Court overturns ruling on SMC’s stamp tax refund claim

THE SUPREME COURT (SC) has overturned a tax court ruling that granted San Miguel Corp. (SMC) a refund of interest penalties worth P15.6 million, which it paid in connection with its 2009 documentary stamp tax (DST) liabilities totaling P30.42 million.

In a 13-page ruling dated April 12 and made public on July 28, the tribunal said that SMC was not entitled to a refund of its DST and penalties since it cannot use good faith as an argument in seeking the refund.

“Good faith cannot be invoked by SMC on the basis of previous Bureau of Internal Revenue (BIR) issuances since the same were not issued in its favor,” according to the ruling penned by Associate Justice Maria Filomena D. Singh.

The court said that the CIR should not have imposed a compromise penalty worth P50,000 to the previously worth interest penalty, ordering the official to refund the amount to the company.

“Since SMC’s case does not involve criminal tax liabilities, the compromise penalty should not have been imposed and collected,” the tribunal said.

The Court of Tax Appeals (CTA) had granted part of the company’s refund claim worth P15.6 million, representing penalties imposed by the CIR in connection with the DST deficiencies, based on the company’s good faith of previous interpretations of the BIR rulings on which documents could be subject to DST.

It earlier denied SMC’s claim for a refund of its documentary stamp tax worth P14.5 million, following a 2011 High Court ruling that found instructional letters, as well as journals and cash vouchers of advances made to affiliates, qualified as loan agreements subject to DST.

The High Court said the company failed to cite a BIR ruling that declared that intercompany loans and advances through memos and vouchers were not subject to DST.

“It is a basic rule that a taxpayer cannot utilize for themselves specific BIR Rulings made for another, as only the taxpayer who sought such BIR Ruling may invoke the same,” the country’s highest court said. — John Victor D. Ordoñez