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Transcript of Tolentino vs Sec
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Today is Wednesday, August 20, 2014
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. 115455 August 25, 1994
ARTURO M. TOLENTINO, petitioner,
vs.
THE SECRETARY OF FINANCE and THE COMMISSIONER OF INTERNAL REVENUE, respondents.
G.R. No. 115525 August 25, 1994
JUAN T. DAVID, petitioner,
vs.
TEOFISTO T. GUINGONA, JR., as Executive Secretary; ROBERTO DE OCAMPO, as Secretary of Finance;
LIWAYWAY VINZONS-CHATO, as Commissioner of Internal Revenue; and their AUTHORIZED AGENTS
OR REPRESENTATIVES, respondents.
G.R. No. 115543 August 25, 1994
RAUL S. ROCO and the INTEGRATED BAR OF THE PHILIPPINES, petitioners,
vs.
THE SECRETARY OF THE DEPARTMENT OF FINANCE; THE COMMISSIONERS OF THE BUREAU OF
INTERNAL REVENUE AND BUREAU OF CUSTOMS, respondents.
G.R. No. 115544 August 25, 1994
PHILIPPINE PRESS INSTITUTE, INC.; EGP PUBLISHING CO., INC.; PUBLISHING CORPORATION;
PHILIPPINE JOURNALISTS, INC.; JOSE L. PAVIA; and OFELIA L. DIMALANTA, petitioners,
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vs.
HON. LIWAYWAY V. CHATO, in her capacity as Commissioner of Internal Revenue; HON. TEOFISTO T.
GUINGONA, JR., in his capacity as Executive Secretary; and HON. ROBERTO B. DE OCAMPO, in his
capacity as Secretary of Finance, respondents.
G.R. No. 115754 August 25, 1994
CHAMBER OF REAL ESTATE AND BUILDERS ASSOCIATIONS, INC., (CREBA), petitioner,
vs.
THE COMMISSIONER OF INTERNAL REVENUE, respondent.
G.R. No. 115781 August 25, 1994
KILOSBAYAN, INC., JOVITO R. SALONGA, CIRILO A. RIGOS, ERME CAMBA, EMILIO C. CAPULONG, JR.,
JOSE T. APOLO, EPHRAIM TENDERO, FERNANDO SANTIAGO, JOSE ABCEDE, CHRISTINE TAN, FELIPE L.
GOZON, RAFAEL G. FERNANDO, RAOUL V. VICTORINO, JOSE CUNANAN, QUINTIN S. DOROMAL,
MOVEMENT OF ATTORNEYS FOR BROTHERHOOD, INTEGRITY AND NATIONALISM, INC. ("MABINI"),FREEDOM FROM DEBT COALITION, INC., PHILIPPINE BIBLE SOCIETY, INC., and WIGBERTO
TAADA,petitioners,
vs.
THE EXECUTIVE SECRETARY, THE SECRETARY OF FINANCE, THE COMMISSIONER OF INTERNAL
REVENUE and THE COMMISSIONER OF CUSTOMS, respondents.
G.R. No. 115852 August 25, 1994
PHILIPPINE AIRLINES, INC., petitioner,
vs.
THE SECRETARY OF FINANCE, and COMMISSIONER OF INTERNAL REVENUE, respondents.
G.R. No. 115873 August 25, 1994
COOPERATIVE UNION OF THE PHILIPPINES, petitioners,
vs.
HON. LIWAYWAY V. CHATO, in her capacity as the Commissioner of Internal Revenue, HON. TEOFISTO
T. GUINGONA, JR., in his capacity as Executive Secretary, and HON. ROBERTO B. DE OCAMPO, in his
capacity as Secretary of Finance, respondents.
G.R. No. 115931 August 25, 1994
PHILIPPINE EDUCATIONAL PUBLISHERS ASSOCIATION, INC., and ASSOCIATION OF PHILIPPINE BOOK-
SELLERS, petitioners,
vs.
HON. ROBERTO B. DE OCAMPO, as the Secretary of Finance; HON. LIWAYWAY V. CHATO, as the
Commissioner of Internal Revenue and HON. GUILLERMO PARAYNO, JR., in his capacity as the
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Commissioner of Customs, respondents.
Arturo M. Tolentino for and in his behalf.
Donna Celeste D. Feliciano and Juan T. David for petitioners in G.R. No. 115525.
Roco, Bunag, Kapunan, Migallos and Jardeleza for petitioner R.S. Roco.
Villaranza and Cruz for petitioners in G.R. No. 115544.
Carlos A. Raneses and Manuel M. Serrano for petitioner in G.R. No. 115754.
Salonga, Hernandez & Allado for Freedon From DebtsCoalition, Inc. & Phil. Bible Society.
Estelito P. Mendoza for petitioner in G.R. No. 115852.
Panganiban, Benitez, Parlade, Africa & Barinaga Law Officesfor petitioners in G.R. No. 115873.
R.B. Rodriguez & Associates for petitioners in G.R. No. 115931.
Reve A.V. Saguisag for MABINI.
MENDOZA,J.:
The value-added tax (VAT) is levied on the sale, barter or exchange of goods and properties as well as on
the sale or exchange of services. It is equivalent to 10% of the gross selling price or gross value
in moneyof goods or properties sold, bartered or exchanged or of the gross receipts from the sale or
exchange of services. Republic Act No. 7716 seeks to widenthe tax base of the existing VAT system andenhance its administration by amending the National Internal Revenue Code.
These are various suits for certiorariand prohibition, challenging the constitutionality of Republic Act
No. 7716 on various grounds summarized in the resolution of July 6, 1994 of this Court, as follows:
I. Procedural Issues:
A. Does Republic Act No. 7716 violate Art. VI, 24 of the Constitution?
B. Does it violate Art. VI, 26(2) of the Constitution?
C. What is the extent of the power of the Bicameral Conference Committee?
II. Substantive Issues:
A. Does the law violate the following provisions in the Bill of Rights(Art. III)?
1. 1
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2. 4
3. 5
4. 10
B. Does the law violate the following other provisions of the Constitution?
1. Art. VI, 28(1)
2. Art. VI, 28(3)
These questions will be dealt in the order they are stated above. As will presently be explained not all of
these questions are judicially cognizable, because not all provisions of the Constitution are self executing
and, therefore, judicially enforceable. The other departments of the government are equally charged
with the enforcement of the Constitution, especially the provisions relating to them.
I. PROCEDURAL ISSUES
The contention of petitioners is that in enacting Republic Act No. 7716, or the Expanded Value-
Added Tax Law, Congress violated the Constitution because, although H. No. 11197 had originated in
the House of Representatives, it was not passed by the Senate but was simply consolidated with the
Senate version (S. No. 1630) in the Conference Committee to produce the bill which the President
signed into law. The following provisions of the Constitution are cited in support of the proposition that
because Republic Act No. 7716 was passed in this manner, it did not originate in the House of
Representatives and it has not thereby become a law:
Art. VI, 24: All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of
local application, and private bills shall originate exclusively in the House of Representatives, but the
Senate may propose or concur with amendments.
Id., 26(2): No bill passed by either House shall become a law unless it has passed three readings on
separate days, and printed copies thereof in its final form have been distributed to its Members three
days before its passage, except when the President certifies to the necessity of its immediate enactment
to meet a public calamity or emergency. Upon the last reading of a bill, no amendment thereto shall be
allowed, and the vote thereon shall be taken immediately thereafter, and theyeasand nays entered in
the Journal.
It appears that on various dates between July 22, 1992 and August 31, 1993, several bills
1were
introduced in the House of Representatives seeking to amend certain provisions of the National Internal Revenue
Code relative to the value-added tax or VAT. These bills were referred to the House Ways and Means Committee
which recommended for approval a substitute measure, H. No. 11197, entitled
AN ACT RESTRUCTURING THE VALUE-ADDED TAX (VAT) SYSTEM TO WIDEN ITS TAX BASE AND ENHANCE
ITS ADMINISTRATION, AMENDING FOR THESE PURPOSES SECTIONS 99, 100, 102, 103, 104, 105, 106,
107, 108 AND 110 OF TITLE IV, 112, 115 AND 116 OF TITLE V, AND 236, 237 AND 238 OF TITLE IX, AND
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REPEALING SECTIONS 113 AND 114 OF TITLE V, ALL OF THE NATIONAL INTERNAL REVENUE CODE, AS
AMENDED
The bill (H. No. 11197) was considered on second reading starting November 6, 1993 and, on November
17, 1993, it was approved by the House of Representatives after third and final reading.
It was sent to the Senate on November 23, 1993 and later referred by that body to its Committee on
Ways and Means.
On February 7, 1994, the Senate Committee submitted its report recommending approval of S. No.
1630, entitled
AN ACT RESTRUCTURING THE VALUE-ADDED TAX (VAT) SYSTEM TO WIDEN ITS TAX BASE AND ENHANCE
ITS ADMINISTRATION, AMENDING FOR THESE PURPOSES SECTIONS 99, 100, 102, 103, 104, 105, 107,
108, AND 110 OF TITLE IV, 112 OF TITLE V, AND 236, 237, AND 238 OF TITLE IX, AND REPEALING
SECTIONS 113, 114 and 116 OF TITLE V, ALL OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED,
AND FOR OTHER PURPOSES
It was stated that the bill was being submitted "in substitution of Senate Bill No. 1129, taking into
consideration P.S. Res. No. 734 and H.B. No. 11197."
On February 8, 1994, the Senate began consideration of the bill (S. No. 1630). It finished debates on the
bill and approved it on second reading on March 24, 1994. On the same day, it approved the bill on third
reading by the affirmative votes of 13 of its members, with one abstention.
H. No. 11197 and its Senate version (S. No. 1630) were then referred to a conference committee which,
after meeting four times (April 13, 19, 21 and 25, 1994), recommended that "House Bill No. 11197, in
consolidation with Senate Bill No. 1630, be approved in accordance with the attached copy of the bill asreconciled and approved by the conferees."
The Conference Committee bill, entitled "AN ACT RESTRUCTURING THE VALUE-ADDED TAX (VAT)
SYSTEM, WIDENING ITS TAX BASE AND ENHANCING ITS ADMINISTRATION AND FOR THESE PURPOSES
AMENDING AND REPEALING THE RELEVANT PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE,
AS AMENDED, AND FOR OTHER PURPOSES," was thereafter approved by the House of Representatives
on April 27, 1994 and by the Senate on May 2, 1994. The enrolled bill was then presented to the
President of the Philippines who, on May 5, 1994, signed it. It became Republic Act No. 7716. On May
12, 1994, Republic Act No. 7716 was published in two newspapers of general circulation and, on May 28,
1994, it took effect, although its implementation was suspended until June 30, 1994 to allow time forthe registration of business entities. It would have been enforced on July 1, 1994 but its enforcement
was stopped because the Court, by the vote of 11 to 4 of its members, granted a temporary restraining
order on June 30, 1994.
First. Petitioners' contention is that Republic Act No. 7716 did not "originate exclusively" in the House of
Representatives as required by Art. VI, 24 of the Constitution, because it is in fact the result of the
consolidation of two distinct bills, H. No. 11197 and S. No. 1630. In this connection, petitioners point out
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that although Art. VI, SS 24 was adopted from the American Federal Constitution,2it is notable in two
respects: the verb "shall originate" is qualified in the Philippine Constitution by the word "exclusively" and the
phrase "as on other bills" in the American version is omitted. This means, according to them, that to be considered
as having originated in the House, Republic Act No. 7716 must retain the essence of H. No. 11197.
This argument will not bear analysis. To begin with, it is not the law but the revenue bill which is
required by the Constitution to "originate exclusively" in the House of Representatives. It is important to
emphasize this, because a bill originating in the House may undergo such extensive changes in the
Senate that the result may be a rewriting of the whole. The possibility of a third version by the
conference committee will be discussed later. At this point, what is important to note is that, as a result
of the Senate action, a distinct bill may be produced. To insist that a revenue statute and not only the
bill which initiated the legislative process culminating in the enactment of the law must substantially
be the same as the House bill would be to deny the Senate's power not only to "concur with
amendments" but also to "propose amendments." It would be to violate the coequality of legislative
power of the two houses of Congress and in fact make the House superior to the Senate.
The contention that the constitutional design is to limit the Senate's power in respect of revenue bills in
order to compensate for the grant to the Senate of the treaty-ratifying power 3and thereby equalize its
powers and those of the House overlooks the fact that the powers being compared are different. We are dealing
here with the legislative power which under the Constitution is vested not in any particular chamber but in the
Congress of the Philippines, consisting of "a Senate and a House of Representatives."4The exercise of the treaty-
ratifying power is not the exercise of legislative power. It is the exercise of a check on the executive power. There
is, therefore, no justification for comparing the legislative powers of the House and of the Senate on the basis of
the possession of such nonlegislative power by the Senate. The possession of a similar power by the U.S.
Senate5has never been thought of as giving it more legislative powers than the House of Representatives.
In the United States, the validity of a provision ( 37) imposing an ad valorem tax based on the weight of
vessels, which the U.S. Senate had inserted in the Tariff Act of 1909, was upheld against the claim that
the provision was a revenue bill which originated in the Senate in contravention of Art. I, 7 of the U.S.
Constitution.6Nor is the power to amend limited to adding a provision or two in a revenue bill emanating from
the House. The U.S. Senate has gone so far as changing the whole of bills following the enacting clause and
substituting its own versions. In 1883, for example, it struck out everything after the enacting clause of a tariff bill
and wrote in its place its own measure, and the House subsequently accepted the amendment. The U.S. Senate
likewise added 847 amendments to what later became the Payne-Aldrich Tariff Act of 1909; it dictated the
schedules of the Tariff Act of 1921; it rewrote an extensive tax revision bill in the same year and recast most of the
tariff bill of 1922.7Given, then, the power of the Senate to propose amendments, the Senate can propose its own
version even with respect to bills which are required by the Constitution to originate in the House.
It is insisted, however, that S. No. 1630 was passed not in substitution of H. No. 11197 but of another
Senate bill (S. No. 1129) earlier filed and that what the Senate did was merely to "take [H. No. 11197]
into consideration" in enacting S. No. 1630. There is really no difference between the Senate preserving
H. No. 11197 up to the enacting clause and then writing its own version following the enacting clause
(which, it would seem, petitioners admit is an amendment by substitution), and, on the other hand,
separately presenting a bill of its own on the same subject matter. In either case the result are two bills
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on the same subject.
Indeed, what the Constitution simply means is that the initiative for filing revenue, tariff, or tax bills, bills
authorizing an increase of the public debt, private bills and bills of local application must come from the
House of Representatives on the theory that, elected as they are from the districts, the members of the
House can be expected to be more sensitive to the local needs and problems. On the other hand, thesenators, who are elected at large, are expected to approach the same problems from the national
perspective. Both views are thereby made to bear on the enactment of such laws.
Nor does the Constitution prohibit the filing in the Senate of a substitute bill in anticipation of its receipt
of the bill from the House, so long as action by the Senate as a body is withheld pending receipt of the
House bill. The Court cannot, therefore, understand the alarm expressed over the fact that on March 1,
1993, eight months before the House passed H. No. 11197, S. No. 1129 had been filed in the Senate.
After all it does not appear that the Senate ever considered it. It was only after the Senate had received
H. No. 11197 on November 23, 1993 that the process of legislation in respect of it began with the
referral to the Senate Committee on Ways and Means of H. No. 11197 and the submission by the
Committee on February 7, 1994 of S. No. 1630. For that matter, if the question were simply the priority
in the time of filing of bills, the fact is that it was in the House that a bill (H. No. 253) to amend the VAT
law was first filed on July 22, 1992. Several other bills had been filed in the House before S. No. 1129
was filed in the Senate, and H. No. 11197 was only a substitute of those earlier bills.
Second. Enough has been said to show that it was within the power of the Senate to propose S. No.
1630. We now pass to the next argument of petitioners that S. No. 1630 did not pass three readings on
separate days as required by the Constitution 8because the second and third readings were done on the same
day, March 24, 1994. But this was because on February 24, 19949and again on March 22, 1994,
10the President
had certified S. No. 1630 as urgent. The presidential certification dispensed with the requirement not only of
printing but also that of reading the bill on separate days. The phrase "except when the President certifies to the
necessity of its immediate enactment, etc." in Art. VI, 26(2) qualifies the two stated conditions before a bill can
become a law: (i) the bill has passed three readings on separate days and (ii) it has been printed in its final form
and distributed three days before it is finally approved.
In other words, the "unless" clause must be read in relation to the "except" clause, because the two are
really coordinate clauses of the same sentence. To construe the "except" clause as simply dispensing
with the second requirement in the "unless" clause ( i.e., printing and distribution three days before final
approval) would not only violate the rules of grammar. It would also negate the very premise of the
"except" clause: the necessity of securing the immediate enactment of a bill which is certified in order to
meet a public calamity or emergency. For if it is only the printing that is dispensed with by presidential
certification, the time saved would be so negligible as to be of any use in insuring immediate enactment.
It may well be doubted whether doing away with the necessity of printing and distributing copies of the
bill three days before the third reading would insure speedy enactment of a law in the face of an
emergency requiring the calling of a special election for President and Vice-President. Under the
Constitution such a law is required to be made within seven days of the convening of Congress in
emergency session. 11
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That upon the certification of a bill by the President the requirement of three readings on separate days
and of printing and distribution can be dispensed with is supported by the weight of legislative practice.
For example, the bill defining the certiorarijurisdiction of this Court which, in consolidation with the
Senate version, became Republic Act No. 5440, was passed on second and third readings in the House of
Representatives on the same day (May 14, 1968) after the bill had been certified by the President as
urgent. 12
There is, therefore, no merit in the contention that presidential certification dispenses only with the
requirement for the printing of the bill and its distribution three days before its passage but not with the
requirement of three readings on separate days, also.
It is nonetheless urged that the certification of the bill in this case was invalid because there was no
emergency, the condition stated in the certification of a "growing budget deficit" not being an unusual
condition in this country.
It is noteworthy that no member of the Senate saw fit to controvert the reality of the factual basis of the
certification. To the contrary, by passing S. No. 1630 on second and third readings on March 24, 1994,
the Senate accepted the President's certification. Should such certification be now reviewed by this
Court, especially when no evidence has been shown that, because S. No. 1630 was taken up on second
and third readings on the same day, the members of the Senate were deprived of the time needed for
the study of a vital piece of legislation?
The sufficiency of the factual basis of the suspension of the writ of habeas corpusor declaration of
martial law under Art. VII, 18, or the existence of a national emergency justifying the delegation of
extraordinary powers to the President under Art. VI, 23(2), is subject to judicial review because basic
rights of individuals may be at hazard. But the factual basis of presidential certification of bills, which
involves doing away with procedural requirements designed to insure that bills are duly considered bymembers of Congress, certainly should elicit a different standard of review.
Petitioners also invite attention to the fact that the President certified S. No. 1630 and not H. No. 11197.
That is because S. No. 1630 was what the Senate was considering. When the matter was before the
House, the President likewise certified H. No. 9210 the pending in the House.
Third. Finally it is contended that the bill which became Republic Act No. 7716 is the bill which the
Conference Committee prepared by consolidating H. No. 11197 and S. No. 1630. It is claimed that the
Conference Committee report included provisions not found in either the House bill or the Senate bill
and that these provisions were "surreptitiously" inserted by the Conference Committee. Much is made
of the fact that in the last two days of its session on April 21 and 25, 1994 the Committee met behind
closed doors. We are not told, however, whether the provisions were not the result of the give and take
that often mark the proceedings of conference committees.
Nor is there anything unusual or extraordinary about the fact that the Conference Committee met in
executive sessions. Often the only way to reach agreement on conflicting provisions is to meet behind
closed doors, with only the conferees present. Otherwise, no compromise is likely to be made. The
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Court is not about to take the suggestion of a cabal or sinister motive attributed to the conferees on the
basis solely of their "secret meetings" on April 21 and 25, 1994, nor read anything into the incomplete
remarks of the members, marked in the transcript of stenographic notes by ellipses. The incomplete
sentences are probably due to the stenographer's own limitations or to the incoherence that sometimes
characterize conversations. William Safire noted some such lapses in recorded talks even by recent past
Presidents of the United States.
In any event, in the United States conference committees had been customarily held in executive
sessions with only the conferees and their staffs in attendance. 13Only in November 1975 was a new rule
adopted requiring open sessions. Even then a majority of either chamber's conferees may vote in public to close
the meetings.14
As to the possibility of an entirely new bill emerging out of a Conference Committee, it has been
explained:
Under congressional rules of procedure, conference committees are not expected to make any material
change in the measure at issue, either by deleting provisions to which both houses have already agreedor by inserting new provisions. But this is a difficult provision to enforce. Note the problem when one
house amends a proposal originating in either house by striking out everything following the enacting
clause and substituting provisions which make it an entirely new bill. The versions are now altogether
different, permitting a conference committee to draft essentially a new bill. . . .15
The result is a third version, which is considered an "amendment in the nature of a substitute," the only
requirement for which being that the third version be germane to the subject of the House and Senate
bills. 16
Indeed, this Court recently held that it is within the power of a conference committee to include in its
report an entirely new provision that is not found either in the House bill or in the Senate bill. 17If the
committee can propose an amendment consisting of one or two provisions, there is no reason why it cannot
propose several provisions, collectively considered as an "amendment in the nature of a substitute," so long as
such amendment is germane to the subject of the bills before the committee. After all, its report was not final but
needed the approval of both houses of Congress to become valid as an act of the legislative department. The
charge that in this case the Conference Committee acted as a third legislative chamber is thus without any basis.18
Nonetheless, it is argued that under the respective Rules of the Senate and the House of
Representatives a conference committee can only act on the differing provisions of a Senate bill and a
House bill, and that contrary to these Rules the Conference Committee inserted provisions not found in
the bills submitted to it. The following provisions are cited in support of this contention:
Rules of the Senate
Rule XII:
26. In the event that the Senate does not agree with the House of Representatives on the provision of
any bill or joint resolution, thedifferences shall be settled by a conference committee of both
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Houses which shall meet within ten days after their composition.
The President shall designate the members of the conference committee in accordance with
subparagraph (c), Section 3 of Rule III.
Each Conference Committee Report shall contain a detailed and sufficiently explicit statement of the
changes in or amendments to the subject measure, and shall be signed by the conferees.
The consideration of such report shall not be in order unless the report has been filed with the Secretary
of the Senate and copies thereof have been distributed to the Members.
(Emphasis added)
Rules of the House of Representatives
Rule XIV:
85. Conference Committee Reports. In the event that the House does not agree with the Senate onthe amendments to any bill or joint resolution, the differences may be settled by conference committees
of both Chambers.
The consideration of conference committee reports shall always be in order, except when the journal is
being read, while the roll is being called or the House is dividing on any question. Each of the pages of
such reports shall be signed by the conferees. Eachreport shall contain a detailed, sufficiently explicit
statement of the changes in or amendments to the subject measure.
The consideration of such report shall not be in order unless copies thereof are distributed to the
Members: Provided, That in the last fifteen days of each session period it shall be deemed sufficient that
three copies of the report, signed as above provided, are deposited in the office of the Secretary
General.
(Emphasis added)
To be sure, nothing in the Rules limits a conference committee to a consideration of conflicting
provisions. But Rule XLIV, 112 of the Rules of the Senate is cited to the effect that "If there is no Rule
applicable to a specific case the precedents of the Legislative Department of the Philippines shall be
resorted to, and as a supplement of these, the Rules contained in Jefferson's Manual." The following is
then quoted from the Jefferson's Manual:
The managers of a conference must confine themselves to the differences committed to them. . . and
may not include subjects not within disagreements, even though germane to a question in issue.
Note that, according to Rule XLIX, 112, in case there is no specific rule applicable, resort must be to the
legislative practice. The Jefferson's Manual is resorted to only as supplement. It is common place in
Congress that conference committee reports include new matters which, though germane, have not
been committed to the committee. This practice was admitted by Senator Raul S. Roco, petitioner in
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G.R. No. 115543, during the oral argument in these cases. Whatever, then, may be provided in the
Jefferson's Manual must be considered to have been modified by the legislative practice. If a change is
desired in the practice it must be sought in Congress since this question is not covered by any
constitutional provision but is only an internal rule of each house. Thus, Art. VI, 16(3) of the
Constitution provides that "Each House may determine the rules of its proceedings. . . ."
This observation applies to the other contention that the Rules of the two chambers were likewise
disregarded in the preparation of the Conference Committee Report because the Report did not contain
a "detailed and sufficiently explicit statement of changes in, or amendments to, the subject measure."
The Report used brackets and capital letters to indicate the changes. This is a standard practice in bill-
drafting. We cannot say that in using these marks and symbols the Committee violated the Rules of the
Senate and the House. Moreover, this Court is not the proper forum for the enforcement of these
internal Rules. To the contrary, as we have already ruled, "parliamentary rules are merely procedural
and with their observance the courts have no concern."19
Our concern is with the procedural requirements
of the Constitution for the enactment of laws. As far as these requirements are concerned, we are satisfied that
they have been faithfully observed in these cases.
Nor is there any reason for requiring that the Committee's Report in these cases must have undergone
three readings in each of the two houses. If that be the case, there would be no end to negotiation since
each house may seek modifications of the compromise bill. The nature of the bill, therefore, requires
that it be acted upon by each house on a "take it or leave it" basis, with the only alternative that if it is
not approved by both houses, another conference committee must be appointed. But then again the
result would still be a compromise measure that may not be wholly satisfying to both houses.
Art. VI, 26(2) must, therefore, be construed as referring only to bills introduced for the first time in
either house of Congress, not to the conference committee report. For if the purpose of requiring three
readings is to give members of Congress time to study bills, it cannot be gainsaid that H. No. 11197 was
passed in the House after three readings; that in the Senate it was considered on first reading and then
referred to a committee of that body; that although the Senate committee did not report out the House
bill, it submitted a version (S. No. 1630) which it had prepared by "taking into consideration" the House
bill; that for its part the Conference Committee consolidated the two bills and prepared a compromise
version; that the Conference Committee Report was thereafter approved by the House and the Senate,
presumably after appropriate study by their members. We cannot say that, as a matter of fact, the
members of Congress were not fully informed of the provisions of the bill. The allegation that the
Conference Committee usurped the legislative power of Congress is, in our view, without warrant in fact
and in law.
Fourth. Whatever doubts there may be as to the formal validity of Republic Act No. 7716 must be
resolved in its favor. Our cases 20manifest firm adherence to the rule that an enrolled copy of a bill is conclusive
not only of its provisions but also of its due enactment. Not even claims that a proposed constitutional amendment
was invalid because the requisite votes for its approval had not been obtained21
or that certain provisions of a
statute had been "smuggled" in the printing of the bill22
have moved or persuaded us to look behind the
proceedings of a coequal branch of the government. There is no reason now to depart from this rule.
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No claim is here made that the "enrolled bill" rule is absolute. In fact in one case23
we "went behind" an
enrolled bill and consulted the Journal to determine whether certain provisions of a statute had been approved by
the Senate in view of the fact that the President of the Senate himself, who had signed the enrolled bill, admitted a
mistake and withdrew his signature, so that in effect there was no longer an enrolled bill to consider.
But where allegations that the constitutional procedures for the passage of bills have not been observed
have no more basis than another allegation that the Conference Committee "surreptitiously" inserted
provisions into a bill which it had prepared, we should decline the invitation to go behind the enrolled
copy of the bill. To disregard the "enrolled bill" rule in such cases would be to disregard the respect due
the other two departments of our government.
Fifth. An additional attack on the formal validity of Republic Act No. 7716 is made by the Philippine
Airlines, Inc., petitioner in G.R. No. 11582, namely, that it violates Art. VI, 26(1) which provides that
"Every bill passed by Congress shall embrace only one subject which shall be expressed in the title
thereof." It is contended that neither H. No. 11197 nor S. No. 1630 provided for removal of exemption
of PAL transactions from the payment of the VAT and that this was made only in the Conference
Committee bill which became Republic Act No. 7716 without reflecting this fact in its title.
The title of Republic Act No. 7716 is:
AN ACT RESTRUCTURING THE VALUE- ADDED TAX (VAT) SYSTEM, WIDENING ITS TAX BASE AND
ENHANCING ITS ADMINISTRATION, AND FOR THESE PURPOSES AMENDING AND REPEALING THE
RELEVANT PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, AND FOR OTHER
PURPOSES.
Among the provisions of the NIRC amended is 103, which originally read:
103. Exempt transactions. The following shall be exempt from the value-added tax:
. . . .
(q) Transactions which are exempt under special laws or international agreements to which the
Philippines is a signatory. Among the transactions exempted from the VAT were those of PAL because it
was exempted under its franchise (P.D. No. 1590) from the payment of all "other taxes . . . now or in the
near future," in consideration of the payment by it either of the corporate income tax or a franchise tax
of 2%.
As a result of its amendment by Republic Act No. 7716, 103 of the NIRC now provides:
103. Exempt transactions. The following shall be exempt from the value-added tax:
. . . .
(q) Transactions which are exempt under special laws, except those granted under Presidential Decree
Nos. 66, 529, 972, 1491, 1590. . . .
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The effect of the amendment is to remove the exemption granted to PAL, as far as the VAT is concerned.
The question is whether this amendment of 103 of the NIRC is fairly embraced in the title of Republic
Act No. 7716, although no mention is made therein of P.D. No. 1590 as among those which the statute
amends. We think it is, since the title states that the purpose of the statute is to expand the VAT system,
and one way of doing this is to widen its base by withdrawing some of the exemptions granted before.To insist that P.D. No. 1590 be mentioned in the title of the law, in addition to 103 of the NIRC, in
which it is specifically referred to, would be to insist that the title of a bill should be a complete index of
its content.
The constitutional requirement that every bill passed by Congress shall embrace only one subject which
shall be expressed in its title is intended to prevent surprise upon the members of Congress and to
inform the people of pending legislation so that, if they wish to, they can be heard regarding it. If, in the
case at bar, petitioner did not know before that its exemption had been withdrawn, it is not because of
any defect in the title but perhaps for the same reason other statutes, although published, pass
unnoticed until some event somehow calls attention to their existence. Indeed, the title of Republic Act
No. 7716 is not any more general than the title of PAL's own franchise under P.D. No. 1590, and yet no
mention is made of its tax exemption. The title of P.D. No. 1590 is:
AN ACT GRANTING A NEW FRANCHISE TO PHILIPPINE AIRLINES, INC. TO ESTABLISH, OPERATE, AND
MAINTAIN AIR-TRANSPORT SERVICES IN THE PHILIPPINES AND BETWEEN THE PHILIPPINES AND OTHER
COUNTRIES.
The trend in our cases is to construe the constitutional requirement in such a manner that courts do not
unduly interfere with the enactment of necessary legislation and to consider it sufficient if the title
expresses the general subject of the statute and all its provisions are germane to the general subject
thus expressed.24
It is further contended that amendment of petitioner's franchise may only be made by special law, in
view of 24 of P.D. No. 1590 which provides:
This franchise, as amended, or any section or provision hereof may only be modified, amended, or
repealed expressly by a special law or decree that shall specifically modify, amend, or repeal this
franchise or any section or provision thereof.
This provision is evidently intended to prevent the amendment of the franchise by mere implication
resulting from the enactment of a later inconsistent statute, in consideration of the fact that a franchise
is a contract which can be altered only by consent of the parties. Thus in Manila Railroad Co. v.Rafferty, 25it was held that an Act of the U.S. Congress, which provided for the payment of tax on certain goods
and articles imported into the Philippines, did not amend the franchise of plaintiff, which exempted it from all
taxes except those mentioned in its franchise. It was held that a special law cannot be amended by a general law.
In contrast, in the case at bar, Republic Act No. 7716 expressly amends PAL's franchise (P.D. No. 1590)
by specifically excepting from the grant of exemptions from the VAT PAL's exemption under P.D. No.
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1590. This is within the power of Congress to do under Art. XII, 11 of the Constitution, which provides
that the grant of a franchise for the operation of a public utility is subject to amendment, alteration or
repeal by Congress when the common good so requires.
II. SUBSTANTIVE ISSUES
A. Claims of Press Freedom, Freedom of Thought and Religious Freedom
The Philippine Press Institute (PPI), petitioner in G.R. No. 115544, is a nonprofit organization of
newspaper publishers established for the improvement of journalism in the Philippines. On the other
hand, petitioner in G.R. No. 115781, the Philippine Bible Society (PBS), is a nonprofit organization
engaged in the printing and distribution of bibles and other religious articles. Both petitioners claim
violations of their rights under 4 and 5 of the Bill of Rights as a result of the enactment of the VAT
Law.
The PPI questions the law insofar as it has withdrawn the exemption previously granted to the press
under 103 (f) of the NIRC. Although the exemption was subsequently restored by administrativeregulation with respect to the circulation income of newspapers, the PPI presses its claim because of the
possibility that the exemption may still be removed by mere revocation of the regulation of the
Secretary of Finance. On the other hand, the PBS goes so far as to question the Secretary's power to
grant exemption for two reasons: (1) The Secretary of Finance has no power to grant tax exemption
because this is vested in Congress and requires for its exercise the vote of a majority of all its
members 26and (2) the Secretary's duty is to execute the law.
103 of the NIRC contains a list of transactions exempted from VAT. Among the transactions previously
granted exemption were:
(f) Printing, publication, importation or sale of books and any newspaper, magazine, review, or bulletin
which appears at regular intervals with fixed prices for subscription and sale and which is devoted
principally to the publication of advertisements.
Republic Act No. 7716 amended 103 by deleting (f) with the result that print media became subject
to the VAT with respect to all aspects of their operations. Later, however, based on a memorandum of
the Secretary of Justice, respondent Secretary of Finance issued Revenue Regulations No. 11-94, dated
June 27, 1994, exempting the "circulation income of print media pursuant to 4 Article III of the 1987
Philippine Constitution guaranteeing against abridgment of freedom of the press, among others." The
exemption of "circulation income" has left income from advertisements still subject to the VAT.
It is unnecessary to pass upon the contention that the exemption granted is beyond the authority of the
Secretary of Finance to give, in view of PPI's contention that even with the exemption of the circulation
revenue of print media there is still an unconstitutional abridgment of press freedom because of the
imposition of the VAT on the gross receipts of newspapers from advertisements and on their acquisition
of paper, ink and services for publication. Even on the assumption that no exemption has effectively
been granted to print media transactions, we find no violation of press freedom in these cases.
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To be sure, we are not dealing here with a statute that on its face operates in the area of press freedom.
The PPI's claim is simply that, as applied to newspapers, the law abridges press freedom. Even with due
recognition of its high estate and its importance in a democratic society, however, the press is not
immune from general regulation by the State. It has been held:
The publisher of a newspaper has no immunity from the application of general laws. He has no specialprivilege to invade the rights and liberties of others. He must answer for libel. He may be punished for
contempt of court. . . . Like others, he must pay equitable and nondiscriminatory taxes on his business. .
. .27
The PPI does not dispute this point, either.
What it contends is that by withdrawing the exemption previously granted to print media transactions
involving printing, publication, importation or sale of newspapers, Republic Act No. 7716 has singled out
the press for discriminatory treatment and that within the class of mass media the law discriminates
against print media by giving broadcast media favored treatment. We have carefully examined this
argument, but we are unable to find a differential treatment of the press by the law, much less any
censorial motivation for its enactment. If the press is now required to pay a value-added tax on its
transactions, it is not because it is being singled out, much less targeted, for special treatment but only
because of the removal of the exemption previously granted to it by law. The withdrawal of exemption
is all that is involved in these cases. Other transactions, likewise previously granted exemption, have
been delisted as part of the scheme to expand the base and the scope of the VAT system. The law would
perhaps be open to the charge of discriminatory treatment if the only privilege withdrawn had been
that granted to the press. But that is not the case.
The situation in the case at bar is indeed a far cry from those cited by the PPI in support of its claim that
Republic Act No. 7716 subjects the press to discriminatory taxation. In the cases cited, thediscriminatory purpose was clear either from the background of the law or from its operation. For
example, in Grosjean v. American Press Co., 28the law imposed a license tax equivalent to 2% of the gross
receipts derived from advertisements only on newspapers which had a circulation of more than 20,000 copies per
week. Because the tax was not based on the volume of advertisement alone but was measured by the extent of its
circulation as well, the law applied only to the thirteen large newspapers in Louisiana, leaving untaxed four papers
with circulation of only slightly less than 20,000 copies a week and 120 weekly newspapers which were in serious
competition with the thirteen newspapers in question. It was well known that the thirteen newspapers had been
critical of Senator Huey Long, and the Long-dominated legislature of Louisiana respondent by taxing what Long
described as the "lying newspapers" by imposing on them "a tax on lying." The effect of the tax was to curtail both
their revenue and their circulation. As the U.S. Supreme Court noted, the tax was "a deliberate and calculated
device in the guise of a tax to limit the circulation of information to which the public is entitled in virtue of the
constitutional guaranties."29
The case is a classic illustration of the warning that the power to tax is the power to
destroy.
In the other case 30invoked by the PPI, the press was also found to have been singled out because everything
was exempt from the "use tax" on ink and paper, except the press. Minnesota imposed a tax on the sales of goods
in that state. To protect the sales tax, it enacted a complementary tax on the privilege of "using, storing or
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consuming in that state tangible personal property" by eliminating the residents' incentive to get goods from
outside states where the sales tax might be lower. The Minnesota Star Tribune was exempted from both taxes
from 1967 to 1971. In 1971, however, the state legislature amended the tax scheme by imposing the "use tax" on
the cost of paper and ink used for publication. The law was held to have singled out the press because (1) there
was no reason for imposing the "use tax" since the press was exempt from the sales tax and (2) the "use tax" was
laid on an "intermediate transaction rather than the ultimate retail sale." Minnesota had a heavy burden ofustifying the differential treatment and it failed to do so. In addition, the U.S. Supreme Court found the law to be
discriminatory because the legislature, by again amending the law so as to exempt the first $100,000 of paper and
ink used, further narrowed the coverage of the tax so that "only a handful of publishers pay any tax at all and even
fewer pay any significant amount of tax."31
The discriminatory purpose was thus very clear.
More recently, inArkansas Writers' Project, Inc. v. Ragland,32
it was held that a law which taxed general
interest magazines but not newspapers and religious, professional, trade and sports journals was discriminatory
because while the tax did not single out the press as a whole, it targeted a small group within the press. What is
more, by differentiating on the basis of contents (i.e., between general interest and special interests such as
religion or sports) the law became "entirely incompatible with the First Amendment's guarantee of freedom of the
press."
These cases come down to this: that unless justified, the differential treatment of the press creates risks
of suppression of expression. In contrast, in the cases at bar, the statute applies to a wide range of
goods and services. The argument that, by imposing the VAT only on print media whose gross sales
exceeds P480,000 but not more than P750,000, the law discriminates 33is without merit since it has not
been shown that as a result the class subject to tax has been unreasonably narrowed. The fact is that this
limitation does not apply to the press along but to all sales. Nor is impermissible motive shown by the fact that
print media and broadcast media are treated differently. The press is taxed on its transactions involving printing
and publication, which are different from the transactions of broadcast media. There is thus a reasonable basis for
the classification.
The cases canvassed, it must be stressed, eschew any suggestion that "owners of newspapers are
immune from any forms of ordinary taxation." The license tax in the Grosjean case was declared invalid
because it was "one single in kind, with a long history of hostile misuse against the freedom of the
press." 34On the other hand, Minneapolis Star acknowledged that "The First Amendment does not prohibit all
regulation of the press [and that] the States and the Federal Government can subject newspapers to generally
applicable economic regulations without creating constitutional problems."35
What has been said above also disposes of the allegations of the PBS that the removal of the exemption
of printing, publication or importation of books and religious articles, as well as their printing and
publication, likewise violates freedom of thought and of conscience. For as the U.S. Supreme Court
unanimously held inJimmy Swaggart Ministries v. Board of Equalization, 36the Free Exercise of ReligionClause does not prohibit imposing a generally applicable sales and use tax on the sale of religious materials by a
religious organization.
This brings us to the question whether the registration provision of the law,37
although of general
applicability, nonetheless is invalid when applied to the press because it lays a prior restraint on its essential
freedom. The case ofAmerican Bible Society v. City of Manila38
is cited by both the PBS and the PPI in support of
their contention that the law imposes censorship. There, this Court held that an ordinance of the City of Manila,
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actual operation of the law and enable us to reach sound judgment regarding so fundamental questions
as those raised in these suits.
Thus, the broad argument against the VAT is that it is regressive and that it violates the requirement
that "The rule of taxation shall be uniform and equitable [and] Congress shall evolve a progressive
system of taxation."42
Petitioners in G.R. No. 115781 quote from a paper, entitled "VAT Policy Issues: Structure,Regressivity, Inflation and Exports" by Alan A. Tait of the International Monetary Fund, that "VAT payment by low-
income households will be a higher proportion of their incomes (and expenditures) than payments by higher-
income households. That is, the VAT will be regressive." Petitioners contend that as a result of the uniform 10%
VAT, the tax on consumption goods of those who are in the higher-income bracket, which before were taxed at a
rate higher than 10%, has been reduced, while basic commodities, which before were taxed at rates ranging from
3% to 5%, are now taxed at a higher rate.
Just as vigorously as it is asserted that the law is regressive, the opposite claim is pressed by
respondents that in fact it distributes the tax burden to as many goods and services as possible
particularly to those which are within the reach of higher-income groups, even as the law exempts basic
goods and services. It is thus equitable. The goods and properties subject to the VAT are those used orconsumed by higher-income groups. These include real properties held primarily for sale to customers
or held for lease in the ordinary course of business, the right or privilege to use industrial, commercial or
scientific equipment, hotels, restaurants and similar places, tourist buses, and the like. On the other
hand, small business establishments, with annual gross sales of less than P500,000, are exempted. This,
according to respondents, removes from the coverage of the law some 30,000 business establishments.
On the other hand, an occasional paper 43of the Center for Research and Communication cities a NEDA study
that the VAT has minimal impact on inflation and income distribution and that while additional expenditure for the
lowest income class is only P301 or 1.49% a year, that for a family earning P500,000 a year or more is P8,340 or
2.2%.
Lacking empirical data on which to base any conclusion regarding these arguments, any discussion
whether the VAT is regressive in the sense that it will hit the "poor" and middle-income group in society
harder than it will the "rich," as the Cooperative Union of the Philippines (CUP) claims in G.R. No.
115873, is largely an academic exercise. On the other hand, the CUP's contention that Congress'
withdrawal of exemption of producers cooperatives, marketing cooperatives, and service cooperatives,
while maintaining that granted to electric cooperatives, not only goes against the constitutional policy to
promote cooperatives as instruments of social justice (Art. XII, 15) but also denies such cooperatives
the equal protection of the law is actually a policy argument. The legislature is not required to adhere to
a policy of "all or none" in choosing the subject of taxation.44
Nor is the contention of the Chamber of Real Estateand Builders Association (CREBA), petitioner in G.R.
115754, that the VAT will reduce the mark up of its members by as much as 85% to 90% any more
concrete. It is a mere allegation. On the other hand, the claim of the Philippine Press Institute, petitioner
in G.R. No. 115544, that the VAT will drive some of its members out of circulation because their profits
from advertisements will not be enough to pay for their tax liability, while purporting to be based on the
financial statements of the newspapers in question, still falls short of the establishment of facts by
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evidence so necessary for adjudicating the question whether the tax is oppressive and confiscatory.
Indeed, regressivity is not a negative standard for courts to enforce. What Congress is required by the
Constitution to do is to "evolve a progressive system of taxation." This is a directive to Congress, just like
the directive to it to give priority to the enactment of laws for the enhancement of human dignity and
the reduction of social, economic and political inequalities (Art. XIII, 1), or for the promotion of theright to "quality education" (Art. XIV, 1). These provisions are put in the Constitution as moral
incentives to legislation, not as judicially enforceable rights.
At all events, our 1988 decision in Kapatiran 45should have laid to rest the questions now raised against the
VAT. There similar arguments made against the original VAT Law (Executive Order No. 273) were held to be
hypothetical, with no more basis than newspaper articles which this Court found to be "hearsay and [without]
evidentiary value." As Republic Act No. 7716 merely expands the base of the VAT system and its coverage as
provided in the original VAT Law, further debate on the desirability and wisdom of the law should have shifted to
Congress.
Only slightly less abstract but nonetheless hypothetical is the contention of CREBA that the imposition ofthe VAT on the sales and leases of real estate by virtue of contracts entered into prior to the effectivity
of the law would violate the constitutional provision that "No law impairing the obligation of contracts
shall be passed." It is enough to say that the parties to a contract cannot, through the exercise of
prophetic discernment, fetter the exercise of the taxing power of the State. For not only are existing
laws read into contracts in order to fix obligations as between parties, but the reservation of essential
attributes of sovereign power is also read into contracts as a basic postulate of the legal order. The
policy of protecting contracts against impairment presupposes the maintenance of a government which
retains adequate authority to secure the peace and good order of society. 46
In truth, the Contract Clause has never been thought as a limitation on the exercise of the State's power
of taxation save only where a tax exemption has been granted for a valid consideration. 47Such is not the
case of PAL in G.R. No. 115852, and we do not understand it to make this claim. Rather, its position, as discussed
above, is that the removal of its tax exemption cannot be made by a general, but only by a specific, law.
The substantive issues raised in some of the cases are presented in abstract, hypothetical form because
of the lack of a concrete record. We accept that this Court does not only adjudicate private cases; that
public actions by "non-Hohfeldian"48
or ideological plaintiffs are now cognizable provided they meet the
standing requirement of the Constitution; that under Art. VIII, 1, 2 the Court has a "special function" of
vindicating constitutional rights. Nonetheless the feeling cannot be escaped that we do not have before us in these
cases a fully developed factual record that alone can impart to our adjudication the impact of actuality49
to insure
that decision-making is informed and well grounded. Needless to say, we do not have power to render advisoryopinions or even jurisdiction over petitions for declaratory judgment. In effect we are being asked to do what the
Conference Committee is precisely accused of having done in these cases to sit as a third legislative chamber to
review legislation.
We are told, however, that the power of judicial review is not so much power as it is duty imposed on
this Court by the Constitution and that we would be remiss in the performance of that duty if we decline
to look behind the barriers set by the principle of separation of powers. Art. VIII, 1, 2 is cited in
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support of this view:
Judicial power includes the duty of the courts of justice to settle actual controversies involving rights
which are legally demandable and enforceable, and to determine whether or not there has been a grave
abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government.
To view the judicial power of review as a duty is nothing new. Chief Justice Marshall said so in 1803, to
ustify the assertion of this power in Marbury v. Madison:
It is emphatically the province and duty of the judicial department to say what the law is. Those who
apply the rule to particular cases must of necessity expound and interpret that rule. If two laws conflict
with each other, the courts must decide on the operation of each.50
Justice Laurel echoed this justification in 1936 inAngara v. Electoral Commission:
And when the judiciary mediates to allocate constitutional boundaries, it does not assert any superiority
over the other departments; it does not in reality nullify or invalidate an act of the legislature, but only
asserts the solemn and sacred obligation assigned to it by the Constitution to determine conflicting
claims of authority under the Constitution and to establish for the parties in an actual controversy the
rights which that instrument secures and guarantees to them. 51
This conception of the judicial power has been affirmed in several
cases 52of this Court followingAngara.
It does not add anything, therefore, to invoke this "duty" to justify this Court's intervention in what is
essentially a case that at best is not ripe for adjudication. That duty must still be performed in the
context of a concrete case or controversy, as Art. VIII, 5(2) clearly defines our jurisdiction in terms of"cases," and nothing but "cases." That the other departments of the government may have committed a
grave abuse of discretion is not an independent ground for exercising our power. Disregard of the
essential limits imposed by the case and controversy requirement can in the long run only result in
undermining our authority as a court of law. For, as judges, what we are called upon to render is
udgment according to law, not according to what may appear to be the opinion of the day.
_______________________________
In the preceeding pages we have endeavored to discuss, within limits, the validity of Republic Act No.
7716 in its formal and substantive aspects as this has been raised in the various cases before us. To sum
up, we hold:
(1) That the procedural requirements of the Constitution have been complied with by Congress in the
enactment of the statute;
(2) That judicial inquiry whether the formal requirements for the enactment of statutes beyond those
prescribed by the Constitution have been observed is precluded by the principle of separation of
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powers;
(3) That the law does not abridge freedom of speech, expression or the press, nor interfere with the free
exercise of religion, nor deny to any of the parties the right to an education; and
(4) That, in view of the absence of a factual foundation of record, claims that the law is regressive,
oppressive and confiscatory and that it violates vested rights protected under the Contract Clause are
prematurely raised and do not justify the grant of prospective relief by writ of prohibition.
WHEREFORE, the petitions in these cases are DISMISSED.
Bidin, Quiason, and Kapunan, JJ., concur.
Separate Opinions
NARVASA, C.J.:
I fully concur with the conclusions set forth in the scholarly opinion of my learned colleague, Mr. Justice
Vicente V. Mendoza. I write this separate opinion to express my own views relative to the procedural
issues raised by the various petitions and death with by some other Members of the Court in their
separate opinions.
By their very nature, it would seem, discussions of constitutional issues prove fertile ground for a not
uncommon phenomenon: debate marked by passionate partisanship amounting sometimes to
impatience with adverse views, an eagerness on the part of the proponents on each side to assume the
role of, or be perceived as, staunch defenders of constitutional principles, manifesting itself in flights of
rhetoric, even hyperbole. The peril in this, obviously, is a diminution of objectivity that quality which,
on the part of those charged with the duty and authority of interpreting the fundamental law, is of the
essence of their great function. For the Court, more perhaps than for any other person or group, it is
necessary to maintain that desirable objectivity. It must make certain that on this as on any other
occasion, the judicial function is meticulously performed, the facts ascertained as comprehensively and
as accurately as possible, all the issues particularly identified, all the arguments clearly understood; else,
it may itself be accused, by its own members or by others, of a lack of adherence to, or a careless
observance of, its own procedures, the signatures of its individual members on its enrolled verdicts
notwithstanding.
In the matter now before the Court, and whatever reservations some people may entertain about their
intellectual limitations or moral scruples, I cannot bring myself to accept the thesis which necessarily
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implies that the members of our august Congress, in enacting the expanded VAT law, exposed their
ignorance, or indifference to the observance, of the rules of procedure set down by the Constitution or
by their respective chambers, or what is worse, deliberately ignored those rules for some yet
undiscovered purpose nefarious in nature, or at least some purpose other than the public weal; or that a
few of their fellows, acting as a bicameral conference committee, by devious schemes and cunning
maneuvers, and in conspiracy with officials of the Executive Department and others, succeeded in
"pulling the wool over the eyes" of all their other colleagues and foisting on them a bill containing
provisions that neither chamber of our bicameral legislature conceived or contemplated. This is the
thesis that the petitioners would have this Court approve. It is a thesis I consider bereft of any factual or
logical foundation.
Other than the bare declarations of some of the petitioners, or arguments from the use and import of
the language employed in the relevant documents and records, there is no evidence before the Court
adequate to support a finding that the legislators concerned, whether of the upper or lower chamber,
acted otherwise than in good faith, in the honest discharge of their functions, in the sincere belief that
the established procedures were being regularly observed or, at least, that there occurred no serious orfatal deviation therefrom. There is no evidence on which reasonably to rest a conclusion that any
executive or other official took part in or unduly influenced the proceedings before the bicameral
conference committee, or that the members of the latter were motivated by a desire to surreptitiously
introduce improper revisions in the bills which they were required to reconcile, or that after agreement
had been reached on the mode and manner of reconciliation of the "disagreeing provisions," had
resorted to stratragems or employed under-handed ploys to ensure their approval and adoption by
either House. Neither is there any proof that in voting on the Bicameral Conference Committee (BCC)
version of the reconciled bills, the members of the Senate and the House did so in ignorance of, or
without understanding, the contents thereof or the bills therein reconciled.
Also unacceptable is the theory that since the Constitution requires appropriation and revenue bills to
originate exclusively in the House of Representatives, it is improper if not unconstitutional for the
Senate to formulate, or even think about formulating, its own draft of this type of measure in
anticipation of receipt of one transmitted by the lower Chamber. This is specially cogent as regards
much-publicized suggestions for legislation (like the expanded VAT Law) emanating from one or more
legislators, or from the Executive Department, or the private sector, etc. which understandably could be
expected to forthwith generate much Congressional cogitation.
Exclusive origination, I submit, should have no reference to time of conception. As a practical matter,
origination should refer to the affirmative act which effectively puts the bicameral legislative procedure
in motion, i.e., the transmission by one chamber to the other of a bill for its adoption. This is the
purposeful act which sets the legislative machinery in operation to effectively lead to the enactment of a
statute. Until this transmission takes place, the formulation and discussions, or the reading for three or
more times of proposed measures in either chamber, would be meaningless in the context of the
activity leading towards concrete legislation. Unless transmitted to the other chamber, a bill prepared
by either house cannot possibly become law. In other words, the first affirmative, efficacious step, the
operative act as it were, leading to actual enactment of a statute, is the transmission of a bill from one
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house to the other for action by the latter. This is the origination that is spoken of in the Constitution in
its Article VI, Section 24, in reference to appropriation, revenue, or tariff bills, etc.
It may be that in the Senate, revenue or tax measures are discussed, even drafted, and this before a
similar activity takes place in the House. This is of no moment, so long as those measures or bill remain
in the Senate and are not sent over the House. There is no origination of revenue or tax measures by theSenate in this case. However, once the House completes the drawing up of a similar tax measure in
accordance with the prescribed procedure, ven if this is done subsequent to the Senates own measure
indeed, even if this be inspired by information that measure of the Senate and after third reading
transmits its bill to the Senate, there is origination by (or in) the House within the contemplation of the
Constitution.
So it is entirely possible, as intimated, that in expectation of the receipt of a revenue or tax bill from the
House of Representatives, the Senate commences deliberations on its own concept of such a legislative
measure. This, possibly to save time, so that when the House bill raches it, its thoughts and views on the
matter are already formed and even reduced to writing in the form of a draft statute. This should not be
thought ilegal, as interdicted by the Constitution. What the Constitution prohibits is for the Senate to
begin the legislative process first, by sending its own revenue bill to the House of Representatives for its
consideration and action. This is the initiation that is prohibited to the Senate.
But petitioners claims that this last was what in fact happened, that the went through the legislative mill
and was finally approved as R.A. No. 7716, was the Senate version, SB 1630. This is disputed by the
respondents. They claim it was House Bill 11197 that, after being transmitted to the Senate, was
referred after first reading to its Committee on Ways and Means; was reported out by said Committee;
underwent second and third readings, was sent to the bicameral conference committee and then, after
appropriate proceedings therein culminating in extensive amendments thereof, was finally approved by
both Houses and became the Expanded VAT Law.
On whose side does the truth lie? If it is not possible to make that determination from the pleadings and
records before this Court, shall it require evidence to be presented? No, on both law and principle. The
Court will reject a case where the legal issues raised, whatever they may be, depend for their resolution
on still unsettled questions of fact. Petitioners may not, by raising what are Court to assume the role of a
trier of facts. It is on the contrary their obligation, before raising those questions to this Court, to see to
it that all issues of fact are settled in accordance with the procedures laid down by law for proof of facts.
Failing this, petitioners would have only themselves to blame for a peremptory dismissal.
Now, what is really proven about what happened to HB 11197 after it was transmitted to the Senate? Itseems to be admitted on all sides that after going through first reading, HB 11197 was referred to the
Committee on Ways and Means chaired by Senator Ernesto Herrera.
It is however surmised that after this initial step, HB 11197 was never afterwards deliberated on in the
Senate, that it was there given nothing more than a "passing glance," and that it never went through a
proper second and third reading. There is no competent proof to substantiate this claim. What is certain
is that on February 7, 1994, the Senate Committee on Ways and Means submitted its Report (No. 349)
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stating that HB 11197 was considered, and recommending that SB 1630 be approved "in substitution of
S.B. No. 1129, taking into consideration P.S. Res. No. 7341and H.B. No. 11197." This Report made known to
the Senate, and clearly indicates, that H.B. No. 11197 was indeed deliberated on by the Committee; in truth, as
Senator Herrera pointed out, the BCC later "agreed to adopt (a broader coverage of the VAT) which is closely
adhering to the Senate version ** ** with some new provisions or amendments." The plain implication is that the
Senate Committee had indeed discussed HB 11197 in comparison with the inconsistent parts of SB 1129 andafterwards proposed amendments to the former in the form of a new bill (No. 1630) more closely akin to the
Senate bill (No. 1129).
And it is as reasonable to suppose as not that later, during the second and third readings on March 24,
1994, the Senators, assembled as a body, had before them copies of HB 11197 and SB 1129, as well as of
the Committee's new "SB 1630" that had been recommended for their approval, or at the very least
were otherwise perfectly aware that they were considering the particular provisions of these bills. That
there was such a deliberation in the Senate on HB 11197 in light of inconsistent portions of SB 1630,
may further be necessarily inferred from the request, made by the Senate on the same day, March 24,
1994, for the convocation of a bicameral conference committee to reconcile "the disagreeing provisions
of said bill (SB 1630) and House Bill No. 11197," a request that could not have been made had not the
Senators more or less closely examined the provisions of HB 11197 and compared them with those of
the counterpart Senate measures.
Were the proceedings before the bicameral conference committee fatally flawed? The affirmative is
suggested because the committee allegedly overlooked or ignored the fact that SB 1630 could not
validly originate in the Senate, and that HB 11197 and SB 1630 never properly passed both chambers.
The untenability of these contentions has already been demonstrated. Now, demonstration of the
indefensibility of other arguments purporting to establish the impropriety of the BCC proceedings will be
attempted.
There is the argument, for instance, that the conference committee never used HB 11197 even as
"frame of reference" because it does not appear that the suggestion therefor (made by House Penal
Chairman Exequiel Javier at the bicameral conference committee's meeting on April 19, 1994, with the
concurrence of Senator Maceda) was ever resolved, the minutes being regrettably vague as to what
occurred after that suggestion was made. It is, however, as reasonable to assume that it was, as it was
not, given the vagueness of the minutes already alluded to. In fact, a reading of the BCC Report
persuasively demonstrates that HB 11197 was not only utilized as a "frame of reference" but actually
discussed and deliberated on.
Said BCC Report pertinently states: 2
CONFERENCE COMMITTEE REPORT
The Conference Committee on the disagreeing provisions of House Bill No. 11197, entitled:
AN ACT RESTRUCTURING THE VALUE ADDED TAX (VAT) SYSTEM TO WIDEN ITS TAX BASE AND ENHANCE
ITS ADMINISTRATION, AMENDING FOR THESE PURPOSES SECTIONS 99, 100, 102, 1013, 104, 105, 106,
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107, 108 AND 110 OF TITLE IV, 112, 115 AND 116 OF TITLE V, AND 236, 237, AND 238 OF TITLE IX, AND
REPEALING SECTIONS 113SD AND 114 OF TITLE V, ALL OF THE NATIONAL INTERNAL REVENUE CODE, AS
AMENDED
and Senate Bill No. 1630 entitled:
AN ACT RESTRUCTURING THE VALUE ADDED TAX (VAT) SYSTEM TO WIDEN ITS TAX BASE AND ENHANCE
ITS ADMINISTRATION, AMENDING FOR THESE PURPOSES SECTIONS 99, 100, 102, 103, 104, 1 106, 107,
108 AND 110 OF TITLE IV, 112, 115, 117 AND 121 OF TITLE V, ACND 236, 237, AND 238 OF TITLE IX, AND
REPEALING SECTIONS 1113, 114, 116, 119 AND 120 OF TITLE V, ALL OF THE NATIONAL INTERNAL
REVENUE CODE, AS AMENDED AND FOR OTHER PURPOSES
having met, afterfull and free conference, has agreed to recommend and do hereby recommend to their
respective Houses that House Bill No. 11197, in consolidation with Senate Bill No. 1630, be approved in
accordance with the attached copy of the bill as reconciled and approved by the conferees.
Approved.
The Report, it will be noted, explicitly adverts to House Bill No. 11197, it being in fact mentioned ahead
of Senate Bill No. 1630; graphically shows the very close identity of the subjects of both bills (indicated
in their respective titles); and clearly says that the committee met in "full and free conference" on the
"disagreeing provisions" of both bills (obviously in an effort to reconcile them); and that reconciliation of
said "disagreeing provisions" had been effected, the BCC having agreed that "House Bill No. 11197, in
consolidation with Senate Bill No. 1630, be approved in accordance with the attached copy of the bill as
reconciled and approved by the conferees."
It may be concluded, in other words, that, conformably to the procedure provided in the Constitution
with which all the Members of the bicameral conference committee cannot but be presumed to be
familiar, and no proof to the contrary having been adduced on the point, it was the original bill (HB
11197) which said body had considered and deliberated on in detail, reconciled or harmonized with SB
1630, and used as basis for drawing up the amended version eventually reported out and submitted to
both houses of Congress.
It is further contended that the BCC was created and convoked prematurely, that SB 1630 should first
have been sent to the House of Representatives for concurrence It is maintained, in other words, that
the latter chamber should have refused the Senate request for a bicameral conference committee to
reconcile the "disagreeing provisions" of both bills, and should have required that SB 1630 be first
transmitted to it. This, seemingly, is nit-picking given the urgency of the proposed legislation as certifiedby the President (to both houses, in fact). Time was of the essence, according to the President's best
udgment as regards which absolutely no one in either chamber of Congress took exception, general
acceptance being on the contrary otherwise manifested and that judgment the Court will not now
question. In light of that urgency, what was so vital or indispensable about such a transmittal that its
absence would invalidate all else that had been done towards enactment of the law, completely escapes
me, specially considering that the House had immediately acceded without demur to the request for
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reconciling differences between, or "disagreeing provisions" in, a bill originating from the House in
relation to amendments proposed by the Senate whether as regards some or all of its provisions? Is
the mode of reconciliation, subject to fixed procedure and guidelines? What exactly can the committee
do, or not do? Can it only clarify or revise provisions found in either Senate or House bill? Is it forbidden
to propose additional or new provisions, even on matters necessarily or reasonably connected with or
germane to items in the bills being reconciled?
In answer, it is postulated that the reconciliation function is quite limited. In these cases, the conference
committee should have confined itself to reconciliation of differences or inconsistencies only by (a)
restoring provisions of HB11197 aliminated by SB 1630, or (b) sustaining wholly or partly the Senate
amendments, or (c) as a compromise, agreeing that neither provisions nor amendments be carried into
the final form of HB 11197 for submission to both chambers of the legislature.
The trouble is, it is theorized, the committee incorporated activities or transactions which were not
within the contemplation of both bills; it made additions and deletions which did not enjoy the
enlightenment of initial committee studies; it exercised what is known as an " ex post veto power"
granted to it by no law, rule or regulation, a power that in truth is denied to it by the rules of both the
Senate and the House. In substantiation, the Senate rule is cited, similar to that of the House, providing
that "differences shall be settled by a conference committee" whose report shall contain "detailed and
sufficiently explicit statement of the changes in or amendments to the subject measure, ** (to be)
signed by the conferees;" as well as the "Jefferson's Manual," adopted by the Senate as supplement to
its own rules, directing that the managers of the conference must confine themselves to differences
submitted to them; they may not include subjects not within the disagreements even though germane
to a question in issue."
It is significant that the limiting proviso in the relevant rules has been construed and applied as
directory, not mandatory. During the oral argument, counsel for petitioners admitted that the practice
for decades has been for bicameral conference committees to include such provisions in the reconciled
bill as they believed to be germane or necessary and acceptable to both chambers, even if not within
any of the "disagreeing provisions," and the reconciled bills, containing such provisions had invariably
been approved and adopted by both houses of Congress. It is a practice, they say, that should be
stopped. But it is a practice that establishes in no uncertain manner the prevailing concept in both
houses of Congress of the permissible and acceptable modes of reconciliation that their conference
committees may adopt, one whose undesirability is not all that patent if not, indeed, incapable of
unquestionable demonstration. The fact is that conference committees only take up bills which have
already been freely and fully discussed in both chambers of the legislature, but as to which there is need
of reconciliation in view of "disagreeing provisions" between them; and both chambers entrust the
function of reconciling the bills to their delegates at a conference committee with full awareness, and
tacit consent, that conformably with established practice unquestioningly observed over many years,
new provisions may be included even if not within the "disagreeing provisions" but of which, together
with other changes, they will be given detailed and sufficiently explicit information prior to voting on the
conference committee version.
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In any event, a fairly recent decision written for the Court by Senior Associate Justice Isagani A. Cruz,
promulgated on November 11, 1993 (G.R. No. 105371, The Philippine Judges Association, etc., et al. v.
Hon. Pete Prado, etc., et al.), should leave no doubt of the continuing vitality of the enrolled bill doctrine
and give an insight into the nature of the reconciling function of bicameral conference committees. In
that case, a bilateral conference committee was constituted and met to reconcile Senate Bill No. 720
and House Bill No. 4200. It adopted a "reconciled" measure that was submitted to and approved by both
chambers of Congress and ultimately signed into law by the President, as R.A. No. 7354. A provision in
this statute (removing the franking privilege from the courts, among others) was assailed as being an
invalid amendment because it was not included in the original version of either the senate or the house
bill and hence had generated no disagreement between them which had to be reconciled. The Court
held:
While it is true that a conference committee is the mechanism for compromising differences between
the Senate and the House, it is not limited in its jurisdiction to this question. Its broader function is
described thus:
A conference committee may deal generally with the subject matter or it may be limited to resolving the
precise differences between the two houses. Even where the conference committee is not by rule
limited in its jurisdiction, legislative custom severely limits the freedom with which new subject matter
can be inserted into the conference bill. But occasionally a conference committee produces unexpected
results, results beyond its mandate. These excursions occur even where the rules impose strict
limitations on conference committee jurisdiction. This is symptomatic of the authoritarian power of
conference committee (Davies, Legislative Law and Process: In A Nutshell, 1987 Ed., p. 81).
It is a matter of record that the Conference Committee Report on the bill in question was returned to
and duly approved by both the Senate and the House of Representatives. Thereafter, the bill was
enrolled with its certification by Senate President Neptali A. Gonzales and Speaker Ramon V. Mitra of
the House of Representatives as having been duly passed by both Houses of Congress. It was then
presented to and approved by President Corazon C. Aquino on April 3, 1992.
Under the doctrine of separation of powers, the Court may not inquire beyond the certification of the
approval of a bill from the presiding officers of Congress. Casco Philippine Chemical Co. v. Gimenez(7
SCRA 347) laid down the rule that the enrolled bill is conclusive upon the Judiciary (except in matters
that have to be entered in the journals like the yeasand nays on the final reading of the bill) (Mabanag
v. Lopez Vito, 78 Phil. 1). The journals are themselves also binding on the Supreme Court, as we held in
the old (but still valid) case of U.S. v. Pons (34 Phil. 729), where we explained the reason thus:
To inquire into the veracity of the journals of the Philippine legislature when they are, as we have said,
clear and explicit, would be to violate both the letter and spirit of the organic laws by which the
Philippine Government was brought into existence, to invade a coordinate and independent department
of the Government, and to interfere with the legitimate powers and functions of the Legislature.
Applying these principles, we shall decline to look into the petitioners' charges that an