The Court of Tax Appeals has affirmed two earlier rulings ordering the government to refund San Miguel Brewery Inc. P740.29 million in taxes it paid in 2011 for its San Mig Light product.
In a 35-page decision dated Sept. 28, the full court voted 7-1 to affirm “in toto (as a whole)” the Dec. 23, 2014, and March 26, 2015, rulings by the tax court’s Second Division.
The court denied the commissioner of internal revenue’s petition challenging the earlier rulings, which found that San Mig Light was a separate beer “brand” that should have been taxed lower than “variants” of San Miguel’s premium brand.
Thus San Mig Light should be taxed “according to its current net retail price,” which would effectively reduce its excise tax to P15.49 per liter from P20.57 per liter.
The Bureau of Internal Revenue had classified San Mig Light as a “variant” of San Miguel’s Pale Pilsen brand, taxing it “under the highest classification of any variant of that brand,” under Republic Act No. 8424.
The tax court, however, affirmed the earlier rulings that San Mig Light was introduced in 1999 as a “new brand” since the Pale Pilsen brand—a beer with more calories but with the same 5 percent alcoholic content
—did not carry the name “San Miguel” or “San Mig.”
The ruling said that reclassifying San Mig Light as a “variant” through a BIR order was prohibited under the National Internal Revenue Code. The reclassification of liquor brands introduced between 1997 and 2003 must be done through an act of Congress, the court said.