tolentino vs sec

8/11/2019 Tolentino vs Sec

1/244

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,


2/244

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


3/244

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


4/244

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


5/244

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


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


6/244

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


7/244

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


8/244

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


9/244

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


10/244

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


11/244

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.


12/244

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. . . .


13/244

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.


14/244

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.


15/244

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


16/244

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,


17/244


18/244

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


19/244

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


20/244

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


21/244

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


22/244

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


23/244

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)


24/244

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



25/244

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


26/244


27/244

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.


28/244

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

tolentino vs sec

Documents