Pilipinas Shell posts bond pending tax dispute

Pilipinas Shell Petroleum Corp. has posted a surety bond with the Court of Tax Appeals to cover P7.35 billion in disputed back taxes, following an assurance from the government that it would not seize fuel imports. Solicitor-General Alberto Agra told reporters by phone on Tuesday Shell had written him about posting a surety bond instead of depositing money in an escrow account. "My reply was that there was nothing legally objectionable to that." In his letter to Pilipinas Shell, Agra said the offer was being accepted "owing to the undeniable paramount public interest involved." With the posting of the surety bond, the Customs bureau would no longer seize the oil firm's imports pending the tax dispute, he told the company. Pilipinas Shell spokesman Roberto S. Kanapi confirmed the decision, saying the firm had immediately posted the surety bond with the Court of Tax Appeals on Monday. Agra said the government would manifest to the court a reiteration of its acceptance of the surety deal before March 9. The surety bond is a security of sorts for Pilipinas Shell’s alleged tax deficiency while waiting for a final decision from the tax court. It is not so much different from an escrow account since the money will go to whomever wins the suit. Last February 9, the tax court declined to extend a restraining order that had barred the government from confiscating the oil firm's imports as tax payment pending the dispute. Pilipinas Shell thereafter said it would discontinue importation of what it claims are raw materials that it uses to make unleaded fuel. It was about to announce the depletion of its inventory when the deal was reached. Originally, the government wanted the amount placed in an escrow account. "The interim arrangement between the government and Shell provided a positive resolution, thus, averting a shortage in oil supply that would have adversely affected the public and the economy," Kanapi said. — Ira P. Pedrasa, BusinessWorld