Corporate News

By Kristine Joy V. Patag,

Tax court orders P761-million refund to San Miguel Brewery

Posted on June 19, 2017

THE Court of Tax Appeals (CTA) has ordered the Bureau of Internal Revenue (BIR) to issue a tax refund certificate of P761 million to San Miguel Brewery, Inc. for its San Mig Light brand.

Acting on a petition for review filed by the unit of San Miguel Corp., the Second Division of the CTA has ordered the BIR “to refund or to issue a tax credit certificate in favor of petitioner (San Miguel Brewery) the amount of P761,067,629.80” for the 2012 tax year.

The case stemmed from San Miguel Brewery’s request to be given authority by the BIR excise tax services to register San Mig Light as a new brand and thus be taxed lower than the variants of existing products. The request was granted by BIR’s Assistant Commissioner Leonardo B. Albar.

However, the CTA recalled that San Mig Brewery “was obliged to pay excise taxes on its removals of ‘San Mig Light’ at the increased tax rate of P20.57 per liter.”

The petitioner claimed that it should have paid only P15.49 per liter. It also claimed that “there was an erroneous, excessive and/or illegal assessment and collection in the amount of P5.08 per liter amounting to P761,067,629.80,” prompting the brewery to file its claim for refund, and later raising it to the tax court for a petition for review.

The BIR, for its part, argued that San Mig Light is a variant of San Mig Beer, and that the petitioner “is not entitled to a tax refund because there was no erroneous or illegal collection of excise taxes.”

Ruling on the merits of the case, the tax court said: “The issue as to whether ‘San Mig Light’ is a variant of petitioner’s existing brand or a new brand is not a novel issue. In several decisions issued by the CTA En Banc, it has been consistently ruled that ‘San Mig Light’ is a new brand and not a variant, thus, subject to the excise tax rate of P15.49 per liter instead of the P20.57 per liter imposed by respondent,” the CTA said.

“Consequently, there was an erroneous, excessive and/or illegal assessment and collection in the amount of P5.08 per liter removal of petitioner’s ‘San Mig Light,’” the decision reads.

“In sum, petitioner has sufficiently proven that it had overpaid the excise taxes due on its removals of ‘San Mig Light’ for the period of Jan. 1, 2012 to Dec. 31, 2012 in the amount of P761,067,629.80,” the tax court said.

The 33-page decision dated June 9, 2017 was penned by CTA Second Division Chairperson Associate Justice Caesar A. Casanova. Concurring are Associate Justices Juanito C. Castañeda, Jr. and Catherine T. Manahan.