SC orders BIR to refund Tan P1-b

PHILIPPINE NEWS SERVICE — THE Supreme Court has ordered the Bureau of Internal Revenue to refund more than P1 billion in overpaid excise taxes to businessman Lucio Tan’s Fortune Tobacco Corp.

The court’s decision, written by Associate Justice Dante Tinga, upheld the Court of Appeals’ decision in September 2004 that, in turn, supported a ruling by the Court of Tax Appeals, which had first ordered the refund covering overpaid taxes for the years 2001 and 2002.

In December 2003, the Court of Tax Appeals granted Fortune Tobacco’s claim and ordered the bureau to refund P355,385,920 representing overpaid taxes in 2002.

The court also ordered the bureau in an earlier decision to pay Fortune Tobacco P680,387,025, which represented overpaid excise taxes in 2001.

The bureau brought the cases before the Court of Appeals, then elevated them to the Supreme Court when it lost in 2004.

“What is controlling in this case is the well-settled doctrine of strict interpretation in the imposition of taxes, not the similar doctrine as applied to tax exemptions,” the Supreme Court said.

“The rule in the interpretation of tax laws is that a statute will not be construed as imposing a tax unless it does so clearly, expressly, and unambiguously. A tax cannot be imposed without clear and express words for that purpose.

“As burdens, taxes should not be unduly exacted nor assumed beyond the plain meaning of the tax laws.”

The Court said taxpayers expected fair treatment from the government, which “has the duty to refund without any unreasonable delay what it has erroneously collected.

“If the state expects its taxpayers to observe fairness and honesty in paying their taxes, it must hold itself against the same standard in refunding excess (or erroneous) payments of such taxes. It should not unjustly enrich itself at the expense of taxpayers.”

In its argument on behalf of the bureau, the Office of the Solicitor General said the Tax Code allowed several interpretations, but the one that should prevail was that in line with the law’s intent to raise revenues for the government.

But the Court disagreed.

“As burdens, taxes should not be unduly exacted nor assumed beyond the plain meaning of the tax laws,” the decision said.