G.R. No. 211303 - Dissenting Opinion

G.R. No. 211303, June 15, 2021,
♦ Decision, Perlas-Bernabe, [J]
♦ Dissenting Opinion, Leonen, [J]
♦ Concurring Opinion, Caguioa, [J]
♦ Dissenting Opinion, Lazaro-Javier, [J]
♦ Separate Concurring Opinion, Inting, [J]
♦ Dissenting Opinion, Zalameda, [J]

PILIPINAS SHELL PETROLEUM CORPORATION, PETITIONER, VS. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

After a careful perusal of the pertinent laws and jurisprudence, I respectfully dissent from the ponencia and maintain that manufacturers, sellers, and importers, like petitioner in this case, are not entitled to a claim of refund or tax credit of excise taxes paid on petroleum products which are eventually sold to tax-exempt entities and international carriers.

At the outset, the principle of stare decisis does not and should not apply when there is conflict between the precedent and the law. The duty of this Court is to forsake and abandon any doctrine or rule found to be in violation of the law in force.1 Blind adherence to precedents, simply as precedent, no longer rules.2 In line with the purpose of our judicial system to discover the truth and see that justice is done,3 We must not condone the perpetuation of an erroneous or inaccurate interpretation of the law merely on the basis of a mechanical application of the doctrine of stare decisis. As such, this Court must not be shackled by precedents, more so when overturning the same promotes judicious dispensation of justice.

Section 135 of the Tax Code does not confer excise tax exemption upon manufacturers, sellers, and importers of petroleum products

It is well settled that when the law is clear and free from any doubt or ambiguity, it must be given its literal meaning or applied according to its express terms, without any attempted interpretation, and leaving the court no room for any extended ratiocination or rationalization.4

In this regard, Section 135 of the Tax Code unequivocally provides exemption from excise tax payment on petroleum products to buyers, international carriers and tax-exempt entities enlisted therein who purchased the same for their use or consumption outside the Philippines. Nowhere in the provision was it stated that the exemption extends to the benefit of the manufacturers, sellers, and importers of petroleum products. In fact, nowhere in the entire Tax Code was it provided that the excise tax exemption given to buyers, international carriers and tax-exempt entities enumerated in Section 135 shall redound to the benefit of the manufacturers, sellers, and importers of petroleum products.

Verily, since Section 135 of the Tax Code is clear and unambiguous, there is no need to consider the effects of disallowing refund or tax credit to oil companies on the latter's sale to tax-exempt entities in the application of said provision.

It must be underlined that actions for tax refund or credit, as in the instant case, are in the nature of a claim for exemption and, thus, the law is construed in strictissimi juris against the taxpayer. Since taxes are the lifeblood of the government, tax laws must be faithfully and strictly implemented as they are not intended to be liberally construed.5

Excise tax is an indirect tax due upon removal of petroleum products from place of production

Excise tax is a tax on the production, sale, or consumption of a specific commodity in a country.6 As jurisprudence dictates, it does not matter to what use the article[s] subject to tax is put; the excise taxes are still due, even though the articles are removed merely for storage in some other place and are not actually sold or consumed.7

Indeed, an excise tax is an indirect tax where the tax burden can be shifted to the consumer but the tax liability remains with the manufacturer, seller, or importer. The same are collected from the manufacturer, seller, or importer before removal of the domestic products from the place of production.8 In other words, the excise tax is due from the manufacturers, sellers, or importers of the petroleum products and is paid upon removal of the products from their refineries. Even before the product is sold by or purchased from said parties, the excise tax has already accrued9 and this is without regard to whether or not the petroleum purchaser is an exempt entity.10

It is clear from the plain text of Section 229 of the Tax Code that what can be refunded or credited is a tax that is "erroneously, x x x illegally, x x x excessively or in any manner wrongfully collected." In short, there must be a wrongful payment because what is paid, or part of it, is not legally due. Section 229 should "apply only to instances of erroneous payment or illegal collection of internal revenue taxes."11 Akin to unutilized input VAT,12 the excise tax in this case is not erroneously or illegally collected as contemplated in Section 229, because at the time the same is collected, the amount paid is correct and proper. In fact, Section 148 of the Tax Code explicitly sanctions the collection of said excise tax as soon as the enumerated goods therein are in existence.

Excise taxes accrue upon removal of petroleum products from place of production, without regard to the purchaser. As aptly explained by Justice Bersamin in his separate opinion in CIR v. Pilipinas Shell,13 the accrual of the tax liability is contingent on the production, manufacture, or importation of the taxable goods and the intention of the manufacturer, producer or importer to have the goods locally sold or consumed or disposed of in any other manner. This is the reason why the accrual and liability for the payment of the excise tax are imposed directly on the manufacturer or producer of the taxable goods, and arise before the removal of the goods from the place of their production. Notably, at the time excise taxes are due and remitted, manufacturers, sellers, and importers are not certain how much petroleum products they will sell, if any, to exempt entities.

Undoubtedly, excise taxes paid upon removal of petroleum products from the place of production are not erroneously, excessively, or illegally collected tax within the purview of Section 229 of the Tax Code. Thus, petitioner may not anchor its claim for refund on said provision.

It is also worthy to note that in any event, petitioner is not the proper party to file for refund of the excise tax paid on the petroleum products it bought from Chevron. As likewise raised by Justice Lazaro-Javier, the right to claim a refund, if legally allowed, belongs to the statutory taxpayer, in this case Chevron, and cannot be transferred to another without any clear provision of the law allowing the same.14 I recognize, however, that the ponencia qualified the excise taxes refundable to petitioner taking into consideration this very matter.

The tax exemption enjoyed by the buyer cannot be the basis of a claim for exemption by the manufacturer, seller, or importer

To reiterate, the Tax Code only provides for tax exemption of petroleum purchasers outlined in Section 135.(awÞhi( It does not grant manufacturers, sellers, or importers with the same tax privilege. Clearly, the excise tax exemption enjoyed by the buyer does not redound to the benefit of manufacturers, sellers, or importers of petroleum products.

In fact, upon perusing the Tax Code, it may be observed that the only instance wherein the buyer's tax privilege explicitly extends to the seller is found in Section 112 for Value-Added Tax (VAT) transactions pertaining to zero-rated or effectively zero-rated sales. Under said provision, excess input taxes may be claimed for refund or issuance of tax credit certificate by any VAT-registered person whose sales are zero-rated or effectively zero-rated.

Section 135 grants the excise tax exemption only to the international carriers or agencies as the buyers of petroleum products. Although generally, indirect taxes such as excise taxes paid by manufacturers, sellers, and importers may be shifted or passed on to buyers, Section 135 of the Tax Code provides for an exception as it explicitly prohibits manufacturers, sellers, and importers from shifting or passing on the excise taxes they paid on the petroleum products sold to international carriers and tax-exempt entities enumerated under said provision.15 This is why the manufacturer, seller, or importer is required to pay the excise tax in advance without regard to whether or not the petroleum purchaser is an exempt entity.16

In sum, while it is the taxpayer who can claim for refund, petitioner has no basis to apply for the same. The tax privilege enjoyed by the duly specified buyer cannot be the basis of the seller's exemption. This, especially since the excise tax is due upon removal of the petroleum products from the place of production, regardless of who will buy it. As Section 135 of the Tax Code pertains to tax exemption, its strict construction and application is warranted. In this regard, it is unequivocal that the provision does not extend the tax exemption to the benefit of the manufacturer, seller, or importer of petroleum products. Since said provision is clear and free from ambiguity, it must be applied according to its express terms, without any attempted interpretation or ratiocination. Further, given that the excise tax paid by petitioner was correct and proper at the time of collection, petitioner cannot anchor its claim on Section 229 of the Tax Code.

Ultimately, I agree with Justice Leonen that oil companies which sold petroleum products to tax-exempt entities are not entitled to a refund of excise taxes paid on the goods.