ABS-CBN v.
CTA  Petitioner requested for a reconsideration and withdrawal of the
Facts
 Petitioner corporation was engaged in the business of telecasting
local as well as foreign films acquired from foreign corporations not
engaged in trade or business within the Philippines, for which
petitioner paid rentals after withholding income tax of 30% of one-
half of the film rentals.
 In so far as the income tax on non-resident corporations is
concerned, section 24 (b) of the National Internal Revenue Code, as
amended by Republic Act No. 2343 dated June 20, 1959, used to
provide:
(b) Tax on foreign corporations.—(1) Non-resident corporations.—
There shall be levied, collected, and paid for each taxable year, in
lieu of the tax imposed by the preceding paragraph, upon the amount
received by every foreign corporation not engaged in trade or
business within the Philippines, from an sources within the
Philippines, as interest, dividends, rents, salaries, wages, premiums,
annuities, compensations, remunerations, emoluments, or other
fixed or determinable annual or periodical gains, profits, and income,
a tax equal to thirty per centum of such amount.
 CIR issued General Circular No. V-334. Sec. 4 provides that:
The local distributor should withhold 30% of one-half of the film
rentals paid to the non-resident foreign film distributor and pay the
same to this office in accordance with law unless the non- resident
foreign film distributor makes a prior settlement of its income tax
liability.
 Petitioner withheld and turned over to the BIR 30% of one-half of the
film rentals paid by it to foreign corporations not engaged in trade or
business within the Philippines. The last year that petitioner withheld
taxes pursuant to the foregoing Circular was in 1968.
 In 1968, RA 5431 amended Section 24 (b) of the Tax Code
increasing the tax rate from 30 % to 35 % and revising the tax basis
from "such amount" referring to rents, etc. to "gross income."
 In February 1971, CIR issued Revenue Memorandum Circular No. 4-
71, revoking General Circular No. V-334, and holding that the latter
was "erroneous for lack of legal basis," because "the tax therein
prescribed should be based on gross income without deduction
whatever”.
 On the basis of this new Circular, CIR issued against petitioner a
letter of assessment and demand dated April 15, 1971, but allegedly
released by it and received by petitioner on April 12, 1971, requiring
them to pay deficiency withholding income tax on the remitted film
rentals for the years 1965 through 1968 and film royalty as of the end
of 1968 in the total amount of P525,897.06
assessment. However, without acting thereon, CIR, on April 6, 1976,
issued a warrant of distraint and levy over petitioner's personal as
well as real properties. The petitioner then filed its Petition for
Review with the CTA. CTA affirmed the assessment by CIR.
Issue: WoN respondent CIR can apply General Circular No. 4-71
retroactively and issue a deficiency assessment against petitioner for the
years 1965-1968
 NO
 In point is Sec. 338-A (now Sec. 327) of the Tax Code. As inserted
by Republic Act No. 6110 on August 9, 1969, it provides:
Sec. 338-A. Non-retroactivity of rulings. — Any revocation,
modification, or reversal of and of the rules and regulations
promulgated in accordance with the preceding section or any of the
rulings or circulars promulgated by the Commissioner of Internal
Revenue shall not be given retroactive application if the relocation,
modification, or reversal will be prejudicial to the taxpayers, except in
the following cases: (a) where the taxpayer deliberately mis-states or
omits material facts from his return or 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. (italics for emphasis)
 It is clear that rulings or circulars promulgated by the CIR have no
retroactive application where to so apply them would be prejudicial to
taxpayers.
 The prejudice to petitioner of the retroactive application of
Memorandum Circular No. 4-71 is beyond question. It was issued
only in 1971, or three years after 1968, the last year that petitioner
had withheld taxes under General Circular No. V-334.
 The assessment and demand on petitioner to pay deficiency
withholding income tax was also made three years after 1968 for a
period of time commencing in 1965. Petitioner was no longer in a
position to withhold taxes due from foreign corporations because it
had already remitted all film rentals and no longer had any control
over them when the new Circular was issued. And in so far as the
enumerated exceptions are concerned, admittedly, petitioner does
not fall under any of them.
Estoppel
 This Court is not unaware of the well-entrenched principle that the
Government is never estopped from collecting taxes because of
mistakes or errors on the part of its
agents. In fact, utmost caution should be taken in this regard. But,
like other principles of law, this also admits of exceptions in the
interest of justice and fairplay.
 The insertion of Sec. 338-A into the National Internal Revenue Code,
as held in the case of Tuason, Jr. vs. Lingad, 10 is indicative of
legislative intention to support the principle of good faith. In fact, in
the United States, from where Sec. 24 (b) was patterned, it has been
held that the Commissioner of Collector is precluded from adopting a
position inconsistent with one previously taken where injustice would
result therefrom, or where there has been a misrepresentation to the
taxpayer.