Case Digest (G.R. No. 255961)
Facts:
In Petron Corporation v. Commissioner of Internal Revenue (G.R. No. 255961, March 20, 2023), Petron Corporation, a domestic oil refinery operator in Bataan, imported alkylate on five occasions between July 22 and November 6, 2012, under Bills of Lading ML-5918, CTK 1985, SLC12010-DSB01, POL12007-DSBT01, and HASL0941TACA251, resulting in aggregate excise tax payments of ₱219,153,851.00 pursuant to Customs Memorandum Circular No. 164-2012, which implemented a June 29, 2012 BIR Letter declaring alkylate a “product of distillation” subject to tax under Section 148(e) of the National Internal Revenue Code (NIRC) of 1997, as amended. Petron filed two administrative claims for refund—₱148,546,113.00 on October 10, 2014 and ₱70,607,738.00 on January 23, 2015—but the Commissioner of Internal Revenue did not act. Consequently, Petron instituted consolidated petitions (CTA Case Nos. 8914 and 8981) before the Court of Tax Appeals (CTA). The CTA Special Second Division denied relief on DecemCase Digest (G.R. No. 255961)
Facts:
- Parties and Background
- Petitioner Petron Corporation is a domestic petroleum manufacturer and importer of alkylate.
- Respondent is the Commissioner of Internal Revenue (CIR).
- Importation and Excise Tax Assessment
- Between July 22 and November 6, 2012, Petron imported alkylate in five shipments.
- Pursuant to Customs Memorandum Circular No. 164-2012 (implementing a BIR letter), the Bureau of Customs assessed excise taxes totaling ₱219,153,851.00.
- Administrative and Judicial Refund Claims
- Petron filed two administrative claims with the BIR (October 2014 for ₱148,546,113.00; January 2015 for ₱70,607,738.00); no action was taken.
- Petron then filed consolidated petitions before the Court of Tax Appeals (CTA) Second Division (CTA Cases 8914 & 8981).
- CTA Special Second Division Decision
- By Decision dated December 18, 2018, the CTA Special Second Division denied the refund, holding that alkylate is “similar to naphtha” and thus a “product of distillation” under Sec. 148(e) of the National Internal Revenue Code (NIRC).
- Petron’s motion for reconsideration was denied on April 30, 2019.
- CTA En Banc Decision and Resolution
- On July 22, 2020, the CTA En Banc affirmed the Special Second Division, citing BIR interpretations and applying strict construction of tax-exemption laws.
- On February 18, 2021, the CTA En Banc denied Petron’s motion for reconsideration for failure to obtain requisite votes, despite some members favoring strict interpretation of tax imposition.
- Elevation to the Supreme Court
- Petron filed a Petition for Review on Certiorari under Rule 45, challenging CTA En Banc’s decisions as erroneous in law.
Issues:
- Doctrine of Strict Construction
- Whether the CTA erred in applying the rule of strict construction against the taxpayer (applicable to exemptions) instead of applying strict interpretation in the imposition of taxes.
- Scope of Sec. 148(e), NIRC
- Whether alkylate is subject to excise tax as “naphtha, regular gasoline and other similar products of distillation.”
- Administrative Interpretation
- Whether the CIR’s or BIR’s administrative rulings (Letter of former BIR Commissioner, Customs Circular) can override or modify the plain language of the statute.
- Double Taxation
- Whether taxing alkylate and subsequently the finished gasoline constitutes prohibited double taxation.
Ruling:
- (Subscriber-Only)
Ratio:
- (Subscriber-Only)
Doctrine:
- (Subscriber-Only)