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    ABSCBN V CTA

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    Kenneth Buri
    This case involves a dispute over retroactive application of a revenue memorandum circular issued by the Commissioner of Internal Revenue. ABS-CBN Corporation paid withholding taxes on film rentals from 1965-1968 based on the rates and procedures in an earlier general circular. In 1971, a new revenue memorandum circular revoked the earlier circular and assessed higher tax rates and a different tax basis. The Commissioner then issued ABS-CBN a deficiency assessment for 1965-1968 based on the new circular. However, the Court ruled the new circular could not be applied retroactively as this would prejudice ABS-CBN, since it was issued years later and ABS-CBN no longer had control over the film rentals. Under the tax code, r

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    ABSCBN V CTA

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    Kenneth Buri
    103 views2 pages
    This case involves a dispute over retroactive application of a revenue memorandum circular issued by the Commissioner of Internal Revenue. ABS-CBN Corporation paid withholding taxes on film rentals from 1965-1968 based on the rates and procedures in an earlier general circular. In 1971, a new revenue memorandum circular revoked the earlier circular and assessed higher tax rates and a different tax basis. The Commissioner then issued ABS-CBN a deficiency assessment for 1965-1968 based on the new circular. However, the Court ruled the new circular could not be applied retroactively as this would prejudice ABS-CBN, since it was issued years later and ABS-CBN no longer had control over the film rentals. Under the tax code, r

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    Taxation2 Case

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    ABSCBN v CTA

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    This case involves a dispute over retroactive application of a revenue memorandum circular issued by the Commissioner of Internal Revenue. ABS-CBN Corporation paid withholding taxes on film rentals from 1965-1968 based on the rates and procedures in an earlier general circular. In 1971, a new revenue memorandum circular revoked the earlier circular and assessed higher tax rates and a different tax basis. The Commissioner then issued ABS-CBN a deficiency assessment for 1965-1968 based on the new circular. However, the Court ruled the new circular could not be applied retroactively as this would prejudice ABS-CBN, since it was issued years later and ABS-CBN no longer had control over the film rentals. Under the tax code, r

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    103 views2 pages

    ABSCBN V CTA

    Uploaded by

    Kenneth Buri
    This case involves a dispute over retroactive application of a revenue memorandum circular issued by the Commissioner of Internal Revenue. ABS-CBN Corporation paid withholding taxes on film rentals from 1965-1968 based on the rates and procedures in an earlier general circular. In 1971, a new revenue memorandum circular revoked the earlier circular and assessed higher tax rates and a different tax basis. The Commissioner then issued ABS-CBN a deficiency assessment for 1965-1968 based on the new circular. However, the Court ruled the new circular could not be applied retroactively as this would prejudice ABS-CBN, since it was issued years later and ABS-CBN no longer had control over the film rentals. Under the tax code, r

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    ABS-CBN BROADCASTING CORPORATION v CTA

    GR No. L-52306 October 12, 1981


    Buri, Kenneth Roger R.
    FACTS:
    From the years 1965-1968, ABS-CBN Corporation was engaged in the
    business of telecasting local as well as foreign films acquired from
    foreign corporations not engaged in trade or business within the
    Philippines, for which petitioner paid rentals after withholding income
    tax of 30%of one-half of the film rentals.
    In so far as the income tax on non-resident corporations is concerned,
    section 24 (b) of the National Internal Revenue Code, as amended by
    Republic Act No. 2343 is governing. This was implemented by General
    Circular No. V-334 issued by the Commissioner of Internal Revenue;
    ABS-CBN paid the taxes due based on the same.

    On June 27, 1968, Republic Act No. 5431 amended Section 24 (b) of
    the Tax Code increasing the tax rate from 30 % to 35 % and revising
    the tax basis from "such amount" referring to rents, etc. to "gross
    income".

    On February 8, 1971, the Commissioner of Internal Revenue issued


    Revenue Memorandum Circular No. 4-71, revoking General Circular No.
    V-334 and holding that the latter was erroneous for lack of legal basis,
    because the tax therein prescribed should be based on gross income
    without deduction.
    On the basis of this new Circular, respondent Commissioner of Internal
    Revenue issued against petitioner a letter of assessment and demand
    dated April 15, 1971, but allegedly released by it and received by
    petitioner on April 12, 1971, requiring them to pay deficiency
    withholding income tax on the remitted film rentals for the years 1965
    through 1968 and film royalty as of the end of 1968 in the total amount
    of P525,897.06
    ISSUES:
    1.)
    Whether or not General Circular No. 4-71 can apply retroactively,
    viz, the CIR can issue a deficiency assessment against ABS-CBN
    Corporation in the amount of P 525,897.06 as deficiency withholding
    income tax for the years 1965-1968.
    HELD:

    No!
    In point is Sec. 338-A (now Sec. 327) of the Tax Code. As inserted by Republic
    Act No. 6110 on August 9, 1969, it provides:
    Sec. 338-A. Non-retroactivity of rulings. Any revocation,
    modification, or reversal of and of the rules and regulations
    promulgated in accordance with the preceding section or any of the
    rulings or circulars promulgated by the Commissioner of Internal
    Revenue shall not be given retroactive application if the relocation,
    modification, or reversal will be prejudicial to the taxpayers, except in
    the following cases: (a) where the taxpayer deliberately mis-states or
    omits material facts from his return or any document required of him
    by the Bureau of Internal Revenue: (b) where the facts subsequently
    gathered by the Bureau of Internal Revenue are materially different
    from the facts on which the ruling is based; or (c) where the taxpayer
    acted in bad faith. (italics for emphasis)

    It is clear from the foregoing that rulings or circulars promulgated by the


    Commissioner of Internal Revenue have no retroactive application where to
    so apply them would be prejudicial to taxpayers. The prejudice to petitioner
    of the retroactive application of Memorandum Circular No. 4-71 is beyond
    question. It was issued only in 1971, or three years after 1968, the last year
    that petitioner had withheld taxes under General Circular No. V-334. The
    assessment and demand on petitioner to pay deficiency withholding income
    tax was also made three years after 1968 for a period of time commencing in
    1965. Petitioner was no longer in a position to withhold taxes due from
    foreign corporations because it had already remitted all film rentals and no
    longer had any control over them when the new Circular was issued. And in
    so far as the enumerated exceptions are concerned, admittedly, petitioner
    does not fall under any of them.

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