Lorenzo v. Posadas, G.R. No.

L-43082 (64 PHIL 353) June 18, 1937

Facts: Herein petitioner Lorenzo, in his capacity as trustee of the estate of a certain Thomas Hanley, deceased, brought an action
against respondent Posadas, Collector of Internal Revenue. Petitioner alleges the respondent to have exceeded in its tax collection,
which, as assessed by the former, should only be in the amount of PhP1,434.24 instead of PhP2,052.74. Disregarding the allegation,
respondent filed a motion in the CFI of Zamboanga praying that the trustee be made to pay such tax. The motion was granted.
Petitioner paid the amount in protest, however notified the respondent that until a refund is prompted, suit would be bought for its
recovery. Respondent overruled the protest. Hence, the case at bar.

Issue/s:
1. Whether or not the provisions of Act No. 3606 (Tax Law) which is favorable to the taxpayer be given retroactive effect?

Held and Reasoning: No. The respondent levied and assessed the inheritance tax collected from the petitioner under the provisions
of section 1544 of the Revised Administrative Code as amended by Act No. 3606. However, the latter only enacted in 1930 - not the
law in force when the testator died in 1922. Laws cannot be applied retroactively. The Court states that it is a well-settled principle that
inheritance taxation is governed by the statue in force at the time of the death of the decendent. The Court also emphasized
that "a statute should be considered as prospective in its operation, unless the language of the statute clearly demands or expresses that it shall have
retroactive effect...” Act No. 3606 does not contain any provisions indicating a legislative intent to give it a retroactive effect. Therefore,
the provisions of Act No. 3606 cannot be applied to the case at bar.

[RELATED to Article 4, Civil Code of the Philippines]