Claro Ortiz, BIR head revenue executive assistant and overall coordinator for Run After Tax Evaders, said the agency is filing a motion for reconsideration before the High Court.
“We will try to persuade the Supreme Court to rule in our favor. We believe that the case warrants a reconsideration,” Ortiz said.
BIR Commissioner Kim Henares earlier said in the event the agency’s motion is denied, making the Supreme Court’s ruling final and executory, Tan would have to wait for the next General Appropriations Act (GAA) to be enacted before it gets the tax refund.
“Tax refunds are not part of the BIR’s budget, and we can no longer touch the money we already collected since those were already remitted to the [Bureau of Treasury],” Henares said.
Last month the Supreme Court granted the petition of Tan’s Fortune Tobacco Corp. for a P491-million tax refund from the BIR, after claiming it had paid excessive excise taxes in 2003 and 2004.
A 14-page decision of the High Court’s Second Division, written by Associate Justice Arturo Brion, denied a petition of the BIR seeking to reverse a 2007 ruling of the Court of Tax Appeals that granted Fortune Tobacco’s claim for a tax refund.
Concurring with the ruling were Associate Justices Mariano del Castillo, Jose Portugal Perez and Jose Catral Mendoza.
Based on the records, Fortune Tobacco’s cigarette products such as Champion, Salem, Salem King, Camel Filters King, Camel Lights Box, Camel Filters Box, Winston F Kings and Winston Light were subjected to ad-valorem tax, pursuant to the Tax Code of 1977.
As such, the brands Champion, Salem and Camel had a tax rate of P1 per pack and P5 per pack for Winston.
On January 1, 1997, however, Republic Act 8240, or the excise tax law on alcohol and tobacco products, took effect, which allowed a shift from the ad-valorem tax system to the specific tax system.
The new law subjected Fortune Tobacco’s brands to specific tax under the 1997 Tax Code.
The High Court said the 1987 Constitution requires that taxation should be uniform and equitable, a provision that was violated by the BIR when it implemented Section 1 of RR 17-99, which provides that “the new specific tax rate for any existing brand of cigars and cigarettes packed by machine, distilled spirits, wines and fermented liquors shall not be lower than the excise tax that is actually being paid prior to January 1, 2000.”
“In the process, the CIR [Commission on Internal Revenue] also perpetuated the unequal tax treatment of similar goods that was supposed to be cured by the shift from ad valorem to specific taxes,” it said.
Except for the tax period and the amounts involved, the court noted that it had already resolved the same issue in 2008 when it declared invalid the provision in Section 1 of Republic Act 17-99.
