Silkair v. Commissioner of Internal Revenue
REITERATIONFacts
The Antecedents: Petitioner Silkair (Singapore) Pte. Ltd. (Silkair), an international air carrier with a Philippine representative office, sought a refund of P4,567,450.79 in excise taxes paid on its purchases of jet fuel from Petron Corporation between January and June 2000. Silkair contended that these fuel purchases were exempt from excise tax under Section 135(b) of the National Internal Revenue Code (NIRC) of 1997 and Article 4(2) of the Air Transport Agreement between the Philippines and Singapore. The Commissioner of Internal Revenue (CIR) opposed the claim, arguing that Silkair, as the purchaser, was not the proper party to claim the refund, as the excise tax was directly imposed on Petron Corporation as the manufacturer. The CIR asserted that any excise tax passed on to Silkair by Petron was merely an added cost and part of the purchase price, not a tax that Silkair could claim a refund for. Procedural History: Following the BIR's inaction on its refund application, Silkair filed a Petition for Review with the Court of Tax Appeals (CTA) Second Division. The CTA denied the petition, ruling that the excise tax liability rested with Petron Corporation, the manufacturer, and thus only Petron could claim a refund. Silkair's motion for reconsideration was also denied. Subsequently, Silkair filed a Petition for Review with the CTA En Banc. The CTA En Banc dismissed this petition as having been filed out of time, determining that the appeal period should have commenced from the date Silkair's original counsel of record received the CTA Second Division's resolution, despite Silkair's subsequent change of counsel. Silkair's motion for reconsideration of this dismissal was also denied. The Petition: Silkair filed a Petition for Review with the Supreme Court, raising three main issues: (1) whether its Petition for Review before the CTA En Banc was timely filed; (2) whether it should be deprived of its right to appeal on a technicality; and (3) assuming the petition was timely, whether it was the proper party to claim the refund or tax credit. Silkair argued that the CTA En Banc erred in its computation of the appeal period, citing a case where a new counsel's receipt of notice was deemed controlling. On the merits, Silkair maintained its entitlement to the refund based on the tax exemption provisions and the Air Transport Agreement. The Supreme Court, however, found that Silkair was not the proper party to claim the refund, as the excise tax was imposed on Petron Corporation, the manufacturer, and any amount passed on to Silkair constituted part of the purchase price. The Court also clarified that the exemption provisions did not extend to indirect taxes without clear legislative intent.
Issue(s)
Whether the Petition for Review filed with the CTA En Banc was timely filed. Whether Silkair is the proper party to claim the refund or tax credit for excise taxes paid on jet fuel. Whether petitioner should be deprived of its right to appeal on the basis of technicality.
Ruling
The petition is DENIED. Costs against petitioner.
Ratio Decidendi
On the timeliness of the appeal: The Supreme Court held that the Petition for Review filed with the CTA En Banc was filed out of time. The period to appeal is fifteen (15) days from notice of the resolution. Silkair's counsel of record, Jimenez, Gonzales, Liwanag, Bello, Valdez, Caluya & Fernandez (JGLaw), received the CTA Second Division's Resolution on October 3, 2005. According to Section 2 of Rule 13 of the Rules of Court, service upon one of the counsels of record is sufficient. Even though another law firm, The Bengzon Law Firm, had entered its appearance, JGLaw was still the counsel of record until its Notice of Withdrawal was filed on October 13, 2005. Therefore, notice to JGLaw on October 3, 2005, was binding on Silkair, and the appeal period should have commenced from that date, making the petition filed on November 17, 2005, late. The Court distinguished this case from Dolores De Mesa Abad by emphasizing that in the present case, the withdrawal of counsel was not formally communicated to the court until after the receipt of the resolution. On whether Silkair is the proper party to claim the refund: The Supreme Court ruled that Silkair is not the proper party to claim the refund. The excise tax on petroleum products is imposed by Section 130(A)(2) of the National Internal Revenue Code (NIRC) of 1997 on the manufacturer or producer, which in this case is Petron Corporation. While the burden of the tax may be shifted to the purchaser like Silkair, the amount passed on becomes an added cost or part of the purchase price, not the tax itself. Therefore, Petron Corporation, as the statutory taxpayer who paid and remitted the excise tax to the BIR, is the proper party to claim any refund based on exemptions. The Court clarified that tax exemption statutes must be construed strictly against the taxpayer and liberally in favor of the government, and the exemption under Section 135(b) of the NIRC and the Air Transport Agreement between the Philippines and Singapore does not clearly show legislative intent to include indirect taxes. The Supreme Court implicitly addressed the issue of technicality by ruling against Silkair's appeal due to its untimeliness. The Court's decision underscores the importance of adhering to procedural rules, as failure to comply can result in the loss of the right to appeal, regardless of the merits of the substantive claim. The detailed analysis of the dates and the effectivity of the notice to counsel demonstrates that the Court prioritized the enforcement of procedural rules to ensure the orderly administration of justice.
Main Doctrine
The statutory taxpayer, not the one who merely shoulders the burden of an indirect tax, is the proper party to claim for a refund of excise taxes. Furthermore, the period to appeal is reckoned from the date of receipt of the resolution by the counsel of record, even if another counsel has entered an appearance but has not yet formally withdrawn.