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OSG Formally Accepts Agreement Between Government and Shell on Tax Case

Today, the Office of the Solicitor General (OSG) confirmed before the Court of Tax Appeals (CTA) the Bureau of Customs' acceptance of Pilipinas Shell Petroleum Corporation's (Pilipinas Shell) offer to post a surety bond in lieu of cash as security for its alleged tax deficiency worth P7.35 billion.

The OSG Manifestation was submitted for resolution during the CTA hearing today. In the said hearing, Presiding Justice Ernesto Acosta said that the CTA will just look into the compliance with the pertinent Supreme Court Circular on the filing of the surety bond.
 
The agreement was a result of discussions between the company and the Executive Department in order to avert any negative public consequences, particularly resulting fuel supply shortages with earlier threats by the BOC to seize or hold Pilipinas Shell’s incoming imports. The OSG Manifestation conveyed the BOC’s decision not to seize or hold Pilipinas Shell’s importations while the case is being heard and until the issue on Pilipinas Shell’s excise tax liability is resolved with finality.
 
“The interim arrangement between the Government and Pilipinas Shell provides a positive resolution, thus, averting a shortage in oil supply that would have adversely affected the public and the economy. With this development, we can now bring in our products into the refinery and this will ensure continuity of supply,” Roberto Kanapi, Pilipinas Shell’s Vice-President for Communications said.
 
“We would like to reiterate our gratitude, most especially to President Gloria Macapagal Arroyo, as well as Solicitor General Alberto Agra, Secretary Margarito Teves, Secretary Angelo Reyes and Secretary Peter Favila, who have been instrumental in forging an agreement between the Government and Pilipinas Shell, that will be implemented during the pendency of the tax case,” Kanapi added.
 
Pilipinas Shell will now resume its product and crude oil importations that are necessary to supply nearly 30% of the market thus, preventing  any  supply disruption  which  could have resulted from Pilipinas Shell's inability to import products since 9th February 2010.   The legal merits of the case will continue to be heard by the Court of Tax Appeals to determine the issues of “double taxation” and whether Pilipinas Shell's imports of Catalytic Cracked Gasoline (CCG) and Light Catalytic Cracked Gasoline (LCCG) are raw materials and should not be subject to excise taxes.