MANILA, Philippines - The Supreme Court (SC) has cleared Petron Corp. in the P580-million tax claim of the Bureau of Internal Revenue (BIR).
In a recent decision, the first division of the High Court reversed an earlier ruling of the Court of Tax Appeals (CTA) ordering Petron to settle excise taxes from 1995 to 1997, which the oil firm settled using tax credit certificates (TCCs) that the BIR later on said were fraudulently acquired.
“In finding that the assignments of the TCCs in favor of Petron were fraudulent, we find that the CTA reversibly erred in relying on the abovementioned affidavits executed by the grantees’ former general managers/officers who, after disavowing knowledge of the assignment of the subject TCCs and Petron’s delivery of bunker fuel oil in consideration thereof, requested the cancellation of the TCCs,” stated the ruling penned by Associate Justice Jose Perez.
Chief Justice Renato Corona and Associate Justices Presbitero Velasco, Teresa Leonardo-De Castro and Mariano del Castillo concurred in the decision.
Records show that CTA had ordered Petron to pay P580,236,552 representing deficiency excise taxes for the taxable years 1995 to 1997,consisting of P 284.3 million in basic taxes, a 25-percent late payment surcharge and interest of P295.39 million.
The CTA had also ordered the oil firm to pay a separate delinquency interest per annum on the principal amount – computed from Dec. 4, 1999 – until the amount is fully paid.
The SC ruled the BIR can no longer take back the tax credits it had already approved even if the TCCs were subsequently found by the BIR to have been fraudulently obtained since witnesses alleging the fraud were not available for cross examination.
Petron said it had acquired TCCS from Diamond Knitting Corp., Filstar Textile Industrial Corp., Alliance Thread Co. Inc., Fiber Tech. Corp., Jantex Phils. Inc. and Master Colour System Corp.
The assignments of the TCCs were approved by the now defunct Department of Finance One-Stop-Shop Inter-Agency Tax Credit and Duty Drawback Center (the Center), a tax credit window composed of representatives from the Department of Finance (DOF), the BOI, the Bureau of Customs (BOC) and the Bureau of Internal Revenue (BIR).
Issued DOF tax debit memos (DOF-TDMs) by the Center, Petron, as assignee of said TCCs, utilized the same to pay its excise tax liabilities for the years 1993 to 1997.