BRITISH AMERICAN TOBACCO (PHILIPPINES), LIMITED, v. COMMISSIONER OF INTERNAL REVENUE

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY SECOND DIVISION BRITISH AMERICAN CTA CASE NO. 999fi TOBACCO (PHILIPPINES), LIMITED, Members: CASTANEDA, JR., Chairperson, Petitioner, BACORRO-VILLENA, fl. -versus - COMMISSIONER OF INTERNAL REVENUE, Promulgated: Respondent. JlJN Z8 2021 / ""7 '!~ r. . x----------- --- ------------ -- --- - ---- _J _------- -- x DECISION BACORRO-VILLENA, L_: At bar is a Petition for Review filed by petitioner British American Tobacco (Philippines), Limited (petitioner/ BATL). It seeks a tax refund of the aggregate amount of P3os,823,304.oo, representing excise taxes prepaid by petitioner during the period 29 December 2016 to 18 May 2017 on internal revenue stamps requisitioned through the Bureau of Internal Revenue's (BIR's) Internal Revenue Stamp ... Integrated System (IRSIS), the return of spoiled stamps and bad orders/ Fi led on 2 1 December 20 18, Division Docket, Volume I, pp. I0-19.

DECISION CTA CASE NO. 9998 BRITISH AMERICAN TOBACCO (PHILIPPINES), LIMITED v. CIR Page 2 of16 X--------------------------------------------- -X consisting of short deliveries, as well as the unapplied balance of petitioner's advance deposit in the IRSIS. PARTIES OF THE CASE Petitioner is a corporation organized and existing under the laws of the United Kingdom with a License to Transact Business in the Philippines through a branch office located at nth Floor Kingston Tower, Acacia Avenue, Madrigal Business Park, Alabang, Muntinlupa under Company Registration No. Al99812004 issued by the Securities and Exchange Commission (SEC). Respondent, on the other hand, is the duly appointed Commissioner of Internal Revenue {respondent/CIR) who holds office at the BIR National Office Building located at Agham Road, Diliman, Quezon City where he may be served with summons and other legal processes. FACTS OF THE CASE Petitioner is engaged in the importation of tobacco products. As part of its compliance with Revenue Regulations (RR) No. 7-2014', petitioner pays in advance the corresponding excise tax on internal revenue stamps ordered through IRSIS for subsequent placement on cigarette packs to be imported. On 13 December 2017, petitioner's head office passed a resolution for the cessation of all operations and closure of its branch office in the Philippines as of 31 December 2017.3 As a result, petitioner's remaining deposits with the IRSIS and the value of all unused and spoiled stamps, and bad orders (credited back to the IRSIS) remained unutilized.4 The � remaining balance of petitioner's advance deposits as of 31 Decembey Prescribing the Affixture of Internal Revenue Stamps on Imported and Locally Manufactured Cigarettes and the Use of the Internal Revenue Stamp Integrated System (IRSIS) for the Ordering, Distribution and Monitoring Thereof. Exhibit "P-6", Division Docket, Volume II, pp. 798-802. 4 Id., Volume I, p. II.

DECISION CTA CASE NO. 9998 BRITISH AMERICAN TOBACCO (PHILIPPINES), LIMITED v. CIR x----------------------------------------------x 2017 amounted to P154,86sA36.ooS, resulting from the following schedule of advance payments, to wit: Date of Payment Filing Ref. No. Amount Paid 29 December 2016 81600017982541 1"227, 700,000.00 29 December 2016 81600017983011 231,900,000.00 81700018079997 165,ooo.oo o6 January 2017 81700018648605 12,537,165.00 o8 February 2017 81600020028034 148,5oo,ooo.oo 81600020082524 99,000,000.00 12 May 2017 18 May 2017 According to petitioner, the BIR gave due course to its several requests for credit back of spoiled stamps and bad orders. The details thereof as of 19 December 20186 are as follows: Credit Back Date IRSIS Ref. No. Reason Amount Factory Defect; 1"1,460, 250.00 23 February 2018 201701ooooo19-ooAo2-ooo1 Short Delivery Factory Defect; 217,800.00 23 February 2018 2017010ooo018-ooA01-oo01 Short Delivery Factory Defect; 504,900.00 23 February 2018 2017010000016-00974�0001 Short Delivery Factory Defect; 1,415,700.00 23 February 2018 2017010000015-00973�0001 Short Delivery Spoiled Stamps 1,020,857-00 16 March 2018 SS-o10-032018-ooo2 Spoiled Stamps 972,J22.00 16 March 2018 SS-010-032018-ooo1 Spoiled Stamps SS-o10-072018-oo01 Spoiled Stamps 1,828,640.00 20 July 2018 SS-o10-092018-ooo2 Spoiled Stamps 56,3o6,25o.oo 12 September 2018 SS-010-032018-oo01 Spoiled Stamps 59,296,o5o.oo 12 September 2018 SS-o10-122018-ooo4 Spoiled Stamps 12 September 2018 SS-o10-122018-ooo3 Spoiled Stamps 3.988,134-00 19 December 2018 SS-010-122018-ooo2 Spoiled Stamps 2,704.443-00 19 December 2018 SS-010-122018-oo01 22,811,324.00 19 December 2018 4,927,529.00 Pis7.454,199�oo Total The remaining balance of petitioner's advance deposits of Pts4,86s,436.oo and the credit back for short deliveries and spoiled stamps of P157.454,199-00 totals to P312,319.63s.oo, out of which amount petitioner claims a refund ofP3os,823,304.00./ Exhibits "P-14" to "P-14-1", id., Volume III, pp. 1021-1044. 6 Exhibit "P-20", id., p. 1219. ld., Volume I, p. 13.

DECISION CTA CASE NO. 9998 BRITISH AMERICAN TOBACCO (PHILIPPINES), LIMITED v. CIR x----------------------------------------------x On 22 June 2018, petitioner filed an administrative claim for excise tax refund with the BIR Excise Large Taxpayers Audit Division II (ELTAD II) for IRSIS credits representing the unused stamps and unutilized balance.8 On 20 December 2018, petitioner filed another administrative claim for refund or credit back of the value of spoiled stamps and bad orders.9 On 21 December 2018, petitioner filed its judicial claim for refund before the Court via the present petition.10 On 22 March 2018, respondent filed his Answer thereto.11 Thereafter, as the issues have been joined, the Court issued a Notice of Pre-Trial Conference on 28 March 201912, setting the pre-trial conference on 11 April 2019. Later, pursuant to the Court's order, both petitioner and respondent filed their respective Pre-Trial Briefs on o8 April 201913 and 10 April2019.14 On 26 April 2019, the parties filed their Joint Stipulation of Facts and Issues15 (JSFI). Subsequently, on 10 May 2019, the Court issued a Pre-Trial Ordee6 thereby terminating the pre-trial in the present case. In the trial that ensued, petitioner presented the testimonies of Joan D. Ventanilla (Ventanilla), Bethany L. Cruz (Cruz), Allen H. Valino (Valino) and Glenn Ian Villanueva (Villanueva), the court- appointed Independent Certified Public Accountant (ICPA), who all testified through their judicial-affidavits. On the witness stand, Ventanilla essentially testified to petitioner's corporate existence and decision to cease its operations in the Philippines.17 Her testimony was offered to prove petitioner's authority to conduct business within the Philippines, its subsequent cessation of operations, and its right to refund of taxes claimed) Exhibit "P-8-2", id., Volume II, p. 945. 9 Exhibit "P-9", id., pp. 946-949. 10 Supra at note I. II Division Docket, Volume I, pp. 84-91. 12 ld., pp. 92-93. 13 Pre-Trial Brief for Petitioner, id., pp. 516-527. 14 Respondent's Pre-Trial Brief, id., pp. 528-530. 15 ld., pp. 545-554. 16 Id., Volume Ill, pp. 556-562. 17 Exhibit "P-27", Judicial Affidavit of Joan D. Ventanilla, id., pp. 387-391.

DECISION CTA CASE NO. 9998 BRITISH AMERICAN TOBACCO (PHILIPPINES), LIMITED v. CIR x----------------------------------------------x Next, Cruz attested to petitioner's filing of Excise Tax Returns and the BIR's crediting back of the value of spoiled stamps to the IRSIS.'8 Her testimony was offered to prove the advance payment of petitioner's excise taxes to the BIR and the unutilized balance of deposit remaining with the IRSIS. Thereafter, Valino testified to petitioner's use of the IRSIS and its process in refunding the cost for spoiled stamps.'9 His testimony was offered to prove petitioner's enrolment in the IRSIS and the processes and documentation involved in ordering stamps. Lastly, Villanueva testified to his examination of petitioner's documents and his findings as reflected in the ICPA Report.20 As officer of the Court, his testimony was offered for the purpose of verifying petitioner's documents and his findings in relation thereto. When Cruz was recalled for the presentation of her supplemental testimony21, the Court also ordered petitioner to file its Formal Offer of Evidence (FOE) and for respondent to file his comment thereon within five (5) days from its receipt.22 Accordingly, petitioner filed its FOE23 on 05 August 2019 with respondent's Comment'4 on 09 August 2019. In a Resolution dated 10 September 201925, the Court admitted all of petitioner's exhibits except Exhibits "P-5"26 and "P-39" to "P-49".27 Exhibit "P-s" was, however, subsequently admitted in a Resolution dated 27 January 2020.28 a; During a hearing on 26 February 202029, respondent manifested t that there was no report of investigation in the present case. As 18 Exhibit "P-28-2", Judicial Affidavit of Bethany L. Cruz, id., Volume II, pp. 626-630. 19 Exhibit "P-29", Judicial Affidavit of Allen H. Valino, id., Volume I, pp. 136-145. 20 Exhibit "P-30", Judicial Affidavit of Glenn Ian D. Villanueva, id., Volume II, pp. 616-618. 21 Exhibit "P-28-4", Supplemental Judicial Affidavit of Bethany L. Cruz, id., pp. 700-702. 22 See Order dated 22 July 2019, id., p. 709. 23 Id., pp. 717-737. 24 Id., Volume III, pp. 1328-1330. 2S Id., pp. 1333-1334 26 Bureau of Customs Certificate of Accreditation as Importer dated November 3, 2015. 27 Not Submitted. 28 Division Docket, Volume III, pp. I349- I35 I. 29 See Minutes of Hearing, id., p. 1353.

DECISION CTA CASE NO. 9998 BRITISH AMERICAN TOBACCO (PHILIPPINES), LIMITED v. CIR X----------------------------------------------X result, the parties were given thirty (30) days within which to submit their respective memoranda.30 Respondent filed his Memorandum on 16 June 20203', while petitioner filed its Memorandum on 30 June 2020.32 Finally, the petition was submitted for decision through the Court's Resolution dated 07 July 2020.33 ISSUE The principal issue to be resolved in the case at bar is - WHETHER OR NOT PETITIONER BRITISH AMERICAN TOBACCO (PHILIPPINES), LIMITED IS ENTITLED TO THE REFUND OF P3os,823,304.oo. In support of the above issue, petitioner argues that it has a right to a refund of its excise taxes comprising of the remaining balance and value of all bad and spoiled stamps prepaid to the BIR through the IRSIS given that it has already ceased its operations as of 31 December 2017 by virtue of a resolution passed by its head office in the United Kingdom. On the other hand, respondent contends that petitioner cannot claim a refund of the subject amounts since they are neither illegally nor erroneously collected by the BIR. RULING OF THE COURT After a careful scrutiny of the records, We are constrained to deny the present petition/ 30 See Order dated 26 February 2020, id., p. I354. 31 Id., pp. I355-I362. 32 Id., pp. I364-I382. 33 Id., p. I387.

DECISION CTA CASE NO. 9998 BRITISH AMERICAN TOBACCO (PHILIPPINES), LIMITED v. CIR x-- ------------------------------------------- -x Petitioner anchors its claim for refund on Sections 204(c) and 229 of the National Internal Revenue Code (NIRC) of 1997, as amended, which provide: SEC. 2.04. Authority of the Commissioner to Compromise, Abate and Refund or Credit Taxes. -The Commissioner may - (c) Credit or refund taxes erroneously or illegally received or penalties imposed without authority, refund the value of internal revenue stamps when they are returned in good condition by the purchaser, and, in his discretion, redeem or change unused stamps that have been rendered unfit for use and refund their value upon proof of destruction. No credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing with the Commissioner a claim for credit or refund within two (2.) years after the payment of the tax or penalty: Provided, however, That a return filed showing an overpayment shall be considered as a written claim for credit or refund.34 SEC. 2.2.9. Recovery of Tax Erroneously or Illegally Collected. -No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessively or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress. In any case, no such suit or proceeding shall be filed after the expiration of two (2.) years from the date of payment of the tax or penalty regardless of any supervening cause that may arise after payment: Provided, however, That the Commissioner may, even without written claim therefor, refund or credit any tax, where on the face of the return upon which payment was made, such payment ~~pears clearly to have been erroneously paid./ 34 Emphasis supplied. 35 Emphasis supplied.

DECISION CTA CASE NO. 9998 BRITISH AMERICAN TOBACCO (PHILIPPINES), LIMITED v. CIR Page 8 of16 x----------------------------------------------x In a nutshell, the foregoing provisions cover the following claims for refund: 1) Credit or refund taxes erroneously or illegally received; 2) Credit or refund penalties imposed without authority; 3) Credit or refund any sum of money alleged to have been excessively or in any manner wrongfully collected; 4) Refund the value of internal revenue stamps when they are returned in good condition by the purchaser; and, s) In the discretion of the Commissioner, redeem or change unused stamps that have been rendered unfit for use and refund their value upon proof of destruction. The instant case, however, does not fall under any of the first three (3) instances because the subject claim for refund was composed of petitioner's duly made advance deposits, i.e., voluntarily filed and prepaid by petitioner through eFPS using Excise Tax Return for Tobacco Products (BIR Form No. 2200-T) and the value of spoiled stamps and bad orders credited back by the BIR to petitioner's IRSIS account. In fact, petitioner's witness, Valino36, testified that the minimum number of stamps usually ordered and paid by petitioner was good for two (2) months. In The Commissioner of Internal Revenue v. Acesite (Philippines) Hotel Corporation37, the Supreme Court explained that "there is erroneous payment of taxes when a taxpayer pays under a mistake of fact, as for the instance in a case where he is not aware of an existing exemption in his favor at the time the payment was made." Alternatively, illegally assessed or collected taxes arise when payments are made under duress or the assessment thereof is rendered by a person who has no power to assess the tax.38 Accordingly, a taxpayer who pays or advances a legally and lawfully due and payable tax to the government is not entitled to recover such tax because the same is neither erroneously nor illegally collected/ 36 Supra at note 29, p. 140. 37 545 Phil. I (2007). 38 Sacdalan-Casasola, NIRC: National Internal Revenue Code (Annotated), Volume 2, p. 1265 (2013).

DECISION CTA CASE NO. 9998 BRITISH AMERICAN TOBACCO (PHILIPPINES), LIMITED v. CIR x----------------------------------------------x As regards the spoiled stamps and bad orders credited back by the BIR to petitioner's IRSIS, the same does not constitute erroneous nor illegal, nor excessive collections. In fact, the process of crediting back to petitioner's IRSIS account for the latter's consumption, i.e., the purchase of new stamps, is a mechanism devised to conveniently refund to petitioner any spoiled or bad stamps without going through the judicial process. Likewise, the instant claim does not fall under the last two (z) instances. A condition sine qua non for the said last two (z) instances is the showing that the unused internal revenue stamps are in good condition. However, such is inapplicable in the instant case. Section 5 ofRR 7-201439, states: SEC. 5� Prior Payment ofExcise Tax on Orders of Internal Revenue Stamps. - Each and every order of internal revenue stamp submitted by the authorized user of the importer or local manufacturer of cigarettes shall be approved by the BlR: Provided, however, That the excise tax due on the total number of internal revenue stamps ordered has been paid by the importer or local manufacturer of cigarettes. Thus, under the IRSIS, the running balance in the IRSIS Taxpayer Ledger pertains to the maximum value of stamps a taxpayer can order through the IRSIS' stamp ordering module. Corollary thereto, any stamp ordered would reduce the running balance of the IRSIS Taxpayer Ledger. Accordingly, petitioner's subject claim for refund (which pertains to the running balance of its IRSIS Taxpayer Ledger) is not yet evidenced by any stamp. Nonetheless, Section 7640 of the NIRC of 1997, as amended, 1 which embodies the irrevocability rule (i.e., once the option to carry/ 39 Supra at note 2. 40 SEC. 76. Final Alijustment Return. - Every corporation liable to tax under Section 27 shall file a final adjustment return covering the total taxable income for the preceding calendar or fiscal year. If the sum of the quarterly tax payments made during the said taxable year is not equal to the total tax due on the entire taxable income of that year, the corporation shall either: (A) Pay the balance of the tax still due; or (B) Carry-over the excess credit; or (C) Be credited or refunded with the excess amount paid, as the case may be.

DECISION CTA CASE NO. 9998 BRITISH AMERICAN TOBACCO (PHILIPPINES), LIMITED v. CIR X--------------------------------------------- -X over the excess credit to the succeeding taxable quarters is made, such option is irrevocable for that taxable period and the corporation may no longer claim a refund or the issuance of a tax credit certificate), admits of an exception in its application in the event of cessation of business or dissolution of the corporation. It was in Systra Philippines, Inc. v. Commissioner of Internal Revenue4', where the Supreme Court provided the said exception to the irrevocability rule, to wit: Where, however, the corporation permanently ceases its operations before full utilization of the tax credits it opted to carry over, it may then be allowed to claim the refund ofthe remaining tax credits. In such a case, the remaining tax credits can no longer be carried over and the irrevocability rule ceases to apply. Cessante ratione legis, cessat ipse lex. In the event of cessation of business, petitioner may opt to claim for refund even if it previously chose the irrevocable carry-over option since there is no more opportunity for it to utilize such excess credits. By analogy and based on equity, the foregoing principle may apply to petitioner's case since, if it had truly ceased its operations, it would no longer be able to utilize the balance of its IRSIS account. However, it should be emphasized that for the exception to the irrevocability rule to apply, petitioner must prove that it has satisfied the requirements for cessation or dissolution. A corporation is considered dissolved only if it complies with Sections 52(C) and 235(e) of the NIRC ofl997, as amended, which state: SEC. 52. Corporation Returns. -~' In case the corporation is entitled to a tax credit or refund of the excess estimated quarterly income taxes paid, the excess amount on its final adjustment return may be carried over and credited against the estimated quarterly income tax liabilities for the taxable quarters of the succeeding taxable years. Once the option to carry over and apply the excess quarterly income tax against income tax due for the taxable quarters of the succeeding taxable years has been made, such option shall be considered irrevocable for that taxable period and no application for cash refund or issuance of a tax credit certificate shall be allowed therefor. (Emphasis supplied.) 41 560 Phil. 261 (2007).

DECISION CTA CASE NO. 9998 BRITISH AMERICAN TOBACCO (PHILIPPINES), LIMITED v. CIR X----------------------------------------------X (C) Return of Corporation Contemplating Dissolution or Reorganization. - Every corporation shall, within thirty (30) days after the adoption by the corporation of a resolution or plan for its dissolution, or for the liquidation of the whole or any part of its capital stock, including a corporation which has been notified of possible involuntary dissolution by the Securities and Exchange Commission; or for its reorganization, render a correct return to the Commissioner, verified under oath, setting forth the terms of such resolution or plan and such other information as the Secretary of Finance, upon recommendation of the Commissioner, shall, by rules and regulations, prescribe. The dissolving or reorganizing corporation shall, prior to the issuance by the Securities and Exchange Commission of the Certificate of Dissolution or Reorganization, as may be defined by rules and regulations prescribed by the Secretary of Finance, upon recommendation of the Commissioner, secure a certificate of tax clearance from the Bureau of Internal Revenue which certificate shall be submitted to the Securities and Exchange Commission.42 SEC. 235. Preservation of Books of Accounts and Other Accounting Records.- ... (e) ... All corporations, partnerships or persons that retire from business shall, within ten (10) days from the date of retirement or within such period of time as may be allowed by the Commissioner in special cases, submit their books of accounts, including the subsidiary books and other accounting records to the Commissioner or any of his deputies for examination, after which they shall be returned. Corporations and partnerships contemplating dissolution must notify the Commissioner and shall not be dissolved until cleared of any tax liability.43 Corollary to the above, Section 13644 of the Corporation Code provides: SEC. 136. Withdrawal of Foreign Corporations. - Subject to existing ' laws and regulations, a foreign corporation licensed to transacy 42 Emphasis supplied. 43 Emphasis supplied. 44 Batas Parnbansa Silang 68, 01 May 1980.

DECISION CTA CASE NO. 9998 BRITISH AMERICAN TOBACCO (PHILIPPINES), LIMITED v. CIR Page 12 of16 x----------------------------------------------x business in the Philippines may be allowed to withdraw from the Philippines by filing a petition for withdrawal of license. No certificate of withdrawal shall be issued by the Securities and Exchange Commission unless all the following requirements are met: 1. All claims which have accrued in the Philippines have been paid, compromised or settled; 2. All taxes, imposts, assessments, and penalties, if any, lawfully due to the Philippine Government or any of its agencies or political subdivisions have been paid; and 3� The petition for withdrawal of license has been published once a week for three (3) consecutive weeks in a newspaper of general circulation in the Philippines.45 As can be gleaned from the above-cited provisions, a dissolving foreign branch which was given a license to transact business in the Philippines, such as petitioner, must have secured the following requirements before it could be considered legally dissolved for tax purposes: (1) Certificate Tax Clearance from the BIR; and, (2) Certificate of Withdrawal from the SEC. The word "shall" in Section 52(C) of the NIRC of 1997, as amended, is of a mandatory nature that connotes a word of command. In UCPB General Insurance Company, Inc. v. Hughes Electronics Corporation 46 the Supreme Court explains, thus: , Jurisprudence and statutory construction teach us that the word "shall" connotes mandatory character; it indicates a word of command, and one which has always or which must be given a compulsory meaning, and it is generally imperative or mandatory in nature. Following this principle, the words "shall not" in Section 235(e) of the NIRC of 1997, as amended, as a rule must also be regarded to be I compulsory. Thus, the inescapable conclusion is that it is mandatory/ 45 Emphasis supplied. 46 800 Phil. 67 (2016); Citation omitted.

DECISION CTA CASE NO. 9998 BRITISH AMERICAN TOBACCO (PHILIPPINES), LIMITED v. CIR Page 13 of16 x----------------------------------------------x for a taxpayer who contemplates dissolution to comply with the compulsory requirements above-mentioned. The significance of a tax clearance from the BIR anent a dissolving corporation's claim for tax refund has been elucidated in Axia Power Holdings Philippines Corporation v. Commissioner of Internal Revenue47, where the Supreme Court declared that, prior to obtaining a tax clearance, a taxpayer is not yet considered dissolved for tax purposes, to wit: As discussed above, the purpose of the tax clearance requirement under Sec. sz(c) of the NIRC is to ensure that a corporation contemplating dissolution does not renege on its tax liabilities and thereby irreparably deprive the government of much needed revenues. Consequently, Sec. 235(e) prevents the corporation from being dissolved without having been cleared by the BIR. In light of the purpose of the law, We hold that MESC is considered not dissolved prior to its obtaining a tax clearance, but only for tax purposes. Indeed, it is mandatory for a taxpayer contemplating dissolution with advance deposits of excise taxes in the IRSIS to comply with the requirements above-mentioned, particularly securing a BIR Certificate of Tax Clearance as a condition for entitlement to a tax refund. Unfortunately, petitioner has yet to comply with this requirement. While it is true that petitioner was able to file with the BIR an application for cancellation of its BIR registration due to dissolution48, petitioner has not presented a Certificate of Tax Clearance to evince that it has been cleared of, and/or has settled its tax liabilities. In line with the foregoing disquisitions, absent a Certificate of Tax Clearance from the BIR, the Court cannot consider petitioner as already dissolved to remove it from the application of the irrevocability rule under Section 76 of the NIRC ofl997�/ 47 G.R. No. 230847, 14 October 2020; Emphasis supplied and italics in the original text. 48 Exhibit "P-7", Division Docket, Volume II, pp. 803-804.

DECISION CTA CASE NO. 9998 BRITISH AMERICAN TOBACCO (PHILIPPINES), LIMITED v. CIR X--------------------------------------------- -X It bears noting that in petitioner's Application for Cancellation of Registration/TIN49, it has yet to submit the unused invoices and receipts, which is among the documentary requirements for the cancellation of a TIN/registration as provided under Part VI, Annex A ofRR No. 7-2012.50 RR No. 7-2012 explicitly defines "Ceased/Dissolved" as "to the status of a registered taxpayer who has completed the requirements for cancellation of registration prior to the termination of audit." Hence, even under RR No. 7-2012, petitioner cannot be considered as dissolved or ceased. This Court has consistently held that strict compliance with the requisites set forth by law and regulations is imperative for claims for tax refund, considering that such claims are "not only construed in strictissimi juris against the taxpayer, but also the pieces of evidence presented entitling a taxpayer to an exemption is strictissimi scrutinized and must be duly proven".51 In Harte-Hanks Philippines, Inc. v. Commissioner ofInternal Revenue52, the Supreme Court held: Tax refunds or credits, just like tax exemptions, are strictly construed against the taxpayer. A refund is not a matter of right by the mere fact that a taxpayer has undisputed excess input VAT or that such tax was admittedly illegally, erroneously or excessively collected... As discussed above, it would appear that petitioner failed to sufficiently prove that it is entitled to a refund of its prepaid excise taxes, given that there is no showing that it has satisfactorily complied with the legal requirements to effect its dissolution. Similarly, as regards its refund claim on the value of its bad orders and spoiled stamps, the Court finds nothing in the records that could support its argument that the BIR erroneously or illegally collected the taxes paid thereon./ 49 I d. 50 Amended Consolidated Revenue Regulations On Primary Registration, Updates, and Cancellation. 5I Coca-Cola Bottlers Philippines, Inc. v. Commissioner of Internal Revenue, G.R. No. 222428, 19 February 2018 citing Atlas Consolidated Mining and Development Corporation v. Commissioner ofInternal Revenue, 569 Phil. 483 (2008). 52 G.R. No. 205721, 14 September 2016; Citation omitted and emphasis supplied.

DECISION CTA CASE NO. 9998 BRITISH AMERICAN TOBACCO (PHILIPPINES), LIMITED v. CJR x----------------------------------------------x WHEREFORE, premises considered, the instant Petition for Review filed by petitioner British American Tobacco (Philippines}, Limited on 21 December 2018 is hereby DENIED for lack of merit. SOODERED. ...... JEAN IVU\.n.U'. I CONCUR: 9<~~ c. ~-ct. L., g_' 'jtJANITO C. CASTANEu<A, JR. Associate Justice ATTESTATION I attest that the conclusions in the above Decision were reached m consultation before the case was assigned to the writer of the opinion of the Court's Division. ~z;:-c.~ f<RJ... JtjANITO C. CASTANEDA, Associate Justice 2nd Division Chairperson

DECISION CTA CASE NO. 9998 BRITISH AMERICAN TOBACCO (PHILIPPINES), LIMITED v. CIR X----------------------------------------------X CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson's Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. Presiding Justice