CEBU PORTLAND CEMENT COMPANY, petitioner, vs. COLLECTOR (Now COMMISSIONER) OF INTERNAL REVENUE, respondent.; G.R. No. L-20563 ; October 29, 1968

 TOPIC: Art. 4, Non-retroactivity of laws

FACTS:

1. Cebu Portland Cement Company had been paying 7% sales/percentage of the gross selling price inclusive of the cost of the bag containers of cement and the gypsum used in the manufacture of said product.

2. Petitioner had been protesting the imposition of the sales tax on its APO portland cement, and on January 16, 1953, it also protested the payment of ad valorem taxes. A written claim for refund of sales and ad valorem taxes paid by petitioner was filed two years later (September 1955) which was reiterated on July 26, 1956. 

3. After the approval of Republic Act No. 1299 on June 16, 1955, Cebu Portland stopped paying sales tax on its gross sales and instead paid the ad valorem tax [according to value] on the selling price of the product after deducting therefrom the corresponding cost of the containers thereof.(selling price-containers' cost = profit -> taxed)

4. Original and amended pleading before Court of Tax Appeals:

- January 24, 1957: petitioner filed a petition for review, claiming refund of sales or percentage taxes amounting to P448,893.63. 

- February 27, 1957: respondent did not raise the defense of prescription in its answer

- September 3, 1959:  respondent filed an amended answer but prescription was still not included.

- October 24, 1959: petitioner asked for leave to file an amended petition for review in which amendment it added the sum of P400,499.99 representing overpaid ad valorem taxes, in its claim for refund.

- December 28, 1959: the amended petition was deemed admitted as of the date of its filing on October 24, 1959

- February 26, 1960: respondent filed their answer, this time pleading prescription as a defense insofar as the portion of the sales tax sought to be refunded was paid more than two years from the date the petition for review was filed with the Tax Court.

- June 23, 1961: petitioner re-amended its petition with said court praying finally, that respondent be ordered to refund the amount of P458,241.45 paid as percentage taxes, and the amount of P427,552.95, representing overpayment of ad valorem taxes; or alternatively, the amount of P590, 649.92, or P854,619.89, depending on the correct basis for the computation of the ad valorem tax. 

5. The Court of Tax Appeals dismissed the petitioner's petition for review holding that petitioner was not exempt from payment of the sales taxes on its APO Portland cement prior to R.A. No. 1299's effectivity. Thus, petitioner raised the issue before this Court.

ISSUES:

W/N R.A. 1299 can be applied retroactively and be construed as if it had been originally passed in its amended form, so that cement should be considered as "mineral product" even before the enactment of Republic Act 1299, and therefore exempt from the sales or percentage tax, pursuant to the provision of section 188(c) of the National Internal Revenue Code.

 

RULING: 

NO. It R.A. 1299 cannot be applied retroactively. Like other statutes, tax laws operate prospectively, whether they enact, amend or repeal unless the purpose of the Legislature to give retrospective effect is expressly declared or may clearly be implied from the language used. Thus, when cement was not yet categorized under either "minerals" or "mineral products," it was not exempt from percentage tax imposed by section 186 of said Code, and was, therefore, taxable as a  manufactured product prior to the amendment of Section 246 of the Tax Code. Also, there is no manifestation in the Legislature's intention to have it applied to taxes due in the past. Thus,  cement was taxable as a "manufactured product" under section 186 before R.A. 1299's effectivity and its amended category under "mineral product" cannot be applied retroactively to warrant for refund.