G.R. Nos. 134587 & 134588 - COMMISSIONER OF INTERNAL REVENUE, VS. BENGUET CORPORATION.D E C I S I O N - Supreme Court E-Library

Ruling

WHEREFORE, the appealed decision is hereby REVERSED. The respondent Commissioner of Internal Revenue is ordered to award the following tax credits to petitioner. 1) In CA-G.R. SP No. 37209 - P49,611,914.00 2) in CA-G.R. SP No. 38958 - P19,218,738.44 3) in CA-G.R. SP No. 39435 - P84,909,247.96 [25] Dissatisfied with the above ruling, petitioner filed the instant Petition for Review questioning the determination of the Court of Appeals that the retroactive application of the subject issuance was prejudicial to respondent and could not be applied retroactively. Apart from the central issue on the validity of the retroactive application of VAT Ruling No. 008-92, the question of the validity of the issuance itself has been touched upon in the pleadings, including a reference made by respondent to a Court of Appeals Decision holding that the VAT Ruling had no legal basis. [26] For its part, as the party that raised this issue, petitioner spiritedly defends the validity of the issuance. [27] Effectively, however, the question is a non-issue and delving into it would be a needless exercise for, as respondent emphatically pointed out in its Comment , "unlike petitioner's formulation of the issues, the only real issue in this case is whether VAT Ruling No. 008-92 which revoked previous rulings of the petitioner which respondent heavily relied upon . . . may be legally applied retroactively to respondent." [28] This Court need not invalidate the BIR issuances, which have the force and effect of law, unless the issue of validity is so crucially at the heart of the controversy that the Court cannot resolve the case without having to strike down the issuances. Clearly, whether the subject VAT ruling may validly be given retrospective effect is the lis mota in the case. Put in another but specific fashion, the sole issue to be addressed is whether respondent's sale of gold to the Central Bank during the period when such was classified by BIR issuances as zero-rated could be taxed validly at a 10% rate after the consummation of the transactions involved. In a long line of cases, [29] this Court has affirmed that the rulings, circular, rules and regulations promulgated by the Commissioner of Internal Revenue would have no retroactive application if to so apply them would be prejudicial to the taxpayers. In fact, both petitioner [30] and respondent [31] agree that the retroactive application of VAT Ruling No. 008-92 is valid only if such application would not be prejudicial to the respondent-pursuant to the explicit mandate under Sec. 246 of the NIRC, thus: Sec. 246. Non-retroactivity of rulings. 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 taxpayers except in the following cases: (a) where the taxpaye