Facts:

• The case involves the Commissioner of Internal Revenue (CIR) as the petitioner and San Miguel Corporation as the respondent.
• The dispute centers on excise taxes for fermented liquor, specifically Red Horse beer produced by San Miguel Corporation.
• Republic Act No. 8424, the Tax Reform Act of 1997, took effect on January 1, 1998, establishing excise tax rates for various fermented liquors.
• The law mandated that new variants introduced after its effectivity would be taxed under the highest classification of existing variants of that brand.
• On December 16, 1999, Revenue Regulations No. 17-99 increased tax rates on fermented liquor by 12%, effective January 1, 2000.
• The regulations stated that the new specific tax rate for existing brands should not be lower than the excise tax paid prior to January 1, 2000.
• From June 1, 2004, to December 31, 2004, San Miguel Corporation paid approximately P2.29 billion in excise taxes based on a rate of P7.07 per liter.
• San Miguel later argued that the applicable tax rate should have been P6.89 per liter, leading to a claim for a refund of the excess amount.
• On May 22, 2006, San Miguel filed a claim for a refund of P60.78 million, later reduced to P58.21 million due to prescription.
• The CIR did not act on this claim, prompting San Miguel to petition the Court of Tax Appeals (CTA).
• The CTA ruled in favor of San Miguel, stating that the last paragraph of Revenue Regulations No. 17-99 contradicted Section 143 of the Tax Reform Act of 1997.
• The CTA En Banc affirmed this decision, leading the CIR to file a petition for review on certiorari.

Issue:

• (Unlock)

Ruling:

• The Supreme Court denied the petition for review on certiorari, affirming the decision of the Court of Tax Appeals.
• The Court held that the last paragraph of Section 1 of Revenue Regulations No. 17-99 was a...(Unlock)

Ratio:

• The Supreme Court noted that Section 143 of the Tax Reform Act of 1997 clearly delineates two periods for excise tax rates: a three-year transition period and a subsequent period.
• During the transition period, the excise tax for any brand of fermented liquor should not be lower than the tax due on October 1, 1996.
• Aft...continue reading