The Bureau of Internal Revenue, headed by Commissioner Romeo D. Lumagui Jr., won a case before the Supreme Court (SC) against the tax refund claim of San Miguel Corporation (SMC) in the total amount of P30,424,259.59.
In a decision promulgated on April 12, 2023, the (SC) ruled that SMC is not entitled to a refund of its documentary stamp tax (DST) on its inter-company advances that was made on 2009, based on Section 179 of the NIRC.
The SC further ruled that the application of a case law that was only promulgated on 2011 is not prejudicial to SMC, as the same was merely an interpretation of the NIRC, which has been in effect since December 23, 1993.
“All applications for tax refund should comply with both substantive and formal requirements. This includes the legal basis for the refund and the documentary requirements to show such basis”, Commissioner Lumagui stated.
The Court of Tax Appeals had earlier granted a portion of SMC’s tax refund claim pertaining to its interest rate amounting P15,916,794.59 reasoning that the latter acted in good faith when it relied on previous BIR issuances which stated that intercompany loans and advances covered by inter-office memoranda are not subject to DST.
However, it was later on reversed by the High Court stating that: “Good faith cannot be invoked by SMC on the basis of previous BIR issuances since the same were not issued in its favor. Since SMC failed to obtain a favorable ruling from the BIR declaring that their advances to related parties were not subject to DST, it cannot belatedly claim good faith under a BIR Ruling issued to a different entity.” Thus, SMC is not entitled to a refund.