Case Summary (G.R. No. 211303)
Applicable Law
1987 Philippine Constitution
National Internal Revenue Code (Republic Act No. 8424, as amended) – in particular:
• Section 129 (scope and nature of excise taxes)
• Section 131 (payment of excise taxes on imported articles)
• Section 135 (exemption of petroleum products sold to international carriers and exempt entities)
• Section 204 and Section 229 (claim for refund or credit of erroneously or illegally collected taxes)
CTA Rules of Procedure
Revenue Regulations No. 3-2008 (mechanics for excise tax refund or product replenishment)
Facts
• Between February and March 2006, PSPC imported 28,578,673 L of Jet A-1 fuel, paying excise taxes of ₱3.67/L (₱104,883,730.27).
• In the same period, PSPC purchased 3,192,012 L of Jet A-1 from Chevron Inc., which passed on its earlier-paid excise taxes as part of the purchase price.
• From February 27 to April 9, 2006, PSPC sold 24,974,294 L of Jet A-1 fuel to various international carriers for consumption outside the Philippines.
• On February 15, 2007, PSPC filed with the BIR a refund/tax-credit claim for ₱91,655,658.98, alleging erroneous collection of excise taxes on fuel sold to exempt carriers.
• After BIR inaction, PSPC petitioned the CTA (CTA Case No. 7731). On September 7, 2012, the CTA Third Division denied the claim, relying on the 2012 Pilipinas Shell decision that Section 135 does not grant exemption to local manufacturers/importers.
• PSPC’s motion for reconsideration was denied (November 12, 2012), and CTA En Banc likewise denied relief (Decision September 9, 2013; Resolution February 3, 2014).
Issue
Is PSPC entitled to a refund or tax credit of the excise taxes it paid on imported and locally purchased Jet A-1 fuel subsequently sold to international carriers under Section 135 of the Tax Code?
Supreme Court Ruling
- Stare decisis is not an absolute bar but, absent compelling reasons, identical factual and legal questions merit the same outcome. This Court’s 2014 Pilipinas Shell Resolution and the 2015 Chevron decision squarely apply.
- Excise taxes under the Tax Code are taxes on specified goods that attach immediately upon manufacture or importation. They are indirect taxes paid by the statutory taxpayer (manufacturer or importer), who alone may benefit from any exemption.
- Section 135 grants an impersonal exemption in favor of the petroleum products when sold to international carriers or other named exempt entities. It does not vest a new exemption in purchasers or retroactively alter tax liability upon resale.
- Upon sale to international carriers, excise taxes “erroneously or illegally collected” become refundable under Sections 204 and 229. The statutory taxpayer—PSPC when it directly imported the fuel—may claim this refund.
- For fuel locally purchased from Chevron, the excise tax liability
Case Syllabus (G.R. No. 211303)
Facts
- Pilipinas Shell Petroleum Corporation (PSPC) manufactures, processes, refines, and sells petroleum products, including Jet A-1 fuel, at its Tabangao, Batangas refinery.
- Between February and March 2006, PSPC imported 28,578,673 liters of Jet A-1 fuel and paid excise taxes of ₱3.67 per liter (total ₱104,883,730.27) to the Bureau of Customs.
- In that same period, PSPC purchased 3,192,012 liters of Jet A-1 fuel from Chevron Philippines, Inc., which passed on its own excise-tax cost to PSPC.
- From February 27 to April 9, 2006, PSPC sold a total of 24,974,294 liters of Jet A-1 fuel to various international carriers for consumption outside the Philippines.
Procedural History
- On February 15, 2007, PSPC filed a claim for refund or tax credit (₱91,655,658.98) with the BIR’s Large Taxpayers Audit and Investigation Division II, asserting that the excise taxes on fuel sold to international carriers were “erroneously or illegally collected.”
- PSPC elevated its unacted-upon claim to the Court of Tax Appeals (CTA) Division via Petition for Review on February 15, 2008 (CTA Case No. 7731).
- On September 7, 2012, the CTA Division denied the claim, relying on the 2012 Pilipinas Shell Decision that Section 135(a) did not exempt local manufacturers from paying excise tax.
- A Motion for Reconsideration was denied on November 12, 2012, and PSPC appealed to the CTA En Banc (CTA EB No. 960).
- The CTA En Banc denied relief by Decision dated September 9, 2013, and by Resolution dated February 3, 2014, again citing the 2012 Pilipinas Shell Decision.
- While PSPC’s petition was pending, the Supreme Court en banc reversed the 2012 Pilipinas Shell Decision by Resolution of February 19, 2014 (2014 Pilipinas Shell Resolution).
- On April 3, 2014, PSPC filed its Petition for Review in the Supreme Court.
Issue
- Whether PSPC is entitled to a refund or tax credit for the excise taxes it paid on Jet A-1 fuel sold to international carriers between February 27 and April 9,