Tolentino vs Finance 115455

7/31/2019 Tolentino vs Finance 115455

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Republic of the PhilippinesSUPREME 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 ofInternal Revenue; and their AUTHORIZED AGENTS OR

REPRESENTATIVES, respondents.

G.R. No. 115543 August 25, 1994

RAUL S. ROCO and the INTEGRATED BAR OF THEPHILIPPINES, 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 PUBLISHINGCO., INC.; PUBLISHING CORPORATION; PHILIPPINE

JOURNALISTS, INC.; JOSE L. PAVIA; and OFELIA L.DIMALANTA, petitioners,

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 BUILDERSASSOCIATIONS, 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, JOSECUNANAN, QUINTIN S. DOROMAL, MOVEMENT OF

ATTORNEYS FOR BROTHERHOOD, INTEGRITY ANDNATIONALISM, INC. ("MABINI"), FREEDOM FROM DEBTCOALITION, INC., PHILIPPINE BIBLE SOCIETY, INC., and

WIGBERTO TAADA,petitioners,vs.

THE EXECUTIVE SECRETARY, THE SECRETARY OF

FINANCE, THE COMMISSIONER OF INTERNAL REVENUEand THE COMMISSIONER OF CUSTOMS, respondents.

G.R. No. 115852 August 25, 1994

PHILIPPINE AIRLINES, INC., petitioner,vs.

THE SECRETARY OF FINANCE, and COMMISSIONER OFINTERNAL REVENUE, respondents.

G.R. No. 115873 August 25, 1994

COOPERATIVE UNION OF THEPHILIPPINES, 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 PUBLISHERSASSOCIATION, INC., and ASSOCIATION OF PHILIPPINE

BOOK-SELLERS, petitioners,vs.HON. ROBERTO B. DE OCAMPO, as the Secretary of

Finance; HON. LIWAYWAY V. CHATO, as theCommissioner of Internal Revenue and HON.

GUILLERMO PARAYNO, JR., in his capacity as theCommissioner 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 Debts

Coalition, Inc. & Phil. Bible Society.

Estelito P. Mendoza for petitioner in G.R. No. 115852.

Panganiban, Benitez, Parlade, Africa & Barinaga Law Offices

for petitioners in G.R. No. 115873.

R.B. Rodriguez & Associates for petitioners in G.R. No.

115931.

Reve A.V. Saguisag for MABINI.


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MENDOZA,J.:

The value-added tax (VAT) is levied on the sale, barter orexchange of goods and properties as well as on the sale orexchange of services. It is equivalent to 10% of the grossselling price or gross value in money of goods orproperties sold, bartered or exchanged or of the grossreceipts from the sale or exchange of services. Republic ActNo. 7716 seeks to widen the tax base of the existing VAT

system and enhance its administration by amending theNational Internal Revenue Code.

These are various suits for certiorari and prohibition,challenging the constitutionality of Republic Act No. 7716on 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 theBicameral Conference Committee?

II. Substantive Issues:

A. Does the law violate the followingprovisions in the Bill of Rights (Art. III)?

1. 12. 43. 5

4. 10

B. Does the law violate the following otherprovisions of the Constitution?

1. Art. VI, 28(1)2. Art. VI, 28(3)

These questions will be dealt in the order they are statedabove. As will presently be explained not all of thesequestions are judicially cognizable, because not allprovisions of the Constitution are self executing and,therefore, judicially enforceable. The other departments ofthe government are equally charged with the enforcementof the Constitution, especially the provisions relating tothem.

I. PROCEDURAL ISSUES

The contention of petitioners is that in enacting RepublicAct 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 simplyconsolidated with the Senate version (S. No. 1630) in the

Conference Committee to produce the bill which thePresident signed into law. The following provisions of theConstitution are cited in support of the proposition thatbecause Republic Act No. 7716 was passed in this mannerit did not originate in the House of Representatives and ithas not thereby become a law:

Art. VI, 24: All appropriation, revenue or tariffbills, bills authorizing increase of the public debt

bills of local application, and private bills shaloriginate exclusively in the House ofRepresentatives, but the Senate may propose orconcur with amendments.

Id., 26(2): No bill passed by either House shalbecome a law unless it has passed three readingson separate days, and printed copies thereof in itsfinal form have been distributed to its Membersthree days before its passage, except when thePresident certifies to the necessity of itsimmediate enactment to meet a public calamity oremergency. Upon the last reading of a bill, no

amendment thereto shall be allowed, and the votethereon shall be taken immediately thereafterand the yeas and nays entered in the Journal.

It appears that on various dates between July 22, 1992 andAugust 31, 1993, several bills 1were introduced in theHouse of Representatives seeking to amend certainprovisions of the National Internal Revenue Code relativeto the value-added tax or VAT. These bills were referred tothe House Ways and Means Committee whichrecommended for approval a substitute measure, H. No11197, entitled

AN ACT RESTRUCTURING THE VALUE-ADDEDTAX (VAT) SYSTEM TO WIDEN ITS TAX BASE ANDENHANCE ITS ADMINISTRATION, AMENDINGFOR THESE PURPOSES SECTIONS 99, 100, 102103, 104, 105, 106, 107, 108 AND 110 OF TITLEIV, 112, 115 AND 116 OF TITLE V, AND 236, 237AND 238 OF TITLE IX, AND REPEALING SECTIONS113 AND 114 OF TITLE V, ALL OF THE NATIONALINTERNAL REVENUE CODE, AS AMENDED

The bill (H. No. 11197) was considered on second readingstarting November 6, 1993 and, on November 17, 1993, itwas approved by the House of Representatives after thirdand final reading.

It was sent to the Senate on November 23, 1993 and laterreferred by that body to its Committee on Ways andMeans.

On February 7, 1994, the Senate Committee submitted itsreport recommending approval of S. No. 1630, entitled

AN ACT RESTRUCTURING THE VALUE-ADDEDTAX (VAT) SYSTEM TO WIDEN ITS TAX BASE AND


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then, the power of the Senate to propose amendments, theSenate can propose its own version even with respect tobills which are required by the Constitution to originate inthe House.

It is insisted, however, that S. No. 1630 was passed not insubstitution of H. No. 11197 but of another Senate bill (S.No. 1129) earlier filed and that what the Senate did wasmerely to "take [H. No. 11197] into consideration" in

enacting S. No. 1630. There is really no difference betweenthe Senate preserving H. No. 11197 up to the enactingclause and then writing its own version following theenacting clause (which, it would seem, petitioners admit isan amendment by substitution), and, on the other hand,separately presenting a bill of its own on the same subjectmatter. In either case the result are two bills on the samesubject.

Indeed, what the Constitution simply means is that theinitiative for filing revenue, tariff, or tax bills, billsauthorizing an increase of the public debt, private bills andbills of local application must come from the House of

Representatives on the theory that, elected as they arefrom the districts, the members of the House can beexpected to be more sensitive to the local needs andproblems. On the other hand, the senators, who are electedat large, are expected to approach the same problems fromthe national perspective. Both views are thereby made tobear on the enactment of such laws.

Nor does the Constitution prohibit the filing in the Senateof a substitute bill in anticipation of its receipt of the billfrom the House, so long as action by the Senate as a body iswithheld pending receipt of the House bill. The Courtcannot, therefore, understand the alarm expressed over

the fact that on March 1, 1993, eight months before theHouse passed H. No. 11197, S. No. 1129 had been filed inthe Senate. After all it does not appear that the Senate everconsidered it. It was only after the Senate had received H.No. 11197 on November 23, 1993 that the process oflegislation in respect of it began with the referral to theSenate Committee on Ways and Means of H. No. 11197 andthe submission by the Committee on February 7, 1994 of S.No. 1630. For that matter, if the question were simply thepriority in the time of filing of bills, the fact is that it was inthe House that a bill (H. No. 253) to amend the VAT lawwas first filed on July 22, 1992. Several other bills had beenfiled in the House before S. No. 1129 was filed in the

Senate, and H. No. 11197 was only a substitute of thoseearlier bills.

Second. Enough has been said to show that it was withinthe power of the Senate to propose S. No. 1630. We nowpass to the next argument of petitioners that S. No. 1630did not pass three readings on separate days as requiredby the Constitution 8because the second and thirdreadings were done on the same day, March 24, 1994. Butthis was because on February 24, 1994 9and again onMarch 22, 1994, 10the President had certified S. No. 1630as urgent. The presidential certification dispensed with the

requirement not only of printing but also that of readingthe bill on separate days. The phrase "except when thePresident certifies to the necessity of its immediateenactment, etc." in Art. VI, 26(2) qualifies the two statedconditions before a bill can become a law: (i) the bill haspassed three readings on separate days and (ii) it has beenprinted in its final form and distributed three days beforeit is finally approved.

In other words, the "unless" clause must be read inrelation to the "except" clause, because the two are reallycoordinate clauses of the same sentence. To construe the"except" clause as simply dispensing with the secondrequirement in the "unless" clause (i.e., printing anddistribution three days before final approval) would notonly violate the rules of grammar. It would also negate thevery premise of the "except" clause: the necessity osecuring the immediate enactment of a bill which iscertified in order to meet a public calamity or emergencyFor if it is only the printing that is dispensed with bypresidential certification, the time saved would be sonegligible as to be of any use in insuring immediate

enactment. It may well be doubted whether doing awaywith the necessity of printing and distributing copies of thebill three days before the third reading would insurespeedy enactment of a law in the face of an emergencyrequiring the calling of a special election for President andVice-President. Under the Constitution such a law isrequired to be made within seven days of the convening ofCongress in emergency session. 11

That upon the certification of a bill by the President therequirement of three readings on separate days and oprinting and distribution can be dispensed with issupported by the weight of legislative practice. For

example, the bill defining the certiorari jurisdiction of thisCourt which, in consolidation with the Senate versionbecame Republic Act No. 5440, was passed on second andthird readings in the House of Representatives on the sameday (May 14, 1968) after the bill had been certified by thePresident as urgent. 12

There is, therefore, no merit in the contention thatpresidential certification dispenses only with therequirement for the printing of the bill and its distributionthree days before its passage but not with the requirementof three readings on separate days, also.

It is nonetheless urged that the certification of the bill inthis case was invalid because there was no emergency, thecondition stated in the certification of a "growing budgetdeficit" not being an unusual condition in this country.

It is noteworthy that no member of the Senate saw fit tocontrovert the reality of the factual basis of thecertification. To the contrary, by passing S. No. 1630 onsecond and third readings on March 24, 1994, the Senateaccepted the President's certification. Should suchcertification be now reviewed by this Court, especiallywhen no evidence has been shown that, because S. No


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1630 was taken up on second and third readings on thesame day, the members of the Senate were deprived of thetime needed for the study of a vital piece of legislation?

The sufficiency of the factual basis of the suspension of thewrit ofhabeas corpus or declaration of martial law underArt. VII, 18, or the existence of a national emergencyjustifying the delegation of extraordinary powers to thePresident under Art. VI, 23(2), is subject to judicial

review because basic rights of individuals may be athazard. But the factual basis of presidential certification ofbills, which involves doing away with proceduralrequirements designed to insure that bills are dulyconsidered by members of Congress, certainly should elicita different standard of review.

Petitioners also invite attention to the fact that thePresident certified S. No. 1630 and not H. No. 11197. Thatis because S. No. 1630 was what the Senate wasconsidering. When the matter was before the House, thePresident likewise certified H. No. 9210 the pending in theHouse.

Third. Finally it is contended that the bill which becameRepublic Act No. 7716 is the bill which the ConferenceCommittee prepared by consolidating H. No. 11197 and S.No. 1630. It is claimed that the Conference Committeereport included provisions not found in either the Housebill 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 itssession on April 21 and 25, 1994 the Committee metbehind closed doors. We are not told, however, whetherthe provisions were not the result of the give and take thatoften mark the proceedings of conference committees.

Nor is there anything unusual or extraordinary about thefact that the Conference Committee met in executivesessions. Often the only way to reach agreement onconflicting provisions is to meet behind closed doors, withonly the conferees present. Otherwise, no compromise islikely to be made. The Court is not about to take thesuggestion of a cabal or sinister motive attributed to theconferees on the basis solely of their "secret meetings" onApril 21 and 25, 1994, nor read anything into theincomplete remarks of the members, marked in thetranscript of stenographic notes by ellipses. Theincomplete sentences are probably due to the

stenographer's own limitations or to the incoherence thatsometimes characterize conversations. William Safirenoted some such lapses in recorded talks even by recentpast Presidents of the United States.

In any event, in the United States conference committeeshad been customarily held in executive sessions with onlythe conferees and their staffs in attendance. 13Only inNovember 1975 was a new rule adopted requiring opensessions. Even then a majority of either chamber'sconferees may vote in public to close the meetings. 14

As to the possibility of an entirely new bill emerging out ofa Conference Committee, it has been explained:

Under congressional rules of procedureconference committees are not expected to makeany material change in the measure at issueeither by deleting provisions to which both houseshave already agreed or by inserting newprovisions. But this is a difficult provision to

enforce. Note the problem when one houseamends a proposal originating in either house bystriking out everything following the enactingclause and substituting provisions which make itan entirely new bill. The versions are nowaltogether different, permitting a conferencecommittee 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 onlyrequirement for which being that the third version begermane to the subject of the House and Senate bills. 16

Indeed, this Court recently held that it is within the powerof a conference committee to include in its report anentirely new provision that is not found either in theHouse bill or in the Senate bill. 17If the committee canpropose an amendment consisting of one or twoprovisions, there is no reason why it cannot proposeseveral provisions, collectively considered as an"amendment in the nature of a substitute," so long as suchamendment is germane to the subject of the bills beforethe committee. After all, its report was not final but neededthe approval of both houses of Congress to become valid asan act of the legislative department. The charge that in thiscase the Conference Committee acted as a third legislative

chamber is thus without any basis. 18

Nonetheless, it is argued that under the respective Rules ofthe Senate and the House of Representatives a conferencecommittee can only act on the differing provisions of aSenate bill and a House bill, and that contrary to theseRules the Conference Committee inserted provisions notfound in the bills submitted to it. The following provisionsare cited in support of this contention:

Rules of the Senate

Rule XII:

26. In the event that the Senate does not agreewith the House of Representatives on theprovision of any bill or jointresolution, thedifferences shall be settled by aconference committee of both Houses which shalmeet within ten days after their composition.

The President shall designate the members of theconference committee in accordance withsubparagraph (c), Section 3 of Rule III.


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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 inorder unless the report has been filed with theSecretary of the Senate and copies thereof havebeen distributed to the Members.

(Emphasis added)

Rules of the House of Representatives

Rule XIV:

85. Conference Committee Reports. In theevent that the House does not agree with theSenate on the amendments to any bill or jointresolution, the differences may be settled byconference committees of both Chambers.

The consideration of conference committeereports shall always be in order, except when thejournal is being read, while the roll is being calledor the House is dividing on any question. Each ofthe pages of such reports shall be signed by theconferees. 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 inorder unless copies thereof are distributed to theMembers: Provided, That in the last fifteen days of

each session period it shall be deemed sufficientthat three copies of the report, signed as aboveprovided, are deposited in the office of theSecretary General.

(Emphasis added)

To be sure, nothing in the Rules limits a conferencecommittee to a consideration of conflicting provisions. ButRule XLIV, 112 of the Rules of the Senate is cited to theeffect that "If there is no Rule applicable to a specific casethe precedents of the Legislative Department of thePhilippines shall be resorted to, and as a supplement of

these, the Rules contained in Jefferson's Manual." Thefollowing is then quoted from the Jefferson's Manual:

The managers of a conference must confinethemselves to the differences committed to them. .. and may not include subjects not withindisagreements, even though germane to aquestion in issue.

Note that, according to Rule XLIX, 112, in case there is nospecific rule applicable, resort must be to the legislativepractice. The Jefferson's Manual is resorted to only as

supplement. It is common place in Congress thatconference committee reports include new matters whichthough germane, have not been committed to thecommittee. This practice was admitted by Senator Raul SRoco, petitioner in G.R. No. 115543, during the oraargument in these cases. Whatever, then, may be providedin the Jefferson's Manual must be considered to have beenmodified by the legislative practice. If a change is desiredin the practice it must be sought in Congress since this

question is not covered by any constitutional provision butis only an internal rule of each house. Thus, Art. VI, 16(3)of the Constitution provides that "Each House maydetermine the rules of its proceedings. . . ."

This observation applies to the other contention that theRules of the two chambers were likewise disregarded inthe preparation of the Conference Committee Reportbecause the Report did not contain a "detailed andsufficiently explicit statement of changes in, oramendments to, the subject measure." The Report usedbrackets and capital letters to indicate the changes. This isa standard practice in bill-drafting. We cannot say that in

using these marks and symbols the Committee violated theRules of the Senate and the House. Moreover, this Court isnot the proper forum for the enforcement of these internaRules. To the contrary, as we have already ruled"parliamentary rules are merely procedural and with theirobservance the courts have no concern." 19Our concern iswith the procedural requirements of the Constitution forthe enactment of laws. As far as these requirements areconcerned, we are satisfied that they have been faithfullyobserved in these cases.

Nor is there any reason for requiring that the Committee'sReport in these cases must have undergone three readings

in each of the two houses. If that be the case, there wouldbe no end to negotiation since each house may seekmodifications of the compromise bill. The nature of the billtherefore, requires that it be acted upon by each house ona "take it or leave it" basis, with the only alternative that ifit is not approved by both houses, another conferencecommittee must be appointed. But then again the resultwould still be a compromise measure that may not bewholly satisfying to both houses.

Art. VI, 26(2) must, therefore, be construed as referringonly to bills introduced for the first time in either house ofCongress, not to the conference committee report. For if

the purpose of requiring three readings is to give membersof Congress time to study bills, it cannot be gainsaid that HNo. 11197 was passed in the House after three readings;that in the Senate it was considered on first reading andthen referred to a committee of that body; that althoughthe Senate committee did not report out the House bill, itsubmitted a version (S. No. 1630) which it had prepared by"taking into consideration" the House bill; that for its partthe Conference Committee consolidated the two bills andprepared a compromise version; that the ConferenceCommittee Report was thereafter approved by the Houseand the Senate, presumably after appropriate study by


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their members. We cannot say that, as a matter of fact, themembers of Congress were not fully informed of theprovisions of the bill. The allegation that the ConferenceCommittee usurped the legislative power of Congress is, inour view, without warrant in fact and in law.

Fourth. Whatever doubts there may be as to the formalvalidity of Republic Act No. 7716 must be resolved in itsfavor. Our cases 20manifest firm adherence to the rule that

an enrolled copy of a bill is conclusive not only of itsprovisions but also of its due enactment. Not even claimsthat a proposed constitutional amendment was invalidbecause the requisite votes for its approval had not beenobtained 21or that certain provisions of a statute had been"smuggled" in the printing of the bill 22have moved orpersuaded us to look behind the proceedings of a coequalbranch of the government. There is no reason now todepart from this rule.

No claim is here made that the "enrolled bill" rule isabsolute. In fact in one case 23we "went behind" anenrolled bill and consulted the Journal to determine

whether certain provisions of a statute had been approvedby the Senate in view of the fact that the President of theSenate himself, who had signed the enrolled bill, admitteda mistake and withdrew his signature, so that in effectthere was no longer an enrolled bill to consider.

But where allegations that the constitutional proceduresfor the passage of bills have not been observed have nomore basis than another allegation that the ConferenceCommittee "surreptitiously" inserted provisions into a billwhich it had prepared, we should decline the invitation togo 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 ofRepublic Act No. 7716 is made by the Philippine Airlines,Inc., petitioner in G.R. No. 11582, namely, that it violatesArt. VI, 26(1) which provides that "Every bill passed byCongress shall embrace only one subject which shall beexpressed in the title thereof." It is contended that neitherH. No. 11197 nor S. No. 1630 provided for removal ofexemption of PAL transactions from the payment of theVAT and that this was made only in the ConferenceCommittee bill which became Republic Act No. 7716without reflecting this fact in its title.

The title of Republic Act No. 7716 is:

AN ACT RESTRUCTURING THE VALUE- ADDEDTAX (VAT) SYSTEM, WIDENING ITS TAX BASEAND ENHANCING ITS ADMINISTRATION, ANDFOR THESE PURPOSES AMENDING ANDREPEALING THE RELEVANT PROVISIONS OF THENATIONAL INTERNAL REVENUE CODE, ASAMENDED, AND FOR OTHER PURPOSES.

Among the provisions of the NIRC amended is 103, whichoriginally read:

103. Exempt transactions. The following shalbe exempt from the value-added tax:

. . . .

(q) Transactions which are exempt under specia

laws or international agreements to which thePhilippines is a signatory. Among the transactionsexempted from the VAT were those of PALbecause it was exempted under its franchise (P.DNo. 1590) from the payment of all "other taxes . . now or in the near future," in consideration of thepayment by it either of the corporate income taxor 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 shalbe exempt from the value-added tax:

. . . .

(q) Transactions which are exempt under specialaws, except those granted under PresidentiaDecree Nos. 66, 529, 972, 1491, 1590. . . .

The effect of the amendment is to remove the exemptiongranted 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 No7716, although no mention is made therein of P.D. No1590 as among those which the statute amends. We thinkit is, since the title states that the purpose of the statute isto expand the VAT system, and one way of doing this is towiden its base by withdrawing some of the exemptionsgranted before. To insist that P.D. No. 1590 be mentionedin the title of the law, in addition to 103 of the NIRC, inwhich it is specifically referred to, would be to insist thatthe title of a bill should be a complete index of its content.

The constitutional requirement that every bill passed byCongress shall embrace only one subject which shall beexpressed in its title is intended to prevent surprise uponthe members of Congress and to inform the people ofpending legislation so that, if they wish to, they can beheard regarding it. If, in the case at bar, petitioner did notknow before that its exemption had been withdrawn, it isnot because of any defect in the title but perhaps for thesame reason other statutes, although published, passunnoticed until some event somehow calls attention totheir existence. Indeed, the title of Republic Act No. 7716 isnot any more general than the title of PAL's own franchiseunder P.D. No. 1590, and yet no mention is made of its taxexemption. The title of P.D. No. 1590 is:


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AN ACT GRANTING A NEW FRANCHISE TOPHILIPPINE AIRLINES, INC. TO ESTABLISH,OPERATE, AND MAINTAIN AIR-TRANSPORTSERVICES IN THE PHILIPPINES AND BETWEENTHE PHILIPPINES AND OTHER COUNTRIES.

The trend in our cases is to construe the constitutionalrequirement in such a manner that courts do not undulyinterfere with the enactment of necessary legislation and

to consider it sufficient if the title expresses the generalsubject of the statute and all its provisions are germane tothe general subject thus expressed. 24

It is further contended that amendment of petitioner'sfranchise may only be made by special law, in view of 24of P.D. No. 1590 which provides:

This franchise, as amended, or any section orprovision hereof may only be modified, amended,or repealed expressly by a special law or decreethat shall specifically modify, amend, or repealthis franchise or any section or provision thereof.

This provision is evidently intended to prevent theamendment of the franchise by mere implication resultingfrom the enactment of a later inconsistent statute, inconsideration of the fact that a franchise is a contractwhich can be altered only by consent of the parties. Thusin Manila Railroad Co. v. Rafferty, 25 it was held that an Actof the U.S. Congress, which provided for the payment of taxon certain goods and articles imported into thePhilippines, did not amend the franchise of plaintiff, whichexempted it from all taxes except those mentioned in itsfranchise. It was held that a special law cannot be amendedby a general law.

In contrast, in the case at bar, Republic Act No. 7716expressly amends PAL's franchise (P.D. No. 1590) byspecifically excepting from the grant of exemptions fromthe VAT PAL's exemption under P.D. No. 1590. This iswithin the power of Congress to do under Art. XII, 11 ofthe Constitution, which provides that the grant of afranchise for the operation of a public utility is subject toamendment, alteration or repeal by Congress when thecommon good so requires.

II. SUBSTANTIVE ISSUES

A. Claims of Press Freedom, Freedom ofThought and Religious Freedom

The Philippine Press Institute (PPI), petitioner in G.R. No.115544, is a nonprofit organization of newspaperpublishers established for the improvement of journalismin the Philippines. On the other hand, petitioner in G.R. No.115781, the Philippine Bible Society (PBS), is a nonprofitorganization engaged in the printing and distribution ofbibles and other religious articles. Both petitioners claim

violations of their rights under 4 and 5 of the Bill ofRights as a result of the enactment of the VAT Law.

The PPI questions the law insofar as it has withdrawn theexemption previously granted to the press under 103 (f)of the NIRC. Although the exemption was subsequentlyrestored by administrative regulation with respect to thecirculation income of newspapers, the PPI presses its claimbecause of the possibility that the exemption may still be

removed by mere revocation of the regulation of theSecretary of Finance. On the other hand, the PBS goes sofar as to question the Secretary's power to grantexemption for two reasons: (1) The Secretary of Financehas no power to grant tax exemption because this is vestedin Congress and requires for its exercise the vote of amajority of all its members 26and (2) the Secretary's dutyis to execute the law.

103 of the NIRC contains a list of transactions exemptedfrom VAT. Among the transactions previously grantedexemption were:

(f) Printing, publication, importation or sale obooks and any newspaper, magazine, review, orbulletin which appears at regular intervals withfixed prices for subscription and sale and which isdevoted principally to the publication ofadvertisements.

Republic Act No. 7716 amended 103 by deleting (f)with the result that print media became subject to the VATwith respect to all aspects of their operations. Laterhowever, based on a memorandum of the Secretary ofJustice, respondent Secretary of Finance issued RevenueRegulations No. 11-94, dated June 27, 1994, exempting the

"circulation income of print media pursuant to 4 ArticleIII of the 1987 Philippine Constitution guaranteeingagainst abridgment of freedom of the press, amongothers." The exemption of "circulation income" has leftincome from advertisements still subject to the VAT.

It is unnecessary to pass upon the contention that theexemption granted is beyond the authority of the Secretaryof Finance to give, in view of PPI's contention that evenwith the exemption of the circulation revenue of printmedia there is still an unconstitutional abridgment opress freedom because of the imposition of the VAT on thegross receipts of newspapers from advertisements and ontheir acquisition of paper, ink and services for publicationEven on the assumption that no exemption has effectivelybeen granted to print media transactions, we find noviolation of press freedom in these cases.

To be sure, we are not dealing here with a statute that onits face operates in the area of press freedom. The PPI'sclaim is simply that, as appliedto newspapers, the lawabridges press freedom. Even with due recognition of itshigh estate and its importance in a democratic societyhowever, the press is not immune from general regulationby the State. It has been held:


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single in kind, with a long history of hostile misuse againstthe freedom of the press." 34On the otherhand, Minneapolis Staracknowledged that "The FirstAmendment does not prohibit all regulation of the press[and that] the States and the Federal Government cansubject newspapers to generally applicable economicregulations 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 violatesfreedom of thought and of conscience. For as the U.S.Supreme Court unanimously held inJimmy SwaggartMinistries v. Board of Equalization, 36the Free Exercise ofReligion Clause does not prohibit imposing a generallyapplicable sales and use tax on the sale of religiousmaterials by a religious organization.

This brings us to the question whether the registrationprovision of the law, 37although of general applicability,nonetheless is invalid when applied to the press because it

lays a prior restraint on its essential freedom. The caseofAmerican Bible Society v. City of Manila 38is cited by boththe PBS and the PPI in support of their contention that thelaw imposes censorship. There, this Court held that anordinance of the City of Manila, which imposed a licensefee on those engaged in the business of generalmerchandise, could not be applied to the appellant's sale ofbibles and other religious literature. This Court reliedon Murdock v. Pennsylvania, 39in which it was held that, asa license fee is fixed in amount and unrelated to thereceipts of the taxpayer, the license fee, when applied to areligious sect, was actually being imposed as a conditionfor the exercise of the sect's right under the Constitution.

For that reason, it was held, the license fee "restrains inadvance those constitutional liberties of press and religionand inevitably tends to suppress their exercise." 40

But, in this case, the fee in 107, although a fixed amount(P1,000), is not imposed for the exercise of a privilege butonly for the purpose of defraying part of the cost ofregistration. The registration requirement is a centralfeature of the VAT system. It is designed to provide arecord of tax credits because any person who is subject tothe payment of the VAT pays an input tax, even as hecollects an output tax on sales made or services rendered.The registration fee is thus a mere administrative fee, one

not imposed on the exercise of a privilege, much less aconstitutional right.

For the foregoing reasons, we find the attack on RepublicAct No. 7716 on the ground that it offends the free speech,press and freedom of religion guarantees of theConstitution to be without merit. For the same reasons, wefind the claim of the Philippine Educational PublishersAssociation (PEPA) in G.R. No. 115931 that the increase inthe price of books and other educational materials as aresult of the VAT would violate the constitutional mandate

to the government to give priority to education, scienceand technology (Art. II, 17) to be untenable.

B. Claims of Regressivity, Denial of Due ProcessEqual Protection, and Impairment

of Contracts

There is basis for passing upon claims that on its face thestatute violates the guarantees of freedom of speech, pressand religion. The possible "chilling effect" which it mayhave on the essential freedom of the mind and conscienceand the need to assure that the channels of communicationare open and operating importunately demand theexercise of this Court's power of review.

There is, however, no justification for passing upon theclaims that the law also violates the rule that taxation mustbe progressive and that it denies petitioners' right to dueprocess and that equal protection of the laws. The reasonfor this different treatment has been cogently stated by an

eminent authority on constitutional law thus: "[W]henfreedom of the mind is imperiled by law, it is freedom thatcommands a momentum of respect; when property isimperiled it is the lawmakers' judgment that commandsrespect. This dual standard may not precisely reverse thepresumption of constitutionality in civil liberties cases, butobviously it does set up a hierarchy of values within thedue process clause." 41

Indeed, the absence of threat of immediate harm makesthe need for judicial intervention less evident andunderscores the essential nature of petitioners' attack onthe law on the grounds of regressivity, denial of dueprocess and equal protection and impairment of contractsas a mere academic discussion of the merits of the law. Forthe fact is that there have even been no notices oassessments issued to petitioners and no determinationsat the administrative levels of their claims so as toilluminate the actual operation of the law and enable us toreach sound judgment regarding so fundamental questionsas those raised in these suits.

Thus, the broad argument against the VAT is that it isregressive and that it violates the requirement that "Therule of taxation shall be uniform and equitable [and]

Congress shall evolve a progressive system oftaxation." 42Petitioners in G.R. No. 115781 quote from apaper, entitled "VAT Policy Issues: Structure, RegressivityInflation and Exports" by Alan A. Tait of the InternationalMonetary Fund, that "VAT payment by low-incomehouseholds will be a higher proportion of their incomes(and expenditures) than payments by higher-incomehouseholds. 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 thehigher-income bracket, which before were taxed at a ratehigher than 10%, has been reduced, while basic


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commodities, which before were taxed at rates rangingfrom 3% to 5%, are now taxed at a higher rate.

Just as vigorously as it is asserted that the law isregressive, the opposite claim is pressed by respondentsthat in fact it distributes the tax burden to as many goodsand services as possible particularly to those which arewithin the reach of higher-income groups, even as the lawexempts 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 realproperties held primarily for sale to customers or held forlease in the ordinary course of business, the right orprivilege to use industrial, commercial or scientificequipment, hotels, restaurants and similar places, touristbuses, and the like. On the other hand, small businessestablishments, with annual gross sales of less thanP500,000, are exempted. This, according to respondents,removes from the coverage of the law some 30,000business establishments. On the other hand, an occasionalpaper 43of the Center for Research and Communicationcities a NEDA study that the VAT has minimal impact on

inflation and income distribution and that while additionalexpenditure for the lowest income class is only P301 or1.49% a year, that for a family earning P500,000 a year ormore is P8,340 or 2.2%.

Lacking empirical data on which to base any conclusionregarding these arguments, any discussion whether theVAT is regressive in the sense that it will hit the "poor" andmiddle-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, whilemaintaining that granted to electric cooperatives, not onlygoes against the constitutional policy to promotecooperatives as instruments of social justice (Art. XII, 15)but also denies such cooperatives the equal protection ofthe law is actually a policy argument. The legislature is notrequired to adhere to a policy of "all or none" in choosingthe subject of taxation.44

Nor is the contention of the Chamber of Real Estate andBuilders Association (CREBA), petitioner in G.R. 115754,that the VAT will reduce the mark up of its members by asmuch as 85% to 90% any more concrete. It is a mere

allegation. On the other hand, the claim of the PhilippinePress Institute, petitioner in G.R. No. 115544, that the VATwill drive some of its members out of circulation becausetheir profits from advertisements will not be enough topay for their tax liability, while purporting to be based onthe financial statements of the newspapers in question,still falls short of the establishment of facts by evidence sonecessary for adjudicating the question whether the tax isoppressive and confiscatory.

Indeed, regressivity is not a negative standard for courts toenforce. What Congress is required by the Constitution to

do is to "evolve a progressive system of taxation." This is adirective to Congress, just like the directive to it to givepriority to the enactment of laws for the enhancement ofhuman dignity and the reduction of social, economic andpolitical inequalities (Art. XIII, 1), or for the promotion ofthe right to "quality education" (Art. XIV, 1). Theseprovisions are put in the Constitution as moral incentivesto legislation, not as judicially enforceable rights.

At all events, our 1988 decision in Kapatiran45

shouldhave laid to rest the questions now raised against the VATThere similar arguments made against the original VATLaw (Executive Order No. 273) were held to behypothetical, with no more basis than newspaper articleswhich this Court found to be "hearsay and [without]evidentiary value." As Republic Act No. 7716 merelyexpands the base of the VAT system and its coverage asprovided in the original VAT Law, further debate on thedesirability and wisdom of the law should have shifted toCongress.

Only slightly less abstract but nonetheless hypothetical is

the contention of CREBA that the imposition of the VAT onthe sales and leases of real estate by virtue of contractsentered into prior to the effectivity of the law wouldviolate the constitutional provision that "No law impairingthe obligation of contracts shall be passed." It is enough tosay that the parties to a contract cannot, through theexercise of prophetic discernment, fetter the exercise othe taxing power of the State. For not only are existinglaws read into contracts in order to fix obligations asbetween parties, but the reservation of essential attributesof sovereign power is also read into contracts as a basicpostulate of the legal order. The policy of protectingcontracts against impairment presupposes the

maintenance of a government which retains adequateauthority to secure the peace and good order of society. 46

In truth, the Contract Clause has never been thought as alimitation on the exercise of the State's power of taxationsave only where a tax exemption has been granted for avalid consideration. 47Such is not the case of PAL in G.RNo. 115852, and we do not understand it to make thisclaim. Rather, its position, as discussed above, is that theremoval of its tax exemption cannot be made by a generalbut only by a specific, law.

The substantive issues raised in some of the cases are

presented in abstract, hypothetical form because of thelack of a concrete record. We accept that this Court doesnot only adjudicate private cases; that public actions by"non-Hohfeldian" 48or ideological plaintiffs are nowcognizable provided they meet the standing requirementof the Constitution; that under Art. VIII, 1, 2 the Courthas a "special function" of vindicating constitutional rightsNonetheless the feeling cannot be escaped that we do nothave before us in these cases a fully developed factuarecord that alone can impart to our adjudication theimpact of actuality 49to insure that decision-making isinformed and well grounded. Needless to say, we do not


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have power to render advisory opinions or evenjurisdiction over petitions for declaratory judgment. Ineffect we are being asked to do what the ConferenceCommittee is precisely accused of having done in thesecases to sit as a third legislative chamber to reviewlegislation.

We are told, however, that the power of judicial review isnot so much power as it is duty imposed on this Court by

the Constitution and that we would be remiss in theperformance of that duty if we decline to look behind thebarriers set by the principle of separation of powers. Art.VIII, 1, 2 is cited in support of this view:

Judicial power includes the duty of the courts ofjustice to settle actual controversies involvingrights which are legally demandable andenforceable, and to determine whether or notthere has been a grave abuse of discretionamounting to lack or excess of jurisdiction on thepart of any branch or instrumentality of theGovernment.

To view the judicial power of review as a duty is nothingnew. Chief Justice Marshall said so in 1803, to justify theassertion of this power in Marbury v. Madison:

It is emphatically the province and duty of thejudicial department to say what the law is. Thosewho apply the rule to particular cases must ofnecessity expound and interpret that rule. If twolaws conflict with each other, the courts mustdecide on the operation of each. 50

Justice Laurel echoed this justification in 1936 in Angara v.Electoral Commission:

And when the judiciary mediates to allocateconstitutional boundaries, it does not assert anysuperiority over the other departments; it doesnot in reality nullify or invalidate an act of thelegislature, but only asserts the solemn and sacredobligation assigned to it by the Constitution todetermine conflicting claims of authority underthe Constitution and to establish for the parties inan actual controversy the rights which thatinstrument secures and guarantees to them. 51

This conception of the judicial power has been affirmed inseveral cases 52of this Court followingAngara.

It does not add anything, therefore, to invoke this "duty" tojustify this Court's intervention in what is essentially acase that at best is not ripe for adjudication. That dutymust still be performed in the context of a concrete case orcontroversy, as Art. VIII, 5(2) clearly defines ourjurisdiction in terms of "cases," and nothing but "cases."That the other departments of the government may havecommitted a grave abuse of discretion is not an

independent ground for exercising our power. Disregard othe essential limits imposed by the case and controversyrequirement can in the long run only result inundermining our authority as a court of law. For, as judgeswhat we are called upon to render is judgment accordingto law, not according to what may appear to be the opinionof the day.

_______________________________

In the preceeding pages we have endeavored to discusswithin limits, the validity of Republic Act No. 7716 in itsformal and substantive aspects as this has been raised inthe various cases before us. To sum up, we hold:

(1) That the procedural requirements of the Constitutionhave been complied with by Congress in the enactment othe statute;

(2) That judicial inquiry whether the formal requirementsfor the enactment of statutes beyond those prescribedby the Constitution have been observed is precluded by

the principle of separation of powers;

(3) That the law does not abridge freedom of speechexpression or the press, nor interfere with the freeexercise of religion, nor deny to any of the parties the rightto an education; and

(4) That, in view of the absence of a factual foundation orecord, claims that the law is regressive, oppressive andconfiscatory and that it violates vested rights protectedunder the Contract Clause are prematurely raised and donot 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 thescholarly opinion of my learned colleague, Mr. Justice

Vicente V. Mendoza. I write this separate opinion toexpress my own views relative to the procedural issuesraised by the various petitions and death with by someother Members of the Court in their separate opinions.

By their very nature, it would seem, discussions ofconstitutional issues prove fertile ground for a notuncommon phenomenon: debate marked by passionatepartisanship amounting sometimes to impatience withadverse views, an eagerness on the part of the proponentson each side to assume the role of, or be perceived asstaunch defenders of constitutional principles, manifestingitself in flights of rhetoric, even hyperbole. The peril in this


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obviously, is a diminution of objectivity that qualitywhich, on the part of those charged with the duty andauthority of interpreting the fundamental law, is of theessence of their great function. For the Court, moreperhaps than for any other person or group, it is necessaryto maintain that desirable objectivity. It must make certainthat on this as on any other occasion, the judicial functionis meticulously performed, the facts ascertained ascomprehensively and as accurately as possible, all the

issues particularly identified, all the arguments clearlyunderstood; else, it may itself be accused, by its ownmembers or by others, of a lack of adherence to, or acareless observance of, its own procedures, the signaturesof its individual members on its enrolled verdictsnotwithstanding.

In the matter now before the Court, and whateverreservations some people may entertain about theirintellectual limitations or moral scruples, I cannot bringmyself to accept the thesis which necessarily implies thatthe members of our august Congress, in enacting theexpanded VAT law, exposed their ignorance, or

indifference to the observance, of the rules of procedureset down by the Constitution or by their respectivechambers, or what is worse, deliberately ignored thoserules for some yet undiscovered purpose nefarious innature, or at least some purpose other than the publicweal; or that a few of their fellows, acting as a bicameralconference committee, by devious schemes and cunningmaneuvers, and in conspiracy with officials of theExecutive Department and others, succeeded in "pullingthe wool over the eyes" of all their other colleagues andfoisting on them a bill containing provisions that neitherchamber of our bicameral legislature conceived orcontemplated. This is the thesis that the petitioners would

have this Court approve. It is a thesis I consider bereft ofany factual or logical foundation.

Other than the bare declarations of some of the petitioners,or arguments from the use and import of the languageemployed in the relevant documents and records, there isno evidence before the Court adequate to support a findingthat the legislators concerned, whether of the upper orlower chamber, acted otherwise than in good faith, in thehonest discharge of their functions, in the sincere beliefthat the established procedures were being regularlyobserved 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 otherofficial took part in or unduly influenced the proceedingsbefore the bicameral conference committee, or that themembers of the latter were motivated by a desire tosurreptitiously introduce improper revisions in the billswhich they were required to reconcile, or that afteragreement had been reached on the mode and manner ofreconciliation of the "disagreeing provisions," had resortedto stratragems or employed under-handed ploys to ensuretheir approval and adoption by either House. Neither isthere any proof that in voting on the Bicameral ConferenceCommittee (BCC) version of the reconciled bills, themembers of the Senate and the House did so in ignorance

of, or without understanding, the contents thereof or thebills therein reconciled.

Also unacceptable is the theory that since the Constitutionrequires appropriation and revenue bills to originateexclusively in the House of Representatives, it is improperif not unconstitutional for the Senate to formulate, or eventhink about formulating, its own draft of this type ofmeasure in anticipation of receipt of one transmitted by

the lower Chamber. This is specially cogent as regardsmuch-publicized suggestions for legislation (like theexpanded VAT Law) emanating from one or morelegislators, or from the Executive Department, or theprivate sector, etc. which understandably could beexpected to forthwith generate much Congressionacogitation.

Exclusive origination, I submit, should have no referenceto time of conception. As a practical matter, originationshould refer to the affirmative act which effectively putsthe bicameral legislative procedure in motion, i.e., thetransmission by one chamber to the other of a bill for its

adoption. This is the purposeful act which sets thelegislative machinery in operation to effectively lead to theenactment of a statute. Until this transmission takes placethe formulation and discussions, or the reading for threeor more times of proposed measures in either chamberwould be meaningless in the context of the activity leadingtowards concrete legislation. Unless transmitted to theother chamber, a bill prepared by either house cannotpossibly become law. In other words, the first affirmativeefficacious step, the operative act as it were, leading toactual enactment of a statute, is the transmission of a bilfrom one house to the other for action by the latter. This isthe origination that is spoken of in the Constitution in its

Article VI, Section 24, in reference to appropriationrevenue, or tariff bills, etc.

It may be that in the Senate, revenue or tax measures arediscussed, even drafted, and this before a similar activitytakes place in the House. This is of no moment, so long asthose measures or bill remain in the Senate and are notsent over the House. There is no origination of revenue ortax measures by the Senate in this case. However, once theHouse completes the drawing up of a similar tax measurein accordance with the prescribed procedure, ven if this isdone subsequent to the Senates own measure indeedeven if this be inspired by information that measure of the

Senate and after third reading transmits its bill to theSenate, there is origination by (or in) the House within thecontemplation of the Constitution.

So it is entirely possible, as intimated, that in expectationof the receipt of a revenue or tax bill from the House ofRepresentatives, the Senate commences deliberations onits own concept of such a legislative measure. Thispossibly to save time, so that when the House bill raches itits thoughts and views on the matter are already formedand even reduced to writing in the form of a draft statuteThis should not be thought ilegal, as interdicted by the


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Constitution. What the Constitution prohibits is for theSenate to begin the legislative process first, by sending itsown revenue bill to the House of Representatives for itsconsideration and action. This is the initiation that isprohibited to the Senate.

But petitioners claims that this last was what in facthappened, that the went through the legislative mill andwas 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 beingtransmitted to the Senate, was referred after first readingto its Committee on Ways and Means; was reported out bysaid Committee; underwent second and third readings,was sent to the bicameral conference committee and then,after appropriate proceedings therein culminating inextensive amendments thereof, was finally approved byboth Houses and became the Expanded VAT Law.

On whose side does the truth lie? If it is not possible tomake that determination from the pleadings and recordsbefore this Court, shall it require evidence to be

presented? No, on both law and principle. The Court willreject a case where the legal issues raised, whatever theymay be, depend for their resolution on still unsettledquestions of fact. Petitioners may not, by raising what areCourt to assume the role of a trier of facts. It is on thecontrary their obligation, before raising those questions tothis Court, to see to it that all issues of fact are settled inaccordance with the procedures laid down by law for proofof facts. Failing this, petitioners would have onlythemselves to blame for a peremptory dismissal.

Now, what is really proven about what happened to HB11197 after it was transmitted to the Senate? It seems to

be admitted on all sides that after going through firstreading, HB 11197 was referred to the Committee on Waysand Means chaired by Senator Ernesto Herrera.

It is however surmised that after this initial step, HB11197 was never afterwards deliberated on in the Senate,that it was there given nothing more than a "passingglance," and that it never went through a proper secondand third reading. There is no competent proof tosubstantiate this claim. What is certain is that on February7, 1994, the Senate Committee on Ways and Meanssubmitted its Report (No. 349) stating that HB 11197was considered, and recommending that SB 1630 be

approved "in substitution of S.B. No. 1129, taking intoconsideration P.S. Res. No. 734 1and H.B. No. 11197." ThisReport made known to the Senate, and clearly indicates,that H.B. No. 11197 was indeed deliberated on by theCommittee; in truth, as Senator Herrera pointed out, theBCC later "agreed to adopt (a broader coverage of the VAT)which is closely adhering to the Senate version ** ** withsome new provisions or amendments." The plainimplication is that the Senate Committee had indeeddiscussed HB 11197 in comparison with the inconsistentparts of SB 1129 and afterwards proposed amendments to

the former in the form of a new bill (No. 1630) moreclosely akin to the Senate bill (No. 1129).

And it is as reasonable to suppose as not that later, duringthe second and third readings on March 24, 1994, theSenators, assembled as a body, had before them copies ofHB 11197 and SB 1129, as well as of the Committee's new"SB 1630" that had been recommended for their approvalor at the very least were otherwise perfectly aware that

they were considering the particular provisions of thesebills. That there was such a deliberation in the Senate onHB 11197 in light of inconsistent portions of SB 1630, mayfurther be necessarily inferred from the request, made bythe Senate on the same day, March 24, 1994, for theconvocation of a bicameral conference committee toreconcile "the disagreeing provisions of said bill (SB 1630)and House Bill No. 11197," a request that could not havebeen made had not the Senators more or less closelyexamined the provisions of HB 11197 and compared themwith those of the counterpart Senate measures.

Were the proceedings before the bicameral conference

committee fatally flawed? The affirmative is suggestedbecause the committee allegedly overlooked or ignoredthe fact that SB 1630 could not validly originate in theSenate, and that HB 11197 and SB 1630 never properlypassed both chambers. The untenability of thesecontentions has already been demonstrated. Nowdemonstration of the indefensibility of other argumentspurporting to establish the impropriety of the BCCproceedings will be attempted.

There is the argument, for instance, that the conferencecommittee never used HB 11197 even as "frame ofreference" because it does not appear that the suggestion

therefor (made by House Penal Chairman Exequiel Javierat the bicameral conference committee's meeting on April19, 1994, with the concurrence of Senator Maceda) wasever resolved, the minutes being regrettably vague as towhat occurred after that suggestion was made. It ishowever, as reasonable to assume that it was, as it was notgiven the vagueness of the minutes already alluded to. Infact, a reading of the BCC Report persuasivelydemonstrates that HB 11197 was not only utilized as a"frame of reference" but actually discussed anddeliberated on.

Said BCC Report pertinently states: 2

CONFERENCE COMMITTEE REPORT

The Conference Committee on the disagreeingprovisions of House Bill No. 11197, entitled:

AN ACT RESTRUCTURING THE VALUE ADDEDTAX (VAT) SYSTEM TO WIDEN ITS TAX BASE ANDENHANCE ITS ADMINISTRATION, AMENDINGFOR THESE PURPOSES SECTIONS 99, 100, 1021013, 104, 105, 106, 107, 108 AND 110 OF TITLEIV, 112, 115 AND 116 OF TITLE V, AND 236, 237,


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AND 238 OF TITLE IX, AND REPEALING SECTIONS113SD AND 114 OF TITLE V, ALL OF THENATIONAL INTERNAL REVENUE CODE, ASAMENDED

and Senate Bill No. 1630 entitled:

AN ACT RESTRUCTURING THE VALUE ADDEDTAX (VAT) SYSTEM TO WIDEN ITS TAX BASE AND

ENHANCE ITS ADMINISTRATION, AMENDINGFOR 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 REPEALINGSECTIONS 1113, 114, 116, 119 AND 120 OF TITLEV, ALL OF THE NATIONAL INTERNAL REVENUECODE, AS AMENDED AND FOR OTHER PURPOSES

having met, after full and free conference, hasagreed to recommend and do hereby recommendto their respective Houses thatHouse Bill No.11197, in consolidation with Senate Bill No. 1630 ,

be approved in accordance with the attached copyof the bill as reconciled and approvedby theconferees.

Approved.

The Report, it will be noted, explicitly adverts to House BillNo. 11197, it being in fact mentioned ahead of Senate BillNo. 1630; graphically shows the very close identity of thesubjects of both bills (indicated in their respective titles);and clearly says that the committee met in "full and freeconference" on the "disagreeing provisions"of both bills(obviously in an effort to reconcile them); and thatreconciliation of said "disagreeing provisions" had beeneffected, the BCC having agreed that "House Bill No. 11197,in consolidation with Senate Bill No. 1630, be approved inaccordance with the attached copy of the bill asreconciledand approved by the conferees."

It may be concluded, in other words, that, conformably tothe procedure provided in the Constitution with which allthe Members of the bicameral conference committeecannot but be presumed to be familiar, and no proof to thecontrary having been adduced on the point, it was theoriginal bill (HB 11197) which said body had considered

and deliberated on in detail, reconciled or harmonizedwith SB 1630, and used as basis for drawing up theamended version eventually reported out and submittedto both houses of Congress.

It is further contended that the BCC was created andconvoked prematurely, that SB 1630 should first havebeen sent to the House of Representatives for concurrenceIt is maintained, in other words, that the latter chambershould have refused the Senate request for a bicameralconference committee to reconcile the "disagreeingprovisions" of both bills, and should have required that SB1630 be first transmitted to it. This, seemingly, is nit-

picking given the urgency of the proposed legislation ascertified by the President (to both houses, in fact). Timewas of the essence, according to the President's bestjudgment as regards which absolutely no one in eitherchamber of Congress took exception, general acceptancebeing on the contrary otherwise manifested and thajudgment the Court will not now question. In light of thaturgency, what was so vital or indispensable about such atransmittal that its absence would invalidate all else that

had been done towards enactment of the law, completelyescapes me, specially considering that the House hadimmediately acceded without demur to the request forconvocation of the conference committee.

What has just been said should dispose of the argumentthat the statement in the enrolled bill, that "This Act whichis a consolidation of House Bill No. 11197 and Senate BilNo. 11630 was finally passed by the House oRepresentatives and the Senate on April 27, 1994 and May2, 1994," necessarily signifies that there were two (2) billsseparately introduced, retaining their independentexistence until they reached the bicameral conference

committee where they were consolidated, and thereforethe VAT law did not originate exclusively in the Househaving originated in part in the Senate as SB 1630, whichbill was not embodied in but merely merged with HB11197, retaining its separate identity until it was joined bythe BCC with the house measure. The more logical, andfairer, course is to construe the expression, "consolidationof House Bill No. 11197 and Senate Bill No. 11630" in thecontext of accompanying and contemporaneousstatements, i.e.: (a) the declaration in the BCCReport, supra, that the committee met to reconcile thedisagreeing provisions of the two bills, "and after full andfree conference" on the matter, agreed and so

recommended that "House Bill No. 11197, in consolidationwith Senate Bill No. 1630, be approved in accordance withthe attached copy of the bill as reconciled and approved bythe conferees;" and (b) the averment of Senator Herrera, inthe Report of the Ways and Means Committee, supra, thathe committee had actually "considered" (discussed) HBNo. 11197 and taken it "into consideration" inrecommending that its own version of the measure (SB1630) be the one approved.

That the Senate might have drawn up its own version ofthe expanded VAT bill, contemporaneously with or evenbefore the House did, is of no moment. It bears repeating

in this connection that no VAT bill ever originatedin theSenate; neither its SB 1129 or SB 1630 or any of its draftswas ever officially transmitted to the House as an initiatingbill which, as already pointed out, is what the Constitutionforbids; it was HB 11197 that was first sent to the Senateunderwent first reading, was referred to Committee onWays and Means and there discussed in relation to and incomparison with the counterpart Senate version orversions the mere formulation of which was, as alsoalready discussed, not prohibited to it and afterwardsconsidered by the Senate itself, also in connection with SB1630, on second and third readings. HB 11197 was in thetruest sense, the originating bill.


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An issue has also arisen respecting the so-called "enrolledbill doctrine" which, it is said, whatever sacrosanct statusit might originally have enjoyed, is now in bad odor withmodern scholars on account of its imputed rigidity andunrealism; it being also submitted that the rulingin Mabanag v. Lopez Vito (78 Phil. 1) and the casesreaffirming it, is no longer good law, it being based on aprovision of the Code of Civil Procedure 3long sincestricken from the statute books.

I would myself consider the "enrolled bill" theory as layingdown a presumption of so strong a character as to be wellnigh absolute or conclusive, fully in accord with thefamiliar and fundamental philosophy of separation ofpowers. The result, as far as I am concerned, is to makediscussion of the enrolled bill principle purely academic;for as already pointed out, there is no proof worthy of thename of any facts to justify its reexamination and, possibly,disregard.

The other question is, what is the nature of the powergiven to a bicameral conference committee of reconciling

differences between, or "disagreeing provisions" in, a billoriginating from the House in relation to amendmentsproposed by the Senate whether as regards some or allof its provisions? Is the mode of reconciliation, subject tofixed procedure and guidelines? What exactly can thecommittee do, or not do? Can it only clarify or reviseprovisions found in either Senate or House bill? Is itforbidden to propose additional or new provisions, evenon matters necessarily or reasonably connected with orgermane to items in the bills being reconciled?

In answer, it is postulated that the reconciliation functionis quite limited. In these cases, the conference committee

should have confined itself to reconciliation of differencesor inconsistencies only by (a) restoring provisions ofHB11197 aliminated by SB 1630, or (b) sustaining whollyor partly the Senate amendments, or (c) as a compromise,agreeing that neither provisions nor amendments becarried into the final form of HB 11197 for submission toboth chambers of the legislature.

The trouble is, it is theorized, the committee incorporatedactivities or transactions which were not within thecontemplation of both bills; it made additions anddeletions which did not enjoy the enlightenment of initialcommittee studies; it exercised what is known as an "ex

postveto power" granted to it by no law, rule or regulation,a power that in truth is denied to it by the rules of both theSenate and the House. In substantiation, the Senate rule iscited, similar to that of the House, providing that"differences shall be settled by a conference committee"whose report shall contain "detailed and sufficientlyexplicit statement of the changes in or amendments to thesubject measure, ** (to be) signed by the conferees;" aswell as the "Jefferson's Manual," adopted by the Senate assupplement to its own rules, directing that the managers ofthe conference must confine themselves to differencessubmitted to them; they may not include subjects not

within the disagreements even though germane to aquestion in issue."

It is significant that the limiting proviso in the relevantrules has been construed and applied as directory, notmandatory. During the oral argument, counsel forpetitioners admitted that the practice for decades has beenfor bicameral conference committees to include suchprovisions in the reconciled bill as they believed to be

germane or necessary and acceptable to both chamberseven if not within any of the "disagreeing provisions," andthe reconciled bills, containing such provisions hadinvariably been approved and adopted by both houses ofCongress. It is a practice, they say, that should be stoppedBut it is a practice that establishes in no uncertain mannerthe prevailing concept in both houses of Congress of thepermissible and acceptable modes of reconciliation thattheir conference committees may adopt, one whoseundesirability is not all that patent if not, indeed, incapableof unquestionable demonstration. The fact is thatconference committees only take up bills which havealready been freely and fully discussed in both chambers

of the legislature, but as to which there is need oreconciliation in view of "disagreeing provisions" betweenthem; and both chambers entrust the function oreconciling the bills to their delegates at a conferencecommittee with full awareness, and tacit consent, thatconformably with established practice unquestioninglyobserved over many years, new provisions may beincluded even if not within the "disagreeing provisions"but of which, together with other changes, they will begiven detailed and sufficiently explicit information prior tovoting on the conference committee version.

In any event, a fairly recent decision written for the Court

by Senior Associate Justice Isagani A. Cruz, promulgated onNovember 11, 1993 (G.R. No. 105371, The PhilippineJudges Association, etc., et al. v. Hon. Pete Prado, etc., et al.)should leave no doubt of the continuing vitality of theenrolled bill doctrine and give an insight into the nature othe reconciling function of bicameral conferencecommittees. In that case, a bilateral conference committeewas constituted and met to reconcile Senate Bill No. 720and House Bill No. 4200. It adopted a "reconciled" measurethat was submitted to and approved by both chambers oCongress and ultimately signed into law by the Presidentas R.A. No. 7354. A provision in this statute (removing thefranking privilege from the courts, among others) was

assailed as being an invalid amendment because it was notincluded in the original version of either the senate or thehouse bill and hence had generated no disagreementbetween them which had to be reconciled. The Court held:

While it is true that a conference committee is themechanism for compromising differencesbetween the Senate and the House, it is not limitedin its jurisdiction to this question. Its broaderfunction is described thus:


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A conference committee may dealgenerally with the subject matter or itmay be limited to resolving the precisedifferences between the two houses. Evenwhere the conference committee is not byrule limited in its jurisdiction, legislativecustom severely limits the freedom withwhich new subject matter can be insertedinto the conference bill. But occasionally a

conference committee producesunexpected results, results beyond itsmandate. These excursions occur evenwhere the rules impose strict limitationson conference committee jurisdiction.This is symptomatic of the authoritarianpower of conference committee (Davies,Legislative Law and Process: In ANutshell, 1987 Ed., p. 81).

It is a matter of record that the ConferenceCommittee Report on the bill in question wasreturned to and duly approved by both the Senate

and the House of Representatives. Thereafter, thebill was enrolled with its certification by SenatePresident Neptali A. Gonzales and Speaker RamonV. Mitra of the House of Representatives as havingbeen duly passed by both Houses of Congress. Itwas then presented to and approved by PresidentCorazon C. Aquino on April 3, 1992.

Under the doctrine of separation of powers, theCourt may not inquire beyond the certification ofthe approval of a bill from the presiding officers ofCongress. 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 thejournals like theyeas and nays on the final readingof the bill) (Mabanag v. Lopez Vito, 78 Phil. 1). Thejournals are themselves also binding on theSupreme Court, as we held in the old (but stillvalid) case ofU.S. v. Pons (34 Phil. 729), where weexplained the reason thus:

To inquire into the veracity of thejournals of the Philippine legislaturewhen they are, as we have said, clear andexplicit, would be to violate both the

letter and spirit of the organic laws bywhich the Philippine Government wasbrought into existence, to invade acoordinate and independent departmentof the Government, and to interfere withthe legitimate powers and functions of theLegislature. Applying these principles, weshall decline to look into the petitioners'charges that an amendment was madeupon the last reading of the bill thateventually R.A. No. 7354 and that copiesthereof in its final form were not

distributed among the members of eachHouse. Both the enrolled bill and thelegislative journals certify that themeasure was duly enacted i.e., inaccordance with Article VI, Sec. 26 (2) othe Constitution. We are bound by suchofficial assurances from a coordinatedepartment of the government, to whichwe owe, at the very least, a becoming

courtesy.

Withal, an analysis of the changes made by the conferencecommittee in HB 11197 and SB 1630 by way of reconcilingtheir "disagreeing provisions," assailed by petitioners asunauthorized or incongrouous reveals that many of thechanges related to actual "disagreeing provisions," andthat those that might perhaps be considered as entirelynew are nevertheless necessarily or logically connectedwith or germane to particular matters in the bills beingreconciled.

For instance, the change made by the bicameral conference

committee (BCC) concerning amendments to Section 99 ofthe National Internal Revenue Code (NIRC) the additionof "lessors of goods or properties and importers of goods" is really a reconciliation of disagreeing provisions, forwhile HB 11197 mentions as among those subject to tax"one who sells, barters, or exchanges goods or propertiesand any person who leases personal properties," SB 1630does not. The change also merely clarifies the provision byproviding that the contemplated taxpayers includes"importers." The revision as regards the amendment toSection 100, NIRC, is also simple reconciliation, beingnothing more than the adoption by the BCC of theprovision in HB 11197 governing the sale of gold to

Bangko Sentral, in contrast to SB 1630 containing no suchprovision. Similarly, only simple reconciliation wasinvolved as regards approval by the BCC of a provisiondeclaring as not exempt, the sale of real propertiesprimarily held for sale to customers or held for lease in theordinary course of trade or business, which provision isfound in HB 11197 but not in SB 1630; as regards theadoption by the BCC of a provision on life insurancebusiness, contained in SB 1630 but not found in HB 11197as regards adoption by the BCC of the provision in SB 1630for deferment of tax on certain goods and services for nolonger than 3 years, as to which there was no counterpartprovision in SB 11197; and as regards the fixing of a period

for the adoption of implementing rules, a period beingprescribed in SB 1630 and none in HB 11197.

In respect of other revisions, it would seem that questionslogically arose in the course of the discussion of specific"disagreeing provisions" to which answers were givenwhich, because believed acceptable to both houses ofCongress, were placed in the BCC draft. For exampleduring consideration ofradio and television time (Sec. 100NIRC) dealt with in both House and Senate bills, thequestion apparently came up, the relevance of which isapparent on its face, relative to satellite transmission and


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cable television time. Hence, a provision in the BCC bill onthe matter. Again, while deliberating on the definition ofgoods or properties in relation to the provision subjectingsales thereof to tax, a question apparently arose, logicallyrelevant, about real properties intended to be sold by aperson in economic difficulties, or because he wishes tobuy a car, i.e., not as part of a business, the BCC evidentlyresolved to clarify the matter by excluding from the tax,"real properties held primarily for sale to customers or held

for lease in the ordinary course of business." And in thecourse of consideration of the term,sale or exchange ofservices (Sec 102, NIRC), the inquiry most probably wasposed as to whether the term should be understood asincluding other services: e.g., services of lessors ofproperty whether real or personal, of warehousemen, ofkeepers of resthouses, pension houses, inns, resorts, or ofcommon carriers, etc., and presumably the BCC resolved toclarify the matter by including the services just mentioned.Surely, changes of this nature are obviously to be expectedin proceedings before bicameral conference committeesand may even be considered grist for their mill, given thehistory of such BCCs and their general practice here andabroad

In any case, all the changes and revisions, and deletions,made by the conference committee were all subsequentlyconsidered by and approved by both the Senate and theHouse, meeting and voting separately. It is an unacceptabletheorization, to repeat, that when the BCC report and itsproposed bill were submitted to the Senate and the House,the members thereof did not bother to read, or what isworse, having read did not understand, what was beforethem, or did not realize that there were new provisions inthe reconciled version unrelated to any "disagreeingprovisions," or that said new provisions or revisions were

effectively concealed from them

Moreover, it certainly was entirely within the power andprerogative of either legislative chamber to reject the BCCbill and require the organization of a new bicameralconference committee. That this option was not exercisedby either house only proves that the BCC measure wasfound to be acceptable as in fact it was approved andadopted by both chambers.

I vote to DISMISS the petitions for lack of merit.

PADILLA, J.:

I

The original VAT law and the expanded VAT law

In Kapatiran v. Tan, 1where the ponente was the writer ofthis Separate Opinion, a unanimous Supreme Courtenbanc upheld the validity of the original VAT law (ExecutiveOrder No. 273, approved on 25 July 1987). It will, in myview, be pointless at this time to re-open argumentsadvanced in said case as to why said VAT law was invalid,and it will be equally redundant to re-state the principles

laid down by the Court in the same case affirming thevalidity of the VAT law as a tax measure. And yet, the samearguments are, in effect, marshalled against the merits andsubstance of the expanded VAT law (Rep. Act. No. 7716approved on 5 May 1994). The same Supreme Courtdecision should therefore dispose, in the main, of sucharguments, for the expanded VAT law is predicatedbasically on the same principles as the original VAT lawexcept that now the tax base of the VAT imposition has

been expanded or broadened.

It only needs to be stated what actually should beobvious that a tax measure, like the expanded VAT law(Republic Act. No. 7716), is enacted by Congress andapproved by the President in the exercise of the State'spower to tax, which is an attribute of sovereignty. Andwhile the power to tax, if exercised without limit, is apower to destroy, and should, therefore, not be allowed insuch form, it has to be equally recognized that the powerto tax is an essential right of government. Without taxesbasic services to the people can come to a halt; economicprogress will be stunted, and, in the long run, the people

will suffer the pains of stagnation and retrogression.

Consequently, upon careful deliberation, I have nodifficulty in reaching the conclusion that the expanded VATlaw comes within the legitimate powerof the state to taxAnd as I had occasion to previously state:

Constitutional Law, to begin with, is concernedwith power not political convenience, wisdomexigency, or even necessity. Neither the Executivenor the legislative (Commission on Appointments)can create power where the Constitution confersnone. 2

Likewise, in the first VAT case, I said:

In any event, if petitioners seriously believe thatthe adoption and continued application of the VATare prejudicial to the general welfare or theinterests of the majority of the people, they shouldseek, recourse and relief from the politicabranches of the government. The Court, followingthe time-honored doctrine of separation ofpowers, cannot substitute its judgment for that ofthe President (and Congress) as to the wisdomjustice and advisability of the adoption of theVAT. 3

This Court should not, as a rule, concern itself withquestions of policy, much less, economic policy. That isbetter left to the two (2) political branches of governmentThat the expanded VAT law is unwise, unpopular and evenanti-poor, among other things said against it, arearguments and considerations within the realm of policy-debate, which only Congress and the Executive have theauthority to decisively confront, alleviate, remedy andresolve.


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II

The procedure followed in the approval of Rep. Act No.7716

Petitioners however posit that the present case raises afar-reaching constitutional question which the Court isduty-bound to decide under its expanded jurisdiction inthe 1987 Constitution. 4Petitioners more specifically

question and impugn the mannerby which the expandedVAT law (Rep. Act. No. 7716) was approved by Congress.They contend that it was approved in violation of theConstitution from which fact it follows, as a consequence,that the law is null and void. Main reliance of thepetitioners in their assault in Section 24, Art. VI of theConstitution which provides:

Sec. 24. All appropriation, revenue or tariff bills,bills authorizing increase of the public debt, bill oflocal application, and private bills shall originateexclusively in the House of Representatives, butthe Senate may propose or concur with

amendments.

While it should be admitted at the outset that there was norigorous and strict adherence to the literal command of theabove provision, it may however be said, after carefulreflection, that there was substantial compliance with theprovision.

There is no question that House Bill No. 11197 expandingthe VAT law originated from the House of Representatives.It is undeniably a House measure. On the other hand,Senate Bill No. 1129, also expanding the VAT law,originated from the Senate. It is undeniably a Senateme

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