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    CIR v. San Miguel Corporation G.R. No. 180740/G.R. No. 180910, November 11, 2019

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    Ezi Angeles
    1. The Supreme Court ruled that Section 1 of Revenue Regulations 17-99, which imposed a 12% increase in excise tax on fermented liquors, was unauthorized and invalid as it was not supported by Republic Act 8240. 2. The Court also ruled that San Miguel Corporation's claim for refund of excess excise tax payments made from January to February 2001 was barred by the two-year prescriptive period under the Tax Reform Act of 1997. SMC failed to present evidence that it filed the required tax returns for that period after the goods were removed from production. 3. The petitions of the Commissioner of Internal Revenue and San Miguel Corporation challenging the Court of Tax Appeals

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    CIR v. San Miguel Corporation G.R. No. 180740/G.R. No. 180910, November 11, 2019

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    Ezi Angeles
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    1. The Supreme Court ruled that Section 1 of Revenue Regulations 17-99, which imposed a 12% increase in excise tax on fermented liquors, was unauthorized and invalid as it was not supported by Republic Act 8240. 2. The Court also ruled that San Miguel Corporation's claim for refund of excess excise tax payments made from January to February 2001 was barred by the two-year prescriptive period under the Tax Reform Act of 1997. SMC failed to present evidence that it filed the required tax returns for that period after the goods were removed from production. 3. The petitions of the Commissioner of Internal Revenue and San Miguel Corporation challenging the Court of Tax Appeals

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    CIR v SMC

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    1. The Supreme Court ruled that Section 1 of Revenue Regulations 17-99, which imposed a 12% increase in excise tax on fermented liquors, was unauthorized and invalid as it was not supported by Republic Act 8240. 2. The Court also ruled that San Miguel Corporation's claim for refund of excess excise tax payments made from January to February 2001 was barred by the two-year prescriptive period under the Tax Reform Act of 1997. SMC failed to present evidence that it filed the required tax returns for that period after the goods were removed from production. 3. The petitions of the Commissioner of Internal Revenue and San Miguel Corporation challenging the Court of Tax Appeals

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    131 views3 pages

    CIR v. San Miguel Corporation G.R. No. 180740/G.R. No. 180910, November 11, 2019

    Uploaded by

    Ezi Angeles
    1. The Supreme Court ruled that Section 1 of Revenue Regulations 17-99, which imposed a 12% increase in excise tax on fermented liquors, was unauthorized and invalid as it was not supported by Republic Act 8240. 2. The Court also ruled that San Miguel Corporation's claim for refund of excess excise tax payments made from January to February 2001 was barred by the two-year prescriptive period under the Tax Reform Act of 1997. SMC failed to present evidence that it filed the required tax returns for that period after the goods were removed from production. 3. The petitions of the Commissioner of Internal Revenue and San Miguel Corporation challenging the Court of Tax Appeals

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    CIR v.

    San Miguel Corporation

    G.R. No. 180740/G.R. No. 180910, November 11, 2019

    Hernando, J.:

    Topics for personal note: unauthorized administrative legislation, prescription period for refund

    FACTS:

    On January 1, 1997, Republic Act (RA) No. 8240 took effect adopting a specific tax system instead of the
    ad valorem tax system imposed on, among others, fermented liquor. As a result, fermented liquors
    were specifically subjected to excise taxes in accordance with the schedule in Section 140 of RA 8240
    (renumbered to Section 143 under RA 8424). On December 16, 1999, the Secretary of Finance, upon
    recommendation of the CIR, issued RR No. 17-99 to implement 12% increase on excise tax, among
    others, fermented liquors by January 1, 2000.

    On January 10, 2003, SMC filed a claim for tax refund or credit of excise tax it paid on its Red Horse Beer
    product from January 11, 2001 to December 31, 2000 in the amount of 94,494,801.96 php equivalent to
    the difference before the effectivity of RA 8240 and the new rate imposed under Section 145 of RA
    8424.

    Without waiting for the CIR to act on its administrative claim for tax refund or credit, SMC filed a
    Petition for Review before the CTA.

    The CTA 1st Division approved SMC’s claim for tax refund or credit for its excess excise tax payment
    from March 1, 2001 to December 31, 2002 in the amount of 88,090,531.56 (excluded prescribed claim
    for January to February 2001).

    The SMC filed a Motion for Reconsideration (MR) for the prescribed claim for January to February 2001
    arguing that under the Advance Payment or Deposit scheme authorized by Section 11.1(2)(b) of RR No.
    2-97, the filing of the returns and supporting documents may be submitted even a week after the actual
    removals.

    The CTA 1st Division denied MR. Though due date of tax payment is not always the reckoning point for
    purposes of prescription, SMC failed to present its excise tax returns for January 1, 2001 to February 28,
    2001 to prove the dates they were actually filed.

    CIR and SMC filed a Petition for Review with the CTA En Banc.

    The CTA en Banc denied the petition since SMC claim is barred by prescription based on Section 229 and
    130(A)(2) of the Tax Reform Act of 1997 since it failed to present the proof of the exact amount it paid
    for the period February 1 to 23, 2001.

    CIR filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court with the CTA En Banc.
    ISSUES:

    1. Whether or not Section 1 of RR 17-99 is valid (NO)

    2. Whether or not SMC is entitled claim has prescribed (YES)

    RULING:

    Petitions are denied.

    1. NO.

    As correctly contended by SMC, CIR v. Fortune Tobacco Corporation (G.R. Nos. 167274-75, July 21,
    2008) declaring Section 1 of RR No. 17-99 as unauthorized administrative legislation applies. In this
    case, the provision is not supported by the plain wording of Section 143 of the Tax Code on fermented
    liquor just like Section 145 of the same Code on cigars and cigarettes in the above-mentioned case.

    Moreover, in CIR v. San Miguel Corporation (G.R. No. 184428, November 23, 2011) which involved the
    same parties herein and similar claim for refund of SMC for excess excise tax payments on its Red Horse
    beer product paid from May 22 to December 31, 2004.

    2. YES.

    In CIR v. Meralco (G.R. No. 181459, June 9, 2014), the court ruled that the two (2)-year prescriptive
    period under Section 229 of the Tax Reform Act of 1997 applies and that the six (6)-year period for
    actions based on solutio indebiti under Art. 1145 of the Civil Code. The first element of solution indebiti
    where payment is made when there exists no binding relation between the payor, who has no duty to
    pay, and the person who received the payment is lacking. Moreover, it is inapplicable since the Tax
    Code is a special law which explicitly provides for a mandatory period for claiming a refund for taxes
    erroneously paid. Generalia specialibus non derogant.

    Neither can the claim be excepted from the two (2)-year prescription period based on equity
    considerations when there is clear statutory law governing the matter.

    It is a basic rule of evidence that each party must prove its affirmative allegation. The burden rests upon
    SMC to present evidence that its prescribed returns for the excise taxes on its Red Horse beer product
    for February 2001 were actually filed after the removal of the said products from the place of production
    or later than February 24, 2001. Yet, it failed to present a definitive computation of the excise taxes on
    its Red Horse Beer product which it had paid from February 24 to 28, 2001 and which would still have
    been within the prescriptive period.

    Only questions of law may be raised under Rule 45 of the Rules of Court. The sufficiency of a claimant’s
    evidence and the determination of the amount of refund are questions of fact which are for the
    judicious determination by the CTA of the evidence on record. Rule finds greater significance with
    respect to the findings of specialized courts such as the CTA because of the very nature of its functions,
    which is dedicated exclusively to the resolution of tax problems and has accordingly developed an
    expertise on the subject, and consequently its conclusions are not lightly set aside unless there has been
    an abuse or improvident exercise of authority.

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