Publishing the full text of Republic Act No. 7167 which provides for increased basic personal and additional exemptions allowable to individual taxpayers for income tax purposes; and clarifying the effectivity date as well as applicability of said Act

January 3, 1992 REVENUE MEMORANDUM CIRCULAR NO. 01-92 SUBJECT : Publishing the Full Text of Republic ActNo.7167 Which Provides for Increased Basic Personal and Additional Exemptions Allowable to Individual Taxpayers for Income Tax Purposes; and Clarifying the Effectivity Date As Well As Applicability of Said Act TO : All Internal Revenue Officers and Others Concerned For the information and guidance of all concerned, quoted hereunder is the full text of Republic Act No. 7167: "REPUBLIC ACTNO.7167 "AN ACT ADJUSTING THE BASIC PERSONAL AND ADDITIONAL EXEMPTIONSALLOWABLE TO INDIVIDUALS FOR INCOME TAX PURPOSES TO THE POVERTYTHRESHOLD LEVEL, AMENDING FOR THE PURPOSE SECTION 29, PARAGRAPH (L), ITEMS (1) AND (2) (A), OF THE NATIONALINTERNALREVENUECODE, AS AMENDED, AND FOR OTHER PURPOSES "Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled: "Sec. 1. The first paragraph of item (1) paragraph (1) of Section 29 of the National InternalRevenueCode, as amended, is hereby further amended to read as follows: cdt "(1) Personal exemptions allowable to individuals, (1) Basic personal exemption. For the purpose of determining the tax provided in Section 21(a) of this Title, there shall be allowed a basic personal exemption as follows: "For single individual or married individual judicially decreed as legally separated with no qualified dependents P 9,000 "For head of a family P12,000 "For married individual P18,000 " Provided , That husband and wife electing to compute their income tax separately shall be entitled to a personal exemption of P9,000 each." "Sec. 2. The first paragraph of item (2) (A), paragraph (1) of Section 29 of the sameCode, as amended, is hereby further amended to read as follows: "(2) Additional exemption "(A) Taxpayers with dependents. A married individual or a head of family shall be allowed an additional exemption of Five thousand pesos (P5,000) for each dependent. Provided That the total numbers of dependents for which additional exemptions may be claimed shall not exceed four dependents: Provided further , That an additional exemption of One thousand pesos (P1,000) shall be allowed for each child who otherwise qualified as dependent prior to January 1, 1980: Provided, finally , That the additional exemption for dependents shall be claimed by only one of the spouses in the case of married individuals electing to compute their income tax liabilities separately." "Sec. 3. This Act shall take effect upon its approval. "Approved, xxx xxx xxx "Approved: December 19, 1991 (Sgd.) CORAZON C. AQUINO President of the Philippines" SALIENT FEATURES (1) Under Section 29, paragraph (i), (1) and (2) of the National Internal Revenue Code, as amended by Republic Act No. 7167, the increased basic personal exemptions are as follows: cd i (a) For single individual or married individual judicially decreed as legally separated with no qualified dependents P 9,000 (b) For head of a family P12,000 (c) For married individual P18,000 (d) For husband and wife electing to compute their income tax separately P 9,000 each while the increased additional exemption allowed to a married individual or a head of family shall be P5,000 for each dependent as defined under Section 29(1) of the Tax Code. (2) The provision that "This Act shall take effect upon its approval." (Sec. 3, R.A. No. 7167) cannot be construed to mean that the law (R.A. No. 7167) shall be considered effective as of its approval by the President of the Philippines which was on December 19, 1991. It must first satisfy the legal requirement of Publication and shall take effect after fifteen (15) days following the completion thereof, either in the Official Gazette or in a newspaper of general circulation in the Philippines, as amended by Executive Order No. 200. That publication either in the Official Gazette or newspaper of general circulation is a sine qua non requirement for the effectivity of laws is well expounded by the Supreme Court, in the case of Taada, et al. vs. Tuvera, et al. (G.R. No. 63915, December 29, 1986; 46 SCRA 446), wherein it ruled that "After a careful study of this provision and of the arguments of the parties, both on the original petition and on the instant motion, we have come to the conclusion, and so hold, that the clause "unless it is otherwise provided" refers to the date of effectivity and not to the requirement of publication itself, which cannot in any event be omitted. This clause does not mean that the legislature may make the law effective immediately upon approval, or on any other date, without its previous publication. "Publication is indispensable in every case, but the legislature may in its discretion provide that the usual fifteen-day period shall be shortened or extended." An example, as pointed out by the present Chief Justice in his separate concurrence in the original decision, is the CivilCode which did not become effective after fifteen days from its publication in the Official Gazette but "one year after such publication." The general rule did not apply because it was "otherwise provided." It is not correct to say that under the disputed clause publication may be dispensed with altogether. The reason is that such omission would offend due process insofar as it would deny the public knowledge of the laws that are supposed to govern it. Surely, it the legislature could validly provide that a law shall become effective immediately upon its approval notwithstanding the lack of publication (or after an unreasonably short period after publication), it is not unlikely that persons not aware of it would be prejudiced as a result; and they would be so not because of a failure to comply with it but simply because they did no know of its existence. . . ." (Emphasis supplied) Thus, in the more recent case of Caltex (Phils.), Inc. vs. the Commissioner of Internal Revenue, G.R. No. 97281, the Supreme Court in its Resolution dated June 26, 1991 construed Section 3 of R.A. No. 6965 containing the effectivity clause (Similar to R.A. No. 7167) which provides, "This Act shall take effect upon its approval." To mean that inasmuch as R.A. No. 6965 has no specific date for its effectivity and neither can it become effective upon its approval notwithstanding its express statement, following Article 2 of the Civil Code and the doctrine enunciated in Taada, supra , R.A. No. 6965 took effect fifteen (15) days after September 20, 1990 (date of publication in Phil. Journal) or specifically on October 5, 1990. Besides, it has been the constant and uniform holding that exemption from taxation is not favored and is never presumed, so that if granted it should be construed " strictissimi juris ". (Resins Inc. vs. Auditor General & Central Bank of the Philippines, 25 SCRA, 754) This is so, even as to the effectivity of the statute granting such exemption for if Congress intended that Republic Act No. 7167 would apply to income earned beginning taxable year 1991, it would have so provided as in the case of Republic Act No. 5431 where the effectivity clause of said Act provides succinctly that it "shall apply to income for taxable years beginning after June thirty, nineteen hundred sixty-eight." (65 O.G., No. 28, p. 7114; The Manila Times Publishing Co., Inc. vs. Commissioner of Internal Revenue, CTA Case No. 2263) Moreover, it is a rule of statutory construction that all statutes are to be construed as having only a prospective operation unless the purpose and intention of the legislature to give them a retrospective effect is expressly declared or is necessarily implied from the language used. In every case of doubt, the doubt must be resolved against the retrospective effect. (Montilla vs. Agustinian Corp., 24 Phil. 220) Such being the case, the increased personal and additional exemptions under the amendatory provisions of Republic Act No. 7167 shall apply to earnings/income of individual taxpayers starting taxable year 1992 (and not 1991) which shall be declared for income tax purposes in their income tax returns to be filed on or before April 15, 1993. cdt It is desired that this Circular be given as wide a publicity as possible. (SGD.) JOSE U. ONG Commissioner of Internal Revenue