Circularizing the Effectivity Date of Republic Act (RA) No. 11467 Entitled "An Act Amending Sections 109, 141, 142, 143, 144, 147, 152, 263, 263-A, 265, and 288-A, and Adding a New Section 290-A to Republic Act No. 8424, as Amended, Otherwise Known as the National Internal Revenue Code of 1997, and for Other Purposes"

June 22, 2020 REVENUE MEMORANDUM CIRCULAR NO. 065-20 SUBJECT : Circularizing the Effectivity Date of Republic Act (RA) No. 11 467 Entitled "An Act Amending Sections 109, 141, 142, 143, 144, 147, 152, 263, 263-A, 265, and 288-A, and Add ing a New Section 290-A to Republic Act No. 8424, as Amended, Otherwise Known as the National Internal Revenue Code of 1997, and for Other Purposes" TO : All Internal Revenue Officers and Others Concerned For the information and guidance of all internal revenue officials, employees and others concerned, attached herewith as Annex "A" is the Memorandum dated January 29, 2020 from the Department of Finance informing the effectivity of RA No. 11467 entitled "An Act Amending Sections 109, 141, 142, 143, 144, 147, 152, 263, 263-A, 265, and 288-A, and Adding a New Section 290-A to Republic Act No. 8424, as amended, Otherwise Known as the National Internal Revenue Code of 1997, and for Other Purposes" which states that this Act shall take effect immediately after its complete publication in a newspaper of general circulation pursuant to Section 15 of RA No. 11467 or on January 27, 2020. All internal revenue officials and employees are enjoined to give this Circular as wide a publicity as possible. (SGD.) CAESAR R. DULAY Commissioner of Internal Revenue ATTACHMENT Department of Finance MEMORANDUM SUBJECT : CARLOS G. DOMINGUEZ Secretary of Finance FROM : (SGD.) ANTONETTE C. TIONKO Undersecretary, Revenue Operations Group SUBJECT : Date of Effectivity of Republic Act ("RA") No. 11467 DATE : 29 January 2020 BACKGROUND 1. This refers to Section 15 of RA No. 11467 entitled "An Act Amending Sections 109, 141, 142, 143, 144, 147, 152, 263, 263-A, 265, and 288-A, and Adding a New Section 290-A to Republic Act No. 8424, as amended, Otherwise Known as the National Internal Revenue Code of 1997, and for Other Purposes," which states that "This Act shall take effect on January 1, 2020 after its complete publication either in the Official Gazette or in a newspaper of general circulation." 2. However, RA No. 11467 was only published in the Official Gazette website on 23 January 2020, 1 and published in a newspaper of general circulation on 27 January 2020. As such, there is an issue on the date of effectivity of the law. DISCUSSION 1 January 2020 is not the effective date 3. As a general rule, laws shall have only a prospective effect and must not be applied retroactively. This is expressed in the familiar legal maxim lex prospicit , non respicit , the law looks forward and not backward. 2 4. The abovementioned principle finds its application in Article 4 of the New Civil Code of the Philippines ("Civil Code"), which provides that "[l]aws shall have no retroactive effect, unless the contrary is provided." The rule is intended to the tendency of retroactive legislation to be unjust and oppressive on account of its liability to punish individuals for violations of laws not yet enacted, unsettle vested rights or disturb the legal effect of prior transactions. 3 5. In determining whether retroactive legislation for taxation is acceptable, we must look at its nature. In the case of Mactan Cebu International Airport Authority vs. Marcos , 4 the Supreme Court recognized the power of taxation as a "destructive power which interferes with the personal and property * for the support of the government. Accordingly, tax statutes must be construed strictly against the government and liberally in favor of the taxpayer." 6. Furthermore, the Supreme Court has consistently emphasized the inherent necessity to publish laws. In Tanada v. Tuvera 5 (" Tanada "), the Supreme Court held that publication is essential to give effect to the principle ignorantia legis non excusat , ignorance of the law excuses no one from compliance therewith. The Supreme Court further held that "it would be the height of injustice to punish or otherwise burden a citizen for the transgression of a law of which he had no notice whatsoever, not even a constructive one." 7. RA No. 11467 is a tax measure that imposes higher tax rates on certain products. As such, the retroactive application of RA No. 11467 to 1 January 2020 cannot be applied since it will be unjust against the affected taxpayers whose liabilities and responsibilities are increased. Taxpayers who relied in good faith and paid the correct taxes at the time when the law is yet to be published should not be required to pay additional taxes. RA No. 11467 shall take effect on 27 January 2020 8. In Article 2 of the Civil Code, it is provided that as a general rule, laws shall take effect after fifteen (15) days following the completion of their publication in the Official Gazette. However, the same Article admits of an exception wherein the law itself provides for a different effectivity date, unless it is otherwise provided. 9. This is further explained in the Tanada case 6 wherein the Supreme Court, in resolving the Motion for Reconsideration, held 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. "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, 6 is the Civil Code 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." 10. In interpreting Article 2 of the Civil Code, Tanada clearly recognizes the power of Congress to provide for a shorter period of publication before a law becomes effective. Without any qualification, the law can even be made effective immediately after the publication of the law. 11. For RA No. 11467, although 1 January 2020 was the intended effective date, however, since the law was only published on 27 January 2020, it must give way to the rights of the taxpayer who are entitled to proper notice of the requirements of the law before the law becomes effective. 12. In properly giving effect to RA No. 11467, the legislative intent must be taken into consideration. It is a well-settled rule of statutory construction that where a status is susceptible of several interpretations or where there is ambiguity in its language, there is no better means of ascertaining the will and intention of the legislature than that which is afforded by the history of the statute. 7 13. Although Congress intended that the law would take effect on 1 January 2020, it is also clear from Section 15 of RA No. 11467 that Congress likewise intended to opt for a shorter publication period. 14. RA No. 11467, a bill at that time, was only transmitted to the Office of the President for his approval and signature on 23 December 2019. Counting the remaining days from 23 December 2019 leading to 1 January 2020, there were only nine (9) days remaining, showing the clear intention of Congress to forego with the fifteen-day publication period. 15. In fact, the President himself certified RA No. 11467 as urgent stating the "necessity of the immediate enactment of Senate Bill 1074 to address the urgent need to generate additional revenue to support the effective implementation of the Universal Health Care (UHC) Act and to further protect the right to health of the people." 8 Acting on the request of the President, Congress acted swiftly and reflected the urgent nature of the law in Section 15 of RA No. 11467. 16. With said facts surrounding RA No. 11467, there is no doubt that Congress intended to have RA No. 11467 effective 1 January 2020 or, if already lapsed, immediately after publication or on 27 January 2020. 17. As to whether the publication through the website of the Official Gazette is considered as compliance with the publication requirement, the Supreme Court held in the case of Garcillano v. House of Representatives, et al. 9 that publication through the internet is insufficient, to wit: "The invocation by the respondents of the provisions of R.A. No. 8792, otherwise known as the Electronic Commerce Act of 2000, to support their claim of valid publication through the internet is all the more incorrect. R.A. 8792 considers an electronic data message or an electronic document as the functional equivalent of a written document only for evidentiary purposes. In other words, the law merely recognizes the admissibility in evidence (for their being the original) of electronic data messages and/or electronic documents. It does not make the internet a medium for publishing laws, rules and regulations ." RECOMMENDATION 18. Based on the foregoing discussion, it is our considered view that RA No. 11467 became effective last 27 January 2020, immediately after its publication in a newspaper of general circulation pursuant to Section 15 of RA No. 11467. If the Secretary approves, we also recommend that the Department informs the Bureau of Internal Revenue on its position on the date of effectivity of RA No. 11467 in its entirety including the commencement of the VAT exemption of the sale or importation of prescription drugs and medicines for diabetes, high cholesterol, and hypertension on 28 January 2020. In the event of any VAT refund, we recommend that the same be refunded pursuant to Joint Circular No. 001-2018. 10 For the Secretary's consideration. Thank you. APPROVED: (SGD.) CARLOS G. DOMINGUEZ Secretary of Finance Footnotes 1. https://www.officialgazette.gov.ph/2020/01/22/republic-act-no-11467/ 2. Philippine National Bank v. Tejano , G.R. No. 173615, October 16, 2009. 3. Curata v. Philippine Ports Authority , G.R. Nos. 154211-12, June 22, 2009. 4. G.R. No. 120082, September 11, 1996. 5. G.R. No. L-63915, April 24, 1985. 6. G.R. No. L-63915, December 29, 1986. 7. Greenfield v. Meer , G.R. No. 156, 27 September 1946. 8. 12 November 2019. https://news.mb.com.ph/2019/11/12/duterte-certifies-bill-seeking-additional-sin-taxes-as-urgent/ 9. G.R. No. 179275, December 23, 2008. 10. Joint Circular No. 001-2018 between DOF, DBM, BTr, BIR, BOC and COA.