SILKAIR (SINGAPORE) PTE, LTD. v.

COMMISSIONER OF
INTERNAL REVENUE. G.R. No. 173594. February 6, 2008

FACTS:

Petitioner is a corporation organized under the laws of Singapore which has a Philippine representative
office, is an online international air carrier.

Silkair filed with the Bureau of Internal Revenue (BIR) for the refund of excise taxes for their purchase of
jet fuel.

The CIR, in their reply, said that petitioner failed to prove that the sale of the fuel was directly made from a
domestic oil company to them. The excise tax on petroleum products is the direct liability of the
manufacturer/producer, and when added to the cost of the goods sold to the buyer, it is no longer a tax but
part of the price which the buyer has to pay to obtain the article.

The CTA denying Silkair’s petition stated that as the excise tax was imposed manufacturer of petroleum
products, any claim for refund should be filed by the latter; and where the burden of tax is shifted to the
purchaser, the amount passed on to it is no longer a tax but becomes an added cost of the goods purchased.

ISSUE:

Whether Silkair PTE. Ltd. can claim for tax credit.

RULING:

No.

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.
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.

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.
SILKAIR (SINGAPORE) PTE, LTD. v. COMMISSIONER OF
INTERNAL REVENUE. G.R. No. 173594. February 6, 2008

FACTS:

Petitioner Silkair (Singapore) Pte. Ltd., a foreign corp. which has a Philippine representative office, is an
outline international air carrier. Dec 19, 2001: Silkair filed with the BIR a written application for the refund
of excise tax it paid on its purchases or jet fuels from Petron Corp. from Jan - June 2000. Dec 26, 2001: not
having been acted upon by the BIR, it filed a petition for review before the CTA. CTA: denied its petition on
the ground that the excise tax is imposed on Petron are manufacturer. When the burden is shifted to Silkair,
it is no longer a tax but added cost of goods purchased. After changing counsel to Atty. Pastrana CTA En
Banc dismissed it for being filed out of time.

Petitioner filed a Petition for Review with the SC.

ISSUE:

W/N Silkair can claim a refund for indirect excise tax

HELD:

Petition is denied.
NO. 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.

Unlike in Maceda v. Macaraig Jr. where it expressly includes indirect taxes. Rule that tax exemptions are
construed in strictissimi juris against taxpayer applies.
CIR v. Aichi Forging Company (2010)
G.R. No. 184823 October 6, 2010

Lessons Applicable: Legal Period: 1 year = 12 months, Exhaust Administrative Claim Before Judicial
Claim, Lex Posterioni Derogati Priori

FACTS:

▪ Aichi forging, a VAT entity filed a claim for refund of input VAT for its zero-rated sales with the Dept.
of Finance One-Stop Inter-Agency Tax Credit and Duty Drawback Center on Sept 30, 2004.
▪ On the same date, it filed a Petition for Review with the CTA.
▪ CTA partially granted the refund by reducing the leaseless claims.
▪ CIR filed a Motion for Reconsideration insisting that they were filed beyond the prescriptive
period in accordance to Art. 13 that: 1 year = 365 days and that filing an administrative claim is a
condition precedent before a judicial claim can be filed with the CTA.
▪ CTA and CTA En Banc denied petition.

ISSUE:
1. W/N the claim was filed with the prescriptive period of 2 year provided under Sec. 112 (A) NIRC
2. W/N filing an administrative claim is a condition precedent to a judicial claim for refund.

HELD:
1. Yes. Sec. 204 (c) and 229 are applied only in instances of erroneous payment and illegal collection. Sec.
112 (A) of NIRC applies here. Sec. 31 Chapter VIII Book I of the Administrative Code of 1987 being the more
recent law governing legal period applies making 1 year = 12 months. The principle of Lex Posterioni
Derogati Priori applies. Thus, since it is filed on exactly Sept. 30, 2004 filing is timely.

2. Yes. Sec. 112 (D) of the NIRC clearly provides that the CIR has 120 days from date of the submission of
the complete documents in support of the application within which to grant or deny the claim. In case of
full or partial denial by the CIR, the recourse is to appeal before the CTA within 30 days from receipt of the
decision of the CIR. However, if after the 120-day period the CIR fails to act on the application for tax
refund, the remedy is to appeal the inaction of the CIR to the CTA within 30 days.
Commissioner of Internal Revenue v. Aichi Forging Company of
Asia, Inc., G.R. No. 184823, 06 October 2010

FACTS:

Respondent Aichi filed a claim for refund/credit of input VAT for the period July 1, 2002 to September 30,
2002, with the petitioner Commissioner of Internal Revenue (CIR), through the Department of Finance
(DOF) One-Stop Shop Inter-Agency Tax Credit and Duty Drawback Center.On even date, respondent filed
a Petition for Review with the CTA for the refund/credit of the same input VAT. The CTA partially granted
the petition. In a Motion for Reconsideration, petitioner argued that the simultaneous filing of the
administrative and the judicial claims contravenes Sections 112 and 229 of the NIRC and a prior filing of an
administrative claim is a “condition precedent” before a judicial claim can be filed. The CTA En Banc
affirmed the division ruling.

ISSUE:

Whether the respondent’s judicial and administrative claims for tax refund/credit were filed within the two-
year prescriptive period as provided in Sections 112(A) and 229 of the NIRC.

HELD:

NO. The two-year period to file a claim for tax refund/credit for the period July 1, 2002 to September 30,
2002 expired on September 30, 2004. Hence, respondent’s administrative claim was timely filed. The filing
of the judicial claim was premature. However, notwithstanding the timely filing of the administrative claim,
[the Supreme Court is] constrained to deny respondent’s claim for tax refund/credit for having been filed
in violation of Section 112(D). Section 112(D) of the NIRC clearly provides that the CIR has “120 days, from
the date of the submission of the complete documents in support of the application [for tax refund/credit],”
within which to grant or deny the claim. In case of full or partial denial by the CIR, the taxpayer’s recourse
is to file an appeal before the CTA within 30 days from receipt of the decision of the CIR. However, if after
the 120-day period the CIR fails to act on the application for tax refund/credit, the remedy of the taxpayer
is to appeal the inaction of the CIR to CTA within 30 days.

In this case, the administrative and the judicial claims were simultaneously filed on September 30, 2004.
Obviously, respondent did not wait for the decision of the CIR or the lapse of the 120-day period. For this
reason, we find the filing of the judicial claim with the CTA premature. The premature filing of respondent’s
claim for refund/credit of input VAT before the CTA warrants a dismissal inasmuch as no jurisdiction was
acquired by the CTA.
COMMISSIONER OF INTERNAL REVENUE vs. AICHI FORGING
COMPANY OF ASIA, INC.- Tax Refund

FACTS:

On September 30, 2004, Aichi Forging filed a claim for refund/credit of input VAT attributable to its zero-
rated sales for the period July 1, 2002 to September 30, 2002 with the CIR through the DOF One-Stop
Shop. On the same day, Aichi Forging filed a Petition for Review with the CTA for the same action. The BIR
disputed the claim and alleged that the same was filed beyond the two-year period given that 2004 was a
leap year and thus the claim should have been filed on September 29, 2004. The CIR also raised issues
related to the reckoning of the 2-year period and the simultaneous filing of the administrative and judicial
claims.

ISSUES:

(1) Was the Petitioner’s administrative claim filed out of time?

(2) Was the filing of the judicial claim premature?

HELD:

(1) NO. The right to claim the refund must be reckoned from the “close of the taxable quarter when the sales
were made” – in this case September 30, 2004. The Court added that the rules under Sections 204 (C) and
229 as cross-referred to Section 114 do not apply as they only cover erroneous payments or illegal collections
of taxes which is not the case for refund of unutilized input VAT. Thus, the claim was filed on time even if
2004 was a leap year since the sanctioned method of counting is the number of months.

(2) YES. Section 112 mandates that the taxpayer filing the refund must either wait for the decision of the
CIR or the lapse of the 120-day period provided therein before filing its judicial claim. Failure to observe
this rule is fatal to a claim. Thus, Section 112 (A) was interpreted to refer only to claims filed with the CIR
and not appeals to the CTA given that the word used is “application”. Finally, the Court said that applying
the 2-year period even to judicial claims would render nugatory Section 112 (D) which already provides for
a specific period to appeal to the CTA --- i.e., (a) within 30 days after a decision within the 120-day period
and (b) upon expiry of the 120-day without a decision.
Commissioner of Internal Revenue vs Metro Star Superama, Inc.

FACTS:

Taxation – Pre-Assessment Notice – Due Process Requirement

In January 2001, a revenue officer was authorized to examine the books of accounts of Metro Star
Superama, Inc. In April 2002, after the audit review, the revenue district officer issued a formal assessment
notice against Metro Star advising the latter that it is liable to pay P292,874.16 in deficiency taxes. Metro
Star assailed the issuance of the formal assessment notice as it averred that due process was not observed
when it was not issued a pre-assessment notice. Nevertheless, the Commissioner of Internal Revenue
authorized the issuance of a Warrant of Distraint and/or Levy against the properties of Metro Star.

Metro Star then appealed to the Court of Tax Appeals (CTA Case No. 7169). The CTA ruled in favor of Metro
Star.

ISSUE:

Whether or not due process was observed in the issuance of the formal assessment notice against Metro
Star.

HELD:

No. It is true that there is a presumption that the tax assessment was duly issued. However, this
presumption is disregarded if the taxpayer denies ever having received a tax assessment from the Bureau
of Internal Revenue. In such cases, it is incumbent upon the BIR to prove by competent evidence that such
notice was indeed received by the addressee-taxpayer. The onus probandi was shifted to the BIR to prove
by contrary evidence that the Metro Star received the assessment in the due course of mail. In the case at
bar, the CIR merely alleged that Metro Star received the pre-assessment notice in January 2002. The CIR
could have simply presented the registry receipt or the certification from the postmaster that it mailed the
pre-assessment notice, but failed. Neither did it offer any explanation on why it failed to comply with the
requirement of service of the pre-assessment notice. The Supreme Court emphasized that the sending of a
pre-assessment notice is part of the due process requirement in the issuance of a deficiency tax assessment,”
the absence of which renders nugatory any assessment made by the tax authorities.

Taxes are the lifeblood of the government and so should be collected without unnecessary hindrance. But
even so, it is a requirement in all democratic regimes that it be exercised reasonably and in accordance with
the prescribed procedure.
COMMISSIONER OF INTERNAL REVENUE vs. METRO STAR
SUPERAMA, INC.- Pre-Assessment Notice

FACT:

Metro Star Superama was audited for taxable year 1999 and received a Preliminary 15-day Letter on
November 15, 2001. On April 11, 2002, it received a Formal Letter of Demand dated April 3, 2002. Denying
that it received a Pre-Assessment Notice and thus not accorded due process, Metro Star Superama filed a
Petition with the CTA.

ISSUE:

Was the Petitioner accorded the required due process?

HELD:

NO. Since the Petitioner denied receipt of the Pre-Assessment Notice, the burden of proving the same shifts
to the BIR. To raise the presumption of receipt, it must be shown that (a) the letter was properly addressed
with postage prepaid and (b) that it was mailed. If receipt is denied, the BIR must then show actual receipt
through presentation of the registry receipt or, if the same cannot be located, at least a certification from
the Bureau of Posts.

The Court likewise added that the issuance of a Pre-Assessment Notice is a mandatory requirement save
only on specified instances. The old rule laid down in CIR vs. Menguito that only the FAN is mandatory no
longer applies since the same was ruled upon based on the old provision.
CIR v. Primetown, GR 162155, August 28, 2007

FACTS:

Gilbert Yap, Vice Chair of Primetown applied on March 11, 1999 for a refund or credit of income tax which
Primetown paid in 1997. He claimed that they are entitled for a refund because they suffered losses that
year due to the increase of cost of labor and materials, etc. However, despite the losses, they still paid their
quarterly income tax and remitted creditable withholding tax from real estate sales to BIR. Hence, they
were claiming for a refund. On May 13, 1999, revenue officer Elizabeth Santos required Primetown to
submit additional documents to which Primetown complied with. However, its claim was not acted upon
which prompted it to file a petition for review in CTA on April 14, 2000. CTA dismissed the petition as it
was filed beyonf the 2-year prescriptive period for filing a judicial claim for tax refund according to Sec 229
of NIRC. According to CTA, the two-year period is equivalent to 730 days pursuant to Art 13 of NCC. Since
Primetown filed its final adjustment return on April 14, 1998 and that year 2000 was a leap year, the petition
was filed 731 days after Primetown filed its final adjusted return. Hence, beyond the reglementary period.
Primetown appealed to CA. CA reversed the decision of CTA. Hence, this appeal.

ISSUE:

W/N petition was filed within the two-year period

HELD:

Pursuant to EO 292 or the Administrative Code of 1987, a year shall be understood to be 12 calendar
months. The SC defined a calendar month as a month designated in the calendar without regard to the
number of days it may contain. The court held that Administrative Code of 1987 impliedly repealed Art 13
of NCC as the provisions are irreconcilable. Primetown is entitled for the refund since it is filed within the
2-year reglementary period.
 CIR v. Primetown Property Group

GR 161155; August 28, 2007

Facts:

Gilbert Yap, vice chair of respondent Primetown Property Group, Inc., applied for the refund or credit of
income tax respondent’s paid in 1997.

The CTA found that respondent filed its final adjusted return on April 14, 1998. Thus, its right to claim a
refund or credit commenced on that date. According to the CTA, the two-year prescriptive period under
Section 229 of the NIRC for the filing of judicial claims was equivalent to 730 days. Because the year 2000
was a leap year, respondent's petition, which was filed 731 days after respondent filed its final adjusted
return, was filed beyond the reglementary period.

On appeal, the CA reversed and set aside the decision of the CTA. It ruled that Article 13 of the Civil Code
did not distinguish between a regular year and a leap year. According to the CA, even if the year 2000 was
a leap year, the periods covered by April 15, 1998 to April 14, 1999 and April 15, 1999 to April 14, 2000
should still be counted as 365 days each or a total of 730 days. A statute which is clear and explicit shall be
neither interpreted nor construed.

Issue:

Whether or not the counting of the 2-year prescriptive period for filing claim of refund is governed by the
Civil Code.

Held:

Counting of 2-year period for filing claim for refund is no longer in accordance with Art 13 of the Civil Code
but under Sec 31 of EO 227 - The Administrative Code of 1987.

As between the Civil Code, which provides that a year is equivalent to 365 days, and the Administrative
Code of 1987, which states that a year is composed of 12 calendar months, it is the latter that must prevail
being the more recent law, following the legal maxim, Lex posteriori derogat priori.

In the case at bar, there are 24 calendar months in 2 years. For a Final Corporate ITR filed on Apr 14, 1998,
the counting should start from Apr 15, 1998 and end on Apr 14, 2000. The procedure is 1st month -Apr 15,
1998 to May 14, 1998 …. 24th month - Mar 15, 2000 to Apr 14, 2000. National Marketing v. Tecson, 139
Phil 584 (1969) is no longer controlling. The 2-year period should start to run from filing of the final
adjusted return.

We therefore hold that respondent's petition (filed on April 14, 2000) was filed on the last day of the
24th calendar month from the day respondent filed its final adjusted return. Hence, it was filed within the
reglementary period.
AGFHA INCORPORATED v. COURT OF TAX APPEALSAND
COMMISSIONER OF CUSTOMS

FACTS:

Agfha owned a shipment of bales of “text grey cloth” which arrived at the Manila
International Container Port and was later placed under a Hold Order, following a forfeiture proceedings
for alleged violation of the Tariff and Customs Code.

The District Collector of Customs ordered the forfeiture of the shipment in favor of the government which
prompted Agfha to lodge an appeal to the Commissioner of Customs. Commissioner of Customs denied the
same. On appeal, Court of Tax Appeals (CTA) ordered the release of the shipment in favor of
Agfha. Commissioner of Customs appealed to the Court of Appeals (CA) and then to the Supreme Court
(SC). In both instances, the CTA‘s decision was affirmed.

CTA issued a writ of execution to release the shipment to Agfha but it was not implemented. Agfha filed
before the CTA a motion to set case for hearing to determine the amount Commissioner of Customs should
pay should the shipment be found to have been actually lost. CTA found
the Commissioner of Customs liable for the loss of the shipment and ordered it to pay.

On motion for reconsideration by both parties, CTA ordered that the taxes and duties on the shipment
be deducted from the amount recoverable by Agfha. It then filed a motion for partial reconsideration of the
Resolution which was denied by the CTA. Agfha filed before SC a petition for certiorari.
The Commissioner of Customs filed with the CTA en banc a petition for review while Agfha filed a motion
to dismiss, arguing that a petition for review is not the proper remedy to challenge an order of execution.
The two petitions were consolidated in this petition.

ISSUE:

Whether or not the CTA en banc‘s order of execution is appealable

HELD:

It is well settled that when, after judgment has been rendered and it has become final, facts and
circumstances transpire which render its execution impossible or unjust, the interested party may ask for
the modification or alteration of the judgment to harmonize the same with justice and the facts.
The loss of the shipment, owing to the Commissioner‘s negligence, rendered impossible the enforcement of
this Courts decision dated October 2, 2001 ordering the Commissioner to release the shipment. The loss
presented a supervening event warranting the modification of this Courts decision.

Acting on the motion filed by petitioner for a determination of the amount respondent should pay
on account of the loss of the shipment, the CTA issued the May 17, 2005 Resolution and the assailed
resolution adjudging respondent liable for the commercial value thereof in the amount of US$160,348.08.

Contrary to Agfha view, the assailed resolution is not an interlocutory order since it left nothing to be done
by the CTA with respect to the merits of the case. It is a final judgment which fully disposed of the issue
appurtenant to respondent‘s liability to petitioner on account of the loss of the shipment. Under Section 18
of Republic Act (R.A.) No. 1125, as amended by R.A. No. 9282, a party adversely affected by a resolution of
a Division of the CTA on a motion for reconsideration or new trial, may file a petition for review with the
CTA en banc. Rule 8, Section 4, paragraph (b) of the Revised Rules of the CTA also provides the same.