Exxonmobil v. Commissioner of Internal Revenue
REITERATIONFacts
The Antecedents: Petitioner Exxonmobil Petroleum and Chemical Holdings, Inc. - Philippine Branch (Exxon) is a foreign corporation engaged in selling petroleum products, specifically Jet A-1 fuel, to domestic and international carriers. Exxon purchased these products from Caltex Philippines, Inc. and Petron Corporation, who initially paid the excise taxes. These taxes were subsequently passed on to Exxon as part of the purchase price. Exxon sold a total of 28,635,841 liters of Jet A-1 fuel to international carriers between November 2001 and June 2002, for which it claimed excise taxes amounting to Php105,093,536.47 were erroneously paid and sought a refund. Procedural History: Exxon filed administrative claims for refund with the Bureau of Internal Revenue (BIR), which were not acted upon. Subsequently, Exxon filed a petition for review with the Court of Tax Appeals (CTA) seeking a refund of Php105,093,536.47. The Commissioner of Internal Revenue (CIR) filed a motion to first resolve the issue of whether Exxon was the proper party to claim the refund. The CTA First Division granted this motion and dismissed Exxon's claim. Exxon's motion for reconsideration was denied. Exxon then appealed to the CTA En Banc, which affirmed the First Division's ruling, holding that only the manufacturer or producer of the petroleum products has the legal personality to claim a refund of excise taxes. Exxon's motion for reconsideration of the CTA En Banc decision was also denied. The Petition: Exxon filed a petition for review on certiorari under Rule 45 of the Rules of Court, seeking to set aside the decision and resolution of the CTA En Banc. Exxon raises two main issues: first, whether it, as a distributor and vendor of petroleum products to international carriers, is prohibited from claiming a refund of excise taxes paid, despite these taxes being passed on to it; and second, whether the CTA erred in affirming the dismissal of its claim based on the CIR's motion, arguing that the motion was essentially a motion to dismiss filed out of time and should not have been granted preliminary resolution.
Issue(s)
Whether the CTA erred in granting the CIR's motion to resolve first the issue of whether petitioner is the proper party to claim a refund. Whether petitioner, as the distributor and vendor of petroleum products to international carriers, is the proper party to claim a refund of excise taxes paid thereon.
Ruling
The petition is DENIED. The Court affirmed the decision of the Court of Tax Appeals En Banc which dismissed Exxon's claim for refund.
Ratio Decidendi
On whether the CTA erred in granting the CIR's motion to resolve first the issue of whether petitioner is the proper party to claim a refund: The Court ruled that the CTA did not err in granting the CIR's motion. The CIR did not file a motion to dismiss but pleaded the grounds for dismissal as affirmative defenses in its Answer. Rule 16, Section 6 of the Rules of Court allows for a preliminary hearing on such affirmative defenses at the discretion of the court. The issue of whether the petitioner was the proper party to claim a refund was a crucial issue that could have settled the entire case, making a preliminary hearing appropriate to expedite proceedings. Denying such a hearing would have been a grave abuse of discretion, as it would lead to unnecessary trial on a matter that could be resolved upfront. The CIR's motion was filed to expedite, not delay, the proceedings, distinguishing it from cases where motions to dismiss are filed out of time. On whether petitioner, as the distributor and vendor of petroleum products to international carriers, is the proper party to claim a refund of excise taxes paid thereon: The Court held that Exxon is not the proper party to claim a refund of excise taxes. Excise taxes are indirect taxes, meaning the liability for payment falls on one person (the manufacturer or producer), but the burden can be shifted or passed on to another (the purchaser). The National Internal Revenue Code (NIRC) clearly states that the manufacturer or producer is liable to file a return and pay the excise tax before removal of domestic products from the place of production. Jurisprudence consistently holds that the proper party to question or seek a refund of an indirect tax is the statutory taxpayer, i.e., the person on whom the tax is imposed by law and who paid the same, even if the burden is shifted. In this case, Caltex and Petron were the statutory taxpayers. When they passed on the excise tax to Exxon, it became part of the purchase price, and Exxon, as the buyer, was not paying the tax per se but the price of the commodity. Therefore, Exxon, not being the statutory taxpayer, is not entitled to claim a refund. The Court also clarified that this ruling does not unilaterally amend bilateral agreements, as the exemption under Section 135 of the NIRC applies to the petroleum products themselves, and international carriers can still invoke this exemption at the point of sale.
Main Doctrine
Only the statutory taxpayer, who is the person on whom the tax is imposed by law and who paid the same, is entitled to claim a refund of indirect taxes, even if the burden of the tax is shifted to another party.