Myline Cordial

Diageo Philippines, Inc. vs. Commissioner of Internal Revenue
G.R. No. 183553, November 12, 2012

FACTS:
Petitioner Diageo Philippines, Inc. (Diageo) is engaged in the business of importing, exporting, manufacturing, marketing, distributing, buying and selling, by wholesale, all kinds of beverages and liquors. It purchased raw alcohol from its supplier for use in the manufacture of its beverage and liquor products. The supplier imported the raw alcohol and paid the related excise taxes thereon before they were sold to the petitioner. The purchase price for the raw alcohol included the excise taxes paid by the supplier. Diageo applied for tax refund/issuance of tax credit certificates corresponding to the excise taxes which its supplier paid but passed on to it as part of the purchase price of the subject raw alcohol. It filed a petition for review with the CTA for failure of the CIR to act upon its claims for refund.

CIR’s Answer: Diageo has no legal personality to institute the claim for refund because it was not the one that paid the alleged excise taxes but its supplier.

CTA 2nd Division’s decision: Dismissed the petition on the ground that Diageo is not the real party in interest to file the claim for refund. Denied MR.

CTA En Banc’s decision: Denied on the ground that the right to a refund or tax credit of the excise taxes falls on the ones primarily and legally liable to pay taxes.

ISSUE:
Who may claim the refund or tax credit of excise taxes paid by its supplier on the raw alcohol it purchased and used in the manufacture of its exported goods?

RULING:
The person entitled to claim a tax refund is the statutory taxpayer or the person liable for or subject to tax.
Excise taxes partake of the nature of indirect taxes. 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. Indirect taxes are those wherein the liability for the payment of the tax falls on one person but the burden thereof can be shifted to another person. 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 price of goods sold or services rendered.

NOTES:

A taxpayer is any person subject to tax. He is the person legally liable to file a return and pay the tax. As such, he is the person entitled to claim a refund.

Full text: Diageo Philippines, Inc. vs. Commissioner of Internal Revenue G.R. No. 183553, November 12, 2012