Supreme Court junks oil firm's tax refund claim

MANILA, Philippines - The Supreme Court (SC) has junked the bid of American oil giant Exxon to refund P105 million in excise taxes it paid for fuel products sold to international carriers from November 2001 to June 2002.

The third division of the High Court ruled that Exxon did not pay the excise taxes, and therefore was not entitled to refund of the same paid to the Bureau of Internal Revenue (BIR).

A decision penned by Associate Justice Jose Mendoza and promulgated last Jan. 19 declared that the excise taxes being claimed by the foreign firm were erroneously paid for and remitted to BIR by local oil companies Petron Corp. and Chevron Phils. Corp. (formerly Caltex), from which Exxon purchased the Jet A-1 fuel and other petroleum products it sold to international carriers for use in international flight operations.

It dismissed the petition of Exxon, which operates in the Philippines under the name ExxonMobil Petroleum and Chemical Holdings Inc. and had shouldered the taxes amounting to P105 million.

Petitioner based it’s tax refund claim on Section 135 (a) of the National Internal Revenue Code (NIRC), which provides that petroleum products sold to international carriers are exempted from paying excise taxes.

But the SC held that Exxon is not the proper party to claim a tax refund since it was just a distributor and vendor of the fuel products to international carriers registered in foreign countries which have existing bilateral agreements with the Philippines.

It stressed that the American firm “is not the party statutorily liable for payment of excise taxes” and “not the proper party to claim a refund of any taxes erroneously paid.”

The High Court accepted the argument of the BIR, which was upheld by the Court of Tax Appeal (CTA), that only the taxpayer or the manufacturer of the products sold has the legal personality to claim the tax refund, which in this case is Petron and Chevron.

“As early as the 1960s, this Court has ruled that the proper party to question, or to seek a refund of, an indirect tax, is the statutory taxpayer, or the person on whom the tax is imposed by law and who paid the same, even if he shifts to the burden thereof to another,” the Court said.

The Court also said that “the excise tax, when passed on the purchaser, becomes part of the purchase price.”