BAGUIO CITY, Philippines—The Bureau of Internal Revenue (BIR) lost about P600-million tax case against Petron Corporation.
In a decision promulgated March 21 but was released to the media today, the high court, through Associate Justice Maria Lourdes Sereno, dismissed the appeal filed by the BIR for lack of merit.
The BIR went to the Supreme Court after the Court of Tax Appeals en banc reversed its second division ruling ordering Petron to pay P600,769,353.95 as deficiency excise taxes for 1995 to 1998 including surcharges and interest plus 25 percent surcharge and 20 percent delinquency interest per annum.
In its petition, the BIR said that Tax Credit Certificates (TCCs) from various Board of Investments (BOI) entities assigned to Petron covering taxable years 1995 to 1998, which Petron used to pay its excise taxes, had been cancelled by the Department of Finance (DOF) pursuant to DOF EXCOM Resolution No. 03-05-99 for having been “fraudulently issued and transferred.”
The CTA Second Division in its 2007 ruling ordered Petron to pay the BIR P600,769,353 in deficiency excise taxes for subject years. The CTA en banc, however, held that Petron is a “transferee in good faith,” had no participation in the issuance and transfer of the TCCs, and could not be held accountable for the cancelled TCCs.
In its ruling, the high court echoed the CTA en banc’s decision that Petron is a “transferee in god faith and for value of the subject TCCs.”
“From the records, we observe that the BIR had no allegation that there was a deviation from the process for the approval of the TCCs, which Petron used as payment to settle its excise tax liabilities for the years 1995 to 1998,” the high court said.
The high court said it agreed with the ruling of CTA en banc that Petron has not been “shown or proven to have participated in the alleged fraudulent acts involved in the transfer and utilization of the subject TCCs. “
“Petron had the right to rely on the joint stipulation that absolved it from any participation in the alleged fraud pertaining to the issuance and procurement of the subject TCCs. The joint stipulation made by the parties consequently obviated the opportunity of the BIR to present evidence on this matter as no proof is required for an admission made by a party in the course of the proceedings. Thus, the BIR cannot now be allowed to change its stand and renege on that admission,” the high court said.