Commissioner of Internal Revenue v. Pilipinas Shell Petroleum Corporation
REITERATIONFacts
The Antecedents: Pilipinas Shell Petroleum Corporation (Pilipinas Shell) sold and delivered petroleum products to various international carriers for their use outside the Philippines between November 2000 and March 2001. A portion of these products was sourced from Petron Corporation under a loan or borrow agreement, with excise taxes paid by Petron being passed on to Pilipinas Shell. The other portion was sourced from Pilipinas Shell's own tax-paid inventories. Procedural History: Pilipinas Shell filed claims for refund or credit of P49,058,733.09 in excise taxes paid. Due to the Bureau of Internal Revenue's inaction, Pilipinas Shell filed a petition with the Court of Tax Appeals (CTA). The CTA Second Division granted the claim at P39,305,419.49, based on sales from Pilipinas Shell's own inventories, disallowing the claim for taxes sourced from Petron. The CTA en banc affirmed this decision. The Commissioner of Internal Revenue (CIR) appealed to the Supreme Court. The Petition: The CIR argued that Pilipinas Shell is not entitled to a refund/credit because excise taxes are levied on the manufacturer prior to sale, are rightfully due from Pilipinas Shell as manufacturer, and Section 135 of the NIRC only exempts international carriers, not the manufacturer. The CIR also sought to nullify BIR issuances allowing such refunds.
Issue(s)
Whether Pilipinas Shell is entitled to a refund or credit of excise taxes paid on petroleum products sold to international carriers. Whether BIR Ruling No. 051-99, Revenue Regulations No. 5-2000, and other BIR issuances allowing tax refund/credit of excise taxes paid on petroleum products sold to tax-exempt entities should be nullified.
Ruling
The petition is DENIED. Pilipinas Shell is entitled to a refund or credit of the excise taxes it paid for petroleum products sold to international carriers.
Ratio Decidendi
On the entitlement to refund/credit of excise taxes: The Court held that the issue has been squarely dealt with in Commissioner of Internal Revenue v. Pilipinas Shell Petroleum Corporation (G.R. No. 188497, April 25, 2012, and Resolution dated February 19, 2014). In that case, the Court ultimately granted Pilipinas Shell's motion for reconsideration, recognizing that Section 135(a) of the NIRC, in fulfillment of international agreements and practice to exempt aviation fuel, prohibits the passing of excise tax to international carriers. The Court agreed that denying domestic manufacturers/sellers a refund of excise taxes paid on petroleum products sold to international carriers has serious implications on the Philippines' commitment to the Chicago Convention and other bilateral air service agreements. Therefore, the statutory taxpayer, Pilipinas Shell, is entitled to a refund or credit of the excise taxes it paid for petroleum products sold to international carriers, as these carriers are exempt under Section 135(a) of the NIRC. The principle of stare decisis mandates adherence to this established legal principle, especially given the identical facts, issues, and parties. On the nullification of BIR issuances: The Court denied the CIR's prayer to nullify BIR Ruling No. 051-99, Revenue Regulations No. 5-2000, and other related BIR issuances. The Court noted that Pilipinas Shell already ruled that petroleum products sold to international carriers are exempt from excise taxes. Furthermore, the CIR failed to provide specific details or official copies of these issuances, making its request for wholesale invalidation a mere "shotgun approach" without sufficient basis. The Court also found that BIR Ruling No. 051-99 involved Petron, not a party to the present case, and Revenue Regulations No. 5-2000 pertains to general regulations on tax credit certificates, not solely excise tax refunds on petroleum products.
Main Doctrine
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 Section 135(a) of the National Internal Revenue Code (NIRC).