BOC asks tax court judge to inhibit in Shell case

MANILA, Philippines - The Bureau of Customs (BOC) wants presiding Justice Ernesto Acosta of the Court of Tax Appeals (CTA) to inhibit himself from a case involving the government’s claim of P7.34 billion in unpaid taxes from Pilipinas Shell Petroleum Corp.

The BOC said that Acosta must inhibit himself from deciding the case because he never disclosed the fact that he worked as fiscal services assistant for Shell in 1975 to 1981.

The BOC said that judicial ethics mandate that a judge disclose his connections with a party to a case before him in order to place himself above reproach and suspicion.

The BOC, quoting the Code of Judicial Conduct, said that judges should disqualify themselves from participating in any proceedings in which they are unable to decide the matter impartially or in which it may appear to a reasonable observer that they are unable to decide the matter impartially.

The Philippine government wants Shell to pay P7.34 billion in unpaid excise taxes and VAT for its unleaded gas importations from 2004 to 2009.

Shell claimed it was exempt from paying excise taxes on its unleaded gas importations on the basis of a March 24, 2004 legal memorandum by former Bureau of Internal Revenue (BIR) Deputy Commissioner Jose Mario Bunag. Buñag’s ruling was affirmed by former Commissioner of Internal Revenue Sixto Esquivias IV.

The BOC argued that Bunag’s memorandum was unauthorized and had no legal basis. It said that at the time of the memorandum, Shell was paying excise taxes on its importations of unleaded gasoline, thereby recognizing its own tax liability under the law. According to the BOC, Shell cannot escape its tax liability by relying on the “illegal” memorandum.

On the other hand, the BIR upheld the position of the BOC that Shell is liable for more than P7 billion in excise taxes and VAT on its unleaded gas importations from 2004 to 2009.

In a Dec. 15, 2009 ruling by Commissioner Joel Tan-Torres, the BIR reversed with finality an earlier ruling by Bunag, saying the exemption has no legal and factual basis.

BOC Commissioner Napoleon Morales also decried moves by certain quarters to prevent the government from collecting from Shell by using black propaganda.

Presidential adviser on revenue enhancement Narciso Santiago Jr. also cried foul at the dirty tactics.

“We are just trying to protect the revenues of the government. However, they are muddling the issue of Shell’s liability to the government by attributing ill motives to government officials,” Santiago said.