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

CTA Form No.8 1111111111111111111111111111111111111 1111111111111111111111111 1111111111 11111111 22-000035-0064 REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY . FIRST DIVISION CTA CASE NO. 10745 SAN MIGUEL BREWERY, INC., NOTICE OF DECISION Petitioner, - versus - COMMISSIONER OF INTERNAL REVENUE, Respondent. To: OFFICE OF THE SOLICITOR GEJ\'ERAL 134 Amorsolo Street, Legazpi Village Makati City ATTY. AYESHA RANIA B. GUTLING-MATANOG ATTY. CLARISSA J. VIRTUDES-BABARAN Bureau of Intemal Revenue Room 703, Litigation Division, BlR National Office Building Sen. Miriam P. Defensor-Santiago Avenue Diliman, Quezon City SYCIP SALAZAR HE RNANDEZ & GATMAITAN 4th Floor, SyCiplaw Center I05 Paseo de Roxas, Makati City GREETINGS: You are hereby notified by these presents that on November 18, 2024,a Decision was rendered in the above-entitled case, copy of which is attached hereto. Quezon City, Philippines, November 20, 2024.

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY FIRST DIVISION SAN MIGUEL BREWERY, INC., CTA CASE NO. 10745 Petitioner, Members: -versus- DEL ROSARIO, P.J. , Chairperson, BACORRO-VILLENA, and CUI-DAVID, JJ. COMMISSIONER OF INTERNAL Promulgated : REVENUE, Respondent. X- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - DECISION DEL ROSARIO, P.J.: At bar is a Petition for Review filed by San Miguel Brewery, Inc. (SMB) on February 2, 2022 seeking the Court to render judgment: 1. declaring null and void: (a) the excise tax rate of P27.07 per liter imposed by respondent Commissioner of Internal Revenue (CIR) on petitioner's beer products during the period January 23, 2020 to February 9, 2020; (b) Revenue Memorandum Circular (RMC) No. 90-2012, particularly the portions thereof imposing the tax rate of P20.57 instead of the tax rates provided for in Section 143 of the National Internal Revenue Code (NIRC) of 1997, as amended , and Revenue Regulations (RR) No. 17-2012, particularly the portion of Section 5 thereof providing that "Starting January 1, 2014, the applicable tax rate shall be increase[d] by four percent (4%) annually"; and , (c) RMC No. 65-2020, as amended by RMC No. 113-2020 which provides that the effectivity date of Republic Act (RAdl

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 No. 11467 is on January 23, 2020 or the date of posting on the Official Gazette's website; 2. declaring that petitioner is entitled to a refund of the excise taxes subject of its claims for refund filed with respondent on December 6, 2021 and January 12,2022, which excise taxes were allegedly erroneously, excessively, illegally and/or wrongfully assessed on, and collected by respondent from petitioner; and, 3. ordering respondent to refund or issue a corresponding tax credit certificate (TCC) to petitioner the total amount of P1 ,068,775,829.04 representing the excise taxes allegedly erroneously, excessively, illegally and/or wrongfully assessed on and collected from petitioner. 1 THE PARTIES Petitioner SMB is a corporation duly organized and existing under Philippine laws, with principal office or place of business at 40 San Miguel Avenue, Mandaluyong City, Metro Manila 2 It is engaged in the business of, among others, manufacture, sale, and distribution of fermented and malt-based beverages 3 Respondent CIR heads the Bureau of Internal Revenue (BIR) and is vested by law with the power to decide, approve, and grant claims for refund or tax credit of internal revenue taxes. Respondent holds office at the Office of the Commissioner of Internal Revenue, BIR National Office Building, Agham Road, Diliman, Quezon City, Metro Manila 4 THE FACTS On December 19, 2012, Congress enacted RA No. 10351 5 amending, among others, Section 143 of the NIRC of 1997, as amended, 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. It took effect on December 21, 2012. 1 Petition for Review, CTA Docket Vol. I, pp. 50-51. 2 Par. 26, Petition for Review, CTA Docket Vol. I, p. 17. 3 Par. 28, Petition for Review, CTA Docket Vol. I, p. 18. 4 Par. 1, Stipulated Facts, Joint Stipulation, CTA Docket Vol. II, p 874. 5 An Act Restructuring the Excise Tax on Alcohol and Tobacco Products by Amending Sections 141, 142, 143, 144, 145, 8, 131 And 288 of Republic Act No. 8424, otherwise known as the National Internal Revenue Code of 1997, as amended by Republic Act No. 9334, and for Other Purpose(il

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 To implement RA No. 10351, then Secretary of Finance (SOF) Cesar V. Purisima, upon recommendation of the then CIR Kim S. Jacinto-Henares, issued RR No. 17-20126 on December 21, 2012. In turn, CIR Henares issued RMC No. 90-20127 on December 27, 2012. On January 22, 2020, RA No. 114678 was signed into law further amending Section 143 of the NIRC of 1997, as amended, and increasing the excise tax for fermented liquors effective January 1, 2020 to P35.00, among others. Relative thereto, then CIR Caesar R. Dulay issued RMC No. 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 clarifying that RA No. 11467 was published in the Official Gazette on January 23, 2020 through its website. Claim A To remove its beer products from the breweries for the period from January 23, 2020 to February 9, 2020, petitioner paid excise taxes thereon at the tax rate of P27.07, instead of P26.44, per liter. For this payment, petitioner filed with the SIR a claim for refund 9 amounting to P8,278,851.12, representing the difference in the tax rates per liter under RA No. 10351. Claim B The SIR Large Taxpayers Service (LTS) - Excise LT Field Operations Division issued a Notice of Discrepancy (NOD) dated July 8, 2020, 10 assessing petitioner for deficiency excise tax amounting to P941 ,871 ,604.98, inclusive of increments, covering withdrawals of beer products from January 27, 2020 to February 12, 2020, allegedly 6 SUBJECT: Prescribing the Implementing Guidelines on the Revised Tax Rates on Alcohol and Tobacco Products Pursuant to the Provisions of Republic Act No. 10351 and to Clarify Certain Provisions of Existing Revenue Regulaf1ons. 7 SUBJECT: Revised Tax Rates of Alcohol and Tobacco Products Under Republic Act No. 10351, "An Act Restructuring The Excise Tax on Alcohol And Tobacco Products By Amending Sections 141, 142, 143, 144, 145, 8, 131 and 288 of Republic Act No. 8424, Otherwise Known As The National Internal Revenue Code of 1997, as amended by Republic Act No. 9334, and for Other Purposes". 8 An Act Amending Sections 109, 141, 142, 143,144, 147, 152, 263, 263-A, 265, And 288-A, And Adding a New Section 290-A To Republic Act No 8424, As Amended, Otherwise Known As The National Internal Revenue Code Of 1997, and for Other Purposes. 9 Exhibit "P-4", CTA Docket Vol. Ill, p. 1068. 10 Exhibit "P-8", CTA Docket Vol. Ill, pp. 1080-1081~

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 due to the increase in the excise tax rates on fermented liquors which purportedly took effect on January 27, 2020. On September 4, 2020, petitioner paid the excise tax difference in the amount of P168,959,037.24 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. 11 The SIR then issued a revised NOD dated September 22, 202012 which reiterated its new position that RA No. 11467 took effect on January 23, 2020, and adjusted petitioner's alleged deficiency excise tax to P1 ,035,355,418.45 (net of the payment of P168,959,037.24). In its Letter dated December 10, 2020, 13 petitioner advised the SIR that it would pay under protest the alleged deficiency excise tax on December 21, 2020 in the adjusted amount of P1 ,060,496,977.92 through TCCs. The SIR issued a Revised NOD dated December 15, 2020 adjusting the alleged deficiency taxes to P1 ,060,496,977.92. 14 On December 21, 2020, petitioner paid the alleged deficiency excise tax, as adjusted. On January 12, 2022, petitioner filed with the SIR a claim for refund 15 dated January 10, 2022 amounting to P1 ,060,496,977.92, representing excise taxes excessively passed on, or collected from, petitioner in respect of its beer products from January 23, 2020 to February 9, 2020. Citing inaction of respondent on both claims, petitioner filed the present Petition for Review on February 2, 2022. 16 Summonses were served on respondent on March 4, 2022 and the Office of the Solicitor General on March 7, 2022. 17 Subsequently, respondent filed a Motion for Extension of Time to File Answer18 which 11 Exhibits"P-12" and "P-12-a", CTA Docket Vol. Ill, pp. 1095-1102. 12 Exhibit''P-13", CTADocketVol.lll, pp.1103-1104. 13 Exhibits "P-17" and "P-17-a", CTA Docket Vol. Ill, p 1154. 14 Exhibit "P-18", CTA Docket Vol. Ill, pp. 1156-1157. 15 Although Exhibit "P-19" (CTA Docket Vol. Ill, p. 1165) shows that the stamped date of receipt is January 11, 2022, petitioner alleged, and respondent did not controvert, that the actual date of receipt is January 12, 2022. 1' CTA Docket Vol. I, p.10. 17 CTA Docket Vol. II., p 762. 1s CTA Docket Vol. II., pp. 763-765~

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 the Court granted in the Resolution 19 dated April 8, 2022, g1v1ng respondent until May 3, 2022 within which to file Answer. On April 28, 2022, within the extended period, respondent filed his Answer, 20 raising the following special and affirmative defenses: (i) the instant petition is not warranted to be given due course for lack of jurisdiction; (ii) assuming without conceding that the Court may take cognizance of cases involving validity or constitutionality of BIR issuances, the Court should dismiss the instant petition due to petitioner's non-exhaustion of administrative remedies; (iii) assuming without conceding that the Court has jurisdiction and/or petitioner has cause of action, petitioner is not entitled to a tax refund because there was no erroneous or illegal collection of excise taxes; and, (iv) RA No. 11647 was made effective upon its complete publication in the website of the Official Gazette and thus, RA No. 11647 became effective beginning January 23, 2020; and, (v) claims for refund are construed strictly against the taxpayer and in favor of the government Respondent's Pre-Trial Brief21 was filed on May 25, 2022 while the Pre-Trial Brief for the Petitioner22 was filed on July 4, 2022. The Pre-Trial Conference was held on July 7, 2022 23 On July 28, 2022, the parties filed their Joint Stipulation24 which was approved by the Court in the Resolution dated August 18, 2022, thereby terminating the Pre-Trial. 25 On September 12, 2022, the Pre-Trial Order26 was issued. 19 CTA Docket Vol. II, p. 768. 20 CTA Docket Vol. II, pp. 774-800. 21 CTA Docket Vol. II, pp. 803-806. 22 CTA Docket Vol. II, pp. 810-836. 23 Order dated July 7, 2022. CTA Docket Vol II, pp. 847-852. 24 CTA Docket Vol. II, pp 874-882. 2s CTA Docket Vol. II, p. 893. "COA D~<e< VoL LL " on~o"~

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 Upon motion27 of petitioner, the Court commissioned Mr. Jerome Antonio B. Constantino, as Independent Certified Public Accountant (ICPA), on September 1, 2022. 28 During trial, petitioner presented the testimonies of Mr. Joel L. Atienza, petitioner's Manager for Tax Services, 29 and Mr. Jerome Antonio B. Constantino, the Court-commissioned ICPA. 30 On December 12, 2022, petitioner filed its Formal Offer of Evidence 31 In the Resolution dated February 17, 2023, 32 the Court admitted all of petitioner's exhibits, except: (i) Exhibits "P-31-5001" to "P-31-5500", for the USB/flash drive submitted to the Court which purportedly contains said documents is inaccessible; and, (ii) Exhibit "P-36" for petitioner's failure to identify the same. The Court, however, in a subsequent Resolution dated October 26, 2023, 33 admitted in evidence Exhibits "P-31-5001" to "P-31-5500" upon access of the same in the replacement USB/flash drive, and Exhibit "P-36" after Mr. Constantino had identified the same in his Supplemental Affidavit. In the same Resolution, considering counsel for respondent's manifestation during the hearing on November 10, 2022 that he was waiving the right to present evidence, both parties were given a non- extendible period of thirty (30) days from notice to submit their respective memoranda. Respondent's Memorandum34 was filed on March 13, 2023, while petitioner's Memorandum Ad Cautelam35 and Supplemental Memorandum for the Petitioner36 were filed on March 29, 2023 and November 20, 2023, respectively. Thereafter, the case was finally submitted for decision on January 4, 2024_37 ISSUES The issues to be resolved in this case are the following: 38 27 CTA Docket Vol. II. pp. 853-855 28 CTA Docket Vol. II, pp. 899-901. 29 Exhibit"P-20", CTA Docket Vol. II, pp. 597-619. 30 Exhibit "P-21", CTA Docket Vol. II, pp. 856-862; Exhibit "P-23", CTA Docket Vol. Ill, pp. 1211- 1215; Exhibit "P-44", CTA Docket Vol. II, pp. 997-1015; Exhibit "P-46", CTA Docket Vol. Ill, pp. 1299-1304. 31 CTA Docket Vol. Ill, pp. 1031-1051. 32CTADocketVol.lll, p.1237. 33 CTA Docket Vol. Ill, pp. 1426-1428. 34 CTA Docket Vol. Ill, pp. 1238-1263. 35 CTA Docket Vol. Ill, pp. 1314-1372. 36 CTA Docket Vol. IV, pp. 1438-1456. 37 Resolution dated January 5, 2024, CTA Docket Vol. IV, p. 1821. 38 Pre-Trial Order, CTA Docket IV, pp. 935-936"1

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 1. Whether or not petitioner is entitled to an excise tax refund in the total amount of ~1 ,068, 775,829.04, representing excise taxes erroneously, excessively, illegally and/or wrongfully assessed on, and collected from, petitioner by respondent; and, 2. Whether or not the Court has jurisdiction to act on the present Petition for Review. PARTIES' ARGUMENTS Petitioner argues that: 39 (i) the Court has jurisdiction to act on and resolve the present Petition for Review; (ii) it is entitled to an excise tax refund in the amount of ~8.278,851.12, representing erroneous, excessive, illegal and/or wrongful collection from, and overpayment by petitioner of excise taxes on its subject beer products for the period beginning January 23, 2020 up to February 9, 2020; a. the excise tax of ~27.07 per liter imposed by respondent on petitioner's subject beer products, as well as RMC No. 90-2012 and RR No. 17-2012 on which said tax rate is based, are void for being directly contradictory to and violative of the express provisions of the sixth and seventh paragraphs of Section 143 of the NIRC, as amended by RA No.10351; b. the excise tax rate of ~27.07 is void since RMC No. 90- 2012 and RR No. 17-2012, from which said tax rate of ~27.07 per liter is based, are invalid, unconstitutional and confiscatory for having been issued without prior notice to petitioner and the conduct of a hearing, in utter disregard of the due process provisions of the Administrative Code of 1987 requiring the BIR to afford affected parties the opportunity to be heard prior to the implementation of such issuances; ''Petition for Review, CTA Docket Vol. I, pp. 31-46; Memorandum Ad Cautelam, CTA Docket Vol. Ill, pp 1314-1372; Supplemental Memorandum, CTA Docket Vol. IV, pp. 1438-1456.<!1/

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 (iii) it is entitled to an exc1se tax refund in the amount of ~1 ,060,496,977.92, representing erroneous, excessive, illegal and/or wrongful collection from, and overpayment by petitioner of excise taxes on its subject beer products using the ~35.00 per liter tax rate under RA No. 11467 for the period beginning January 23, 2020 up to February 9, 2020; a. the excise tax rate of ~35.00 per liter provided under RA No. 11467 should have been imposed starting from the date of effectivity of RA No. 11467, or on February 10, 2020, when RA No. 11467 was published in the Official Gazette pursuant to Article 2 of the Civil Code and the ruling in Garcillano vs. The House of Representatives Committees on Public Information, Public Order and Safety, National Defense and Security, Information and Communications Technology, and Suffrage and Electoral Reforms40 '� b. no less than Congress or the Legislative Department itself recognizes that the current law does not allow online publication in the Official Gazette and that online publication in the Official Gazette can be done only through an amendment of the Civil Code; c. the Executive Department itself, through the Official Gazette website, recognizes that the online version of the Official Gazette (as seen on the website and mobile applications) provides only a copy of the issuance and does not serve as official publication for purposes of effectivity of the issuance; and, d. since RA No. 11467 was published in the February 10, 2020 issue of the actual/physical Official Gazette (Volume 116, No. 6), the higher excise tax rate of ~35.00 should be applied beginning February 10, 2020 only, and not from January 23, 2020. Respondent counter-argues that: 41 (i) the instant petition is not warranted to be given due course for lack of jurisdiction; 40 G. R. No. 170338, December 23, 2008. 41 Answer, CTA Docket Vol. II, pp. 775-779; Memorandum. CTA Docket Vol. Ill, pp. 1238-126(!;1

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 (ii) assuming without conceding that this Court may take cognizance of cases involving validity or constitutionality of BIR issuances, the Court should dismiss the instant petition due to petitioner's non-exhaustion of administrative remedies; (iii) assuming without conceding that this Court has jurisdiction and/or petitioner has cause of action, petitioner is not entitled to a tax refund because there was no erroneous or illegal collection of excise taxes; (iv) RA No. 11467 was made effective upon its complete publication in the website of the Official Gazette, thus, RA No. 11467 became effective beginning January 23, 2020; and, (v) claims for refund are construed strictly against the taxpayer and in favor of the government. THE COURT'S RULING The Court finds the Petition for Review meritorious. The Petition for Review was timely filed; hence, the Court has jurisdiction over the case The Court is vested with ample authority to review respondent's inaction on the refund claim pursuant to Section (7)(a)(2) of RA No. 1125, as amended by RA No. 9282,42 in relation to Section 3(a)(2), Rule 4 of the Revised Rules of the Court of Tax Appeals (RRCTA), as amended 43 42 "SEC. 7. Jurisdiction.- The Court shall exercise: (a) Exclusive appellate jurisdiction to review by appeal, as herein provided: XXX (2) Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes, fees or other charges, penalties in relation thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue, where the National Internal Revenue Code provides a specific period for action, in which case the inaction shall be deemed a denial;" 43 "SEC. 3. Cases within the JUrisdiction of the Court in Divisions. - The Court in Division shall exercise: (a) Exclusive original over or appellate jurisdiction to review by appeal the following: XXX (2) Inaction by the Commissioner of Internal Revenue in cases involving disputed assessments, refunds of internal revenue taxes. fees or other charges. penalties in relation thereto, or other matters arising under the National Internal Revenue Code or other laws administered by the Bureau of Internal Revenue xxx;~

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 Sections 204(C) and 229 of the NIRC of 1997, as amended, provide the prescriptive period for filing of administrative and judicial claims for refund or recovery of tax erroneously or illegally collected, to wit: SEC. 204. Authority of the Commissioner to Compromise, Abate and Refund or Credit Taxes. - The Commissioner may- XXX XXX XXX (C) Credit or refund taxes erroneously or illegally received or penalties imposed without authority, refund the value of internal revenue stamps when they are returned in good condition by the purchaser, and, in his discretion, redeem or change unused stamps that have been rendered unfit for use and refund their value upon proof of destruction. No credit or refund of taxes or penalties shall be allowed unless the taxpayer files in writing with the Commissioner a claim for credit or refund within two (2) years after the payment of the tax or penalty: Provided, however, that a return filed showing an overpayment shall be considered as a written claim for credit or refund. XXX XXX XXX SEC. 229. Recovery of Tax Erroneously or Illegally Collected. - No suit or proceeding shall be maintained in any court for the recovery of any national internal revenue tax hereafter alleged to have been erroneously or illegally assessed or collected, or of any penalty claimed to have been collected without authority, or of any sum alleged to have been excessively or in any manner wrongfully collected, until a claim for refund or credit has been duly filed with the Commissioner; but such suit or proceeding may be maintained, whether or not such tax, penalty, or sum has been paid under protest or duress. In any case, no such suit or proceeding shall be filed after the expiration of two (2) years from the date of payment of the tax or penalty regardless of any supervening cause that may arise after payment: Provided, however, That the Commissioner may, even without a written claim therefor, refund or credit any tax, where on the face of the return upon which payment was made, such payment appears clearly to have been erroneously paid.~

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 Section 204 of the NIRC of 1997, as amended, applies to administrative claims for refund, while Section 229 of the same Code pertains to judicial claims for refund. 44 Based on the foregoing, within two (2) years from the date of payment of tax, the claimant must first file an administrative claim with the CIR before filing its judicial claim with the courts of law. Both claims must be filed within a two (2)-year reglementary period. For excise tax on domestic products in general, the return is filed and the excise tax is paid by the manufacturer or producer before removal of the products from the place of production. The date of payment of excise tax on domestic products depends on the date of actual removal of the taxable domestic products from the place of production 45 Hence, the reckoning point for the two (2)-year period to file both administrative and judicial claims is the date of the removal of the products from the place of production. The relevant dates relative to the subject claim for refund are as follows: DATE OF DATE OF FILING OF DATE OF FILING PAYMENT ADMINISTRATIVE OF JUDICIAL CLAIM CLAIM Claim A January 23, 2020 to December 6, 2021 January 21, 202246 February 9, 2020 January 12, 2022 Claim B December 21, 2020 With regard to petitioner's Claim A, counting two (2) years from January 23, 2020 to February 9, 2020, petitioner had until January 24, 202247 to February 9, 2022, to file its administrative and judicial claims. On the other hand, for its Claim B, petitioner had until December 21, 2022 to file its administrative and judicial claims. Petitioner filed its administrative claims on December 6, 2021 and January 12, 2022 for Claim A and Claim B, respectively, which dates, undeniably, fall within the two (2)-year period. " Commissioner of Internal Revenue vs. Univation Motor Philippines, Inc. (formerly Nissan Motor Philippines. Inc.}, G.R No. 231581, April10, 2019. 45 Commissioner of Internal Revenue v. San Miguel Corp., G.R. Nos. 180740 & 180910, November 11,2019 46 CTA Docket Vol. II, p 386. 1 47 January 23, 2022 fell on a Sunday

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 On the other hand, with regard to petitioner's judicial claim for its Claim A covering the period January 23, 2020 to February 9, 2020, due to the increasing COVID-19 cases, 48 the Supreme Court (SC) extended the filing period until February 1, 2022 for pleadings and other court submissions that fell due in the month of January 2022. Thus, for Claim A, petitioner had until February 1, 2022 to February 9, 2022, at the latest, within which to file its judicial claim for refund. Notably, petitioner's judicial claim, covering both Claim A and Claim B, was filed on January 21, 2022. In fine, petitioner timely filed its administrative and judicial claims. The Court has jurisdiction to determine the constitutionality and validity of a revenue issuance in a Petition for Review questioning respondent's inaction on a refund claim The SC En Bane's ruling in Banco de Oro, eta/. vs. Republic of the Philippines et al49 is unambiguous in holding that the Court of Tax Appeals (CTA) has jurisdiction to rule on the constitutionality or validity of a tax law, regulation, or administrative issuance, to wit: The Court of Tax Appeals has undoubted jurisdiction to pass upon the constitutionality or validity of a tax law or regulation when raised by the taxpayer as a defense in disputing or contesting an assessment or claiming a refund. It is only in the lawful exercise of its power to pass upon matters 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 of cases directly challenging the constitutionality or validity of a tax law or regulation or administrative issuance (revenue orders, revenue memorandum circulars, rulings). XXX 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 48 Item 4, SC Memorandum Order No. 10-2022 dated January 12, 2022. 49 G.R. No. 198756, August 16, 2016~

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 omissions of the said quasi-judicial agencies should, thus, be filed before the Court of Tax Appeals. (Boldfacing supplied) Banco De Oro emphatically highlighted the exclusive authority of the CTA to adjudicate the constitutionality or validity of tax laws, regulations or administrative issuances. Such jurisdiction is undoubted, whether the challenge presented is brought directly before the Court or arises as a defense in an assessment case or refund case. In this case, petitioner assails the issue of validity of RMC No. 90-2012 and RR No. 17-2012 in support of its position that it is entitled to its claim for refund. Thus, in line with the SC's pronouncement in Banco De Oro, this Court has jurisdiction to determine the validity of RMC No. 90-2012 and RR No. 17-2012. Exhaustion of administrative remedies is not applicable in this case RMC No. 90-2012 and RR No. 17-2012 were issued by respondent in view of his power to interpret the provisions of the NIRC and other tax laws pursuant to Section 4 of the NIRC of 1997, as amended. This authority has been characterized as a rule-making or quasi-legislative power delegated by Congress to the CIR. 50 As held by the SC in Alliance of Non-Life Insurance Workers of the Philippines, et a/. vs. Han. Leandro R. Mendoza, et a/., 51 the doctrine of exhaustion of administrative remedies does not apply when the questioned act is quasi-legislative in character, viz.: 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. x x x (Boldfacing supplied) �5 Commissioner of Internal Revenue vs. Court of Tax Appeals (Second Division) and Petron Corporation, G.R No. 207843, July 15, 2015. '' G.R. No. 206159, August 26, 2020~

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 Verily, petitioner need not file an appeal before the SOF seeking a review of the validity of the aforesaid issuances, as its recourse to this Court to seek judicial redress is proper. Petitioner is entitled to its excise tax refund in the full amount of F1,068, 775,829.04 Petitioner's Claim A and Claim B in the amounts of ~8.278,851.12 and ~1 ,060,496,977.92, respectively, pertain to the following beer products of petitioner: Beer Products Packaging San Mig Light bottle, can, keg Other Beer Products: � Pale Pilsen can San Mig Zero bottle Premium All Malt bottle, can Super Dry can Red Horse can San Miguel Flavored Beer Apple bottle San Mi~el Flavored Beer Lemon I bottle I Claim A- F8,278,851.12 For Claim A, petitioner alleges that from January 23, 2020 up to February 9, 2020, it was constrained to pay the excise taxes on the removals of its beer products at the rate of ~27.07 per liter, instead of only ~26.44 per liter. Section 143 of the NIRC of 1997, as amended by RA No. 10351, reads: SEC. 3. Section 143 of the National Internal Revenue Code of 1997, as amended by Republic Act No. 9334, is hereby further amended to read as follows: SEC. 143. Fermented Liquors. - There shall be levied, assessed and collected an excise tax on beer, lager beer, ale, porter and other fermented liquors except tuba, basi, tapuy and similar fermented liquors in accordance with the following schedule:~

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 Effective on January 1, 2013 (a) If the net retail price (excluding the excise tax and the value-added tax) per liter of volume capacity is Fifty pesos and sixty centavos (P50.60) or less, the tax shall be Fifteen pesos (P15.00) per liter; and (b) If the net retail price (excluding the excise tax and the value-added tax) per liter of volume capacity is more than Fifty pesos and sixty centavos (P50.60), the tax shall be Twenty pesos (P20.00) per liter. Effective on January 1, 2014 (a) If the net retail price (excluding the excise tax and the value-added tax) per liter of volume capacity is Fifty pesos and sixty centavos (P50.60) or less, the tax shall be Seventeen pesos (P17.00) per liter; and (b) If the net retail price (excluding the excise tax and the value-added tax) per liter of volume capacity is more than Fifty pesos and sixty centavos (P50.60), the tax shall be Twenty-one pesos (P21.00) per liter. Effective on January 1, 2015 (a) If the net retail price (excluding the excise tax and the value-added tax) per liter of volume capacity is Fifty pesos and sixty centavos (P50.60) or less, the tax shall be Nineteen pesos (P19.00) per liter�, and (b) If the net retail price (excluding the excise tax and the value-added tax) per liter of volume capacity is more than Fifty pesos and sixty centavos (P50.60), the tax shall be Twenty-two pesos (P22.00) per liter. Effective on January 1, 2016 (a) If the net retail price (excluding the excise tax and the value-added tax) per liter of volume capacity is Fifty pesos and sixty centavos (P50.60) or less, the tax shall be Twenty-one pesos (P21.00) per liter; and (b) If the net retail price (excluding the excise tax and the value-added tax) per liter of volume capacity is more than Fifty pesos and sixty centavos (P50.60), the tax shall be Twenty-three pesos (P23.00) per liter. Effective on January 1, 2017, the tax on all fermented liquors shall be Twenty-three pesos and fifty centavos (P23.50) per liter. The rates of tax imposed under this Section shall be increased by four percent (4%) every year thereafter effective on January 1, 2018, through revenue regulations issued by the Secretary of Finance. However, in case of fermented liquors affected by the 'no downward reclassification' provision prescribed under this Section, the four percent (4%) increase shall apply to their respective applicable tax ratese1f1

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 XXX Any downward reclassification of present categories, for tax purposes, of fermented liquors duly registered at the time of the effectivity of this Act which will reduce the tax imposed herein, or the payment thereof, shall be prohibited. The proper tax classification of fermented liquors, whether registered before or after the effectivity of this Act, shall be determined every two (2) years from the date of effectivity of this Act. All fermented liquors existing in the market at the time of the effectivity of this Act shall be classified according to the net retail prices and the tax rates provided above based on the latest price survey of the fermented liquors conducted by the Bureau of Internal Revenue. (Boldfacing and underscoring supplied) To implement the afore-quoted provision introduced by RA No. 10351, RR No. 17-201252 and RMC No. 90-201253 were issued. Section 3 of RR No. 17-2012 states: SEC. 3. REVISED RATES AND BASES OF THE SPECIFIC TAX.- There shall be levied, assessed and collected an excise tax on alcohol or tobacco products, in accordance with the following schedule: PRODUCT DATE OF EFFECTIVITY OF TAX RATES January January January January January 2018 1, 2013 1, 2014 1, 2015 1, 2016 1' 2017 Onwards A. ALCOHOL PRODUCTS (1) Distilled Spirits (a) Ad Valorem tax Rate 52 SUBJECT: Prescribing the Implementing Guidelines on the Revised Tax Rates on Alcohol and Tobacco Products Pursuant to the Provisions of Republic Act No. 10351 and to Clarify Certain Provisions of Existing Revenue Regulations. 53 SUBJECT: Revised Tax Rates of Alcohol and Tobacco Products Under Republic Act No. 10351, 'An Act Restructuring The Excise Tax on Alcohol And Tobacco Products By Amending Sections 141, 142, 143, 144, 145, 8, 131 And 288 of Republic Act No. 8424, Otherwise Known As The National Internal Revenue Code Of 1997, as amended By Republic Act No. 9334, And For Other Purposes'Cil

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 Based on the net retail price per proof (excluding the excise and value- 15% 15% 20% 20% 20% 20% added taxes), and (b) Specific Tax Php20.00 Php20 00 Php20.00 Php20.80 Php21.63 Effective Per Proof liter 1/1/2016, the specific tax rate shall be increased by 4% every year thereafter (2) Wines Per liter Per liter Per liter Per liter Per liter (a) Sparkling wines/champagnes, where the net retail price (excluding the excise and value- added taxes) per bottle of 750 ml, regardless of proof is: (1) Five Hundred Pesos (P500.00) or Effective less Php250.00 Php260 00 Php270.40 Php281.22 Php292.47 1/1/2014, the specific (2) More than tax rate Five Hundred shall be Pesos increased (P500 00) Php700.00 Php728.00 Php757.12 Php787.40 Php818.90 by4% every year (b) Still wines and thereafter carbonated wines containing fourteen percent (14%) of alcohol by volume Php30.00 Php31 20 Php32.45 Php33.75 Php35.10 or less (c) Still wines and carbonated wines containing more than fourteen percent (14%) of

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 alcohol by volume Php60.00 Php70.20 but not more than twenty-five percent (25%) of alcohol by volume Php62.40 Php64.90 Php67.50 (d) Fortified wines Taxed as Taxed as Taxed as Taxed as Taxed as containing more Distilled Distilled Distilled Distilled Distilled than twenty-five Spirits Spirits Spirits Spirits Spirits (25%) percent of alcohol by volume shall be taxed as distilled spirits (3) Fermented liquors, Per Liter Per Liter Per Liter Per Liter Per Liter where the net retail price (excluding excise and Php17.00 Php19.00 Php21.00 Effective value-added taxes) per liter Php21.00 Php22.00 Php23.00 1/1/2018, of volume capacity is: the (a) Fifty Pesos and specific tax rate Sixty Centavos shall be increased (P50.60) or less Php15.00 Php23.50 by 4% every b. More than Fifty year Pesos and Sixty thereafter Centavos (P50.60) Php20.00 Php23.50 Fermented liquors brewed Effective 111/2014, and sold at microbreweries the or small establishments specific tax rate such as pubs and Php3276 shall be increased restaurants, regardless of by 4% every the net retail price. Php28 00 Php29 12 Php30.28 Php31 50 year thereafter Meanwhile, Section 5 of RR No. 17-2012 provides: SEC. 5. DOWNWARD RECLASSIFICATION OF FERMENTED LIQUORS. - Any downward reclassification of any fermented liquor product that is duly registered with the BIR at the time of effectivity of the Act which will reduce the tax imposed herein, or the payment thereof, shall be prohibited. Starting January 1, 2014, the applicable Ia< "te sholl be;"""""' by fo"' pe<ee"t (4%)'"""'"Y: Pro>;ded~

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 however, it shall not be lower than the rates prescribed under Section 3 of these regulations. (Boldfacing supplied) Meanwhile, Annex "A-1" of RMC No. 90-2012 prescribes an excise tax rate of P20.57 per liter- the tax rate that petitioner had been paying prior to RA No. 10351 -for petitioner's beer products effective January 1, 2013, as shown below: Annex A-1 LIST OF BRANDS OF LOCALLY MANUFACTURED FERMENTED LIQUORS As of December 2012 I. LISt 0 f Bran ds Based on 2010 BIR Pn.ee Surve BRAND NAME/ Product TYPE OF CONTENT NET RETAIL Applicable Description PACKAGING PRICE Excise PER (Based on 201 o Tax Rate Per TYPE OF BIR Liter PACKAGING Price Survey) Per (Effective Liter January {in milliliter) 1, 2013) A NRP is P50.60 per liter and below 1 Beer Macho bottle 1000 42.65 15.00 bottle 1000 36.79 15.00 2 Beer Pale Pilsen bottle 320 48.84 15.00 3 Beer Pale Pilsen bottle 1000 31.05 15.00 4 Colt-45 bottle 330 30 04 15.00 5 Colt-45 bottle 500 31.27 15.00 6 Colt-45 bottle 1000 28.75 15.00 bottle 330 39.02 15.00 7 Gold Eagle Beer King bottle 330 31.62 15.00 8 Lone Star bottle 330 5026 15.00 9 Lone Star Light bottle 1000 40.58 15.00 10 Manila Beer bottle 330 41.77 15.00 11 Manila Beer Litro 12 Manila Beer Strong - bottle 330 50.58 15.00 bottle 330 47.18 15.00 (Regional) bottle 1000 48.07 15.00 13 Manila Light bottle 330 45.85 15.00 14 Manila Premium bottle 500 38.97 15.00 15 Red Horse bottle 1000 32.73 15.49 16 Red Horse 17 Red Horse 18 San Miguel Pale Pilsen

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 19 San Miguel Pale Pilsen bottle 320 45.48 15.49 (embossed label marking) 20 Coors Light Beer bottle 330 43.18 20.57 21 San Mig Light 47.99 20.57 22 The Original Coors bottle 330 32.36 20.57 23 The Silver Bullet Coorslight 45.21 20.57 bottle 330 bottle 330 B. NRP is more than P50.60 24 Beer Pale Pilsen bottle 750 67.74 20.00 77.99 20.00 25 Cerveza Negra non- 330 returnable bottle 26 Cerveza Negra bottle 320 69.15 20.00 56.81 20.00 27 Colt-45 can 330 57.49 20.00 60.26 20.00 28 Lone Star can 330 55.97 20.00 55.97 20.00 29 Lone Star Light can 330 77.88 20.00 30 Manila Beer can 330 31 Manila Light can 330 32 San Miguel Pale Pilsen (with bottle 320 paper label) 33 Super Dry non- 330 73.87 20.00 returnable bottle 34 I Scp" Do bottle 330 69.53 20.00 78.33 20.00 35 Super Dry can 330 60.37 20.57 56.03 20.57 36 Colt Ice bottle 330 56.61 20.57 37 Coors Light Beer 66.39 20.57 38 Red Horse can 330 61.51 20.57 62.66 20.57 ' 65.10 20.57 can 330 39 San Mig Cerveza Negra bottle 320 ' - 40 San Mig Light ' can 330 41 San Mig Strong Ice bottle 330 42 San Mig Strong Ice non- 330 returnable bottle 43 San Mig Strong Ice can 330 70.36 20.57 74.75 20.57 44 San Miguel Oktoberfest Beer bottle 330 60.05 20.57 45 San Miguel Pale Pilsen can 330

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 107 45 46 San Miguel Premium All Malt bottle 330 91.73 20.57 Beer 47 San Miguel Premium All Malt can 330 100.30 20.57 Beer 48 San Miguel Premium All Malt I non- 330 104.73 20.57 Beer returnable I bottle 49 Super Dry can 330 69.90 20.57 54.00 20.57 50 The Original Coors can 330 57 05 20.57 51 The Silver Bullet Coorslight can 330 II. List of Brands (not included in 2010 BIR Price Survey and introduced in the market before effectivity of RA No. 10351) Based on Latest Suggested Net Retail Price Per Sworn Statement Submitted by the Manufacturer or Importer BRAND NAME/ Product TYPE OF CONTENT NET RETAIL Applicable Description PACKAGING PRICE Excise PER A. NRP is P50.60 and below {Based on Latest Tax Rate Per TYPE OF Suggested Net Liter PACKAGING Retail Price Per (Effective {in milliliter) Sworn Statement) January Per Liter 1' 2013} 1 Lone Star bottle 500 48.00 15.00 44.00 15.00 2 Manila Beer bottle 500 41.76 15.00 36.36 15.00 3 Manila Beer Strong bottle 330 37.50 15.00 48.48 20.57 4 Stag bottle 320 5 Stag bottle 330 7 Beer Pale Pilsen can 330 B. NRP is more than P50.60 l ___,_ 8 Carlsberg 1 bottle 330 57.58 20.00 100.00 20.00 9 Carlsberg Chill bottle 330 20.00 56.25 20.00 10 Gold Eagle Beer bottle 320 54.55 20.00 78.79 20.00 11 Lone Star Ultra bottle 330 109.09 20.57 78.79 20.57 12 Manila Ice bottle 330 60.58 20.57 75.76 13 Manila Ice Can 330 14 Carlsberg Can 330 15 San Mig Zero Bottle 330 16 San Miguel Flavored Beer- Bottle 330 Apple

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 BRAND NAME/ Product TYPE OF CONTENT NET RETAIL Applicable Description PACKAGING PRICE Excise PER 17 San Miguel Flavored Beer- (Based on Latest Tax Rate Per Lemon TYPE OF Suggested Net Liter Retail Price Per 18 San Miguel Magnum Beer PACKAGING (Effective Strong Lager Sworn Statement) January {in milliliter) Per Liter 1. 2013) 19 Stag Bottle 330 75.76 20.57 20 The Original Coors Bottle 330 55.18 20.57 (Boldfacmg supplted) Can 330 68.18 20.57 Bottle 1000 55.00 20.57 Using the excise tax rate of ~20.57 per liter as a starting rate in 2013, respondent imposed a compounding 4% increase pursuant to Section 5 of RR No. 17-2012. Hence in 2020, the excise tax rate for petitioner's beer products pursuant to RMC No. 90-2012 in relation to RR No. 17-2012 was already at ~27.07 per liter. Below is a summary comparing side by side the excise tax rates pursuant to Section 143 of the NIRC, as amended by RA No. 10351 vis-a-vis the excise tax rates under RR No. 17-2012 and RMC No. 90- 2012 for the taxable years 2013 to 2020: Period Excise Tax Rate Excise Tax Rate per liter under RR No. I per Liter under 17-2012 and RMC No. 90-2012 Section 143 of the NIRC, as amended by RA No. 10351 1-- 2013 15.00/20.00 20.57 2014 17.00/21.00 21.39 22.25 2015 19.00/22.00 23.14 24.06 2016 21.00/23.00 25.03 26 03 2017 - 23.50 27.07 t= 2018 24.44 i 25.42 l-----2�0c2190 26.44 To address the controversy surrounding Claim A, the critical issue that must be resolved is the correct excise tax rate applicable to (jJ petitioner in 2013; specifically, whether it should be ~15.00/~20.00 per liter based on Section 143 of the NIRC, as amended by Section 3

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 RA No. 10351, or ~20.57 per liter as prescribed under RMC No. 90- 2012. Petitioner contends that the previous excise tax rate of ~20.57, which it had paid under protest to the BIR in 2012, was already superseded by the new rates (i.e., ~15.00/~20.00 per liter in 2013, ~17.00/~21.00 per liter in 2014, and so on) as provided under Section 143 of the NIRC of 1997, as amended by Section 3 of RA No. 10351. Conversely, in assessing petitioner deficiency excise tax based on the rate of ~27.07 for 2020, respondent effectively asserts that the excise tax rate of ~20.57 was retained and served as the initial rate for the indexation starting from 2014 until 2020, when it was ultimately adjusted to ~27.07. Respondent anchors its position in the "no downward reclassification" provision found in Section 3 of RA No. 10351, which reads: The rates of tax imposed under this Section shall be increased by four percent (4%) every year thereafter effective on January 1, 2018, through revenue regulations issued by the Secretary of Finance. However, in case of fermented liquors affected by the 'no downward reclassification' provision prescribed under this Section, the four percent (4%) increase shall apply to their respective applicable tax rates. Allegedly, under the "no downward reclassification", a reclassification from high-tier to low-tier category is prohibited as it reduces the excise tax imposed consistent with the subsequent paragraph in Section 3 of RA No. 10351, viz.: Any downward reclassification of present categories, for tax purposes, of fermented liquors duly registered at the time of the effectivity of this Act which will reduce the tax imposed herein, or the payment thereof, shall be prohibited. Aside from the prohibition of reclassification from high-tier to low- tier category, it is respondent's position that the "no downward reclassification" provision likew1se contemplates "no downgrading of pre-RA No. 10351 rates" (~20.57 in the case of petitioner) to the new rates of ~15.00 or ~20.00 per liter for 2013 per Section 143 of the NIRC, as amended by Section 3 of RA No. 10351. Consequently, according to respondent, petitioner, having paid ~20.57 per liter prior to the enactment of RA No. 10351, is required to continue paying the same rate, instead of the new rates of ~15.00 or ~20.00 per lite{jj

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 The Court agrees with petitioner. The "no downgrading of pre-RA 10351 rates" rule espoused by respondent runs contrary to the clear mandate of Section 3 of RA No. 10351 which expressly states that: All fermented liquors existing in the market at the time of the effectivity of this Act shall be classified according to the net retail prices and the tax rates provided above based on the latest price survey of the fermented liquors conducted by the Bureau of Internal Revenue. Otherwise stated, the "no downgrading of pre-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. 10351. For one, there is nothing in Section 3 of RA No. 10351 which states that rates specified therein may not be applied if it results in downward reduction of rates, i.e., from a higher pre-RA No. 10351 excise tax rate per liter, to a lower RA No. 10351 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 fermented 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 of RA 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 of RA No. 10351. A statute must be construed as to harmonize all apparent conflicts and give effect to all its provisions whenever possible 54 However, in case of irreconcilable conflict between two provisions of the same statute, the last in order of position is frequently held to

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 prevail, unless it clearly appears that the intent of the legislature is otherwise. 55 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 effectivity of RA No. 10351 is a later provision, the latter prevails. In effect, the no downgrading rule is rendered ineffectual. 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 effectivity of RA No. 10351 has been rendered ineffective by the later provision, the applicable initial excise tax rate for 2013 is P15.00/P20.00, not P20.57 per liter. In San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue, 56 which involves the same parties and issues but pertaining only to a different taxable period (i.e., January 1, 2018 to December 31, 2018), the Court's Second Division issued a Decision57 declaring that the applicable excise tax rate for 2013 is P15.00/P20.00, depending on the net retail price, to wit: Upon review, the Court finds that certain parts of Annex "A-1" of RMC No. 90-2012 imposed excise tax rates per liter (effective January 1, 2013) either by P15.49 or P20.57 regardless of whether the net retail price per liter of volume capacity of the fermented liquor is below or more than P50.60 per liter. This is contrary to the afore-quoted Section 143 of the NIRC of 1997, as amended by RA No. 10351, which imposed excise tax rates per liter at P15.00 and P20.00 only of the net retail price per liter of volume capacity of the fermented liquor is 1"50.60 or less, or more than 1"50.60 (effective January 1, 2013), respectively. (Boldfacing supplied) Accordingly, Section 5 of RR 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 toRANo.10351. In Commissioner of Internal Revenue vs. The Hon. Court of Appeals, R. O.H. Auto Products Philippines, Inc. and The Hon. Court of 55 Cuyegkeng, eta/. vs. Cruz, G.R. No. L-16263, July 26, 1960. 56 CTA Case No. 10223, July 5, 2023. 57 Penned by Honorable Associate Justice Lanee S. Cui-David, and joined by Associate Justice Jean Marie A Bacorro-Villenao11

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 Tax Appea/s, 58 the Supreme Court clarified that BIR issuances must not override, but must remain consistent and in harmony with, the law they seek to apply and implement, to wit: The authority of the Minister of Finance (now the Secretary of Finance), in conjunction with the Commissioner of Internal Revenue, to promulgate all needful rules and regulations for the effective enforcement of internal revenue laws cannot be controverted. Neither can it be disputed that such rules and regulations, as well as administrative opinions and rulings, ordinarily should deserve weight and respect by the courts. Much more fundamental than either of the above, however, is that all such issuances must not override, but must remain consistent and in harmony with, the law they seek to apply and implement. Administrative rules and regulations are intended to carry out, neither to supplant nor modify, the law. (Boldfacing supplied) More recently, in Department of Finance (DOF), et a/. vs. Asia United Bank, et a/., 59 the Supreme Court, in voiding Revenue Regulations No. 4-2011, held that administrative issuances, like BIR regulations, cannot simply amend the law they seek to implement, to wit: We rule that RR 4-2011 is void. We now expound. It is settled that administrative issuances must not override, supplant, or modify the law; they must remain consistent with the law they intend to carry out. When the application of an administrative issuance modifies existing laws or exceeds the intended scope, the issuance becomes void, not only for being ultra vires, but also for being unreasonable. Surely, courts will not countenance such administrative issuances that override, instead of remaining consistent and in harmony with the law they seek to apply and implement. We underline that the power of administrative officials to promulgate rules in the implementation of a statute is necessarily limited to what is provided for in the legislative enactment. The implementing rules and regulations of a law cannot extend the law or expand its coverage, as the power to amend or repeal a statute is vested in the legislature. It bears stressing, however, that administrative bodies are allowed under their power of subordinate legislation to implement the broad policies laid down in a statute by 'filing in' the details. All that is required is that the regulation be germane to the objectives and purposes of the law; that the regulation does not contradict but conforms with the standards prescribed by law. ss G.R. No. 108358, January 20, 1995. 59 G.R.Nos. 240163 & 240168-69, December 1, 202~

DECISION San Miguel Brewery. Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 XXX Indeed, administrative issuances, such as revenue regulations, cannot simply amend the law it seeks to implement. In Commissioner of Internal Revenue v. Seagate Technology (Philippines), We held that a mere administrative, issuance like a BIR regulation, cannot amend the law; the former cannot purport to do any more than implement the latter. To reiterate, the courts will not countenance an administrative regulation that overrides the statute it seeks to implement. (Boldfacing supplied) Following the nullification of the initial tax rate of f'l20.57 per liter as provided in Annex "A-1" of RMC No. 90-2012, petitioner's beer products are subject to the excise tax rates outlined in Section 3 of RA No. 10351. Therefore, applying the 4% indexation rate starting January 1, 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 f'l0.63 between the excise tax rate of f'l27.07 per liter erroneously, 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 f'l26.44 per liter. The imposition of the additional f'l0.63 excise tax rate per liter totalled f'l8,278,851.12, which is broken down as follows: EXHIBIT PLANT PRODUCT VOLUME OF TAX EXCISE TAX APPLICAB SHOULD BE DIFFERENCE NO. REMOVALS PAID EXCISE TAX DESCRIPTION (IN LITERS) RATE LET AX PER AMOUNT RATE LITER For the period January 23, 2020 to January 31, 2020 P-29-108 STA. ROSA SML BOTTLE 146.543 76 27.07 p 3,966,939.58 26.44 ~ 3,874,617 01 p 92,322.57 P-29-110 DAVAO SML BOTTLE 361,848.96 27.07 9.795.251.35 227,964.85 P-29-110 DAVAO SM APPLE 269,478.00 27 07 7,294,769.46 26.44 9,567.286.50 169,771 14 P-29-112 SML BOTTLE 464,959 44 27.07 292,924.45 BACOLOD 12,586.452.04 26.44 7.124,998.32 26.44 12.293,527_59 P-29-114 MANDAUE SML BOTTLE 466,353.36 27.07 12,624.185_46 26.44 12,330,382.84 293,802.62 336.156.48 27 07 9,099,755.91 26.44 8,887,977.33 211,778.58 P-29-114 MANDAUE SM APPLE 2,272.065 84 27.07 61,504,822 29 26.44 1,431.401.48 1.549,738.08 27.07 41,951.409.83 26.44 60,073,420.81 976.334.99 P-29-116 SAN FERNANDO SML BOTTLE 27.07 26.44 40.975,074 84 9.300 00 27.07 251 .751_00 26.44 5.859.00 P-29-118 POLO SML BOTTLE 16,200 00 27.07 438,534_00 26.44 245,892 00 10,206_00 567,333_36 27.07 15.357,714_06 26.44 428,328_00 357,420.02 P-29-118 POLO SML DRAFT 30 LITERS 52,279.92 1.415.217.43 15,000.294.04 32,936_35 1 ,382.281_08 P-29-118 POLO SML DRAFT 50 LITERS P-29-118 POLO SMLCAN P-29-118 POLO PALE PILSEN CAN

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 P-29-118 POLO PREMIUM 330ML CAN 2,304.72 27.07 62,388 77 26_44 60,936.80 1,451.97 P-29-118 POLO SUPER DRY CAN 17,843.76 27.07 483,030.58 26.44 471,789.01 11,241.57 P-29-118 POLO RED HORSE CAN 201,072.96 27 07 5,443,045.03 26.44 5,316,369.06 126,675.97 P-29-118 POLO SAN MIG BEER APPLE 972.480.96 27.07 26.325,059.59 26.44 25,712,396.58 612,663.01 4,651,929.69 26 44 P-29-118 POLO SAN MIG BEER LEMON 171.848.16 27.07 91,975.20 26.44 4,543,665.35 108,264.34 P-29-118 POLO PREMIUM 330ML 3,397.68 27.07 89,834.66 2,140.54 P-29-118 POLO SAN MIG ZERO 330 BTL 205.92 27.07 5,574 25 26 44 5,444.52 129.73 4.965,289 16 Subtotal- January 23, 2020 to January 31. 2020 7,881,411.36 p 213,349,805.52 ,. ,. 208,384.516.36 EXHIBIT PLANT PRODUCT VOLUME OF TAX EXCISE TAX APPLICAB SHOULD BE DIFFERENCE NO. DESCRIPTION REMOVALS RATE PAID LE TAX EXCISE TAX (IN LITERS) PER RATE LITER AMOUNT For the period February 1, 2020 to February 9, 2020 P-29-1 09 STA ROSA SML BOTTLE 705.291.84 27 07 19,092,25011 26_44 18,647,916.25 444,333.86 P-29-111 DAVAO SML BOTTLE 32.820_48 27.07 888,450_39 26.44 867,773.49 20,676.90 27.07 26.44 32,382.51 P-29-111 DAVAO SM APPLE 51.400.80 27.07 1,391,41 9_66 26 44 1,359,037.15 27.07 11.884.524 78 26_44 11,607,936.28 276,588.50 P-29-113 BACOLOD SML BOTTLE 439.029 36 27.07 26.44 180,369 05 27 07 7,750,143.17 26.44 7,569,774_12 P-29-115 MANDAUE SML BOTTLE 286.300.08 27.07 1,500 76 26_44 1,465.83 34_93 27.07 26 44 802,083.19 P-29-115 MANDAUE SM APPLE 55.44 27.07 34.464.114_19 26.44 33,662,031.00 678.875_00 27.07 29,170.073 28 26.44 28,491 '198.28 P-29-117 SAN FERNANDO SML BOTTLE 1,273.147.92 27.07 26.44 7,994.70 27.07 343,518_30 26.44 335,523.60 5,796.00 P-29-119 POLO BREWERY SML BOTTLE 1.077.579.36 27.07 249.044.00 26.44 243.248.00 311,780.15 27.07 13,396,648.48 26.44 13,084,868_33 P-29-119 POLO BREWERY SML DRAFT 30 LITERS 12.690.00 27 07 26.44 283.50 27.07 12.181.50 26.44 11,898.00 71,066_87 P-29-119 POLO BREWERY SML DRAFT 50 LITERS 9,200.00 27.07 3.053.619 44 26.44 2,982,552_57 27.07 26 44 1.407_07 P-29-119 POLO SML CAN 494.889.12 27.07 60.459.22 26.44 59,052 15 3,926 81 P-29-119 POLO SML 15LTS KEG 450.00 168,728_39 164.801 58 148,280.93 6,371,372. 78 6,223,091.85 183,337.86 P-29-119 POLO PALE PILSEN CAN 112.804.56 7.877.707 83 7,694.369.97 37.032.81 1,591 ,235_24 1,554,202.43 P-29-119 POLO PREMIUM 330ML CAN 2.233.44 598.75 25,727.33 25.128.58 284.41 P-29-119 POLO SUPER DRY CAN 6,233_04 12,220 48 11,936.07 P-29-119 POLO RED HORSE CAN 235,366.56 P-29-119 POLO SAN MIG BEER APPLE 291.012 48 P-29-119 POLO SAN MIG BEER LEMON 58.782.24 P-29-119 POLO PREMIUM 330ML 950.40 P-29-119 POLO PREMIUM 330ML -CAN 451.44 27.07 2,645.412.50 26.44 2,583,845_83 61,566.67 P-29-119 POLO 97.724_88 P-29-119 POLO SAN MIGUEL BEER 27 07 192,954 96 26 44 188.464.32 4,490_64 APPLE 7,128.00 SAN MIGUEL BEER LEMON P-29-119 POLO SAN MIG ZERO 330 BTL 32.646 24 27.07 883,733.72 26.44 863.166 59 20,567.13 P-29-119 POLO SAN MIG BEER APPLE 31.434_48 2707 850,931_37 26.44 831.127.65 19,80372 3.313.561.96 Subtotal- February 1. 2020 to February 9. 2020 5.259.622.16 ,. 142.377.971.88 ,. ,. 139,064,409_92 8,278,851.12 AMOUNT SUBJECT FOR REFUND (Claim A) 13,141,033.52 p 355,727,777.40 p 347,448,926.28 p cf

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 To support the subject refund claim, petitioner adduced in evidence the following pertinent documents, which were all examined and verified by the Court-commissioned ICPA: Document Exhibit No. Excise Tax Returns (ETR) and eFPS "P-25-1" to "P-25-521" Filing Reference Numbers Official Register Books (ORB) "P-29"; "P-29-1"; "P-29-2"; "P-29-3"; "P-29-4"; "P- 29-5"; "P-29-6"; "P-29-7"; "P-29-8"; "P-29-9"; "P-29- 10"; "P-29-11 "; "P-29-12"; and, "P-29-13" Movement Reports with Allocated "P-28-1 ", "P-28-1" Deposits eFPS Payment Details - BPI "P-26" to "P-26-117" eFPS Payment Details - Unionbank "P-27" to "P-27-113" Scrutiny of petitioner's ETRs, with supporting eFPS filing reference numbers60 and eFPS Payment Details, 61 shows that petitioner paid advance excise taxes from January 23, 2020 to February 9, 2020 in the aggregate amount of P2,842,568,000.00, broken down as follows: Exhibit Nos. Plant Amount of Excise Tax Deposit For the period January 23, 2020 to January 31, 2020 "P-27", ''P-27-1", "P-27-2", "P-27-3", Sta. Rosa I" 279,773,000.00 "P-27-4", "P-27-5", "P-27-6" Davao Bacolod 215,803,000.00 "P-27-7", "P-27-8", "P-27-9", "P-27- 10", "P-27-11", "P-27-12", "P-27-13" Mandaue 103,716,000.00 San Fernando "P-27-14", "P-27-15", "P-27-16", "P- 387,473,000.00 27-17", "P-27-18", "P-27-19", "P-27- 20" 580,130,000.00 "P-27-21", "P-27-22", "P-27-23", "P- 27-24", "P-27-25", "P-27-26", "P-27- 27" "P-27-28", "P-27-29", "P-27-30", "P- 27-31", "P-27-32", "P-27-33", "P-27- 34" 60 Exhibit Nos. "P-25-1" to "P-25-521". 61 Exhibit Nos. "P-26" to "P-26-117" and "P-27" to "P-27-113'(j)

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 107 45 "P-27-35", "P-27-36", "P-27-37", "P- Polo 293,842,000.00 27-38", "P-27-39", "P-27-40", "P-27- 41" Subtotal- January 23, 2020 to January 31, 2020 p 1,860,737,000.00 Exhibit No. Plant Amount of Excise Tax Deposit For the period February 1, 2020 to February 9, 2020 "P-26", "P-26-1 ", "P-26-2", "P-26-3", Sta. Rosa 1" 126,091,000.00 "P-26-4" Davao Bacolod 98,822,000.00 "P-26-5", "P-26-6", "P-26-7", "P-26- 8", "P-26-9" Mandaue 50,837,000.00 San Fernando "P-26-10", "P-26-11", "P-26-12", "P- 181,909,000.00 26-13", "P-26-14" Polo 340,881,000 00 "P-26-15", "P-26-16", "P-26-17", "P- 26-18", "P-26-19" 183,291,000.00 "P-26-20", "P-26-21", "P-26-22", "P- 26-23", "P-26-24" "P-26-25", "P-26-26", "P-26-27", "P- 26-28", "P-26-29" p 981,831,000.00 Subtotal- February 01, 2020 to February 9, 2020 1" 2,842,568,000.00 Total Advance Excise Tax Deposits For January 23, 2020 To February 9, 2020 In its January and February 2020 Monthly Movement Report with Allocated Deposit62 as cross-referred to its ORB and ETR, petitioner had excise taxes due amounting to 1"'2,810,518,941.08 on the total removals of all its beer products from the following plants for the period January 23, 2020 to February 9, 2020, computed as follows: Exhibit No. Plant Amount of Removals ORB ETR For the period January 23, 2020 to January 31, 2020 "P-29" "P-25-1", Sta. Rosa I" 255,913,282.81 "P-25-3", 62 Exhibit Nos. "P-28" to "P-28-1", USB~

DECISION San Miguel Brewery, inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 "P-25-5", "P-25-7", "P-25-9", "P-25-11", "P-25-13" "P-29-2" "P-25-25", Davao 198,055,796.00 "P-25-27", 88,221,238.41 "P-25-29", "P-25-31 ", 364,860,687.58 "P-25-33", 510,695,060.96 "P-25-35", 276,589,023.51 "P-25-37" 1"1, 694,335,089.27 "P-29-4" "P-25-49", Bacolod "P-25-51 ", "P-25-53", "P-25-55", "P-25-57", "P-25-59", "P-25-61" "P-29-6" "P-25-73", Mandaue "P-25-75", "P-25-77", "P-25-79", "P-25-81 ", "P-25-83" "P-25-85" "P-29-8" "P-25-97", San Fernando "P-25-99", "P-25-1 01 ", "P-25-1 03", "P-25-1 05", "P-25-1 07", "P-25-1 09" "P-29-10" "P-25-121", Polo "P-25-123", "P-25-125", "P-25-127", "P-25-129", "P-25-131", "P-25-133" Subtotal- January 23, 2020 to January 31, 2020 Exhibit No. Plant Amount of Removals ORB ETR For the period February 1, 2020 to February 9, 2020 "P-29-1" "P-25-14", Sta. Rosa p 150,329,188.92 "P-25-16", "P-25-18", "P-25-20",

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 "P-25-22", "P-25-163" "P-29-3" "P-25-38", Davao 113,891,352.93 "P-25-40", 65,164,225.59 "P-25-42", "P-25-44", 211,571,839.95 "P-25-46", 374,560,924.59 "P-25-164" 200,666,319.83 1"1, 116,183,851.81 "P-29-5" "P-25-62", Bacolod "P-25-64", "P-25-66", "P-25-68", "P-25-70", "P-25-165" "P-29-7" "P-25-86", Mandaue "P-25-88", "P-25-90", "P-25-92", "P-25-94", "P-25-166", "P-29-9" "P-25-110", San Fernando "P-25-112", "P-25-114", "P-25-116", "P-25-118", "P-25-167" "P-29-11" "P-25-134", Polo "P-25-136", "P-25-138", "P-25-140", "P-25-142", "P-25-168" Subtotal- February 1, 2020 to February 9, 2020 TOTAL REMOVALS OF BEER PRODUCTS FROM 1>2,810,518,941 .08 JANUARY 23, 2020 TO FEBRUARY 9, 2020 Petitioner's total advance exc1se tax deposits for the period January 23, 2020 to February 9, 2020 in the amount of P2,842,568,000.00 were sufficient to cover the total excise tax due amounting to P2,810,518,941.08 on the removal of all its beer products from the above listed six plants for the same period, as shown belowe11

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 Plant Exhibit Beginning Add: Advance Less: Removals Unused/Excess No. Available Excise Excise Tax Advance Tax Payments Not Related to Tax Deposit, Related to Claim Claim Total Deposit, January January 23, 2020 31, 2020 As of the Period from January 23, 2020 to January 31, 2020 Sta "P-29" p 7,130.840.37 I" 279.773.000.00 !' 3.966,939.58 !' 251,946,343.23 !' 255.913,282.81 !' 30.990,557.56 Rosa Davao "P-29- 3,691,563.28 215.803.000.00 17,090,020.81 180,965,775.19 198,055,796.00 21 ,438,767.28 2" Bacolod "P-29- 1,507,297.20 103,716,000.00 12.586,452.04 75,634,786.37 88,221 ,238.41 17,002.058.79 4" Mandaue "P-29- 23,219,016.90 387,473,000.00 21,723,941.37 343,136,746.21 364,860,687.58 45,831,329.32 6" San "P-29- 7,906.927.11 580.130.000.00 61.504,822.29 449,190,238.67 510,695,060.96 77,341,866.15 Fernando 8" Polo "P-29- 22,026,360.75 293.842,000.00 96,477,629.43 180,111 ,394.08 276,589,023.51 39,279,337.24 1 0'" TOTAL (Janua1y ~65.482.005.61 p 1. 860,737,000.00 f' 213,349.805.52 f' 1 480,985.,28375. p 1.694,335,089 27 f' 231,883,91634 23-31. 2020) As of the Period from February 01, 2020 to February 9, 2020 Plant Exhibit Beginning Add: Advance Related to Claim Less: Removals Total Unused/Excess No. Available Excise Excise Tax Advance Tax Sta. Payments Not Related to Deposit, Rosa Tax Deposit, Claim January 23, 2020 February 9, 2020 "P-29- !' 30,990,557.56 p 126,091,000.00 p 19,092,250.11 I' 131,236,938.81 I' 150,329.188.92 I' 6,752,368.64 1" Davao "P-29- 21.438,767.28 98,822,000.00 2,279,870.05 111,611,482.88 113,891,352.93 6,369,414.35 3" Baco!od "P-29- 17.002.058.79 50.837.000.00 11.884,524.78 53.279,700.81 65.164,225.59 2,674.833.20 5" Mandaue "P-29- 45,831,329 32 181,909,000.00 7,751,643.93 203.820,196.02 211,571.839.95 16,168.489.37 7" San 'P-29- 77.341,86615 340.881,000.00 34.464,114.19 340,096,810.40 374.560,924.59 43.661.941.56 Fernando 9" Polo "P-29- 39,279,337.24 183,291,000.00 66,905,568.82 133,760,751.01 200,666,319.83 21,904,017.41 11" TOTAL (February f' 231.883,91634 f' 981,83100000 ~ 142.377.971 88 f' 973,805,879 93 f' 1, 116,183,85181 f' 97.531,064.53 01-9. 2020) To recapitulate, for the period from January 23, 2020 to February 9, 2020, petitioner had total advance excise tax payments of ~2,908,050,005.61 (sum of the beginning balance as of January 23, 2020 amounting to ~65,482,005.61 and additional payments during the period amounting to ~2,842,568,000.00). During the same period, petitioner had total removals of ~2,810,518,941.08, of which ~355,727,777.40 relates to petitioner's claim. Deducting the total removals of ~2,810,518,941.08 from the advance deposits of ~2,908,050,005.61, petitioner had unused or excess advance tax deposit in the amount of ~97,531 ,064.53()'tf)

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 As shown above, petitioner paid F>355, 727,777.3863 for the subject removals based on the tax rate of F>27.07. However, based on the applicable tax rate of F>26.44, the amount due should have been F>347,448,926.26 only. Consequently, this discrepancy resulted 1n an overpayment of excise tax in the amount of F>8,278,851.12. In fine, petitioner has sufficiently proven that it is entitled to the refund of its Claim A representing overpayment of the excise taxes due on its removals of various beer products from January 23, 2020 to February 9, 2020 in the amount of F>8,278,851.12. Claim B - P1,060,496,977.92 Petitioner's Claim B represents the excise tax deficiency assessed by the BIR pursuant to the Revised NOD dated December 15, 202064 , and paid by petitioner on December 21, 2020 using TCCs, 65 viz.: Plant NRP of P50.60 NRP of P50.60 TOTAL (in LITER) SPECIFIC TAX at NRP of MORE SPECIFIC TAX at Excise Tax paid SPECIFIC TAX at Basic Excise Tax Polo and BELOW and MORE THAN ([cNaJ+[b]) P26.4411iter (in THAN P50.60 old P27.07/liter (in perEFPS PJS.OO/Jiter NEW Deficiency (in old rate (in old rate (in liter) RATE (in PHP) PHP) liter) PHP) rate (in liter) PHP) ({g]={dj+[fj) ({h]=({c]+[e])x P35} {'} {b{ ({d] "[c}x[P26 44]) {of ({fj={ejxP27 07) (fhHgJJ 10,339.814 00 3,278,782 44 13,618.596 44 360.075,689 67 7,700.014 64 208.439.396 30 568.515,086.18 746. 151,387_80 177636,30162 Mandaue 22 403,412.00 1 436 928.00 23,840,340 00 630.338,589.60 1.40499216 38.033.137 77 668.371 727.37 883,586.625 60 215.214_898.23 San Fernando 32.435 382 00 2.500.238 40 34.935,620 40 923.697.803 38 4_056.14088 109,799.73362 1.033.497.537 00 1364.711,644 80 331.214,107 80 Davao 12.220 278 00 673,436 54 12.893.714 64 340.909 815 08 836.692 56 22.649_267 60 363.559.082 68 480.564.252.00 117 005.169 32 Bacolod 3.917.867 28 212079528 924,992 64 6.038,662 56 159.662.238.09 25.039,550 76 184,701.788 85 243,727.932 00 59.026.143.15 Sta Rosa 16.850 586 00 319.12056 17.169.706.56 453967.04145 931 170 24 25.206.778.40 479,173.819 84 633 530.688 00 154,356,868 16 Tagoloan 6 707.916 00 489.240 00 7 197.156.00 190.292.804.64 83 825.28 2 269 150 33 192,561,954 97 254.834,344 80 62.272 389 83 TOTAL 104,875,255.28 10.818,541.32 115,693,796.60 3,056,943,982.10 15,937,628.40 431,437,014.79 3,490,360,996.69 4,607,106,875.00 1,116,725,878.11 The total amount due, inclusive of interests, IS computed as follows: Basic Excise Tax Deficiency f> 1,116,725,878.11 Less: Excise Tax Payment (due from 168,959,037.24 947,766,840.87 02/10/2020 to 02/12/2020) 79,140,464.93 Balance Add: Interest (computed from 01/23/2020 to 09/04/2020) 63 Petitioner's computation had a negligible difference of P.02. "CTA Docket Vol. I, p. 346. 65 CTA Docket Vol. I, pp. 295-298.~

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 Add: Interest (computed from 33,589,672.12 09/05/2020 to 12/21/2020) p 1,060,496,977.92 Total Amount Still Due Section 15 of RA No. 11467 provides: Section 15. Effectivity.- This Act shall take effect on January 1, 2020 after its complete publication either in the Official Gazette or in newspaper of general circulation. (Boldfacing supplied) Notably, the effectivity clause states that RA No. 11467 "shall take effect on January 1, 2020". Considering that the law was approved by President Rodrigo R. Duterte only on January 22, 2020, and the publication thereof at a much later date, it effectively calls for retroactive application. The general rule is 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 lawB6 In this case, applying RA No. 11467 retroactively to transactions predating its publication imposes new obligations in the form of additional tax liabilities. Undoubtedly, 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 inexistent, at the time. Even the Department of Finance took the position that January 1, 2020 is not the effectivity date of RA No. 11467. In a Memorandum dated January 29, 202067 from Undersecretary Antonette C. Tionko, Revenue Operations Group of the Department of Finance, for SOF 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 of RA 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 6616 C.J.S. 99-102. 67 The Memorandum was attached to RMC No. 65-2020 dated June 22, 2020(1/

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 time when the law is yet to be published should not be required to pay additional taxes. (Boldfacing supplied) Clearly, RA No. 11467 took effect not on January 1, 2020, but upon publication. The issue now lies on the date of publication of RA No. 11467. As mentioned, petitioner claims that RA No. 11467 took effect on February 10, 2020 citing a Certification dated July 27, 2020 issued by the Malacanang Records Office68 which states that said Republic Act was published in the February 10, 2020 issue of the Official Gazette (Volume 116, No. 6). Thus, the increased excise tax rate of ~35.00 per liter could be imposed only starting February 10, 2020. On the other hand, respondent insists that RA No. 11467 took effect on January 23, 2020 based on RMC No. 113-2020 which published the full text of the Letter dated August 18, 2020 from Undersecretary Tionko, clarifying that RA No. 11467 was published in the Official Gazette on January 23, 2020 through its website. Thus, petitioner should pay the increased excise tax rate beginning January 23, 2020. 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. 69 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 whatsoever70 In Garcillano, the SC clarified that pursuant to Taiiada vs. Tuvera, 71 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 68 Exhibit "P-10", CTA Docket Vol. Ill, p. 1088. 69 National Association of Electricity Consumers for Reforms (NASECORE) vs. Energy Regulatory Commission (ERG}, G.R. No. 163935, August 16, 2006. 70 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, G.R. No. 170338, December 23, 2008. 71 G.R. No. L-63915 April24, 1985~

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 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 rules 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 form 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 effect 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. (Boldfacing supplied) Indeed, 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 Garcillano, 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, petitioner, 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. For declaring a contradictory effectivity date of RA No. 11467, RMC No. 65-2020 which initially declared that RA No. 11467 took effect on January 27, 2020, and RMC No. 113-2020 which finally clarified that RA No. 11467 took effect on January 23, 2020 instead, are deemed null and void(]'{

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 Relatedly, the Court takes judicial notice of pending bills before the House of Representatives (i.e., House Bill Nos. 200, 72 4494, 73 and 622674) and the Senate (i.e., Senate Bill No. 164575), all seeking to amend both Article 2 of the Civil Code76 and Section 18 of Executive Order No. 29277 to include online publication in either the Official Gazette or newspapers of general circulation as a mode of publication of laws. The legislature is presumed to have known existing laws on the subject and not to have enacted conflicting statutesl8 By extension, legislators are presumed to be knowledgeable about existing laws and to refrain from proposing bills that unnecessarily duplicate laws already in force. Indeed, if it were the case that the publication of laws, rules and regulations through the online version of the Official Gazette was already contemplated in and covered by the Civil Code and the Administrative Code, then there would have been no need for our legislators to author bills seeking to amend pertinent provisions of law relative to publication of laws. In accordance with Garcillano, and as supported by the fact that Congress has yet to pass a law amending the modes of publication of laws to include online publication, RA No. 11467 is deemed to have taken effect only upon its publication in print in the Official Gazette, specifically on February 10, 2020, as certified by the Malacanang Records Office. Accordingly, the increased excise tax rate of ~35.00 per liter may only be imposed beginning February 10, 2020. 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 "Full Title, As Filed AN ACT PROVIDING FOR THE PUBLICATION OF LAWS IN THE PRINT OR ONLINE VERSION OF THE OFFICIAL GAZETTE AND OF A NEWSPAPER OF GENERAL CIRCULATION; CTA Docket Vol. IV, pp 1794-1798. 73 Full Title, As Filed AN ACT PROVIDING FOR THE PUBLICATION OF LAWS IN THE PRINT OR ONLINE VERSION OF THE OFFICIAL GAZETTE AND OF A NEWSPAPER OF GENERAL CIRCULATION; CTA Docket Vol. IV, pp. 1799-1802. 74 Full Title, As Filed: AN ACT PROVIDING FOR THE PUBLICATION OF LAWS IN THE PRINT OR ONLINE VERSION OF THE OFFICIAL GAZETTE AND OF A NEWSPAPER OF GENERAL CIRCULATION; CTA Docket Vol. IV, pp. 1803-1807. 75 Full Title, As Filed AN ACT PROVIDING FOR THE PUBLICATION OF LAWS IN THE PRINT OR ONLINE VERSION OF THE OFFICIAL GAZETTE AND OF A NEWSPAPER OF GENERAL CIRCULATION; CTA Docket Vol. IV, pp. 1808-1812. 76 ARTICLE 2. Laws shall take effect after fifteen days following the completion of their publication either in the Official Gazette or in a newspaper of general circulation in the Philippines, unless it is otherwise provided. 77 SECTION 18. When Laws Take Effect. -Laws shall take effect after fifteen (15) days following the completion of their publication in the Official Gazette or in a newspaper of general circulation, unless It is otherwise provided. 78 Remman Enterprises. Inc. vs. Professional Regulatory Board of Real Estate Service, G.R. No. 197676, February 4, 2014, citing Gov~j)nt Service Insurance System vs. City Assessor of Iloilo City, G.R. No. 147192, June 27, 2006lf'/

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 payment of ~1 ,060,496,977.92 by petitioner, which it may claim as refund. To prove that petitioner paid the afore-stated basic deficiency excise tax of ~1 ,060,496,977.92 it presented its Letter dated January 4, 2021 sent to the BIR regarding such payment with attached BIR Payment Form (BIR Form No. 0605), 79 eFPS Filing Reference and Payment Confirmation, 80 and Tax Debit Memos 81 These documents sufficiently prove petitioner's payment of the ~1 ,060,496,977.92 it seeks to refund. In sum, petitioner is entitled to the full amount of its Claim A and Claim 8 in the total amount of P1 ,068,775,829.04 for the period from January 23, 2020 to February 9, 2020. WHEREFORE, the Petition for Review IS GRANTED. Accordingly: (i) Section 5 of Revenue Regulations No. 17-2012 dated December 21, 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 of ~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 ~27.07 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 of 79 Exhibit "P-18", CTA Docket Vol Ill, pp. 1158-1159. 80 Exhibit"P-18", CTADocketVollll, pp.1160-1162. 81 Exhibit "P-18", CTA Docket Vol Ill, pp 1163-11611/

DECISION San Miguel Brewery, Inc. vs. Commissioner of Internal Revenue CTA Case No. 10745 ~1 ,068,775,829.04 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. Presiding Justice WE CONCUR: LAN~1!~D JEAN 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. Presiding Justice