Primary Holding

Tax laws are prospective unless expressly stated otherwise; Republic Act No. 1612’s increased rates for real estate dealer’s fixed annual tax applied prospectively from its effective date (August 24, 1956) and could not retroactively impose additional liability for taxes already paid for 1956.

Background

Respondent Filipinas Compañía de Seguros, a real estate dealer, paid P150 as the 1956 fixed annual tax under the original National Internal Revenue Code. RA 1612 (effective August 24, 1956) introduced graduated rates. The Commissioner later demanded an additional P350, claiming retroactive application. The Court of Tax Appeals ruled for the respondent, prompting the Commissioner’s appeal to the Supreme Court.

Facts

• 1. Respondent paid the 1956 fixed tax (P150) under the original law.
• 2. RA 1612 introduced graduated rates (up to P500) but took effect August 24, 1956.
• 3. RA 1856 (June 22, 1957) amended RA 1612’s effective date to January 1, 1957.
• 4. The Commissioner sought retroactive application of RA 1612 to 1956, demanding an additional P350.

Arguments of the Petitioners

• 1. RA 1612’s increased rates applied retroactively to the entire 1956 tax year.
• 2. RA 1856’s proviso limiting retroactivity applied only to occupation taxes, not business taxes like real estate.

Arguments of the Respondents

• 1. The tax for 1956 was fully paid before RA 1612’s enactment.
• 2. RA 1856 clarified Congress’s intent to apply new rates prospectively from January 1, 1957.
• 3. Retroactive application violated the Civil Code’s prospectivity rule.

Issues

• 1. Whether RA 1612’s increased tax rates could retroactively apply to 1956.
• 2. Whether RA 1856’s proviso covered real estate dealer’s taxes (a business tax).

Ruling

• 1. Prospectivity of Laws: Laws operate prospectively unless expressly retroactive. RA 1612’s Section 21 stated it took effect upon approval (August 24, 1956), not retroactively.
• 2. Legislative Intent: RA 1856’s legislative history showed Congress intended to limit retroactive collection and align new rates with 1957.
• 3. Taxation Principle: Fixed annual taxes are due on January 1; respondent’s payment under the old law extinguished 1956 liability.
• 4. Statutory Construction: The proviso in RA 1856, though technically under “occupation taxes,” was interpreted to cover business taxes based on congressional debates.

Doctrines

• 1. Prospectivity of Laws (Art. 4, Civil Code): Laws apply forward unless retroactivity is explicit.
• 2. Strict Construction Against Retroactivity: Tax laws are construed narrowly to avoid retroactive burdens.
• 3. Legislative Intent: Courts discern intent through statutory language and legislative history.

Key Excerpts

• 1. “Laws have no retroactive effect, unless the contrary is provided.”
• 2. “A statute should be considered as prospective… unless the language clearly demands retroactive effect.”

Precedents Cited

• 1. Manila Trading and Supply Co. vs. Santos: Affirmed prospectivity of laws.
• 2. La Provisora Filipina vs. Ledda: Reinforced no retroactivity without express intent.
• 3. Loremo vs. Posadas: Cited 61 C.J. 1602 on tax law prospectivity.

Statutory and Constitutional Provisions

• 1. Art. 4, Civil Code: Prospectivity of laws.
• 2. RA 1612 (1956): Amended NIRC Sections 178, 182, 192.
• 3. RA 1856 (1957): Adjusted RA 1612’s effective date to January 1, 1957.
• 4. NIRC Sections 180, 182: Fixed tax payment deadlines and rates.