Tax court orders P761-M refund to San Miguel unit

MANILA, Philippines - The Court of Tax Appeals (CTA) has ordered the Bureau of Internal Revenue (BIR) to refund or issue a tax credit certificate worth P761.063 million to San Miguel Brewery Inc. (SMB) for excessive taxes collected from the company in 2012 for its light beer product.

In a 33-page decision promulgated on June 9, the tax court’s Second Division sided with SMB’s claim that the BIR erroneously levied higher excise taxes for its San Mig Light brand from Jan. 1 to Dec. 31, 2012.

The court concurred with SMB’s argument in its petition that the BIR “erroneously” assessed and collected excise tax of P20.57 per liter for the San Mig Light after it classified the product as a “variant” of its older brand San Miguel Pale Pilsen.

SMB, a unit of San Miguel Corp., said the tax for  San Mig Light should have been lower at P15.49 per liter as it is not a variant but a “new brand” with different ingredients and lower calorie content.

“It has been consistently ruled that ‘San Mig Light’ is a new brand and not a variant... 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 penned by Associate Justice Caesar Casanova said.

Associate Justices Juanito Castañeda Jr. and Catherine Manahan concurred with the decision.

Based on court records, SMB filed its claim before the BIR in August 2013 but no action was supposedly taken by the agency, prompting the company to file its petition for review before the CTA on Dec. 19, 2013.

In 2012, SMB brewed a total of 149.82 million liters from its five plants nationwide for its San Mig Light product. 

In November last year, the CTA en banc affirmed the Second Division’s November 2014 ruling ordering the BIR to refund SMB with P934.12 million for taxes on San Mig Light collected from August 2007 to December 2008.

The CTA en banc cited the BIR’s October 1999 decision granting San Mig Light’s tax registration as a “new brand.”

The tax court pointed out that re-classifying San Mig Light as a “variant” would violate Republic Act 9334 or the Revised Sin Tax Law, which prohibits the BIR from revising the classification alcohol and tobacco brands duly registered from 1997 to 2003.