CIR v. San Miguel Corporation

FACTS: Respondent San Miguel Corporation, a domestic corporation engaged in the manufacture and sale of fermented liquor, produces as one of its products “Red Horse” beer. On January 1, 1998, Republic Act (R.A.) No. 8424 or the Tax Reform Act of 1997 took effect. It reproduced, as Section 143 thereof, which provides that Fermented Liquor shall be levied, assessed and collected an excise tax on beer, lager beer, ale, porter and other fermented liquors except tuba, basi, tapuy and similar domestic fermented liquors. The law also provided that the excise tax for fermented liquor within the next 3 years shall not be lower than the tax which was due from each brand on October 1, 1996. On December 16, 1999, the Secretary of Finance issued Revenue Regulations No. 17-99 increasing the applicable tax rates on fermented liquor by 12%.

For the period June 1, 2004 to December 31, 2004, respondent was assessed and paid excise taxes amounting to P2,286,488,861.583 for the 323,407,194 liters of Red Horse beer products removed from its plants. On May 22, 2006, respondent filed before the BIR a claim for refund or tax credit of the amount of P60,778,519.565 as erroneously paid excise taxes for the period of May 22, 2004 to December 31, 2004. Later, said amount was reduced to P58,213,294.92 because of prescription. 

CIR failed to act on the claim. Respondent filed a petition for review to the CTA which was then granted. Petitioner filed a petition for review on certiorari.

ISSUE: Whether or not the CTA committed a reversible error in judgment.

HELD: No. It bears reiterating that tax burdens are not to be imposed, nor presumed to be imposed beyond what the statute expressly and clearly imports, tax statutes being construed strictissimi juris against the government. In case of discrepancy between the basic law and a rule or regulation issued to implement said law, the basic law prevails as said rule or regulation cannot go beyond the terms and provisions of the basic law. It must be stressed that the objective of issuing BIR Revenue Regulations is to establish parameters or guidelines within which our tax laws should be implemented, and not to amend or modify its substantive meaning and import.