OSG stands by move to accept Shell surety bond

MANILA, Philippines - The Office of the Solicitor General (OSG) believes it has made the right decision in accepting the P7.3-billion surety bond of Pilipinas Shell Petroleum Corp. 

Solicitor General Alberto Agra said he was “surprised” that the Bureau of Customs (BOC) is questioning the move of the OSG on the surety bond. According to Agra, the issue of surety bond has nothing to do with the merits of the case.

He said the posting of the surety bond pertains only to the previous tax liabilities of Shell from 2001 to 2004.

The government lawyer said pending the final determination of the merits of the case, there should be no threat on the seizure of the current and future importations of Shell.

Agra said Shell is currently paying taxes for its new importations.

“Basically, my basis for agreeing is number one, public interest and number two, there is no prohibition in any law,” he said.

He said Customs and Shell, “in effect, in this case, agreed to foreclose any attempt for seizure.”

Agra also pointed out that it is maintaining its position that Shell should pay its taxes and there is no double taxation on the part of the government.

Shell recently entered into a compromise agreement with Customs and the Department of Finance so that it could prevent any disruption in the supply of petroleum in the market.

At present, Shell supplies about 30 percent of the fuel needs of the metropolis.

After posting the bond, Shell decided to resume its importation. It momentarily suspended importation for fear that the BOC would confiscate its products.

The OSG official also noted that the posting of bond has precedent and the government could still forfeit the bond in the event the CTA decides in favor of BOC.

“What we agreed to is to seizure, no hold on products. We maintain that we did not abandon our position insofar as saying that Shell is liable and that there is no double taxation,” he said.

He said there is still a case pending at the CTA and it’s only fair to wait for the decision of the court. “It’s up to the CTA to decide that,” Agra said.

The CTA is currently hearing the merits of Shell’s claim that CCG and LCCG are raw materials for unleaded gasoline and should not be imposed taxes.

“The interim arrangement between the Government and Pilipinas Shell provides a positive resolution, thus, averting a shortage in oil supply that would have adversely affected the public and the economy. With this development, we can now bring in our products into the refinery and this will ensure continuity of supply,” Shell spokesman Roberto Kanapi said.

“We would like to reiterate our gratitude, most especially to President Gloria Macapagal Arroyo, as well as Solicitor General Alberto Agra, Secretary Margarito Teves, Secretary Angelo Reyes and Secretary Peter Favila, who have been instrumental in forging an agreement between the Government and Pilipinas Shell, that will be implemented during the pendency of the tax case,” Kanapi added.