COMMISSIONER OF INTERNAL REVENUE, Petitioner, v. FILIPINAS COMPAIA DE SEGUROS,Respondent.

1. STATUTORY CONSTRUCTION; STATUTES, PROSPECTIVE IN OPERATION. A statute should be considered as

prospective in its operation whether it enacts, amends or repeals a tax, unless the language of the statute clearly
demands or expresses that it shall have a retroactive effect.
2. TAX LAWS; REAL ESTATE DEALERS TAX; IMPOSITION OF HIGHER RATE OF TAXES AFTER THE TAXPAYER
HAS PAID THE TAX UNDER THE OLD RATE. On January 4, 1956, respondent, in accordance with the single rate
then prescribed under Section 182 of the National Internal Revenue Code, paid its real estate dealers fixed annual tax for
the year 1956. Subsequently, said Section 182 of the Code was amended by Republic Act No. 1612 which imposes new
and higher rates of real estate dealers tax. section 21 thereof provides that the Act "shall take effect upon its approval" on
August 24, 1956.
DECISION
FACTS:
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Respondent Filipinas Compaia de Seguros, an insurance company, is also engaged in business as a real estate
dealer
On January 4, 1956, respondent, in accordance with the single rate then prescribed under Section 182 of the
National Internal Revenue Code paid the amount of P150.00 as real estate dealers fixed annual tax for the year
1956.
Subsequently said Section 182 of the Code was amended by Republic Act No. 1612, which took effect on August
24, 1956, by providing a scale of graduated rates: P150 if the annual income of the real estate dealer from his
business as such is P4,000, but does not exceed P10,000; P300, if such annual income exceeds P10,000 but
does not exceed P30,000; and P500 if such annual income exceeds P30,000.
On June 17, 1957, petitioner Commissioner of Internal Revenue assessed and demanded from respondent
(whose annual income exceeded P30,000.00) the amount of P350.00 as additional real estate dealers fixed
annual tax for the year 1956.
On July 16, 1957, respondent wrote a letter to petitioner stating that the "records will show that the real estate
dealers fixed tax for 1956 of this Company was fully paid by us prior to the effectivity of Republic Act No. 1612
which amended, among other things, Sections 178 and 182 of the National Internal Revenue Code."
On October 23, 1957, petitioner informed respondent that "Republic Act No. 1856 which took effect June 22, 1957
amended the date of effectivity of Republic Act 1612 to January 1, 1957. However, the said amendment applies
only to fixed taxes on occupation and not to fixed taxes on business." Hence, petitioner insisted that respondent
should pay the amount of P350.00 as additional real estate dealers fixed annual tax for the year 1956.
On November 20, 1957, respondent filed with the Court of Tax Appeals a petition for review.
Petitioner filed his answer on December 6, 1957.
Petitioner practically admitted the material factual allegations in the petition for review. The case was submitted
for judgment on the pleadings.
On November 22, 1958, the Court of Tax Appeals rendered a decision sustaining the contention of respondent
company and ordering the petitioner Commissioner of Internal Revenue to desist from collecting the P350.00
additional assessment.

Issue:
Whether R.A. 1612 be given a retroactive effect.
Held:
Since the respondent has paid the annual tax then prescribed for the year 1956, to require it to pay the additional tax
provided in Republic Act 1612 would result in the imposition upon respondent of a tax burden to which it was not liable
before the enactment of said amendatory act, thus rendering its operation retroactive rather than prospective, which
cannot be done, as it would contravene Section 21 of said Act as well as the established rule regarding the prospectivity
of operation of statutes.
On the general principle of prospectivity of statutes, on the language of Republic Act 1612 itself, especially Section 21
thereof, and on the basis of its intended scope and purpose as disclosed in the Congressional Records, we find ourselves
in agreement with the Court of Tax Appeals.
Wherefore, the decision appealed from is hereby affirmed, without costs.

CIR vs.MEGA GENERAL MERCHANDISING CORPORATION and THE C.A.

This is a petition for review of the decision of the Court of Tax Appeals holding that respondent corporation is not liable for
specific tax in the sum of P275,652.00 on its importations of crude paraffin wax, but to 7% advance sales tax,
FACTS:
-

Prior to the promulgation of P.D. No. 392 on February 18, 1974, all importations of paraffin wax, irrespective of
kind and nature, were subject to 7% advance sales tax on landed costs plus 25% mark up pursuant to Section
183(b) now Section 197(II) in relation to Section 186 (now Section 200) of the Tax Code.
P.D. No. 392 gives a provision for the imposition of specific tax. It was added to Section 142 of the Tax Code, that
is, sub- section (i) which reads:
Section 142. Specific tax on manufactured oils and other fuels.On refined and manufactured mineral
oils and other motor fuels, there shall be collected the following taxes:
(i) Greases, waxes and petroleum, per kilogram, thirty-five centavos; ...

February 18,1974, the date of effectivity of P.D. No. 392. All importations of paraffin wax were subject to
the specific tax imposed under Section 142(i) of the Tax Code, instead of the former 7% sales tax.

Respondent corporation paid the corresponding specific tax thereon in the total amount of P177,750.00 which
applies to its total importation of crude paraffin on April 18, 1975, or exactly 1 year and 2 months after the
effectivity of P.D. No. 392.

On April 22, 1975, the respondent corporation wrote the Commissioner of Internal Revenue for clarification as to
whether imported crude paraffin wax is subject to specific tax under Section 142 (i) of the Tax Code, as amended
by P.D. No. 392, or to the 7% advance sales tax.

On May 14, 1975 Former Commissioner Misael P. Vera in his reply ruled that only wax used as high pressure
lubricant and micro crystallin is subject to specific tax; that paraffin which was used as raw material in the
manufacture of candles, wax paper, matches, crayons, drugs, appointments etc., is subject to the 7% advance
sales tax, the tax to be based on the landed cost thereof, plus 25% mark-up.

On November 27, 1975, requested for a refund or tax credit of the amount of P321,436.79 representing the
difference between the amount paid as specific tax and the 7% advance sales tax.

Acting Commissioner of Internal Revenue Efren I. Plana, on January 28, 1977 denied respondent Corporation's
claim for refund or tax credit of the amount of P321,436,79.

Petitioner in a letter dated January 11, 1978, granted respondent corporation's claim for refund or tax credit of the
amount of P321,436.79 since the importation which had arrived in Manila on April 18, 1975 was covered by the
ruling of May 14, 1975 (before its revocation by the ruling of January 28, 1977).

Respondent corporation protested the tax assessment of May 8,1978 in the amount of P275,652.00 in a letter
dated June 5, 1978 alleging that crude paraffin wax is subject to 7% advance sales tax pursuant to petitioner's
ruling of May 14, 1975. The protest was denied by petitioner in a letter dated February 15, 1980.

- On May 21,1984, respondent Court of Tax Appeals reversed the decision of the Commissioner of Internal Revenue.
Petitioner is not liable for specific tax on its importation of crude paraffin wax in the sum of P275,652.00 imposed
against petitioner but only subject to the 7% advance sales tax which petitioner had already paid.
-

Petition filed on January 15, 1984 contending that the controlling interpretation is that given by Commissioner
Plana and not that of Commissioner Vera. Petitioner further argues that respondent corporation's request for
refund of the amount of P321,436.79 was granted in the letter of petitioner dated January 11, 1978 because the
importation of private respondent was made on April 18,1975 wherein petitioner made clear that all importation of
crude paraffin wax only after the ruling of January 28, 1977, is subject to specific tax prescribed in Section 142(i) of
the Tax Code as amended by P.D. No. 392.

Issue:
Whether respondent corporation's importation of crude paraffin wax on June 21 and August 17, 1977 are subject to
specific tax under Section 142(i) of the Tax Code, as amended by P.D. No. 392, promulgated on February 18, 1974.
Held:
Petitioner's contention is completely meritorious.
Contrary to the Court of Tax Appeals' ruling, the letter of Commissioner Plana dated January 11, 1978 did not in any way
revoke his ruling dated January 28,1977 which ruling applied the specific tax to wax (without distinction). The reason he
removed in 1978 private respondent's liability for the specific tax was NOT (as erroneously pointed out by the Court of Tax
Appeals) because he wanted to revoke, expressly or implicitly, his ruling of January 28, 1977 but because the
P321,436.79 tax referred to importation BEFORE January 28, 1977 and hence still covered by the ruling of Commissioner
Vera, and not by the January 28,1977 ruling of Commissioner Plana. The decision of the Court of Tax Appeals is hereby

REVERSED and SET ASIDE, and the private respondent is ordered to pay the tax as assessed by the Commissioner of
Internal Revenue, together with interest.