G.R. No. 257697 - San Miguel Corporation vs. Commissioner of Internal Revenue

July 19, 2011 – The Supreme Court, in Commissioner of Internal Revenue v. Filinvest Development Corporation (669 Phil. 323), held that instructional letters and journal and cash vouchers evidencing advances by an entity to its affiliates constitute “loan agreements” subject to Documentary Stamp Tax (DST) under Section 179 (formerly Section 180) of the National Internal Revenue Code (NIRC).
October 6, 2011 – Pursuant to Filinvest, the Bureau of Internal Revenue (BIR) issued Revenue Memorandum Circular No. 48-2011 directing all revenue officers to assess deficiency DST, if warranted, on similar intercompany advance transactions evidenced by vouchers or memos.

May 14, 2014 – San Miguel Corporation (SMC) received a Preliminary Assessment Notice (PAN) for taxable year 2009, finding P3,310,612,351.45 in aggregate tax deficiencies, including a DST deficiency of P14,507,465.00 based on P2,901,493,003.15 in inter-affiliate advances.
May 29, 2014 – SMC filed its Reply to the PAN, asserting that (a) its advances were not loans; and (b) applying Filinvest retroactively to 2009 transactions prejudiced taxpayers.
June 24, 2014 – SMC paid P30,424,259.59 under protest and, upon BIR’s failure to act on its refund claim, filed a Petition for Review with the Court of Tax Appeals (CTA) Division on June 22, 2016.

May 3, 2019 – The CTA Division partially granted SMC’s refund claim, ordering the return of P15,916,794.59 (interest and compromise penalty) on grounds of SMC’s good-faith reliance on prior BIR interpretations; but denied the P14,507,465.00 DST refund, upholding Filinvest’s applicability.
Motions for partial reconsideration by both parties were denied, leading to separate petitions to the CTA En Banc (CTA-EB Nos. 2167 and 2169).

Filinvest’s interpretation of Section 179 of the NIRC applies retroactively as an integral part of the law since December 23, 1993.
SMC was entitled to refund interest, surcharge, and compromise penalty for having acted in good faith.

Both the Commissioner of Internal Revenue (CIR) and SMC filed Petitions for Review on Certiorari with the Supreme Court, presenting the question of Filinvest’s retroactive application as the principal issue.

Whether the CTA En Banc erred in applying the doctrine of Filinvest retroactively to impose DST on SMC’s inter-affiliate advances for taxable year 2009.
Whether SMC was entitled to a refund of interest, surcharge, and compromise penalty by virtue of its alleged good-faith reliance on prior BIR issuances not directly issued in its favor.