Silkair (Singapore) Pte. Ltd. vs. Commissioner of Internal Revenue

A purchaser who merely bears the economic burden of an indirect excise tax passed on by the manufacturer is not the statutory taxpayer entitled to claim a refund thereof.

Petitioner Silkair (Singapore) Pte. Ltd., a foreign corporation operating international flights between Singapore and the Philippines, purchased aviation jet fuel from Petron Corporation from June to December 2000. Excise taxes were paid on these purchases. Relying on BIR Ruling No. 339-92 and the reciprocity clause in Article 4(2) of the Air Transport Agreement between the Philippines and Singapore, in conjunction with Section 135(b) of the NIRC, petitioner filed an administrative claim for refund of the excise taxes paid, asserting exemption as an international carrier.

• The Claim for Refund: Petitioner, an international carrier plying the Singapore-Cebu-Singapore and Singapore-Cebu-Davao-Singapore routes, purchased aviation jet fuel from Petron Corporation from June to December 2000. On June 24, 2002, petitioner filed an administrative claim for refund of excise taxes paid on these purchases, invoking Section 135(b) of the NIRC and Article 4(2) of the Air Transport Agreement between the Philippines and Singapore, which provides reciprocity on tax exemptions for fuel used by designated airlines.
• Evidentiary Deficiency: To prove its authority to operate in the Philippines during the subject period, petitioner presented a Foreign Air Carrier’s Permit (Exhibit "B"), but offered mere photocopies of its SEC Certificate of Registration (Exhibit "A") and its CAB operating permits (Exhibits "P," "Q," and "R"). The original copies were not presented for comparison and verification. The CTA First Division denied the admission of these photocopies, resulting in petitioner's failure to establish its authority to operate in the Philippines for the period June to December 2000.
• Judicial Notice Argument: Petitioner moved for the CTA to take judicial notice of its SEC Registration, arguing that the document had been previously offered and admitted in similar cases before the same court. Petitioner also claimed that only photocopies of Exhibits "P," "Q," and "R" were introduced by inadvertence.

• Authority to Operate: Petitioner argued that it substantially proved its authority to operate in the Philippines through the admission of its Foreign Air Carrier’s Permit (Exhibit "B"). It claimed Exhibits "P," "Q," and "R" were merely flight schedules, and that only photocopies were introduced by inadvertence.
• Judicial Notice: Petitioner maintained that the CTA should take judicial notice of its SEC Registration since it was previously offered and admitted in evidence in similar cases involving the same parties and subject matter before the same court.
• Proper Party to Claim Refund: Petitioner asserted that it was the proper party to claim the refund because it was the entity granted the tax exemption and the one that made the erroneous payment. It argued that the excise tax exemption was a personal privilege granted to it as a buyer, and that the tax, though initially payable by the manufacturer, attaches to the goods and becomes the liability of the possessor.

• Evidentiary Rules: Respondent countered that the admission of the FACP did not cure petitioner's failure to formally offer original or certified true copies of Exhibit "A" and Exhibits "P," "Q," and "R," which were necessary to prove authority to operate.
• Statutory Taxpayer: Respondent maintained that an excise tax is an indirect tax, the direct liability of which falls on the manufacturer or producer. When the excise tax is shifted to the buyer, it ceases to be a tax and becomes part of the purchase price; thus, petitioner, as purchaser, was neither the entity required by law nor statutorily liable to pay the tax, and could not seek reimbursement.

• Proof of Authority to Operate: Whether petitioner substantially proved its authority to operate in the Philippines for the period June to December 2000.
• Locus Standi to Claim Refund: Whether petitioner is the proper party to claim a refund or tax credit of excise taxes paid on aviation fuel.

• Proof of Authority to Operate: Petitioner failed to prove its authority to operate in the Philippines. The CTA correctly refused to admit the photocopies of the SEC registration and operating permits without the presentation of original copies for comparison, pursuant to Section 3, Rule 130 of the Rules of Court. Judicial notice was properly denied because SEC registrations and CAB permits are not matters of mandatory judicial notice under Section 1, Rule 129, nor are they of public knowledge capable of unquestionable demonstration under Section 2, Rule 129. Furthermore, Section 3, Rule 129 requires a hearing before judicial notice may be taken. Evidence admitted in previous cases cannot simply be adopted in a separate case without being offered and identified anew.
• Locus Standi to Claim Refund: Petitioner is not the proper party to claim the refund. Under Section 130(A)(2) of the NIRC, the manufacturer or producer (Petron) is the statutory taxpayer required to file the return and pay the excise tax before removal of domestic products. An excise tax is an indirect tax where the liability for payment falls on the manufacturer, even if the burden is shifted to the consumer. When the burden of the tax is shifted, the amount passed on to the buyer is no longer a tax but part of the purchase price. The exemption under Section 135(b) of the NIRC cannot be enlarged by construction to include indirect taxes absent a clear showing of legislative intent, tax exemptions being construed strictly against the taxpayer. Stare decisis applies, as previous cases involving the same parties settled this issue.

• Statutory Taxpayer in Indirect Taxes — The statutory taxpayer is the person on whom the tax is imposed by law and who paid the same, even if the burden is shifted to another. In indirect taxes such as excise taxes, the manufacturer or producer is the statutory taxpayer. The purchaser who ultimately bears the economic burden of the passed-on tax is not the statutory taxpayer and cannot claim a refund, because the amount shifted becomes part of the purchase price, not a tax.
• Judicial Notice of Evidence in Other Cases — A court is not mandated to take judicial notice of pieces of evidence offered and admitted in previous cases, even between the same parties. Evidence presented in a prior case cannot be considered in a separate pending case without being formally offered and identified anew.
• Strict Construction of Tax Exemptions — Tax refunds are in the nature of tax exemptions representing a loss of revenue to the government. They must be granted by clear and unequivocal provision of law and construed strictly against the taxpayer and liberally in favor of the taxing authority. Statutes granting tax exemptions cannot be enlarged by construction to include indirect taxes without a clear showing of legislative intent.

• "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."
• "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 purchase price of goods sold or services rendered."
• "Each and every case is distinct and separate in character and matter although similar parties may have been involved. Thus, in a pending case, it is not mandatory upon the courts to take judicial notice of pieces of evidence which have been offered in other cases even when such cases have been tried or pending in the same court."
• "The exemption granted under Section 135 (b) of the NIRC of 1997 and Article 4(2) of the Air Transport Agreement between RP and Singapore cannot, without a clear showing of legislative intent, be construed as including indirect taxes."

• Silkair (Singapore) Pte, Ltd. v. Commissioner of Internal Revenue, G.R. No. 173594, February 6, 2008 — Controlling precedent. Held that Petron, not Silkair, is the statutory taxpayer entitled to claim a refund of the indirect excise tax under Section 135 of the NIRC and the Air Transport Agreement.
• Silkair (Singapore) Pte, Ltd. v. Commissioner of Internal Revenue, G.R. Nos. 171383 and 172379, November 14, 2008 — Controlling precedent. Explained that an excise tax is an indirect tax where the burden can be shifted to the consumer but the liability remains with the manufacturer; the amount passed on becomes part of the purchase price.
• Commissioner of Internal Revenue v. Philippine Long Distance Telephone Company, G.R. No. 140230, December 15, 2005 — Cited for the distinction between direct and indirect taxes.
• Maceda v. Macaraig, Jr., 274 Phil. 1060 (1991) — Cited for the definition of indirect taxes as those primarily paid by persons who can shift the burden upon someone else.
• Philippine Acetylene Co., Inc. v. Commissioner of Internal Revenue — Cited for the principle that while the economic burden of the tax falls on the purchaser, it becomes part of the price the purchaser must pay.
• Commissioner of Internal Revenue v. Trustworthy Pawnshop, Inc., G.R. No. 149834, May 2, 2006 — Cited for the doctrine of stare decisis et non quieta movere.

• Section 135(b), Republic Act No. 8424 (1997 NIRC) — Exempts from excise tax petroleum products sold to exempt entities or agencies covered by international agreements, provided the foreign country grants similar exemptions to Philippine carriers.
• Article 4(2), Air Transport Agreement between the Philippines and Singapore — Exempts fuel introduced into or taken on board aircraft by a designated airline of a Contracting Party from customs duties, inspection fees, and other duties or taxes.
• Section 130(A)(2), 1997 NIRC — Provides that the return shall be filed and the excise tax paid by the manufacturer or producer before removal of domestic products from place of production.
• Section 204(C), 1997 NIRC — Prescribes a two-year prescriptive period within which a taxpayer may file an administrative claim for refund or tax credit.
• Section 3, Rule 130, 1997 Revised Rules of Court — The Best Evidence Rule: when the subject of inquiry is the contents of a document, no evidence shall be admissible other than the original document itself.
• Section 1, Rule 129, Rules of Court — Enumerates matters of mandatory judicial notice.
• Section 2, Rule 129, Rules of Court — Enumerates matters of discretionary judicial notice.
• Section 3, Rule 129, Rules of Court — Requires a hearing before judicial notice may be taken by the court.

Reynato S. Puno (C.J.), Conchita Carpio Morales, Lucas P. Bersamin, Martin S. Villarama, Jr.