Petroleum Products Sold By Local Manufacturers/Sellers To International Carriers Are Exempt From The Imposition f Excise Taxes As These International Carriers En!oy Exemption From Payment f Excise Taxes "nder Section #$%&a' f The (I)C* THIRD DIVISION, G.R. NO. 180402, FEBRUARY 10, 2016, COMMISSIONER OF INTERNAL REVENUE, PETITIONER, VS. PILIPINAS SHELL PETROLEUM CORPORATION, RESPONDENT.
The Case+ The petitioe! "##"i$# the %e&i#io o' the (o)!t o' T"* Appe"$# +!"ti+ the &$"i 'o!-&!e%it o' the e*&i#e t"*e# p"i% / !e#po%et i$ipi"# She$$ et!o$e) (o!po!"tio o the 'o$$oi+ +!o)%# 31 e*&i#e t"*e# "!e $e5ie% o the ")'"&t)!e!-p!o%)&e! p!io! to #"$e "% %e$i5e!/ to ite!"tio"$ &"!!ie!# "%, !e+"!%$e## o' it# p)!&h"#e!, #"i% t"*e# )#t e #ho)$%e!e% / the ")'"&t)!e!-p!o%)&e! ")'"&t)!e!-p!o%)&e! o! i thi# &"#e, i$ipi"# She$$ 32 the e*&i#e t"*e# p"i% / i$ipi"# She$$ %o ot &o#tit)te t"*e# e!!oeo)#$/ p"i% "# the/ "!e !i+ht')$$/ %)e '!o i$ipi"# She$$ "# ")'"&t)!e!-p!o%)&e! o' the pet!o$e) p!o%)&t# #o$% to ite!"tio"$ &"!!ie!# 37 the itet o' the $" Se&tio 179 o' the N"tio"$ Ite!"$ Re5e)e (o%e 3NIR( i# to e*ept the ite!"tio"$ &"!!ie!# '!o p"/i+ the e*&i#e t"*e# )t ot the ")'"&t)!e!-p!o%)&e! ")'"&t)!e!-p!o%)&e! "%
34 BIR R)$i+ No. 091:;;, Re5e)e Re+)$"tio# No. 9:2000 "% othe! BIR i##)"&e# "$$oi+ t"* !e')%-&!e%it o' e*&i#e t"*e# p"i% o pet!o$e) p!o%)&t# #o$% to t"*:e*ept etitie# o! "+e&ie# #ho)$% e )$$i'ie% 'o! ei+ &ot!"!/ to Se&tio# 12;, 170 "% 148 o' the NIR(. Re#po%et, Re#po%et, o the othe! h"%, "!+)e# th"t the e*&i#e t"* e*eptio o pet!o$e) p!o%)&t# #o$% to ite!"tio"$ &"!!ie!# i# "#e% o p!i&ip$e# o' ite!"tio"$ &oit/ "% to i#i#t o it# p"/et )%e! the &i!&)#t"&e# "% #)++e#t th"t it e !e&o5e!e% / the ")'"&t)!e! "# p"!t o' it# #e$$i+ p!i&e o)$% e to !e%e! e"i+$e## it# p)!po#e. The )ulin,+ The (o)!t ee% ot )e&e##"!i$/ e$"o! the "!+)et# po#e% / the p"!tie# "# the#e h"5e "$!e"%/ ee #<)"!e$/ %e"$t ith !e&et$/ i G.R. No. No. 1884;= etit$e% etit$e% >Commissioner > Commissioner of Internal Reen!e . Pili"inas S#ell Petrole!m Cor"oration.? Cor"oration .?1 I #"i% &"#e, the #"e !e#po%et i thi# &"#e, i$ipi"# She$$, #o)+ht " !e')%-&!e%it o' the e*&i#e t"*e# "$$e+e%$/ p"i% e!!oeo)#$/ o #"$e# "% %e$i5e!ie# o' +"# "% ')e$ oi$# to 5"!io)# ite!"tio"$ &"!!ie!# %)!i+ the pe!io% o' O&toe! to De&ee! 2001. A# i the p!e#et &"#e, i$ipi"# She$$ "$$e+e% th"t it "# e*ept '!o p"/et o' e*&i#e t"*e# $e5ie% o it# pet!o$e) p!o%)&t# #o$% "% %e$i5e!e% to ite!"tio"$ &"!!ie!# o' 'o!ei+ !e+i#t!/. The #"e petitioe! i thi# &"#e, the (IR, "# !ep!e#ete% / the O''i&e o' the So$i&ito! Gee!"$, o@e&te% to the t"* !e')%-&!e%it +!"te% / the (TA, "$#o o the #"e +!o)% !"i#e% i the p!e#et &"#e th"t the e*&i#e t"* o pet!o$e) p!o%)&t# i# $e5ie% o the ")'"&t)!e! o' the pet!o$e) p!o%)&t !e+"!%$e## o' it# p)!&h"#e! o! )/e! "% th"t the +!"t o' e*eptio )%e! Se&tio 179 o' the NIR( #ip$/ e"# th"t the ")'"&t)!e! &"ot p"## o to the ite!"tio"$ &"!!ie!:)/e! the e*&i#e t"*e# it p"i% o it# pet!o$e) p!o%)&t#. Iiti" Iiti"$$/ $$/,, the (o)!t (o)!t #)#t"i #)#t"ie% e% (IR# (IR# "!+) "!+)et et#, #, !e5e!# !e5e!#e% e% the (TA (TA !)$i+ !)$i+ "% "% %eie% %eie% i$ipi i$ipi"# "# She$$ She$$# # &$"i &$"i 'o! 'o! t"* 2 !e')%-&!e%it. I " De&i#io %"te% Ap!i$ 29, 2012, the (o)!t &o&$)%e% th"t i$ipi"# She$$# $o&"$$/ ")'"&t)!e% pet!o$e) p!o%)&t# "!e #)@e&t to e*&i#e t"* )%e! Se&tio 148 o' the NIR(. The (o)!t "$#o !)$e% th"t the e*eptio '!o e*&i#e t"* p"/et o pet!o$e) p!o%)&t# )%e! Se&tio 1793" >e!e$/ "$$o# the ite!"tio"$ &"!!ie!# to p)!&h"#e pet!o$e) p!o%)&t# itho)t the e*&i#e t"* &opoet "# " "%%e% &o#t i the p!i&e 'i*e% / the ")'"&t)!e!# o! %i#t!i)to!#-#e$$e!#. (o#e<)et$/, the oi$ &op"ie# hi&h #o$% #)&h pet!o$e) p!o%)&t# to ite!"tio"$ &"!!ie!# "!e ot etit$e% to " !e')% o' e*&i#e t"*e# p!e5io)#$/ p"i% o the +oo%#.? 7 I " Re#o$)tio 4 %"te% Fe!)"!/ 1;, 2014, hoe5e!, the (o)!t "%%!e##e% the "!+)et o' i$ipi"# She$$ i it# otio# 'o! !e&o#i%e!"tio th"t Se&tio 1793" ite%e% the t"* e*eptio to "pp$/ to pet!o$e) p!o%)&t# "t the poit o' p!o%)&tio, "o+ othe!#. The (o)!t 'o)% e!it i i$ipi"# She$$# otio# 'o! !e&o#i%e!"tio "% &o#e<)et$/ %i!e&te% the (IR to i##)e " t"* &!e%it &e!ti'i&"te to i$ipi"# She$$. The %i#po#iti5e po!tio o' the !e#o$)tio !e"%#
HEREFORE, the (o)!t he!e/ !e#o$5e# to 31
-)A(T the o!i+i"$ "% #)pp$eet"$ otio# 'o! !e&o#i%e!"tio 'i$e% / !e#po%et i$ipi"# She$$ et!o$e) (o!po!"ti "%
32
AFFI)M the De&i#io %"te% C"!&h 29, 200; "% Re#o$)tio %"te% )e 24, 200; o' the (o)!t o' '"* Appe"$# En $an (TA EB No. 419 "% .I)ECT petitioe! (oi##ioe! o' Ite!"$ Re5e)e to !e')% o! to i##)e " t"* &!e%it &e!ti'i&"te i$ipi"# She$$ et!o$e) (o!po!"tio i the "o)t o' ;9,014,287.00 !ep!e#eti+ the e*&i#e t"*e# it p"i% o pet!o$e p!o%)&t# #o$% to ite!"tio"$ &"!!ie!# '!o O&toe! 2001 to )e 2002.
S ).E)E.9 I +!"ti+ i$ipi"# She$$# otio# 'o! !e&o#i%e!"tio, the (o)!t !)$e% e "it"i th"t Se&tio 179 3", i ')$'i$$et o' ite!"tio"$ "+!eeet "% p!"&ti&e to e*ept "5i"tio ')e$ '!o e*&i#e t"* "% othe! ipo#itio#, p!ohiit# the p"##i+ o' the e*&i#e t"* to ite!"tio"$ &"!!ie!# ho )/# pet!o$e) p!o%)&t# '!o $o&"$ ")'"&t)!e!#-#e$$e!# #)&h "# !e#po%et. Hoe5e!, 0e a,ree that there is a need to rcexamine the effect of denyin, the domestic manufacturers/sellers1 claim for refund of the excise taxes they already paid on petroleum products sold to international carriers2 and its serious implications on our -o3ernment1s commitment to the ,oals and o4!ecti3es of the Chica,o Con3ention. The (hi&"+o (o5etio, hi&h e#t"$i#he% the $e+"$ '!"eo! 'o! ite!"tio"$ &i5i$ "5i"tio, %i% ot %e"$ &op!ehe#i5e$/ ith t"* "tte!#. A!ti&$e 24 3" o' the (o5etio #ip$/ p!o5i%e# th"t ')e$ "% $)!i&"ti+ oi$# o o"!% " "i!&!"'t o' " (ot!"&ti+ St"te, o "!!i5"$ i the te!!ito!/ o' "othe! (ot!"&ti+ St"te "% !et"ie% o o"!% o $e"5i+ the te!!ito!/ o' th"t St"te, #h"$$ e e*ept '!o &)#to# %)t/, i#pe&tio 'ee# o! #ii$"! "tio"$ o! $o&"$ %)tie# "% &h"!+e#. S)#e<)et$/, the e*eptio o' "i!$ie# '!o "tio"$ t"*e# "% &)#to# %)tie# o #p"!e p"!t# "% ')e$ h"# e&oe " #t"%"!% e$eet o' i$"te!"$ "i! #e!5i&e "+!eeet# 3ASA# etee i%i5i%)"$ &o)t!ie#. The ipo!t"&e o' e*eptio '!o "5i"tio ')e$ t"* "# )%e!#&o!e% i the 'o$$oi+ o#e!5"tio "%e / " B!iti#h ")tho! i " p"pe! "##e##i+ the %e"te o )#i+ t"* to &ot!o$ "5i"tio ei##io# "% the o#t"&$e# to it!o%)&i+ e*&i#e %)t/ o "5i"tio ')e$, th)# **** ith the p!o#pe&t o' %e&$ii+ #"$e# o' "5i"tio @et ')e$ #"$e# to ite!"tio"$ &"!!ie!# o "&&o)t o' "@o! %oe#ti& oi$ &op"ie# )i$$i+e## to #ho)$%e! the )!%e o' e*&i#e t"*, o! o' pet!o$e) p!o%)&t# ei+ #o$% to #"i% &"!!ie!# / $o&"$ ")'"&t)!e!# o! #e$$e!# "t #ti$$ hi+h p!i&e#, the p!"&ti&e o' >H"e!i+? o)$% ot e %i#&o)!"+e%. Thi# #&e"!io %oe# ot ")+)! e$$ 'o! the hi$ippie#:+!oi+ e&oo/ "% the ooi+ to)!i# i%)#t!/. o!#e, o)! Go5e!et o)$% e !i#i+ !et"$i"to!/ "&tio )%e! #e5e!"$ i$"te!"$ "+!eeet# ith 5"!io)# &o)t!ie#. E3idently2 construction of the tax exemption pro3ision in 5uestion should ,i3e primary consideration to its 4road implications on our commitment under international a,reements I 5ie o' the 'o!e+oi+ !e"#o#, e 'i% e!it i !e#po%et# otio 'o! !e&o#i%e!"tio. e the!e'o!e ho$% th"t respondent2 as the statutory taxpayer 0ho is directly lia4le to pay the excise tax on its petroleum products2 is entitled to a refund or credit of the excise taxes it paid for petroleum products sold to international carriers2 the latter ha3in, 4een ,ranted exemption from the payment of said excise tax under Sec #$%&a' of the (I)C6 3(it"tio oitte% "% eph"#e# o)!# U%e! the %o&t!ie o' stare &e%isis,= the (o)!t )#t "%he!e to the p!i&ip$e o' $" $"i% %o i Pili"inas S#ell "% "pp$/ the #"e i the p!e#et &"#e, e#pe&i"$$/ #i&e the '"&t#, i##)e#, "% e5e the p"!tie# i5o$5e% "!e e*"&t$/ i%eti&"$. Th)#, the (o)!t he!e/ ho$%# th"t i$ipi"# She$$# &$"i 'o! !e')%-t"* &!e%it )#t e +!"te% p)!#)"t to Pili"inas S#ell , "# it# pet!o$e) p!o%)&t# #o$% to ite!"tio"$ &"!!ie!# 'o! the pe!io% o' No5ee! 2000 to C"!&h 2001 "!e e*ept '!o e*&i#e t"*, the#e ite!"tio"$ &"!!ie!# ei+ e*ept '!o p"/et o' e*&i#e t"* )%e! Se&tio 1793" o' the NIR(. The (o)!t ')!the! ote# th"t %)!i+ the pe%e&/ o' thi# &"#e, the (o)!t, #itti+ en 'an%, !e%e!e% " %e&i#io i C#eron P#ili""ines, In%. . Commissioner of Internal Reen!e ,8 hi&h $iei#e i5o$5e% the !e')% o' e*&i#e t"*e# p"i% o the ipo!t"tio o' pet!o$e) p!o%)&t#. App$/i+ the p!i&ip$e e)&i"te% i Pili"inas S#ell , the (o)!t +!"te% the!ei petitioe!
(he5!o hi$ippie#, I&.# otio 'o! !e&o#i%e!"tio "% %i!e&te% the!ei !e#po%et (IR to !e')% the e*&i#e t"*e# p"i% o the pet!o$e) p!o%)&t# #o$% to ($"! De5e$opet (o!po!"tio i the pe!io% '!o A)+)#t 200= to De&ee! 200=, o! to i##)e " t"* &!e%it &e!ti'i&"te. The (o)!t #t"te% th"t hi$e the &$"i# i Pili"inas S#ell "% C#eron e!e p!ei#e% o %i''e!et #)#e&tio# o' Se&tio 179 o' the NIR(, >the "#i& t"* p!i&ip$e "pp$i&"$e "# the #"e i oth &"#e# th"t e*&i#e t"* i# " t"* o p!ope!t/ he&e, the e*eptio '!o the e*&i#e t"* e*p!e##$/ +!"te% )%e! Se&tio 179 o' the NIR( )#t e &o#t!)e% i '"5o! o' the pet!o$e) p!o%)&t# o hi&h the e*&i#e t"* "# iiti"$$/ ipo#e%.? ; "#t$/, the (o)!t &"ot +!"t (IR# p!"/e! th"t BIR R)$i+ No. 091:;;, Re5e)e Re+)$"tio# No. 9:2000 "% othe! BIR i##)"&e# "$$oi+ t"* !e')%-&!e%it o' e*&i#e t"*e# p"i% o pet!o$e) p!o%)&t# #o$% to t"*:e*ept etitie# o! "+e&ie# e %e&$"!e% i5"$i%. h"t the (IR "t# i# " ho$e#"$e i5"$i%"tio o' the#e i##)"&e#, hi&h the (o)!t i$$ ot "$$o. Fo! oe, Pili"inas S#ell "$!e"%/ !)$e% th"t pet!o$e) p!o%)&t# #o$% / $o&"$ ")'"&t)!e!#-#e$$e!# to ite!"tio"$ &"!!ie!# "!e e*ept '!o the ipo#itio o' e*&i#e t"*e# "# the#e ite!"tio"$ &"!!ie!# e@o/ e*eptio '!o p"/et o' e*&i#e t"*e# )%e! Se&tio 1793" o' the NIR(. Fo! "othe! the (IR 'oi$e% to #t"te ith #pe&i'i&it/ the teo! o' the#e i##)"&e#, e*&ept th"t the#e !e$"te to the BIR# "$$e+e% +!"t o' e*&i#e t"* e*eptio o pet!o$e) p!o%)&t#, itho)t e5e "i+ " e''o!t to p!e#et " o''i&i"$ &op/ o' the#e i##)"&e#, )&h $e## it# &otet#. Co!eo5e!, the (o)!t too )po it#e$' the t"# o' $ooi+ ito the#e i##)"&e# "% %i#&o5e!e% th"t BIR R)$i+ No. 091:;; 10 "&t)"$$/ i5o$5e# the pet!o$e) p!o%)&t ith%!""$# / et!o ho i# ot e5e p"!t/ to the p!e#et &"#e. O the othe! h"%, Re5e)e Re+)$"tio# No. 9:2000 11 %oe# ot pe!t"i #o$e$/ to !e')%-&!e%it o' e*&i#e t"*e# o pet!o$e) p!o%)&t# )t p!e#&!ie# +ee!"$ !e+)$"tio# o the "e! o' the i##)"&e o' t"* &!e%it &e!ti'i&"te# "% the &o%itio# 'o! thei! )#e, !e5"$i%"tio "% t!"#'e!. Fo! the#e !e"#o#, the (o)!t &"ot #"&tio the (IR# >#hot+) "pp!o"&h? "% #)#t"i it# "!e "!+)et# itho)t o!e. 67E)EF)E, the petitio i# .E(IE..
S ).E)E. )E8ES2 9+ Velas%o, (r., )C#air"erson*, Peralta, "% Pere+, ((., &o&)!. Leonen, (., I %i##et &o#i#tet ith / opiio i G.R. No. 210876 (he5!o (IR 3Septee! 2019.
