G.R. No. L-14880; April 29, 1960
COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. FILIPINAS COMPAÑIA DE SEGUROS, respondent.

FACTS

Respondent Filipinas Compañia de Seguros, an insurance company also engaged in real estate business, paid P150.00 on January 4, 1956, as its real estate dealer’s fixed annual tax for 1956 under the single rate then prescribed by Section 182 of the National Internal Revenue Code. Republic Act No. 1612 , which took effect on August 24, 1956, amended Section 182 by introducing graduated tax rates: P150 for annual income between P4,000 and P10,000; P300 for income exceeding P10,000 but not exceeding P30,000; and P500 for income exceeding P30,000. On June 17, 1957, petitioner Commissioner of Internal Revenue assessed and demanded from respondent (whose annual income exceeded P30,000) an additional P350.00 as real estate dealer’s fixed annual tax for 1956. Respondent objected, arguing its tax for 1956 was fully paid prior to the effectivity of R.A. No. 1612 and that R.A. No. 1856 (effective June 22, 1957) showed Congress’s intent for the increased rates to be effective only from January 1, 1957. Petitioner insisted the assessment was proper, contending R.A. No. 1856 ’s amendment applied only to fixed taxes on occupation, not business. The Court of Tax Appeals ruled in favor of respondent, ordering petitioner to desist from collecting the additional assessment. Petitioner appealed.

ISSUE

Whether Republic Act No. 1612 , which increased the rates of the real estate dealer’s fixed annual tax, can be applied retroactively to require respondent to pay an additional tax for the year 1956.

RULING

No. The Supreme Court affirmed the decision of the Court of Tax Appeals. Laws are generally prospective unless the contrary is expressly provided. R.A. No. 1612 expressly stated it “shall take effect upon its approval” on August 24, 1956. The fixed annual tax for 1956 was due on January 1, 1956, and respondent had fully paid the amount then prescribed (P150.00) on January 4, 1956. To require an additional payment based on a law effective only in August 1956 would give it retroactive effect, contravening its own express provision and the rule on prospectivity of statutes. The legislative intent for prospectivity is further affirmed by R.A. No. 1856 , which inserted a proviso in Section 182 of the Tax Code stating that any amount collected in excess of the rates in effect prior to January 1, 1957, shall be refunded or credited. Although this proviso was technically placed under the paragraph on occupation taxes, the Senate deliberations reveal the bill was intended to amend provisions on fixed taxes on business and was enacted precisely to eliminate the “iniquitous effects” of the Bureau of Internal Revenue’s retroactive application of R.A. No. 1612 from January 1, 1956. Therefore, the increased rates under R.A. No. 1612 apply prospectively from its effectivity and cannot be imposed for the tax year 1956. The assessment for additional tax was invalid.