FACTS
Burroughs Ltd filed a written claim for a refund or tax credit for an alleged overpaid branch profit remittance tax. It claims that its 15 percent profit remittance tax should have been computed on the basis of the amount actually remitted (P6,499,999.30) and not on the amount before profit remittance tax (P7,647,058.00).
The CIR conceded that Burroughs Ltd was entitled to the tax credit in accordance with a BIR ruling which interpreted Sec 24(b)(2)(ii) of NIRC that that is the profit actually remitted abroad. But the CIR reversed itself, arguing that a subsequent Memorandum had revoked and/or repealed the BIR ruling.
RULING
The Court ruled in favor of Burroughs Ltd.
RATIO: The Court held that the BIR ruling still prevails because Burroughs Ltd paid the tax on March 14, 1979 and the Memorandum cannot be given retroactive effect in accordance with Sec. 327 of NIRC.
Sec. 327 of the NIRC states that: "Any revocation, modification, or reversal of any of the rules and regulations promulgated in accordance with the preceding section or any of the rulings or circulars promulgated by the Commissioner shall not be given retroactive application if the revocation, modification, or reversal will be prejudicial to the taxpayer except in the following cases (a) where the taxpayer deliberately misstates or omits material facts from his return or in 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."
