COMMISSIONER OF INTERNAL REVENUE v. SAN MIGUEL BREWERY, INC.

REPUBLIC OF THE PHILIPPINES Court of Tax Appeals QUEZON CITY En Bane COMMISSIONER OF INTERNAL CTA EB NO. 3157 REVENUE, (CTA Case No. 10745) Petitioner, Present: RINGPIS-LIBAN, PJ, BACORRO-VILLENA, MODESTO-SAN PEDRO, REYES-FAJARDO, CUI-DAVID, -versus- FERRER-FLORES, and ANGELES, JJ. Promulgated: SAN MIGUEL BREWERY, INC., Respondent. X -------------------------------------------------------------------------------------------- ------------------------ X DECISION MODESTO-SAN PEDRO, J.: The Case Before the Court En Bane is petitioner's Petition for Review ("Petition") filed on May 22, 2025 ,1 with respondent's Comment (on the Petition for Review dated May 16, 2025) ("Comment") filed on June 20, 2025.2 The Petition prays that the Assailed Decision, dated November 18, 2024, and the Assailed Resolution, dated May 6, 2025, be nullified and a new one be rendered denying respondent' s entire claim for refund;,----� 1 Rollo, pp. 1-88. !d. , at 91-516 . !d. , at 29.

DECISIO:\ CTA EB NO_ 3157 (CTA Case 1\o. 10745) Page2of\7 The Parties Petitioner Commissioner of Internal Revenue ("CIR") is the Commissioner of the Bureau oflntemal Revenue ("BIR"), duly appointed to exercise the powers and perform the duties of his office including, inter alia, the power to decide disputed assessments, refunds of internal revenue taxes, fees, other charges, and penalties imposed in relation thereto, or other matters arising under the Tax Code. He holds office at the BIR National Office Building, Agham Road, Diliman, Quezon City.4 Respondent San Miguel Brewery, Inc. ("San Miguel") is a corporation duly organized and existing under the laws of the Republic of the Philippines, with principal address at 40 San Miguel Avenue, Mandaluyong City, Metro Manila. It is engaged in the business of, among others, the manufacture, sale, and distribution of fermented and malt-based beverages.5 The Facts On December 19, 2012, Congress enacted Republic Act No. ("RA '') 10351, amending, among others, Section 143 ofthe National Internal Revenue Code, as amended, (''NIRC '') which imposes an excise tax on fermented liquors at tiered rates from 2013 to 2016, a uniform rate in 2017 and a 4% indexation starting 2018. RA 10351 took effect on December 21,2012.6 To implement RA No. 10351, then Secretary of Finance ("SOF") Cesar V. Purisima, upon recommendation of then CIR, Kim S. Jacinto-Henares, issued Revenue Regulation No. ("RR ") 17-2012 on December 21, 2012. In turn, CIR Henares issued Revenue Memorandum Circular No. ("RMC") 90- 2012 on December 27,2012. 7 On January 22, 2020, RA No. 11467 was signed into law further amending Section 143 ofthe NIRC and increasing the excise tax for fermented liquors effective January I, 2020 to P35.00, among others. 8 Relative thereto, then CIR Caesar R. Dulay issued RMC 65- 2020, dated June 22, 2020, which states that RA No. 11467 took effect immediately after its complete publication in a newspaper of general circulation on January 27, 2020. On October 14, 2020, CIR Dulay issued RMC No. 113-2020 clarif)rin,gr----- ' ld, at 2. hi., at93. 6 See Assailed Decision, Annex ..A''. Petition, Rollo. p. 41. 7 !d. at 42. 8 /d., at 42.

DECISIO:\ CTA f:B NO. 3157 (CTA Case No. 107-!..5) that RA No. 11467 was published in the Official Gazette on January 23, 2020 through its website. 9 To remove its beer products from the breweries for the period from January 23, 2020 to February 9, 2020, respondent paid excise taxes thereon at the tax rate of P27.07, instead of P26.44, per liter. For this payment, respondent filed with the BIR a claim for refund amounting to Php8,278,851.12, representing the difference in the tax rates per liter under RA No. 10351. ("Claim A") 10 The BIR Large Taxpayers Service ("LTS") - Excise LT Field Operations Division issued a Notice of Discrepancy ("NOD"), dated July 8, 2020, assessing respondent for deficiency excise tax amounting to Php941 ,871 ,604.98, inclusive of increments, covering withdrawals of beer products from January 27, 2020 to February 12, 2020, allegedly due to the increase in the excise tax rates on fermented liquors which purportedly took effect on January 27, 2020. 11 On September 4, 2020, respondent paid the excise tax difference in the amount ofPhp168,959,037.24 covering withdrawals of beer products for the period from February 10, 2020 to February 12, 2020, premised on the effectivity of RA No. 11467 on February 10,2020 upon its actual publication in the Official Gazette on even date. 12 The BIR then issued a revised NOD, dated September 22, 2020, which reiterated its new position that RA No. 11467 took effect on January 23, 2020, and adjusted respondent's alleged deficiency excise tax to Php1,035,355,418.45 (net of the payment ofPhp168,959,037.24). 13 In its Letter, dated December 10, 2020, respondent advised the BIR that it would pay under protest the alleged deficiency excise tax on December 21, 2020 in the adjusted amount of Php 1,060,496,977.92 through Tax Credit Certificates ("TCCs''). 1+ The BIR issued a revised NOD, dated December 15, 2020, adjusting the alleged deficiency taxes to Php1,060,496,977.92. On December 21,2020, respondent paid the alleged deficiency excise tax, as adjusted~ 9 !d. at 42. 10 !d. at 42. 11 !d.. at 42-43. 11 !d., at 43. 13 /d., at 43. 14 /d., at 43. 15 !d., at 43.

DECISIO:'\ CTA EB NO. 31.57 (CTA Case No. 107-l-.5) Page-t.of\7 On January 12, 2022, respondent filed with the BIR a claim for refund, dated January I 0, 2022, amounting to Php I ,060,496,977 .92, representing excise taxes excessively passed on, or collected from, respondent in respect of its beer products from January 23, 2020 to February 9, 2020. ("Claim B") 16 Citing the inaction of petitioner on both claims, respondent filed a Petition for Review on February 2, 2022 with the Court in Division. 17 The Court in Division then granted San Miguel's claim for refund in the Decision, dated November 18, 2024, to wit: 18 WHEREFORE, the Petition for Review ts GRANTED. Accordingly: (i) Section 5 of Revenue Regulations No. 17-2012 dated December 2 L 2012 insofar as it implements the 'no downgrading' rule embedded in the "no downward reclassification' provision is deemed null and void; (ii) Annex 'A-1' of Revenue Memorandum Circular No. 90-2012 dated December 27, 2012 insofar as it prescribes the excise tax rate ofPhp 20.57 is deemed null and void: (iii) Revenue Memorandum Circular No. 65-2020 dated June 22, 2020 and Revenue Memorandum Circular No. 113- 2020 dated October 14, 2020 insofar as they provide an erroneous effectivity date of Republic Act No. 11467 are deemed null and void; (iv) The excise tax rate of Php27.07 per liter imposed during the period from January 23. 2020 to February 9. 2020 pursuant to Revenue Regulations No. 17-2012 in relation to Revenue Memorandum Circular No. 90-2012 is void; and, (v) Respondent Commissioner of Internal Revenue is ordered to refund or issue a tax credit certificate in favor of petitioner San Miguel Brewery. Inc. in the amount ofPhp L068. 775.829.04 representing the excise taxes erroneously. excessively. illegally and/or wrongfully collected from petitioner for the period from January 23, 2020 to February 9, 2020. SO ORDERED. This was affirmed by the Court in Division in the Resolution, dated May 6, 2025, which denied for lack of merit the CIR's Motion for Reconsideration filed on December II, 2024. 19 Consequently, on May 22, 2025, the CIR filed the instant Petition~ 16 !d.. at 43. 17 !d., at 43. 18 /d., at 78-79. 19 Assailed Resolution, Annex ..B.., Petition. Rollo. pp. 80-88. 20 Rollo, pp. 1-88.

DECISIO:\ CT1\ EB NO. 3157 (CTA Case No. 10745) Page 5 ofl7 On June 4, 2025, the Court En Bane issued a Resolution ordering San Miguel to file a Comment on the Petition.21 Then, on June 20, 2025, San Miguel filed its Comment.22 The Court En Bane issued a Resolution, dated July 16,2025, submitting the Petition for decision. 23 Hence, this Decision. The Assigned Errors The issues to be resolved are as follows: 24 1. Whether the Court in Division erred in declaring Section 5 of RR 17-2012, dated December 21, 2012, insofar as it implements the "no downgrading" rule embedded in the "no downward reclassification" provision, null and void; u. Whether the Court in Division erred in declaring Annex A-I of RMC 90-2012, dated December 27, 2012, insofar as it prescribes the excise tax rate ofPhp20.57, null and void; HI. Whether the Court in Division erred when it declared RMC 65-2020, dated June 22, 2020, and RMC 113-2020, dated October 14, 2020, insofar as they provide an erroneous effectivity date of RA 11467, null and void; 1v. Whether the Court in Division erred when it declared void the excise tax rate ofPhp27 .07 per liter imposed during the period from January 23, 2020 to February 9, 2020 pursuant toRR 17- 2012, in relation to RMC 90-2012; and v. Whether the Court in Division erred when it granted San Miguel's claim for refund in the amount of Php I,068,775,829.04 representing alleged excise taxes erroneously, excessively, illegally and/or wrongfully . collected for the period January 23,2020 to February 9, 2020~ :n !d., at 90. ~~ !d., at91-516. ~3 Rollo. 2.t !d., at 3-4.

DECISIO\ CTA EB NO. 3!57 (CTA Case No. 10745) Page 6 or 17 Arguments ofthe Parties The CIR alleges the following: 25 I. The Court in Division lacks jurisdiction to entertain the Petition for Review. The Court in Division erred when it declared Section 5 ofRR 17-2012 as null and void insofar as it implements the "no downgrading" rule embedded in the "no downward reclassification" provision; 2. The Court in Division erred when it declared null and void Annex "A- I" of RMC 90-2012 void insofar as it prescribes the excise tax rate of Php20.57. The Honorable Court erred in ruling that respondent is entitled to refund; and 3. The Court in Division erred when it declared null and void RMC 65- 2020 and RMC 113-2020 insofar as they provide an erroneous effectivity date of RA 11467. RA 11467 was made effective upon its complete publication in the website of the Official Gazette. Thus, RA 11467 became effective beginning January 23, 2020. In response to the CIR's allegations, San Miguel counter-argues the following: 26 I. The Court in Division correctly assumed jurisdiction and resolved San Miguel's Petition, which squarely sought a refund of unlawfully collected excise taxes. Petitioner's attempt to frame the nature of the action as a collateral attack on BIR issuances ignores that the declaration of nullity was a necessary and well-established incident of the refund claim, and is a relief consistently recognized by the Honorable Court En Bane and the Supreme Court in similar tax refund cases; 2. The Court En Bane correctly ruled that the Php27.07 per liter excise tax rate imposed on San Mig Light, together with RMC 90-2012 and RR 17-2012, were ultra vires and void. These issuances imposed classifications and tax increases without any statutory basis in Section 143 ofthe NIRC; and 3. The Court in Division properly held that the Php35.00 per liter rate under RA 11467 took effect only on February I 0, 2020 which is the date of complete publication in the Official Gazette. The petitioner's contrary position disregards both the clear text of Article 2 of the Civil Code and settled jurisprudence, including Garcillano v. House of Representatives. eta!., and Tanada v. Tuvera, which this Court En Banu---- 25 !d., at 5-29. 26 /d.,atll4-136.

DECISIO:\ CTA EB NO. 3157 (CTA Case No. I07-15) Page7ofl7 has consistently applied to determine the effectivity of tax statutes absent express exemption from the publication requirement. The Ruling ofthe Court En Bane The Petition lack merit. At the onset, it must be emphasized that the arguments posited by petitioner are a repeat of those he raised before the Court in Division, and as such, have already been sufficiently tackled in the Assailed Decision and Assailed Resolution. Nonetheless, to finally set aside petitioner's contentions, the Court En Bane shall once more address the same. This Court has jurisdiction to entertain the present suit. With respect to the CIR's contention that the Court of Tax Appeals ("CTA") has no jurisdiction entertaining the present suit (i.e., a challenge on the constitutionality or validity of revenue issuances), this has long been settled. The CTA has the undoubted jurisdiction to pass upon the validity of a tax law or regulation regardless if the same was made an ancillary issue in a tax assessment or tax refund case, or an actual direct challenge of said tax law or regulation. In Banco De Oro, eta!., v. Republic ofthe Philippines, eta!., 27 the Supreme Court declared as follows: The Courl of Tax Appeals has undoubted jurisdiction to pass upon the constitutionality or validity of' a lax /em or regulation �when raised by the taxpayer as a defense in di.1puting or contesting an assessment or claiming a refimd It is only in the lawfid exercise of"its power to pass upon all maters brought before it. as sanctioned by Section 7 of'Republic Act No. 1125, as amended This Court. however, declares that the Court of Tax Appeals may likewise take cognizance (){ cases directly challenging the constitutionality or validity of a tax law or regulation or administrative issuance (revenue orders. revenue memorandum circulars. rulings). Section 7 of Republic Act No. 1125. as amended, is explicit that, except for local taxes. appeals from the decisions of quasi-judicial agencies (Commissioner of Internal Revenue, Commissioner of Customs, Secretary of Finance. Central Board of Assessment Appeals, Secretary of Trade and Industry) on tax-related problems must be brought exclusively to the Court of Tax Appeals/ 27 G.R. No. 198756, 16 August 2016.

DECISIO'i CT A EB NO. 3157 (CT A Case No. 107-1-5) In other words. within the judicial system. the law intends the Court of Tax Appeals to have exclusive jurisdiction to resolve all tax problems. Petitions for writs of certiorari against the acts and omissions of the said quasi-judicial agencies should. thus. be tiled before the Court of Tax Appeals. Republic Act No. 9282, a special and later law than Balas Pambansa Big. 129 provides an exception to the original jurisdiction of the Regional Trial Courts over actions questioning the constitutionality or validity of tax laws or regulations. Except for local tax cases. actions directly challenging the constitutionality or validity of a tax law or regulation or administrative issuance may be tiled directly before the Court of Tax Appeals. Furthermore. with respect to administrative issuances (revenue orders, revenue memorandum circulars, or rulings), these are issued by the Commissioner under its power to make rulings or opinions in connection with the implementation of the provisions of internal revenue laws. Tax rulings. on the other hand. are official positions of the Bureau on inquiries of taxpayers who request clarification on certain provisions of the National Internal Revenue Code. other tax laws, or their implementing regulations. Hence, the determination of the validity of these issuances clearly falls within the exclusive appellate jurisdiction of the Court of Tax Appeals under Section 7(1) of Republic Act No. 1125, as amended, subject to prior review by the Secretary of Finance. as required under Republic Act No. 8424. (Italics, Ours) Consequently, it cannot be denied that this Court has absolute jurisdiction to entertain the present refund case for erroneously paid excise taxes, the success of which is dependent on the invalidity or unconstitutionality of certain revenue issuances. With respect to the CIR' s contention that even if the CTA has jurisdiction to entertain questions on the validity or constitutionality of revenue issuances, it remains that the doctrine of exhaustion of administrative remedies has not been complied with, the same is groundless. It is true that RMC 90-2012 and RR 17-2012 were issued by respondent in view of his power to interpret the provisions of the NJRC and other tax laws pursuant to Section 4 ofthe NJRC. This authority has been characterized as a rule-making or quasi-legislative power delegated by Congress to the CIR.28 However, as stated by the High Court in Alliance of Non-Life Insurance Workers of the Philippines, eta!. vs. Han. Leandro R. Mendoza, eta!., 29 the doctrine of exhaustion of administrative remedies does n__g.t-apply when the questioned act is quasi-legislative in character, to wit:~ 28 Commissioner of Internal Revenue vs. Court of Tax Appeals (Second Division) and Petron Corporation, G.R No. 207843, July 15.2015. 19 G.R. No. 206159. August 26,2020.

DECISIO:\ CTA EB l\0. 3157 (CT A Case No. l 0745) However. it is settled that the doctrine of exhaustion of administrative remedies finds no application when a questioned act was done in the exercise of quasi-legislative powers: In questioning the validity or constitutionality of a rule or regulation issued by an administrative agency, a party need not exhaust administrative remedies before going to court. This principle applies only where the act of the administrative agency concerned was performed pursuant to its quasi-judicial function, and not when the assailed act pertained to its rule-making or quasi legislative power. Thus, petitioner is not duty bound to file first an Appeal before the Secretary of Finance questioning the constitutionality and validity of RMC 90-2012 and RR 17-2012 before it can seek judicial redress before the CTA. The Court in Division did not err when it declared RMC 90-2012 null and void in so far as it prescribes an excise tax rate of Php20.57; thus, respondent properly established that it erroneously paid excise tax in the total amount of Php8,278,851.12 covered by Claim A. It is a well-established principle that rules and regulations implementing a law are designed to fill in the details or to make explicit what is general, as these cannot all be incorporated in the provision of the law.30 Administrative issuances must not override, supplant, or modify the law; they must remain consistent with the law intended to carry out.31 Particularly, administrative issuances, such as revenue memorandum circulars, cannot amend or modify the law.32 Indeed, in tax refund cases filed before this Court, it is incumbent upon the taxpayer-claimant to prove every minute aspect of his claim. It cannot simply rely on the evidence it has already presented in the administrative claim before the BIR for the success of the judicial claim for refund. It must present and offer anew with this Court the evidence already presented before the CIR and such other evidence (although was not submitted to the CIR during the administrative proceedings)_which are necessary to prove its entitlement to the tax refund claim~ 30 La Suerte Cigar and Cigarette Factory v. Court of Appeals. G.R. Nos. 125346. 136328-29, 144942, 148605, 158197 & 165499, November II, 2014. " In the matter of declaratory relied on the validity of Revenue Memorandum Circular No. 65-2020, Bureau of Internal Revenue (BJR). as herein represented by its Commissioner, Kim S. Jacinto-Henares and Revenue District Officer (ROO) Ricardo B. Espiritu v. First E-Bank Tower Condominium Corp., G.R. No. 215801. January 15. 2020: and First E-Bank Tower Condominium Corp. v. Bureau of Internal Revenue (BJR). as herein represented by its Commissioner Kim S. Jacinto-Henares. G.R. No. 218924, January 15. 2020. " lNG Bank N.Y., engaged in banking operations in the Philippines as lNG Bank N.Y. Manila Branch v. Commissioner of Internal Revenue. G.R. No. 167679, April 20. 2016.

()[CISlO:\ CTA EB NO. 3157 (CTA Case No. J07-J.5) Page l0ofl7 In La Suerte Cigar and Cigarette Factory v. Court of Appeals, 33 the Supreme Court ruled: To be valid. a revenue regulation must be within the scope of statutory authority or standard granted by the legislature. Specifically, the regulation must be germane to the object and purpose of the law; (2) not contradict, but conform to. the standards the law prescribes; and (3) be issued for the sole purpose of carrying into effect the general provisions of our tax laws. Similarly, in the recent case of Manila Peninsula Manila Hotel, Inc. v. Commissioner of Internal Revenue, 3+ the Supreme Court cited Philippine Bank of Communications v. Commissioner of Internal Revenue, 35 wherein it upheld the nullification of RMC 7-85 for being inconsistent with Section 230 ofthe then NIRC. The Supreme Court emphasized that the BIR did not simply interpret the law but legislated guidelines contrary to the statute passed by Congress. Thus, the Supreme Court held: It bears repeating that Revenue [Memorandum Circulars] are considered administrative rulings (in the sense of more specific and less general interpretations of tax laws) which are issued ti�om time to time by the Commissioner of Internal Revenue. It is widely accepted that the interpretation placed upon a statute by the executive otlicers, whose duty is to enforce it, is entitled to great respect by the courts. Nevertheless, such interpretation is not conclusive and will be ignored if judicially found to be erroneous. Thus, courts will not countenance administrative issuances that override. instead of remaining consistent and in harmony with, the law they seek to apply and implement. Moreover, in Saint Wealth Ltd. v. Bureau of Internal Revenue,36 the Supreme Court En Bane declared certain parts of RMC 102-2017 and RMC 78-2018 invalid and unconstitutional, as they lacked statutory basis and encroached upon the legislative power to enact laws. Given the foregoing, we quote with approval the discussion ofthe Court in Division as to why RMC 90-2012 is void for going beyond the scope of the law, viz. :37 Otherwise stated. the �no downgrading ofpre-RA 10351 rates' rule may not necessarily be construed as within the context of the 'no downward reclassification' provision in Section 3 of RA No. I 0351. For one. there is nothing in Section 3 of RA No. I 0351 which states that rates specified therein may not be applied if it results in downward reduction of rates. i.e~ 33 G.R. Nos. 125346. 136328-29, 144942. 148605. 158197 & !65499. November II. 2014. " G.R. No. 229338. April 17. 2024. " G.R. No. 112024. January 28. 1994. ' 6 G.R. Nos. 252965 and 254102. December 7. 2021. 37 See Assailed Decision.

DECISIO'i CTA EB NO. 31 :'i7 (CTA Case 1\o. 10745) Page l 1 of 17 from a higher pre-RA No. I0351 excise tax rate per liter, to a lower RA No. I0351 excise tax rate per liter. Even assuming that the �no downgrading of pre-RA 10351 rates� rule is construed to be within the context of the �no downward reclassification' provision. it would appear that there is an inconsistency within the law itself. On one hand. Congress intended for existing brands to maintain their pre-RA No. 10351 excise tax rates under the �no downgrading of rates� rule allegedly embedded in the 'no downward reclassification' provision. On the other hand, another provision in the same Section, mandates that all fennented liquors existing in the market at the effectivity date of the law. must be classified as low-tier or high-tier categories based on the net retail prices as outlined therein. In essence, adhering to respondent's proposition would simply give rise to conflict between two (2) provisions of Section 3 ofRA No. 10351 as one stipulates, albeit impliedly, that fermented liquors already subject to higher pre-RA No. 10351 rates must retain those rates, while another expressly mandates a comprehensive classification of all existing fermented liquors based on their net retail prices and the corresponding tax rates as outlined in Section 3 ofRA No. 10351. A statute must be construed as to ham1onize all apparent conflicts and give effect to all its provisions whenever possible. However, in case of irreconcilable conflict between two provisions of the same statute, the last in order of position is frequently held to prevail. unless it clearly appears that the intent of the legislature is otherwise. Given the irreconcilable nature of the two provisions and the fact that the provision mandating the classification of all fermented liquors existing in the market during the etl'ectivity of RA No. I0351 is a later provision. the latter prevails. In effect. the no downgrading rule is rendered inefl'ectual. Having established that the �no downward reclassification' provision insofar as it prohibits the downgrading of previous excise tax rates paid on fermented liquors existing in the market upon the efl'ectivity of RA No. I 0351 has been rendered ineffective by the later provision, the applicable initial excise tax rate for 2013 is Pl5.00/P20.00, not P20.57 per liter. In San Miguel Brewery. Inc. vs. Commissioner of Internal Revenue, which involves the same parties and issues but pertaining only to a difl'erent taxable period (i.e., January I, 2018 to December 31, 20 18). the Court's Second Division issued a Decision declaring that the applicable excise tax rate for 2013 is Pl5.00/P20.00. depending on the net retail price. Accordingly, Section 5 ofRR No. 17-2012 insofar as it implements the �no downgrading� rule, as well as Annex �A-1' of RMC No. 90-2012 insofar as it prescribes the initial tax rate of P20.57 per liter as basis for .....------ indexation. are deemed null and void for being contrary to RA No. I0351,............-

DECISIO' CTA�BN0.3157{CTACaseNo.107-J.5) Following the nullification of the initial tax rate of P20.57 per liter as provided in Annex 'A-I' ofRMC No. 90-2012. petitioner's beer products are subject to the excise tax rates outlined in Section 3 of RA No. I 0351. Therefore, applying the 4% indexation rate starting January I, 2018, the correct excise tax rate for 2020 applicable to petitioner's beer products is P26.44 per liter. Recall that there is a difference of P0.63 between the excise tax rate of P27.07 per liter eJToneously, illegally. excessively and/or wrongfully imposed upon petitioner by the BIR for the removal of the former's beer products from January 23, 2020 to February 9, 2020. and the correct excise tax rate of P26.44 per liter. The imposition of the additional P0.63 excise tax rate per liter totaled P8.278,851.12. Accordingly, RMC 90-2012 is void in so far as it prescribes an excise tax rate ofPhp20.57. This is because it went beyond the law, RA 10351, which it seeks to implement. In addition to this, RMC 90-2012 is also void as it was issued without the requisite prior notice and hearing as required by jurisprudence. The Supreme Court in Philippine Stock Exchange, Inc. v. Secretary ofFinance,38 provided that: In fine, the gauge on determining if a regulation requires prior notice and hearing is its substance or content. Prior notice and hearing are required if the regulation substantially increases the burden of those governed, notwithstanding its nomenclature - despite the regulation being called or designated as interpretative. Thus, if the questioned regulations here in this case are legislative rules or substantially increase the burden of those governed, they should have undergone prior notice and hearing (which, in this case, are undisputedly absent) for their validity. If they are interpretative rules, prior notice and hearing are not essential for their validity. As duly found in another case tried before the Court En Bane involving the same parties, Commissioner of Internal Revenue v. San Miguel Brewery Inc. ,39 RMC No. 90-2012 is void for being issued without prior notice and hearing. Consequently, it was duly established that the applicable rate for respondent's beer products is only Php26.44 per liter. However, as it was charged by petitioner a rate ofPhp27.07 per liter, this resulted in an additional Php0.63 per liter excise tax being charged against respondent. As such, respondent is indeed entitled to a refund of erroneously or excessively p~ excise tax in the total amount of Php8,278,851.12 covered by Claim A~ 38 G.R. No. 213860. July 5. 2022. 39 CTA EB No. 2890. CTA Case No. 8955. November 26.2024.

DECISIO' CT/\ t.B NO. 3157 (CTA Cas~! >-Jo. 107-J.5) RA 11467 only took effect on February I 0, 2020 when it was published in print in the Official Gazette: thus, the imposition of the increased excise tax rates under RA 11467 on respondent's products before such effectivity date is an erroneous collection ofexcise tax. In the case at bar, petitioner insists that the increased excise tax imposed on petitioner's beer products by virtue of RA 11467 from January 23, 2020 to February 9, 2020 was a valid imposition considering that the said law became effective on January 23, 2020, pursuant to RMC 113-2020, which published the full text ofthe Letter, dated August 18, 2020, from Undersecretary Tionko, clarifYing that RA 11467 was published in the Official Gazette on January 23, 2020 through its website. Thus, per petitioner, San Miguel should pay the increased excise tax rate beginning January 23, 2020. This is misplaced. RA 11467 only became effective on February I0, 2020 after it was published in print in the Official Gazette of the Philippines. Elementary is the rule that retrospective laws are unconstitutional if they disturb or destroy existing or vested rights, as where they disturb or destroy existing or vested rights embodied in judgments or judicial decisions, or create new obligations with respect to past transactions, as by creating a substantive right, or a fundamental cause of action where none existed before and making such retroactive, or by arbitrarily recreating a right or liability already extinguished by operating of law.40 Section 15 ofRA 11467 provides, as follows: Section 15. Effectivity.- This Act shall take effect on January I, 2020 after its complete publication either in the Otiicial Gazette or in newspaper of general circulation. The said law should be interpreted to become effective only after its complete publication either in the Official Gazette or in a newspaper of general circulation. To interpret that RA 11467 instantly becomes effective on January I, 2020 will result in a retroactive application of the law. Applying RA 11467 retroactively to transactions predating its publication imposes new obligations to taxpayers in the form of additional tax liabilities. Certainly, this retroactive imposition encroaches upon vested property rights, including the right to enter into transactions that are governed by tax laws in force, and not by tax rates imposed by laws then inexistent, at the time. In fact, the Department of Finance made it clear that the effectivity date of RA 11467 is_,.....------- '" 16 C.J.S. 99-!02.

DECISIO:\ CTA EB NO. 3157 (CTA Case No_ 107.l5) Page 14ofl7 not on January 1, 2020. In a Memorandum, dated January 29, 2020,41 from Undersecretary Antonette C. Tionko, Revenue Operations Group of the Department of Finance, for Secretary of Finance Carlos G. Dominguez. The Memorandum states: RA No. 11467 is a tax measure that imposes higher tax rates on certain products. As such. the retroactive application ofRA No. 11467 to 1 January 2020 cannot be applied since it will be unjust against the affected taxpayer whose liabilities and responsibilities are increased. Taxpayers relied in good faith and paid the correct taxes at the time when the law is yet to be published should not be required to pay additional taxes. Clearly, RA 11467 did not take effect on January 1, 2020 but only upon publication. Publication is a necessary component of procedural due process to give as wide publicity as possible so that all persons having an interest in the proceedings may be notified thereof.-12 The requirement of publication is intended to satisfY the basic requirements of due process. It is imperative for it will be the height of injustice to punish or otherwise burden a citizen for the transgressions of a law or rule of which he had no notice whatsoever.43 In Garcillano vs House of Representatives Committees on Public Information, Public Order and Safety, National Defense and Security, Information and Communication Technology, and Suffrage and Electoral Reforms ('"Garcillano case"), n the Supreme Court, applying Tanada vs. Tuvera, .,5 held that publication is restricted to the Official Gazette and newspapers of general circulation, and other mediums, such as the internet, do not satisfY this requirement, to wit: Respondents justifY their non-observance of the constitutionally mandated publication by arguing that the rules have never been amended since 1995 and, despite that, they are published in booklet form available to anyone for free, and accessible to the public at the Senate's internet web page. The Court does not agree. The absence of any amendment to the rules cannot justify the Senate's defiance of the clear and unambiguous language of Section 21, Article VI of the Constitution. The organic law instructs, without more, that the Senate or its committees may conduct ___- inquiries in aid of legislation only in accordance with duly published rule~ " The Memorandum was attached to RMC 65-2020. dated June 22. 2020. 4.:! National Association of Electricity Consumers for Reforms (NASECORE) vs. Energy Regulatory Commission (ERG}, G.R. No. 163935. August 16.2006. 43 Garcillano vs House of Representatives Committees on Public Information, Public Order and Safety, National Defense and Security, Information and Communication Technology, and Suffrage and Electoral Refonns, G.R. No. 170338, December 23,2008. H fbfd_ " G.R. No. L-63915, April24. 1985.

DECISIO:\. CTA EB l\0. 3157 (CTA Case No. 10745) Page 15of\7 of procedure. and does not make any distinction whether or not these rules have undergone amendments or revision. The constitutional mandate to publish the said rules prevails over any custom, practice or tradition followed by the Senate. Justice Carpio's response to the same argument raised by the respondents is illuminating: The publication of the Rules of Procedure in the website of the Senate, or in pamphlet fmm available at the Senate, is not sufficient under the Taiiada vs. Tuvera ruling which requires publication either in the Official Gazette or in a newspaper of general circulation. The Rules of Procedure even provide that the rules 'shall take etiect seven (7) days after publication in two (2) newspapers of general circulation', precluding any other form of publication. Publication in accordance with the due process requirement because the Rules of Procedure put a person's liberty at risk. A person who violates the Rules of Procedure could be arrested and detained by the Senate. Following these disquisitions, RA 11467 only became effective on February 10, 2020 after it was published in print in the Official Gazette of the Philippines. Taxpayers who acted in good faith and paid the appropriate taxes prevailing before an amendatory law was published should not be compelled to pay additional taxes. Pursuant to the Garcillano case, publication can only be made in print through the Official Gazette or in a newspaper of general circulation. Thus, prior to the publication of RA No. 11467 in the printed version of the Official Gazette on February 10, 2020, respondent, who relied in good faith and paid the then prevailing excise tax rates cannot be compelled to pay the additional excise tax levied under the amendatory law. Thus, for declaring a different effectivity date for RA 11467, RMC 65- 2020, which initially declared that RA 11467 took effect on January 27, 2020, and RMC 113-2020, which finally clarified that RA 11467 took effect on January 23, 2020 instead, are null and void. Accordingly, the increased excise tax rate per RA 11467 of P3 5.00 per liter may only be imposed beginning February 10, 2020. The imposition of the increased excise tax rates under RA 11467 on respondent's products before such effectivity date is erroneous. Finally, this Court En Bane agrees with the findings of the Court in Division regarding the specific amount claimed, as follows.~ -tG See Assailed Decision.

DECISIO:\. CTAEBN0.3157(CTACascNo.10745) Page 16of\7 [T]he premature imposition of the increased excise tax rate for the period from January 23, 2020 to February 9, 2020 on petitioner's beer products resulted to an erroneous, excessive, illegal and/or wrongful. The premature imposition of the increased excise tax rate for the period from January 23, 2020 to February 9, 2020 on petitioner's beer products resulted to an erroneous, excessive, illegal and/or wrongful payment of Phpl,060A96,977.92 by petitioner, which it may claim as refund. To prove that petitioner paid the afore-stated basic deficiency excise tax of PhpL060,496,977.92, it presented its Letter dated January 4, 2021 sent to the BIR regarding such payment with attached BIR Payment Form (BIR Form No. 0605), eFPS Filing Reference and Payment Confirmation, and Tax Debit Memos. These documents sufficiently prove petitioner's payment of the Php I,060,496.977.92 it seeks to refund. Therefore, respondent is indeed entitled to a refund of erroneously or excessively paid excise tax in the total amount of Php I,060,496,977.92 covered by Claim B which represents the imposition of the increased excise tax rates under RA 11467 on respondent's products prior to said law's effectivity date. In totality, respondent was able to prove its entitlement to the full amount of its claimed refund of erroneously paid excise tax equivalent to Php 1,068,775,829.04 for the period from January 23, 2020 to February 9, 2020. ACCORDINGLY, the Petition filed by the CIR is hereby DENIED for lack of merit. Accordingly, the Assailed Decision, dated November 18, 2024, and the Assailed Resolution, dated May 6, 2025, promulgated by the Court in Division are hereby AFFIRMED. SO ORDERED. MARIARO WE CONCUR: ~. -tct, ... I - MA. BELEN M. RINGPIS-LIBAN Presiding Justice r

DlCISIO" CTA I:.B NO. 3157 (CTA Case No. 107-l-5) Page 17ofl7 ~ I~ VVF.f.R~E~E-S-FF~ACJM.AtRkoDO MARIAN Associate Justice LA~~ID Associate Justice ~#. CORA~ G. Associate Justice HENRY 1/.~GELES Associate Justice CERTIFICATION Pursuant to Article VIII, Section 13 of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Court, ~.~r- MA. BELEN M. RINGPIS-LIBAN Presiding Justice