SC affirms Tax Court’s ruling denying Fortune Tobacco’s P219-M tax refund claim

THE Supreme Court denied the request of Fortune Tobacco Corporation (FTC) to claim a tax refund worth P219-million representing alleged overpaid excise tax for the period covering June 1 to December 31, 2004.

In a 14-page decision, the high court’s second division through Associate Justice Lucas Bersamin said FTC failed to present the necessary documents to show that it is entitled to the refund.

The Court said FTC presented mere photocopies of the documents.

While the courts allow exception from presenting the original documents, the high court said “petitioner [FTC] did not even attempt to provide a plausible reason as to why the original copies of the documents presented could not be produced before the Court of Tax Appeals (CTA).”

On March 31, 2005, FTC filed a claim for tax credit or refund worth P219,566,450.00 covering June to Dec. 31, 2004 before the Bureau of Internal Revenue (BIR).

On Nov. 14, 2005, it then filed a petition for review before the CTA’s First Division. The Tax Court’s 1st division denied their claim prompting FTC to elevate the case to the CTA en banc who ruled that there is no cause to reverse the findings of its first division.

Then, FTC went to the high court.

In affirming the Tax Court’s decision, the high court said, “the Court finds that the failure of petitioner to prove its claim in accordance with the settled rules merits its dismissal.”

The high court agreed with the CTA that it cannot verify its claim for refund on taxes paid for particular brand of cigarette because it merely presented summary of  excise taxes it has paid for all its cigarette brands.

The high court added that the CTA cannot also rely on the computation submitted by the FTC.

“Clearly, it is petitioner’s burden to prove the allegations made in its claim for refund. For a claim for refund to be granted, the manner in proving it must be in accordance with the prescribed rules of evidence,” the high court said.

“It would have been erroneous had the CTA en banc relied on petitioner’s own Excise Tax Refund Computation Summary or the unsatisfactory explanation of its lone witness to justify its claim for tax refund,” it added.