LAW OF BASIC TAXATION IN THE PHILIPPINES. Supreme Court reiterated the rule on non-retroactivity of BIR rulings in Commissioner of Internal Revenue v. Court of Appeals, et al. (G.R. No. 117982, Feb. 6, 1997). j It would seem however, that if a subsequent ruling revokes a prior ruling on the ground of nullity, the same being erroneous and contrary to existing law, there might be a basis for giving the subsequent ruling a retroactive application. LEGISLATIVE ADOPTION OF TAX RULINGS. There are instances where the legislature may have approved the interpretation of tax statutes by administrative agencies through reenactment. This is known as the the principle of legislative approval of an administrative interpretation through reenactment and may be briefly described thus: Where a statute is susceptible of the meaning placed upon it by a ruling of the government agency charged with its enforcement and the legislature thereafter reenacts the provisions without substantial change, such action is to some extent confirmatory that the ruling carries out the legislative purpose (Alexander Howden and Co., Ltd. v. Collector of Internal Revenue, supra). Tt may be mentioned in this connection that Sec. 28(A)(5) of the 1997 NIRC now clearly provides that the 15% tax on branch profit remittances shall be based on the total profits applied or earmarked for remittance without any deduction for the tax component thereof, except those activities which are registered with the Philippine Economic Zone Authority (PEZA). In effect, the revocatory ruling issued by the Commissioner in 1982 in the Burroughs case regarding the basis for the computation of the 15% branch profits remittance tax is confirmed by the legislature with the reenactment of the administrative ruling in the 1997 Tax Code. Itis also settled that the reenactment of a statute substantially unchanged is persuasive indication of the adoption by Congress of prior executive construction (ABS-CBN Broadcasting Corp. v. CTA, et al., G.R. No. 52306, Oct. 12, 1981). DOCTRINE OF IMPLICATIONS. The doctrine of implications means that that which is plainly implied in the language of a statute is as much a part of it as that which is expressed (City of Manila, et al. v. Gomez, etc,, et al., L-37251, Aug. 31, 1981). It was ruled that where R.A. 5447 (creating the Special Education Fund, or SEF, which imposes a 1% additional tax on real property; now, found in Sec. 235, Local Government Code), in levying the 1% 152 ‘TAX LAWS AND REGULATIONS. additional real estate tax provides that “the total real property tax shall not exceed a maximum of three per centum,” the City of Manila, under its charter, can increase the existing regular rate of one and one-half per cent to two per cent; so that the 2% added to the 1% ‘equals 3%, or the maximum rate allowed under R.A. 5447. ‘TAX TREATIES AND INTERNATIONAL AGREEMENTS. ‘Tax treaties or conventions also constitute an important source of tax law. Tax treaties ordinarily comprehend two objectives. One is to avoid double taxation especially in cases where the income is taxed twice: one by the country where the income is earned (country of source) and another by the country where the subject of taxation is, either a citizen or resident (country of residence). Another objective is to eliminate or minimize tax evasion through the adoption of the exchange of information scheme whereby the signatory countries to the treaty undertake to furnish each other on a mutual basis information on the taxable income and/or activities of any of their nationals or residents. ‘The Philippines has entered into a aumber.of tax treaties, notable of which are those with European countries, the United States and ASEAN, or the Southeast Asian nations like Indonesia, Singapore, Malaysia, and others. In Commissioner of Internal Revenue v. S.C. Johnson and Son, Inc,, et al. (G.R. No. 127105, June 26, 1999), the Supreme Court exhaustively expounded on the purpose and desired effects of tax treaties: “xxx The purpose of these international agreements is to reconcile the national fiscal legislations of the contracting parties in order to help the taxpayer avoid simultaneous taxation in two different jurisdictions. More precisely, the tax conventions are drafted with a view towards the elimination of international juridical double taxation, which is defined as the imposition of comparable taxes in two or more states on the same taxpayer in respect of the same subject matter and for identical periods. The apparent rationale for doing away with double taxation is to encourage the free flow of goods and services and the movement of capital, technology and persons between countries, conditions deemed vital in creating robust and dynamic economies. Foreign investments will only thrive in a fairly predictable and reasonable international investment climate and the protection against double taxation is crucial in creating such a climate.” Incidentally, on the ratification of treaties, the Constitution requires the concurring vote of at least two-thirds of all the members 153