FACTS
Section 143 of the Tax Reform Act of 1997 provides for an excise tax on fermented liquor in accordance with a schedule.
The last paragraph of said article provides that the excise tax within the next 3 years from effectivity of R.A. 8240 (which is January 1997) shall not be lower than the tax due from each brand on October 1, 1996. It also provides that the rate shall be increased by 12% on January 1, 2000.
Revenue Regulations No. 17-99 increased the applicable tax rates and the increase was qualified by the last paragraph of Section 1 stating that the excise tax shall not be lower than that is actually being paid prior to January 1, 2000.
SMC is engaged in the manufacture and sale of fermented liquor. It paid excise taxes according to said RR. 17-99 but soon filed for a refund claiming that the last paragraph of Section 1 of RR No. 17-99 has no basis in law.
RULING
The Court ruled in favor of San Miguel Corporation.
The SC held that the last paragraph of Section 1 RR No. 17-99 is void for being contrary to the Tax Reform Act of 1997.
Revenue Regulations No. 17-99, however, created a new tax rate when it added in the last paragraph of Section 1 thereof, the qualification that the tax due after the 12% increase becomes effective shall not be lower than the tax actually paid prior to January 1, 2000.
In case of discrepancy between the basic law and a rule or regulation issued to implement said law, the basic law prevails as said rule or regulation cannot go beyond the terms and provisions of the basic law.
The objective of issuing BIR Revenue Regulations is to establish parameters or guidelines within which our tax laws should be implemented, and not to amend or modify its substantive meaning and import.
