TAXATION

on prescription should perforce be strictly construed.

I. DOCTRINES IN TAXATION [Commissioner v. C.A., G.R.No. 104171 (1999)]
I.1. PROSPECTIVITY OF TAX LAWS i. Prescriptions found in statutes
General rule: Tax laws are prospective in operation. (1) National Internal Revenue Code- statute of
Reason: Nature and amount of the tax could not be limitations (see Section 203 and 222) in the
foreseen and understood by the taxpayer at the time assessment and collection of taxes therein imposed.
the transaction.
Exception: Tax laws may be applied retroactively (2) Tariff and Customs Code- does not express any
provided it is expressly declared or clearly the general statute of limitation; it provides, however,
legislative intent.(e.g increase taxes on income that “when articles have been entered and passed free
already earned) of duty or final adjustments of duties made, with
when retroactive application would be so harsh and subsequent delivery, such entry and passage free of
oppressive (Republic v. Fernandez, G.R. No. L- duty or settlements
9141. September 25, 1956).
It is a cardinal rule that laws shall have no retroactive
effect, unless the contrary is provided (citing Art. 4
of the Civil Code).[Hydro Resources v.CA]
The language of the statute must clearly demand or
press that it shall have a retroactive effect.[Lorenzo
v.Posadas]
Exception to the exception:
Collection of interest in tax cases is not penal in
nature; it is but a just compensation to the State. The
constitutional prohibition against ex post facto laws
is not applicable to the collection of interest on back
taxes. [Central Azucarera v.CTA]
I.2. NON-RETROACTIVITY OF RULINGS
(SEC. 246)
General rule: Any revocation, modification or
reversal of rules and regulations promulgated in
accordance with Sections 244 and 245 of the Tax
Code and rulings or circulars promulgated by the
CIR, that is prejudicial to the taxpayer, shall NOT be
given retroactive effect.
Exceptions:
(1) Where the taxpayer deliberately misstates or
omits material facts from his return or any document
required of him by BIR;
(2) Where the facts subsequently gathered by the
BIR are materially different from the facts on which
the ruling is based; OR
(3) Where the taxpayer acted in bad faith. (Sec. 246,
NIRC)

I.3. IMPRESCRIPTIBILITY
Unless otherwise provided by the tax itself, taxes are
imprescriptible. (CIR v. Ayala Securities
Corporation)
The law on prescription, being a remedial measure,
should be liberally construed in order to afford such
protection. As a corollary, the exceptions to the law