Leading cigarette manufacturer Philip Morris Fortune Tobacco Corp. (PMFTC) has lost its bid to recover P2.7 billion in tax refund representing excise taxes paid for cigarette packs containing less than 20 sticks for the taxable period starting January 1, 2014 until December 31, 2015.
In a 24-page decision, the Court of Tax Appeals’ (CTA) Second Division junked PMFTC’s petition for review filed on July 11, 2019 assailing the Bureau of Internal Revenue’s (BIR) decision denying its demand for a refund or issuance of a tax credit certificate.
The CTA 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.
It noted that under Sections 204(C) and 229 of the National Internal Revenue Code of 1997 (NIRC) “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 or collected.
In the case of PMFTC, the CTA noted that the payment of the subject excise taxes were made from February 20, 2014 until December 15, 2015, thus, the two-year prescriptive should end on 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 CTA did not give merit to petitioner’s claim that the temporary restraining order (TRO) issued by the Supreme Court in the Purisima case warrants the suspension of the two-year prescriptive period.
The petitioner argued that in deference to the said TRO, it continuously paid under protest the excise taxes allegedly due to the government under the subject revenue issuances, pending the appeal filed by the Secretary of Finance.
Furthermore, petitioner contends that the two-year prescriptive period must likewise be suspended to avoid unjust enrichment on the part of the government at the expense of the taxpayer.
“Considering that in this case, the two-year prescriptive period under Section 229 of the NIRC of 1997 had already elapsed before petitioner filed its administrative and judicial claims, and since such prescriptive period continues to run regardless of any supervening cause that may arise after payment, the present Petition for Review must already fail,” the CTA said.
Furthermore, the CTA said the TRO issued by the Supreme Court (SC) in the Purisima case was not directed against the petitioner, but only to Philippine Tobacco Institute Inc. (PTI) , the Regional Trial Court of Las Piñas City and their representatives.
“In other words, since petitioner is not one to whom the TRO is directed, the same would have no binding effect on petitioner. Moreover, the fact that petitioner is a member of PTI does not automatically mean that it is one of the latter’s representatives,” it added.
“Thus, finding that petitioner’s refund claims have prescribed, and considering that two-year prescriptive period under Section 229 of the NIRC of 1997 is not only mandatory but t is also jurisdictional, this Court has no recourse but to dismiss the present Petition for Review, for its lack of jurisdiction.”
Rates
The PMFTC sought the refund after the SC, in a decision issued on April 17, 2017, affirmed with finality the decision of the trial court which declared null and void Revenue Regulation (RR) 17-2012 and Revenue Memorandum Circular (RMC) 90-2012 issued by then Finance Secretary Cesar Purisima for allegedly violating the Constitution and imposing tax rates not authorized by Republic Act (RA) 1035, or the Sin Tax Reform Law.
The decision stemmed from the petition for declaratory relief filed by the PTI which argued that the excise tax rate of either P12 or P25 under RA 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 pouches of 5’s and 10’s
Section 11 of RR 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.
RMC 90-2012 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 RA 10351 based on the 2010 BIR price survey of these products, and the suggested net retail price declared in the latest sworn statement 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.
Petitioner then paid excise taxes on the 20’s cigarette packs and 2×10’s cigarette packaging combinations from February 20, 2014 until December 17, 2015.
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