Source: http://lawlibrary.chanrobles.com/index.php?option=com_content&view=article&id=83719:57963&catid=1588&Itemid=566
Timestamp: 2019-04-21 04:56:38+00:00

Document:
G.R. No. 186223, October 01, 2014 - COMMISSIONER OF INTERNAL REVENUE, Petitioner, v. PHILIPPINE ASSOCIATED SMELTING AND REFINING CORPORATION, Respondent.
COMMISSIONER OF INTERNAL REVENUE, Petitioner, v. PHILIPPINE ASSOCIATED SMELTING AND REFINING CORPORATION, Respondent.
The instant petition filed under Rule 45 of the Revised Rules of Court seeks to reverse and set aside the Court of Tax Appeals (CTA) En Bane Decision1 dated November 12, 2008 in CTA E.B. Case No. 351 (CTA Case No. 7565) entitled "Philippine Associated Smelting and Refining Corporation v. The Honorable Commissioner of Internal Revenue" which ruled that respondent is a PEZA-registered enterprise and enjoys tax exemption privilege; hence, it is exempt from paying the excise tax on petroleum products in issue and entitled to seek a refund thereof. The Resolution2 dated January 30, 2009 denied the motion for reconsideration filed by the Commissioner of Internal Revenue (petitioner).
The respondent Philippine Associated Smelting and Refining Corporation (PASAR) is a domestic corporation engaged in the business of processing, smelting, refining and exporting refined copper cathodes and other copper products, and a registered Zone Export Enterprise with the Export Processing Zone Authority (EPZA).3 PASAR uses petroleum products for its manufacturing and other processes, and purchases it from local distributors, which import the same and pay the corresponding excise taxes. The excise taxes paid are then passed on by the local distributors to its purchasers. In this particular case, Petron passed on to PASAR the excise taxes it paid on the petroleum products bought by the latter during the period of January 2005 to October 2005, totalling eleven million six hundred eighty-seven thousand four hundred sixty-seven 62/100 (P11,687,467.62).
1. Whether or not petroleum products purchased from Petron and delivered to PASAR to be used in its operation in LIDE are exempt from excise taxes under Section 17 of P.D. No. 66 and thus entitled to a refund or issuance of a tax credit certificate.
2. Whether or not PASAR is the proper party to claim for refund or issuance of tax credit certificate for excise taxes paid.
3. Whether or not the claim for tax credit/refund is properly substantiated by receipts and invoices.
On September 19, 2007, the CTA Second Division issued a Resolution6 granting the petitioner's motion to preliminarily resolve whether PASAR is the proper party to ask for a refund, and dismissed its petition for review. When its motion for reconsideration was denied in the Resolution7 dated December 3, 2007, PASAR filed a petition for review with the CTA En Banc.
In the assailed Resolution8 dated November 12, 2008, the CTA En Banc set aside CTA Resolutions dated September 19, 2007 and December 3, 2007, and ordered the remand of the petition for review to the CTA Second Division for reception of evidence and determination of the amount to be refunded to the petitioner. The petitioner filed a motion for reconsideration, which was denied by the CTA En Banc in the assailed Resolution9 dated January 30, 2009.
THE CTA SHOULD HAVE DISMISSED RESPONDENT'S PETITION FOR REVIEW FOR LACK OF JURISDICTION OVER THE SUBJECT MATTER OF THE CASE.
THE CTA EN BANC'S RELIANCE ON COMMISSIONER OF CUSTOMS V. PHILIPPINE PHOSPHATE FERTILIZER CORPORATION AND PHILIPPINE PHOSPHATE FERTILIZER CORPORATION V. COMMISSIONER OF INTERNAL REVENUE IS MISPLACED.
RESPONDENT IS NOT THE PROPER PARTY TO CLAIM A TAX CREDIT AND/OR REFUND.
At the outset, it must be stated that the Court will limit the issue to be resolved in this case to whether PASAR is the proper party to claim the tax credit/refund on the excise taxes paid on the petroleum products purchased from Petron. The other grounds raised by the petitioner, i.e., jurisdiction and the factual basis of PASAR's claim for tax refund/credit, are not proper at the moment inasmuch as the CTA En Banc's review only dealt with the petitioner's "motion to preliminary resolve the issue of whether or not [respondent] is the proper party that may ask for a refund."16 And on this issue, the Court finds that the CTA En Banc did not commit any reversible error when it ruled that PASAR is the proper party to file a claim for the refund/credit of excise taxes. Hence, the petition must be denied.
Commissioner of Customs involved a claim for refund by Philippine Phosphate Fertilizer Corporation (Philphos) of the customs duties it indirectly paid on fuel and petroleum products purchased from Petron Corporation for the period of October 1991 until June 1992. This was opposed by the Commissioner of Customs. One of the issues raised in the case was the legal basis for Philphos' exemption from duties and taxes, it being an EPZA-registered company. While it may be true that Commissioner of Customs involved the refund of customs duties paid on petroleum products, it was nevertheless correctly applied by the CTA En Banc.
SEC. 17. Tax Treatment of Merchandize in the Zone. - (1) Except as otherwise provided in this Decree, foreign and domestic merchandise, raw materials, supplies, articles, equipment, machineries, spare parts and wares of every description, except those prohibited by law, brought into the Zone to be sold, stored, broken up, repacked, assembled, installed, sorted, cleaned, graded, or otherwise processed, manipulated, manufactured, mixed with foreign or domestic merchandise or used whether directly or indirectly in such activity, shall not be subject to customs and internal revenue laws and regulations nor to local tax ordinances, the following provisions of law to the contrary notwithstanding.
In this case, there is no dispute that petitioner is entitled to exemption from the payment of excise taxes by virtue of its being an EPZA registered enterprise. As stated by the CTA, the only thing left to be determined is whether or not petitioner is entitled to the amount claimed for refund.
Applying the foregoing rulings in this case, it is therefore undeniable that PASAR is exempted from payment of excise taxes.
The next pivotal question then that must be resolved is whether PASAR has the legal personality to file the claim for the refund of the excise taxes passed on by Petron. The petitioner insists that PASAR is not the proper party to seek a refund of an indirect tax, such as an excise tax or Value Added Tax, because it is not the statutory taxpayer. The petitioner's argument, however, has no merit.
The rule that it is the statutory taxpayer which has the legal personality to file a claim for refund23 finds no applicability in this case. In Philippine Airlines, Inc. v. Commissioner of Internal Revenue,24 the Court distinguished between the kinds of exemption enjoyed by a claimant in order to determine the propriety of a tax refund claim. "If the law confers an exemption from both direct or indirect taxes, a claimant is entitled to a tax refund even if it only bears the economic burden of the applicable tax. On the other hand, if the exemption conferred only applies to direct taxes, then the statutory taxpayer is regarded as the proper party to file the refund claim."25 In PASAR's case, Section 17 of P.D. No. 66, as affirmed in Commissioner of Customs, specifically declared that supplies, including petroleum products, whether used directly or indirectly, shall not be subject to internal revenue laws and regulations. Such exemption includes the payment of excise taxes, which was passed on to PASAR by Petron. PASAR, therefore, is the proper party to file a claim for refund.
WHEREFORE, the petition is DENIED for lack of merit. Accordingly, the Decision dated November 12, 2008 and its Resolution dated January 30, 2009 of the Court of Tax Appeals En Banc in CTA E.B. Case No. 351 are hereby AFFIRMED in toto.
1 Penned by Associate Justice Caesar A. Casanova, with Presiding Justice Ernesto D. Acosta and Associate Justices Juanito C. Castafleda, Jr. Lovell R. Bautista, Erlinda P. Uy, Olga Palanca-Enriquez. concurring; rollo, pp. 51 -67.
10 481 Phil. 31 (2004).
11 500 Phil. 149 (2005).
17 CREATING THE EXPORT PROCESSING ZONE AUTHORITY AND REVISING REPUBLIC ACT NO. 5490.
20 Supra note 10, at 38-39.
22 Supra note 11, at 164, 168-169.
23 See Silkair (Singapore) Pte. Ltd. v. Commissioner of Internal Revenue, G.R. No. 166482 January 25, 2012, 664 SCRA 33.
24 G.R. No. 198759, July 1, 2013, 700 SCRA 322.

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