Archive for May, 2007

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Court tells Petron to pay P601M in taxes

May 18, 2007

BY PAUL C.H. HOW, Reporter
BusinessWorld, May 18, 2007

THE Court of Tax Appeals has ordered Petron Corp. to pay P600.8 million in deficiency excise taxes for the years 1995 to 1998, which it had previously paid with fraudulent tax credit certificates (TCCs).

The court’s second division ruled that the Finance department’s subsequent cancellation of the TCCs in 1999 effectively meant that the oil firm had not paid excise taxes corresponding to the value of the certificates.

“It bears stressing that a valueless instrument, even if delivered to and accepted by the creditor, not knowing that the same is worthless, would not produce payment,” the decision written by Associate Justice Erlinda P. Uy stated.

Sec. 222 of the National Internal Revenue Code allows the Bureau of Internal Revenue (BIR) to collect tax liabilities within 10 years of discovering the fraudulent nature of the taxpayer’s returns. The court pointed out that the bureau filed an assessment for the deficiency tax on Jan. 30, 2002, well within the prescriptive period.

The tax court also cited a Supreme Court decision dated Oct. 12, 2006 that had required Proton Pilipinas Corp. to pay its liability to the Bureau of Customs after the TCCs the automaker had used were found to be spurious.

The ruling had stated that the taxpayer “should not make the government suffer for its own misfortune.”

The tax court also noted that the cancellation of the TCCs by the Finance department’s One Stop Shop Inter-Agency Tax Credit and Duty Drawback Center, which had earlier approved these, was based on the agency’s findings of fraudulent assignment and transfer of the certificates.

“Whether or not petitioner was actually involved in the fraudulent transfers, the same resulted in the nonpayment by petitioner of its excise taxes for the period covering 1995 to 1998.”

Petron was also ordered to pay a 25% late payment surcharge and 20% delinquency interest on the tax liability, until fully paid.

The court, however, ruled that a 50% fraud surcharge should not be imposed. “Respondent did not produce evidence to directly prove that there was a willful intention on the part of petitioner to evade the payment of taxes. At the utmost, petitioner appears to have been merely negligent in its acquisition of the controversial TCCs by failing to trace and investigate the validity of the same before obtaining them from the transferor/assignor entities,” it said.

Petron Vice-President for Legal and External Affairs Jose Jesus G. Laurel said the company will file a motion for reconsideration. “Petron remains confident of its position in the subject case, and we reiterate that the company will continue to pursue all legal remedies available, including an appeal to the Supreme Court,” he said.

Petron is one of 64 companies affected by a tax credit scam allegedly perpetrated by businessman Faustino T. Chingkoe from 1992 to 1998, depriving the government of a total of P5.3 billion. Mr. Chingkoe and his wife had fled to Canada in 2001.

In a separate case involving different TCCs, the tax court had earlier ordered the oil firm to pay P580.2 million for taxes it had paid for the period of 1995 to 1997 using the fake certificates.

From 1995 to 1998, Petron had been an assignee of the TCCs which came from Mr. Chingkoe’s various companies registered with the Board of Investments, and these certificates were used as payment of the oil firm’s excise taxes for the period.

Meanwhile, the Finance department, after an investigation on the matter, issued Resolution no. 03-05-99 that led to the cancellation of the controversial TCCs. The BIR issued an assessment to Petron, initially finding the company liable for P739 million, inclusive of surcharges and other penalties. This was protested by Petron, alleging that the TCCs had been approved by the Finance department, and that some of the items in the assessment were included in the other tax case.

Petron filed its petition with the tax court on April 2, 2002. The BIR later manifested to the court that, after recomputing the assessment, it had reduced the amount of deficiency taxes to P720.9 million.

In issuing its decision, the tax court separated the basic excise tax liability from the additional charges, arriving at the figure of P600.1 million.

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Canadian envoy visits Guimaras

May 12, 2007

CANADIAN Ambassador to the Philippines Peter Sutherland started his first visit in Guimaras yesterday to see projects funded by his government, especially those implemented following the oil spill that hit the island-province last year.

Sutherland’s first stop was Barangay Tando in Nueva Valencia, one of the worst-hit areas, where he turned-over pumpboats to fisherfolks.

Arriving with Sutherland for a two-day visit (May 10-11, 2007) are Myrna Jarillas, senior program officer of the Canadian International Development Agency (CIDA), and Carlo Figueroa, public affairs officer of the Canadian Embassy.

In the afternoon, the ambassador met with the steering committee members of the UNICEF Country Programme for Children, a project that is also funded by the Canadian government.

On the second day, Sutherland will visit the Guisi Community-based Heritage Tourism Project in Barangay Dolores, Nueva Valencia, a project initiated by the provincial government in partnership with the Canadian Urban Institute.

The project — with components on governance, environmental conservation, cultural preservation and economic development — is being managed and operated by the residents through the Barangay Dolores Tourism Council (BDTC).

Sutherland will be met by Nueva Valencia Mayor Diosdado Gonzaga and Jose Garonita, president of the BDTC. The ambassador and his party will experience the unique tour package that the people in the area offer to their guests.

Guisi has about 80 families whose main sources of sources of livelihood include copra making, fishing, seasonal farming and gathering of forest products. The place boasts of a scenic white-sand beach, forested hills, a cave and a waterfall. The coast also offers a magnificent view of the sunset over Panay Gulf.

Peopled by settlers from southern Iloilo in the 18th century, the inhabitants have preserved their indigenous culture. It is also home to a Spanish-era lighthouse that was built by the colonial government in 1857.

Before flying back to Manila, Sutherland will also visit the Guimaras Trade and Information Center (GTIC) in Jordan. (NCLujan, The News Today, May 11, 2007)

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Petron Q1 net income slides to P953M

May 4, 2007

PETRON Corp., the country’s largest oil refiner, on Thursday reported a net income of P953 million for the first quarter of 2007, slightly lower than the P1 billion profit it posted in the same period a year ago.

Petron president Khalid D. Al-Faddagh attributed the drop in earnings to the expiration of the income tax holiday on the company’s Mixed Xylene sales last December.

Domestic sales remained weak as local oil demand continued to contract, while the company’s export sales also declined due to unfavorable international prices particularly in January. Total volumes fell by 13.3 percent.

“We managed to maintain our resilient performance because of the initiatives that we have implemented over the years, including the application of the latest technologies at various points of our supply chain and our ability to introduce innovative products,” Al-Faddagh said. GMANews.TV