the manufacturer, seller, or importer.[16] Corollarily, it ruled that petitioner, as seller of imported petroleum products to tax-exempt entities, cannot claim the exemption granted to its buyers.[17] Besides, the only claim for refund of excise taxes authorized by the NIRC is found in Section 130(D)[18] of the same Code, which petitioner cannot invoke as the petroleum products in this case were not locally produced or manufactured, but were imported.[19] Moreover, in the case of Commissioner of Internal Revenue v. Pilipinas Shell Petroleum Corporation,[20] the Supreme Court already declared that Section 135(a) of the NIRC "merely allows the international carriers to purchase petroleum products without the excise tax component as an added cost in the price fixed by the manufacturers or distributors/sellers. Consequently, the oil companies which sold such petroleum products to international earners are not entitled to a refund of excise taxes previously paid on the goods,"[21] In other words, petitioner, as a seller of imported petroleum products to tax-exempt entities, is not exempt from the payment of excise taxes thereon nor is it entitled to a refund or credit on the excise taxes it paid on the petroleum products.[22]
Aggrieved, petitioner filed a Motion for Reconsideration,[23] which the CTA 1st Division denied in its Resolution dated November 20, 2012.[24]
This prompted petitioner to elevate the case to the CTA En Banc via a Petition for Review,[25] which was docketed as CTA EB No. 964.
Ruling of the CTA En Banc
In a Decision[26] dated September 30, 2013, the CTA En Banc affirmed the ruling of the CTA 1st Division that there is nothing in Section 135(c) of the NIRC that explicitly exempts petitioner, as seller of imported petroleum products, from payment of excise taxes thereon.[27] And since petitioner does not fall in any of the categories exempted from paying excise tax, it is not entitled to a tax refund or credit.[28]
Petitioner sought reconsideration[29] but the CTA En Banc denied the same in a Resolution[30] dated January 7, 2014.
Unfazed, petitioner filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court, which we denied in a Resolution dated March 19, 2014 for failure to show any reversible error in the assailed judgment to warrant the exercise of this Court's discretionary appellate jurisdiction.
Hence, petitioner filed the instant Motion for Reconsideration arguing that it is entitled to a tax refund or credit because the Court's April 25, 2012 Decision in Pilipinas Shell[31] which was the basis for the denial of its claim for refund or credit of excise taxes, was reversed on reconsideration per the Court's February 19, 2014 Resolution.
Petitioner's Arguments
In light of the February 19, 2014 Resolution of the Court in Pilipinas Shell[32] petitioner contends that its claim for tax refund or credit must be granted. It posits that the justification used by the Court in that case similarly applies to the instant case as the denial of the tax refund or credit would likewise result to serious adverse consequences on the supply of fuel to tax-exempt entities under Section 135(c) of the NIRC.[33] Petitioner anchors its theory on the premise that major oil companies would be unwilling to sell petroleum products to tax-exempt entities as they would be unduly burdened by the excise taxes paid upon production or importation.[34]
Petitioner likewise points out that the exemption in Section 135 of the NIRC aims to promote economic growth as investors, both foreign and local, would be encouraged to invest in special economic zones, creating employment opportunities within their localities.[35] However, in order to attain this objective, manufacturers, sellers, and importers should be allowed to claim a refund or credit of the excise taxes paid on the petroleum products sold to tax-exempt entities.[36]
In addition, petitioner argues that following the ruling of the Court in Exxonmobil Petroleum and Chemical Holdings, Inc. - Philippine Branch v. Commissioner of Internal Revenue,[37] petitioner is not liable to pay excise taxes on the petroleum products it sold to CDC. In that case, the Supreme Court ruled that excise taxes are imposed when two conditions concur: first, that the articles subject to tax belong to any of the categories of goods enumerated in Title VI of the NIRC; and second, that said articles are for domestic sale or consumption, excluding those that are actually exported.[38] In this case, the second condition was not met because the petroleum products were not for domestic sale or consumption as these were sold to CDC, which is deemed a separate customs territory and is regarded in law as foreign soil.[39] Thus, petitioner asserts that it is not liable to pay excise taxes on the petroleum products sold to CDC.
To further bolster its claim, petitioner cites Revenue Memorandum Order (RMO) No. 19-06,[40] which prescribes the guidelines and procedures for the processing of pending claims for tax credit/refund of excise tax paid on petroleum products, and two BIR Rulings,[41] which acknowledge that sellers are entitled to a refund of excise taxes paid on petroleum products sold to tax-exempt entities.[42]
Respondent's Arguments
Respondent, on the other hand, maintains that the CTA did not err in denying the claim as there is nothing in Section 135 of the NIRC that grants petitioner exemption from the payment of excise taxes.[43] It insists that the only claim for refund of excise taxes authorized by the NIRC is the payment of excise taxes on exported goods under Section 130(D) of the same Code, which does not apply in this case.[44]
I vote to deny the Motion for Reconsideration.
On April 25, 2012, the Court in the case of Pilipinas Shell[45] rendered a Decision denying Pilipinas Shell's claim for refund on the ground that Section 135(a)[46] of the NIRC does not exempt oil companies selling petroleum products international carriers from the payment of excise tax under Section 148[47] of the NIRC. However, two years after, the Court reversed its April 25, 2012 Decision. Thus, in a Resolution[48] dated February 19, 2014, the Court granted Pilipinas Shell's motion for reconsideration and allowed its claim for refund. In reversing its earlier Decision, the Court ratiocinated that:
We maintain that Section 135(a), in fulfillment of international agreement and practice to exempt aviation fuel from excise tax and other impositions, prohibits the passing [on] of the excise tax to international carriers [that buy] petroleum products from local manufacturers/sellers such as respondent. However, we agree that there is a need to re[-]examine the effect of denying the domestic manufacturers/sellers' claim for refund of the excise taxes they already paid on petroleum products sold to international carriers, and its serious implications on our Government's commitment to the goals and objectives of the Chicago Convention.
The Chicago Convention, which established the legal framework for international civil aviation, did not deal comprehensively with tax matters. Article 24(a) of the Convention simply provides that fuel and lubricating oils on board an aircraft of a Contracting State, on arrival in the territory of another Contracting State and retained on board on leaving the territory of that State, shall be exempt from customs duty, inspection fees or similar national or local duties and charges. Subsequently, the exemption of airlines from national taxes and customs duties on spare parts and fuel has become a standard element of bilateral air service agreements (ASAs) between individual countries.
The importance of exemption from aviation fuel tax was underscored in the following observation made by a British author in a paper assessing the debate on using tax to control aviation emissions and the obstacles to introducing excise duty on aviation fuel, thus:
Without any international agreement on taxing fuel, it is highly likely that moves to impose duty on international flights, either at a domestic or European level, would encourage 'tankering': carriers filling [fuel tanks to the limit] whenever they [land] outside the EU to avoid paying tax. Clearly, this would be entirely counterproductive. Aircraft would be travelling further than necessary to fill up in low-tax jurisdictions; in addition they would be burning up more fuel when carrying the extra weight of a full fuel tank.With the prospect of declining sales of aviation jet fuel x x x to international carriers on account of major domestic oil companies' unwillingness to shoulder the burden of excise tax, or of petroleum products being sold to said carriers by local manufacturers or sellers at still high prices, the practice of "tankering" would not be discouraged. This scenario does not augur well for the Philippines' growing economy and the booming tourism industry. Worse, our Government would be risking retaliatory action under several bilateral agreements with various countries. Evidently, construction of the tax exemption provision in question should give primary consideration to its broad implications on our commitment under international agreements.
In view of the foregoing reasons, we find merit in respondent's motion for reconsideration. We therefore hold that respondent, as the statutory taxpayer who is directly liable to pay the excise tax on its petroleum products, is entitled to a refund or credit of the excise taxes it paid for petroleum products sold to international carriers, the latter having been granted exemption from the payment of said excise tax under Sec. 135(a) of the NIRC.[49]
Upon close examination, I find it imperative to abandon our February 19, 2014 ruling in Pilipinas Shell[50]
The NIRC does not distinguish between
petroleum products sold to international
carriers and those sold to tax-exempt
entities.
To begin with, the ratiocination adopted therein applies only to international carriers under Section 135(a) of the NIRC, and not to tax-exempt entities under paragraphs (b)[51] and (c) of the same provision. Also, said ruling creates an unreasonable classification or distinction between petroleum products sold to international carriers, and those sold to tax-exempt entities, because manufacturers, sellers, and importers would be allowed to claim a tax refund or credit only under Section 135(a) of the NIRC but not under paragraphs (b) and (c) of the same provision. This is unfair considering that the NIRC does not make a distinction between them.
More important, the prospect of declining sales of aviation jet fuel sold to international carriers on account of the unwillingness of major domestic oil companies to shoulder the burden of excise tax, which in a way encourages "tankering," hinges on speculation. Neither is it a legal justification to grant manufacturers a refund or credit of the excise taxes paid on petroleum products sold to international carriers.
Granting the tax refund or credit
would constitute judicial legislation.
In the same vein, I cannot subscribe to petitioner's postulation that the denial of its claim would result in serious adverse consequences on the supply of fuel to tax-exempt entities under Section 135(c) of the NIRC as oil companies would be unwilling to sell petroleum products to customers operating within the special economic zone. This is not only unsubstantiated but is also not a legal ground to grant petitioner's claim for tax refund or credit. It bears stressing that tax refunds, just like tax exemptions must not rest on vague, uncertain or indefinite inference but should be granted only by a clear and unequivocal provision of law on the basis of language too plain to be mistaken, as taxes are the lifeblood of the government.[52] Thus, unless there is a clear grant of tax exemption or refund in the law, the Court cannot grant petitioner's claim for tax refund or credit as this would constitute judicial legislation, which is not allowed.
Section 135 of the NIRC is not a refund
provision.
Notably, Section 135 of the NIRC is not a refund provision as it does not provide for a tax refund in favor of the buyers, i.e., international carriers and tax-exempt entities, and the sellers of petroleum products. Thus, there is no legal basis to grant petitioner's claim for tax refund or credit.
Besides, if the lawmakers intended to allow manufacturers, sellers, and importers to claim a refund of excise taxes paid on petroleum products sold to international carriers and tax-exempt entities under Section 135 of the NIRC, they would have expressly provided for it, just like in Section 130(D) of the same Code, which categorically allows the refund or credit of excise taxes paid on goods which are locally produced or manufactured and subsequently exported. Obviously, the absence of a tax refund provision in the NIRC in favor of these manufacturers, sellers, and importers of petroleum products only proves that the lawmakers never intended to grant such kind of refund.
In addition, since the excise taxes on the petroleum products were paid pursuant to the NIRC, in this case, Section 131 (A) of the NIRC, these cannot be considered as illegally or erroneously collected taxes. Thus, a claim for tax refund under Section 229[53] of the NIRC will also not prosper.
Section 135 of the NIRC is not a tax
exemption in favor of manufacturers,
sellers, and importers of petroleum
products.
Neither can Section 135 of the NIRC be construed as a tax exemption in favor of manufacturers, sellers, and importers, which would allow them to claim a refund or credit of the excise taxes paid on the petroleum products sold to international carriers and tax-exempt entities. In fact, a simple reading of the provision clearly shows that it is a tax exemption in favor of the buyers, the international carriers and tax-exempt entities under Section 135 of the NIRC. And as the Court in its April 25, 2012 Decision in Pilipinas Shell[54] has previously said, "the tax exemption being enjoyed by the buyer cannot be the basis of a claim for exemption by the manufacturer, seller, or importer."[55] Thus, petitioner cannot use this provision to claim an exemption from the payment of excise tax.
However, while Section 135 of the NIRC is construed as a tax exemption in favor of the buyers, we have consistently ruled that they are not entitled to a refund or credit of the excise taxes paid on the petroleum products because they are not the statutory taxpayers.[56] If so, how could the international carriers and the tax-exempt entities under Section 135 of the NIRC, as buyers, benefit from such exemption? The answer is simple. Section 135 of the NIRC exempts them from paying excise taxes passed on by manufacturers, sellers, and importers to buyers of petroleum products. An excise tax, as we have often said, is an indirect tax wherein the tax liability falls on one person but the burden thereof can be shifted or passed on to another person, such as the consumer.[57] Thus, pursuant to Section 135 of the NIRC, manufacturers, sellers, and importers have no choice but to shoulder the burden of the excise tax as their buyers, the international carriers and the tax-exempt entities under the said provision, are exempt from paying excise tax on petroleum products.
Section 135 of the NIRC merely
prohibits the shifting or passing
on of the burden of excise tax.
As I see it then, Section 135 of the NIRC should simply be construed as prohibition on the shifting or passing on of the burden of excise tax to international carriers and tax-exempt entities, which purchase petroleum products from manufacturers, sellers, and importers. As aptly explained in the Decision dated April 25, 2012 in Pilipinas Shell,[58] Section 135 of the NIRC merely allows international carriers or, in this case, tax-exempt entities, to purchase petroleum products without the excise tax component as an added cost in the price fixed by the manufacturers, sellers, or importers.[59] In other words, while generally excise taxes paid by manufacturers, sellers, and importers may be shifted or passed on to their buyers, Section 135 of the NIRC provides for an exception as it prohibits manufacturers, sellers, and importers from shifting or passing on the excise taxes they paid on the petroleum products sold to international carriers and tax-exempt entities under the said provision.
The BIR Rulings and RMO cited by
petitioner should not override, supplant,
or modify the law.
As to the RMO and BIR Rulings cited by petitioner, the Court is not bound by these administrative interpretations or rulings. As we have consistently ruled, interpretations placed upon a statute by the executive officers, whose duty is to enforce it, are not conclusive and will be ignored if judicially found to be erroneous as the courts will not countenance administrative issuances that override, instead of remaining consistent and in harmony with, the law they seek to apply and implement.[60]
All told, I find that the CTA in this case, did not err in denying petitioner's claim for tax refund or credit. To be clear, Section 135 of the NIRC, upon which petitioner anchors its claim, is not a tax refund provision nor is it a tax exemption in favor of manufacturers, sellers, and importers of petroleum products. Rather, it is a tax exemption for excise tax on petroleum products in favor of the international carriers and the tax-exempt entities under the said provision. It is a prohibition preventing manufacturers, sellers, and importers from shifting or passing on the excise taxes paid on the petroleum products they sold to their buyers, the entities enumerated in the said provision.
In view of the foregoing, I submit that the doctrine laid down in the Resolution dated February 19, 2014 in Pilipinas Shell[61] should be abandoned. It is my opinion that manufacturers, sellers, and importers are not entitled to claim a refund or credit of excise taxes paid on petroleum products sold to, international carriers and tax-exempt entities under Section 135 of the NIRC.
ACCORDINGLY, I vote that petitioner's Motion for Reconsideration be DENIED WITH FINALITY for lack of merit.
[1] Gulf Air Company, Philippine Branch (GF) v. Commissioner of Internal Revenue, G.R. No. 182045, September 19, 2012, 681 SCRA 377, 389.
[2] Id.
[3] Rollo, p. 28.
[4] "CDC is a government-owned and controlled corporation established under Executive Order (EO) No. 80, Series of 1993 as the operating and implementing arm of the Bases Conversion and Development Authority (BCDA). It manages the Clark Special Economic Zone (CSEZ) and Clark Freeport Zone (CFZ). It is a duly registered CSEZ enterprise operating within the CFZ, thus it enjoys, under Section 5 of EO No. 80, all the applicable incentives in the Subic Special Economic and Free Port Zone under Republic Act (RA) No. 7227 as well as those applicable incentives granted in the Export Processing Zones, the Omnibus Investments Code of 1987, the Foreign Investments Act of 1991 and new investments laws which may thereafter be enacted." (Id. at 103.)
[5] Id. at 99.
[6] SEC. 135. Petroleum Products Sold to International Carriers and Exempt Entities or Agencies. - Petroleum products sold to the following are exempt from excise tax:
x x x x
(c) Entities which are by law exempt from direct and indirect taxes.
[7] SEC. 131. Payment of Excise Taxes on Imported Articles. -
(A) Persons Liable. - Excise taxes on imported articles shall be paid by the owner or importer to the Customs Officers, conformably with the regulations of the Department of Finance and before the release of such articles from the customs house, or by the person who is found in possession of articles which are exempt from excise taxes other than those legally entitled to exemption, x x x
[8] Rollo, p. 100.
[9] Total Volume of Gold Products: 570,000 + Total Volume of Silver products: 934,000 = 1,504,000 x P4.35 (excise tax rate under Section 148 (f) of the NIRC = P6,542,400.00; (Id. at 125.)
[10] Id. at 100.
[11] Id. at 119-152.
[12] Id. at 100.
[13] Id. at 100-101.
[14] Id. at 98-118; penned by Associate Justice Esperanza R. Fabon-Victorino and concurred in by Presiding Justice Ernesto D. Acosta and Associate Justice Erlinda P. Uy.
[15] 127 Phil. 461 (1967).
[16] Rollo, p. 112.
[17] Id
[18] SEC. 130. Filing of Return and Payment of Excise Tax on Domestic Products. —
x x x x
(D) Credit for Excise tax on Goods Actually Exported. — When goods locally produced or manufactured are removed and actually exported without returning to the Philippines, whether so exported in their original state or as ingredients or parts of any manufactured goods or products, any excise tax paid thereon shall be credited or refunded upon submission of the proof of actual exportation and upon receipt of the corresponding foreign exchange payment: Provided, That the excise tax on mineral products, except coal and coke, imposed under Section 151 shall not be creditable or refundable even if the mineral products are actually exported.
[19] Rollo, pp. 113-116.
[20] G.R. No. 188497, April 25,2012, 671 SCRA241.
[21] Rollo, p. 113, citing Commissioner of Internal Revenue v. Pilipinas Shell Petroleum Corporation, supra.
[22] Id. at 109-117.
[23] Id. at 394-418.
[24] Id. at 90-96.
[25] Id. at 419-453.
[26] Id. at 76-88; penned by Associate Justice Amelia R. Cotangco-Manalastas and concurred in by Presiding Justice Roman G. Del Rosario and Associate Justices Juanito C. Castaneda, Jr., Lovell R. Bautista, Erlinda P. Uy, Caesar A. Casanova, Esperanza R. Fabon-Victorino, Cielito N. Mindaro-Grulla, and Ma. Belen M. Ringis-Liban.
[27] Id. at 83.
[28] Id.
[29] Id. at 454-478.
[30] Id. at 69-74. Supra note 20.
[31] Commissioner of Internal Revenue v. Pilipinas Shell Petroleum Corporation, G.R. No. 188497, February 19, 2014, 717 SCRA 53 (Resolution).
[33] Rollo, pp. 520-526.
[34] Id. at 526.
[35] Id. at 524.
[36] Id. at 524-526.
[37] 655 Phil. 199(2011).
[38] Id. at 212.
[39] Rollo, pp. 526-529.
[40] Issued on August 10, 2006.
[41] BIR Ruling No. 036-99, dated March 29,1999 and BIR Ruling No. 051-99, dated April 19, 1999.
[42] Rollo, p. 524.
[43] Id. at 536.
[44] Id.
[45] Supra note 20.
[46] SEC. 135. Petroleum Products Sold to International Carriers and Exempt Entities or Agencies. - Petroleum products sold to the following are exempt from excise tax:
(a) International carriers of Philippine or foreign registry on their use or consumption outside the Philippines: Provided, That the petroleum products sold to these international carriers shall be stored in a bonded storage tank and may be disposed of only in accordance with the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner; xxxx
[47] SEC. 148. Manufactured Oils and Other Fuels. - There shall be collected on refined and manufactured mineral oils and motor fuels, the following excise taxes which shall attach to the goods hereunder enumerated as soon as they are in existence as such:
(a) Lubricating oils and greases, including but not limited to, base stock for lube oils and greases, high vacuum distillates, aromatic extracts, and other similar preparations, and additives for lubricating oils and greases, whether such additives are petroleum based or not, per liter and kilogram respectively, of volume capacity or weight, Four pesos and fifty centavos (P4.50): Provided, however, That the excise taxes paid on the purchased feedstock (bunker) used in the manufacture of excisable articles and forming part thereof shall be credited against the excise tax due therefrom: Provided, further, That lubricating oils and greases produced from basestocks and additives on which the excise tax has already been paid shall no longer be subject to excise tax: Provided, finally, That locally produced or imported oils previously taxed as such but are subsequently reprocessed, rerefined or recycled shall likewise be subject to the tax imposed under this Section.
(b) Processed gas, per liter of volume capacity, Five centavos (P0.05);
(c) Waxes and petrolatum, per kilogram, Three pesos and fifty centavos (P3.50);
(d) On denatured alcohol to be used for motive power, per liter of volume capacity, Five centavos (P0.05): Provided, That unless otherwise provided by special laws, if the denatured alcohol is mixed with gasoline, the excise tax on which has already been paid, only the alcohol content shall be subject to the tax herein prescribed. For purposes of this Subsection, the removal of denatured alcohol of not less than one hundred eighty degrees (180°) proof (ninety percent (90%) absolute alcohol) shall be deemed to have been removed for motive power, unless shown otherwise;
(e) Naphtha, regular gasoline and other similar products of distillation, per liter of volume capacity, Four pesos and eighty centavos (P4.80): Provided, however, That naphtha, when used as a raw material in the production of petrochemical products or as replacement fuel for natural-gas-fired-combined cycle power plant, in lieu of locally-extracted natural gas during the non-availability thereof, subject to the rules and regulations to be promulgated by the Secretary of Energy, in consultation with the Secretary of Finance, per liter of volume capacity, Zero (P0.00): Provided, further, That the by-product including fuel oil, diesel fuel, kerosene, pyrolysis gasoline, liquefied petroleum gases and similar oils having more or less the same generating power, which are produced in the processing of naphtha into petrochemical products shall be subject to the applicable excise tax specified in this Section, except when such by-products are transferred to any of the local oil refineries through sale, barter or exchange, for the purpose of further processing or blending into finished products which are subject to excise tax under this Section;
(f) Leaded premium gasoline, per liter of volume capacity, Five pesos and thirty-five centavos (P5.35); unleaded premium gasoline, per liter of volume capacity, Four pesos and thirty-five centavos (P4.35);
(g) Aviation turbojet fuel, per liter of volume capacity, Three pesos and sixty-seven centavos (P3.67);
(h) Kerosene, per liter of volume capacity, Sixty centavos (P0.60): Provided, That kerosene, when used as aviation fuel, shall be subject to the same tax on aviation turbo jet fuel under the preceding paragraph (g), such tax to be assessed on the user thereof;
(i) Diesel fuel oil, and on similar fuel oils having more or less the same generating power, per liter of volume capacity, One peso and sixty-three centavos (P1.63);
(j) Liquefied petroleum gas, per liter, Zero (P0.00): Provided, That liquefied petroleum gas used for motive power shall be taxed at the equivalent rate as the excise tax on diesel fuel oil;
(k) Asphalts, per kilogram, Fifty-six centavos (P0.56); and
(l) Bunker fuel oil, and on similar fuel oils having more or less the same generating power, per liter of volume capacity, Thirty centavos (P0.30).
[48] Commissioner of Internal Revenue v. Pilipinas Shell Petroleum Corporation, Resolution, supra note 32.
[49] Id. at 72-73.
[50] Id.
[51] SEC. 135. Petroleum Products Sold to International Carriers and Exempt Entities or Agencies. - Petroleum products sold to the following are exempt from excise tax:
(b) Exempt entities or agencies covered by tax treaties, conventions and other international agreements for their use or consumption; x x x
[52] Silkair (Singapore) PTE., LTD. v. Commissioner of Internal Revenue, 627 Phil. 453,472 (2010).
[53] SEC. 229. Recovery of Tax Erroneously or Illegally Collected. —No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, of any sum alleged to have been excessively or in any manner wrongfully collected without authority, or of any sum alleged to have been excessively or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress.
In any case, no such suit or proceeding shall be filed after the expiration of two (2) years from the date of payment of the tax or penalty regardless of any supervening cause that may arise after payment: Provided, however, That the Commissioner may, even without a written claim therefor, refund or credit any tax, where on the face of the return upon which payment was made, such payment appears clearly to have been erroneously paid.
[54] Supra note 20.
[55] Id. at 259; citing Philippine Acetylene Co., Inc. v. Commissioner of Internal Revenue, supra note 15.
[56] Silkair (Singapore) Pte. Ltd. v. Commissioner of Internal Revenue, 591 Phil. 754, 767 (2008).
[57] Id. at 765-766.
[58] Supra note 20.
[59] Id. at 263.
[60] Philippine Bank of Communications v. Commissioner of Internal Revenue, 361 Phil. 916, 929 (1999).
[61] Supra note 32.