LAW OF BASIC TAXATION IN THE PHILIPPINES RMC 37-93 apparently applies only to “Hope Luxury,” “Premium More,” and “Champion” cigarettes, and thus suffers from lack of uniformity of taxation. The CTA, in its decision, noted that other cigarettes bearing foreign brands have not been similarly included within the scope of the circular. The hastily promulgated RMC 37-93 has fallen short of a valid and effective administrative issuance. COMMISSIONER OF INTERNAL REVENUE v. COURT OF APPEALS, ET AL., G.R. NO. 117982, FEB. 6, 1997 FACTS: The present dispute arose from the discrepancy in the taxable base on which the excise tax is to apply on account of two incongruous BIR rulings: (1) BIR Ruling 473-88, dated Oct. 4, 1988, which excluded the VAT from the tax base in computing the 15% excise tax due, purportedly in accordance with Sec. 127 of the Tax Code, as amended by E.0. 273; and, (2) BIR Ruling 017-91, dated Feb. 11, 1991, which included back the VAT in computing the tax base for purposes of the 15% ad valorem tax, pursuant to Sec, 142 of the Tax Code and thereby revoking BIR Ruling 473-88. Private respondent Alhambra Industries, Inc. (Alhambra), @ domestic corporation engaged in the manufacture and sale of cigar and cigarette products received on May 7, 1991 a letter dated Apr. 26, 1991 from the Commissioner of Internal Revenue assessing ‘a deficiency ad valorem tax of P488,396.62, inclusive of increments on removals of cigarette products from place of production for the period from Nov. 2, 1990 to Jan. 22, 1991, Alhambra protested the assessment and requested that the same be withdrawn and cancelled. ‘The Commissioner denied the protest and requested payment of the revised amount of P520,835.29. Without waiting for action on its request for reconsideration, Alhambra filed a petition for review with the CTA on June 19, 1991, even as petitioner, in the meanwhile, denied its request for reconsideration on June 21, 1991. Private respondent then paid under protest the disputed ad valorem tax of P520,835.29. For the period from Nov. 2, 1990 to Jan. 21, 1991, priv respondent Alhambra paid P3,905,348.85 ad valorem tax, applying Sec. 127(b), NIRC, as interpreted by BIR Ruling 473-88. Petitioner then sought to apply BIR Ruling 017-91 retroactively to Alhambra’s removals of cigarettes for said period, alleging-bad faith on the part of Alhambra, which is an exception to the rule on non-retroactivity of BIR rulings. ‘The CTA ruled in favor of private respondent Alhambra and ordered the Commissioner of Internal Revenue to refund 520,835.29 160 ‘TAX LAWS AND REGULATIONS: representing erroneously paid ad valorem tax. The Court of Appeals affirmed the CTA’s decision holding that there can be no retroactive ‘application of BIR Ruling 017-91 because Alhambra did not act in had faith HELD: The deficiency tax assessment issued by petitioner against private respondent is without legal basis because of the prohibition under Sec. 246 of the Tax Code against the retroactive application of the revocation of BIR rulings in the absence of bad faith on the part of private respondent. ‘The correct computation of the excise tax on cigarettes in the case at bar is sufficiently addressed by BIR Ruling 017-91 dated Feb. 11, 1991 which revoked BIR Ruling 473-88 dated Ovt. 4, 1988, Well entrenched is the rule that rulings, circulars, 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 taxpayer. Without doubt, private respondent would be prejudiced by the retroactive application of the revocation as it would be assessed deficiency excise tax. As to whether private respondent falls under the third exception under Sec, 246, i.e., taxpayer who acted in bad faith, there is no evidence that Alhambra’s implementation of the computation mandated by BIR Ruling 473-88 is ill-motivated or attended with a dishonest purpose. Neither does the failure of private respondent to consult petitioner imply bad faith on the part of the former. COMMISSIONER OF INTERNAL REVENUE v. COURT OF APPEALS, ET AL., G.R. NO. 115349, APR, 18, 1997 FACTS: Private respondent Ateneo de Manila University (Ateneo), a non-stock, non-profit educational institution, through one of its auxiliary units, the Institute of Philippine Culture (IPC), conduets researches and studies of social organizations and cultural values. The IPC occasionally accepts sponsorships for its research activities from international organizations, private foundations and government agencies. Private respondent Ateneo was assessed on June 3, 1983 the amount of P174,043.97 for alleged deficiency contractor's tax, and on June 27, 1983, the amount of P1,141,837 for alleged deficiency income tax for the fiscal year ending 1978. Ateneo denied said tax liabilities in a letter-protest and contested the validity of the assessments. The Commissioner of Internal Revenue rendered a 161