The Bureau of Internal Revenue won a case before the Supreme Court (SC) against the tax refund claim of San Miguel Corp. amounting to P30.32 million, Commissioner Romeo Lumagui Jr. said Wednesday.
He said that the SC in a decision promulgated on April 12, 2023 ruled that SMC was not entitled to a refund of its documentary stamp tax (DST) on inter-company advances made in 2009 based on Section 179 of the National Internal Revenue Code of 1997 (NIRC).
The SC also ruled that the application of a case law that was only promulgated in 2011 was not prejudicial to SMC, as the same was merely an interpretation of the NIRC, which has been in effect since Dec. 23, 1993, he said.
“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,” Lumagui said.
The Court of Tax Appeals earlier granted a portion of SMC’s tax refund claim pertaining to its interest rate amounting P15,916,794.59, saying 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.
The SC, however, reversed this decision, saying 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,” the SC said.
“Thus, SMC is not entitled to a refund,” said Lumagui.