Semirara Mining and Power filed a petition for declaratory relief before regional trial court of Makati City against Department of Energy

Semirara Mining and Power Corporation (SMPC) filed a petition for declaratory relief before the Regional Trial Court of Makati City against the Department of Energy, seeking a judicial declaration that Revenue Regulations No. 2-2012 does not apply to its operations and that its direct importation of fuel is not subject to Value-Added Tax (VAT) or excise tax. This action followed an assessment by the Bureau of Internal Revenue (BIR) in February 2013, which demanded SMPC pay VAT on a partial shipment of diesel imports, amounting to PHP 27,341,714.00. SMPC paid the amount under protest, asserting its entitlement to Coal Development Act of 1976.

The Regional Trial Court initially ruled in favor of SMPC, affirming its tax exemption privileges under the Coal Development Act. Subsequent proceedings before the Court of Tax Appeals (CTA) also supported SMPC’s claim, with both the CTA First Division and the CTA En Banc ordering the CIR to issue a refund. The CIR appealed the decision to the Supreme Court, which ultimately affirmed the CTA’s ruling, emphasizing that Local Government Code does not repeal national tax exemptions granted under prior laws.

The case centered on whether the Local Government Code (LGC) repealed or rendered inconsistent the tax exemptions granted under Section 16 of P.D. No. 972. The Supreme Court held that LGC withdrawal applies strictly to local taxes and does not extend to national tax exemptions such as VAT and excise taxes. This decision reaffirms the validity of SMPC’s tax exemption privileges under the Coal Development Act.