The Court of Tax Appeals (CTA) has upheld two rulings granting Petron Corp. partial refunds of excise taxes on petroleum products sold to tax-exempt entities. The decisions, promulgated on July 2, denied separate appeals filed by the oil company and the Commissioner of Internal Revenue (CIR).
In the first case, the CTA upheld a refund of P727.33 million out of Petron's P773.90-million claim for excise taxes paid on locally produced unleaded gasoline and diesel fuel sold to Micro Dragon Petroleum, Inc., a Subic Bay Freeport enterprise. The court rejected the CIR's argument that Petron was not entitled to a refund due to an alleged failure by Micro Dragon to satisfy a condition in its Subic Bay Metropolitan Authority registration.
The CTA ruled that the 30% threshold for income tax does not affect Micro Dragon's entitlement to an excise tax exemption under Section 135 of the National Internal Revenue Code. However, the court disallowed P46.57 million of Petron's refund claim, citing a lack of documentary evidence to support the claimed diesel fuel removals.
In a second case, the CTA upheld a refund of P2.77 million out of Petron's P9.55-million claim covering imported lubricating oils and additives sold to tax-exempt entities. The court denied Petron's bid to recover an additional P3.73 million, ruling that the company could not expand its refund claim beyond the specified period.
The CTA emphasized that tax refund claims are strictly construed against the taxpayer and must be supported by documentary evidence establishing entitlement to the refund. The court also noted that granting relief beyond the specified period would violate the CIR's right to due process.
The court's decisions are consistent with previous rulings that manufacturers and importers may recover excise taxes paid on petroleum products sold to entities exempt under Section 135 of the Tax Code. The CTA's rulings have significant implications for tax exemptions and refund claims in the Philippines.
