G.R. No. 166482 ; January 25, 2012
SILKAIR (SINGAPORE) PTE. LTD., Petitioner, vs. COMMISSIONER OF INTERNAL REVENUE, Respondent.

FACTS

Petitioner Silkair (Singapore) Pte. Ltd., a foreign corporation licensed as an international carrier in the Philippines, purchased aviation fuel from Petron Corporation from July 1 to December 31, 1998. The excise taxes on the fuel, amounting to ₱5,007,043.39, were paid (advanced by Singapore Airlines, Ltd. on behalf of petitioner). On October 20, 1999, petitioner filed an administrative claim for refund of this amount, arguing the excise taxes were erroneously paid. The claim was based on Section 135(a) and (b) of the 1997 Tax Code, which exempts petroleum products sold to international carriers for use outside the Philippines, provided there is reciprocity, and on Article 4(2) of the Air Transport Agreement between the Philippines and Singapore, which grants tax exemptions to supplies for designated airlines. Due to the Commissioner of Internal Revenue’s inaction, petitioner filed a petition for review with the Court of Tax Appeals (CTA). The CTA denied the claim, ruling petitioner failed to prove the jet fuel came from a bonded storage tank as required under Section 135(a). Petitioner appealed to the Court of Appeals (CA), which affirmed the denial but on a different ground: it ruled that while petitioner was exempt under Section 135(b), it was not the proper party to seek a refund of the excise taxes paid. The CA held that excise tax is an indirect tax, and the proper party to claim a refund is the statutory taxpayer (the manufacturer/seller, Petron), not the buyer (petitioner). Petitioner’s motion for reconsideration was denied.

ISSUE

Whether petitioner Silkair (Singapore) Pte. Ltd. is the proper party to file an administrative claim for refund of excise taxes paid on its purchase of aviation fuel.

RULING

The Supreme Court ruled for the respondent Commissioner of Internal Revenue and denied the petition. The Court held that petitioner is not the proper party to seek the refund. Excise tax is an indirect tax levied on the manufacturer/importer (Petron), who then passes on the burden to the buyer. 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 it to the government, even if they shift the economic burden to another. Following the principle of stare decisis and its previous rulings in Silkair (Singapore) Pte. Ltd. v. Commissioner of Internal Revenue ( G.R. No. 173594 , February 6, 2008; G.R. Nos. 171383 & 172379, November 14, 2008; and G.R. No. 184398 , February 25, 2010), the Court reiterated that the manufacturer/seller (Petron), not the international carrier buyer (petitioner), is the entity directly liable for the excise tax and thus the proper party to claim any refund. The exemption under Section 135 of the Tax Code and the Air Transport Agreement does not transform the buyer into the statutory taxpayer entitled to a direct refund from the Bureau of Internal Revenue.