San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue

DECISION

DEL ROSARIO, P.J.:

At bar is a Petition for Review filed by San Miguel Brewery, Inc. (SMB) on February 2, 2022 seeking the Court to render judgment:

1. declaring null and void: (a) the excise tax rate of P27.07 per liter imposed by respondent Commissioner of Internal Revenue (CIR) on petitioner's beer products during the period January 23, 2020 to February 9, 2020;

(b) Revenue Memorandum Circular (RMC) No. 90-2012, particularly the portions thereof imposing the tax rate of P20.57 instead of the tax rates provided for in Section 143 of the National Internal Revenue Code (NIRC) of 1997, as amended, and Revenue Regulations (RR) No. 17-2012, particularly the portion of Section 5 thereof providing that "Starting January 1, 2014, the applicable tax rate shall be increase[d] by four percent (4%) annually"; and, (c) RMC No. 65-2020, as amended by RMC No. 113-2020 which provides that the effectivity date of Republic Act (RAdl

San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 107 45

No. 11467 is on January 23, 2020 or the date of posting on the Official Gazette's website;

2. declaring that petitioner is entitled to a refund of the excise taxes subject of its claims for refund filed with respondent on December 6, 2021 and January 12,2022, which excise taxes were allegedly erroneously, excessively, illegally and/or wrongfully assessed on, and collected by respondent from petitioner; and,

3. ordering respondent to refund or issue a corresponding tax credit certificate

(TCC)

to petitioner the total amount of P1 ,068,775,829.04 representing the excise taxes allegedly erroneously, excessively, illegally and/or wrongfully assessed on and collected from petitioner. 1

THE PARTIES

Petitioner SMB is a corporation duly organized and existing under Philippine laws, with principal office or place of business at 40 San Miguel Avenue, Mandaluyong City, Metro Manila 2 It is engaged in the business of, among others, manufacture, sale, and distribution of fermented and malt-based beverages 3 Respondent CIR heads the Bureau of Internal Revenue (BIR) and is vested by law with the power to decide, approve, and grant claims for refund or tax credit of internal revenue taxes. Respondent holds office at the Office of the Commissioner of Internal Revenue, BIR National Office Building, Agham Road, Diliman, Quezon City, Metro

Manila 4

THE FACTS

On December 19, 2012, Congress enacted RA No. 10351 5 amending, among others, Section 143 of the NIRC of 1997, as amended, which imposes an excise tax on fermented liquors at tiered rates from 2013 to 2016, a uniform rate in 2017 and a 4% indexation starting 2018. It took effect on December 21, 2012. 1 Petition for Review, CTA Docket Vol. I, pp. 50-51. 2 Par. 26, Petition for Review, CTA Docket Vol. I, p. 17. 3 Par. 28, Petition for Review, CTA Docket Vol. I, p. 18. 4 Par. 1, Stipulated Facts, Joint Stipulation, CTA Docket Vol. II, p 874. 5 An Act Restructuring the Excise Tax on Alcohol and Tobacco Products by Amending Sections 141, 142, 143, 144, 145, 8, 131 And 288 of Republic Act No. 8424, otherwise known as the National Internal Revenue Code of 1997, as amended by Republic Act No. 9334, and for Other Purpose(il

San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue

To implement RA No. 10351, then Secretary of Finance (SOF) Cesar V. Purisima, upon recommendation of the then CIR Kim S. Jacinto-Henares, issued RR No. 17-20126 on December 21, 2012. In turn, CIR Henares issued RMC No. 90-20127 on December 27, 2012. On January 22, 2020, RA No. 114678 was signed into law further amending Section 143 of the NIRC of 1997, as amended, and increasing the excise tax for fermented liquors effective January 1, 2020 to P35.00, among others.

Relative thereto, then CIR Caesar R. Dulay issued RMC No. 65- 2020 dated June 22, 2020 which states that RA No. 11467 took effect immediately after its complete publication in a newspaper of general circulation on January 27, 2020. On October 14, 2020, CIR Dulay issued RMC No. 113-2020 clarifying that RA No. 11467 was published in the Official Gazette on January 23, 2020 through its website.

Claim A

To remove its beer products from the breweries for the period from January 23, 2020 to February 9, 2020, petitioner paid excise taxes thereon at the tax rate of P27.07, instead of P26.44, per liter. For this payment, petitioner filed with the SIR a claim for refund9 amounting to P8,278,851.12, representing the difference in the tax rates per liter under RA No. 10351.

Claim B

The SIR Large Taxpayers Service (LTS) -

Excise L T Field

Operations Division issued a Notice of Discrepancy (NOD) dated July 8, 2020, 10 assessing petitioner for deficiency excise tax amounting to P941 ,871 ,604.98, inclusive of increments, covering withdrawals of beer products from January 27, 2020 to February 12, 2020, allegedly 6 SUBJECT: Prescribing the Implementing Guidelines on the Revised Tax Rates on Alcohol and Tobacco Products Pursuant to the Provisions of Republic Act No. 10351 and to Clarify Certain Provisions of Existing Revenue Regulaf1ons. 7 SUBJECT: Revised Tax Rates of Alcohol and Tobacco Products Under Republic Act No. 10351, "An Act Restructuring The Excise Tax on Alcohol And Tobacco Products By Amending Sections 141, 142, 143, 144, 145, 8, 131 and 288 of Republic Act No. 8424, Otherwise Known As The National Internal Revenue Code of 1997, as amended by Republic Act No. 9334, and for Other Purposes".

8 An Act Amending Sections 109, 141, 142, 143,144, 147, 152, 263, 263-A, 265, And 288-A, And Adding a New Section 290-A To Republic Act No 8424, As Amended, Otherwise Known As The National Internal Revenue Code Of 1997, and for Other Purposes.

San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 107 45 due to the increase in the excise tax rates on fermented liquors which purportedly took effect on January 27, 2020. On September 4, 2020, petitioner paid the excise tax difference in the amount of P168,959,037.24 covering withdrawals of beer products for the period from February 10, 2020 to February 12, 2020, premised on the effectivity of RA No. 11467 on February 10, 2020 upon its actual publication in the Official Gazette on even date. 11 The SIR then issued a revised NOD dated September 22, 202012 which reiterated its new position that RA No. 11467 took effect on January 23, 2020, and adjusted petitioner's alleged deficiency excise tax to P1 ,035,355,418.45 (net of the payment of P168,959,037.24). In its Letter dated December 10, 2020, 13 petitioner advised the SIR that it would pay under protest the alleged deficiency excise tax on December 21, 2020 in the adjusted amount of P1 ,060,496,977.92 through TCCs.

The SIR issued a Revised NOD dated December 15, 2020 adjusting the alleged deficiency taxes to P1 ,060,496,977.92. 14 On December 21, 2020, petitioner paid the alleged deficiency excise tax, as adjusted.

On January 12, 2022, petitioner filed with the SIR a claim for refund 15 dated January 10, 2022 amounting to P1 ,060,496,977.92, representing excise taxes excessively passed on, or collected from, petitioner in respect of its beer products from January 23, 2020 to February 9, 2020.

Citing inaction of respondent on both claims, petitioner filed the present Petition for Review on February 2, 2022. 16 Summonses were served on respondent on March 4, 2022 and the Office of the Solicitor General on March 7, 2022. 17 Subsequently, respondent filed a Motion for Extension of Time to File Answer18 which 11 Exhibits"P-12" and "P-12-a", CTA Docket Vol. Ill, pp. 1095-1102. 12 Exhibit''P-13", CTADocketVol.lll, pp.1103-1104. 13 Exhibits "P-17" and "P-17-a", CTA Docket Vol. Ill, p 1154. 14 Exhibit "P-18", CTA Docket Vol. Ill, pp. 1156-1157. 15 Although Exhibit "P-19" (CTA Docket Vol. Ill, p. 1165) shows that the stamped date of receipt is January 11, 2022, petitioner alleged, and respondent did not controvert, that the actual date of receipt is January 12, 2022.

1' CTA Docket Vol. I, p.10.

17 CTA Docket Vol. II., p 762.

1s CTA Docket Vol. II., pp. 763-765~

San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 107 45 the Court granted in the Resolution 19 dated April 8, 2022, g1v1ng respondent until May 3, 2022 within which to file Answer. On April 28, 2022, within the extended period, respondent filed his Answer, 20 raising the following special and affirmative defenses: (i) the instant petition is not warranted to be given due course for lack of jurisdiction;

(ii) assuming without conceding that the Court may take cognizance of cases involving validity or constitutionality of BIR issuances, the Court should dismiss the instant petition due to petitioner's non-exhaustion of administrative remedies;

(iii) assuming without conceding that the Court has jurisdiction and/or petitioner has cause of action, petitioner is not entitled to a tax refund because there was no erroneous or illegal collection of excise taxes; and, (iv) RA No. 11647 was made effective upon its complete publication in the website of the Official Gazette and thus, RA No. 11647 became effective beginning January 23, 2020; and, (v) claims for refund are construed strictly against the taxpayer and in favor of the government Respondent's Pre-Trial Brief21 was filed on May 25, 2022 while the Pre-Trial Brief for the Petitioner22 was filed on July 4, 2022. The Pre-Trial Conference was held on July 7, 2022 23 On July 28, 2022, the parties filed their Joint Stipulation24 which was approved by the Court in the Resolution dated August 18, 2022, thereby terminating the Pre-Trial. 25 On September 12, 2022, the Pre-Trial Order26 was issued. 19 CTA Docket Vol. II, p. 768.

20 CTA Docket Vol. II, pp. 774-800.

21 CTA Docket Vol. II, pp. 803-806.

22 CTA Docket Vol. II, pp. 810-836.

23 Order dated July 7, 2022. CTA Docket Vol II, pp. 847-852. 24 CTA Docket Vol. II, pp 874-882.

2s CTA Docket Vol. II, p. 893.

"COA D~<e< VoL LL " on~o"~ San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 107 45 Upon motion27 of petitioner, the Court commissioned Mr. Jerome Antonio B. Constantino, as Independent Certified Public Accountant (ICPA), on September 1, 2022. 28 During trial, petitioner presented the testimonies of Mr. Joel L. Atienza, petitioner's Manager for Tax Services, 29 and Mr. Jerome Antonio B. Constantino, the Court-commissioned ICPA. 30 On December 12, 2022, petitioner filed its Formal Offer of Evidence 31 In the Resolution dated February 17, 2023, 32 the Court admitted all of petitioner's exhibits, except: (i) Exhibits "P-31-5001" to "P-31-5500", for the USB/flash drive submitted to the Court which purportedly contains said documents is inaccessible; and, (ii) Exhibit "P-36" for petitioner's failure to identify the same. The Court, however, in a subsequent Resolution dated October 26, 2023, 33 admitted in evidence Exhibits "P-31-5001" to "P-31-5500" upon access of the same in the replacement USB/flash drive, and Exhibit "P-36" after Mr. Constantino had identified the same in his Supplemental Affidavit. In the same Resolution, considering counsel for respondent's manifestation during the hearing on November 10, 2022 that he was waiving the right to present evidence, both parties were given a non- extendible period of thirty (30) days from notice to submit their respective memoranda.

Respondent's Memorandum34 was filed on March 13, 2023, while petitioner's Memorandum Ad Cautelam35 and Supplemental Memorandum for the Petitioner36 were filed on March 29, 2023 and November 20, 2023, respectively. Thereafter, the case was finally submitted for decision on January 4, 2024_37

ISSUES

The issues to be resolved in this case are the following: 38 27 CTA Docket Vol. II. pp. 853-855 28 CTA Docket Vol. II, pp. 899-901.

29 Exhibit"P-20", CTA Docket Vol. II, pp. 597-619. 30 Exhibit "P-21", CTA Docket Vol. II, pp. 856-862; Exhibit "P-23", CTA Docket Vol. Ill, pp. 1211- 1215; Exhibit "P-44", CTA Docket Vol. II, pp. 997-1015; Exhibit "P-46", CTA Docket Vol. Ill, pp. 1299-1304.

31 CTA Docket Vol. Ill, pp. 1031-1051.

32CTADocketVol.lll, p.1237.

San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue

1. Whether or not petitioner is entitled to an excise tax refund in the total amount of ~1 ,068, 775,829.04, representing excise taxes erroneously, excessively, illegally and/or wrongfully assessed on, and collected from, petitioner by respondent; and,

2. Whether or not the Court has jurisdiction to act on the present Petition for Review.

PARTIES' ARGUMENTS

Petitioner argues that: 39 (i) the Court has jurisdiction to act on and resolve the present Petition for Review;

(ii) it is entitled to an excise tax refund in the amount of ~8.278,851.12, representing erroneous, excessive, illegal and/or wrongful collection from, and overpayment by petitioner of excise taxes on its subject beer products for the period beginning January 23, 2020 up to February 9, 2020;

a. the excise tax of ~27.07 per liter imposed by respondent on petitioner's subject beer products, as well as RMC No. 90-2012 and RR No. 17-2012 on which said tax rate is based, are void for being directly contradictory to and violative of the express provisions of the sixth and seventh paragraphs of Section 143 of the NIRC, as amended by RA No.10351;

b. the excise tax rate of ~27.07 is void since RMC No. 90- 2012 and RR No. 17-2012, from which said tax rate of ~27.07 per liter is based, are invalid, unconstitutional and confiscatory for having been issued without prior notice to petitioner and the conduct of a hearing, in utter disregard of the due process provisions of the Administrative Code of 1987 requiring the BIR to afford affected parties the opportunity to be heard prior to the implementation of such issuances;

''Petition for Review, CTA Docket Vol. I, pp. 31-46; Memorandum Ad Cautelam, CTA Docket Vol. Ill, pp 1314-1372; Supplemental Memorandum, CTA Docket Vol. IV, pp. 1438-1456.<!1/

San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue

(iii) it is entitled to an exc1se tax refund in the amount of ~1 ,060,496,977.92, representing erroneous, excessive, illegal and/or wrongful collection from, and overpayment by petitioner of excise taxes on its subject beer products using the ~35.00 per liter tax rate under RA No. 11467 for the period beginning January 23, 2020 up to February 9, 2020;

a. the excise tax rate of ~35.00 per liter provided under RA No. 11467 should have been imposed starting from the date of effectivity of RA No. 11467, or on February 10, 2020, when RA No. 11467 was published in the Official Gazette pursuant to Article 2 of the Civil Code and the ruling in Garcillano vs. The House of Representatives Committees on Public Information, Public Order and Safety, National Defense and Security, Information and Communications Technology, and Suffrage and Electoral

Reforms40 · '

b. no less than Congress or the Legislative Department itself recognizes that the current law does not allow online publication in the Official Gazette and that online publication in the Official Gazette can be done only through an amendment of the Civil Code;

c. the Executive Department itself, through the Official Gazette website, recognizes that the online version of the Official Gazette (as seen on the website and mobile applications) provides only a copy of the issuance and does not serve as official publication for purposes of effectivity of the issuance; and,

d. since RA No. 11467 was published in the February 10, 2020 issue of the actual/physical Official Gazette (Volume 116, No. 6), the higher excise tax rate of ~35.00 should be applied beginning February 10, 2020 only, and not from January 23, 2020.

Respondent counter-argues that:41 (i) the instant petition is not warranted to be given due course for lack of jurisdiction;

San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 107 45

(ii) assuming without conceding that this Court may take cognizance of cases involving validity or constitutionality of BIR issuances, the Court should dismiss the instant petition due to petitioner's non-exhaustion of administrative remedies; (iii) assuming without conceding that this Court has jurisdiction and/or petitioner has cause of action, petitioner is not entitled to a tax refund because there was no erroneous or illegal collection of excise taxes;

(iv) RA No. 11467 was made effective upon its complete publication in the website of the Official Gazette, thus, RA No. 11467 became effective beginning January 23, 2020; and, (v) claims for refund are construed strictly against the taxpayer and in favor of the government.

THE COURT'S RULING

The Court finds the Petition for Review meritorious. The Petition for Review was timely filed;

hence, the Court has jurisdiction over the case The Court is vested with ample authority to review respondent's inaction on the refund claim pursuant to Section (7)(a)(2) of RA No. 1125, as amended by RA No. 9282,42 in relation to Section 3(a)(2), Rule 4 of the Revised Rules of the Court of Tax Appeals (RRCTA), as amended 43 42 "SEC. 7. Jurisdiction.- The Court shall exercise:

(a) Exclusive appellate jurisdiction to review by appeal, as herein provided:

XXX

(2) Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue, where the National Internal Revenue Code provides a specific period for action, in which case the inaction shall be deemed a denial;"

43 "SEC. 3. Cases within the JUrisdiction of the Court in Divisions. - The Court in Division shall exercise:

(a) Exclusive original over or appellate jurisdiction to review by appeal the following:

XXX

(2) Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes. fees or other charges. penalties in relation thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue xxx;~

San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue

Sections 204(C) and 229 of the NIRC of 1997, as amended, provide the prescriptive period for filing of administrative and judicial claims for refund or recovery of tax erroneously or illegally collected, to wit:

SEC.

204. Authority of the

Commissioner

to Compromise, Abate and Refund or Credit Taxes. - The Commissioner may-

XXX

XXX

XXX

(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.

XXX

XXX

XXX

SEC. 229. 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 a written claim therefor, refund or credit any tax, where on the face of the return upon which payment was made, such payment appears clearly to have been erroneously paid.~

San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue

Section 204 of the NIRC of 1997, as amended, applies to administrative claims for refund, while Section 229 of the same Code pertains to judicial claims for refund. 44 Based on the foregoing, within two (2) years from the date of payment of tax, the claimant must first file an administrative claim with the CIR before filing its judicial claim with the courts of law. Both claims must be filed within a two (2)-year reglementary period. For excise tax on domestic products in general, the return is filed and the excise tax is paid by the manufacturer or producer before removal of the products from the place of production. The date of payment of excise tax on domestic products depends on the date of actual removal of the taxable domestic products from the place of production45 Hence, the reckoning point for the two (2)-year period to file both administrative and judicial claims is the date of the removal of the products from the place of production. The relevant dates relative to the subject claim for refund are as follows:

DATE OF

DATE OF FILING OF

DATE OF FILING

PAYMENT

ADMINISTRATIVE

OF JUDICIAL

CLAIM

CLAIM

Claim A

January 23, 2020 to December 6, 2021 February 9, 2020 January 21, 202246

Claim B

December 21, 2020 January 12, 2022 With regard to petitioner's Claim A, counting two (2) years from January 23, 2020 to February 9, 2020, petitioner had until January 24, 202247 to February 9, 2022, to file its administrative and judicial claims. On the other hand, for its Claim B, petitioner had until December 21, 2022 to file its administrative and judicial claims. Petitioner filed its administrative claims on December 6, 2021 and January 12, 2022 for Claim A and Claim B, respectively, which dates, undeniably, fall within the two (2)-year period. " Commissioner of Internal Revenue vs. Univation Motor Philippines, Inc. (formerly Nissan Motor Philippines. Inc.}, G.R No. 231581, April10, 2019. 45 Commissioner of Internal Revenue v. San Miguel Corp., G.R. Nos. 180740 & 180910, November 11,2019 46 CTA Docket Vol. II, p 386.

47 January 23, 2022 fell on a Sunday 1

San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 107 45

On the other hand, with regard to petitioner's judicial claim for its Claim A covering the period January 23, 2020 to February 9, 2020, due to the increasing COVID-19 cases, 48 the Supreme Court (SC) extended the filing period until February 1, 2022 for pleadings and other court submissions that fell due in the month of January 2022. Thus, for Claim A, petitioner had until February 1, 2022 to February 9, 2022, at the latest, within which to file its judicial claim for refund. Notably, petitioner's judicial claim, covering both Claim A and Claim B, was filed on January 21, 2022.

In fine, petitioner timely filed its administrative and judicial claims. The Court has jurisdiction to determine the constitutionality and validity of a revenue issuance in a Petition for

Review

questioning respondent's inaction on a refund claim The SC En Bane's ruling in Banco de Oro, eta/. vs. Republic of the Philippines et al49 is unambiguous in holding that the Court of Tax Appeals (CT A) has jurisdiction to rule on the constitutionality or validity of a tax law, regulation, or administrative issuance, to wit: The Court of Tax Appeals has undoubted jurisdiction to pass upon the constitutionality or validity of a tax law or regulation when raised by the taxpayer as a defense in disputing or contesting an assessment or claiming a refund. It is only in the lawful exercise of its power to pass upon matters brought before it, as sanctioned by Section 7 of Republic Act No. 1125, as amended. This Court, however, declares that the Court of Tax Appeals may likewise take cognizance of cases directly challenging the constitutionality or validity of a tax law or regulation or administrative issuance (revenue orders, revenue memorandum circulars, rulings).

XXX

In other words, within the judicial system, the law intends the Court of Tax Appeals to have exclusive jurisdiction to resolve all tax problems. Petitions for writs of certiorari against the acts and 48 Item 4, SC Memorandum Order No. 10-2022 dated January 12, 2022.

San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue omissions of the said quasi-judicial agencies should, thus, be filed before the Court of Tax Appeals. (Boldfacing supplied) Banco De Oro emphatically highlighted the exclusive authority of the CT A to adjudicate the constitutionality or validity of tax laws, regulations or administrative issuances.

Such

jurisdiction is undoubted, whether the challenge presented is brought directly before the Court or arises as a defense in an assessment case or refund case. In this case, petitioner assails the issue of validity of RMC No. 90-2012 and RR No. 17-2012 in support of its position that it is entitled to its claim for refund. Thus, in line with the SC's pronouncement in Banco De Oro, this Court has jurisdiction to determine the validity of RMC No. 90-2012 and RR No. 17-2012.

Exhaustion

of administrative remedies is not applicable in this case RMC No. 90-2012 and RR No. 17-2012 were issued by respondent in view of his power to interpret the provisions of the NIRC and other tax laws pursuant to Section 4 of the NIRC of 1997, as amended. This authority has been characterized as a rule-making or quasi-legislative power delegated by Congress to the CIR. 50 As held by the SC in Alliance of Non-Life Insurance Workers of the Philippines, et a/. vs. Han. Leandro R. Mendoza, et a/., 51 the doctrine of exhaustion of administrative remedies does not apply when the questioned act is quasi-legislative in character, viz.: However, it is settled that the doctrine of exhaustion of administrative remedies finds no application when a questioned act was done in the exercise of quasi-legislative powers: In questioning the validity or constitutionality of a rule or regulation issued by an administrative agency, a party need not exhaust administrative remedies before going to court. This principle applies only where the act of the administrative agency concerned was performed pursuant to its quasi-judicial function, and not when the assailed act pertained to its rule-making or quasi- legislative power. x x x (Boldfacing supplied) 5° Commissioner of Internal Revenue vs. Court of Tax Appeals (Second Division) and Petron Corporation, G.R No. 207843, July 15, 2015. '' G.R. No. 206159, August 26, 2020~

San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue

Verily, petitioner need not file an appeal before the SOF seeking a review of the validity of the aforesaid issuances, as its recourse to this Court to seek judicial redress is proper. Petitioner is entitled to its excise tax refund in the full amount of F1,068, 775,829.04

Petitioner's Claim A and

Claim

B in

the amounts of ~8.278,851.12 and ~1 ,060,496,977.92, respectively, pertain to the following beer products of petitioner:

Beer Products

Packaging

San Mig Light

bottle, can, keg

Other Beer Products:

· Pale Pilsen

can

San Mig Zero

bottle

Premium All Malt

bottle, can

Super Dry

can

Red Horse

can

San Miguel Flavored Beer Apple

bottle San Mi~el Flavored Beer Lemon I bottle

I

Claim A- F8,278,851.12 For Claim A, petitioner alleges that from January 23, 2020 up to February 9, 2020, it was constrained to pay the excise taxes on the removals of its beer products at the rate of ~27.07 per liter, instead of only ~26.44 per liter.

Section 143 of the NIRC of 1997, as amended by RA No. 10351, reads:

SEC. 3. Section 143 of the National Internal Revenue Code of 1997, as amended by Republic Act No. 9334, is hereby further amended to read as follows:

SEC. 143. Fermented Liquors. - There 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 fermented liquors in accordance with the following schedule:~

San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue

Effective on January 1, 2013

(a) If the net retail price (excluding the excise tax and the value-added tax) per liter of volume capacity is Fifty pesos and sixty centavos (P50.60) or less, the tax shall be Fifteen pesos (P15.00) per liter; and

(b) If the net retail price (excluding the excise tax and the value-added tax) per liter of volume capacity is more than Fifty pesos and sixty centavos (P50.60), the tax shall be Twenty pesos (P20.00) per liter.

Effective on January 1, 2014

(a) If the net retail price (excluding the excise tax and the value-added tax) per liter of volume capacity is Fifty pesos and sixty centavos (P50.60) or less, the tax shall be Seventeen pesos (P17.00) per liter; and

(b) If the net retail price (excluding the excise tax and the value-added tax) per liter of volume capacity is more than Fifty pesos and sixty centavos (P50.60), the tax shall be Twenty-one pesos (P21.00) per liter.

Effective on January 1, 2015

(a) If the net retail price (excluding the excise tax and the value-added tax) per liter of volume capacity is Fifty pesos and sixty centavos (P50.60) or less, the tax shall be Nineteen pesos (P19.00) per liter·, and

(b) If the net retail price (excluding the excise tax and the value-added tax) per liter of volume capacity is more than Fifty pesos and sixty centavos (P50.60), the tax shall be Twenty-two pesos (P22.00) per liter.

Effective on January 1, 2016

(a) If the net retail price (excluding the excise tax and the value-added tax) per liter of volume capacity is Fifty pesos and sixty centavos (P50.60) or less, the tax shall be Twenty-one pesos (P21.00) per liter; and

(b) If the net retail price (excluding the excise tax and the value-added tax) per liter of volume capacity is more than Fifty pesos and sixty centavos (P50.60), the tax shall be Twenty-three pesos (P23.00) per liter.

Effective on January 1, 2017, the tax on all fermented liquors shall be Twenty-three pesos and fifty centavos (P23.50) per liter.

The rates of tax imposed under this Section shall be increased by four percent (4%) every year thereafter effective on January 1, 2018, through revenue regulations issued by the Secretary of Finance. However, in case of fermented liquors affected by the 'no downward reclassification' provision prescribed under this Section, the four percent (4%) increase shall apply to their respective applicable tax ratese1f1

San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue

XXX

Any downward reclassification of present categories, for tax purposes, of fermented liquors duly registered at the time of the effectivity of this Act which will reduce the tax imposed herein, or the payment thereof, shall be prohibited. The proper tax classification of fermented liquors, whether registered before or after the effectivity of this Act, shall be determined every two (2) years from the date of effectivity of this Act.

All fermented liquors existing in the market at the time of the effectivity of this Act shall be classified according to the net retail prices and the tax rates provided above based on the latest price survey of the fermented liquors conducted by the Bureau of Internal Revenue. (Boldfacing and underscoring supplied) To implement the afore-quoted provision introduced by RA No. 10351, RR No. 17-201252 and RMC No. 90-201253 were issued. Section 3 of RR No. 17-2012 states:

SEC. 3. REVISED RATES AND BASES OF THE SPECIFIC TAX.- There shall be levied, assessed and collected an excise tax on alcohol or tobacco products, in accordance with the following schedule:

DATE OF EFFECTIVITY OF TAX RATES

PRODUCT

January

January

January

January

January

1, 2013 1, 2014 1, 2015 1, 2016 1' 2017 A. ALCOHOL PRODUCTS

(1) Distilled Spirits

(a) Ad Valorem tax

Rate

2018

Onwards

52 SUBJECT: Prescribing the Implementing Guidelines on the Revised Tax Rates on Alcohol and Tobacco Products Pursuant to the Provisions of Republic Act No. 10351 and to Clarify Certain Provisions of Existing Revenue Regulations. 53 SUBJECT: Revised Tax Rates of Alcohol and Tobacco Products Under Republic Act No. 10351, 'An Act Restructuring The Excise Tax on Alcohol And Tobacco Products By Amending Sections 141, 142, 143, 144, 145, 8, 131 And 288 of Republic Act No. 8424, Otherwise Known As The National Internal Revenue Code Of 1997, as amended By Republic Act No. 9334, And For Other

Purposes'Cil

San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 107 45

Based on the net retail price per proof (excluding the excise and value- 15% 15% 20% added taxes), and

(b) Specific Tax Php20.00

Php20 00

Php20.00 Per Proof liter

(2) Wines Per liter Per liter Per liter

(a) Sparkling wines/champagnes, where the net retail price (excluding the excise and value- added taxes) per bottle of 750 ml, regardless of proof is:

(1) Five Hundred

Pesos

(P500.00) or less Php250.00 Php260 00 Php270.40

(2) More than

Five Hundred

Pesos

(P500 00)

Php700.00 Php728.00 Php757.12

(b) Still wines and carbonated wines containing fourteen percent (14%) of alcohol by volume Php30.00 Php31 20 Php32.45 or less

(c) Still wines and carbonated wines containing more than fourteen percent (14%) of 20% 20% 20% Php20.80 Php21.63

Effective

1/1/2016, the specific tax rate shall be increased by 4% every year thereafter Per liter Per liter

Effective

Php281.22 Php292.47 1/1/2014, the specific tax rate shall be increased Php787.40 Php818.90 by4% every year thereafter Php33.75 Php35.10

San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 107 45 alcohol by volume but not more than twenty-five percent (25%) of alcohol by volume Php60.00 Php62.40 Php64.90

(d) Fortified wines containing more than twenty-five (25%) percent of alcohol by volume

Taxed as

shall be taxed as

Distilled

distilled spirits

Spirits

Taxed as

Taxed as

Distilled

Distilled

Spirits

Spirits

(3)

Fermented

liquors,

Per Liter

Per Liter

Per Liter

where the net retail price (excluding excise and value-added taxes) per liter of volume capacity is:

(a) Fifty

Pesos

and

Sixty

Centavos

(P50.60) or less Php15.00 Php17.00 Php19.00

b. More than

Fifty

Pesos

and

Sixty

Centavos (P50.60) Php20.00 Php21.00 Php22.00 Fermented liquors brewed and sold at microbreweries or small establishments such as pubs and restaurants, regardless of the net retail price.

Php28 00

Php29 12

Php30.28 Php67.50

Taxed as

Distilled

Spirits

Per Liter

Php21.00 Php23.00

Php31 50

Meanwhile, Section 5 of RR No. 17-2012 provides: Php70.20

Taxed as

Distilled

Spirits

Per Liter

Effective

1/1/2018, the specific tax rate shall be increased Php23.50 by 4% every year thereafter Php23.50

Effective

111/2014, the specific tax rate

Php3276

shall be increased by 4% every year thereafter SEC. 5. DOWNWARD RECLASSIFICATION OF FERMENTED LIQUORS. - Any downward reclassification of any fermented liquor product that is duly registered with the BIR at the time of effectivity of the Act which will reduce the tax imposed herein, or the payment thereof, shall be prohibited. Starting January 1, 2014, the applicable Ia< "te sholl be;"""""' by fo"' pe<ee"t (4%)'"""'"Y: Pro>;ded~

San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 107 45 however, it shall not be lower than the rates prescribed under Section 3 of these regulations. (Boldfacing supplied) Meanwhile, Annex "A-1" of RMC No. 90-2012 prescribes an excise tax rate of P20.57 per liter- the tax rate that petitioner had been paying prior to RA No. 10351 -for petitioner's beer products effective January 1, 2013, as shown below:

Annex A-1

LIST OF BRANDS OF LOCALLY MANUFACTURED FERMENTED LIQUORS

As of December 2012

I.

L t f B d B d 2010 BIR P .

S

IS 0

ran s ase on nee urve 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

BRAND NAME/ Product

TYPE OF

Description

PACKAGING

A NRP is P50.60 per liter and below

Beer Macho

bottle

Beer Pale Pilsen

bottle

Beer Pale Pilsen

bottle

Colt-45

bottle

Colt-45

bottle

Colt-45

bottle

Gold Eagle Beer King

bottle

Lone Star

bottle

Lone Star Light

bottle

Manila Beer

bottle

Manila Beer Litro

bottle

Manila Beer Strong -

bottle

(Regional)

Manila Light

bottle

Manila Premium

bottle

Red Horse

bottle

Red Horse

bottle

Red Horse

bottle

San Miguel Pale Pilsen

bottle

NET RETAIL

Applicable

CONTENT

PRICE

Excise

PER

(Based on 201 o

Tax Rate Per

TYPE OF

BIR

Liter

PACKAGING

Price Survey) Per

(Effective

{in milliliter)

Liter

January

1, 2013) 1000 42.65 15.00 1000 36.79 15.00 320 48.84 15.00 1000 31.05 15.00 330 30 04 15.00 500 31.27 15.00 1000 28.75 15.00 330 39.02 15.00 330 31.62 15.00 330 5026 15.00 1000 40.58 15.00 330 41.77 15.00 330 50.58 15.00 330 47.18 15.00 1000 48.07 15.00 330 45.85 15.00 500 38.97 15.00 1000 32.73 15.49

San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue

19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 San Miguei Pale Pilsen bottle (embossed label marking) | Coors Light Beer bottle San Mig Light bottle The Original Coors bottle The Silver Bullet Coorslight bott!

orslig ottle B. NRP is more than P50.60 Beer Pale Pilsen bottle 750 67.74 20.00 Cerveza Negra non- 330 77.99 20.00 returnable bottle Cerveza Negra bottle 320 69.15 20.00 Colt-45 can 330 56.81 20.00 Lone Star can 330 57.49 20.00 Lone Star Light can 330 60.26 20.00 Manila Beer can 330 55.97 20.00 — ee ee | Manila Light 330 55.97 20.00 anila Lig can San Miguel Pale Pilsen (with bottle 320 77.88 20.00 paper label) Super Dry non- 330 73.87 20.00 returnable bottle | | Super Dry bottle 330 69.53 20.00 Super Dry can 330 78.33 20.00 | jp Colt Ice bottle 330 | 60.37 20.57 poo Coors Light Beer | can 330 56.03 20.57 a_i _ | Red Horse can 330 56.61 20.57 San Mig Cerveza Negra bottle 320 66.39 20.57 —— - 4 San Mig Light can 330 61.51 20.57 San Mig Strong Ice bottle | 330 62.66 20.57 | San Mig Strong Ice non- 330 65.10 20.57 returnable bottle San Mig Strong Ice can 330 70.36 | 20.57 _|_.

San Miguel Oktoberfest Beer bottle 330 74.75 20.57

EE ———

San Miguel Pale Pilsen can 330 60.05 20.57

San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 107 45

46 47 48 49 50 51

San Miguel Premium All Malt

Beer

San Miguel Premium All Malt

Beer

San Miguel Premium All Malt

Beer

Super Dry

The Original Coors

The Silver Bullet Coorslight

bottle 330 can 330

I

non- 330

I

returnable bottle can 330 can 330 can 330 91.73 20.57 100.30 20.57 104.73 20.57 69.90 20.57 54.00 20.57 57 05 20.57 II. List of Brands (not included in 2010 BIR Price Survey and introduced in the market before effectivity of RA No. 10351) Based on Latest Suggested Net Retail Price Per Sworn Statement Submitted by the Manufacturer or Importer 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16

BRAND NAME/ Product

Description

A. NRP is P50.60 and below

Lone Star

Manila Beer

Manila Beer Strong

Stag

Stag

Beer Pale Pilsen

B. NRP is more than P50.60

Carlsberg

Carlsberg Chill

Gold Eagle Beer

Lone Star Ultra

Manila Ice

Manila Ice

Carlsberg

San Mig Zero

San Miguel Flavored Beer-

Apple

TYPE OF

PACKAGING

bottle bottle bottle bottle bottle can l ___ ,_ 1 bottle bottle bottle bottle bottle

Can

Can

Bottle

Bottle

NET RETAIL

Applicable

CONTENT

PRICE

Excise

PER

{Based on Latest

Tax Rate Per

TYPE OF

Suggested Net

Liter

PACKAGING

Retail Price Per

(Effective

{in milliliter)

Sworn Statement)

January

Per Liter

1' 2013} 500 48.00 15.00 500 44.00 15.00 330 41.76 15.00 320 36.36 15.00 330 37.50 15.00 330 48.48 20.57 330 57.58 20.00 330 100.00 20.00 320 56.25 20.00 330 54.55 20.00 330 78.79 20.00 330 109.09 20.00 330 78.79 20.57 330 60.58 20.57 330 75.76 20.57

San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 107 45

CONTENT

BRAND NAME/ Product

TYPE OF

PER

Description

PACKAGING

TYPE OF

PACKAGING

{in milliliter)

17 San Miguel Flavored Beer-

Bottle

330

Lemon

18 San Miguel Magnum Beer

Bottle

330

Strong Lager

19 Stag

Can

330

20 The Original Coors

Bottle

1000 (Boldfacmg supplted)

NET RETAIL

Applicable

PRICE

Excise

(Based on Latest

Tax Rate Per

Suggested Net

Liter

Retail Price Per

(Effective

Sworn Statement)

January

Per Liter

1. 2013) 75.76 20.57 55.18 20.57 68.18 20.57 55.00 20.57 Using the excise tax rate of ~20.57 per liter as a starting rate in 2013, respondent imposed a compounding 4% increase pursuant to Section 5 of RR No. 17-2012. Hence in 2020, the excise tax rate for petitioner's beer products pursuant to RMC No. 90-2012 in relation to RR No. 17-2012 was already at ~27.07 per liter. Below is a summary comparing side by side the excise tax rates pursuant to Section 143 of the NIRC, as amended by RA No. 10351 vis-a-vis the excise tax rates under RR No. 17-2012 and RMC No. 90- 2012 for the taxable years 2013 to 2020:

I

Excise Tax Rate

Excise Tax Rate per

per Liter under liter under RR No.

Period

Section 143 of the

17-2012 and RMC

NIRC, as amended No. 90-2012 by RA No. 10351 1-- 2013 15.00/20.00 20.57 2014 17.00/21.00 21.39 2015 19.00/22.00 22.25 2016 21.00/23.00 23.14 2017 23.50 24.06 - 2018 t= 24.44 25.03 l-----¥c19 25.42 26 03 26.44 i 27.07 2020 To address the controversy surrounding Claim A, the critical issue that must be resolved is the correct excise tax rate applicable to petitioner in 2013; specifically, whether it should be ~15.00/~20.00 per liter based on Section 143 of the NIRC, as amended by Section 3 (jJ

San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 107 45

RA No. 10351, or ~20.57 per liter as prescribed under RMC No. 90- 2012.

Petitioner contends that the previous excise tax rate of ~20.57, which it had paid under protest to the BIR in 2012, was already superseded by the new rates (i.e., ~15.00/~20.00 per liter in 2013, ~17.00/~21.00 per liter in 2014, and so on) as provided under Section 143 of the NIRC of 1997, as amended by Section 3 of RA No. 10351. Conversely, in assessing petitioner deficiency excise tax based on the rate of ~27.07 for 2020, respondent effectively asserts that the excise tax rate of ~20.57 was retained and served as the initial rate for the indexation starting from 2014 until 2020, when it was ultimately adjusted to ~27.07.

Respondent anchors its position in the "no downward reclassification" provision found in Section 3 of RA No. 10351, which reads:

The rates of tax imposed under this Section shall be increased by four percent (4%) every year thereafter effective on January 1, 2018, through revenue regulations issued by the Secretary of Finance. However, in case of fermented liquors affected by the 'no downward reclassification' provision prescribed under this Section, the four percent (4%) increase shall apply to their respective applicable tax rates.

Allegedly, under the "no downward reclassification", a reclassification from high-tier to low-tier category is prohibited as it reduces the excise tax imposed consistent with the subsequent paragraph in Section 3 of RA No. 10351, viz.: Any downward reclassification of present categories, for tax purposes, of fermented liquors duly registered at the time of the effectivity of this Act which will reduce the tax imposed herein, or the payment thereof, shall be prohibited.

Aside from the prohibition of reclassification from high-tier to low- tier category, it is respondent's position that the "no downward reclassification" provision likew1se contemplates "no downgrading of pre-RA No. 10351 rates" (~20.57 in the case of petitioner) to the new rates of ~15.00 or ~20.00 per liter for 2013 per Section 143 of the NIRC, as amended by Section 3 of RA No. 10351. Consequently, according to respondent, petitioner, having paid ~20.57 per liter prior to the enactment of RA No. 10351, is required to continue paying the same rate, instead of the new rates of ~15.00 or ~20.00 per lite{jj

San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue

The Court agrees with petitioner.

The "no downgrading of pre-RA 10351 rates" rule espoused by respondent runs contrary to the clear mandate of Section 3 of RA No. 1 0351 which expressly states that:

All fermented liquors existing in the market at the time of the effectivity of this Act shall be classified according to the net retail prices and the tax rates provided above based on the latest price survey of the fermented liquors conducted by the Bureau of Internal Revenue. Otherwise stated, the "no downgrading of pre-RA 10351 rates" rule may not necessarily be construed as within the context of the "no downward reclassification" provision in Section 3 of RA No. 10351. For one, there is nothing in Section 3 of RA No. 10351 which states that rates specified therein may not be applied if it results in downward reduction of rates, i.e., from a higher pre-RA No. 10351 excise tax rate per liter, to a lower RA No. 10351 excise tax rate per liter. Even assuming that the "no downgrading of pre-RA 10351 rates" rule is construed to be within the context of the "no downward reclassification" provision, it would appear that there is an inconsistency within the law itself. On one hand, Congress intended for existing brands to maintain their pre-RA No. 10351 excise tax rates under the "no downgrading of rates" rule allegedly embedded in the "no downward reclassification" provision. On the other hand, another provision in the same Section, mandates that all fermented liquors existing in the market at the effectivity date of the law, must be classified as low-tier or high-tier categories based on the net retail prices as outlined therein.

In essence, adhering to respondent's proposition would simply give rise to conflict between two (2) provisions of Section 3 of RA No. 10351 as one stipulates, albeit impliedly, that fermented liquors already subject to higher pre-RA No. 10351 rates must retain those rates, while another expressly mandates a comprehensive classification of all existing fermented liquors based on their net retail prices and the corresponding tax rates as outlined in Section 3 of RA No. 10351. A statute must be construed as to harmonize all apparent conflicts and give effect to all its provisions whenever possible54 However, in case of irreconcilable conflict between two provisions of the same statute, the last in order of position is frequently held to

San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 107 45 prevail, unless it clearly appears that the intent of the legislature is otherwise. 55 Given the irreconcilable nature of the two provisions and the fact that the provision mandating the classification of all fermented liquors existing in the market during the effectivity of RA No. 10351 is a later provision, the latter prevails. In effect, the no downgrading rule is rendered ineffectual.

Having established that the "no downward reclassification" provision insofar as it prohibits the downgrading of previous excise tax rates paid on fermented liquors existing in the market upon the effectivity of RA No. 10351 has been rendered ineffective by the later provision, the applicable initial excise tax rate for 2013 is P15.00/P20.00, not P20.57 per liter.

In San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue, 56 which involves the same parties and issues but pertaining only to a different taxable period (i.e., January 1, 2018 to December 31, 2018), the Court's Second Division issued a Decision57 declaring that the applicable excise tax rate for 2013 is P15.00/P20.00, depending on the net retail price, to wit: Upon review, the Court finds that certain parts of Annex "A-1" of RMC No. 90-2012 imposed excise tax rates per liter (effective January 1, 2013) either by P15.49 or P20.57 regardless of whether the net retail price per liter of volume capacity of the fermented liquor is below or more than P50.60 per liter. This is contrary to the afore-quoted Section 143 of the NIRC of 1997, as amended by RA No. 10351, which imposed excise tax rates per liter at P15.00 and P20.00 only of the net retail price per liter of volume capacity of the fermented liquor is 1"50.60 or less, or more than 1"50.60 (effective January 1, 2013), respectively. (Boldfacing supplied) Accordingly, Section 5 of RR No. 17-2012 insofar as it implements the "no downgrading" rule, as well as Annex "A-1" of RMC No. 90-2012 insofar as it prescribes the initial tax rate of P20.57 per liter as basis for indexation, are deemed null and void for being contrary toRANo.10351.

In Commissioner of Internal Revenue vs. The Hon. Court of Appeals, R. O.H. Auto Products Philippines, Inc. and The Hon. Court of 55 Cuyegkeng, eta/. vs. Cruz, G.R. No. L-16263, July 26, 1960. 56 CTA Case No. 10223, July 5, 2023.

57 Penned by Honorable Associate Justice Lanee S. Cui-David, and joined by Associate Justice

Jean Marie A Bacorro-Villenao11

San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 107 45

Tax Appea/s, 58 the Supreme Court clarified that BIR issuances must not override, but must remain consistent and in harmony with, the law they seek to apply and implement, to wit: The authority of the Minister of Finance (now the Secretary of Finance), in conjunction with the Commissioner of Internal Revenue, to promulgate all needful rules and regulations for the effective enforcement of internal revenue laws cannot be controverted. Neither can it be disputed that such rules and regulations, as well as administrative opinions and rulings, ordinarily should deserve weight and respect by the courts. Much more fundamental than either of the above, however, is that all such issuances must not override, but must remain consistent and in harmony with, the law they seek to apply and implement. Administrative rules and regulations are intended to carry out, neither to supplant nor modify, the law. (Boldfacing supplied) More recently, in Department of Finance (DOF), et a/. vs. Asia United Bank, et a/., 59 the Supreme Court, in voiding Revenue Regulations No. 4-2011, held that administrative issuances, like BIR regulations, cannot simply amend the law they seek to implement, to wit:

We rule that RR 4-2011 is void. We now expound. It is settled that administrative issuances must not override, supplant, or modify the law; they must remain consistent with the law they intend to carry out. When the application of an administrative issuance modifies existing laws or exceeds the intended scope, the issuance becomes void, not only for being ultra vires, but also for being unreasonable. Surely, courts will not countenance such administrative issuances that override, instead of remaining consistent and in harmony with the law they seek to apply and implement. We underline that the power of administrative officials to promulgate rules in the implementation of a statute is necessarily limited to what is provided for in the legislative enactment. The implementing rules and regulations of a law cannot extend the law or expand its coverage, as the power to amend or repeal a statute is vested in the legislature. It bears stressing, however, that administrative bodies are allowed under their power of subordinate legislation to implement the broad policies laid down in a statute by 'filing in' the details. All that is required is that the regulation be germane to the objectives and purposes of the law; that the regulation does not contradict but conforms with the standards prescribed by law.

ss G.R. No. 108358, January 20, 1995.

San Miguel Brewery. Inc. vs. Commissioner of Internal Revenue

XXX

Indeed, administrative issuances, such as revenue regulations, cannot simply amend the law it seeks to implement. In Commissioner of Internal Revenue v.

Seagate Technology

(Philippines), We held that a mere administrative, issuance like a BIR regulation, cannot amend the law; the former cannot purport to do any more than implement the latter. To reiterate, the courts will not countenance an administrative regulation that overrides the statute it seeks to implement. (Boldfacing supplied) Following the nullification of the initial tax rate of f'l20.57 per liter as provided in Annex "A-1" of RMC No. 90-2012, petitioner's beer products are subject to the excise tax rates outlined in Section 3 of RA No. 10351. Therefore, applying the 4% indexation rate starting January 1, 2018, the correct excise tax rate for 2020 applicable to petitioner's beer products is P26.44 per liter. Recall that there is a difference of f'l0.63 between the excise tax rate of f'l27.07 per liter erroneously, illegally, excessively and/or wrongfully imposed upon petitioner by the BIR for the removal of the former's beer products from January 23, 2020 to February 9, 2020, and the correct excise tax rate of f'l26.44 per liter. The imposition of the additional f'l0.63 excise tax rate per liter totalled f'l8,278,851.12, which is broken down as follows:

VOLUME OF

TAX

APPLICAB

SHOULD BE

EXHIBIT

PLANT

PRODUCT

REMOVALS

RATE

EXCISE TAX

LET AX

EXCISE TAX

DIFFERENCE

NO.

DESCRIPTION

PER

PAID

(IN LITERS)

LITER

RATE

AMOUNT

For the period January 23, 2020 to January 31, 2020

P-29-108

STA. ROSA

SML BOTTLE

146.543 76 27.07 p 3,966,939.58 26.44 ~ 3,874,617 01 p 92,322.57

P-29-110

DAVAO

SML BOTTLE

361,848.96 27.07 9.795.251.35 26.44 9,567.286.50 227,964.85

P-29-110

DAVAO

SM APPLE

269,478.00 27 07 7,294,769.46 26.44 7.124,998.32 169,771 14

P-29-112

BACOLOD

SML BOTTLE

464,959 44 27.07 12,586.452.04 26.44 12.293,527_59 292,924.45

P-29-114

MANDAUE

SML BOTTLE

466,353.36 27.07 12,624.185_46 26.44 12,330,382.84 293,802.62

P-29-114

MANDAUE

SM APPLE

336.156.48 27 07 9,099,755.91 26.44 8,887,977.33 211,778.58

P-29-116

SAN FERNANDO

SML BOTTLE

2,272.065 84 27.07 61,504,822 29 26.44 60,073,420.81 1,431.401.48

P-29-118

POLO

SML BOTTLE

1.549,738.08 27.07 41,951.409.83 26.44 40.975,074 84 976.334.99

P-29-118

POLO

SML DRAFT 30 LITERS

9.300 00 27.07 251 .751_00 26.44 245,892 00 5.859.00

P-29-118

POLO

SML DRAFT 50 LITERS

16,200 00 27.07 438,534_00 26.44 428,328_00 10,206_00

P-29-118

POLO

SMLCAN

567,333_36 27.07 15.357,714_06 26.44 15,000.294.04 357,420.02

P-29-118

POLO

PALE PILSEN CAN

52,279.92 27.07 1.415.217.43 26.44 1 ,382.281_08 32,936_35

San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue

PREMIUM 330ML CAN . 62,388.77 SUPER DRY CAN 17,843.76 27.07 483,030.58 471,789.04 P-29-118 POLO RED HORSE CAN 201,072.96 5,443,045.03 | ae.aal 5,316,369.06 126,675.97 POLO SAN MIG BEER APPLE 972,480.96 26,325,059.59 25,712,396.58 612,663.01 P-29-118 SAN MIG BEER LEMON 174,848.16 4,651,929.69 26.44 P-29-118 POLO PREMIUM 330ML 3,397.68 27.07 91,975.20 26.44 89,834.66 2,140.54 P-29-118 SAN MIG ZERO 330 BTL 205.92 27.07 5,574.25 5,444.52 Subtotal - January 23, 2020 to January 31, 2020 7,881,411.36 P 213,349,805,52 a P 208,384.516.36; P 4,965,289.16

TAX

Vi

EXHIBIT PRODUCT OLUME OF Excise Tax | APPLICAB SHOULD BE No. DESCRIPTION REMOVALS PAID LE TAX EXCISE TAX DIFFERENCE

(IN LITERS) RATE AMOUNT

For the period February 1, 2020 to February 9, 2020 STA. ROSA a BOTTLE 27.07 19,092,250.11 26.44 P-29-111 DAVAO SML BOTTLE 32,820.48 20,676.90 SM APPLE §1.400,80 27.07 26.44 32,382.51 286 300.08 27.07 26.44 180,369.05 27.07 26.44 802,083.19 705,291.84

P-29-115 MANDAUE SML BOTTLE

P-29-115 MANDAUE

P-29-117 | SAN FERNANDO |SML BOTTLE 1,273,147.92 P-29-119 1.077,579.38 POLO BREWERY |SML DRAFT 30 LITERS 42,690.00 27.07 7,994.70 P.29-119 | POLO BREWERY {SML DRAFT 50 LITERS 9,200.00 27.07 249.044.00 26.44 P-29-119 27.07 13,396 648.48 26.44 13,084 868.33 311,780.15 | ecto [sam 15LTS KEG 27.07 11,898.00 283.50 P-29-119 PALE PILSEN CAN 112,804.56 27.07 2,982,552.57 P-29-119 PREMIUM 330ML CAN 27.07 60,459.22

P-29-119

= D

a ~ ~~ 2» > = a ad w rs 2 ~ o wo oO [o2) o ~ Ww MN ™ a aD a = o ° @ 2 2 ire) a =] I °o =) oo

P-29-119

P-29-119 SAN MIG BEER APPLE 291,012.48 27.07 7.877.707. 83 26.44 7,694.369,97 P-29-119 POLO PREMIUM 330ML 27,07 25,727.33 25,128.58 : 8, on oO oo wd a

SAN MIGUEL BEER

P-29-119 POLO APPLE 97,724.88 27.07 2,645,412.50 26.44 2,583, 845.83

SAN MIGUEL BEER

P-29-119 POLO LEMON 7,128.00 27.07 492,954 96 26.44 88,464.32 SAN MIG BEER APPLE 31,434.48 27.07 850,931.37 Subtotal - February 1, 2020 to February 9, 2020 5,259.622.76 P 142,377.971.88 P 139,064,409.92| P 3,313, 567.96 P-29-119 831.127.65 19,803.72

San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 107 45

To support the subject refund claim, petitioner adduced in evidence the following pertinent documents, which were all examined and verified by the Court-commissioned ICPA:

Document

Exhibit No.

Excise Tax Returns (ETR) and eFPS

"P-25-1" to "P-25-521"

Filing Reference Numbers

Official Register Books (ORB)

"P-29"; "P-29-1"; "P-29-2"; "P-29-3"; "P-29-4"; "P- 29-5"; "P-29-6"; "P-29-7"; "P-29-8"; "P-29-9"; "P-29- 1 0"; "P-29-11 "; "P-29-12"; and, "P-29-13"

Movement Reports with Allocated

"P-28-1 ", "P-28-1"

Deposits

eFPS Payment Details - BPI

"P-26" to "P-26-117"

eFPS Payment Details - Unionbank

"P-27" to "P-27 -113"

Scrutiny of petitioner's ETRs, with supporting eFPS filing reference numbers60 and eFPS Payment Details, 61 shows that petitioner paid advance excise taxes from January 23, 2020 to February 9, 2020 in the aggregate amount of P2,842,568,000.00, broken down as follows:

Exhibit Nos.

Plant

Amount of Excise Tax

Deposit

For the period January 23, 2020 to January 31, 2020 "P-27", ''P-27-1", "P-27-2", "P-27-3", "P-27-4", "P-27-5", "P-27-6" Sta. Rosa

I"

279,773,000.00 "P-27 -7", "P-27 -8", "P-27 -9", "P-27- 10", "P-27-11", "P-27-12", "P-27-13"

Davao

215,803,000.00 "P-27-14", "P-27-15", "P-27-16", "P- 27-17", "P-27-18", "P-27-19", "P-27- 20"

Bacolod

103,716,000.00 "P-27-21", "P-27-22", "P-27-23", "P- 27-24", "P-27-25", "P-27-26", "P-27- 27"

Mandaue

387,473,000.00 "P-27-28", "P-27-29", "P-27-30", "P- 27-31", "P-27-32", "P-27-33", "P-27- 34"

San Fernando

580,130,000.00

San Miguel Brewery, Inc. vs. Commissioner of internal Revenue

“P-27-35", “P-27-36”, “P-27-37”, “P- 27-38", “P-27-39”, “P-27-40”, “P-27- 41” 293,842 000.00 Subtotal - January 23, 2020 to January 31, 2020 P 4,860, 737,000.00

Amount of Excise Tax

Deposit

For the period February 1, 2020 to February 9, 2020 “P-26”, “P-26-1”, “P-26-2”, “P-26-3”, “P-26-4” Sta. Rosa P 126,091,000.00 “P-26-5", “P-26-6", “P-26-7”, “P-26- 8", “P-26-9” Davao 98, 822,000.00 “P-26-20”, “P-26-21”, “P-26-22”, “P- 26-23”, “P-26-24” San Fernando 340, 881,000.00 “P-26-25", “P-26-26", “P-26-27”, “P- 26-28”, “P-26-29” 183,291,000.00 P 981,831,000.00 Subtotal - February 01, 2020 to February 9, 2020 Total Advance Excise Tax Deposits Pp 2. 842.568,000.00 For January 23, 2020 To February 9, 2020 , , , ;

In its January and February 2020 Monthly Movement Report with Allocated Deposit®* as cross-referred to its ORB and ETR, petitioner had excise taxes due amounting to P2,810,518,947.08 on the total removals of all its beer products from the following plants for the period January 23, 2020 to February 9, 2020, computed as follows:

Exhibit No.

For the period January 23, 2020 to January 31, 2020 62 Exhibit Nos. “P-28" to “P-28-1", “of “P-26-10", “P-26-11", “P-26-12”, “P- 26-13”, “P-26-14” “P-26-15", “P-26-16", “P-26-17", “P- 26-18", “P-26-19”

Amount of

Removals

P 255,913,282.81

San Miguel Brewery, inc. vs. Commissioner of Internal Revenue

"P-25-5", "P-25-7", "P-25-9", "P-25-11",

"P-25-13"

"P-29-2"

"P-25-25",

Davao

"P-25-27", "P-25-29", "P-25-31 ", "P-25-33", "P-25-35",

"P-25-37"

"P-29-4"

"P-25-49",

Bacolod

"P-25-51 ", "P-25-53", "P-25-55", "P-25-57", "P-25-59",

"P-25-61"

"P-29-6"

"P-25-73",

Mandaue

"P-25-75", "P-25-77", "P-25-79", "P-25-81 ",

"P-25-83"

"P-25-85"

"P-29-8"

"P-25-97",

San Fernando

"P-25-99", "P-25-1 01 ", "P-25-1 03", "P-25-1 05", "P-25-1 07",

"P-25-1 09"

"P-29-10"

"P-25-121",

Polo

"P-25-123", "P-25-125", "P-25-127", "P-25-129", "P-25-131",

"P-25-133"

Subtotal- January 23, 2020 to January 31, 2020 Exhibit No.

Plant

ORB

ETR

For the period February 1, 2020 to February 9, 2020

"P-29-1"

"P-25-14", Sta. Rosa "P-25-16", "P-25-18", "P-25-20", 198,055,796.00 88,221,238.41 364,860,687.58 510,695,060.96 276,589,023.51 1"1, 694,335,089.27

Amount of

Removals

p 150,329,188.92

San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue

“P-25-22", “P-25- 163° *P-25-38", Davao a "P-25-40”, “P.25-42", “P-25-44”, “P.25-46", - _ _ “P-25-164" P1,116,183,851.81 P2,810,518,941.08 “P- 25-62”, P-25-64", “P-25-66", “P-25-68", “P-25-70", “P-25-165" “P-25-86", “P-25-88", “P-25-90", “P-25-92", “P-25-94", “P-25-166", “P-25-110", “P-25-112", “P-25-114", “P-25-116", “P-25-118", “P-25-167" “P-25-134", “P-25-136", "P-25-138", “P-25-140", “P-25-142", “P-25-168" Subtotal - Set -February 1 202010 Febery 9 2020 | 1, 2020 to February 9, 2020 TOTAL “eee OF BEER PRODUCTS FROM JANUARY 23, 2020 TO FEBRUARY 9, 2020 Petitioner's total advance excise tax deposits for the period January 23, 2020 to February 9, 2020 in the amount of P2 842,568,000.00 were sufficient to cover the total excise tax due amounting to P2,810,518,941.08 on the removal of all its beer products from the above listed six plants for the same period, as shown below:

of

San Miguel Brewery, inc. vs. Commissioner of Internal Revenue

Beginning . Less: Removals Unused/Excess

Available Excise Ada: Advance Advance Tax

Tax Deposit, Payments Not Rel ti Deposit, January January 23, 2020 Related to Claim Ot ame Total 31, 2020 As of the Period from January 23, 2020 to January 31, 2020 “P-29" |P —-7,130,840.37}P 279,773.000.00)P 3.966,939.58|P 251,946,343.23|]P 255,913,282.81] P 30,990,557.56 Sta.

Davao

Mandaue

ye) fo) “ @

San

Fernando

Bacolod f “P-29- 1,507,297.20 12,586,452.04 88,221 ,238.41 TOTAL (January P65,482,005.61|P 1.860,737,000.00)P 213,349,805.52|P 1,480,985,283.75|P 1,694,335,089.27|P 231,883,916.34 23-31, 2020) As of the Period from February 01, 2020 to February 3, 2020 = oOo

Less: Removals

Unused/Excess

Beginning Ae mavance Advance Tax Available Excise xcise lax . Not Related to Deposit, Tax Deposit, Payments Related to Claim Claim Total February 9, 2020 January 23, 2020 Sta. “P-29- |P 30,990 557.56 | PF 126,091,000.00}] PF 19,092,250.11] P 131,236,938.81} P 150,329.188.92] P 6,752,368.64

Rosa 1"

21.438,767.28 98 822,000.00 2,279 870.05 411,611,482.88 113,891,352.93 6,369 414.35 3" 17,002,058.79 §0.837,000.00 11,884,524.78 53,279,700.81 65,164,225.59 2,674,.833.20 = 45,831 329.32 181,909,000.00] —_—7,751,643.93 203,820,196.02 211,571,839.95| 16,168,489.37 as San “P-29- 77 341,866.15 340,881 ,000.00 34,464,114.19 340,096,.810.40 374,560,924.59 43,661 ,941.56 Fernando g” Poe | “P-29- 39,279,337.24 483,291,000.00 66,905,568.82 133,760,751.01 200,666,319.83 21,904,017.41 11" TOTAL (February | P 231,883,916.34|P 981,837.000.00|P 142,377,971.88| P 973,805,879.93| PF 1,176,183,851.87| P 97,537,064.53 01-9. 2020) To recapitulate, for the period from January 23, 2020 to February 9, 2020, petitioner had total advance excise tax payments of P2,908,050,005.61 (sum of the beginning balance as of January 23, 2020 amounting to P65,482,005.61 and additional payments during the period amounting to ®2,842,568,000.00). During the same period, petitioner had total removals of ®2,810,518,941.08, of which P355,727,777.40 relates to petitioner's claim. Deducting the total removals of ®2,810,518,941.08 from the advance deposits of P2,908,050,005.61, petitioner had unused or excess advance tax deposit in the amount of P97,531 ee San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue As shown above, petitioner paid ®355,727,777.38 for the subject removals based on the tax rate of P27.07. However, based on the applicable tax rate of P26.44, the amount due should have been P347 448,926.26 only. Consequently, this discrepancy resulted in an overpayment of excise tax in the amount of P8,278,851.12.

In fine, petitioner has sufficiently proven that it is entitled to the refund of its Claim A representing overpayment of the excise taxes due on its removals of various beer products from January 23, 2020 to February 9, 2020 in the amount of P8,278 851.12.

Claim B - P1,060,496,977.92 Petitioner's Claim B represents the excise tax deficiency assessed by the BIR pursuant to the Revised NOD dated December 15, 2020, and paid by petitioner on December 21, 2020 using TCCs,® viz.:

N f P50.60 tron NRP of P50.60 TOTAL (in LITER) SPECIFIC TAX at NRP of MORE SPECIFIC TAX at | Excise Tax paid | SPECIFIC TAX at ) Basic Excise Tax Plant old rate (in and MORE THAN P26.44/liter {in ; THAN P50.60 ofd | P27.07/liter {in per EFPS P35.00/liter NEW

Deficiency (in

' old rate {in liter} _ PHP} rate (in titer) PHP) RATE {in PHP) PHP) "al io) (CPI) 1 tay = topfP 26.44) fel (i=fexP27 07) | aisle — | Unp=dielrtepxP35) Inbal 1,404.992.16 38,033, 137.77 668.371.727.37 883, 586,625.60 215,214.898.23 4.056, 140.88 709,799,733 62| 1,033.497,537.00} 1.364.717,644 80 331,274, 107.80 159,662,238.09 924,992.64 25,039, 550.76 184,701.788.85 243, 727,932.00 59,026, 143,15 Sta, Rosa 16,850.586.00 319,120.56 17,169, 706.56 483,967,041.45 934 170.24 25, 206,778.40 479,173,819.84 633,530,688. 00 154,956,868. 76 Tagoloan 6.707 916.00 | 489,240.00 7.197, 156.00 190, 292,804.64 2.269. 450.33 TOTAL 104,875,255.28 40,818,541.32 115,693,796.60| 3,058,943,982,10 The total amount due, inclusive of interests, is computed as Polo 10,339.814.60 3,278,782.44 15,678,596. 44 360,075,689.87 Mandaue 22.403,412.00 San Fernando | 32,435.382.00 2,560,238 40 Davao 12,.220.278.00 673,436.64 72,893,714.64 630, 338,589.60 923,697,803.38 340.909.8715 08 Bacolod 3.917,867.28 2.120.795.28 6,036, 662.56 192,561,954.97 254,834,944.80 62,272 389.83 15,937,828.40 431,437,014.79 3,490,380,996.89 4,607,106,875.00 1,116,725,878.71 follows:

| Basic Excise Tax Deficiency P= 1,116,725,878.11 Less: Excise Tax Payment (due from 02/10/2020 to 02/12/2020) 168,959,037.24 Balance 947, 766,840.87 | Add: Interest (computed from | 01/23/2020 to 09/04/2020) 79,140,464.93 53 Petitioner’s computation had a negligible difference of P.02.

San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue

Add: Interest (computed from 09/05/2020 to 12/21/2020)

Total Amount Still Due

p Section 15 of RA No. 11467 provides:

33,589,672.12 1,060,496,977.92 Section 15. Effectivity.- This Act shall take effect on January 1, 2020 after its complete publication either in the Official Gazette or in newspaper of general circulation. (Boldfacing supplied) Notably, the effectivity clause states that RA No. 11467 "shall take effect on January 1, 2020". Considering that the law was approved by President Rodrigo R. Duterte only on January 22, 2020, and the publication thereof at a much later date, it effectively calls for retroactive application.

The general rule is that retrospective laws are unconstitutional if they disturb or destroy existing or vested rights, as where they disturb or destroy existing or vested rights embodied in judgments or judicial decisions, or create new obligations with respect to past transactions, as by creating a substantive right, or a fundamental cause of action where none existed before and making such retroactive, or by arbitrarily recreating a right or liability already extinguished by operating of lawB6 In this case, applying RA No. 11467 retroactively to transactions predating its publication imposes new obligations in the form of additional tax liabilities. Undoubtedly, this retroactive imposition encroaches upon vested property rights, including the right to enter into transactions that are governed by tax laws in force, and not by tax rates imposed by laws inexistent, at the time. Even the Department of Finance took the position that January 1, 2020 is not the effectivity date of RA No. 11467. In a Memorandum dated January 29, 202067 from Undersecretary Antonette C. Tionko, Revenue Operations Group of the Department of Finance, for SOF Carlos G. Dominguez. The Memorandum states: RA No. 11467 is a tax measure that imposes higher tax rates on certain products. As such, the retroactive application of RA No. 11467 to 1 January 2020 cannot be applied since it will be unjust against the affected taxpayer whose liabilities and responsibilities are increased. Taxpayers relied in good faith and paid the correct taxes at the 6616 C.J.S. 99-102.

67 The Memorandum was attached to RMC No. 65-2020 dated June 22, 2020(1/

San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue time when the law is yet to be published should not be required to pay additional taxes. (Boldfacing supplied) Clearly, RA No. 11467 took effect not on January 1, 2020, but upon publication.

The issue now lies on the date of publication of RA No. 11467. As mentioned, petitioner claims that RA No. 11467 took effect on February 10, 2020 citing a Certification dated July 27, 2020 issued by the Malacanang Records Office68 which states that said Republic Act was published in the February 10, 2020 issue of the Official Gazette (Volume 116, No. 6). Thus, the increased excise tax rate of ~35.00 per liter could be imposed only starting February 10, 2020. On the other hand, respondent insists that RA No. 11467 took effect on January 23, 2020 based on RMC No. 113-2020 which published the full text of the Letter dated August 18, 2020 from Undersecretary Tionko, clarifying that RA No. 11467 was published in the Official Gazette on January 23, 2020 through its website. Thus, petitioner should pay the increased excise tax rate beginning January 23, 2020.

Publication is a necessary component of procedural due process to give as wide publicity as possible so that all persons having an interest in the proceedings may be notified thereof. 69 The requirement of publication is intended to satisfy the basic requirements of due process. It is imperative for it will be the height of injustice to punish or otherwise burden a citizen for the transgressions of a law or rule of which he had no notice whatsoever70 In Garcillano, the SC clarified that pursuant to Taiiada vs. Tuvera, 71 publication is restricted to the Official Gazette and newspapers of general circulation, and other mediums, such as the internet, do not satisfy this requirement, to wit: Respondents justify their non-observance of the constitutionally mandated publication by arguing that the rules have never been 68 Exhibit "P-10", CTA Docket Vol. Ill, p. 1088. 69 National Association of Electricity Consumers for Reforms (NASECORE) vs. Energy Regulatory Commission (ERG}, G.R. No. 163935, August 16, 2006. 70 Garcillano vs House of Representatives Committees on Public Information, Public Order and Safety, National Defense and Security, Information and Communication Technology, and Suffrage and Electoral Reforms, G.R. No. 170338, December 23, 2008.

San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue amended since 1995 and, despite that, they are published in booklet form available to anyone for free, and accessible to the public at the Senate's internet web page.

The Court does not agree. The absence of any amendment to the rules cannot justify the Senate's defiance of the clear and unambiguous language of Section 21, Article VI of the Constitution. The organic law instructs, without more, that the Senate or its committees may conduct inquiries in aid of legislation only in accordance with duly published rules of procedure, and does not make any distinction whether or not these rules have undergone amendments or revision. The constitutional mandate to publish the said rules prevails over any custom, practice or tradition followed by the Senate. Justice Carpio's response to the same argument raised by the respondents is illuminating:

The publication of the Rules of Procedure in the website of the Senate, or in pamphlet form available at the Senate, is not sufficient under the Taiiada vs. Tuvera ruling which requires publication either in the Official Gazette or in a newspaper of general circulation. The Rules of Procedure even provide that the rules 'shall take effect seven (7) days after publication in two (2) newspapers of general circulation', precluding any other form of publication. Publication in accordance with the due process requirement because the Rules of Procedure put a person's liberty at risk. A person who violates the Rules of Procedure could be arrested and detained by the Senate. (Boldfacing supplied) Indeed, taxpayers who acted in good faith and paid the appropriate taxes prevailing before an amendatory law was published should not be compelled to pay additional taxes. Pursuant to Garcillano, publication can only be made in print through the Official Gazette or in a newspaper of general circulation. Thus, prior to the publication of RA No. 11467 in the printed version of the Official Gazette on February 10, 2020, petitioner, who relied in good faith and paid the then prevailing excise tax rates cannot be compelled to pay the additional excise tax levied under the amendatory law. For declaring a contradictory effectivity date of RA No. 11467, RMC No. 65-2020 which initially declared that RA No. 11467 took effect on January 27, 2020, and RMC No. 113-2020 which finally clarified that RA No. 11467 took effect on January 23, 2020 instead, are deemed null and void(]'{

San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 107 45

Relatedly, the Court takes judicial notice of pending bills before the House of Representatives (i.e., House Bill Nos. 200, 72 4494, 73 and 622674) and the Senate (i.e., Senate Bill No. 164575), all seeking to amend both Article 2 of the Civil Code76 and Section 18 of Executive Order No. 29277 to include online publication in either the Official Gazette or newspapers of general circulation as a mode of publication of laws.

The legislature is presumed to have known existing laws on the subject and not to have enacted conflicting statutesl8 By extension, legislators are presumed to be knowledgeable about existing laws and to refrain from proposing bills that unnecessarily duplicate laws already in force. Indeed, if it were the case that the publication of laws, rules and regulations through the online version of the Official Gazette was already contemplated in and covered by the Civil Code and the Administrative Code, then there would have been no need for our legislators to author bills seeking to amend pertinent provisions of law relative to publication of laws.

In accordance with Garcillano, and as supported by the fact that Congress has yet to pass a law amending the modes of publication of laws to include online publication, RA No. 11467 is deemed to have taken effect only upon its publication in print in the Official Gazette, specifically on February 10, 2020, as certified by the Malacanang Records Office. Accordingly, the increased excise tax rate of ~35.00 per liter may only be imposed beginning February 10, 2020. The premature imposition of the increased excise tax rate for the period from January 23, 2020 to February 9, 2020 on petitioner's beer products resulted to an erroneous, excessive, illegal and/or wrongful "Full Title, As Filed AN ACT PROVIDING FOR THE PUBLICATION OF LAWS IN THE PRINT OR ONLINE VERSION OF THE OFFICIAL GAZETTE AND OF A NEWSPAPER OF GENERAL CIRCULATION; CTA Docket Vol. IV, pp 1794-1798. 73 Full Title, As Filed AN ACT PROVIDING FOR THE PUBLICATION OF LAWS IN THE PRINT OR ONLINE VERSION OF THE OFFICIAL GAZETTE AND OF A NEWSPAPER OF GENERAL CIRCULATION; CTA Docket Vol. IV, pp. 1799-1802. 74 Full Title, As Filed: AN ACT PROVIDING FOR THE PUBLICATION OF LAWS IN THE PRINT OR ONLINE VERSION OF THE OFFICIAL GAZETTE AND OF A NEWSPAPER OF GENERAL CIRCULATION; CTA Docket Vol. IV, pp. 1803-1807. 75 Full Title, As Filed AN ACT PROVIDING FOR THE PUBLICATION OF LAWS IN THE PRINT OR ONLINE VERSION OF THE OFFICIAL GAZETTE AND OF A NEWSPAPER OF GENERAL CIRCULATION; CTA Docket Vol. IV, pp. 1808-1812. 76 ARTICLE 2. Laws shall take effect after fifteen days following the completion of their publication either in the Official Gazette or in a newspaper of general circulation in the Philippines, unless it is otherwise provided.

77 SECTION 18. When Laws Take Effect. -Laws shall take effect after fifteen (15) days following the completion of their publication in the Official Gazette or in a newspaper of general circulation, unless It is otherwise provided.

78 Remman Enterprises. Inc. vs. Professional Regulatory Board of Real Estate Service, G.R. No. 197676, February 4, 2014, citing Gov~j)nt Service Insurance System vs. City Assessor of Iloilo City, G.R. No. 147192, June 27, 2006lf'/

San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue payment of ~1 ,060,496,977.92 by petitioner, which it may claim as refund.

To prove that petitioner paid the afore-stated basic deficiency excise tax of ~1 ,060,496,977.92 it presented its Letter dated January 4, 2021 sent to the BIR regarding such payment with attached BIR Payment Form (BIR Form No. 0605), 79 eFPS Filing Reference and Payment Confirmation, 80 and Tax Debit Memos 81 These documents sufficiently prove petitioner's payment of the ~1 ,060,496,977.92 it seeks to refund.

In sum, petitioner is entitled to the full amount of its Claim A and Claim 8 in the total amount of P1 ,068,775,829.04 for the period from January 23, 2020 to February 9, 2020.

WHEREFORE, the

Petition

for

Review

IS

GRANTED.

Accordingly:

(i) Section 5 of Revenue Regulations No. 17-2012 dated December 21, 2012 insofar as it implements the "no downgrading" rule embedded in the "no downward reclassification" provision is deemed null and void; (ii) Annex "A-1" of Revenue Memorandum Circular No. 90- 2012 dated December 27, 2012 insofar as it prescribes the excise tax rate of ~20.57 is deemed null and void; (iii) Revenue Memorandum Circular No. 65-2020 dated June 22, 2020 and Revenue Memorandum Circular No. 113- 2020 dated October 14, 2020 insofar as they provide an erroneous effectivity date of Republic Act No. 11467 are deemed null and void;

(iv) The excise tax rate of ~27.07 per liter imposed during the period from January 23, 2020 to February 9, 2020 pursuant to Revenue Regulations No. 17-2012 in relation to Revenue Memorandum Circular No. 90-2012 is void; and, (v) Respondent Commissioner of Internal Revenue is ordered to refund or issue a tax credit certificate in favor of petitioner San Miguel Brewery, Inc. in the amount of

San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue

~1 ,068,775,829.04 representing the excise taxes erroneously, excessively, illegally and/or wrongfully collected from petitioner for the period from January 23, 2020 to February 9, 2020.

Presiding Justice

WE CONCUR:

JEAN

LAN~1!~D

Associate Justice

CERTIFICATION

Pursuant to Article VIII, Section 13 of the Constitution, 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.

Presiding Justice