BIR Ruling [DA-214-03]

July 9, 2003 BIR RULING [DA-214-03] E.O. 291; s. 2002; 2-2002; 18-2002 DA-170-2002 Mr. Reginaldo M. Tolentino c/o National Council for the Welfare of Disabled Persons 2nd Floor, Philsucen Building, North Avenue Diliman, Quezon City S i r : This refers to your letter dated November 26, 2002 requesting for a reconsideration of BIR Ruling DA-170-2002 dated September 17, 2002 relative to the denial of your request for refund of taxes withheld, collected and remitted for the monetization of leave credits in 1999 on the following grounds: 1) Three (3) of the employees of the same office of the appellant, namely Milagros Molod, Corazon Placino and Ma. Suzette M. Agcaoili were able to claim tax refund of taxes withheld on their monetized leave credits in year 1999; 2) The denial of the Honorable Commissioner of tax refund of the herein appellant constitutes violation of the equal protection clause of the 1987 Constitution; and 3) The Honorable Commissioner, which is under the Secretary of the Department of Finance, is responsible to the President of the Philippines and that the former is subject at all times to the disposition of the latter since he is merely his alter ego. Accordingly, all official acts of the Honorable Commissioner "performed and promulgated in the regular course of business, are, unless disapproved or reprobated by the Chief Executive, presumptively the acts of the Chief Executive" (Villena vs. Secretary of the Interior, 67 Phil. 451) In reply, please be informed that in BIR Ruling No. 2-2002 dated January 12, 2002, it is the position of this Office that Executive Order No. 291 dated September 27, 2000 shall not be given retroactive application. In the case of Commissioner of Internal Revenue vs. Republic Cement Corporation, et al., G.R. No. 35668, August 10, 1983, the Supreme Court, citing the case of Cebu Portland Cement Co. vs. Collector of Internal Revenue, October 29, 1968, L-20563, ruled: "Indeed, like other statutes, tax laws operate prospectively, whether they enact, amend or repeal, unless, as aforesaid, the purpose of the Legislature to give retrospective effect is expressly declared or may clearly be implied from the language used. . . . . . . It was enough for the Court to say in effect that even assuming Republic Act 1299 had re-classified cement as a mineral product, the reclassification could not be given retrospective application (so as to justify the refund of sales taxes paid before Republic Act 1299 was adopted) because laws operate prospectively only, unless the legislative intent to the contrary is manifest, which was not so in the case of Republic Act 1266. [The situation would have been different if the Court instead had ruled in favor of refund, in which case it would have been absolutely necessary (1) to make an unconditional ruling that Republic Act 1299 re-classified cement as a mineral product (not subject to sales tax) and (2) to declare the law retroactive, as a basis for granting refund of sales taxes paid before Republic Act 1299.]" DSEIcT The records show that your application for monetization of leave credits was filed November 25, 1999, and which monetization was approved and paid the same year. Executive Order No. 291 was issued September 27, 2000. Hence, at the time of filing and payment, the tax withheld in the amount of P4,775.00 was neither erroneously nor illegally collected, as the same was collected pursuant to Section 2.78(A)(7) of Revenue Regulations 2-98. The fact that the said Section was subsequently abrogated by his Excellency President Joseph E. Estrada under Executive Order No. 291 does not render erroneous the withholding of the corresponding income tax on your monetized leave credits in excess of ten days as, at the time it was collected, a valid regulation implementing an existing law mandated its collection. (BIR Ruling No. 018-2002 dated May 3, 2002) Very truly yours, Commissioner of Internal Revenue By: (SGD.) JOSE MARIO C. BUAG Deputy Commissioner Legal & Inspection Group