We have recently seen the barrage of revenue issuances, e.g., revenue regulations (RRs), Revenue Memorandum Circulars (RMCs), Revenue Memorandum Orders (RMOs) and other similar issuances, which the Bureau of Internal Revenue (BIR) has been releasing, presumably, to effectively implement its new paradigm shift in revenue collections.
Given the volume of the issuances and the short intervals within which they are each issued, one has to take significant time to read and internalise all these issuances to remain updated on BIR rules and policies.
In the process, one’s focus is on the legality of the subject matter of the BIR issuance. The question of its effectivity, i.e., the basis of the effectivity of the issuance, has oftentimes, gone unnoticed.
Under the New Civil Code (NCC), unless the law provides for its specific date of effectivity, a law generally becomes effective 15 days following the date of its publication in the Official Gazette (OG) or in any newspaper of general circulation.
Similarly, rules and regulations or other issuances that seek to implement or enforce a specific law or other similar issuances issued by the government agency/office tasked to implement the said specific law (referred to as legislative rules) — as distinguished from interpretative regulations and those merely internal in nature, i.e., regulating only the personnel of the administrative agency and not the public — shall likewise take effect 15 days from publication of such issuance as clarified by the Supreme Court (SC) in the case of Tanada vs. Tuvera (G.R. No. L-63915, Dec. 29, 1986).
Thus, based on the NCC and the SC decision, it appears that publication is an indispensable requirement to the effectivity of laws and legislative rules.
In addition, the 1987 Administrative Code (AC) further requires that all administrative issuances must be filed with the University of the Philippines (UP) Law Center and their effectivity shall commence only after 15 days from the date of such filing, unless a different date is fixed by law, or specified in the rules in the case of emergency situations or force majeure.
This additional requirement, which is unknown to many and thus is usually overlooked, applies to both legislative and interpretative issuances.
Strictly speaking, therefore, for legislative issuances to properly take effect, they must be published either in the OG, or in any newspaper of general circulation and filed with the UP Law Center. In the case of interpretative issuances, the only mandatory requirement is filing with the UP Law Center.
The BIR for its part has issued RMC No. 20-86 which prescribes the procedures in the drafting, issuance and implementation of its various revenue issuances in conformity with the basic element of due process.
The RMC provides that internal revenue issuances, i.e., RRs, Revenue Audit Memorandum Orders, RMCs and RMOs, shall not begin to be operative until after due notice thereof to the taxpayer may be presumed. Due notice of the said issuances may be fairly presumed only after compliance with certain procedures, as follows:
1. The Records Division of the BIR National Office has furnished, thru registered mail, all of the following business and professional organizations with the corresponding revenue tax issuance:
- Philippine Institute of Certified Public Accountants;
- Integrated Bar of the Philippines;
- Philippine Chamber of Commerce and Industry;
- American Chamber of Commerce;
- Federation of Filipino-Chinese Chamber of Commerce and Industry; and
- The Japanese Chamber of Commerce & Industry of the Philippines, Inc.
Other person or persons not included in this enumeration may request for a copy of the corresponding revenue issuance.
2. The Bureau has issued a press release about the new revenue issuance, covering its features and highlights, in any newspaper/s of general circulation.
Clearly based on the foregoing provisions of law, court decisions and RMC, effectively, internal revenue issuances of the BIR become validly operative only if these 3 conditions are all met, namely:
- they have been published in the OG or newspaper of general circulation;
- they have been filed with the National Administrative Register maintained by the UP Law Center; and
- the BIR has complied with the due notice procedures of RMC 20-86.
Otherwise, non-compliance with said conditions would render the implementation of the internal revenue issuance in violation of the due process of law requirement of the Constitution.
Various decisions subsequently issued after the Tanada vs. Tuvera case confirm the mandatory nature of these requirements.
In the case of Philippine Association of Service Exporters, Inc. vs. Torres, et. al. (G.R. No. L-101279 dated August 6, 1992), the SC declared certain administrative circulars as legally invalid, defective and unenforceable for lack of proper publication and filing with the Office of the National Administrative Register as required in Article 2 of the Civil Code and Sections 3(1) and 4, Chapter 2, Book VII of the Administrative Code of 1987 and, thus, may not be enforced and implemented.
Furthermore, in the case of Commissioner of Internal Revenue vs. Court of Appeals, et al (G.R. No. L-119761 dated August 29, 1996), the SC also held the invalidity and unenforceability of RMC 37-93 dated July 1, 1993 in view of the BIR’s failure to comply with the UP Law Center filing requirement and due notice procedures imposed under the 1987 AC and RMC 20-86, respectively.
With the internal revenue issuances being released by the BIR left and right, the question to ask now is whether all BIR issuances that have a bearing on internal revenue tax rules and regulations and require compliance on the part of taxpayers have actually taken effect. A puzzle that can provide a heyday to tax practitioners.
