Long game pays off

Thirteen years. That’s how long a domestic miner fought for a tax exemption it already had on paper. The Supreme Court just told the Bureau of Internal Revenue (BIR): you lost, and you lost a long time ago.

The story began in 2013. The company was issued a Certificate of Qualification under PD 972 — the law that exempts coal operators from taxes on fuel they import for their own mining operations. But when the company imported diesel for slapped it with VAT and excise taxes anyway — over P27 million on a single partial shipment — citing a 2012 revenue regulation aimed at curbing fuel smuggling.

SMPC paid under protest and went to court, arguing the regulation couldn’t override a law. A regional trial court agreed.

Two separate appeals — one to the Court of Appeals, the other to the Supreme Court — followed.

Meanwhile, the mining outfit also filed for a tax refund with the Court of Tax Appeals (CTA), which ruled in its favor in 2018, and again on reconsideration, and again when the BIR appealed to the CTA en banc.

The BIR kept losing. But the BIR kept appealing.

This year, the Supreme Court finally closed the loop. Its decision, reached in January but released last month, denied the Commissioner of Internal Revenue’s last petition outright, affirming the CTA’s order that the BIR must shell out a full P27.3-million refund, plus everything the years of litigation represented. This was confirmation that a revenue regulation cannot quietly dissolve an exemption Congress wrote into law.

The case, however, was never really about the P27 million — pocket change to an outfit the size of the mining giant. It was about whether a government agency could use an administrative regulation to claw back what a statute and a signed certificate had already promised.

The BIR’s 2012 regulation imposed an advance value-added tax (VAT) on fuel imports, refundable later, framed as an anti-smuggling measure.

Reasonable enough on the surface. But SMPC’s argument was sharper: you can’t impose a “pay now, refund later” scheme on an entity the law says shouldn’t pay at all.

That’s impairment — the kind the Constitution’s non-impairment clause was written to block.

The Supreme Court’s denial means the principle holds. Exemptions under PD 972 for using diesel in their operations are exactly as the law says. The BIR cannot route around a legislative exemption with a revenue regulation, however well-intentioned the policy goal.