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Chevron vs. CIR

1) Chevron paid excise taxes on petroleum products it imported and sold to Clark Development Corporation (CDC) in 2007. CDC is exempt from direct and indirect taxes. 2) Chevron filed for a tax refund or credit for the excise taxes paid, which was denied by the Court of Tax Appeals. 3) The Supreme Court ruled Chevron was entitled to the refund or credit. As the statutory taxpayer, Chevron paid the excise taxes on importation. However, the products were exempt from excise tax due to the sale to CDC, which is tax exempt.

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100 views

Chevron vs. CIR

1) Chevron paid excise taxes on petroleum products it imported and sold to Clark Development Corporation (CDC) in 2007. CDC is exempt from direct and indirect taxes. 2) Chevron filed for a tax refund or credit for the excise taxes paid, which was denied by the Court of Tax Appeals. 3) The Supreme Court ruled Chevron was entitled to the refund or credit. As the statutory taxpayer, Chevron paid the excise taxes on importation. However, the products were exempt from excise tax due to the sale to CDC, which is tax exempt.

Uploaded by

Jan Echon
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Chevron vs.

CIR
G.R. No. 210836 September 1, 2015
(para written na case digest puydi rag way labot nang blue na part, para mas maba)

Facts: Chevron Philippines, Inc. sold and delivered petroleum products to Clark Development Corporation in the period
from August 2007 to December 2007. Chevron did not pass on to CDC the excise taxes paid on the importation of the
petroleum products sold to CDC in taxable year 2007; hence, on June 26, 2009, it filed an administrative claim for tax
refund or issuance of tax credit certificate in the amount of P6,542,400.00. CIR did not act on the administrative claim for
tax refund or tax credit, hence, Chevron elevated its claim to the CTA. The CTA First Division denied Chevron’s judicial
claim for tax refund or tax credit. In due course, Chevron appealed to the CTA En Banc which  affirmed the ruling of the
CTA First Division, stating that there was nothing in Section 135(c) of the NIRC that explicitly exempted Chevron as the
seller of the imported petroleum products from the payment of the excise taxes; and holding that because it did not fall
under any of the categories exempted from paying excise tax, Chevron was not entitled to the tax refund or tax credit. The
CTA En Banc noted that:

Considering that an excise tax is in the nature of an indirect tax where the tax burden can be shifted, Section 135(c) of the
NIRC of 1997, as amended, should be construed as prohibiting the shifting of the burden of the excise tax to tax-exempt
entities who buys petroleum products from the manufacturer/seller by incorporating the excise tax component as an
added cost in the price fixed by the manufacturer/seller.
Issue: Whether Chevron was entitled to the tax refund or the tax credit for the excise taxes paid on the importation of
petroleum products that it had sold to CDC in 2007.

Ruling: Yes, Chevron was entitled to the refund or credit of the excise taxes erroneously paid on the importation of the
petroleum products sold to CDC.

Under Section 129 of the NIRC, as amended, excise taxes are imposed on two kinds of goods, namely: (a) goods
manufactured or produced in the Philippines for domestic sales or consumption or for any other disposition; and (b) things
imported. Undoubtedly, the excise tax imposed under Section 129 of the NIRC is a tax on property.

With respect to imported things, Section 131 of the NIRC declares that excise taxes on imported things shall be paid by
the owner or importer to the Customs officers, conformably with the regulations of the Department of Finance and before
the release of such articles from the customs house, unless the imported things are exempt from excise taxes and the
person found to be in possession of the same is other than those legally entitled to such tax exemption. For this purpose,
the statutory taxpayer is the importer of the things subject to excise tax.

Chevron, being the statutory taxpayer, paid the excise taxes on its importation of the petroleum products.

Pursuant to Section 135(c), petroleum products sold to entities that are by law exempt from direct and indirect taxes are
exempt from excise tax. The phrase which are by law exempt from direct and indirect taxes describes the entities to whom
the petroleum products must be sold in order to render the exemption operative. Section 135(c) should thus be construed
as an exemption in favor of the petroleum products on which the excise tax was levied in the first place. The exemption
cannot be granted to the buyers – that is, the entities that are by law exempt from direct and indirect taxes – because they
are not under any legal duty to pay the excise tax.

CDC was created to be the implementing and operating arm of the Bases Conversion and Development Authority to
manage the Clark Special Economic Zone. As a duly-registered enterprise in the CSEZ, CDC has been exempt from
paying direct and indirect taxes pursuant to Section 2421 of R.A. No. 7916 (The Special Economic Zone Act of 1995), in
relation to Section 15 of R.A. No. 9400 (Amending the Bases Conversion Development Act of 1992).

Inasmuch as its liability for the payment of the excise taxes accrued immediatel y upon importation and prior to the
removal of the petroleum products from the customshouse, Chevron was bound to pay, and actually paid such taxes. But
the status of the petroleum products as exempt from the excise taxes would be confirmed only upon their sale to CDC in
2007 (or, for that matter, to any of the other entities or agencies listed in Section 135 of the NIRC). Before then, Chevron
did not have any legal basis to claim the tax refund or the tax credit as to the petroleum products. Consequently, the
payment of the excise taxes by Chevron upon its importation of petroleum products was deemed illegal and erroneous
upon the sale of the petroleum products to CDC. Section 204 of the NIRC explicitly allowed Chevron as the statutory
taxpayer to claim the refund or the credit of the excise taxes thereby paid.

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