Informant seeks P1.5-billion reward

MANILA, Philippines - A whistle-blower from the Bureau of Customs (BOC) is seeking a P1.5-billion reward if the bureau wins its case against Pilipinas Shell over alleged unpaid excise taxes worth P7.3 billion, official documents showed.

Geronimo Pinar, who has been a BOC informer for years, is apparently also the whistle-blower in a previous tax case involving Chevron, another oil firm.

Sources said Pinar is a retired military man. There are no details on what he did after serving the military. 

Pinar’s name just cropped up when he informed the BOC of Chevron’s alleged tax liabilities.

It was learned that Pinar was reportedly instrumental in compelling Chevron to pay the BOC almost P1 billion.

Based on documents, Pinar filed his claim with Batangas Customs Collector Juan Tan on Jan. 21, 2009. 

Then on Jan. 30, 2009, Tan issued a demand letter to Shell to pay up, echoing Pinar’s allegations that Shell’s “unleaded gasoline (catalytic cracked gasoline)” was covered by excise taxes.

Shell contested the assessment and said excise taxes apply only to finished products for local consumption. 

It said its imports are raw materials that could not be used directly as fuel because they do not comply with the Clean Air Act and still need to be processed.

Also, if used as fuel, they could cause engine trouble, including knocking (katok) and fuel line corrosion, eventually resulting in a dangerous fuel leakage, Shell said.

Shell said it had to blend its CCG imports to come up with finished products such as premium unleaded gasoline.

At a House hearing, Tan admitted he based his decision to collect only upon looking at Shell’s import invoices that mentioned “unleaded gasoline (catalytic cracked gasoline).”

He said he did not bother to ask for laboratory or technical tests to find out if the imports are indeed raw materials or finished products, which he said was the task of customs examiners.

In 2003, the energy department, following tests, concluded that CCG was indeed a raw material that needed further processing to meet legal standards. This was the basis of Shell’s payment of taxes through the years until Tan stepped in.

He also insisted that Shell should pay the excise taxes for those years. Shell is contesting this, arguing it paid in good faith under a valid government regulation and that Tan’s stand is tantamount to a retroactive application of rules, which is not allowed under the law.

Shell had said the term “unleaded gasoline” is a generic name used globally that refers to various kinds of raw materials. This is why it qualified in parentheses the kind of raw material it was bringing in as “unleaded gasoline (catalytic cracked gasoline).”

Pending resolution whether the imports are raw materials or not, Shell is paying the same excise tax twice, upon importation and upon removal from the refinery of the finished products, resulting in double taxation.