I.
WHETHER THE ASSAILED DECISION AND RESOLUTION ERRONEOUSLY PROHIBITED PETITIONER, AS THE DISTRIBUTOR AND VENDOR OF PETROLEUM PRODUCTS TO INTERNATIONAL CARRIERS REGISTERED IN FOREIGN COUNTRIES WHICH HAVE EXISTING BILATERAL AGREEMENTS WITH THE PHILIPPINES, FROM CLAIMING A REFUND OF THE EXCISE TAXES PAID THEREON; ANDII.
WHETHER THE ASSAILED DECISIONS ERRED IN AFFIRMING THE DISMISSAL OF PETITIONER'S CLAIM FOR REFUND BASED ON RESPONDENT'S "MOTION TO RESOLVE FIRST THE ISSUE OF WHETHER OR NOT THE PETITIONER IS THE PROPER PARTY THAT MAY ASK FOR A REFUND," SINCE SAID MOTION IS ESSENTIALLY A MOTION TO DISMISS, WHICH SHOULD HAVE BEEN DENIED OUTRIGHT BY THE COURT OF TAX APPEALS FOR HAVING BEEN FILED OUT OF TIME.
SEC. 6. Pleading grounds as affirmative defenses. - If no motion to dismiss has been filed, any of the grounds for dismissal provided for in this Rule may be pleaded as an affirmative defense in the answer, and in the discretion of the court, a preliminary hearing may be had thereon as if a motion to dismiss had been filed.
The dismissal of the complaint under this section shall be without prejudice to the prosecution in the same or separate action of a counterclaim pleaded in the answer. (Underscoring supplied.)
Considering that there was only one question, which may even be deemed to be the very touchstone of the whole case, the trial court had no cogent reason to deny the Motion for Preliminary Hearing. Indeed, it committed grave abuse of discretion when it denied a preliminary hearing on a simple issue of fact that could have possibly settled the entire case. Verily, where a preliminary hearing appears to suffice, there is no reason to go on to trial. One reason why dockets of trial courts are clogged is the unreasonable refusal to use a process or procedure, like a motion to dismiss, which is designed to abbreviate the resolution of a case. 59 (Underscoring supplied.)
SEC. 135. Petroleum Products Sold to International Carriers and Exempt Entities or Agencies. - Petroleum products sold to the following are exempt from excise tax:chanroblesvirtuallawlibrary
(a) International carriers of Philippine or foreign registry on their use or consumption outside the Philippines: Provided, That the petroleum products sold to these international carriers shall be stored in a bonded storage tank and may be disposed of only in accordance with the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner;
(b) Exempt entities or agencies covered by tax treaties, conventions and other international agreements for their use of consumption: Provided, however, That the country of said foreign international carrier or exempt entities or agencies exempts from similar taxes petroleum products sold to Philippine carriers, entities or agencies; and
(c) Entities which are by law exempt from direct and indirect taxes. (Underscoring supplied.)
[I]ndirect taxes are those that are demanded, in the first instance, from, or are paid by, one person to someone else. Stated elsewise, indirect taxes are taxes wherein the liability for the payment of the tax falls on one person but the burden thereof can be shifted or passed on to another person, such as when the tax is imposed upon goods before reaching the consumer who ultimately pays for it. When the seller passes on the tax to his buyer, he, in effect, shifts the tax burden, not the liability to pay it, to the purchaser, as part of the goods sold or services rendered.
SEC. 129. Goods subject to Excise Taxes. - Excise taxes apply to goods manufactured or produced in the Philippines for domestic sales or consumption or for any other disposition and to things imported. The excise tax imposed herein shall be in addition to the value-added tax imposed under Title IV.cralawlibrary
For purposes of this Title, excise taxes herein imposed and based on weight or volume capacity or any other physical unit of measurement shall be referred to as 'specific tax' and an excise tax herein imposed and based on selling price or other specified value of the good shall be referred to as 'ad valorem tax.'
SEC. 130. Filing of Return and Payment of Excise Tax on Domestic Products. -
(A) Persons Liable to File a Return, Filing of Return on Removal and Payment of Tax. -
(1) Persons Liable to File a Return. - Every person liable to pay excise tax imposed under this Title shall file a separate return for each place of production setting forth, among others the description and quantity or volume of products to be removed, the applicable tax base and the amount of tax due thereon: Provided, however, That in the case of indigenous petroleum, natural gas or liquefied natural gas, the excise tax shall be paid by the first buyer, purchaser or transferee for local sale, barter or transfer, while the excise tax on exported products shall be paid by the owner, lessee, concessionaire or operator of the mining claim.cralawlibrary
Should domestic products be removed from the place of production without the payment of the tax, the owner or person having possession thereof shall be liable for the tax due thereon.cralawlibrary
(2) Time for Filing of Return and Payment of the Tax. - Unless otherwise specifically allowed, the return shall be filed and the excise tax paid by the manufacturer or producer before removal of domestic products from place of production: Provided, That the tax excise on locally manufactured petroleum products and indigenous petroleum/levied under Sections 148 and 151(A)(4), respectively, of this Title shall be paid within ten (10) days from the date of removal of such products for the period from January 1, 1998 to June 30, 1998; within five (5) days from the date of removal of such products for the period from July 1, 1998 to December 31, 1998; and, before removal from the place of production of such products from January 1, 1999 and thereafter: Provided, further, That the excise tax on nonmetallic mineral or mineral products, or quarry resources shall be due and payable upon removal of such products from the locality where mined or extracted, but with respect to the excise tax on locally produced or extracted metallic mineral or mineral products, the person liable shall file a return and pay the tax within fifteen (15) days after the end of the calendar quarter when such products were removed subject to such conditions as may be prescribed by rules and regulations to be promulgated by the Secretary of Finance, upon recommendation of the Commissioner. For this purpose, the taxpayer shall file a bond in an amount which approximates the amount of excise tax due on the removals for the said quarter. The foregoing rules notwithstanding, for imported mineral or mineral products, whether metallic or nonmetallic, the excise tax due thereon shall be paid before their removal from customs custody.cralawlibrary
x x x
(Italics and underscoring supplied.)
"The phrase 'passed the tax on' is inaccurate, as obviously the tax is laid and remains on the manufacturer and on him alone. The purchaser does not really pay the tax. He pays or may pay the seller more for the goods because of the seller's obligation, but that is all. x x x The price is the sum total paid for the goods. The amount added because of the tax is paid to get the goods and for nothing else. Therefore it is part of the price x x x." 79
It may indeed be that the economic burden of the tax finally falls on the purchaser; when it does the tax becomes a part of the price which the purchaser must pay. It does not matter that an additional amount is billed as tax to the purchaser. x x x The effect is still the same, namely, that the purchaser does not pay the tax. He pays or may pay the seller more for the goods because of the seller's obligation, but that is all and the amount added because of the tax is paid to get the goods and for nothing else.cralawlibrary
But the tax burden may not even be shifted to the purchaser at all. A decision to absorb the burden of the tax is largely a matter of economics. Then it can no longer be contended that a sales tax is a tax on the purchaser. 80
The proper party to question, or seek a refund of, an indirect tax is the statutory taxpayer, the person on whom the tax is imposed by law and who paid the same even if he shifts the burden thereof to another. Section 130 (A) (2) of the NIRC provides that "[u]nless otherwise specifically allowed, the return shall be filed and the excise tax paid by the manufacturer or producer before removal of domestic products from place of production." Thus, Petron Corporation, not Silkair, is the statutory taxpayer which is entitled to claim a refund based on Section 135 of the NIRC of 1997 and Article 4(2) of the Air Transport Agreement between RP and Singapore.cralawlibrary
Even if Petron Corporation passed on to Silkair the burden of the tax, the additional amount billed to Silkair for jet fuel is not a tax but part of the price which Silkair had to pay as a purchaser. 86 (Emphasis and underscoring supplied.)
The issue presented is not novel. In a similar case involving the same parties, this Court has categorically ruled that "the proper party to question, or seek a refund of an indirect tax is the statutory taxpayer, the person on whom the tax is imposed by law and who paid the same even if he shifts the burden thereof to another." The Court added that "even if Petron Corporation passed on to Silkair the burden of the tax, the additional amount billed to Silkair for jet fuel is not a tax but part of the price which Silkair had to pay as a purchaser." 87
The determination of who is the taxpayer plays a pivotal role in claims for refund because the same law provides that it is only the taxpayer who has the legal personality to ask for a refund in case of erroneous payment of taxes. Section 204 (C) of the 1997 NIRC, [provides] in part, as follows:chanroblesvirtuallawlibrarySEC. 204. Authority of the Commissioner to Compromise, Abate, and Refund or Credit Taxes. - The Commissioner may -xxx xxx xxx
(C) Credit or refund taxes erroneously or illegally received or penalties imposed without authority, refund the value of internal revenue stamps when they are returned in good condition by the purchaser, and, in his discretion, redeem or change unused stamps that have been rendered unfit for use and refund their value upon proof of destruction. No credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing with the Commissioner a claim for credit or refund within two (2) years after the payment of the tax or penalty: Provided, however, That a return showing an overpayment shall be considered as a written claim for credit or refund.cralawlibraryxxx xxx xxx
(Emphasis shown supplied by the CTA.) 88
One final point, petitioner's argument "that in effectively holding that only petroleum products purchased directly from the manufacturers or producers are exempt from excise taxes, the First Division of this Court sanctioned a unilateral amendment of existing bilateral agreements which the Philippines have (sic) with other countries, in violation of the basic international principle of "pacta sunt servanda" is misplaced. First, the findings of fact of the First Division of this Court that "when petitioner sold the Jet A-1 fuel to international carriers, it did so free of tax" negates any violation of the exemption from excise tax of the petroleum products sold to international carriers insofar as this case is concerned. Secondly, the right of international carriers to invoke the exemption granted under Section 135 (a) of the 1997 NIRC has neither been affected nor restricted in any way by the ruling of the First Division of this Court. At the point of sale, the international carriers are free to invoke the exemption from excise taxes of the petroleum products sold to them. Lastly, the law-making body is presumed to have enacted a later law with the knowledge of all other laws involving the same subject matter." 90 (Underscoring supplied.)
Endnotes:
1 Rollo, pp. 62-88. Penned by Associate Justice Juanito C. Castañeda Jr., with Associate Justices Lovell R. Bautista, Erlinda P. Uy, Caesar A. Casanova and Olga Palanca-Enriquez, concurring. Presiding Justice Ernesto D. Acosta issued a separate dissenting opinion.cralawlibrary
2 Id. at 89-94.cralawlibrary
3 Id. at 73.cralawlibrary
4 Id.cralawlibrary
5 Id.cralawlibrary
6 Id.cralawlibrary
7 Id.cralawlibrary
8 Id.cralawlibrary
9 Id.cralawlibrary
10 Docketed as CTA Case No. 6809.cralawlibrary
11 Rollo, p. 63.cralawlibrary
12 Id.cralawlibrary
13 Id. at 64.cralawlibrary
14 Id. at 138. Associate Justices Lovell R. Bautista and Caesar A. Casanova, concurring. Presiding Justice Ernesto D. Acosta issued a separate dissenting opinion.cralawlibrary
15 Id. at 150.
[16 Id. at 95.cralawlibrary
17 Id. at 62-63.cralawlibrary
18 SEC. 130. Filing of Return and Payment of Excise Tax on Domestic Products. -
(A) Persons Liable to File a Return, Filing of Return on Removal and Payment of Tax. -
x x x
(2) Time for Filing of Return and Payment of the Tax. - Unless otherwise specifically allowed, the return shall be filed and the excise tax paid by the manufacturer or producer before removal of domestic products from place of production: Provided, That the tax excise on locally manufactured petroleum products and indigenous petroleum levied under Sections 148 and 151(A)(4), respectively, of this Title shall be paid within ten (10) days from the date of removal of such products for the period from January 1, 1998 to June 30, 1998; within five (5) days from the date of removal of such products for the period from July 1, 1998 to December 31, 1998; and, before removal from the place of production of such products from January 1, 1999 and thereafter: Provided, further, That the excise tax on nonmetallic mineral or mineral products, or quarry resources shall be due and payable upon removal of such products from the locality where mined or extracted, but with respect to the excise tax on locally produced or extracted metallic mineral or mineral products, the person liable shall file a return and pay the tax within fifteen (15) days after the end of the calendar quarter when such products were removed subject to such conditions as may be prescribed by rules and regulations to be promulgated by the Secretary of Finance, upon recommendation of the Commissioner. For this purpose, the taxpayer shall file a bond in an amount which approximates the amount of excise tax due on the removals for the said quarter. The foregoing rules notwithstanding, for imported mineral or mineral products, whether metallic or nonmetallic, the excise tax due thereon shall be paid before their removal from customs custody.cralawlibrary
x x x
19 SEC. 135. Petroleum Products Sold to International Carriers and Exempt Entities or Agencies. - Petroleum products sold to the following are exempt from excise tax:chanroblesvirtuallawlibrary
(a) International carriers of Philippine or foreign registry on their use or consumption outside the Philippines: Provided, That the petroleum products sold to these international carriers shall be stored in a bonded storage tank and may be disposed of only in accordance with the rules and regulations to be prescribed by the Secretary of Finance, upon recommendation of the Commissioner;
x x x
20 Koyo Manufacturing (Philippines) Corp. v. Commissioner of Internal Revenue. CTA E.B. No. 194, March 1, 2007; Mobil Philippines, Inc. v. Commissioner of Internal Revenue, CTA E.B. No. 110, July 26, 2006; Dunlop Slazenger Phils., Inc. v. Commissioner of Internal Revenue, CTA E.B. No. 102, May 18, 2006; Commissioner of Internal Revenue v. Silkair (Singapore) Pte. Ltd., CTA E.B. No. 67, January 5, 2006;; Commissioner of Internal Revenue v. Silkair (Singapore) Pte. Ltd., CTA E.B. No. 56, October 20, 2005; and Commissioner of Internal Revenue v. Silkair (Singapore) Pte. Ltd., CTA E.B. No. 25, May 20, 2005.cralawlibrary
21 Rollo, p. 74.cralawlibrary
22 Id. at 75.cralawlibrary
23 Id.cralawlibrary
24 Id, citing Section 204(C) of the NIRC of 1997, which reads:chanroblesvirtuallawlibrary
SEC. 204. Authority of the Commissioner to Compromise, Abate and Refund or Credit Taxes. - The Commissioner may -
x x x
(c) Credit or refund taxes erroneously or illegally received or penalties imposed without authority, refund the value of internal revenue stamps when they are returned in good condition by the purchaser, and, in his discretion, redeem or change unused stamps that have been rendered unfit for use and refund their value upon proof of destruction. No credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing with the Commissioner a claim for credit or refund within two (2) years after the payment of the tax or penalty: Provided, however, That a return filed showing an overpayment shall be considered as a written claim for credit or refund.cralawlibrary
x x x
25 Id. at 77, citing Maceda v. Macaraig, Jr., et. al., 274 Phil. 1060 (1991).cralawlibrary
26 127 Phil. 461 (1967).cralawlibrary
27 G.R. No. 151135, July 2, 2004, 433 SCRA 577.cralawlibrary
28 G.R. No. 140230, December 15, 2005, 478 SCRA 61, citing Philippine Acetylene Co., Inc. v. Commissioner of Internal Revenue, supra note 27 at 470.cralawlibrary
29 Rollo, p. 77.cralawlibrary
30 Id. at 78.cralawlibrary
31 Id. at 80.cralawlibrary
32Cebu Portland Cement Company v. Commissioner of Internal Revenue, 134 Phil. 735 (1968).cralawlibrary
33]Contex Corporation v. Commissioner of Internal Revenue, supra note 27.cralawlibrary
34 Rollo, p. 79, citing Section 204(C) of the 1997 NIRC and Cebu Portland Cement Company v. Collector of Internal Revenue, 134 Phil. 735 (1968).cralawlibrary
35 Id. at 81.cralawlibrary
36 Id.cralawlibrary
37 Id. at 82.cralawlibrary
38 Id.cralawlibrary
39 Id. at 204.cralawlibrary
40 Id. at 205.cralawlibrary
41 Id. at 397.cralawlibrary
42 Id. at 396.cralawlibrary
43 Id. at 397.cralawlibrary
44 Id. at 396.cralawlibrary
45 Id. at 397.cralawlibrary
46 Id.cralawlibrary
47 387 Phil. 491 (2000).cralawlibrary
48 Rollo, p. 399.cralawlibrary
49 Id. at 279.cralawlibrary
50 Id.cralawlibrary
51 Id.cralawlibrary
52 Id.cralawlibrary
53 Id.cralawlibrary
54 Supra note 47.cralawlibrary
55 Rollo, p. 280.cralawlibrary
56 Id.cralawlibrary
57 Id.cralawlibrary
58 399 Phil. 795 (2000).cralawlibrary
59 Id. at 805.cralawlibrary
60 Rollo, p. 39.cralawlibrary
61 Id. at 31.cralawlibrary
62 Id. at 32.cralawlibrary
63 Id.cralawlibrary
64 Id., citing BIR Ruling DA-038-98.cralawlibrary
65 Id. at 34.cralawlibrary
66 Id. at 271.cralawlibrary
67 Id.cralawlibrary
68 Id.cralawlibrary
69 Id. at 273.cralawlibrary
70 Id. at 277.cralawlibrary
71 J.C. Vitug and E.D. Acosta, Tax Law and Jurisprudence, 271 (2006). See also Republic Act No. 8424 (1997), as amended, Sec. 129.cralawlibrary
72 Id.cralawlibrary
73 Id. at 281.cralawlibrary
74 Supra note 28 at 72, citing Commissioner of Internal Revenue v. Tours Specialists, Inc., 262 Phil. 437 (1990).cralawlibrary
75 Silkair (Singapore) Pte, Ltd. v. Commissioner of Internal Revenue, G.R. No. 173594, February 6, 2008, 544 SCRA 100, 112; J.C. Vitug and E.D. Acosta, Tax Law and Jurisprudence, 317 (2006), citing Commissioner of Internal Revenue v. American Rubber Company and Court of Tax Appeals, 124 Phil. 1471 (1966); Cebu Portland Cement Co. v. Collector of Internal Revenue, 134 Phil. 735 (1968).cralawlibrary
76 Supra note 26.cralawlibrary
77 Id. at 470.cralawlibrary
78 278 U.S. 175 (1928).cralawlibrary
79 Supra note 26 at 465-466.cralawlibrary
80 Id. at 470, citing 47 Harv. Ld. Rev. 860, 869 (1934).cralawlibrary
81 Supra note 32.cralawlibrary
82Id. at 743.cralawlibrary
83 Supra note 75. See also Silkair (Singapore) Pte, Ltd. v. Commissioner of Internal Revenue, G.R. Nos. 171383 and 172379, November 14, 2008, 571 SCRA 141.cralawlibrary
84 Id.cralawlibrary
85 Silkair (Singapore) Pte, Ltd. v. Commissioner of Internal Revenue, G.R. No. 173594, February 6, 2008, 544 SCRA 100 and Silkair (Singapore) Pte, Ltd. v. Commissioner of Internal Revenue, G.R. Nos. 171383 and 172379, November 14, 2008, 571 SCRA 141.cralawlibrary
86 Silkair (Singapore) Pte, Ltd. v. Commissioner of Internal Revenue, supra note 75.cralawlibrary
87 Silkair (Singapore) Pte, Ltd. v. Commissioner of Internal Revenue, G.R. Nos. 171383 and 172379, November 14, 2008, 571 SCRA 141, 153-154.cralawlibrary
88 Rollo, pp. 75-76.cralawlibrary
89 Id. at 34.cralawlibrary
90 Id. at 82.