Rulings and circulars, rules and regulations promulgated by the Commissioner of Internal Revenue would have no retroactive effect application if to so apply them would be prejudicial to the taxpayers.

Instances when retroactive application will still be allowed even if prejudicial to the taxpayer:

1. A taxpayer deliberately misstates or omits material facts from his return or any document required by the BIR

2. Where subsequent facts gathered by the BIR are materially different from which the ruling is based.

3. Where the taxpayer acted in bad faith. (Commissioner of Internal Revenue vs. Benguet Corporation,  495 SCRA 5, July 14 2006)