G.R. No. 14880. April 29, 1960
COMMISSIONER OF INTERNAL REVENUE, PETITIONER, VS. FILIPINAS COMPAÑIA DE SEGUROS, RESPONDENT.
BARRERA, J.:
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.[1]
paid the amount of P150.00 as real estate dealer’s 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 dealer’s
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 dealer’s 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.” And, as to the retroactive effect of said Republic Act
No. 1612, respondent added that the Republic Act No. 1856 which, among
other things, amended Section 182 of the National Internal Revenue
Code, Congress has clearly shown its intention when it provided that
the increase in rates of taxes envisioned by Eepublic Act No. 1612 is
to be made effective as of 1 January 1957″.
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 dealer’s fixed
annual tax for the year 1956.
On November 20, 1957, respondent filed with the Court of Tax Appeals
a petition for review. To this petition, petitioner filed his answer on
December 6, 1957. As 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. From this decision, petitioner
appealed to us.
As a rule, laws have no retroactive effect, unless the contrary is
provided. (Art. 4, Civil Code of the Philippines; Manila Trading and
Supply Co. vs. Santos, et al., 66 Phil., 237; La Provisora Filipina vs.
Ledda, 66 Phil., 573.) Otherwise stated, 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. (61 C. J. 1602, cited in
Lorenzo vs. Posadas, 64 Phil., 353.) The rule applies “with
greater force to the case at bar, considering that Republic Act No.
1612, which imposes the new and higher rates of real estate dealer’s
annual fixed tax, expressly provides in Section 21 thereof that said
Act “shall take effect upon its approval” on August 24, 1956.
The instant case involves the fixed annual real estate dealer’s tax
for 1956. There is no dispute that before the enactment of Republic Act
No. 1612 on August 24, 1956, the uniform fixed annual real estate
dealer’s tax was P150.00 for all owners of rental properties receiving
an aggregate amount of P3,000.00 or more a year in the form of rentals[2]
and that “the yearly fixed taxes are due on the first of January of
each year” unless tendered in semi-annual or quarterly installments.[3]
Since the petitioner indisputably paid in full on January 4, 1956, the
total annual tax then prescribed for the year 1956, to require it to
pay an additional sum of P350.00 to complete the P500.00 provided in
Republic Act No. 1612 which became effective by its very terms only on
August. 24, 1956, would, in the language of the Court of Tax Appeals,
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 the aforecited Section 21 of
Republic Act No. 1612 as well as the established rule regarding the
prospectivity of operation of statutes.
The view that Congress did intend to impose said increased rates of
real estate dealer’s annual tax prospectively and not retroactively,
“finds some affirmation in Republic Act No. 1856, approved on June 22,
1957, which fixed the effective date of said new rates under Republic
Act: No. 1612 by inserting the following proviso in Section 182 of the
National Internal Revenue Code:
“Provided, further, That any amount
collected in excess of the rates in effect prior to January one,
nineteen hundred and fifty-seven, shall be refunded or credited to the
taxpayer concerned subject to the provisions of section, three hundred
and nine of this Code.” (Sec. 182 (b) (2) (1).)
Petitioner, however, contends that the above-quoted provision refers
only to fixed taxes on occupation and does not cover fixed taxes on
business, such as the real estate dealer’s fixed tax herein involved.
This is technically, correct, but we note from the deliberations in the
Senate, where the proviso in question was introduced as an amendment,
that said House Bill No. 5819 which became Republic Act No, 1856 was
considered, amended, and enacted into law, in order precisely that the
“iniquitous effects” which were then being felt by taxpayers, in
general, on account of the approval of Republic Act No. 1612, which was
being given retroactive effect, by the Bureau of Internal Revenue by
collecting these taxes retroactively from January 1, 1956, be
eliminated and complaints against such action be finally settled. (See
Senate Congressional Record, May 4, 1957, pp. 1032- 1033.)
It is also to be observed that said House Bill No. 5819 as
originally presented, was expressly intended to amend certain
provisions of the National Internal Revenue Code dealing on fixed taxes
on business. The provisions in respect of fixed tax on occupation
were merely subsequently added. This would seem to indicate that the
proviso in question was intended to cover not only fixed taxes on
occupation, but also fixed taxes on business. (Senate Congressional
Record, March 7, 1957, p. 444.) The fact that said proviso was placed
only at the end of paragraph “(B) On occupation” is not, therefore, in
view of the circumstances, decisive and unmistakable indication that
Congress limited the proviso to occupation taxes.
“Even though the primary purpose of the proviso is
to limit or restrain the general language of a statute, the
legislature, unfortunately, does not always use it with technical
correctness; consequently, where its use creates an ambiguity, it is
the duty of the court to ascertain the legislative” intention, through
resort to the usual rules of construction applicable to statutes,
generally and give it effect even though the statute is thereby
enlarged, or the proviso made to assume the force of an independent
enactment and although a proviso as such has no existence apart from
the provision which it is designed to limit or to qualify.” (Statutory
Construction by E. T. Crawford, pp. 604-606.)“* * * When
construing a statute, the reason for its enactment should be kept in
mind, and the statute should be construed with reference to its
intended scope and purpose.” (Id. at p. 249.)
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. So ordered.
Paras, C. J., Bengzon, Montemayor, Bautista Anqelo, Labrador, Concepcion, Endencia, and Gutierrez David, JJ., concur.
Reyes, J.B.L., J., on leave, took no part.
[1] In relation to Republic Act No. 588.
[2] Republic Act No. 688.
[3] See Section 180, Com. Act No. 466, before its amendment on June 22, 1957 by Republic Act No. 2025.