The Cabinet-level agreement between the Departments of Finance (DoF) and Energy (DoE) would be for the Bureau of Customs to desist from seizing the future catalytic cracked gasoline (CCG) imports of Pilipinas Shell Petroleum Corporation (PSPC) so this will not result in its refinery shutdown or the worst case scenario of exodus of the world’s second largest multinational oil firm.

Energy Secretary Angelo T. Reyes was reacting to reports that the principals of Royal Dutch Shell have already given the green light into closing their Philippine refinery arising from its tax row with the BoC.

The energy chief told reporters in a briefing that: “We have decided on it and that the future importations of Shell will not be seized and we will have to wait for the final court ruling.” BoC previously told media that it plans to seize Shell’s future CCG and light catalytic cracked gasoline (LCCG) imports upon the lapse of a court’s temporary restraining order (TRO) by February 9 this year.

As the government practically blinked first on this long-drawn-out battle, Reyes noted that their main consideration is to ensure that supply is not paralyzed and to somehow portray that they are flexing muscles to address concerns, especially those labeled as ‘unfriendly’ or arbitrary change in investment policies.

Nevertheless, the energy chief indicated that while awaiting the court’s final verdict, the compromise deal being pushed with Shell is for the latter to settle levied taxes “under protest.”

“Shell will still continue to pay the imposed excise taxes but under protest… that was the agreement, so we don’t expect any disruption in supply,” Reyes noted. Nevertheless, he was not able to clarify if this pertains to the P7.3-billion demanded payment by BoC or just for Shell’s continuing importations of CCG and LCCG. He said the matter has to be referred to the DoF for resolution.

Shell, in previous pronouncements though, was firm in saying that it will not pay the P7.3 billion, even under the precept of being “under protest” because this has serious implications on the soundness and predictability of investment policies which should have been the basis of its operations in the country.

The DoF-DoE agreement to defer to final court decision is somehow aligned to an earlier ruling of the House committee on ways and means, wherein it directed both the BoC and the Bureau of Internal Revenue (BIR) to “refrain from holding the importations of CCG and LCCG by PSPC and levying the taxes,” pending the resolution of the case.

The legislative body also labeled the reversal-ruling of BIR Commissioner Joel Tan Torres, as “arbitrary as it lacks factual and legal basis since it runs counter to the finding and provisions of Section 148 of the NIRC (National Internal Revenue Code).”