CIR vs.

MEGA GENERAL MERCHANDISING CORPORATION (September 30, 1988) DOCTRINE: (My own take, not expressly stated in the case) Revenue regulations and rulings have no retroactive effect and apply only for the periods during hich it is valid! Subse"uent rulings hich contradict or revo#e previous rulings ta#e effect only after it is promulgated! NATURE: petition for revie specific ta' PONENTE: (aras for $%& decision holding that respondent corporation is not liable for

FACTS: (Note the dates, theyre vital to the disposition of the case ) (rior to the promulgation of (!)! *o! 39+, all importations of paraffin a' ere sub,ect to -. advance sales ta'/ o 0ith the promulgation of (!)! *o! 39+, a ne provision for the imposition of specific ta'11 Section 12+(i)! Specific ta' on manufactured oils and other fuels 3 Greases, waxes and e!r"#e$%, er &'#"(ra% ,!)'r!*+,'ve -en!av"s. o 4eginning Fe/r$ar* 01,0234, the date of effectivity of (!)! *o! 39+, all importations of paraffin a' ere no sub,ect to the specific tax imposed under Section 12+(i) of the %a' $ode, instead of the former -. sales ta'/ %he respondent corporation rote the $ommissioner of 5nternal Revenue for clarification as to hether imported crude paraffin a' is sub,ect to specific ta' under Section 12+ (i) of the %a' $ode, as amended by (!)! *o! 39+, or to the -. advance sales ta'! o (67R& 5*%7R(R7%&%58*) 8n Ma* 04, 0235, F"r%er C"%%'ss'"ner M'sae# P. 6era in his reply, ruled that1 only a' used as high pressure lubricant and micro crystallin is sub,ect to specific ta'/ paraffin hich as used as ra material in the manufacture of candles, a' paper, matches, crayons, drugs, appointments etc!, is sub,ect to the -. advance sales ta', the ta' to be based on the landed cost thereof, plus +9. mar#3up ! o )ue to $ommissioner 6era:s ruling, several importers including respondent corporation filed several claims for ta' refund or ta' credit of specific ta' paid by them on importation of crude paraffin a' on 7$ne 80 and A$($s! 03, 0233 ((;&*& 5*%7R(R7%&%58*) Since the la (Section 12+(i) of the %a' $ode, amended by (!)! *o! 39+) d"es n"! %a&e an* d's!'n-!'"n as !" !)e &'nd ", wax s$/9e-! !" s e-','- !ax, then &cting $ommissioner of 5nternal Revenue <7fren (lana= denied respondent $orporation:s claim for refund or ta' credit on 7an$ar* 81, 0233. 8n appeal, the $%& rendered its decision stating that etitioner is not liable for specific ta' on its importation of crude paraffin a' imposed against petitioner, but only sub,ect to the -. advance sales ta' hich petitioner had already paid! PETITIONER: (etitioner contends that the controlling interpretation is that given by $ommissioner (lana and not that of $ommissioner 6era! (etitioner further argues that respondent corporation:s re"uest for refund as granted in the letter of petitioner dated >anuary 11, 19-8 because the importation of private respondent as made on &pril 18,19-9 herein petitioner made clear that all importation of crude paraffin a' only after the ruling of >anuary +8, 19--, is sub,ect to specific ta' prescribed in Section 12+(i) of the %a' $ode as amended by (!)! *o! 39+! DATES: Fe/r$ar* 01,0234 ? 7ffectivity of () 39+ A r'# 01,0235 ? Respondent@s previous importation of paraffin a'/ paid both ta'es/ Ma* 04, 0235 ? 6era Ruling that only a' as high pressure lubricant is sub,ect to specific ta'/ 7an$ar* 81, 0233 ? (lana Ruling that there is no distinction in the la / 7an$ar* 00, 0231 ? (lana granted respondent corporation:s re"uest for refund of the amount of (3+1,23A!-9 (for importation on &pril 18, 19-9) 7$ne 80 and A$($s! 03, 0233 ? Respondent imported paraffin a'/ paid both ta'es, ta' under "uestion in the case/

ISSUE: 0hether or not respondent corporation:s importation of crude paraffin a' are sub,ect to specific ta' under Section 12+(i) of the %a' $ode, as amended by (!)! *o! 39+B :ES. RATIO: T)e #e!!er ", C"%%'ss'"ner P#ana da!ed 7an$ar* 00, 0231 d'd n"! 'n an* wa* rev"&e )'s r$#'n( da!ed 7an$ar* 81,0233 w)'-) r$#'n( a #'ed !)e s e-','- !ax !" wax ;w'!)"$! d's!'n-!'"n).

$%& stated that rulings or circulars promulgated by the $ommissioner of 5nternal Revenue, such as the rulings of >anuary +8, 19-- and those of Cay 8, 19-8 and Debruary 19, 1980, cannot have any retroactive application, here to do so, as it did in the case at bar, ould pre,udice the ta'payer! o 0hile correct that such circulars do not have retroactive effect, the reason for removal of respondent@s ta' liability as not because of the revocation of (lana of the >anuary +8, 19-- ruling! %he reason he removed in 19-8 private respondent:s liability for the specific ta' as *8% (as erroneously pointed out by the $ourt of %a' &ppeals) because he anted to revo#e, e'pressly or implicitly, his ruling of >anuary +8, 19--/ but because the ta' referred to importation 47D8R7 >anuary +8, 19-- and hence still covered by the ruling of $ommissioner 6era, and not by the >anuary +8,19-- ruling of $ommissioner (lana!

DISPOSITI6E: the decision of the $ourt of %a' &ppeals is hereby R767RS7) and S7% &S5)7, private respondent is ordered to pay the ta' as assessed by the $ommissioner of 5nternal Revenue/