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o Under Section 129 of the NIRC, excise taxes are imposed on 2 kinds of goods: (a) goods manufactured or produced
in the Philippines for domestic sales or consumption or for any other disposition, and (b) things imported.
o 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. For this purpose, the statutory taxpayer is the importer of the things
subject to excise tax. Chevron, being the statutory taxpayer, paid the excise tax on its importation of the petroleum
products.
o Section 135(c) of the NIRC states that petroleum products sold to entities which are by law exempt from direct and
indirect taxes are exempt from excise taxes. 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. The
Section should thus be constured as an exeption in favour of the petroleum products on which the excise tax was
levied in the first place. The exemption cannot be granted to the buyers (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.
• The CDC was created as the implementing arm of the BCDA to manage the Clark Special Economic Zone. As a duly
registered CSEZ enterprise, it has been exempt from paying direct and indirect taxes. Chevron’s liability to pay excise
taxes accrued immediately upon importation and prior to the removal of the products from the customshouse, but the
status of the petroleum products as exempt would be confirmed only upon their sale to CDC in 2007. Before that
time, Chevron did not have any legal basis to claim the tax refund or credits.
• Thus, the payment of the excise taxes by Chevron upon its importation was deemed illegal. Section 204 of the NIRC is
explicit in saying that since this was an illegal and erroneous payment, it can claim, as the statutory taxpaper, refund.
• The general rule is that in cases involving excise tax exemptions, it is the statutory taxpayer bearing the economic burden
who can claim the tax refund or credit. Chevron did not pass on to CDC the excise taxes paid on the importation of the
petroleum products because the same was exempt from indirect taxes based on RA 7916 (Special Economic Zone Act of
1995), in relation to RA 9400 (BCD Act), not because Section 135(c) exempted CDC from the payment of excise tax.
Held Granted. Refund the excise taxes.
Prepared by: JR [Tax 2 | Laforteza]