Tolentino v.

Secretary of Finance - 249 SCRA 635

FACTS:
Petitioners (Tolentino, Kilosbayan, Inc., Philippine Airlines, Roco, and
Chamber of Real Estate and Builders Association) seek reconsideration of the
Courts previous ruling dismissing the petitions filed for the declaration of
unconstitutionality of R.A. No. 7716, the Expanded Value-Added Tax Law.
Petitioners contend that the R.A. did not originate exclusively in the HoR as
required by Article 6, Section 24 of the Constitution. The Senate allegedly did
not pass it on second and third readings, instead passing its own version.
Petitioners contend that it should have amended the House bill by striking
out the text of the bill and substituting it with the text of its own bill, so as to
conform with the Constitution.
ISSUE:
W/N the R.A. is unconstitutional for having originated from the Senate, and
not the HoR.
HELD:
Petition is unmeritorious. The enactment of the Senate bill has not been the
first instance where the Senate, in the exercise of its power to propose
amendments to bills (required to originate in the House), passed its own
version. An amendment by substitution (striking out the text and substituting
it), as urged by petitioners, concerns a mere matter of form, and considering
the petitioner has not shown what substantial difference it would make if
Senate applied such substitution in the case, it cannot be applied to the case
at bar. While the aforementioned Constitutional provision states that bills
must originate exclusively in the HoR, it also adds, but the Senate may
propose or concur with amendments. The Senate may then propose an
entirely new bill as a substitute measure. Petitioners erred in assuming the
Senate version to be an independent and distinct bill. Without the House bill,
Senate could not have enacted the Senate bill, as the latter was a mere
amendment of the former. As such, it did not have to pass the Senate on
second and third readings.
Petitioners question the signing of the President on both bills, to support their
contention that such are separate and distinct. The President certified the
bills separately only because the certification had to be made of the version
of the same revenue bill which AT THE MOMENT was being considered.
Petitioners question the power of the Conference Committee to insert new
provisions. The jurisdiction of the conference committee is not limited to
resolving differences between the Senate and the House. It may propose an
entirely new provision, given that such are germane to the subject of the
conference, and that the respective houses of Congress subsequently
approve its report.

Petitioner PAL contends that the amendment of its franchise by the

withdrawal of its exemption from VAT is not expressed in the title of the law,
thereby violating the Constitution. The Court believes that the title of the R.A.
satisfies the Constitutional Requirement.

Petitioners claim that the R.A. violates their press freedom and religious
liberty, having removed them from the exemption to pay VAT. Suffice it to
say that since the law granted the press a privilege, the law could take back
the privilege anytime without offense to the Constitution. By granting
exemptions, the State does not forever waive the exercise of its sovereign
prerogative.
Lastly, petitioners contend that the R.A. violates due process, equal
protection and contract clauses and the rule on taxation. Petitioners fail to
take into consideration the fact that the VAT was already provided for in E.O.
No. 273 long before the R.A. was enacted. The latter merely EXPANDS the
base of the tax. Equality and uniformity in taxation means that all taxable
articles or kinds of property of the same class be taxed at the same rate, the
taxing power having authority to make reasonable and natural classifications
for purposes of taxation. It is enough that the statute applies equally to all
persons, forms and corporations placed in s similar situation.

Tolentino v Sec. of Finance

Facts:
House of Rep. filed House Bill 11197 (An Act Restructuring the VAT System to Widen its Tax
Base and Enhance its Admin., Amending for these Purposes)
Upon receipt of Senate, Senate filed another bill completely different from that of the House Bill
Senate finished debates on the bill and had the 2nd and 3rd reading of the Bill on the same day
Bill was deliberated upon in the Conference Committee and become enrolled bill which
eventually became the EVAT law.
Procedural Issue:
(1) WoN RA 7716 originated exclusively from the House of Rep. in accordance with sec 24, art 6 of
Consti
(2) WoN the Senate bill violated the three readings on separate days requirement of the Consti
(3) WoN RA 7716 violated sec 26(1), art 6 - one subject, one title rule.
NOTE: This case was filed by PAL because before the EVAT Law, they were exempt from taxes.
After the passage of EVAT, they were already included. PAL contended that neither the House or
Senate bill provided for the removal of the exemption from taxes of PAL and that it was inly made
after the meeting of the Conference Committee w/c was not expressed in the title of RA 7166
Held:
(1) YES! Court said that it is not the law which should originate from the House of Rep, but the
revenue bill which was required to originate from the House of Rep. The inititiative must ocme from

the Lower House because they are elected in the district level meaning they are expected to be
more sensitive to the needs of the locality.
Also, a bill originating from the Lower House may undergo extensive changes while in the Senate.
Senate can introduce a separate and distinct bill other than the one the Lower House proposed. The
Constitution does not prohibit the filing in the Senate of a substitute bill in anticipation of its receipt of
the House bill, so long as action by Senate is withheld pending the receipt of the House bill.
(2) NO. The Pres. certified that the Senate bill was urgent. Presidential certification dispensed the
requirement not only of printing but also reading the bill in 3 separate days. In fact, the Senate
accepted the Pres. certification
(3) No. Court said that 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. It is also in the power of Congress to amend, alter, repeal grant of franchises for operation of
public utility when the common good so requires.
One subject rule is intended to prevent surprise upon Congress members and inform people of
pending legislation. In the case of PAL, they did not know of their situation not because of any defect
in title but because they might have not noticed its publication until some event calls attention to its
existence.

TOLENTINO VS. THE SECRETARY OF FINANCE Case Digest

ARTURO M. TOLENTINO VS. THE SECRETARY OF FINANCE and THE COMMISSIONER OF
INTERNAL REVENUE
1994 Aug 25
G.R. No. 115455
235 SCRA 630
FACTS: The valued-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 money of 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 widen the tax base
of the existing VAT system and enhance its administration by amending the National Internal
Revenue Code.
The Chamber of Real Estate and Builders Association (CREBA) contends that the imposition of VAT
on sales and leases by virtue of contracts entered into prior to the effectivity of the law would violate
the constitutional provision of non-impairment of contracts.
ISSUE: Whether R.A. No. 7716 is unconstitutional on ground that it violates the contract clause
under Art. III, sec 10 of the Bill of Rights.
RULING: No. The Supreme Court the contention of CREBA, that the imposition of the 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 of non-impairment of contracts, is only slightly less abstract

but nonetheless hypothetical. 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. 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.
Such is not the case of PAL in G.R. No. 115852, and the Court does 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.
Further, the Supreme Court held the validity of Republic Act No. 7716 in its formal and substantive
aspects as this has been raised in the various cases before it. To sum up, the Court holds:
(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 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 are DISMISSED.
Tolentino vs. Secretary of Finance G.R. No. 115455, August 25, 1994
Sunday,
January
25,
2009
Posted
Labels: Case Digests, Political Law

by Coffeeholic

Writes

Facts: 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. RA 7716 seeks to widen the tax base of the existing VAT
system and enhance its administration by amending the National Internal Revenue Code. There are
various suits challenging the constitutionality of RA 7716 on various grounds.
One contention is that RA 7716 did not originate exclusively in the House of Representatives as
required by Art. VI, Sec. 24 of the Constitution, because it is in fact the result of the consolidation of 2
distinct bills, H. No. 11197 and S. No. 1630. There is also a contention that S. No. 1630 did not pass 3
readings as required by the Constitution.
Issue: Whether or not RA 7716 violates Art. VI, Secs. 24 and 26(2) of the Constitution
Held: The argument that RA 7716 did not originate exclusively in the House of Representatives as
required by Art. VI, Sec. 24 of the Constitution 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. 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 Senates power not only to concur with amendments but also to propose
amendments. 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. 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 next argument of the petitioners was that S. No. 1630 did not pass 3 readings on separate days
as required by the Constitution because the second and third readings were done on the same day.
But this was because the 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.
That upon the certification of a bill by the President the requirement of 3 readings on separate days
and of printing and distribution can be dispensed with is supported by the weight of legislative
practice.
*****
Tolentino vs. Secretary of Finance
Facts: These

are motions seeking reconsideration of our decision dismissing the petitions filed in
these cases for the declaration of unconstitutionality of R.A. No. 7716, otherwise known as the
Expanded Value-Added Tax Law. Now it is contended by the PPI that by removing the
exemption of the press from the VAT while maintaining those granted to others, the law
discriminates against the press. At any rate, it is averred, "even nondiscriminatory taxation of
constitutionally guaranteed freedom is unconstitutional."
Issue: Does sales tax on bible sales violative of religious freedom?
Held: No. The Court was speaking in that case of a license tax, which, unlike an ordinary tax, is mainly for regulation.
Its imposition on the press is unconstitutional because it lays a prior restraint on the exercise of its right. Hence,
although its application to others, such those selling goods, is valid, its application to the press or to religious groups,
such as the Jehovah's Witnesses, in connection with the latter's sale of religious books and pamphlets, is
unconstitutional. As the U.S. Supreme Court put it, "it is one thing to impose a tax on income or property of a
preacher. It is quite another thing to exact a tax on him for delivering a sermon."
The VAT is, however, different. It is not a license tax. It is not a tax on the exercise of a privilege, much less a
constitutional right. It is imposed on the sale, barter, lease or exchange of goods or properties or the sale or exchange
of services and the lease of properties purely for revenue purposes. To subject the press to its payment is not to
burden the exercise of its right any more than to make the press pay income tax or subject it to general regulation is
not to violate its freedom under the Constitution