FIRST DIVISION

[G.R. No. 166482. January 25, 2012.]

SILKAIR (SINGAPORE) PTE. LTD. , petitioner, vs.

COMMISSIONER OF INTERNAL REVENUE, respondent.

DECISION

VILLARAMA, JR., J : p

Assailed in this Rule 45 Petition is the Decision 1 dated September 13,

2004 and Resolution 2 dated December 21, 2004 of the Court of Appeals (CA)
in CA-G.R. SP No. 82902.
Petitioner Silkair (Singapore) Pte. Ltd. is a foreign corporation duly
licensed by the Securities and Exchange Commission (SEC) to do business in
the Philippines as an on-line international carrier operating the Cebu-
Singapore-Cebu and Davao-Singapore-Davao routes. In the course of its
international flight operations, petitioner purchased aviation fuel from Petron
Corporation (Petron) from July 1, 1998 to December 31, 1998, paying the
excise taxes thereon in the sum of P5,007,043.39. The payment was
advanced by Singapore Airlines, Ltd. on behalf of petitioner.
On October 20, 1999, petitioner filed an administrative claim for refund
in the amount of P5,007,043.39 representing excise taxes on the purchase
of jet fuel from Petron, which it alleged to have been erroneously paid. The
claim is based on Section 135 (a) and (b) of the 1997 Tax Code, which
provides:
SEC. 135. Petroleum Products Sold to International Carriers and
Exempt Entities or Agencies. — Petroleum products sold to the
following are exempt from excise tax: TASCDI

(a) International carriers of Philippine or foreign registry

on their use or consumption outside the Philippines: Provided, That the
petroleum products sold to these international carriers shall be stored
in a bonded storage tank and may be disposed of only in
accordance with the rules and regulations to be prescribed by the
Secretary of Finance, upon recommendation of the Commissioner;
(b) Exempt entities or agencies covered by tax treaties,
conventions and other international agreements for their use or
consumption: Provided, however, That the country of said foreign
international carrier or exempt entities or agencies exempts from
similar taxes petroleum products sold to Philippine carriers, entities or
agencies; and
xxx xxx xxx (Emphasis supplied.)

Petitioner also invoked Article 4 (2) of the Air Transport Agreement

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 between the Government of the Republic of the Philippines and the
Government of the Republic of Singapore 3 (Air Transport Agreement
between RP and Singapore) which reads:
ART. 4

xxx xxx xxx

2. Fuel, lubricants, spare parts, regular equipment and aircraft
stores introduced into, or taken on board aircraft in the territory of one
Contracting Party by, or on behalf of, a designated airline of the other
Contracting Party and intended solely for use in the operation of the
agreed services shall, with the exception of charges corresponding to
the service performed, be exempt from the same customs duties,
inspection fees and other duties or taxes imposed in the territory of the
first Contracting Party, even when these supplies are to be used on the
parts of the journey performed over the territory of the Contracting
Party in which they are introduced into or taken on board. The
materials referred to above may be required to be kept under customs
supervision and control. 4

Due to the inaction by respondent Commissioner of Internal Revenue,

petitioner filed a petition for review with the Court of Tax Appeals (CTA) on
June 30, 2000.
On July 28, 2003, the CTA rendered its decision 5 denying petitioner's
claim for refund. Said court ruled that while petitioner's country indeed
exempts from similar taxes petroleum products sold to Philippine carriers,
petitioner nevertheless failed to comply with the second requirement under
Section 135 (a) of the 1997 Tax Code as it failed to prove that the jet fuel
delivered by Petron came from the latter's bonded storage tank. Presiding
Justice Ernesto D. Acosta dissented from the majority view that petitioner's
claim should be denied, stating that even if the bonded storage tank is
required under Section 135 (a), the claim can still be justified under Section
135 (b) in view of our country's existing Air Transport Agreement with the
Republic of Singapore which shows the reciprocal enjoyment of the privilege
of the designated airline of the contracting parties. DHTECc

Its motion for reconsideration having been denied by the CTA,

petitioner elevated the case to the CA. Petitioner assailed the CTA in not
holding that there are distinct and separate instances of exemptions
provided in paragraphs (a), (b) and (c) of Section 135, and therefore the
proviso found in paragraph (a) should not have been applied to the
exemption granted under paragraph (b).
The CA affirmed the denial of the claim for tax refund and dismissed
the petition. It ruled that while petitioner is exempt from paying excise taxes
on petroleum products purchased in the Philippines by virtue of Section 135
(b), petitioner is not the proper party to seek for the refund of the excise
taxes paid. Petitioner's motion for reconsideration was likewise denied by the
appellate court.
In this appeal, petitioner argues that it is the proper party to file the
claim for refund, being the entity granted the tax exemption under the Air
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 Transport Agreement between RP and Singapore. It disagrees with
respondent's reasoning that since excise tax is an indirect tax it is the direct
liability of the manufacturer, Petron, and not the petitioner, because this puts
to naught whatever exemption was granted to petitioner by Article 4 of the
Air Transport Agreement.
Petitioner further contends that respondent is estopped from
questioning the right of petitioner to claim a refund of the excise taxes paid
after issuing BIR Ruling No. 339-92 which already settled the matter. It
further points out that the CTA has consistently ruled in a number of
decisions involving the same parties that petitioner is the proper party to
seek the refund of excise taxes paid on its purchases of petroleum products.
Finally, it emphasizes that respondent never raised in issue petitioner's legal
personality to seek a tax refund in the administrative level. Citing this
Court's ruling in the case of Commissioner of Internal Revenue v. Court of
Tax Appeals , et al. 6 petitioner asserts that respondent is in estoppel to
question petitioner's standing to file the claim for refund for its failure to
timely raise the issue in the administrative level, as well as before the CTA.
On the other hand, the Solicitor General on behalf of respondent,
maintains that the excise tax passed on to the petitioner by Petron being in
the nature of an indirect tax, it cannot be the subject matter of an
administrative claim for refund/tax credit, following the ruling in Contex
Corporation v. Commissioner of Internal Revenue . 7 Moreover, assuming
arguendo that petitioner falls under any of the enumerated
transactions/persons entitled to tax exemption under Section 135 of the
1997 Tax Code, what the law merely contemplates is exemption from the
payment of excise tax to the seller/manufacturer, in this case Petron, but not
an exemption from payment of excise tax to the BIR, much more an
entitlement to a refund from the BIR. Being the buyer, petitioner is not the
person required by law nor the person statutorily liable to pay the excise tax
but the seller, following the provision of Section 130 (A) (1) (2).
The Solicitor General also asserts that contrary to petitioner's
argument that respondent never raised in the administrative level the issue
of whether petitioner is the proper party to file the claim for refund, records
would show that respondent actually raised the matter of whether petitioner
is entitled to the tax refund being claimed in his Answer dated August 8,
2000, in the Joint Stipulation of Facts, and in his Memorandum submitted
before the CTA where respondent categorically averred that "petitioner . . .
is not the entity directly liable for the payment of the tax, hence, not the
proper party who should claim the refund of the excise taxes paid." 8
We rule for the respondent. DSITEH

The core issue presented is the legal personality of petitioner to file an

administrative claim for refund of excise taxes alleged to have been
erroneously paid to its supplier of aviation fuel here in the Philippines.
In three previous cases involving the same parties, this Court has
already settled the issue of whether petitioner is the proper party to seek the
refund of excise taxes paid on its purchase of aviation fuel from a local
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 manufacturer/seller. Following the principle of stare decisis, the present
petition must therefore be denied.
Excise taxes, which apply to articles manufactured or produced in the
Philippines for domestic sale or consumption or for any other disposition and
to things imported into the Philippines, 9 is basically an indirect tax. While
the tax is directly levied upon the manufacturer/importer upon removal of
the taxable goods from its place of production or from the customs custody,
the tax, in reality, is actually passed on to the end consumer as part of the
transfer value or selling price of the goods, sold, bartered or exchanged. 10
In early cases, we have ruled that for indirect taxes (such as value-added
tax or VAT), the proper party to question or seek a refund of the tax is the
statutory taxpayer, the person on whom the tax is imposed by law and who
paid the same even when he shifts the burden thereof to another. 11 Thus, in
Contex Corporation v. Commissioner of Internal Revenue, 12 we held that
while it is true that petitioner corporation should not have been liable for the
VAT inadvertently passed on to it by its supplier since their transaction is a
zero-rated sale on the part of the supplier, the petitioner is not the proper
party to claim such VAT refund. Rather, it is the petitioner's suppliers who
are the proper parties to claim the tax credit and accordingly refund the
petitioner of the VAT erroneously passed on to the latter. 13
In the first Silkaircase 14 decided on February 6, 2008, this Court
categorically declared:
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. Section 130 (A) (2) of the NIRC provides that "[u]nless
otherwise specifically allowed, the return shall be filed and the excise
tax paid by the manufacturer or producer before removal of domestic
products from place of production." Thus, Petron Corporation, not
Silkair, is the statutory taxpayer which is entitled to claim a
refund based on Section 135 of the NIRC of 1997 and Article
4(2) of the Air Transport Agreement between RP and
Singapore.
Even if Petron Corporation passed on to Silkair the burden of the
tax, the additional amount billed to Silkair for jet fuel is not a tax but
part of the price which Silkair had to pay as a purchaser. 15 (Emphasis
supplied.)

Just a few months later, the decision in the second Silkair case 16 was
promulgated, reiterating the rule that in the refund of indirect taxes such as
excise taxes, the statutory taxpayer is the proper party who can claim the
refund. We also clarified that petitioner Silkair, as the purchaser and end-
consumer, ultimately bears the tax burden, but this does not transform its
status into a statutory taxpayer. ASTIED

The person entitled to claim a tax refund is the statutory

taxpayer. Section 22(N) of the NIRC defines a taxpayer as "any person
subject to tax." In Commissioner of Internal Revenue v. Procter and
Gamble Phil. Mfg. Corp., the Court ruled that:
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 'A "person liable for tax" has been held to be a "person
subject to tax" and properly considered a "taxpayer." The terms
"liable for tax" and "subject to tax" both connote a legal
obligation or duty to pay a tax.'
The excise tax is due from the manufacturers of the petroleum
products and is paid upon removal of the products from their refineries.
Even before the aviation jet fuel is purchased from Petron, the excise
tax is already paid by Petron. Petron, being the manufacturer, is the
"person subject to tax." In this case, Petron, which paid the excise tax
upon removal of the products from its Bataan refinery, is the "person
liable for tax." Petitioner is neither a "person liable for tax" nor "a
person subject to tax." There is also no legal duty on the part of
petitioner to pay the excise tax; hence, petitioner cannot be
considered the taxpayer.
Even if the tax is shifted by Petron to its customers and even if
the tax is billed as a separate item in the aviation delivery receipts and
invoices issued to its customers, Petron remains the taxpayer
because the excise tax is imposed directly on Petron as the
manufacturer. Hence, Petron, as the statutory taxpayer, is the
proper party that can claim the refund of the excise taxes paid
to the BIR. 17 (Emphasis supplied.)

Petitioner's contention that the CTA and CA rulings would put to naught
the exemption granted under Section 135 (b) of the 1997 Tax Code and
Article 4 of the Air Transport Agreement is not well-taken. Since the supplier
herein involved is also Petron, our pronouncement in the second Silkair case,
relative to the contractual undertaking of petitioner to submit a valid
exemption certificate for the purpose, is relevant. We thus noted:
The General Terms & Conditions for Aviation Fuel Supply (Supply
Contract) signed between petitioner (buyer) and Petron (seller)
provide:
"11.3 If Buyer is entitled to purchase any Fuel sold
pursuant to the Agreement free of any taxes, duties or charges,
Buyer shall timely deliver to Seller a valid exemption
certificate for such purchase." (Emphasis supplied) SDTaHc

This provision instructs petitioner to timely submit a valid

exemption certificate to Petron in order that Petron will not pass on the
excise tax to petitioner. As correctly suggested by the CTA, petitioner
should invoke its tax exemption to Petron before buying the aviation
jet fuel. Petron, however, remains the statutory taxpayer on those
excise taxes.

Revenue Regulations No. 3-2008 (RR 3-2008) provides that

"subject to the subsequent filing of a claim for excise tax credit/refund
or product replenishment, all manufacturers of articles subject to
excise tax under Title VI of the NIRC of 1997, as amended, shall pay
the excise tax that is otherwise due on every removal thereof from the
place of production that is intended for exportation or sale/delivery to
international carriers or to tax-exempt entities/agencies." The
Department of Finance and the BIR recognize the tax exemption
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 granted to international carriers but they consistently adhere to the
view that manufacturers of articles subject to excise tax are the
statutory taxpayers that are liable to pay the tax, thus, the proper
party to claim any tax refunds. 18

The above observation remains pertinent to this case because the very
same provision in the General Terms and Conditions for Aviation Fuel Supply
Contract also appears in the documentary evidence submitted by petitioner
before the CTA. 19 Except for its bare allegation of being "placed in a very
complicated situation" because Petron, "for fear of being assessed by
Respondent, will not allow the withdrawal and delivery of the petroleum
products without Petitioner's pre-payment of the excise taxes," petitioner
has not demonstrated that it dutifully complied with its contractual
undertaking to timely submit to Petron a valid certificate of exemption so
that Petron may subsequently file a claim for excise tax credit/refund
pursuant to Revenue Regulations No. 3-2008 (RR 3-2008). It was indeed
premature for petitioner to assert that the denial of its claim for tax refund
nullifies the tax exemption granted to it under Section 135 (b) of the 1997
Tax Code and Article 4 of the Air Transport Agreement.
In the third Silkairc a s e 20 decided last year, the Court called the
attention to the consistent rulings in the previous two Silkair cases that
petitioner as the purchaser and end-consumer of the aviation fuel is not the
proper party to claim for refund of excise taxes paid thereon. The situation
clearly called for the application of the doctrine, stare decisis et non quieta
movere. Follow past precedents and do not disturb what has been settled.
Once a case has been decided one way, any other case involving exactly the
same point at issue, as in the case at bar, should be decided in the same
manner. 21 The Court thus finds no cogent reason to deviate from those
previous rulings on the same issues herein raised.
WHEREFORE, the petition for review on certiorari is DENIED. The
Decision dated September 13, 2004 and Resolution dated December 21,
2004 of the Court of Appeals in CA-G.R. SP No. 82902 are AFFIRMED.
With costs against the petitioner.
SO ORDERED. ETaHCD

Corona, C.J., Leonardo-de Castro, Bersamin and Del Castillo, JJ., concur.

Footnotes
1. Rollo, pp. 71-81. Penned by Associate Justice Remedios A. Salazar-Fernando with
Presiding Justice Cancio C. Garcia (now a retired member of this Court) and
Associate Justice Hakim S. Abdulwahid concurring.
2. Id. at 101-102. Penned by Associate Justice Remedios A. Salazar-Fernando with
Associate Justices Hakim S. Abdulwahid and Noel G. Tijam concurring.

3. Exhibit "T", CTA records, pp. 172-177.

4. Id. at 174.
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 5. CA rollo, pp. 61-71. Penned by Associate Justice Lovell R. Bautista with Associate
Justice Juanito C. Castañeda, Jr. concurring. Presiding Justice Ernesto D.
Acosta dissented (see Dissenting Opinion, id. at 72-74).

6. G.R. No. 93901, February 11, 1992 (Unsigned Resolution) cited in the Petition for
Review, rollo, p. 58.
7. G.R. No. 151135, July 2, 2004, 433 SCRA 376.

8. CTA Records, pp. 23, 45, 222-223.

9. Sec. 129, National Internal Revenue Code, as amended.

10. H. S. De Leon and H. M. De Leon, Jr., The National Revenue Internal Revenue
Code Annotated, 2003 Ed., Vol. 2, p. 199, citing BIR Ruling No. 201-99,
December 16, 1999.

11. Philippine Geothermal, Inc. v. Commissioner of Internal Revenue , G.R. No.

154028, July 29, 2005, 465 SCRA 308, 317-318, citing Cebu Portland Cement
Co. v. Collector of Internal Revenue, No. L-20563, October 29, 1968, 25 SCRA
789, 797 and Commissioner of Internal Revenue v. American Rubber Co. , No.
L-19667, November 29, 1966, 18 SCRA 842, 853.
12. Supra note 7.

13. Id. at 387, 388.

14. Silkair (Singapore) Pte. Ltd. v. Commissioner of Internal Revenue , G.R. No.
173594, February 6, 2008, 544 SCRA 100.
15. Id. at 112.

16. Silkair (Singapore) Pte. Ltd. v. Commissioner of Internal Revenue , G.R. Nos.
171383 & 172379, November 14, 2008, 571 SCRA 141.

17. Id. at 157-158.

18. Id. at 158-159.

19. CTA records, p. 127.

20. Silkair (Singapore) Pte. Ltd. v. Commissioner of Internal Revenue , G.R. No.
184398, February 25, 2010, 613 SCRA 638.
21. Id. at 660, citing Commissioner of Internal Revenue v. Trustworthy Pawnshop,
Inc., G.R. No. 149834, May 2, 2006, 488 SCRA 538, 545.

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