PMFTC bid to recover ₧2.7-B refund junked

THE Court of Tax Appeals en banc has junked the appeal of leading cigarette manufacturer Philip Morris, Fortune Tobacco Corporation (PMFTC) to reverse the ruling issued by the tax’s court’s second division denying its bid to recover P2.7 billion in tax refund representing excise tax paid for cigarette packs containing less than 20 sticks for the taxable period on January 1, 2014 until December 31, 2015.

In a 16-page decision penned by Associate Justice Ma. Belen Ringpis-liba, the CTA en banc said it found “no compelling reason” to set aside the CTA’S Second Division’s findings in its decision issued on November 25, 2021 and resolution dated April 21, 2022.

The Court’s second division denied the PMFTC’S petition assailing the Bureau of Internal Revenue’s (BIR) decision denying its demand for a refund or issuance of a tax credit certificate.

The said CTA division held that petitioner’s administrative and judicial claims were filed out of time, thus, it is no longer entitled to the claim for refund or issuance of tax credit for alleged erroneous or excessive paid excise taxes.

“After a thorough evaluation of the factual antecedents of the prese Wnt case, the arguments of the parties, as well as the relevant laws and jurisprudence on the matter, the Court en banc finds that the present petition for review are mere restatements of those which were previously raised in petitioner’s prior pleadings and which had already been correctly and adequately discussed by the court Division in the assailed decision,” the CTA en banc declared.

It maintained that the two-year prescriptive period under Section 229 of the National Revenue Code of 1997, as amended, is “mandatory and jurisdictional.”

The CTA noted that under Sections 204(C) and 229 of the National Internal Revenue Code of 1997, “no credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing the Commissioner a claim for credit or refund within 2 years after the payment of the tax or penalty.”

The said provisions also barred the filing of any suit or proceeding in any court for recovery of taxes alleged to have been erroneously or illegally assessed.

However, the provision also states that the BIR commissioner “may, even without written claim therefore, refund or credit any tax, where on the face of the return upon which payment was made, such payment appears clearly to have been erroneously paid.”

The CTA en banc did not give merit to PFMTC’S argument that the two-year prescriptive period for filing of claims for refund is not jurisdiction and must be suspended for reason of equity and other special circumstances or may be tempered on moral and equitable grounds.

Based on the court records, the payments of excise taxes were made from February 20, 2014 until December 17, 2015.

Thus, the CTA en banc explained that both the administrative and judicial claims for refund should have been filed on or before February 20, 2016, at the earliest, and on or before December 17, 2017, at the latest.

However, PMFTC filed its administrative claim before the BIR and the judicial claim before the CTA only on June 13, 2019 and July 11, 2019, respectively.

The PMFTC sought the refund after the Supreme Court, in a decision issued on April 17, 2017, affirmed with finality the decision of the trial court which declared null and void Revenue Regulation No. 17-2012 and Revenue Memorandum

Circular (RMC) No. 90-2012 issued by then Finance Secretary Cesar Purisima for allegedly violating the Constitution and imposing tax rates not authorized by Republic Act No. 1035, otherwise known as the Sin Tax Reform Law.

The decision stem med from the petition for declaratory relief filed by the philippine Tobacco institute inc .( p ti) arguing that the excise tax rate of either P12 or P25 under RA No. 10351 should be imposed only on cigarettes packed by machine in packs of 20’s or packaging combinations of 20’s and should not be imposed on cigarette pouch es of 5’ sand10’ s.

Section 11 of RR No. 17-2012 imposes an excise tax on individual cigarette pouches of 5’s and 10’s even if they are bundled or packed in packaging combinations not exceeding 20 cigarettes.

On the other hand, RMC No. 902012 provides for the initial classifications in tabular form, effective January 1, 2013, of locally- manufactured cigarette brands packed by machine according to the tax rates prescribed under R A No. 10351 based on the (2010 BIR price survey of these products, and suggested net retail price declared in the latest sworn filed by the local manufacturer or importer.

On January 16, 2013, prior to the payment of excise tax on its cigarette packs of l0’s, petitioner wrote the BIR stating that the payment was being made under protest and without prejudice to its right to question the issuances before the court.