ALGARME, Danielle Kym Marie

CIR v. San Miguel Corporation

G.R. No. 184428 | November 23 2011
J. Villarama Jr.
FACTS:

 In 1998 RA 8424 took effect which contained Sec 143 which states that excise tax for fermented liquor shall
not be lower than the tax due on October 1 1996
 In 1999 The secretary of Finance issued BIR Revenue Regulation 17-99 increasing the tax rates on
fermented liquor by 12% qualified by the last paragraph of Sec 1
 For the period of June 2004 till December 2004 the respondent was assessed and paid for excise tax
amounting to PHP 2.2 Billion. The amount was computed for the tax rate prior to Jan 1 2000. Further
respondent argued that the applicable tax rate should be PhP 6.89/liter and should have paid lower taxes
 May 22 2006 respondent filed before the BIR for the refund of PhP 60 million as erroneously paid taxes. The
petitioner CIR failed to act which prompted Respondent to file a petition for review with the CTA.
 CTA 2nd Division ordered CIR to refund PHP 58M for erroneously paid tax credit which held that RR No. 17-
99 modified Sec.143 of the Tax Reform Act which the CTA En Banc Affirmed.
 Hence this petition

ISSUE(S)

 Whether the last paragraph of Sec 1 of BIR Revenue Regulations No. 17-99 complies with Sec 143 of the
Tax Reform Act

HELD:

 Yes, the BIR Regulation complies with Tax Reform Act of 1997.Sec 143 provides for two periods- (1) 3 year
transition from Jan 1997 to Dec 1999; (2) period after. During the transition period the tax for fermented
liquor shall not be lower than what was due each brand on Oct 1996. After the transition period Sec 143
provides that it shall be increased to 12% without regard to whether such rate is lower or higher than thetax
rate paid prior to Jan 1 2000.

Revenue Regulations No. 17-99, however, created a new tax rate when it added in the last paragraph of
Section 1 thereof, the qualification that the tax due after the 12% increase becomes effective “shall not be
lower than the tax actually paid prior to January 1, 2000. As there is nothing which allows the BIR to create a
new tax rate.

The court also reiterated that tax is a burden and are not to be imposed nor presumed to be imposed
beyond what the statute imports, tax statutes being construed strictissimi juris against the government.17 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