A significant victory for Petron Corporation unfolded at the Court of Tax Appeals, resulting in a P389.49 million refund order against the Bureau of Internal Revenue. The ruling centers on a complex issue: excise taxes paid on fuel sold to international airlines and other exempt entities.
Petron initially sought a larger refund of P586.96 million, but the court’s Special Third Division, after careful consideration, determined a substantial portion was rightfully due. The core of the dispute lay in interpreting Section 135 of the National Internal Revenue Code, which grants exemptions for fuel destined for use outside the Philippines or sold to tax-exempt organizations.
The BIR argued the exemption applied solely to the *buyers* – the international carriers themselves – not to Petron, the seller. The CTA decisively rejected this argument, stating the benefit of the tax exemption must extend to the importer and manufacturer who initially bears the tax liability.
This case involved fuel sales spanning the first and second halves of 2020. The court meticulously examined Petron’s claims, acknowledging the company’s adherence to the two-year filing deadline for refund requests. Justice Marian Ivy M. Reyes-Fajardo, who penned the decision, emphasized the fundamental principle of tax law.
The court clarified that international carriers, while ultimately bearing the cost of the fuel, are not the original taxpayers responsible for remitting the excise taxes. They simply pass on the expense, making Petron, as the statutory taxpayer, eligible for the refund on Jet A-1 fuel – the standard kerosene-based fuel powering commercial aviation.
However, the refund wasn’t a full endorsement of Petron’s claim. The court disallowed P197.47 million due to incomplete documentation, lacking delivery confirmations, and instances of fuel being withdrawn before authorized release dates. Precise record-keeping proved crucial.
The decision establishes a clear precedent regarding the tax treatment of fuel sales to international carriers. It confirms that the exemption isn’t merely a cost offset for the airlines, but a legitimate refund claim for the companies like Petron who initially pay the excise taxes.
Beyond the legal victory, Petron reported a robust 84% surge in net income, reaching P15.6 billion in 2025. This growth was fueled by strong domestic sales, enhanced refinery efficiency, and reduced operational expenses.
Despite a 7% dip in overall revenues to P810 billion – attributed to fluctuating global oil prices – Petron demonstrated resilience. Total sales volume across the Philippines and Malaysia increased by 3%, reaching 113.4 million barrels.
Petron continues to dominate the Philippine market, holding a commanding 27.8% market share as of the first half of 2025, according to Department of Energy data. The company operates an extensive network of 50 terminals and nearly 2,700 service stations, supported by a substantial refining capacity of almost 270,000 barrels per day.
