The Court of Tax Appeals (CTA) has ordered the Bureau of Internal Revenue (BIR) to refund San Miguel Holdings Corp. (SMHC) the P50.62-million it paid for surcharges on its documentary stamp tax liabilities for the year 2011.
In a 28-page decision dated June 5, the court’s Second Division partially granted the petition of SMHC—the infrastructure arm of the Ramon Ang-led San Miguel Corp.—to get a refund for the tax it paid under protest.
The CTA, however, allowed the BIR to keep the principal amount of P59.32 million as basic tax, saying it is proper to impose the DST on SMHC’s advances from its parent company and other affiliates.
The court said the Supreme Court’s July 19, 2011 decision on the case of BIR vs Filinvest Development Corp. should be retroactively applied to SMHC’s tax liabilities.
In the Filinvest ruling, the SC declared that instructional letters and journal and cash vouchers extended by a parent company to its affiliates are loan agreements subject to the DST. Three months later, the BIR issued Revenue Memorandum Circular No. 48-2011 as guidelines to implement the SC decision.
The CTA said the Filinvest ruling could be applied because the SC’s interpretation of Section 180 of the National Internal Revenue Code is “deemed constituted as part” of the tax law from its enactment.
On the other hand, the CTA said the BIR should refund the surcharges because it was not SMHC’s fault that it relied on existing court decisions and BIR rulings at the time.
“Considering petitioner’s good faith in relying on previous court decisions and BIR rulings and its payment of the deficiency DST albeit under protest, the deletion of the imposition of surcharge and interest in the instant case is also proper,” read the decision.
The decision was penned by Associate Justice Caesar A. Casanova and concurred in by Associate Justices Juanito C. Castañeda Jr. and Catherine T. Manahan. /ee