Commissioner of Internal Revenue vs Cebu Portland Cement Company

GR No. L-20563
October 29, 1968
I. Doctrine
 Statute operates prospectively only and never retroactively, unless the
legislative intent to the contrary is made manifest. In case of doubt, the
doubt must be resolved against retrospective effect.
 The use of the word ‘shall’ give the unmistakable impression that the
lawmakers intended this enactment to be effective only in the futyre.
II. Facts
 Persons Involved:
 Cebu Portland Cement Company - petitioner
 Case: petitioner’s claim for refund of approx. 450k sales tax paid and
427k ad valorem tax from the sale of APO Portland.
 Sales tax – tax paid to gov for the sales of certain goods and
services.
 Ad valorem tax – excise tax which is based on selling price of other
specified value of the goods/articles.
 Before the enactment of the amendment to sec 246 of the tax code, when
cement was not yet placed under the category of either ‘mineral’ or
‘mineral products’ it was not exempt from the sales tax imposed by sec
186 of said code hence it taxable as a manufactured product.
 The petitioner had been paying the sales tax. After approval of the law,
petitioner stopped paying sales tax on its gross sales and instead paid the
ad valorem.
 Petitioner had been protesting the imposition of the sales tax and the
payment of ad valorem taxes, a written claim for refunds was led 2 years
later.
 Without waiting for the respondent’s decision on the said claims for
refund, petitioner filed a petition for review in CTA for ‘action of the CIR
in refusing to entertain petitioner’s claim for refund of the sales tax’.
 It is urged by petitioner that since the purpose of the amendment was
merely to clarify the meaning of said terms, the section should be
construed as if it had been originally passed in its amendment form, so
that cement should be considered as “mineral product” even before the
enactment of RA 1299 and therefore exempt from the sale tax pursuant to
NIRC.
CTA dismissed the petition for review, grounds are as follows:
1. Petitioner was not exempt from payment of sales tax prior to effectivity of RA
1299.
 2. Petitioner is not entitled to deduction from the gross selling price of the cost of
raw mat in the absence of evidence that they previously subjected to tax
imposed in tax code.
3. Petitioner is not the proper part to claim for refund
4. Refund of taxes were erroneously paid thru wrong computation, double
payment.
III. Issue
Whether or not the sales tax collected prior to RA 1299 is refundable? No
IV. Decision
No, the taxes collected from the petitioner prior to the amendment of 246 of the
NIRC by RA 1299 cannot be refunded. The SC held that a statute operates
prospectively only and never retroactively, unless the legislative intent to the
contrary is made either by the express terms of the statute or by necessary
implication.