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Prof. Joselito Guianan Chan's The Labor Code of the Philippines, Annotated Labor Standards & Social Legislation Volume I of a 3-Volume Series 2019 Edition (3rd Revised Edition)
 

 
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UNITED STATES SUPREME COURT JURISPRUDENCE
 

 
PHILIPPINE SUPREME COURT JURISPRUDENCE
 

   
February-1997 Jurisprudence                 

  • G.R. No. 99039 February 3, 1997 - FORD PHIL., ET AL. v. COURT OF APPEALS, ET AL.

  • G.R. No. 100748 February 3, 1997 - JOSE BARITUA v. COURT OF APPEALS, ET AL.

  • G.R. No. 108547 February 3, 1997 - FELICIDAD VDA. DE CABRERA, ET AL. v. COURT OF APPEALS, ET AL.

  • G.R. Nos. 112761-65 February 3, 1997 - PEOPLE OF THE PHIL. v. PORFERIO M. PEPITO

  • G.R. No. 114183 February 3, 1997 - PEOPLE OF THE PHIL. v. JESUS BORJA

  • G.R. No. 119310 February 3, 1997 - JULIETA V. ESGUERRA v. COURT OF APPEALS, ET AL.

  • G.R. No. 119935 February 3, 1997 - UNITED SOUTH DOCKHANDLERS, INC. v. NLRC, ET AL.

  • G.R. No. 122156 February 3, 1997 - MANILA PRINCE HOTEL v. GSIS, ET AL.

  • G.R. No. 123332 February 3, 1997 - AUGUSTO GATMAYTAN v. COURT OF APPEALS, ET AL.

  • G.R. No. 118915 February 4, 1997 - CAPITOL MEDICAL CENTER-ACE-UFSW v. BIENVENIDO LAGUESMA, ET AL.

  • Adm. Matter No. P-94-1110 February 6, 1997 - MELENCIO S. SY v. CARMELITA S. MONGCUPA

  • Adm. Matter No. P-96-1203 February 6, 1997 - ERNESTO A. REYES v. NORBERTO R. ANOSA

  • G.R. No. 110668 February 6, 1997 ccc zz

    SMITH, BELL & CO., INC. v. COURT OF APPEALS, ET AL.

  • G.R. No. 111682 February 6, 1997 - ZENAIDA REYES v. COURT OF APPEALS, ET AL.

  • G.R. No. 117982 February 6, 1997 - COMMISSIONER OF INTERNAL REVENUE v. COURT OF APPEALS, ET AL.

  • G.R. No. 118843 February 6, 1997 - ERIKS PTE. LTD. v. COURT OF APPEALS, ET AL.

  • G.R. Nos. 118950-54 February 6, 1997 - PEOPLE OF THE PHIL. v. LUCRECIA GABRES

  • G.R. No. 119322 February 6, 1997 - COMMISSIONER OF INTERNAL REVENUE, ET AL. v. COURT OF APPEALS, ET AL.

  • G.R. No. 98252 February 7, 1997 - PEOPLE OF THE PHIL. v. RENE JANUARIO, ET AL.

  • G.R. No. 110391 February 7, 1997 - PEOPLE OF THE PHIL. v. DOLORES DE LEON

  • G.R. No. 112191 February 7, 1997 - FORTUNE MOTORS (PHILS.) CORP., ET AL. v. COURT OF APPEALS, ET AL.

  • G.R. Nos. 112714-15 February 7, 1997 - PEOPLE OF THE PHIL. v. ANTONIO SAGARAL

  • G.R. No. 117472 February 7, 1997 - PEOPLE OF THE PHIL. v. LEO ECHEGARAY

  • G.R. No. 119657 February 7, 1997 - UNIMASTERS CONGLOMERATION, INC. v. COURT OF APPEALS, ET AL.

  • G.R. Nos. 119772-73 February 7, 1997 - PEOPLE OF THE PHIL. v. NIGEL RICHARD GATWARD

  • G.R. No. 125249 February 7, 1997 - JIMMY S. DE CASTRO v. COMELEC, ET AL.

  • Adm. Matter No. P-95-1161 February 10, 1997 - JESUS N. BANDONG v. BELLA R. CHING

  • G.R. No. 108894 February 10, 1997 - TECNOGAS PHIL. MFG. CORP. v. COURT OF APPEALS, ET AL.

  • G.R. No. 109887 February 10, 1997 - CECILIA CARLOS v. COURT OF APPEALS, ET AL.

  • G.R. No. 117702 February 10, 1997 - PEOPLE OF THE PHIL. v. CRISPIN YPARRAGUIRRE

  • G.R. No. 124553 February 10, 1997 - ROSARIO R. TUASON v. COURT OF APPEALS, ET AL.

  • Adm. Matter No. MTJ-95-1070 February 12, 1997 - MARIA APIAG, ET AL. v. ESMERALDO G. CANTERO

  • Adm. Matter No. P-87-100 February 12, 1997 - FELISA ELIC VDA. DE ABELLERA v. NEMESIO N. DALISAY

  • Adm. Matter No. P-96-1231 February 12, 1997 - ISAIAS P. DICDICAN v. RUSSO FERNAN, JR., ET AL.

  • G.R. No. 68166 February 12, 1997 - HEIRS OF EMILIANO NAVARRO v. INTERMEDIATE APPELLATE COURT, ET AL.

  • G.R. No. 104666 February 12, 1997 - PEOPLE OF THE PHIL. v. BIENVENIDO OMBROG

  • G.R. No. 115129 February 12, 1997 - IGNACIO BARZAGA v. COURT OF APPEALS, ET AL.

  • G.R. No. 116511 February 12, 1997 - PEOPLE OF THE PHIL. v. COLOMA TABAG, ET AL.

  • G.R. No. 118025 February 12, 1997 - PEOPLE OF THE PHIL. v. REBECCO SATOR

  • G.R. No. 120769 February 12, 1997 - STANLEY J. FORTICH v. COURT OF APPEALS, ET AL.

  • G.R. No. 125531 February 12, 1997 - JOVAN LAND v. COURT OF APPEALS, ET AL.

  • G.R. No. 126013 February 12, 1997 - HEINZRICH THEIS, ET AL. v. COURT OF APPEALS, ET AL.

  • G.R. No. 107554 February 13, 1997 - CEBU INT’L. FINANCE CORP. v. COURT OF APPEALS, ET AL.

  • G.R. No. 108763 February 13, 1997 - REPUBLIC OF THE PHIL. v. COURT OF APPEALS, ET AL.

  • G.R. No. 112968 February 13, 1997 - PEOPLE OF THE PHIL. v. ARSENIO LETIGIO

  • G.R. No. 114144 February 13, 1997 - PEOPLE OF THE PHIL. v. FLORENTINO ABAD

  • G.R. Nos. 114711 & 115889 February 13, 1997 - GARMENTS and TEXTILE EXPORT BOARD v. COURT OF APPEALS, ET AL.

  • G.R. No. 122728 February 13, 1997 - CASIANO A. ANGCHANGCO v. OMBUDSMAN, ET AL.

  • Adm. Matter No. RTJ-96-217 February 17, 1997 - MANUEL F. CONCEPCION v. JESUS V. AGANA, ET AL.

  • Adm. Matter No. RTJ 97-1369 February 17, 1997 - OCTAVIO DEL CALLAR v. IGNACIO L. SALVADOR, ET AL.

  • G.R. Nos. 103501-03 & 103507 February 17, 1997 - LUIS A. TABUENA v. SANDIGANBAYAN, ET AL.

  • G.R. No. 119247 February 17, 1997 - CESAR SULIT v. COURT OF APPEALS, ET AL.

  • G.R. No. 119536 February 17, 1997 - GLORIA S. DELA CRUZ v. NLRC, ET AL.

  • G.R. No. 121017 February 17, 1997 - OLIVIA B. CAMANAG v. JESUS F. GUERRERO, ET AL.

  • G.R. No. 122165 February 17, 1997 - ALA MODE GARMENTS, INC. v. NLRC, ET AL.

  • G.R. No. 123823 February 17, 1997 - MODESTO G. ESPAÑO v. COURT OF APPEALS, ET AL.

  • G.R. No. 96249 February 19, 1997 - PEOPLE OF THE PHIL. v. ALIPIO QUIAMCO, ET AL.

  • G.R. No. 114396 February 19, 1997 - PEOPLE OF THE PHIL. v. WILLIAM ROBERT BURTON

  • G.R. No. 118140 February 19, 1997 - PEOPLE OF THE PHIL. v. DANTE PIANDIONG, ET AL.

  • G.R. No. 121084 February 19, 1997 - TOYOTA MOTOR PHILS. CORP. v. TOYOTA MOTOR PHILS. CORP. LABOR UNION, ET AL.

  • G.R. No. 107916 February 20, 1997 - PERCIVAL MODAY, ET AL. v. COURT OF APPEALS, ET AL.

  • G.R. No. 112288 February 20, 1997 - DELSAN TRANSPORT LINES, INC. v. COURT OF APPEALS, ET AL.

  • Adm. Matter No. P-94-1034 February 21, 1997 - LEWELYN S. ESTRELLER v. SOFRONIO MANATAD, JR.

  • G.R. No. 73399 February 21, 1997 - PEOPLE OF THE PHIL. v. RAMON ABEDES

  • G.R. No. 117394 February 21, 1997 - HINATUAN MINING CORP. v. NLRC, ET AL.

  • A.M. No. SDC-97-2-P February 24, 1997 - SOPHIA ALAWI v. ASHARY M. ALAUYA

  • G.R. No. 110427 February 24, 1997 - CARMEN CAÑIZA v. COURT OF APPEALS, ET AL.

  • Adm. Matter No. RTJ-94-1195 February 26, 1997 - ROMEO NAZARENO, ET AL. v. ENRIQUE M. ALMARIO

  • G.R. No. 94237 February 26, 1997 - BUILDING CARE CORP. v. NLRC, ET AL.

  • G.R. No. 105294 February 26, 1997 - PACITA DAVID-CHAN v. COURT OF APPEALS, ET AL.

  • G.R. No. 107671 February 26, 1997 - REMMAN ENTERPRISES v. COURT OF APPEALS, ET AL.

  • G.R. No. 109849 February 26, 1997 - MAXIMINO FUENTES v. COURT OF APPEALS, ET AL.

  • G.R. No. 110098 February 26, 1997 - PEOPLE OF THE PHIL. v. BUENAFE AZUGUE

  • G.R. No. 111538 February 26, 1997 - PARAÑAQUE KINGS ENTERPRISES, INC. v. COURT OF APPEALS, ET AL.

  • G.R. No. 116033 February 26, 1997 - ALFREDO L. AZARCON v. SANDIGANBAYAN, ET AL.

  • G.R. No. 123404 February 26, 1997 - AURELIO SUMALPONG v. COURT OF APPEALS, ET AL.

  • Adm. Matter No. RTJ-97-1368 February 27, 1997 - ERNESTO RIEGO, ET AL. v. EMILIO LEACHON, JR.

  •  





     
     

    G.R. No. 117982   February 6, 1997 - COMMISSIONER OF INTERNAL REVENUE v. COURT OF APPEALS, ET AL.

     
    PHILIPPINE SUPREME COURT DECISIONS

    FIRST DIVISION

    [G.R. No. 117982. February 6, 1997.]

    COMMISSIONER OF INTERNAL REVENUE, Petitioner, v. COURT OF APPEALS, COURT OF TAX APPEALS and ALHAMBRA INDUSTRIES, INC., Respondents.

    The Solicitor General for Petitioner.

    William L. Inchoco, Jr., for Private Respondent.


    SYLLABUS


    1. TAXATION; NATIONAL INTERNAL REVENUE CODE; AD VALOREM TAX; DEFICIENCY TAX .ASSESSMENT BASED ON THE RETROACTIVE APPLICATION OF BIR RULING, WITHOUT LEGAL BASIS. — We cannot sustain petitioner. The deficiency tax assessment issued by petitioner against private respondent is without legal basis because of the prohibition against the retroactive application of the revocation of BIR rulings in the absence of bad faith on the part of private Respondent. The present dispute arose from the discrepancy in the taxable base on which the excise tax is to apply on account of two incongruous BIR Rulings: (1) BIR Ruling 473-88 dated 4 October 1988 which excluded the VAT from the tax base in computing the fifteen percent (15%) excise tax due; and, (2) BIR Ruling 017-91 dated 11 February 1991 which included back the VAT in computing the tax base for purposes of the fifteen percent (15%) ad valorem tax. The question as to the correct computation of the excise tax on cigarettes in the case at bar has been sufficiently addressed by BIR Ruling 017-91 dated 11 February 1991 which revoked BIR Ruling 473-88 dated 4 October 1988.

    2. ID.; BUREAU OF INTERNAL REVENUE; COMMISSIONER; RULINGS, CIRCULARS, RULES AND REGULATIONS PROMULGATED, WITHOUT RETROACTIVE APPLICATION. — Well-entrenched is the rule that rulings and circulars, rules and regulations promulgated by the Commissioner of Internal Revenue would have no retroactive application if to so apply them would be prejudicial to the taxpayers.

    3. ID.; TAXES; BAD FAITH, CONSTRUED; CASE AT BAR. — Bad faith imports a dishonest purpose or some moral obliquity and conscious doing of wrong. It partakes of the nature of fraud a breach of a known duty through some motive of interest or ill will. We find no convincing evidence that private respondent’s implementation of the computation mandated by BIR Ruling 473- 88 was ill-motivated or attended with a dishonest purpose. To the contrary, as a sign of good faith, private respondent immediately reverted to the computation mandated by BIR Ruling 017-91 upon knowledge of its issuance on 11 February 1991.

    4. ID.; BUREAU OF INTERNAL REVENUE; BIR RULING 473- 88, CLEAR AND CATEGORICAL; CONSULTATION WITH COMMISSION, NOT NECESSARY. — As regards petitioner’s argument that private respondent should have made consultations with it before private respondent used the computation mandated by BIR Ruling 473-88, suffice it to state that the aforesaid BIR Ruling was clear and categorical thus leaving no room for interpretation. The failure of private respondent to consult petitioner does not imply bad faith on the part of the former.

    5. REMEDIAL LAW; ACTIONS; ESTOPPEL; GOVERNMENT NOT ESTOPPED FROM COLLECTING TAXES ERRONEOUSLY ASSESSED BY ITS AGENTS; EXCEPTION. — Admittedly the government is not estopped from collecting taxes legally due because of mistakes or errors of its agents. But like other principles of law, this admits of exceptions in the interest of justice and fair play, as where injustice will result to the taxpayer. Petitioner Commissioner of Internal Revenue is ordered to refund private respondent Alhambra Industries, Inc., the amount of P520,835.29 upon finality of this Decision.


    D E C I S I O N


    BELLOSILLO, J.:


    ALHAMBRA INDUSTRIES, INC., is a domestic corporation engaged in the manufacture and sale of cigar and cigarette products. On 7 May 1991 private respondent received a letter dated 26 April 1991 from the Commissioner of Internal Revenue assessing it deficiency Ad Valorem Tax (AVT) in the total amount of Four Hundred Eighty-Eight Thousand Three Hundred Ninety-Six Pesos and Sixty-Two Centavos (P488,396.62), inclusive of increments, on the removals of cigarette products from their place of production during the period 2 November 1990 to 22 January 1991. 1 Petitioner computes the deficiency thus —

    Total AVT due per manufacturer’s declaration P4,279,042.33

    Less: AVT paid under BIR Ruling No. 473-88 3,905,348.85

    Deficiency AVT 373,693.48

    Add: Penalties:chanrob1es virtual 1aw library

    25% Surcharge (Sec. 248[c][3] NIRC) 93,423.37

    20% Interest (P467,116.85x82/360 days) 21.279.77

    Total Amount Due P488,396.62

    In a letter dated 22 May 1991 received by petitioner on even date, private respondent thru counsel filed a protest against the proposed assessment with a request that the same be withdrawn and cancelled. On 31 May 1991 private respondent received petitioner’s reply dated 27 May 1991 denying its protest and request for cancellation stating that the decision was final, and at the same time requesting payment of the revised amount of Five Hundred Twenty Thousand Eight Hundred Thirty-Five Pesos and Twenty-Nine Centavos (P520,835.29), with interest updated, within ten (10) days from receipt thereof. In a letter dated 10 June 1991 which petitioner received on the same day, private respondent requested for the reconsideration of petitioner’s denial of its protest. Without waiting for petitioner’s reply to its request for reconsideration, private respondent filed on 19 June 1991 a petition for review with the Court of Tax Appeals. On 25 June 1991 private respondent received from petitioner a letter dated 21 June 1991 denying its request for reconsideration declaring again that its decision was final. On 8 July 1991 private respondent paid under protest the disputed ad valorem tax in the sum of P520,835.29. 2

    In its Decision 3 of 1 December 1993 the Court of Tax Appeals ordered petitioner to refund to private respondent the amount of Five Hundred Twenty Thousand Eight Hundred Thirty-Five Pesos and Twenty-Nine Centavos (P520,835.29) representing erroneously paid ad valorem tax for the period 2 November 1990 to 22 January 1991.chanroblesvirtuallawlibrary

    The Court of Tax Appeals explained that the subject deficiency excise tax assessment resulted from private respondent’s use of the computation mandated by BIR Ruling 473-88 dated 4 October 1988 as basis for computing the fifteen percent (15%) ad valorem tax due on its removals of cigarettes from 2 November 1990 to 22 January 1991. BIR Circular 473-88 was issued by Deputy Commissioner Eufracio D. Santos to Insular-Yebana Tobacco Corporation allowing the latter to exclude the value-added tax (VAT) in the determination of the gross selling price for purposes of computing the ad valorem tax of its cigar and cigarette products in accordance with Sec. 127 of the Tax Code as amended by Executive Order No. 273 which provides as follows:chanrob1es virtual 1aw library

    Sec. 127. Payment of excise taxes on domestic products. — (b) Determination of gross selling price of goods subject to ad valorem tax. — Unless otherwise provided, the price, excluding the value-added tax, at which the goods are sold at wholesale in the place of production or through their sales agents to the public shall constitute the gross selling price.

    The computation, pursuant to the ruling, is illustrated by way of example thus —

    P44.00 x 1/11 = P 4.00 VAT

    P44.00 - P 4.00 = P 40.00 price without VAT

    P40.00 x 15% = P 6.00 Ad Valorem Tax

    For the period 2 November 1990 to 22 January 1991 private respondent paid P3,905,348.85 ad valorem tax, applying Sec. 127 (b) of the NIRC as interpreted by BIR Ruling 473-88 by excluding the VAT in the determination of the gross selling price.

    Thereafter, on 11 February 1991, petitioner issued BIR Ruling 017-91 to Insular-Yebana Tobacco Corporation revoking BIR Ruling 473-88 for being violative of Sec. 142 of the Tax Code. It included back the VAT to the gross selling price in determining the tax base for computing the ad valorem tax on cigarettes. Cited as basis by petitioner is Sec. 142 of the Tax Code, as amended by E.O. No. 273 —

    Sec. 142. Cigar and cigarettes — . . . For purposes of this section, manufacturer’s or importer’s registered wholesale price shall include the ad valorem tax imposed in paragraphs (a), (b), (c) or (d) hereof and the amount intended to cover the value added tax imposed under Title IV of this Code.

    Petitioner sought to apply the revocation retroactively to private respondent’s removals of cigarettes for the period starting 2 November 1990 to 22 January 1991 on the ground that private respondent allegedly acted in bad faith which is an exception to the rule on non-retroactivity of BIR Rulings. 4

    On appeal, the Court of Appeals affirmed the Court of Tax Appeals holding that the retroactive application of BIR Ruling 017-91 cannot be allowed since private respondent did not act in bad faith; private respondent’s computation under BIR Ruling 473-88 was not shown to be motivated by ill will or dishonesty partaking the nature of fraud; hence, this petition.

    Petitioner imputes error to the Court of Appeals: (1) in failing to consider that private respondent’s reliance on BIR Ruling 473-88 being contrary to Sec. 142 of the Tax Code does not confer vested rights to private respondent in the computation of its ad valorem tax; (2) in failing to consider that good faith and prejudice to the taxpayer in cases of reliance on a void BIR Ruling is immaterial and irrelevant and does not place the government in estoppel in collecting taxes legally due; (3) in holding that private respondent acted in good faith in applying BIR Ruling 473-88; and, (4) in failing to consider that the assessment of petitioner is presumed to be regular and the claim for tax refund must be strictly construed against private respondent for being in derogation of sovereign authority.

    Petitioner claims that the main issue before us is whether private respondent’s reliance on a void BIR ruling conferred upon the latter a vested right to apply the same in the computation of its ad valorem tax and claim for tax refund. Sec. 142 (d) of the Tax Code, which provides for the inclusion of the VAT in the tax base for purposes of computing the 15% ad valorem tax, is the applicable law in the instant case as it specifically applies to the manufacturer’s wholesale price of cigar and cigarette products and not Sec. 127 (b) of the Tax Code which applies in general to the wholesale of goods or domestic products. Sec. 142 being a specific provision applicable to cigar and cigarettes must perforce prevail over Sec. 127 (b), a general provision of law insofar as the imposition of the ad valorem tax on cigar and cigarettes is concerned. 5 Consequently, the application of Sec. 127 (b) to the wholesale price of cigar and cigarette products for purposes of computing the ad valorem tax is patently erroneous. Accordingly, BIR Ruling 473-88 is void ab initio as it contravenes the express provisions of Sec. 142 (d) of the Tax Code. 6

    Petitioner contends that BIR Ruling 473-88 being an erroneous interpretation of Sec. 142 (b) of the Tax Code does not confer any vested right to private respondent as to exempt it from the retroactive application of BIR Ruling 017-91. Thus Art. 2254 of the New Civil Code is explicit that" (n)o vested or acquired right can arise from acts or omissions which are against the law . . ." 7 It is argued that the Court of Appeals erred in ruling that retroactive application cannot be made since private respondent acted in good faith. The following circumstances would show that private respondent’s reliance on BIR Ruling 473-88 was induced by ill will: first, private respondent despite knowledge that Sec. 142 of the Tax Code was the specific provision applicable still shifted its accounting method pursuant to Sec. 127 (b) of the Tax Code; and, second, the shift in accounting method was made without any prior consultation with the BIR.8

    It is further contended by petitioner that claims for tax refund must be construed against private Respondent. A tax refund being in the nature of a tax exemption is regarded as in derogation of the sovereign authority and is strictly construed against private respondent as the same partakes the nature of a tax exemption. Tax exemptions cannot merely be implied but must be categorically and unmistakably expressed. 9

    We cannot sustain petitioner. The deficiency tax assessment issued by petitioner against private respondent is without legal basis because of the prohibition against the retroactive application of the revocation of BIR rulings in the absence of bad faith on the part of private Respondent.

    The present dispute arose from the discrepancy in the taxable base on which the excise tax is to apply on account of two incongruous BIR Rulings: (1) BIR Ruling 473-88 dated 4 October 1988 which excluded the VAT from the tax base in computing the fifteen percent (15%) excise tax due; and, (2) BIR Ruling 017-91 dated 11 February 1991 which included back the VAT in computing the tax base for purposes of the fifteen percent (15%) ad valorem tax.

    The question as to the correct computation of the excise tax on cigarettes in the case at bar has been sufficiently addressed by BIR Ruling 017-91 dated 11 February 1991 which revoked BIR Ruling 473-88 dated 4 October 1988 —

    It is to be noted that Section 127 (b) of the Tax Code as amended applies in general to domestic products and excludes the value-added tax in the determination of the gross selling price, which is the tax base for purposes of the imposition of ad valorem tax. On the other hand, the last paragraph of Section 142 of the same Code which includes the value-added tax in the computation of the ad valorem tax, refers specifically to cigar and cigarettes only. It does not include/apply to any other articles or goods subject to the ad valorem tax. Accordingly, Section 142 must perforce prevail over Section 127 (b) which is a general provision of law insofar as the imposition of the ad valorem tax on cigar and cigarettes is concerned.

    Moreover, the phrase unless otherwise provided in Section 127 (b) purports of exceptions to the general rule contained therein, such as that of Section 142, last paragraph thereof which explicitly provides that in the case of cigarettes, the tax base for purposes of the ad valorem tax shall include, among others, the value-added tax.

    Private respondent did not question the correctness of the above BIR ruling. In fact, upon knowledge of the effectivity of BIR Ruling No. 017-91, private respondent immediately implemented the method of computation mandated therein by restoring the VAT in computing the tax base for purposes of the 15% ad valorem tax.

    However, well-entrenched is the rule that rulings and circulars, rules and regulations promulgated by the Commissioner of Internal Revenue would have no retroactive application if to so apply them would be prejudicial to the taxpayers. 10

    The applicable law is Sec. 246 of the Tax Code which provides —

    Sec. 246. Non-retroactivity of rulings. — Any revocation, modification, or reversal of any rules and regulations promulgated in accordance with the preceding section or any of the rulings or circulars promulgated by the Commissioner of Internal Revenue shall not be given retroactive application if the revocation, modification, or reversal will be prejudicial to the taxpayers except in the following cases: a) where the taxpayer deliberately misstates or omits material facts from his return or in any document required of him by the Bureau of Internal Revenue; b) where the facts subsequently gathered by the Bureau of Internal Revenue are materially different from the facts on which the ruling is based; or c) where the taxpayer acted in bad faith.

    Without doubt, private respondent would be prejudiced by the retroactive application of the revocation as it would be assessed deficiency excise tax.

    What is left to be resolved is petitioner’s claim that private respondent falls under the third exception in Sec. 246, i.e., that the taxpayer has acted in bad faith.

    Bad faith imports a dishonest purpose or some moral obliquity and conscious doing of wrong. It partakes of the nature of fraud; a breach of a known duty through some motive of interest or ill will. 11 We find no convincing evidence that private respondent’s implementation of the computation mandated by BIR Ruling 473-88 was ill-motivated or attended with a dishonest purpose. To the contrary, as a sign of good faith, private respondent immediately reverted to the computation mandated by BIR Ruling 017-91 upon knowledge of its issuance on 11 February 1991.

    As regards petitioner’s argument that private respondent should have made consultations with it before private respondent used the computation mandated by BIR Ruling 473-88, suffice it to state that the aforesaid BIR Ruling was clear and categorical thus leaving no room for interpretation. The failure of private respondent to consult petitioner does not imply bad faith on the part of the former.

    Admittedly the government is not estopped from collecting taxes legally due because of mistakes or errors of its agents. But like other principles of law, this admits of exceptions in the interest of justice and fair play, as where injustice will result to the taxpayer. 12

    WHEREFORE, there being no reversible error committed by respondent Court of Appeals, the petition is DENIED and petitioner COMMISSIONER OF INTERNAL REVENUE is ordered to refund private respondent ALHAMBRA INDUSTRIES, INC., the amount of P520,835.29 upon finality of this Decision.

    SO ORDERED.

    Padilla, Kapunan and Hermosisima, Jr., JJ., concur.

    Separate Opinions


    VITUG, J., concurring:chanrob1es virtual 1aw library

    I concur in the ponencia written by my esteemed colleague, Mr. Justice Josue N. Bellosillo. I only would like to stress that the 1988 opinion of the Commissioner of Internal Revenue cannot be considered void, considering that it evinces what the former Commissioner must have felt to be a real inconsistency between Section 127 and Section 142 of the Tax Code. The non-retroactivity proscription under Section 246 of the Tax Code can thus aptly apply. I reserve my vote, however, in a situation where, as the Solicitor General so points out, the revoked ruling is patently null and void in which case it could possibly be disregarded as being inexistent from the very beginning.

    Endnotes:



    1. CA Decision penned by Justice Quirino Abad Santos Jr., concurred in by Justices Antonio Martinez and Godardo Jacinto, pp. 1-2; Rollo, pp. 50-51.

    2. Id., pp. 2-3; Rollo, pp. 51-52.

    3. CTA Decision penned by Presiding Judge Ernesto Acosta with Associate Judges Manuel Gruba and Ramon de Veyra concurring.

    4. CTA Decision, pp. 4-5; Rollo, pp. 39-40.

    5. Petition, pp. 12-15; Rollo, pp. 19-22.

    6. Id., p. 16; id., p. 23

    7. Id., pp. 17-19; id., pp. 24-26.

    8. Id., pp. 21-23; id., pp. 28-30.

    9. Id., pp. 23-24; id., pp. 30-31.

    10. Commissioner of Internal Revenue v. Telefunken Semiconductor Philippines, Inc., G.R. No. 103915, 23 October 1995, 249 SCRA 401; Bank of America v. CA, G.R. No. 103092, 21 July 1994, 234 SCRA 302; Commissioner of Internal Revenue v. CTA, No. L-44007, 20 March 1991, 195 SCRA 444; Commissioner of Internal Revenue v. Mega General Merchandising Corp., G.R. No. 69136, 30 September 1988, 166 SCRA 166; Commissioner of Internal Revenue v. Burroughs, G.R. No. 66653, 19 June 1986, 142 SCRA 324; ABS-CBN v. CTA, G.R. No. 52306, 12 October 1981, 108 SCRA 142.

    11. PAL v. Miano, G.R. No. 106664, 8 March 1995, 242 SCRA 235; Far East Bank v. CA, G.R. No. 108164, 23 February 1995, 241 SCRA 671; Samson v. CA, G.R. No. 108245, 25 November 1994, 238 SCRA 397; Marcelo v. Sandiganbayan, G.R. No. 69983, 14 May 1990, 185 SCRA 346; Ong Yiu v. CA, No. L-40597, 29 June 1979, 91 SCRA 223; Board of Liquidators v. Kalaw, No. L-18805, 14 August 1967, 20 SCRA 987.

    12. ABS-CBN v. CTA, see note 11.

    G.R. No. 117982   February 6, 1997 - COMMISSIONER OF INTERNAL REVENUE v. COURT OF APPEALS, ET AL.


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