Green Cross v. CIR: Cologne and Splash Colognes Are Taxable 'Toilet Waters' Under Excise Tax Law

In Green Cross, Inc. v. Commissioner of Internal Revenue (CTA EB No. 2912, March 3, 2025), the Court of Tax Appeals (CTA) En Banc held that cologne and splash cologne products fall under the excise-taxable category of “toilet waters” and denied Green Cross’s ₱117,973,507.78 refund claim for excise tax and value-added tax (VAT) paid on those products from 2018 to 2019. The ruling turned on the plain text of Section 150(B) of the National Internal Revenue Code (NIRC), which the Court said taxes all “toilet waters” as non-essential goods without any exception based on essential-oil content, price, or market reach. This post is part of the Day in Court series.

Case details #

What happened #

Green Cross, Inc., a Philippine manufacturer, produces and sells cologne and splash cologne products. From November 16, 2018 to December 17, 2019, the company paid ₱106,337,067.99 in excise taxes on the removal of these products from its place of production, plus ₱11,636,439.79 in VAT computed on top of that excise tax — a combined ₱117,973,507.78.

Green Cross took the position that its cologne products should not have been taxed as excise goods at all, or at minimum should have been assessed under a narrower reading of what counts as a “toilet water.” On October 29, 2020, it filed an administrative claim for refund with the BIR’s Large Taxpayers Service. When the BIR did not act, Green Cross filed a Petition for Review with the CTA on November 16, 2020, docketed as CTA Case No. 10401.

The CTA Special Second Division denied the petition after trial in a Decision dated November 22, 2023, and denied Green Cross’s subsequent motion for reconsideration in a Resolution dated April 16, 2024. Green Cross elevated the case to the CTA En Banc on May 8, 2024.

The issue before the court #

Whether cologne and splash cologne products are “toilet waters” subject to the 20% excise tax on non-essential goods under Section 150(B) of the NIRC, as amended, or whether an older regulatory definition should exclude them — and, if the excise tax was properly imposed, whether Green Cross was entitled to a refund of the tax (and the VAT computed on it) that it had already paid.

The ruling #

The CTA En Banc denied Green Cross’s petition for review and affirmed the Special Second Division, finding no basis for the requested refund.

The statute’s plain text controls #

The Court held that Section 150 of the NIRC imposes excise tax on “toilet waters” as a category of non-essential goods, without qualifying that classification by essential-oil content, price point, or market segment. Because the statutory language was unambiguous, the Court declined to read in exceptions that the text does not contain. As reported by BusinessWorld from the 22-page ruling promulgated on March 3, 2025:

“Since the language of the statute is plain and unambiguous, there is no need for further interpretation or to examine legislative intent. The law must be applied as written.”

An older BIR regulation could not narrow what Congress later taxed #

Green Cross had invoked Revenue Regulations (RR) No. 8-84, which defined “toilet waters” as scented preparations containing more than 3% essential oils — a definition that, if still controlling, might have excluded some of its products. The CTA En Banc rejected this argument, holding that RR No. 8-84 implemented an earlier percentage-tax provision that no longer exists: Executive Order No. 273 (1987) reclassified the tax on “perfumes and toilet waters” from a percentage tax to an excise tax under what is now Section 150(B) of the NIRC. With the provision RR No. 8-84 was written to implement effectively superseded, the Court treated the old regulation’s narrower definition as having nothing left to enforce — leaving the plain statutory term “toilet waters” to govern, informed instead by the CIR’s own interpretation in Revenue Memorandum Circular No. 17-02, which the Court treated as a valid and binding administrative construction classifying cologne and splash cologne as toilet waters.

There is no separate or dissenting opinion reported in this Decision.

Our insights #

A refund case decided on statutory classification, not procedure #

Unlike many VAT refund cases in this series — such as CIR v. San Roque Power and CIR v. Team Sual, which turned on filing deadlines — Green Cross was decided on the substantive question of whether the excise tax applied to the goods at all. The taxpayer met the procedural requirements to bring the refund claim; it lost because the CTA found the tax itself correctly assessed. That distinction matters for excise-tax manufacturers: a well-filed, timely refund claim is still not a substitute for confirming, before paying under protest, that the product classification argument is sound.

Excise tax classification disputes turn on definitions that predate the current law #

The case illustrates a recurring pattern in Philippine excise tax litigation: a manufacturer relies on an older implementing regulation’s specific definition, while the BIR and the courts point to a later statutory amendment that changed the underlying tax structure. Business reporting on the decision — covered by both BusinessWorld and Manila Bulletin — frames the ruling as reinforcing that once Congress or an executive issuance amends the underlying provision a regulation was written to implement, the older regulation’s specific carve-outs do not survive on their own; the taxpayer must show the current statutory text, not a superseded regulation, supports the narrower reading.

Strict construction favors the tax, not the exemption, once liability attaches #

Because Green Cross was arguing for a refund — effectively an exemption from tax already paid — the CTA’s approach tracks the general rule that claims for refund, like claims for exemption, are construed strictly against the taxpayer. Combined with the plain-meaning reading of Section 150(B), the decision leaves manufacturers of scented personal-care products with a narrow path to dispute excise-tax classification: the statutory text itself, and any current administrative issuance interpreting it, rather than definitions carried over from a regulation whose underlying provision no longer exists.

What this means for taxpayers #

Manufacturers and importers of colognes, splash colognes, and similar scented preparations should treat these products as falling within the excise-taxable “toilet waters” category under Section 150(B) of the NIRC unless a current BIR issuance says otherwise — an older regulation’s narrower definition, tied to a tax structure Congress has since changed, will not by itself support a refund claim. Before paying excise tax under protest and filing for refund, confirm the product’s classification against the CIR’s current interpretation (such as RMC No. 17-02) rather than relying on definitions from regulations predating the 1997 NIRC reclassification. Because VAT is computed on top of excise tax for these goods, a lost excise-tax classification argument also forecloses the related VAT refund, so the two amounts should be evaluated together before a claim is filed.

Summary #

Green Cross v. CIR confirms that cologne and splash cologne products are excise-taxable “toilet waters” under Section 150(B) of the NIRC, and that a superseded implementing regulation’s narrower definition cannot override the current statutory text. The CTA En Banc denied a ₱117.97-million refund claim on that basis, applying the plain-meaning rule and RMC No. 17-02’s classification of these goods. Read it alongside this site’s other Day in Court posts on refund claims narrowly construed against the taxpayer, including CIR v. Team Sual and CIR v. San Roque Power.

Sources #

Primary sources

• Court of Tax Appeals (cta.judiciary.gov.ph) — CTA EB No. 2912, Green Cross, Inc. v. Commissioner of Internal Revenue, Decision, March 3, 2025 — cited as the citation of record; the CTA’s own site could not be directly fetched from this research session, so the case number, date, and holding below were corroborated across the independent secondary sources listed next before being stated here.

Secondary sources

• BusinessWorld Online — CTA denies Green Cross’ P118-M tax refund petition (March 17, 2025), including the quoted excerpt from the Decision
• Manila Bulletin — CTA junks tax refund for P117.9-M sought by Green Cross, Inc. (March 8, 2025)