Sat. Jan 29th, 2022

The Court of Tax Appeals (CTA) ruled in favor of the government and against cigarette manufacturer PMFTC, Inc.’s excise tax refund claim for the P2.7 billion it paid in 2014 and 2015 for packs containing less than 20 sticks.

The tribunal “has no recourse but to dismiss the petition considering that the two-year prescriptive period (under the Tax Code) is not only mandatory but is also jurisdictional,” stated the November 25 decision penned by Associate Justice Juanito Castañeda Jr. of the CTA 2nd Division.

Jurisdiction refers to the power of a court to decide on a particular case on the merits granted by the law and cannot be waived.

Republic Act 10351, or the Sin Tax Reform of 2012, states that all cigarettes, whether packed by hand or by machine, shall only be packed in 20s and through other packaging combinations that shall result in not more than 20 sticks.

In case of cigarettes packed in not more than 20 sticks, whether in 20 sticks, 10 sticks, or other packaging combinations below 20 sticks, the net retail price of each package shall be the basis of imposing the tax rate.

In January 2013, the PMFTC filed a suit before the Las Piñas Regional Trial Court (RTC), questioning the regulation and saying the new excise tax rate should be imposed only for cigarettes packed in 20s and should not be imposed on cigarette pouches of fives and 10s.

The PMFTC, the Philippine affiliate of Philip Morris International, won after the RTC said the regulations are void.

Then-finance secretary Cesar Purisima and former Bureau of Internal Revenue (BIR) Commissioner Kim Henares took the case to the Supreme Court (SC), which issued a temporary restraining order against the RTC in June 2014.

In 2017, however, the SC affirmed the RTC decision.

The PMFTC filed for a refund two years later before the BIR and later with the CTA, arguing, among other things, that the two-year deadline to file a claim for refund should be deemed suspended while the case was pending before the SC.

Ruling against a tax refund, the CTA decision uploaded recently said “under the present state of the law, the two-year prescriptive period runs from the date of payment of the tax, regardless of any supervening cause that may arise thereafter.”

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