Why did Internal Revenue Commissioner Sixto Esquivias resign from the Bureau of Internal Revenue? He said it was because he was unable to collect the quota assigned to him. It is the decent thing to do, he added.
That’s not the complete picture, according to Secretary Narciso Santiago Jr., presidential adviser on revenue enhancement and husband of Sen. Miriam Defensor-Santiago.
Why is Pilipinas Shell the only oil company among the Big Three to file for the issuance of a temporary restraining order on the executive order imposing price controls on petroleum products?
Santiago: Because Shell itself is facing a lawsuit from the government.
Santiago showed me documents that shed some light on the murky world of the downstream oil industry. Pilipinas Shell, he said, owed the government more than P7 billion in uncollected excise taxes on imported Catalytic Cracked Gasoline (CCG), which is actually unleaded gasoline. Shell paid the taxes on its CCG importations for the years 2001, 2002 and 2003. It stopped paying in 2004. All the other oil companies are at present paying taxes on their unleaded gasoline imports. Only Shell is not paying. Why?
Because in March of 2004, Shell was able to get from then Internal Revenue Commissioner Jose Mario Buñag a memorandum stating that imported CCG, “being intermediate goods not intended for domestic use or consumption but (is) going to be used as additional components in the production of gasoline (which is the finished product),” is not subject to excise tax under the National Internal Revenue Code (NIRC). (Question: Why is the BIR collecting excise taxes from other oil companies for their unleaded gasoline imports? Was that the reason Buñag was replaced as BIR commissioner?)
Buñag’s opinion was affirmed last June 2009 by Commissioner Esquivias in a memorandum to Finance Secretary Margarito Teves.
Last October, however, Customs Collector Juan N. Tan of the Port of Batangas, told Customs Commissioner Napoleon Morales that Shell is liable for the payment of excise taxes on CCG. He invoked Sec. 129 of the National Internal Revenue Code, which states that excise taxes apply to (a) goods manufactured or produced in the Philippines for domestic sale or consumption or for any other disposition and (b) to things imported.
Morales endorsed to Teves the findings of the committee created to study the liability of Shell for unpaid taxes. To date, Shell owes the government P7,348,767,933 in unpaid excise taxes, exclusive of interests, penalties and other charges. No wonder the BIR cannot meet its collection quota.
In a long line of cases, the Supreme Court has ruled that taxation is the rule and exemption is the exception. In other words, any claim to tax exemption is strictly construed against the claimant.
Santiago said that it is interesting to note that Shell did not apply for tax credit for the taxes it paid on its CCG imports for the years 2001, 2002 and 2003. This indicates that Shell was only able to manipulate or made an unlawful agreement with officials of the BIR and Bureau of Customs (BOC) to the prejudice of the interests of the government, Santiago added.
As presidential adviser on revenue enhancement whose duty, as the name suggests, is to help the government collect more revenues, Santiago asked the BIR for classified documents for the years 2007 to 2009 relating to large (as classified by the BIR) taxpayers. Among his duties and responsibilities is the authority to investigate cases in the Large Taxpayers Unit of the BIR and file charges, if warranted, against persons liable for the violation of pertinent laws.
However, Esquivias refused to submit the papers Santiago was asking for, even after Executive Secretary Eduardo Ermita and Secretary Teves had ordered him to do so. Rather than surrender the papers, Esquivias resigned.
Santiago recommended to President Gloria Macapagal-Arroyo that Teves, Morales and Batangas Port Collector Tan be directed to immediately collect from Shell the more than P7.3 billion in unpaid excise taxes plus interests, penalties and other charges.
He also recommended that Esquivias and Deputy Commissioner Gregorio V. Cabantac be directed to explain why they are protecting the interests of Shell instead of the interests of the government.
As I see it, Shell should first pay the taxes—as other oil companies are doing and as Shell did from 2001 to 2003—and then ask the Court of Tax Appeals to order a refund if it is entitled to a tax exemption. It is clear that the government cannot collect enough revenues for its needs because of alleged tax exemptions and other loopholes such as this. Many public officials seem to be working for private companies instead of for the government. I wonder why.
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Still on the BOC, it is now roiled by the appointment of a newcomer as collector of the Port of Manila, the premier collecting district averaging P60 billion a year. Also, he is not a CESO (career executive service officer). Moreover, he has a P3.9-billion extortion case filed against him by customs brokers.
Lawyer Rogelio Gatchalian entered the BOC only on Feb. 20, 2007 as attorney III. Recently, he was promoted collector of the Port of Manila, bypassing more senior customs executives who are all crying “foul”!
The minimum qualification standards for collector VI, include three years of supervisory experience, eligibility and career executive service, they said. Gatchalian failed these standards, they said.
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KAPIHAN NOTES: Sen. Noynoy Aquino, presidential candidate of the Liberal Party, will be the guest at the Kapihan sa Manila this Monday. He will make an exposé on Oplan 2012, whatever that is. It is not known whether his sister Kris would be with him.
