Case Summary (G.R. No. 104037)
Issues
- Effectivity date of RA 7167: upon presidential approval (December 19, 1991) or after fifteen days following publication (January 30, 1992).
- Whether RA 7167’s increased exemptions apply to compensation income earned or received during calendar year 1991.
Effectivity of the Statute
Under Civil Code Article 2 and consistent jurisprudence (Tanada v. Tuvera; Caltex v. CIR), a statute without a specific effectivity date takes effect fifteen days after publication in a newspaper of general circulation. RA 7167, silent on a specific date, therefore became effective January 30, 1992.
Legislative Intent and Scope
Section 29(l)(4) of the NIRC mandates periodic adjustment of exemptions “taking into account” consumer price indices and subsistence levels. RA 7167—the first adjustment since 1986—aimed to mitigate inflation’s impact and raise the poverty threshold. Sponsorship remarks underscored relief for lower- and middle-income taxpayers. The statute’s language contemplates availability of increased exemptions “thenceforth,” i.e., upon effectivity, for income tax returns filed by the mid-April following the calendar year.
Implementation and Conflict with Regulations
Revenue Regulations No. 1-92 postponed application of the increased exemptions until compensation paid on or after January 1, 1992—effectively deferring benefits to taxable year 1992. This directly contradicts Section 3 of RA 7167, which provides that the Act “shall take effect upon its approval” (read in light of required publication) and makes the new exemptions available for income earned in 1991 upon the filing deadline of April 15, 1992.
Court’s Ruling
- Sections 1, 3, and 5 of Revenue Regulations No. 1-92 (effectivity on compensation paid in 1992) are set aside.
- The increased exemptions under RA 7167 apply to compensation income earne
Case Syllabus (G.R. No. 104037)
Facts
- Republic Act No. 7167 (“RA 7167”) was enacted to adjust basic personal and additional exemptions for individual taxpayers to the poverty threshold level.
- RA 7167 amended Section 29, paragraph (L), Items (1) and (2)(A) of the National Internal Revenue Code (NIRC):
• Increased basic personal exemption from P6,000/P7,500/P12,000 to P9,000/P12,000/P18,000, respectively.
• Raised additional exemption per dependent from P3,000 to P5,000, subject to four-dependent limit and special P1,000 rule for pre-1980 dependents. - RA 7167 was approved on December 19, 1991, and published in Malaya on January 14, 1992.
- On December 26, 1991, respondents issued Revenue Regulations No. 1-92, postponing implementation of the increased exemptions on compensation income to January 1, 1992.
- On February 27–28, 1992, petitioners filed consolidated petitions for mandamus and prohibition to compel implementation of RA 7167 retroactively to income earned in 1991 and to enjoin RR 1-92.
Procedural Background
- March 10, 1992: Supreme Court consolidated G.R. Nos. 104037 and 104069.
- Respondents filed comments.
- The core questions:
- When did RA 7167 take effect—upon presidential approval or 15 days after publication?
- If effective January 30, 1992, does RA 7167 nonetheless apply to compensation income earned in 1991?
Issues
- Issue No. 1: Effectivity clause interpretation—“shall take effect upon its approval” vs. Civil Code Article 2 publication rule.
- Issue No. 2: Retroactive application of increased exemptions to taxable year 1991 income.
Applicable Law
- RA 7167, Sections 1–3 (adjusting exemptions; effectivity upon approval).
- NIRC, Section 29(L)(4) – Presidential authority to adjust exemptions at least every three years.
- Executive Order