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*
G.R. No. 115455. August 25, 1994.

ARTURO M. TOLENTINO, petitioner, vs. THE SECRETARY


OF FINANCE and THE COMMISSIONER OF INTERNAL
REVENUE, respondents.
*
G.R. No. 115525. August 25, 1994.

JUAN T. DAVID, petitioner, vs. TEOFISTO T. GUINGONA, JR., as


Executive Secretary; ROBERTO DE OCAMPO, as Secretary of
Finance; LIWAYWAY VINZONS-CHATO, as Commissioner of
Internal Revenue; and their AUTHORIZED AGENTS OR
REPRESENTATIVES, respondents.
*
G.R. No. 115543. August 25, 1994.

RAUL S. ROCO and the INTEGRATED BAR OF THE


PHILIPPINES, petitioners, vs. THE SECRETARY OF THE
DEPARTMENT OF FINANCE; THE COMMISSIONERS OF
THE BUREAU OF INTERNAL REVENUE AND BUREAU OF
CUSTOMS, respondents.

_______________

* EN BANC.

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Tolentino vs. Secretary of Finance

G.R. No. 115544. August 25, 1994.*

PHILIPPINE PRESS INSTITUTE, INC.; EGP PUBLISHING CO.,


INC.; KAMAHALAN 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 BUILDERS


ASSOCIATIONS, INC., (CREBA), petitioner, vs. THE
COMMISSIONER OF INTERNAL REVENUE, respondent.

G.R. No. 115781. August 25, 1994.*

KILOSBAYAN, INC., JOVITO R. SALONGA, CIRILO A. RIGOS,


ERME CAMBA, EMILIO C. CAPULONG, JR., JOSE T. APOLO,
EPHRAIM TENDERO, FERNANDO SANTIAGO, JOSE
ABCEDE, CHRISTINE TAN, FELIPE L. GOZON, RAFAEL G.
FERNANDO, RAOUL V. VICTORINO, JOSE CUNANAN,
QUINTIN S. DOROMAL, MOVEMENT OF ATTORNEYS FOR
BROTHERHOOD, INTEGRITY AND NATIONALISM, INC.
(“MABINI”), FREEDOM FROM DEBT COALITION, INC.,
PHILIPPINE BIBLE SOCIETY, INC., and WIGBERTO TAÑADA,
petitioners, vs. THE EXECUTIVE SECRETARY, THE
SECRETARY OF FINANCE, THE COMMISSIONER OF
INTERNAL REVENUE and THE COMMISSIONER OF
CUSTOMS, respondents.

G.R. No. 115852. August 25, 1994.*

PHILIPPINE AIRLINES, INC. petitioner, vs. THE SECRETARY


OF FINANCE, and COMMISSIONER OF INTERNAL
REVENUE, respondents.

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Tolentino vs. Secretary of Finance

G.R. No. 115873. August 25, 1994.*

COOPERATIVE UNION OF THE PHILIPPINES, petitioners, vs.


HON. LIWAYWAY V. CHATO, in her capacity as the
Commissioner of Internal Revenue, HON. TEOFISTO T.
GUINGONA, JR., in his capacity as Executive Secretary, and
HON. ROBERTO B. DE OCAMPO, in his capacity as Secretary of
Finance, respondents.

G.R. No. 115931. August 25, 1994.*

PHILIPPINE EDUCATIONAL PUBLISHERS ASSOCIATION,


INC., and ASSOCIATION OF PHILIPPINE BOOKSELLERS,
petitioners, vs. HON. ROBERTO B. DE OCAMPO, as the
Secretary of Finance; HON. LIWAYWAY V. CHATO, as the
Commissioner of Internal Revenue and HON. GUILLERMO
PARAYNO, JR., in his capacity as the Commissioner of Customs,
respondents.

Constitutional Law; Statutes; Taxation; Origin of revenue bills; A bill


originating in the House of Representatives may undergo such extensive
changes in the Senate that the result may be a rewriting of the whole; As a
result of the Senate action, a distinct bill may be produced and to insist that
a revenue statute must substantially be the same as the House bill would be
to deny the Senate’s power not only to “concur with amendments” but also
to “propose amendments.”—Petitioners’ contention is that Republic Act
No. 7716 did not “originate exclusively” in the House of Representatives as
required by Art. VI, § 24 of the Constitution, because it is in fact the result
of the consolidation of two distinct bills, H. No. 11197 and S. No. 1630. In
this connection, petitioners point out that although Art. VI, § 24 was
adopted from the American Federal Constitution, it is notable in two
respects: the verb “shall originate” is qualified in the Philippine Constitution
by the word “exclusively” and the phrase “as on other bills” in the American
version is omitted. This means, according to them, that to be considered as
having originated in the House, Republic Act No. 7716 must retain the
essence of H. No. 11197. This argument will not bear analysis. To begin
with, it is not the law—but the revenue bill—which is required by the
Constitution to “originate exclusively” in the House of Representatives. It is
important to emphasize this, because a bill originating in the House may
undergo such extensive changes in the Senate that the result may be a
rewriting of the whole. The possibility of a third version by the conference
committee will be discussed later. At this point, what is important to

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note is that, as a result of the Senate action, a distinct bill may be produced.
To insist that a revenue statute—and not only the bill which initiated the
legislative process culminating in the enactment of the law—must
substantially be the same as the House bill would be to deny the Senate’s
power not only to “concur with amendments” but also to “propose
amendments.” It would be to violate the coequality of legislative power of
the two houses of Congress and in fact make the House superior to the
Senate.
Same; Same; Same; Same; Legislative power is vested in the Congress
of the Philippines, consisting of “a Senate and a House of Representatives,”
not in any particular chamber.—The contention that the constitutional
design is to limit the Senate’s power in respect of revenue bills in order to
compensate for the grant to the Senate of the treaty-ratifying power and
thereby equalize its powers and those of the House overlooks the fact that
the powers being compared are different. We are dealing here with the
legislative power which under the Constitution is vested not in any
particular chamber but in the Congress of the Philippines, consisting of “a
Senate and a House of Represen-tatives.” The exercise of the treaty-
ratifying power is not the exercise of legislative power. It is the exercise of a
check on the executive power. There is, therefore, no justification for
comparing the legislative powers of the House and of the Senate on the
basis of the possession of such nonlegislative power by the Senate. The
possession of a similar power by the U.S. Senate has never been thought of
as giving it more legislative powers than the House of Representatives.
Same; Same; Same; Same; There is really no difference between the
Senate preserving the House Bill up to the enacting clause and then writing
its own version following the enacting clause and, on the other hand,
separately presenting a bill of its own on the same subject matter.—It is
insisted, however, that S. No. 1630 was passed not in substitution of H. No.
11197 but of another Senate bill (S. No. 1129) earlier filed and that what the
Senate did was merely to “take [H. No. 11197] into consideration” in
enacting S. No. 1630. There is really no difference between the Senate
preserving H. No. 11197 up to the enacting clause and then writing its own
version following the enacting clause (which, it would seem, petitioners
admit is an amendment by substitution), and, on the other hand, separately
presenting a bill of its own on the same subject matter. In either case the
result are two bills on the same subject.
Same; Same; Same; Same; The Constitution simply means 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

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must come from the House of Representatives and that it does not prohibit
the filing in the Senate of a substitute bill in anticipation of its receipt of the
bill from the House.—Indeed, what the Constitution simply means is that the
initiative for filing revenue, tariff, or tax bills, bills authorizing an increase
of the public debt, private bills and bills of local application must come
from the House of Representatives on the theory that, elected as they are
from the districts, the members of the House can be expected to be more
sensitive to the local needs and problems. On the other hand, the senators,
who are elected at large, are expected to approach the same problems from
the national perspective. Both views are thereby made to bear on the
enactment of such laws. Nor does the Constitution prohibit the filing in the
Senate of a substitute bill in anticipation of its receipt of the bill from the
House, so long as action by the Senate as a body is withheld pending receipt
of the House bill.
Same; Same; Presidential certification on urgency of a bill dispenses
with the requirement not only of printing but also that of reading the bill on
separate days.—The presidential certification dispensed with the
requirement not only of printing but also that of reading the bill on separate
days. The phrase “except when the President certifies to the necessity of its
immediate enactment, etc.” in Art. VI, § 26(2) qualifies the two stated
conditions before a bill can become a law: (i) the bill has passed three
readings on separate days and (ii) it has been printed in its final form and
distributed three days before it is finally approved. In other words, the
“unless” clause must be read in relation to the “except” clause, because the
two are really coordinate clauses of the same sentence. To construe the
“except” clause as simply dispensing with the second requirement in the
“unless” clause (i.e., printing and distribution three days before final
approval) would not only violate the rules of grammar. It would also negate
the very premise of the “except” clause: the necessity of securing the
immediate enactment of a bill which is certified in order to meet a public
calamity or emergency. For if it is only the printing that is dispensed with by
presidential certification, the time saved would be so negligible as to be of
any use in insuring immediate enactment. It may well be doubted whether
doing away with the necessity of printing and distributing copies of the bill
three days before the third reading would insure speedy enactment of a law
in the face of an emergency requiring the calling of a special election for
President and Vice-President. Under the Constitution such a law is required
to be made within seven days of the convening of Congress in emergency
session.

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Same; Same; Judicial Review; While the sufficiency of the factual basis
of the suspension of the writ of habeas corpus or declaration of martial law
is subject to judicial review because basic rights of individuals may be at
hazard, the factual basis of presidential certification of bills, which involves
doing away with procedural requirements designed to insure that bills are
duly considered by members of Congress, certainly should elicit a different
standard of review.—It is nonetheless urged that the certification of the bill
in this case was invalid because there was no emergency, the condition
stated in the certification of a “growing budget deficit” not being an unusual
condition in this country. It is noteworthy that no member of the Senate saw
fit to controvert the reality of the factual basis of the certification. To the
contrary, by passing S. No. 1630 on second and third readings on March 24,
1994, the Senate accepted the President’s certification. Should such certifi-
cation be now reviewed by this Court, especially when no evidence has been
shown that, because S. No. 1630 was taken up on second and third readings
on the same day, the members of the Senate were deprived of the time
needed for the study of a vital piece of legislation? The sufficiency of the
factual basis of the suspension of the writ of habeas corpus or declaration of
martial law under Art. VII, § 18, or the existence of a national emergency
justifying the delegation of extraordinary powers to the President under Art.
VI, § 23(2), is subject to judicial review because basic rights of individuals
may be at hazard. But the factual basis of presidential certification of bills,
which involves doing away with procedural requirements designed to insure
that bills are duly considered by members of Congress, certainly should
elicit a different standard of review.
Same; Same; Bicameral Conference Committee; A third version of the
bill may result from the conference committee, which is considered an
“amendment in the nature of a substitute,” the only requirement being that
the third version be germane to the subject of the House and Senate bills.—
As to the possibility of an entirely new bill emerging out of a Conference
Committee, it has been explained: Under congressional rules of procedure,
conference committees are not expected to make any material change in the
measure at issue, either by deleting provisions to which both houses have
already agreed or by inserting new provisions. But this is a difficult
provision to enforce. Note the problem when one house amends a proposal
originating in either house by striking out everything following the enacting
clause and substituting provisions which make it an entirely new bill. The
versions are now altogether different, permitting a conference committee to
draft essentially a new bill . . . . The result is a third version, which is
considered an “amendment in the nature of a substitute,” the only
requirement for

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which being that the third version be germane to the subject of the House
and Senate bills.
Same; Same; Same; The report of the conference committee needs the
approval of both houses of Congress to become valid as an act of the
legislative department.—Indeed, this Court recently held that it is within the
power of a conference committee to include in its report an entirely new
provision that is not found either in the House bill or in the Senate bill. If the
committee can propose an amendment consisting of one or two provisions,
there is no reason why it cannot propose several provisions, collectively
considered as an “amendment in the nature of a substitute,” so long as such
amendment is germane to the subject of the bills before the committee.
After all, its report was not final but needed the approval of both houses of
Congress to become valid as an act of the legislative department. The charge
that in this case the Conference Committee acted as a third legislative
chamber is thus without any basis.
Same; Same; Same; Separation of Powers; It is common place in
Congress that conference committee reports include new matters which,
though germane, have not been committed to the committee, and if a change
is desired in the practice, it must be sought in Congress since this question
is not covered by any constitutional provision but is only an internal rule of
each house.—To be sure, nothing in the Rules limits a conference committee
to a consideration of conflicting provisions. But Rule XLIV, § 112 of the
Rules of the Senate is cited to the effect that “If there is no Rule applicable
to a specific case the precedents of the Legislative Department of the
Philippines shall be resorted to, and as a supplement of these, the Rules
contained in Jefferson’s Manual.” The following is then quoted from the
Jefferson’s Manual: The managers of a conference must confine themselves
to the differences committed to them . . . and may not include subjects not
within disagreements, even though germane to a question in issue. Note
that, according to Rule XLIX, § 112, in case there is no specific rule
applicable, resort must be to the legislative practice. The Jefferson’s Manual
is resorted to only as supplement. It is common place in Congress that
conference committee reports include new matters which, though germane,
have not been committed to the committee. This practice was admitted by
Senator Raul S. Roco, petitioner in G.R. No. 115543, during the oral
argument in these cases. Whatever, then, may be provided in the Jefferson’s
Manual must be considered to have been modified by the legislative
practice. If a change is desired in the practice it must be sought in Congress
since this question is not covered by any constitutional provision but is only
an internal rule of each house. Thus, Art. VI, §

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16(3) of the Constitution provides that “Each House may determine the
rules of its proceedings . . . .”
Same; Same; Same; Same; Bill-Drafting; The use of brackets and
capital letters to indicate changes is a standard practice in bill-drafting;
The Supreme Court’s concern is with the procedural requirements of the
Constitution for the enactment of laws, not the enforcement of internal Rules
of Congress since “parliamentary rules are merely procedural and with
their observance the courts have no concern.”—This observation applies to
the other contention that the Rules of the two chambers were likewise
disregarded in the preparation of the Conference Committee Report because
the Report did not contain a “detailed and sufficiently explicit statement of
changes in, or amendments to, the subject measure.” The Report used
brackets and capital letters to indicate the changes. This is a standard
practice in bill-drafting. We cannot say that in using these marks and
symbols the Committee violated the Rules of the Senate and the House.
Moreover, this Court is not the proper forum for the enforcement of these
internal Rules. To the contrary, as we have already ruled, “parliamentary
rules are merely procedural and with their observance the courts have no
concern.” Our concern is with the procedural requirements of the
Constitution for the enactment of laws. As far as these requirements are
concerned, we are satisfied that they have been faithfully observed in these
cases.
Same; Same; Same; Same; The three-reading requirement refers only
to bills introduced for the first time in either house of Congress, not to the
conference committee report.—Art. VI, § 26(2) must, therefore, be
construed as referring only to bills introduced for the first time in either
house of Congress, not to the conference committee report. For if the
purpose of requiring three readings is to give members of Congress time to
study bills, it cannot be gainsaid that H. No. 11197 was passed in the House
after three readings; that in the Senate it was considered on first reading and
then referred to a committee of that body; that although the Senate
committee did not report out the House bill, it submitted a version (S. No.
1630) which it had prepared by “taking into consideration” the House bill;
that for its part the Conference Committee consolidated the two bills and
prepared a compromise version; that the Conference Committee Report was
thereafter approved by the House and the Senate, presumably after
appropriate study by their members. We cannot say that, as a matter of fact,
the members of Congress were not fully informed of the provisions of the
bill. The allegation that the Conference Committee usurped the legislative
power of Congress is, in our view, without warrant in fact and in law.

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Same; Same; Same; Same; Enrolled Bill Doctrine; An enrolled copy of
a bill is conclusive not only of its provisions but also of its due enactment.—
Whatever doubts there may be as to the formal validity of Republic Act No.
7716 must be resolved in its favor. Our cases manifest firm adherence to the
rule that an enrolled copy of a bill is conclusive not only of its provisions
but also of its due enactment. Not even claims that a proposed constitutional
amendment was invalid because the requisite votes for its approval had not
been obtained or that certain provisions of a statute had been “smuggled” in
the printing of the bill have moved or persuaded us to look behind the
proceedings of a coequal branch of the government. There is no reason now
to depart from this rule.
Same; Same; Same; Same; Same; While the “enrolled bill” rule is not
absolute, the Supreme Court should decline the invitation to go behind the
enrolled copy of the bill where allegations that the constitutional procedures
for the passage of bills have not been observed have no more basis than
another allegation that the Conference Committee “surreptitiously”
inserted provisions into a bill which it had prepared.—No claim is here
made that the “enrolled bill” rule is absolute. In fact in one case we “went
behind” an enrolled bill and consulted the Journal to determine whether
certain provisions of a statute had been approved by the Senate in view of
the fact that the President of the Senate himself, who had signed the enrolled
bill, admitted a mistake and withdrew his signature, so that in effect there
was no longer an enrolled bill to consider. But where allegations that the
constitutional procedures for the passage of bills have not been observed
have no more basis than another allegation that the Conference Committee
“surreptitiously” inserted provisions into a bill which it had prepared, we
should decline the invitation to go behind the enrolled copy of the bill. To
disregard the “enrolled bill” rule in such cases would be to disregard the
respect due the other two departments of our government.
Same; Same; Titles of Bills; The constitutional requirement that every
bill passed by Congress shall embrace only one subject which shall be
expressed in its title is intended to prevent surprise upon the members of
Congress and to inform the people of pending legislation so that, if they
wish to, they can be heard regarding it.—The question is whether this
amendment of § 103 of the NIRC is fairly embraced in the title of Republic
Act No. 7716, although no mention is made therein of P.D. No. 1590 as
among those which the statute amends. We think it is, since the title states
that the purpose of the statute is to expand the VAT system, and one way of
doing this is to widen its base by withdrawing some of the exemptions
granted before. To insist that P.D. No. 1590 be

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mentioned in the title of the law, in addition to § 103 of the NIRC, in which
it is specifically referred to, would be to insist that the title of a bill should
be a complete index of its content. The constitutional requirement that every
bill passed by Congress shall embrace only one subject which shall be
expressed in its title is intended to prevent surprise upon the members of
Congress and to inform the people of pending legislation so that, if they
wish to, they can be heard regarding it. If, in the case at bar, petitioner did
not know before that its exemption had been withdrawn, it is not because of
any defect in the title but perhaps for the same reason other statutes,
although published, pass unnoticed until some event somehow calls
attention to their existence. Indeed, the title of Republic Act No. 7716 is not
any more general than the title of PAL’s own franchise under P.D. No. 1590,
and yet no mention is made of its tax exemption.
Same; Same; Same; The trend is to construe the constitutional
requirement in such a manner that courts do not unduly interfere with the
enactment of necessary legislation.—The trend in our cases is to construe
the constitutional requirement in such a manner that courts do not unduly
interfere with the enactment of necessary legislation and to consider it
sufficient if the title expresses the general subject of the statute and all its
provisions are germane to the general subject thus expressed.
Same; Same; Public Utilities; Franchises; The grant of a franchise for
the operation of a public utility is subject to amendment, alteration or
repeal by Congress when the common good so requires.—In contrast, in the
case at bar, Republic Act No. 7716 expressly amends PAL’s franchise (P.D.
No. 1590) by specifically excepting from the grant of exemptions from the
VAT PAL’s exemption under P.D. No. 1590. This is within the power of
Congress to do under Art. XII, § 11 of the Constitution, which provides that
the grant of a franchise for the operation of a public utility is subject to
amendment, alteration or repeal by Congress when the common good so
requires.
Same; Taxation; Expanded Value Added Tax Law; Bill of Rights;
Freedom of Expression; Even with due recognition of its high estate and its
importance in a democratic society, the press is not immune from general
regulation by the State.—To be sure, we are not dealing here with a statute
that on its face operates in the area of press freedom. The PPI’s claim is
simply that, as applied to newspapers, the law abridges press freedom. Even
with due recognition of its high estate and its importance in a democratic
society, however, the press is not immune from general regulation by the
State.

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Same; Same; Same; Same; Same; Equal Protection Clause; The VAT
law would perhaps be open to the charge of discriminatory treatment if the
only privilege withdrawn had been that granted to the press.—What it
contends is that by withdrawing the exemption previously granted to print
media transactions involving printing, publication, importation or sale of
newspapers, Republic Act No. 7716 has singled out the press for
discriminatory treatment and that within the class of mass media the law
discriminates against print media by giving broadcast media favored
treatment. We have carefully examined this argument, but we are unable to
find a differential treatment of the press by the law, much less any censorial
motivation for its enactment. If the press is now required to pay a value-
added tax on its transactions, it is not because it is being singled out, much
less targeted, for special treatment but only because of the removal of the
exemption previously granted to it by law. The withdrawal of exemption is
all that is involved in these cases. Other transactions, likewise previously
granted exemption, have been delisted as part of the scheme to expand the
base and the scope of the VAT system. The law would perhaps be open to
the charge of discriminatory treatment if the only privilege withdrawn had
been that granted to the press. But that is not the case.
Same; Same; Same; Same; Same; Same; There is a reasonable basis
for the classification and different treatment between print media and
broadcast media.—Nor is impermissible motive shown by the fact that print
media and broadcast media are treated differently. The press is taxed on its
transactions involving printing and publication, which are different from the
transactions of broadcast media. There is thus a reasonable basis for the
classification.
Same; Same; Same; Same; Freedom of Religion; The Free Exercise of
Religion Clause does not prohibit imposing a generally applicable sales and
use tax on the sale of religious materials by a religious organization.—What
has been said above also disposes of the allegations of the PBS that the
removal of the exemption of printing, publication or importation of books
and religious articles, as well as their printing and publication, likewise
violates freedom of thought and of conscience. For as the U.S. Supreme
Court unanimously held in Jimmy Swaggart Ministries v. Board of
Equalization, the Free Exercise of Religion Clause does not prohibit
imposing a generally applicable sales and use tax on the sale of religious
materials by a religious organization.
Same; Same; Same; Same; The VAT registration fee is a mere
administrative fee, one not imposed on the exercise of a privilege, much less
a constitutional right.—In this case, the fee in § 107, although a

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fixed amount (P1,000), is not imposed for the exercise of a privilege but
only for the purpose of defraying part of the cost of registration. The
registration requirement is a central feature of the VAT system. It is
designed to provide a record of tax credits because any person who is
subject to the payment of the VAT pays an input tax, even as he collects 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 a constitutional right.
Same; Same; Same; Same; Due Process; Hierarchy of Values; When
freedom of the mind is imperiled by law, it is freedom that commands a
momentum of respect and when property is imperiled, it is the lawmakers’
judgment that commands respect.—There is basis for passing upon claims
that on its face the statute violates the guarantees of freedom of speech,
press and religion. The possible “chilling effect” which it may have on the
essential freedom of the mind and conscience and the need to assure that the
channels of communication are open and operating importunately demand
the exercise of this Court’s power of review. There is, however, no
justification for passing upon the claims that the law also violates the rule
that taxation must be progressive and that it denies petitioners’ right to due
process and the equal protection of the laws. The reason for this different
treatment has been cogently stated by an eminent authority on constitutional
law thus: “[W]hen freedom of the mind is imperiled by law, it is freedom
that commands a momentum of respect; when property is imperiled it is the
lawmakers’ judgment that commands respect. This dual standard may not
precisely reverse the presumption of constitutionality in civil liberties cases,
but obviously it does set up a hierarchy of values within the due process
clause.”
Same; Same; Same; The legislature is not required to adhere to a
policy of “all or none” in choosing the subject of taxation.—On the other
hand, the CUP’s contention that Congress’ withdrawal of exemption of
producers cooperatives, marketing cooperatives, and service cooperatives,
while maintaining that granted to electric cooperatives, not only goes
against the constitutional policy to promote cooperatives as instruments of
social justice (Art. XII, § 15) but also denies such cooperatives the equal
protection of the law is actually a policy argument. The legislature is not
required to adhere to a policy of “all or none” in choosing the subject of
taxation.
Same; Same; Same; Regressivity is not a negative standard for courts
to enforce since what Congress is required by the Constitution to do is to
“evolve a progressive system of taxation.”—Indeed, regressivity

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is not a negative standard for courts to enforce. What Congress is required
by the Constitution to do is to “evolve a progressive system of taxation.”
This is a directive to Congress, just like the directive to it to give priority to
the enactment of laws for the enhancement of human dignity and the
reduction of social, economic and political inequalities (Art. XIII, § 1), or
for the promotion of the right to “quality education” (Art. XIV, § 1). These
provisions are put in the Constitution as moral incentives to legislation, not
as judicially enforceable rights.
Same; Same; Same; Contract Clause; Contracts; 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.—Only slightly less abstract
but nonetheless hypothetical is 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 that “No law impairing the obligation of contracts
shall be passed.” It is enough to say that the parties to a contract cannot,
through the exercise of prophetic discernment, fetter the exercise of the
taxing power of the State. For not only are existing laws read into contracts
in order to fix obligations as between parties, but the reservation of essential
attributes of sovereign power is also read into contracts as a basic postulate
of the legal order. The policy of protecting contracts against impairment
presupposes the maintenance of a government which retains adequate
authority to secure the peace and good order of society.
Same; Same; Same; Same; Same; Contract Clause is not a limitation
on the power of taxation save only where a tax exemption was granted for a
valid consideration.—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 we do not understand it to
make this claim. Rather, its position, as discussed above, is that the removal
of its tax exemption cannot be made by a general, but only by a specific,
law.
Same; Judicial Review; Public actions by “non-Hohfeldian” or
ideological plaintiffs are now cognizable provided they meet the standing
requirement of the Constitution; There must be before the Court a fully
developed factual record that alone can impart to its adjudication the
impact of actuality to insure that decision-making is informed and well-
grounded.—The substantive issues raised in some of the cases are presented
in abstract, hypothetical form because of the lack of a

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concrete record. We accept that this Court does not only adjudicate private
cases; that public actions by “non-Hohfeldian” or ideological plaintiffs are
now cognizable provided they meet the standing requirement of the
Constitution; that under Art. VIII, § 1, ¶ 2 the Court has a “special function”
of vindicating constitutional rights. Nonetheless the feeling cannot be
escaped that we do not have before us in these cases a fully developed
factual record that alone can impart to our adjudication the impact of
actuality to insure that decision-making is informed and well grounded.
Needless to say, we do not have power to render advisory opinions or even
jurisdiction over petitions for declaratory judgment. In effect we are being
asked to do what the Conference Committee is precisely accused of having
done in these cases—to sit as a third legislative chamber to review
legislation.
Same; Same; The duty of the Court to exercise its power of judicial
review must still be performed in the context of a concrete case or
controversy; That the other departments of the government may have
committed a grave abuse of discretion is not an independent ground for
exercising the Court’s power.—It does not add anything, therefore, to invoke
this “duty” to justify this Court’s intervention in what is essentially a case
that at best is not ripe for adjudication. That duty must still be performed in
the context of a concrete case or controversy, as Art. VIII, § 5(2) clearly
defines our jurisdiction in terms of “cases,” and nothing but “cases.” That
the other departments of the government may have committed a grave abuse
of discretion is not an independent ground for exercising our power.
Disregard of the essential limits imposed by the case and controversy
requirement can in the long run only result in undermining our authority as a
court of law. For, as judges, what we are called upon to render is judgment
according to law, not according to what may appear to be the opinion of the
day.

NARVASA, C.J., Separate Opinion:

Constitutional Law; Statutes; Origin of Revenue Bills; Origination


should have no reference to time of conception but to the affirmative act
which effectively puts the bicameral legislative procedure in motion, i.e., the
transmission by one chamber to the other of a bill for its adoption, and it
may be that in the Senate, revenue or tax measures are discussed, even
drafted, before a similar activity takes place in the House.—Exclusive
origination, I submit, should have no reference to time of conception. As a
practical matter, origination should refer to the affirmative act which
effectively puts the bicameral legislative procedure in motion, i.e., the
transmission by one chamber to the other of a bill for its adoption. This is
the purposeful act which sets the legislative machinery in operation

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to effectively lead to the enactment of a statute. Until this transmission takes


place, the formulation and discussions, or the reading for three or more
times of proposed measures in either chamber, would be meaningless in the
context of the activity leading towards concrete legislation. Unless
transmitted to the other chamber, a bill prepared by either house cannot
possibly become law. In other words, the first affirmative, efficacious step,
the operative act as it were, leading to actual enactment of a statute, is the
transmission of a bill from one house to the other for action by the latter.
This is the origination that is spoken of in the Constitution in its Article VI,
Section 24, in reference to appropriation, revenue, or tariff bills, etc. It may
be that in the Senate, revenue or tax measures are discussed, even drafted,
and this before a similar activity takes place in the House. This is of no
moment, so long as those measures or bills remain in the Senate and are not
sent over to the House. There is no origination of revenue or tax measures
by the Senate in this case. However, once the House completes the drawing
up of a similar tax measure in accordance with the prescribed procedure,
even if this is done subsequent to the Senate’s own measure—indeed, even
if this be inspired by information that a measure of the same nature or on the
same subject has been formulated in the Senate—and after third reading
transmits its bill to the Senate, there is origination by (or in) the House
within the contemplation of the Constitution.
Same; Same; Judicial Review; Supreme Court; Petitioners may not, by
raising what are concededly novel and weighty constitutional questions,
compel the Supreme Court to assume the role of a trier of facts.—The Court
will reject a case where the legal issues raised, whatever they may be,
depend for their resolution on still unsettled questions of fact. Petitioners
may not, by raising what are concededly novel and weighty constitutional
questions, compel the Court to assume the role of a trier of facts. It is on the
contrary their obligation, before raising those questions to this Court, to see
to it that all issues of fact are settled in accordance with the procedures laid
down by law for proof of facts. Failing this, petitioners would have only
themselves to blame for a peremptory dismissal.
Same; Same; “Enrolled Bill” Doctrine; Separation of Powers; There is
no proof worthy of the name of any facts to justify the reexamination and,
possibly, disregard, of the “enrolled bill” theory.—I would myself consider
the “enrolled bill” theory as laying down a presumption of so strong a
character as to be well nigh absolute or conclusive, fully in accord with the
familiar and fundamental philosophy of separation of powers. The result, as
far as I am concerned, is to make discussion of the enrolled bill principle
purely academic; for as already

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pointed out, there is no proof worthy of the name of any facts to justify its
reexamination and, possibly, disregard.
Same; Same; Bicameral Conference Committee; Both chambers of
Congress entrust the function of reconciling the bills to their delegates at a
conference committee with full awareness, and tacit consent, that new
provisions may be included even if not within the “disagreeing
provisions.”—The fact is that conference committees only take up bills
which have already been freely and fully discussed in both chambers of the
legislature, but as to which there is need of reconciliation in view of
“disagreeing provisions” between them; and both chambers entrust the
function of reconciling the bills to their delegates at a conference committee
with full awareness, and tacit consent, that conformably with established
practice unquestioningly observed over many years, new provisions may be
included even if not within the “disagreeing provisions” but of which,
together with other changes, they will be given detailed and sufficiently
explicit information prior to voting on the conference committee version.
Same; Same; Same; It is an unacceptable theorization that when the
BCC report and its proposed bill were submitted to the Senate and the
House, and the members thereof did not bother to read, or what is worse,
having read did not understand, what was before them.—In any case, all the
changes and revisions, and deletions, made by the conference committee
were all subsequently considered by and approved by both the Senate and
the House, meeting and voting separately. It is an unacceptable theorization,
to repeat, that when the BCC report and its proposed bill were submitted to
the Senate and the House, and the members thereof did not bother to read,
or what is worse, having read did not understand, what was before them, or
did not realize that there were new provisions in the reconciled version
unrelated to any “disagreeing provisions,” or that said new provisions or
revisions were effectively concealed from them. Moreover, it certainly was
entirely within the power and prerogative of either legislative chamber to
reject the BCC bill and require the organization of a new bicameral
conference committee. That this option was not exercised by either house
only proves that the BCC measure was found to be acceptable as in fact it
was approved and adopted by both chambers.

CRUZ, J., Separate Opinion:

Constitutional Law; Judicial Review; Where a specific procedure is


fixed by the Constitution itself, it should not suffice for Congress to simply
say that the rules have been observed and flatly consider the

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matter closed.—I am persuaded even now that where a specific procedure is


fixed by the Constitution itself, it should not suffice for Congress to simply
say that the rules have been observed and flatly consider the matter closed.
It does not have to be as final as that. I would imagine that the judiciary, and
particularly this Court, should be able to verify that statement and determine
for itself, through the exercise of its own powers, if the Constitution has,
indeed, been obeyed. In fact, the Court has already said that the question of
whether certain procedural rules have been followed is justiciable rather
than political because what is involved is the legality and not the wisdom of
the act in question. So we ruled in Sanidad v. Commission on Elections (73
SCRA 333) on the amendment of the Constitution; in Daza v. Singson (180
SCRA 496) on the composition of the Commission on Appointments; and in
the earlier case of Tañada v. Cuenco (100 SCRA 1101) on the organization
of the Senate Electoral Tribunal, among several other cases. By the same
token, the ascertainment of whether a bill underwent the obligatory three
readings in both Houses of Congres should not be considered an invasion of
the territory of the legislature as this would not involve an inquiry into its
discretion in approving the measure but only the manner in which the
measure was enacted.
Same; Expanded VAT Law; Bicameral Conference Committee; The
resultant enrolled bill did not originate exclusively in the House of
Representatives.—The two bills were separately introduced in their
respective Chambers. Both retained their independent existence until they
reached the bicameral conference committee where they were consolidated.
It was this consolidated measure that was finally passed by Congress and
submitted to the President of the Philippines for his approval. House Bill
No. 11197 originated in the House of Representatives but this was not the
bill that eventually became R.A. No. 7716. The measure that was signed
into law by President Ramos was the consolidation of that bill and another
bill, viz., Senate Bill No. 1630, which was introduced in the Senate. The
resultant enrolled bill thus did not originate exclusively in the House of
Representatives. The enrolled bill itself says that part of it (and it does not
matter to what extent) originated in the Senate.
Same; Same; Same; The participation of the Senate was not in
proposing or concurring with amendments but in originating its own Senate
bill which was not embodied in but merged with the House bill.—It would
have been different if the only participation of the Senate was in the
amendment of the measure that was originally proposed in the House of
Representatives. But this was not the case. The participation of the Senate
was not in proposing or concurring with

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amendments that would have been incorporated in House Bill No. 11197. Its
participation was in originating its own Senate Bill No. 1630, which was
not embodied in but merged with House Bill No. 11197. Senate Bill No.
1630 was not even an amendment by substitution, assuming this was
permissible. To “substitute” means “to take the place of; to put or use in
place of another.” Senate Bill No. 1630 did not, upon its approval, replace
(and thus eliminate) House Bill No. 11197. Both bills retained their separate
identities until they were joined or united into what became the enrolled bill
and ultimately R.A. No. 7716.

PADILLA, J., Separate Opinion:

Constitutional Law; Statutes; Origin of Revenue Bills; The approval by


the Senate of Senate Bill No. 1630, after it had considered House Bill No.
11197, may be taken as an amendment by substitution by the Senate not only
of Senate Bill No. 1129 but of House Bill No. 11197 as well.—Since the
Senate is, under the above-quoted constitutional provision, empowered to
concur with a revenue measure exclusively originating from the House, or
to propose amendments thereto, to the extent of proposing amendments by
SUBSTITUTION to the House measure, the approval by the Senate of
Senate Bill No. 1630, after it had considered House Bill No. 11197, may be
taken, in my view, as an AMENDMENT BY SUBSTITUTION by the
Senate not only of Senate Bill No. 1129 but of House Bill No. 11197 as well
which, it must be remembered, originated exclusively from the House.
Same; Same; Separation of Powers; Presidential Certification of Bills;
A becoming respect for a co-equal and coordinate department of
government points that weight and credibility be given to such Presidential
judgment.—We have here then a situation where the President did certify to
the necessity of Senate Bill No. 1630’s immediate enactment to meet an
emergency and the Senate responded accordingly. While I would be the last
to say that this Court cannot review the exercise of such power by the
President in appropriate cases ripe for judicial review, I am not prepared
however to say that the President gravely abused his discretion in the
exercise of such power as to require that this Court overturn his action. We
have been shown no fact or circumstance which would impugn the
judgment of the President, concurred in by the Senate, that there was an
emergency that required the immediate enactment of Senate Bill No. 1630.
On the other hand, a becoming respect for a co-equal and coordinate
department of government points that weight and credibility be given to
such Presidential judgment.

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Same; Bill of Rights; Freedom of Expression; R.A. 7716 in imposing a


value-added tax on circulation income of newspapers and similar
publications and on income derived from publishing advertisements in
newspapers violates Sec. 4, Art III of the Constitution.—Rep. Act No. 7716
in imposing a value-added tax on circulation income of newspapers and
similar publications and on income derived from publishing advertisements
in newspapers, to my mind, violates Sec. 4, Art. III of the Constitution.
Indeed, even the Executive Department has tried to cure this defect by the
issuance of BIR Regulation No. 11-94 precluding implementation of the tax
in this area. It should be clear, however, that the BIR regulation cannot
amend the law (Rep. Act No. 7716). Only legislation (as distinguished from
administration regulation) can amend an existing law.
Same; Same; Freedom of Religion; The imposition of the VAT on the
sale and distribution of religious articles must be struck down for being
contrary to Sec. 5, Art. III of the Constitution.—Similarly, the imposition of
the VAT on the sale and distribution of religious articles must be struck
down for being contrary to Sec. 5, Art. III of the Constitution which
provides: “Sec. 5. No law shall be made respecting an establishment of
religion, or prohibiting the free exercise thereof. The free exercise and
enjoyment of religious profession and worship, without discrimination or
preference, shall forever be allowed. No religious test shall be required for
the exercise of civil or political rights.”
Same; Same; Taxation; The inherent power of the State to tax, which is
vested in the legislature, includes the power to determine whom or what to
tax, as well as how much to tax.—CREBA which specifically assails the
10% value-added tax on the gross selling price of real properties, fails to
distinguish between a sale of real properties primarily held for sale to
customers or held for lease in the ordinary course of trade or business and
isolated sales by individual real property owners (Sec. 103[s]). That those
engaged in the business of real estate development realize great profits is of
common knowledge and need not be discussed at length here. The
qualification in the law that the 10% VAT covers only sales of real property
primarily held for sale to customers, i.e. for trade or business thus takes into
consideration a taxpayer’s capacity to pay. There is no showing that the
consequent distinction in real estate sales is arbitrary and in violation of the
equal protection clause of the Constitution. The inherent power to tax of the
State, which is vested in the legislature, includes the power to determine
whom or what to tax, as well as how much to tax. In the absence of a clear
showing that the tax violates the due process and equal protection

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clauses of the Constitution, this Court, in keeping with the doctrine of


separation of powers, has to defer to the discretion and judgment of
Congress on this point.
Same; Same; Franchises; R.A. 7716 can be considered a special law
amending PAL’s franchise.—There can be no dispute, in my mind, that the
clear intent of Congress was to modify PAL’s franchise with respect to the
taxes it has to pay. To this extent, Rep. Act No. 7716 can be considered as a
special law amending PAL’s franchise and its tax liability thereunder. That
Rep. Act No. 7716 imposes the value-added taxes on other subjects does not
make it a general law which cannot amend PD No. 1590.

VITUG, J., Separate Opinion:

Constitutional Law; Judicial Review; Separation of Powers; It is not


believed that judicial tyranny is envisioned, let alone institutionalized, by
the people in the 1987 Constitution.—I cannot yet concede to the novel
theory, so challengingly provocative as it might be, that under the 1987
Constitution the Court may now at good liberty intrude, in the guise of the
people’s imprimatur, into every affair of government. What significance can
still then remain, I ask, of the time honored and widely acclaimed principle
of separation of powers, if at every turn the Court allows itself to pass upon,
at will, the disposition of a co-equal, independent and coordinate branch in
our system of government. I dread to think of the so varied uncertainties that
such an undue interference can lead to. The respect for long standing
doctrines in our jurisprudence, nourished through time, is one of maturity
not timidity, of stability rather than quiescence. It has never occurred to me,
and neither do I believe it has been intended, that judicial tyranny is
envisioned, let alone institutionalized, by our people in the 1987
Constitution. The test of tyranny is not solely on how it is wielded but on
how, in the first place, it can be capable of being exercised. It is time that
any such perception of judicial omnipotence is corrected.

REGALADO, J., Dissenting Opinion:

Constitutional Law; Expanded VAT Law; The Senate clearly and


deliberately violated the requirements of the Constitution not only in the
origination of the bill but in the very enactment of R.A. 7716.—This writer
consequently agrees with the clearly tenable proposition of petitioners that
when the Senate passed and approved S.B. No. 1630, had it certified by the
Chief Executive, and thereafter caused its

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consideration by the bicameral conference committee in total substitution of


H.B. No. 11197, it clearly and deliberately violated the requirements of the
Constitution not only in the origination of the bill but in the very enactment
of Republic Act No. 7716. Contrarily, the shifting sands of inconsistency in
the arguments adduced for respondents betray such lack of intellectual
rectitude as to give the impression of being mere rhetorics in defense of the
indefensible.

DAVIDE, JR., J., Dissenting Opinion:

Constitutional Law; Expanded VAT Law; R.A. 7716 did not originate
exclusively in the House.—Since R.A. No. 7716 is a revenue measure, it
must originate exclusively in the House—not in the Senate. As correctly
asserted by petitioner Tolentino, on the face of the enrolled copy of R.A.
No. 7716, it is a “CONSOLIDATION OF HOUSE BILL NO. 11197 AND
SENATE BILL NO. 1630.” In short, it is an illicit marriage of a bill which
originated in the House and a bill which originated in the Senate. Therefore,
R.A. No. 7716 did not originate exclusively in the House.
Same; Same; Origin of Revenue Bills; The Senate cannot amend by
substitution with an entirely new bill of its own any bill covered by Section
24 of Article VI which the House transmitted to it because such substitution
would indirectly violate Section 24.—Since the origination is not exclusively
vested in the House of Representatives of the United States, the Senate’s
authority to propose or concur with amendments is necessarily broader. That
broader authority is further confirmed by the phrase “as on other Bills,” i.e.,
its power to propose or concur with amendments thereon is the same as in
ordinary bills. The absence of this phrase in our Constitution was clearly
intended to restrict or limit the Philippine Senate’s power to propose or
concur with amendments. In the light of the exclusivity of origination and
the absence of the phrase “as on other Bills,” the Philippine Senate cannot
amend by substitution with an entirely new bill of its own any bill covered
by Section 24 of Article VI which the House of Representatives transmitted
to it because such substitution would indirectly violate Section 24.
Same; Same; Same; Presidential Certification of Bills; The only
revenue bill which could be properly certified on permissible constitutional
grounds is the bill that was introduced in the House.—I submit, however,
that the Presidential certification is void ab initio not necessarily for the
reason adduced by petitioner Kilosbayan, Inc., but because it was addressed
to the Senate for a bill which is prohibited from originating therein. The
only bill which could be properly certified on permissible

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constitutional grounds even if it had already been transmitted to the Senate


is HB No. 11197. As earlier observed, this was not so certified, although HB
No. 9210 (one of those consolidated into HB No. 11197) was certified on 1
June 1993. Also, the certification of SB No. 1630 cannot, by any stretch of
the imagination, be extended to HB No. 11197 because SB No. 1630 did not
substitute HB No. 11197 but SB No. 1129. Considering that the certification
of SB No. 1630 is void, its approval on second and third readings in one day
violated Section 26(2), Article VI of the Constitution.
Same; Statutes; Bicameral Conference Committee; The duty of the
BCC is limited to the reconciliation of disagreeing provisions or the
resolution of differences or inconsistencies of the bills from both Houses of
Congress.—Even granting arguendo that both HB No. 11197 and SB No.
1630 had been validly approved by both chambers of Congress and validly
referred to the bicameral conference committee, the latter had very limited
authority thereon. It was created “in view of the disagreeing provisions of”
the two bills. Its duty was limited to the reconciliation of disagreeing
provisions or the resolution of differences or inconsistencies. The committee
recognized that limited authority in the opening paragraph of its Report
when it said: “The Conference Committee on the disagreeing provisions of
House Bill No. 11197 x x x and Senate Bill No. 1630 x x x.” Under such
limited authority, it could only either (a) restore, wholly or partly, the
specific provisions of HB No. 11197 amended by SB No. 1630, (b) sustain,
wholly or partly, the Senate’s amendments, or (c) by way of a compromise,
to agree that neither provisions in HB No. 11197 amended by the Senate nor
the latter’s amendments thereto be carried into the final form of the former.
Same; Same; Same; Doctrine of Ratification; The doctrine of
ratification may apply to minor procedural flaws or tolerable breaches of
the parameters of the bicameral conference committee’s limited powers but
never to violations of the Constitution.—I cannot agree with the suggestion
that since both the Senate and the House had approved the bicameral
conference committee report and the bill proposed by it in substitution of
HB No. 11197 and SB No. 1630, whatever infirmities may have been
committed by it were cured by ratification. This doctrine of ratification may
apply to minor procedural flaws or tolerable breaches of the parameters of
the bicameral conference committee’s limited powers but never to violations
of the Constitution. Congress is not above the Constitution. In the instant
case, since SB No. 1630 was introduced in violation of Section 24, Article
VI of the Constitution, was passed in the Senate in violation of the “three
readings” rule, and was not transmitted to the House for the completion of
the constitutional

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process of legislation, and HB No. 11197 was not likewise passed by the
Senate on second and third readings, neither the Senate nor the House could
validly approve the bicameral conference committee report and the
proposed bill.
Same; Same; “Enrolled Bill” Doctrine; Invocation of the “enrolled
bill” doctrine is misplaced.—The majority opinion, however, invokes the
enrolled bill doctrine and wants this Court to desist from looking behind the
copy of the assailed measure as certified by the Senate President and the
Speaker of the House. I respectfully submit that the invocation is misplaced.
First, as to the issue of origination, the certification in this case explicitly
states that R.A. No. 7716 is a “consolidation of House Bill No. 11197 and
Senate Bill No. 1630.” This is conclusive evidence that the measure did not
originate exclusively in the House. Second, the enrolled bill doctrine is of
American origin, and unquestioned fealty to it may no longer be justified in
view of the expanded jurisdiction of this Court under Section 1, Article VIII
of our Constitution. Third, even under the regime of the 1935 Constitution
which did not contain the above provision, this Court, through Mr. Chief
Justice Makalintal, in Astorga vs. Villegas, declared that it cannot be truly
said that Mabanag vs. Lopez Vito has laid to rest the question of whether the
enrolled bill doctrine or the journal entry rule should be adhered to in this
jurisdiction. Fourth, even in the United States, the enrolled bill doctrine has
been substantially undercut. This is shown in the disquisitions of Mr. Justice
Reynato S. Puno in his dissenting opinion, citing Sutherland, Statutory
Construction.

ROMERO, J., Dissenting Opinion:

Constitutional Law; Expanded VAT Law; Bicameral Conference


Committee; A bicameral conference committee is a creature, not of the
Constitution, but of the legislative body under its power to determine rules
of its proceeding.—As a conference committee has been defined: “. . . unlike
the joint committee is two committees, one appointed by each house. It is
normally appointed for a specific bill and its function is to gain accord
between the two houses either by the recession of one house from its bill or
its amendments or by the further amendment of the existing legislation or by
the substitution of an entirely new bill. Obviously the conference committee
is always a special committee and normally includes the member who
introduced the bill and the chairman of the committee which considered it
together with such other representatives of the house as seem expedient.
(Horack, Cases and Materials on Legislation [1940] 220. See also Zinn,
Conference Procedure in Congress, 38 ABAJ 864 [1952]; Steiner, The
Congressional Conference

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Tolentino vs. Secretary of Finance

Committee [U of Ill. Press, 1951]).” From the foregoing definition, it is


clear that a bicameral conference committee is a creature, not of the
Constitution, but of the legislative body under its power to determine rules
of its proceedings under Article VI, Sec. 16 (3) of the Constitution. Thus, it
draws its life and vitality from the rules governing its creation.
Same; Same; Same; The Bicameral Conference Committee exceeded
the power and authority granted in the Rules of its creation.—Even a
cursory perusal of the above outline will convince one that, indeed, the
Bicameral Conference Committee (henceforth to be referred to as BICAM)
exceeded the power and authority granted in the Rules of its creation. Both
Senate and House Rules limit the task of the Conference Committee in
almost identical language to the settlement of differences in the provisions
or amendments to any bill or joint resolution. If it means anything at all, it is
that there are provisions in subject bill, to start with, which differ and,
therefore, need reconciliation. Nowhere in the Rules is it authorized to
initiate or propose completely new matter. Although under certain rules on
legislative procedure, like those in Jefferson’s Manual, a conference
committee may introduce germane matters in a particular bill, such matters
should be circumsribed by the committee’s sole authority and function to
reconcile differences.
Same; Same; Same; Insertion of new matter on the part of the
Bicameral Conference Committee is an ultra vires act which makes the
same void.—Parenthetically, in the Senate and in the House, a matter is
“germane” to a particular bill if there is a common tie between said matter
and the provisions which tend to promote the object and purpose of the bill
it seeks to amend. If it introduces a new subject matter not within the
purview of the bill, then it is not “germane” to the bill. The test is whether
or not the change represented an amendment or extension of the basic
purpose of the original, or the introduction of an entirely new and different
subject matter. In the BICAM, however, the germane subject matter must be
within the ambit of the disagreement between the two Houses. If the
“germane” subject is not covered by the disagreement but it is reflected in
the final version of the bill as reported by the Conference Committee or, if
what appears to be a “germane” matter in the sense that it is “relevant or
closely allied” with the purpose of the bill, was not the subject of a
disagreement between the Senate and the House, it should be deemed an
extraneous matter or even a “rider” which should never be considered
legally passed for not having undergone the three-day reading requirement.
Insertion of new matter on the part of the BICAM is, therefore, an ulta vires
act which makes the same void.

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Tolentino vs. Secretary of Finance

BELLOSILLO, J., Dissenting Opinion:

Constitutional Law; Origin of Revenue Bills; Statutory Construction;


The provision in the Constitution requiring that all revenue bills shall
originate exclusively from the Lower House is mandatory.—Verily, the
provision in our Constitution requiring that all revenue bills shall originate
exclusively from the Lower House is mandatory. The word “exclusively” is
an “exclusive word,” which is indicative of an intent that the provision is
mandatory. Hence, all American authorities expounding on the meaning and
application of Sec. 7, par. (1), Art. I, of the U.S. Constitution cannot be used
in the interpretation of Sec. 24, Art. VI, of our 1987 Constitution which has
a distinct feature of “exclusiveness” all its own. Thus, when our
Constitution absolutely requires—as it is mandatory—that a particular bill
should exclusively emanate from the Lower House, there is no alternative to
the requirement that the bill to become valid law must originate exclusively
from that House.
Same; Same; Same; It is the general rule to regard constitutional
provisions as mandatory, and not to leave any discretion to the will of the
legislature to obey or disregard them.—In the interpretation of constitutions,
questions frequently arise as to whether particular sections are mandatory or
directory. The courts usually hesitate to declare that a constitutional
provision is directory merely in view of the tendency of the legislature to
disregard provisions which are not said to be mandatory. Accordingly, it is
the general rule to regard constitutional provisions as mandatory, and not to
leave any discretion to the will of the legislature to obey or disregard them.
This presumption as to mandatory quality is usually followed unless it is
unmistakably manifest that the provisions are intended to be merely
directory. So strong is the inclination in favor of giving obligatory force to
the terms of the organic law that it has even been said that neither by the
courts nor by any other department of the government may any provision of
the Constitution be regarded as merely directory, but that each and everyone
of its provisions should be treated as imperative and mandatory, without
reference to the rules and distinguishing between the directory and the
mandatory statutes.
Same; Same; A Senate amendment by substitution simply means that
the bill did not in effect originate from the lower chamber but from the
upper chamber, disguising itself as a mere amendment of the House version.
—In fine, in the cases cited which were lifted from American authorities, it
appears that the revenue bills in question actually originated from the House
of Representatives and were amended by the Senate only after they were
transmitted to it. Perhaps, if the factual

655
VOL. 235, AUGUST 25, 1994 655

Tolentino vs. Secretary of Finance

circumstances in those cases were exactly the same as the ones at bench,
then the subject revenue or tariff bill may be upheld in this jurisdiction on
the principle of substantial compliance, as they were in the United States,
except possibly in instances where the House bill undergoes what is now
referred to as “amendment by substitutionn,” for that would be in derogation
of our Constitution which vests solely in the House of Representatives the
power to initiate revenue bills. A Senate amendment by substitution simply
means that the bill in question did not in effect originate from the lower
chamber but from the upper chamber and now disguises itself as a mere
amendment of the House version.
Same; Judicial Review; Courts will not decline the exercise of
jurisdiction upon the suggestion that action might be taken by political
agencies in disregard of the judgment of the judicial tribunals.—The rule is
fixed that the duty in a proper case to declare a law unconstitutional cannot
be declined and must be performed in accordance with the deliberate
judgment of the tribunal before which the validity of the enactment is
directly drawn into question. When it is clear that a statute transgresses the
authority vested in the legislature by the Constitution, it is the duty of the
courts to declare the act unconstitutional because they cannot shirk from it
without violating their oaths of office. This duty of the courts to maintain
the Constitution as the fundamental law of the state is imperative and
unceasing; and, as Chief Justice Marshal said, whenever a statute is in
violation of the fundamental law, the courts must so adjudge and thereby
give effect to the Constitution. Any other course would lead to the
destruction of the Constitutionn. Since the question as to the
constitutionality of a statute is a judicial matter, the courts will not decline
the exercise of jurisdiction upon the suggestion that action might be taken
by political agencies in disregard of the judgment of the judicial tribunals.

PUNO, J., Dissenting Opinion:

Constitutional Law; Bicameral Conference Committee; Ex Post Veto


Power; There is absolutely no legal warrant for the bold submission that a
Bicameral Conference Committee possesses the power to add or delete
provisions in bills already approved on third reading by both Houses or an
ex post veto power.—There is absolutely no legal warrant for the bold
submission that a Bicameral Conference Committee possesses the power to
add/delete provisions in bills already approved on third reading by both
Houses or an ex post veto power. To support this postulate that can enfeeble
Congress itself, respondents cite no constitutional provision, no law, not
even any rule or regulation. Worse,

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656 SUPREME COURT REPORTS ANNOTATED

Tolentino vs. Secretary of Finance

their stance is categorically repudiated by the rules of both the Senate and
the House of Representatives which define with precision the parameters of
power of a Bicameral Conference Committee.
Same; Same; Same; The thesis that a Bicameral Conference Committee
can wield ex post veto power wages war against our settled ideals of
representative democracy.—But the thesis that a Bicameral Conference
Committee can wield ex post veto power does not only contravene the rules
of both the Senate and the House. It wages war againt our settled ideals of
representative democracy. For the inevitable, catastrophic effect of the thesis
is to install a Bicameral Conference Committee as the Third Chamber of our
Congress, similarly vested with the power to make laws but with the
dissimilarity that its laws are not the subject of a free and full discussion of
both Houses of Congress. With such a vagrant power, a Bicameral
Conference Com-mittee acting as a Third Chamber will be a constitutional
monstrosity.
Same; “Enrolled Bill” Doctrine; The enrolled bill theory is a historical
relic that should not continuously rule us from the fossilized past.—
Respondents seek sanctuary in the conclusiveness of an enrolled bill to bar
any judicial inquiry on whether Congress observed our constitutional
procedure in the passage of R.A. No. 7716. The enrolled bill theory is a
historical relic that should not continuously rule us from the fossilized past.
It should be immediately emphasized that the enrolled bill theory originated
in England where there is no written constitution and where Parliament is
supreme. In this jurisdiction, we have a written constitution and the
legislature is a body of limited powers. Likewise, it must be pointed out that
starting from the decade of the 40’s, even American courts have veered
away from the regidity and unrealism of the conclusiveness of an enrolled
bill.
Same; Same; The previous rulings of the Supreme Court on the
conclusiveness of an enrolled bill are no longer good law.—I am not
unaware that this Court has subscribed to the conclusiveness of an enrolled
bill as enunciated in the 1947 lead case of Mabanag v. Lopez Vito, and
reiterated in subsequent cases. With due respect, I submit that these rulings
are no longer good law. Suffice to state that section 313 of the Old Code of
Civil Procedure as amended by Act No. 2210 is no longer in our statute
books. It has long been repealed by the Rules of Court. Mabanag also relied
on jurisprudence and authorities in the United States which are under severe
criticisms by modern scholars. Hence, even in the United States the
conclusiveness of an enrolled bill has been junked by most of the States.

657
VOL. 235, AUGUST 25, 1994 657
Tolentino vs. Secretary of Finance

ORIGINAL ACTIONS in the Supreme Court. Certiorari and


prohibition.

The facts are stated in the opinion of the Court.


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.
Villaraza 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 Freedom 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.
Rene A.V. Saguisag for MABINI.

MENDOZA, J.:

The value-added tax (VAT) is levied on the sale, barter or exchange


of goods and properties as well as on the sale or exchange of
services. It is equivalent to 10% of the gross selling price or gross
value in 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.
These are various suits for certiorari and prohibition, challenging
the constitutionality of Republic Act No. 7716 on various grounds
summarized in the resolution of July 6, 1994 of this Court, as
follows:
658

658 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

I. Procedural Issues:

A. Does Republic Act No. 7716 violate Art. VI, § 24 of the


Constitution?
B. Does it violate Art. VI, § 26(2) of the Constitution?
C. What is the extent of the power of the Bicameral Conference
Committee?

II. Substantive Issues:

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

1. § 1
2. § 4
3. § 5
4. § 10

B. Does the law violate the following other provisions of the


Constitution?

1. Art. VI, § 28(1)


2. Art. VI, § 28(3)

These questions will be dealt in the order they are stated above. As
will presently be explained not all of these questions are judicially
cognizable, because not all provisions of the Constitution are self
executing and, therefore, judicially enforceable. The other
departments of the government are equally charged with the
enforcement of the Constitution, especially the provisions relating to
them.

I. PROCEDURAL ISSUES

The contention of petitioners is that in enacting Republic Act No.


7716, or the Expanded Value-Added Tax Law, Congress violated the
Constitution because, although H. No. 11197 had originated in the
House of Representatives, it was not passed by the Senate but was
simply consolidated with the Senate version (S. No. 1630) in the
Conference Committee to produce the bill which the President
signed into law. The following provisions of the Constitution are
cited in support of the proposition that because Republic Act No.
7716 was passed in this manner, it did

659

VOL. 235, AUGUST 25, 1994 659


Tolentino vs. Secretary of Finance

not originate in the House of Representatives and it has not thereby


become a law:
Art. VI, § 24: All appropriation, revenue or tariff bills, bills authorizing
increase of the public debt, bills of local application, and private bills shall
originate exclusively in the House of Representatives, but the Senate may
propose or concur with amendments.
Id., § 26(2): No bill passed by either House shall become a law unless it
has passed three readings on separate days, and printed copies thereof in its
final form have been distributed to its Members three days before its
passage, except when the President certifies to the necessity of its
immediate enactment to meet a public calamity or emergency. Upon the last
reading of a bill, no amendment thereto shall be allowed, and the vote
thereon shall be taken immediately thereafter, and the yeas and nays entered
in the Journal.

It appears that on various 1dates between July 22, 1992 and August
31, 1993, several bills were introduced in the House of
Representatives seeking to amend certain provisions of the National
Internal Revenue Code relative to the value-added tax or VAT. These
bills were referred to the House Ways and Means Committee which
recommended for approval a substitute measure, H. No. 11197,
entitled

AN ACT RESTRUCTURING THE VALUE-ADDED TAX (VAT)


SYSTEM TO WIDEN ITS TAX BASE AND ENHANCE ITS
ADMINISTRATION, AMENDING FOR THESE PURPOSES SECTIONS
99, 100, 102, 103, 104, 105, 106, 107, 108 AND 110 OF TITLE IV, 112,
115 AND 116 OF TITLE V, AND 236, 237 AND 238 OF TITLE IX, AND
REPEALING SECTIONS 113 AND 114 OF TITLE V, ALL OF THE
NATIONAL INTERNAL REVENUE CODE, AS AMENDED

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

________________

1 H. Nos. 253, 771, 2450, 7033, 8086, 9030, 9210, 9297, 10012 and 10100.
(Respondents’ Consolidated Memorandum, Annexes 3-12).

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660 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

It was sent to the Senate on November 23, 1993 and later referred by
that body to its Committee on Ways and Means.
On February 7, 1994, the Senate Committee submitted its report
recommending approval of S. No. 1630, entitled
AN ACT RESTRUCTURING THE VALUE-ADDED TAX (VAT)
SYSTEM TO WIDEN ITS TAX BASE AND ENHANCE ITS
ADMINISTRATION, AMENDING FOR THESE PURPOSES SECTIONS
99, 100, 102, 103, 104, 105, 107, 108, AND 110 OF TITLE IV, 112 OF
TITLE V, AND 236, 237, AND 238 OF TITLE IX, AND REPEALING
SECTIONS 113, 114 AND 116 OF TITLE V, ALL OF THE NATIONAL
INTERNAL REVENUE CODE, AS AMENDED, AND FOR OTHER
PURPOSES

It was stated that the bill was being submitted “in substitution of
Senate Bill No. 1129, taking into consideration P.S. Res. No. 734
and H.B. No. 11197.”
On February 8, 1994, the Senate began consideration of the bill
(S. No. 1630). It finished debates on the bill and approved it on
second reading on March 24, 1994. On the same day, it approved the
bill on third reading by the affirmative votes of 13 of its members,
with one abstention.
H. No. 11197 and its Senate version (S. No. 1630) were then
referred to a conference committee which, after meeting four times
(April 13, 19, 21 and 25, 1994), recommended that “House Bill No.
11197, in consolidation with Senate Bill No. 1630, be approved in
accordance with the attached copy of the bill as reconciled and
approved by the conferees.”
The Conference Committee bill, entitled “AN ACT
RESTRUCTURING THE VALUE-ADDED TAX (VAT) SYSTEM,
WIDENING ITS TAX BASE AND ENHANCING ITS
ADMINISTRATION AND FOR THESE PURPOSES AMENDING
AND REPEALING THE RELEVANT PROVISIONS OF THE
NATIONAL INTERNAL REVENUE CODE, AS AMENDED,
AND FOR OTHER PURPOSES,” was thereafter approved by the
House of Representatives on April 27, 1994 and by the Senate on
May 2, 1994. The enrolled bill was then presented to the President
of the Philippines who, on May 5, 1994, signed it. It became
Republic Act No. 7716. On May 12, 1994, Republic Act No. 7716
was published in two newspapers of general circulation and, on May
28, 1994, it took effect, although

661

VOL. 235, AUGUST 25, 1994 661


Tolentino vs. Secretary of Finance

its implementation was suspended until June 30, 1994 to allow time
for the registration of business entities. It would have been enforced
on July 1, 1994 but its enforcement was stopped because the Court,
by the vote of 11 to 4 of its members, granted a temporary
restraining order on June 30, 1994.
First. Petitioners’ contention is that Republic Act No. 7716 did
not “originate exclusively” in the House of Representatives as
required by Art. VI, § 24 of the Constitution, because it is in fact the
result of the consolidation of two distinct bills, H. No. 11197 and S.
No. 1630. In this connection, petitioners point out that although2 Art.
VI, § 24 was adopted from the American Federal Constitution, it is
notable in two respects: the verb “shall originate” is qualified in the
Philippine Constitution by the word “exclusively” and the phrase “as
on other bills” in the American version is omitted. This means,
according to them, that to be considered as having originated in the
House, Republic Act No. 7716 must retain the essence of H. No.
11197.
This argument will not bear analysis. To begin with, it is not the
law—but the revenue bill—which is required by the Constitution to
“originate exclusively” in the House of Representatives. It is
important to emphasize this, because a bill originating in the House
may undergo such extensive changes in the Senate that the result
may be a rewriting of the whole. The possibility of a third version by
the conference committee will be discussed later. At this point, what
is important to note is that, as a result of the Senate action, a distinct
bill may be produced. To insist that a revenue statute—and not only
the bill which initiated the legislative process culminating in the
enactment of the law—must substantially be the same as the House
bill would be to deny the Senate’s power not only to “concur with
amendments” but also to “propose amendments.” It would be to
violate the coequality of legislative power of the two houses of
Congress and in fact make the House superior to the Senate.
The contention that the constitutional design is to limit the
Senate’s power in respect of revenue bills in order to compensate

________________

2 U.S. CONST., Art. 1, § 7, cl. 1: “All bills for raising revenue shall originate in
the House of Representatives, but the Senate may propose or concur with
amendments, as on other bills.”

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662 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance
3
for the grant to the Senate of the treaty-ratifying power and thereby
equalize its powers and those of the House overlooks the fact that
the powers being compared are different. We are dealing here with
the legislative power which under the Constitution is vested not in
any particular chamber but in the Congress of the Philippines, 4
consisting of “a Senate and a House of Representatives.” The
exercise of the treaty-ratifying power is not the exercise of
legislative power. It is the exercise of a check on the executive
power. There is, therefore, no justification for comparing the
legislative powers of the House and of the Senate on the basis of the
possession of such nonlegislative power by the 5
Senate. The
possession of a similar power by the U.S. Senate has never been
thought of as giving it more legislative powers than the House of
Representatives.
In the United States, the validity of a provision (§ 37) imposing
an ad valorem tax based on the weight of vessels, which the U.S.
Senate had inserted in the Tariff Act of 1909, was upheld against the
claim that the provision was a revenue bill which originated in 6
the
Senate in contravention of Art. I, § 7 of the U.S. Constitution. Nor
is the power to amend limited to adding a provision or two in a
revenue bill emanating from the House. The U.S. Senate has gone so
far as changing the whole of bills following the enacting clause and
substituting its own versions. In 1883, for example, it struck out
everything after the enacting clause of a tariff bill and wrote in its
place its own measure, and the House subsequently accepted the
amendment. The U.S. Senate likewise added 847 amendments to
what later became the Payne-Aldrich Tariff Act of 1909; it dictated
the schedules of the Tariff Act of 1921; it rewrote an extensive tax
revision
7
bill in the same year and recast most of the tariff bill of
1922. Given, then, the power of the Senate to propose amendments,
the Senate can propose its own version even with respect to bills
which are required by the Constitution to originate in the House.

________________

3 Art. VII, § 21.


4 Art. VI, § 1.
5 U.S. CONST., Art. II, § 2, cl. 2.
6 Rainey v. United States, 232 U.S. 309, 58 L. Ed. 117 (1914).
7 F.A. OGG AND P.O. RAY, INTRODUCTION TO AMERICAN
GOVERNMENT 309, n. 2 (1945).

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Tolentino vs. Secretary of Finance

It is insisted, however, that S. No. 1630 was passed not in


substitution of H. No. 11197 but of another Senate bill (S. No. 1129)
earlier filed and that what the Senate did was merely to “take [H.
No. 11197] into consideration” in enacting S. No. 1630. There is
really no difference between the Senate preserving H. No. 11197 up
to the enacting clause and then writing its own version following the
enacting clause (which, it would seem, petitioners admit is an
amendment by substitution), and, on the other hand, separately
presenting a bill of its own on the same subject matter. In either case
the result are two bills on the same subject.
Indeed, what the Constitution simply means is that the initiative
for filing revenue, tariff, or tax bills, bills authorizing an increase of
the public debt, private bills and bills of local application must come
from the House of Representatives on the theory that, elected as they
are from the districts, the members of the House can be expected to
be more sensitive to the local needs and problems. On the other
hand, the senators, who are elected at large, are expected to
approach the same problems from the national perspective. Both
views are thereby made to bear on the enactment of such laws.
Nor does the Constitution prohibit the filing in the Senate of a
substitute bill in anticipation of its receipt of the bill from the House,
so long as action by the Senate as a body is withheld pending receipt
of the House bill. The Court cannot, therefore, understand the alarm
expressed over the fact that on March 1, 1993, eight months before
the House passed H. No. 11197, S. No. 1129 had been filed in the
Senate. After all it does not appear that the Senate ever considered it.
It was only after the Senate had received H. No. 11197 on November
23, 1993 that the process of legislation in respect of it began with the
referral to the Senate Committee on Ways and Means of H. No.
11197 and the submission by the Committee on February 7, 1994 of
S. No. 1630. For that matter, if the question were simply the priority
in the time of filing of bills, the fact is that it was in the House that a
bill (H. No. 253) to amend the VAT law was first filed on July 22,
1992. Several other bills had been filed in the House before S. No.
1129 was filed in the Senate, and H. No. 11197 was only a substitute
of those earlier bills.

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664 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

Second. Enough has been said to show that it was within the power
of the Senate to propose S. No. 1630. We now pass to the next
argument of petitioners that S. No. 1630 did not8 pass three readings
on separate days as required by the Constitution because the second
and third readings were done on the same9 day, March 24, 1994. But
this was
10
because on February 24, 1994 and again on March 22,
1994, 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. The phrase
“except when the President certifies to the necessity of its immediate
enactment, etc.” in Art. VI, § 26(2) qualifies the two stated
conditions before a bill can become a law: (i) the bill has passed
three readings on separate days and (ii) it has been printed in its final
form and distributed three days before it is finally approved.
In other words, the “unless” clause must be read in relation to the
“except” clause, because the two are really coordinate clauses of the
same sentence. To construe the “except” clause as simply dispensing
with the second requirement in the “unless” clause (i.e., printing and
distribution three days before final approval) would not only violate
the rules of grammar. It would also negate the very premise of the
“except” clause: the necessity of securing

_______________

8 Although the 1935 Constitution did not expressly require that bills must pass
three readings in each House, this was clearly implied from its Art. VI, § 21(2) so that
the two Houses by their rules prescribed three readings for the passage of bills. Later
the requirement was expressly provided in the 1973 Constitution from which Art. VI,
§ 26(2) was taken. Art. VIII, § 19(2) of the 1973 document provided: No bill shall
become a law unless it has passed three readings on separate days, and printed copies
thereof in its final form have been distributed to the Members three days before its
passage, except when the Prime Minister certifies to the necessity of its immediate
enactment to meet a public calamity or emergency. Upon the last reading of a bill, no
amendment thereto shall be allowed, and the vote thereon shall be taken immediately
thereafter, and the yeas and nays entered in the Journal.
9 Respondents’ Consolidated Reply, Annex 14.
10 Memorandum of Petitioner Arturo M. Tolentino, Supplement C.

665

VOL. 235, AUGUST 25, 1994 665


Tolentino vs. Secretary of Finance

the immediate enactment of a bill which is certified in order to meet


a public calamity or emergency. For if it is only the printing that is
dispensed with by presidential certification, the time saved would be
so negligible as to be of any use in insuring imme-diate enactment.
It may well be doubted whether doing away with the necessity of
printing and distributing copies of the bill three days before the third
reading would insure speedy enactment of a law in the face of an
emergency requiring the calling of a special election for President
and Vice-President. Under the Constitution such a law is required to
be made within seven11
days of the convening of Congress in
emergency session.
That upon the certification of a bill by the President the
requirement of three readings on separate days and of printing and
distribution can be dispensed with is supported by the weight of
legislative practice. For example, the bill defining the certiorari
jurisdiction of this Court which, in consolidation with the Senate
version, became Republic Act No. 5440, was passed on second and
third readings in the House of Representatives on the same day
(May 14,12
1968) after the bill had been certified by the President as
urgent.
There is, therefore, no merit in the contention that presidential
certification dispenses only with the requirement for the printing of
the bill and its distribution three days before its passage but

________________

11 Art. VII, § 10 provides: “The Congress shall, at ten o’clock in the morning of
the third day after the vacancy in the offices of the President and Vice-President
occurs, convene in accordance with its rules without need of a call and within seven
days enact a law calling for a special election to elect a President and a Vice-President
to be held not earlier than forty-five days nor later than sixty days from the time of
such call. The bill calling such special election shall be deemed certified under
paragraph 2, Section 26, Article VI of this Constitution and shall become law upon its
approval on third reading by the Congress. Appro-priations for the special election
shall be charged against any current appropriations and shall be exempt from the
requirements of paragraph 4, Section 25, Article VI of this Constitution. The
convening of the Congress cannot be suspended nor the special election postponed.
No special election shall be called if the vacancy occurs within eighteen months
before the date of the next presidential election.”
12 JOURNAL OF THE HOUSE OF REPRESENTATIVES, SIXTH CONGRESS,
FOURTH SESSION 398-399 (1968).

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666 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

not with the requirement of three readings on separate days, also.


It is nonetheless urged that the certification of the bill in this case
was invalid because there was no emergency, the condition stated in
the certification of a “growing budget deficit” not being an unusual
condition in this country.
It is noteworthy that no member of the Senate saw fit to
controvert the reality of the factual basis of the certification. To the
contrary, by passing S. No. 1630 on second and third readings on
March 24, 1994, the Senate accepted the President’s certification.
Should such certification be now reviewed by this Court, especially
when no evidence has been shown that, because S. No. 1630 was
taken up on second and third readings on the same day, the members
of the Senate were deprived of the time needed for the study of a
vital piece of legislation?
The sufficiency of the factual basis of the suspension of the writ
of habeas corpus or declaration of martial law under Art. VII, § 18,
or the existence of a national emergency justifying the delegation of
extraordinary powers to the President under Art. VI, § 23(2), is
subject to judicial review because basic rights of individuals may be
at hazard. But the factual basis of presidential certification of bills,
which involves doing away with procedural requirements designed
to insure that bills are duly considered by members of Congress,
certainly should elicit a different standard of review.
Petitioners also invite attention to the fact that the President
certified S. No. 1630 and not H. No. 11197. That is because S. No.
1630 was what the Senate was considering. When the matter was
before the House, the President likewise certified H. No. 9210 then
pending in the House.
Third. Finally it is contended that the bill which became Republic
Act No. 7716 is the bill which the Conference Committee prepared
by consolidating H. No. 11197 and S. No. 1630. It is claimed that
the Conference Committee report included provisions not found in
either the House bill or the Senate bill and that these provisions were
“surreptitiously” inserted by the Conference Committee. Much is
made of the fact that in the last two days of its session on April 21
and 25, 1994 the Committee met behind closed doors. We are not
told, however, whether the provisions were not the result of the give
and take that often mark the

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Tolentino vs. Secretary of Finance

proceedings of conference committees.


Nor is there anything unusual or extraordinary about the fact that
the Conference Committee met in executive sessions. Often the only
way to reach agreement on conflicting provisions is to meet behind
closed doors, with only the conferees present. Otherwise, no
compromise is likely to be made. The Court is not about to take the
suggestion of a cabal or sinister motive attributed to the conferees on
the basis solely of their “secret meetings” on April 21 and 25, 1994,
nor read anything into the incomplete remarks of the members,
marked in the transcript of stenographic notes by ellipses. The
incomplete sentences are probably due to the stenographer’s own
limitations or to the incoherence that sometimes characterize
conversations. William Safire noted some such lapses in recorded
talks even by recent past Presidents of the United States.
In any event, in the United States conference committees had
been customarily held in executive
13
sessions with only the conferees
and their staffs in attendance. Only in November 1975 was a new
rule adopted requiring open sessions. Even then a majority of14either
chamber’s conferees may vote in public to close the meetings.
As to the possibility of an entirely new bill emerging out of a
Conference Committee, it has been explained:
Under congressional rules of procedure, conference committees are not
expected to make any material change in the measure at issue, either by
deleting provisions to which both houses have already agreed or by inserting
new provisions. But this is a difficult provision to enforce. Note the problem
when one house amends a proposal originating in either house by striking
out everything following the enacting clause and substituting provisions
which make it an entirely new bill. The versions are now altogether
different,
15
permitting a conference committee to draft essentially a new bill .
...

________________

13 Zinn, Conference Procedure in Congress, 38 ABAJ 864-865 (1952).


14 CONG. QUARTERLY 65 (1983); M. JEWELL, THE LEGISLATIVE
PROCESS IN THE UNITED STATES 169 (1986); LEES AND SHAW,
COMMITTEES IN LEGISLATURES 163 (1979).
15 W. KEEFE AND M. OGUL, THE AMERICAN LEGISLATIVE PROCESS 149
(1985).

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668 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

The result is a third version, which is considered an “amendment in


the nature of a substitute,” the only requirement for which being that
the third
16
version be germane to the subject of the House and Senate
bills.
Indeed, this Court recently held that it is within the power of a
conference committee to include in its report an entirely new
provision
17
that is not found either in the House bill or in the Senate
bill. If the committee can propose an amendment consisting of one
or two provisions, there is no reason why it cannot propose several
provisions, collectively considered as an “amendment in the nature
of a substitute,” so long as such amendment is germane to the
subject of the bills before the committee. After all, its report was not
final but needed the approval of both houses of Congress to become
valid as an act of the legislative department. The charge that in this
case the Conference Committee
18
acted as a third legislative chamber
is thus without any basis.

________________

16 W. OLESZEK, CONGRESSIONAL PROCEDURES AND POLICY PROCESS


214 (1984).
17 Philippine Judges Association v. Prado, G.R. No. 105371, Nov. 11, 1993.
18 The charge is an old one. In the United States, the same charge, including claims
that important provisions were being “surreptitiously added” in the committee, was
made in the 1940s. But no satisfactory alternative to the conference committee has
been devised. And today, given the bicameral nature of the U.S. Congress, the charge
is no longer heard. Compare the following from a 1945 comment: “As a devise for
oiling the machinery of legislation, committees of conference are, under American
conditions, useful, if not indispensable. Nevertheless, they have shortcomings.
Without exception, they work behind closed doors, hold no hearings, and give their
proceedings no publicity. Doubtless it would be difficult for them to make headway if
they did otherwise. Nevertheless, in view of the power which they wield, strong
objection can be, and is, raised. For, while the committees are supposed to deal only
with actual differences between the houses and to stay well within the bounds set by
the extreme positions which the houses have taken, they often work into measures, as
reported, provisions of their own devising, even going so far as to rewrite whole
sections with the sole purpose of incorporating the views which the majority members
happen to hold. . . . In practice, this often results in the adoption of important
provisions, more or less surreptitiously added, without consideration by either house
—in other words, legislation nominally by Congress but

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Tolentino vs. Secretary of Finance

Nonetheless, it is argued that under the respective Rules of the


Senate and the House of Representatives a conference committee
can only act on the differing provisions of a Senate bill and a House
bill, and that contrary to these Rules the Conference Committee
inserted provisions not found in the bills submitted to it. The
following provisions are cited in support of this contention:

Rules of the Senate

Rule XII:

§ 26. In the event that the Senate does not agree with the House of
Representatives on the provision of any bill or joint resolution, the
differences shall be settled by a conference committee of both Houses which
shall meet within ten days after their composition.
The President shall designate the members of the conference committee
in accordance with subparagraph (c), Section 3 of Rule III.
Each Conference Committee Report shall contain a detailed and
sufficiently explicit statement of the changes in or amendments to the
subject measure, and shall be signed by the conferees.
The consideration of such report shall not be in order unless the report
has been filed with the Secretary of the Senate and copies thereof have
been distributed to the Members.
(Emphasis added)

Rules of the House of Representatives


Rule XIV:

§ 85. Conference Committee Reports.—In the event that the House does
not agree with the Senate on the amendments to any bill or

________________

actually by conference committee. Any remedy found will probably take the form of
reducing the need for using conference committees at all; and the principal suggestion to that
end is that bills and resolutions be referred, not, as now, to separate committees of the two
houses, but to joint committees, which not only would hold single sets of hearings, but might
deliberate and report back bills to the two houses in such agreed form that further significant
differences would not be likely to develop. Arrangements of this nature yield excellent results
in the legislature of Massachusetts. But there are obstacles to adoption of the plan for Congress,
not the least of them being a natural aversion of House members to joint committees in which
senators seem likely to dominate; and, as indicated below, the outlook for the reform is
problematical.” F.A. OGG AND P.O. RAY, supra note 7 at 310-311.

670

670 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

joint resolution, the differences may be settled by conference committees of


both Chambers.
The consideration of conference committee reports shall always be in
order, except when the journal is being read, while the roll is being called or
the House is dividing on any question. Each of the pages of such reports
shall be signed by the conferees. Each report shall contain a detailed,
sufficiently explicit statement of the changes in or amendments to the
subject measure.
The consideration of such report shall not be in order unless copies
thereof are distributed to the Members: Provided, That in the last fifteen
days of each session period it shall be deemed sufficient that three copies of
the report, signed as above provided, are deposited in the office of the
Secretary General.
(Emphasis added)

To be sure, nothing in the Rules limits a conference committee to a


consideration of conflicting provisions. But Rule XLIV, § 112 of the
Rules of the Senate is cited to the effect that “If there is no Rule
applicable to a specific case the precedents of the Legislative
Department of the Philippines shall be resorted to, and as a
supplement of these, the Rules contained in Jefferson’s Manual.”
The following is then quoted from the Jefferson’s Manual:

The managers of a conference must confine themselves to the differences


committed to them . . . and may not include subjects not within
disagreements, even though germane to a question in issue.
Note that, according to Rule XLIX, § 112, in case there is no
specific rule applicable, resort must be to the legislative practice.
The Jefferson’s Manual is resorted to only as supplement. It is
common place in Congress that conference committee reports
include new matters which, though germane, have not been
committed to the committee. This practice was admitted by Senator
Raul S. Roco, petitioner in G.R. No. 115543, during the oral
argument in these cases. Whatever, then, may be provided in the
Jefferson’s Manual must be considered to have been modified by the
legislative practice. If a change is desired in the practice it must be
sought in Congress since this question is not covered by any
constitutional provision but is only an internal rule of each house.
Thus, Art. VI, § 16(3) of the Constitution provides that “Each House
may determine the rules of its proceedings . . . .”

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Tolentino vs. Secretary of Finance

This observation applies to the other contention that the Rules of the
two chambers were likewise disregarded in the preparation of the
Conference Committee Report because the Report did not contain a
“detailed and sufficiently explicit statement of changes in, or
amendments to, the subject measure.” The Report used brackets and
capital letters to indicate the changes. This is a standard practice in
bill-drafting. We cannot say that in using these marks and symbols
the Committee violated the Rules of the Senate and the House.
Moreover, this Court is not the proper forum for the enforcement of
these internal Rules. To the contrary, as we have already ruled,
“parliamentary rules are merely procedural 19
and with their
observance the courts have no concern.” Our concern is with the
procedural requirements of the Constitution for the enactment of
laws. As far as these requirements are concerned, we are satisfied
that they have been faithfully observed in these cases.
Nor is there any reason for requiring that the Committee’s Report
in these cases must have undergone three readings in each of the two
houses. If that be the case, there would be no end to negotiation
since each house may seek modifications of the compromise bill.
The nature of the bill, therefore, requires that it be acted upon by
each house on a “take it or leave it” basis, with the only alternative
that if it is not approved by both houses, another conference
committee must be appointed. But then again the result would still
be a compromise measure that may not be wholly satisfying to both
houses.
Art. VI, § 26(2) must, therefore, be construed as referring only to
bills introduced for the first time in either house of Congress, not to
the conference committee report. For if the purpose of requiring
three readings is to give members of Congress time to study bills, it
cannot be gainsaid that H. No. 11197 was passed in the House after
three readings; that in the Senate it was considered on first reading
and then referred to a committee of that body; that although the
Senate committee did not report out the House bill, it submitted a
version (S. No. 1630) which it had prepared by “taking into
consideration” the House bill; that for its part the Conference
Committee consolidated the two bills and prepared a

_________________

19 Osmeña v. Pendatun, 109 Phil. 863, 871 (1960).

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672 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

compromise version; that the Conference Committee Report was


thereafter approved by the House and the Senate, presumably after
appropriate study by their members. We cannot say that, as a matter
of fact, the members of Congress were not fully informed of the
provisions of the bill. The allegation that the Conference Committee
usurped the legislative power of Congress is, in our view, without
warrant in fact and in law.
Fourth. Whatever doubts there may be as to the formal validity 20
of Republic Act No. 7716 must be resolved in its favor. Our cases
manifest firm adherence to the rule that an enrolled copy of a bill is
conclusive not only of its provisions but also of its due enactment.
Not even claims that a proposed constitutional amendment was
invalid because
21
the requisite votes for its approval had not been
obtained or that certain provisions 22
of a statute had been
“smuggled” in the printing of the bill have moved or persuaded us
to look behind the proceedings of a coequal branch of the
government. There is no reason now to depart from this rule.
No claim is here
23
made that the “enrolled bill” rule is absolute. In
fact in one case we “went behind” an enrolled bill and consulted
the Journal to determine whether certain provisions of a statute had
been approved by the Senate in view of the fact that the President of
the Senate himself, who had signed the enrolled bill, admitted a
mistake and withdrew his signature, so that in effect there was no
longer an enrolled bill to consider.
But where allegations that the constitutional procedures for the
passage of bills have not been observed have no more basis than
another allegation that the Conference Committee “surreptitiously”
inserted provisions into a bill which it had prepared, we should
decline the invitation to go behind the enrolled copy of the bill. To
disregard the “enrolled bill” rule in such cases would be to disregard
the respect due the other two departments of our government.

________________

20 E.g., Mabanag v. Lopez Vito, 78 Phil. 1 (1947); Casco (Phil.) Inc. v. Gimenez, 7
SCRA 347 (1963); Morales v. Subido, 27 SCRA 131 (1969).
21 Mabanag v. Lopez Vito, supra note 20.
22 Morales v. Subido, supra note 20.
23 Astorga v. Villegas, 56 SCRA 714 (1974).

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Tolentino vs. Secretary of Finance

Fifth. An additional attack on the formal validity of Republic Act


No. 7716 is made by the Philippine Airlines, Inc., petitioner in G.R.
No. 11582, namely, that it violates Art. VI, § 26(1) which provides
that “Every bill passed by Congress shall embrace only one subject
which shall be expressed in the title thereof.” It is contended that
neither H. No. 11197 nor S. No. 1630 provided for removal of
exemption of PAL transactions from the payment of the VAT and
that this was made only in the Conference Committee bill which
became Republic Act No. 7716 without reflecting this fact in its
title.
The title of Republic Act No. 7716 is:

AN ACT RESTRUCTURING THE VALUE-ADDED TAX (VAT)


SYSTEM, WIDENING ITS TAX BASE AND ENHANCING ITS
ADMINISTRATION, AND FOR THESE PURPOSES AMENDING AND
REPEALING THE RELEVANT PROVISIONS OF THE NATIONAL
INTERNAL REVENUE CODE, AS AMENDED, AND FOR OTHER
PURPOSES.

Among the provisions of the NIRC amended is § 103, which


originally read:

§ 103. Exempt transactions.—The following shall be exempt from the


value-added tax:
....
(q) Transactions which are exempt under special laws or international
agreements to which the Philippines is a signatory.

Among the transactions exempted from the VAT were those of PAL
because it was exempted under its franchise (P.D. No. 1590) from
the payment of all “other taxes . . . now or in the near future,” in
consideration of the payment by it either of the corporate income tax
or a franchise tax of 2%.
As a result of its amendment by Republic Act No. 7716, § 103 of
the NIRC now provides:

§ 103. Exempt transactions.—The following shall be exempt from the


value-added tax:
....
(q) Transactions which are exempt under special laws, except those
granted under Presidential Decree Nos. 66, 529, 972, 1491, 1590. . . .

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674 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

The effect of the amendment is to remove the exemption granted to


PAL, as far as the VAT is concerned.
The question is whether this amendment of § 103 of the NIRC is
fairly embraced in the title of Republic Act No. 7716, although no
mention is made therein of P.D. No. 1590 as among those which the
statute amends. We think it is, since the title states that the purpose
of the statute is to expand the VAT system, and one way of doing
this is to widen its base by withdrawing some of the exemptions
granted before. To insist that P.D. No. 1590 be mentioned in the title
of the law, in addition to § 103 of the NIRC, in which it is
specifically referred to, would be to insist that the title of a bill
should be a complete index of its content.
The constitutional requirement that every bill passed by Congress
shall embrace only one subject which shall be expressed in its title is
intended to prevent surprise upon the members of Congress and to
inform the people of pending legislation so that, if they wish to, they
can be heard regarding it. If, in the case at bar, petitioner did not
know before that its exemption had been withdrawn, it is not
because of any defect in the title but perhaps for the same reason
other statutes, although published, pass unnoticed until some event
somehow calls attention to their existence. Indeed, the title of
Republic Act No. 7716 is not any more general than the title of
PAL’s own franchise under P.D. No. 1590, and yet no mention is
made of its tax exemption. The title of P.D. No. 1590 is:

AN ACT GRANTING A NEW FRANCHISE TO PHILIPPINE AIRLINES,


INC. TO ESTABLISH, OPERATE, AND MAINTAIN AIRTRANSPORT
SERVICES IN THE PHILIPPINES AND BETWEEN THE PHILIPPINES
AND OTHER COUNTRIES.

The trend in our cases is to construe the constitutional requirement


in such a manner that courts do not unduly interfere with the
enactment of necessary legislation and to consider it sufficient if the
title expresses the general subject of the statute and
24
all its provisions
are germane to the general subject thus expressed.
________________

24 See, e.g., Alalayan v. National Power Corp., 24 SCRA 172 (1968); Cordero v.
Cabatuando, 6 SCRA 418 (1962); Sumulong v. COMELEC, 73 Phil. 288 (1941).

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Tolentino vs. Secretary of Finance

It is further contended that amendment of petitioner’s franchise may


only be made by special law, in view of § 24 of P.D. No. 1590 which
provides:

This franchise, as amended, or any section or provision hereof may only be


modified, amended, or repealed expressly by a special law or decree that
shall specifically modify, amend, or repeal this franchise or any section or
provision thereof.

This provision is evidently intended to prevent the amendment of the


franchise by mere implication resulting from the enactment of a later
inconsistent statute, in consideration of the fact that a franchise is a
contract which can be altered only by consent of the parties. Thus in
Manila Railroad Co. v. Rafferty,25 it was held that an Act of the U.S.
Congress, which provided for the payment of tax on certain goods
and articles imported into the Philippines, did not amend the
franchise of plaintiff, which exempted it from all taxes except those
mentioned in its franchise. It was held that a special law cannot be
amended by a general law.
In contrast, in the case at bar, Republic Act No. 7716 expressly
amends PAL’s franchise (P.D. No. 1590) by specifically excepting
from the grant of exemptions from the VAT PAL’s exemption under
P.D. No. 1590. This is within the power of Congress to do under Art.
XII, § 11 of the Constitution, which provides that the grant of a
franchise for the operation of a public utility is subject to
amendment, alteration or repeal by Congress when the common
good so requires.

II. SUBSTANTIVE ISSUES

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


Freedom
The Philippine Press Institute (PPI), petitioner in G.R. No. 115544,
is a nonprofit organization of newspaper publishers established for
the improvement of journalism in the Philippines. On the other hand,
petitioner in G.R. No. 115781, the Philippine Bible Society (PBS), is
a nonprofit organization engaged in the
_______________

25 40 Phil. 224 (1919).

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676 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

printing and distribution of bibles and other religious articles. Both


petitioners claim violations of their rights under §§ 4 and 5 of the
Bill of Rights as a result of the enactment of the VAT Law.
The PPI questions the law insofar as it has withdrawn the
exemption previously granted to the press under § 103 (f) of the
NIRC. Although the exemption was subsequently restored by
administrative regulation with respect to the circulation income of
newspapers, the PPI presses its claim because of the possibility that
the exemption may still be removed by mere revocation of the
regulation of the Secretary of Finance. On the other hand, the PBS
goes so far as to question the Secretary’s power to grant exemption
for two reasons: (1) The Secretary of Finance has no power to
grant tax exemption because this is vested in Congress 26and requires
for its exercise the vote of a majority of all its members and (2) the
Secretary’s duty is to execute the law. § 103 of the NIRC contains a
list of transactions exempted from VAT. Among the transactions
previously granted exemption were:

(f) Printing, publication, importation or sale of books and any newspaper,


magazine, review, or bulletin which appears at regular intervals with fixed
prices for subscription and sale and which is devoted principally to the
publication of advertisements.

Republic Act No. 7716 amended § 103 by deleting ¶ (f) with the
result that print media became subject to the VAT with respect to all
aspects of their operations. Later, however, based on a memorandum
of the Secretary of Justice, respondent Secretary of Finance issued
Revenue Regulations No. 11-94, dated June 27, 1994, exempting the
“circulation income of print media pursuant to § 4 Article III of the
1987 Philippine Constitution guaranteeing against abridgment of
freedom of the press, among others.” The exemption of “circulation
income” has left income from advertisements still subject to the
VAT.
It is unnecessary to pass upon the contention that the exemption
granted is beyond the authority of the Secretary of Finance to

________________

26 Art. VI, § 28(4) provides: “No law granting any tax exemption shall be passed
without the concurrence of a majority of all the Members of the Congress.”
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Tolentino vs. Secretary of Finance

give, in view of PPI’s contention that even with the exemption of the
circulation revenue of print media there is still an unconstitutional
abridgment of press freedom because of the imposition of the VAT
on the gross receipts of newspapers from advertisements and on
their acquisition of paper, ink and services for publication. Even on
the assumption that no exemption has effectively been granted to
print media transactions, we find no violation of press freedom in
these cases.
To be sure, we are not dealing here with a statute that on its face
operates in the area of press freedom. The PPI’s claim is simply that,
as applied to newspapers, the law abridges press freedom. Even with
due recognition of its high estate and its importance in a democratic
society, however, the press is not immune from general regulation by
the State. It has been held:

The publisher of a newspaper has no immunity from the application of


general laws. He has no special privilege to invade the rights and liberties of
others. He must answer for libel. He may be punished for contempt of court
. . . . Like others,
27
he must pay equitable and nondiscriminatory taxes on his
business . . . .

The PPI does not dispute this point, either.


What it contends is that by withdrawing the exemption
previously granted to print media transactions involving printing,
publication, importation or sale of newspapers, Republic Act No.
7716 has singled out the press for discriminatory treatment and that
within the class of mass media the law discriminates against print
media by giving broadcast media favored treatment. We have
carefully examined this argument, but we are unable to find a
differential treatment of the press by the law, much less any
censorial motivation for its enactment. If the press is now required to
pay a value-added tax on its transactions, it is not because it is being
singled out, much less targeted, for special treatment but only
because of the removal of the exemption previously granted to it by
law. The withdrawal of exemption is all that is involved in these
cases. Other transactions, likewise previously granted exemption,
have been delisted as part of the

_______________

27 Associated Press v. NLRB, 301 U.S. 103, 132, 81 L.Ed. 953, 961 (1937).

678
678 SUPREME COURT REPORTS ANNOTATED
Tolentino vs. Secretary of Finance

scheme to expand the base and the scope of the VAT system. The
law would perhaps be open to the charge of discriminatory treatment
if the only privilege withdrawn had been that granted to the press.
But that is not the case.
The situation in the case at bar is indeed a far cry from those
cited by the PPI in support of its claim that Republic Act No. 7716
subjects the press to discriminatory taxation. In the cases cited, the
discriminatory purpose was clear either from the background of the
law or from 28
its operation. For example, in Grosjean v. American
Press Co., the law imposed a license tax equivalent to 2% of the
gross receipts derived from advertisements only on newspapers
which had a circulation of more than 20,000 copies per week.
Because the tax was not based on the volume of advertisement alone
but was measured by the extent of its circulation as well, the law
applied only to the thirteen large newspapers in Louisiana, leaving
untaxed four papers with circulation of only slightly less than 20,000
copies a week and 120 weekly newspapers which were in serious
competition with the thirteen newspapers in question. It was well
known that the thirteen newspapers had been critical of Senator
Huey Long, and the Long-dominated legislature of Louisiana
responded by taxing what Long described as the “lying newspapers”
by imposing on them “a tax on lying.” The effect of the tax was to
curtail both their revenue and their circulation. As the U.S. Supreme
Court noted, the tax was “a deliberate and calculated device in the
guise of a tax to limit the circulation of information to which 29
the
public is entitled in virtue of the constitutional guaranties.” The
case is a classic illustration of the warning that the power to tax is
the power to destroy.30
In the other case invoked by the PPI, the press was also found to
have been singled out because everything was exempt from the “use
tax” on ink and paper, except the press. Minnesota imposed a tax on
the sales of goods in that state. To protect the sales tax, it enacted a
complementary tax on the privilege of “using, storing or consuming
in that state tangible personal

_______________

28 297 U.S. 233, 80 L.Ed. 660 (1936).


29 297 U.S. at 250, 80 L.Ed. at 669.
30 Minneapolis Star v. Minnesota Commissioner of Revenue, 460 U.S. 575, 75
L.Ed.2d 295 (1983).

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Tolentino vs. Secretary of Finance

property” by eliminating the residents’ incentive to get goods from


outside states where the sales tax might be lower. The Minnesota
Star Tribune was exempted from both taxes from 1967 to 1971. In
1971, however, the state legislature amended the tax scheme by
imposing the “use tax” on the cost of paper and ink used for
publication. The law was held to have singled out the press because
(1) there was no reason for imposing the “use tax” since the press
was exempt from the sales tax and (2) the “use tax” was laid on an
“intermediate transaction rather than the ultimate retail sale.”
Minnesota had a heavy burden of justifying the differential treatment
and it failed to do so. In addition, the U.S. Supreme Court found the
law to be discriminatory because the legislature, by again amending
the law so as to exempt the first $100,000 of paper and ink used,
further narrowed the coverage of the tax so that “only a handful of
publishers pay 31any tax at all and even fewer pay any significant
amount of tax.” The discriminatory purpose was thus very clear. 32
More recently, in Arkansas Writers’ Project, Inc. v. Ragland, it
was held that a law which taxed general interest magazines but not
newspapers and religious, professional, trade and sports journals was
discriminatory because while the tax did not single out the press as a
whole, it targeted a small group within the press. What is more, by
differentiating on the basis of contents (i.e., between general interest
and special interests such as religion or sports) the law became
“entirely incompatible with the First Amendment’s guarantee of
freedom of the press.”
These cases come down to this: that unless justified, the
differential treatment of the press creates risks of suppression of
expression. In contrast, in the cases at bar, the statute applies to a
wide range of goods and services. The argument that, by imposing
the VAT only on print media whose gross sales 33exceeds P480,000
but not more than P750,000, the law discriminates is

________________

31 460 U.S. at 591, 75 L.Ed.2d at 308-9 (1983).


32 481 U.S. 221, 95 L.Ed.2d 209 (1987).
33 § 103(t) of the NIRC exempts from the VAT “Sale or lease of goods or
properties or the performance of services other than the transactions mentioned in the
preceding paragraphs, the gross annual sales and/or receipts [of which] do not exceed
the amount prescribed in regulations to be promulgated by the President upon the
recommendation

680

680 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance
without merit since it has not been shown that as a result the class
subject to tax has been unreasonably narrowed. The fact is that this
limitation does not apply to the press alone but to all sales. Nor is
impermissible motive shown by the fact that print media and
broadcast media are treated differently. The press is taxed on its
transactions involving printing and publication, which are different
from the transactions of broadcast media. There is thus a reasonable
basis for the classification.
The cases canvassed, it must be stressed, eschew any suggestion
that “owners of newspapers are immune from any forms of ordinary
taxation.” The license tax in the Grosjean case was declared invalid
because it was “one single in kind, with a 34long history of hostile
misuse against the freedom of the press.” On the other hand,
Minneapolis Star acknowledged that “The First Amendment does
not prohibit all regulation of the press [and that] the States and the
Federal Government can subject newspapers to generally applicable35
economic regulations without creating constitutional problems.”
What has been said above also disposes of the allegations of the
PBS that the removal of the exemption of printing, publication or
importation of books and religious articles, as well as their printing
and publication, likewise violates freedom of thought and of
conscience. For as the U.S. Supreme Court unanimously 36
held in
Jimmy Swaggart Ministries v. Board of Equalization, the Free
Exercise of Religion Clause does not prohibit imposing a generally
applicable sales and use tax on the sale of religious materials by a
religious organization.
This brings
37
us to the question whether the registration provision
of the law, although of general applicability, nonetheless is

_________________

by the Secretary of Finance which shall not be less than Four hundred eighty
thousand pesos (P480,000.00) or more than Seven hundred twenty thousand pesos
(P720,000.00) subject to tax under Section 112 of this Code.”
34 297 U.S. at 250, 80 L.Ed. at 668.
35 460 U.S. at 581, 75 L.Ed.2d at 302.
36 493 U.S. 378, 107 L.Ed.2d 796 (1990).
37 § 107 of the NIRC provides: “Any person subject to a value added tax under
Sections 100 and 102 of this Code shall register with the appropriate Revenue District
Officer and pay an annual registration

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VOL. 235, AUGUST 25, 1994 681


Tolentino vs. Secretary of Finance
invalid when applied to the press because it lays a prior restraint on
its essential
38
freedom. The case of American Bible Society v. City of
Manila is cited by both the PBS and the PPI in support of their
contention that the law imposes censorship. There, this Court held
that an ordinance of the City of Manila, which imposed a license fee
on those engaged in the business of general merchandise, could not
be applied to the appellant’s sale of bibles and other39 religious
literature. This Court relied on Murdock v. Pennsylvania, in which
it was held that, as a license fee is fixed in amount and unrelated to
the receipts of the taxpayer, the license fee, when applied to a
religious sect, was actually being imposed as a condition for the
exercise of the sect’s right under the Constitution. For that reason, it
was held, the license fee “restrains in advance those constitutional
liberties of40 press and religion and inevitably tends to suppress their
exercise.”
But, in this case, the fee in § 107, although a fixed amount
(P1,000), is not imposed for the exercise of a privilege but only for
the purpose of defraying part of the cost of registration. The
registration requirement is a central feature of the VAT system. It is
designed to provide a record of tax credits because any person who
is subject to the payment of the VAT pays an input tax, even as he
collects 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 a constitutional right.

________________

fee in the amount of One thousand pesos (P1,000.00) for every separate or distinct
establishment or place of business and every year thereafter on or before the last day
of January. Any person just commencing a business subject to the value-added tax
must pay the fee before engaging therein . . .”
38 101 Phil. 386 (1957).
39 319 U.S. 105, 113, 87 L.Ed. 1292 (1943).
40 319 U.S. at 114, 87 L.Ed. 1292 at 1298. For the same reason, in People v.
Korins, 385 N.Y.S. 2d 474 (1976) a decision of the city court of Utica, Oneida County
held that to apply an ordinance requiring a business license to be obtained before a
person could sell newspapers in the streets would be to impose a prior restraint on
press freedom because “a newspaper is not in the same category as pineapple or a
soap powder or a pair of shoes” whose sale may be conditioned on the possession of a
business license.

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682 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

For the foregoing reasons, we find the attack on Republic Act No.
7716 on the ground that it offends the free speech, press and
freedom of religion guarantees of the Constitution to be without
merit. For the same reasons, we find the claim of the Philippine
Educational Publishers Association (PEPA) in G.R. No. 115931 that
the increase in the price of books and other educational materials as
a result of the VAT would violate the constitutional mandate to the
government to give priority to education, science and technology
(Art. II, § 17) to be untenable.

B. Claims of Regressivity, Denial of Due Process, Equal Protection,


and Impairment of Contracts
There is basis for passing upon claims that on its face the statute
violates the guarantees of freedom of speech, press and religion. The
possible “chilling effect” which it may have on the essential freedom
of the mind and conscience and the need to assure that the channels
of communication are open and operating importunately demand the
exercise of this Court’s power of review.
There is, however, no justification for passing upon the claims
that the law also violates the rule that taxation must be progressive
and that it denies petitioners’ right to due process and the equal
protection of the laws. The reason for this different treatment has
been cogently stated by an eminent authority on constitutional law
thus: “[W]hen freedom of the mind is imperiled by law, it is freedom
that commands a momentum of respect; when property is imperiled
it is the lawmakers’ judgment that commands respect. This dual
standard may not precisely reverse the presumption of
constitutionality in civil liberties cases, but obviously
41
it does set up a
hierarchy of values within the due process clause.”
Indeed, the absence of threat of immediate harm makes the need
for judicial intervention less evident and underscores the essential
nature of petitioners’ attack on the law on the grounds of
regressivity, denial of due process and equal protection and

________________

41 P.A. FREUND, ON UNDERSTANDING THE SUPREME COURT II (1950),


quoted in Ermita, Malate Hotel and Motel Operators Ass’n v. City Mayor, 21 SCRA
449, 459 (1967).

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Tolentino vs. Secretary of Finance

impairment of contracts as a mere academic discussion of the merits


of the law. For the fact is that there have even been no notices of
assessments issued to petitioners and no determinations at the
administrative levels of their claims so as to illuminate the actual
operation of the law and enable us to reach sound judgment
regarding so fundamental questions as those raised in these suits.
Thus, the broad argument against the VAT is that it is regressive
and that it violates the requirement that “The rule of taxation shall be
uniform and equitable 42
[and] Congress shall evolve a progressive
system of taxation.” Petitioners in G.R. No. 115781 quote from a
paper, entitled “VAT Policy Issues: Structure, Regressivity, Inflation
and Exports” by Alan A. Tait of the International Monetary Fund,
that “VAT payment by low-income households will be a higher
proportion of their incomes (and expenditures) than payments by
higher-income households. That is, the VAT will be regressive.”
Petitioners contend that as a result of the uniform 10% VAT, the tax
on consumption goods of those who are in the higher-income
bracket, which before were taxed at a rate higher than 10%, has been
reduced, while basic commodities, which before were taxed at rates
ranging from 3% to 5%, are now taxed at a higher rate.
Just as vigorously as it is asserted that the law is regressive, the
opposite claim is pressed by respondents that in fact it distributes the
tax burden to as many goods and services as possible particularly to
those which are within the reach of higher-income groups, even as
the law exempts basic goods and services. It is thus equitable. The
goods and properties subject to the VAT are those used or consumed
by higher-income groups. These include real properties held
primarily for sale to customers or held for lease in the ordinary
course of business, the right or privilege to use industrial,
commercial or scientific equipment, hotels, restaurants and similar
places, tourist buses, and the like. On the other hand, small business
establishments, with annual gross sales of less than P500,000, are
exempted. This,

_________________

42 Art. VI, § 28(1). Related to this argument is the claim that Republic Act No.
7716 likewise infringes the Due Process and Equal Protection Clauses of the Bill of
Rights, Art. III, § 1(1).

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684 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

according to respondents, removes from the coverage of the law


some 30,000 business
43
establishments. On the other hand, an
occasional paper of the Center for Research and Communication
cites a NEDA study that the VAT has minimal impact on inflation
and income distribution and that while additional expenditure for the
lowest income class is only P301 or 1.49% a year, that for a family
earning P500,000 a year or more is P8,340 or 2.2%.
Lacking empirical data on which to base any conclusion
regarding these arguments, any discussion whether the VAT is
regressive in the sense that it will hit the “poor” and middle-income
group in society harder than it will the “rich,” as the Cooperative
Union of the Philippines (CUP) claims in G.R. No. 115873, is
largely an academic exercise. On the other hand, the CUP’s
contention that Congress’ withdrawal of exemption of producers
cooperatives, marketing cooperatives, and service cooperatives,
while maintaining that granted to electric cooperatives, not only
goes against the constitutional policy to promote cooperatives as
instruments of social justice (Art. XII, § 15) but also denies such
cooperatives the equal protection of the law is actually a policy
argument. The legislature is not required to adhere
44
to a policy of “all
or none” in choosing the subject of taxation.
Nor is the contention of the Chamber of Real Estate and Builders
Association (CREBA), petitioner in G.R. 115754, that the VAT will
reduce the mark up of its members by as much as 85% to 90% any
more concrete. It is a mere allegation. On the other hand, the claim
of the Philippine Press Institute, petitioner in G.R. No. 115544, that
the VAT will drive some of its members out of circulation because
their profits from advertisements will not be enough to pay for their
tax liability, while purporting to be based on the financial statements
of the newspapers in question, still falls short of the establishment of
facts by evidence so necessary for adjudicating the question whether
the tax is oppressive and confiscatory.
Indeed, regressivity is not a negative standard for courts to
enforce. What Congress is required by the Constitution to do is to

_______________

43 Neri, “In Support of the Expanded Value-Added Tax,” (CRC Economic Policy
Papers No. 5 1994) pp. 3-4.
44 Cf. Lutz v. Araneta, 98 Phil. 148, 153 (1955).

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Tolentino vs. Secretary of Finance

“evolve a progressive system of taxation.” This is a directive to


Congress, just like the directive to it to give priority to the enactment
of laws for the enhancement of human dignity and the reduction of
social, economic and political inequalities (Art. XIII, § 1), or for the
promotion of the right to “quality education” (Art. XIV, § 1). These
provisions are put in the Constitution as moral incentives to
legislation, not as judicially enforceable rights. 45
At all events, our 1988 decision in Kapatiran should have laid
to rest the questions now raised against the VAT. There similar
arguments made against the original VAT Law (Executive Order No.
273) were held to be hypothetical, with no more basis than
newspaper articles which this Court found to be “hearsay and
[without] evidentiary value.” As Republic Act No. 7716 merely
expands the base of the VAT system and its coverage as provided in
the original VAT Law, further debate on the desirability and wisdom
of the law should have shifted to Congress.
Only slightly less abstract but nonetheless hypothetical is the
contention of CREBA that the imposition 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
that “No law impairing the obligation of contracts shall be passed.”
It is enough to say that the parties to a contract cannot, through the
exercise of prophetic discernment, fetter the exercise of the taxing
power of the State. For not only are existing laws read into contracts
in order to fix obligations as between parties, but the reservation of
essential attributes of sovereign power is also read into contracts as a
basic postulate of the legal order. The policy of protecting contracts
against impairment presupposes the maintenance of a government
which retains
46
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

_________________

45 Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas, Inc. v. Tan, 163


SCRA 371.
46 Cf. Philippine American Life Ins. Co. v. Auditor General, 22 SCRA 135 (1968).

686

686 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

only where 47a tax exemption has been granted for a valid
consideration. Such is not the case of PAL in G.R. No. 115852, and
we do not understand it to make this claim. Rather, its position, as
discussed above, is that the removal of its tax exemption cannot be
made by a general, but only by a specific, law.
The substantive issues raised in some of the cases are presented
in abstract, hypothetical form because of the lack of a concrete
record. We accept that this Court does not only adjudicate
48
private
cases; that public actions by “non-Hohfeldian” or ideological
plaintiffs are now cognizable provided they meet the standing
requirement of the Constitution; that under Art. VIII, § 1, ¶ 2 the
Court has a “special function” of vindicating constitutional rights.
Nonetheless the feeling cannot be escaped that we do not have
before us in these cases a fully developed factual record
49
that alone
can impart to our adjudication the impact of actuality to insure that
decision-making is informed and well grounded. Needless to say, we
do not have power to render advisory opinions or even jurisdiction
over petitions for declaratory judgment. In effect we are being asked
to do what the Conference Committee is precisely accused of having
done in these cases—to sit as a third legislative chamber to review
legislation.

________________

47 See E. M. FERNANDO, THE CONSTITUTION OF THE PHILIPPINES 560-


561 (2d Ed., 1977).
48 The term is Professor Jaffe’s (JUDICIAL CONTROL OF ADMINISTRATIVE
ACTION (1965) adopted by Justice Harlan in his dissent in Flast v. Cohen, 392 U.S.
83, 119-120, L.Ed.2d 947, 973 (1968) to distinguish between the personal and
proprietary interest of traditional plaintiffs and the public interest of a citizen suing in
a public action. The term was mentioned by some members of this Court in the Lotto
case (Kilosbayan, Inc. v. Guingona, G.R. No. 113375, May 5, 1994).
49 Compare Justice Laurel: “Even then, this power of judicial review is limited to
actual cases and controversies to be exercised after full opportunity of argument by
the parties, and limited further to the constitutional question raised or the very lis
mota presented. Any attempt at abstraction could only lead to dialectics and barren
legal questions and to sterile conclusions unrelated to actualities.” Angara v. Electoral
Commission, 63 Phil. 139, 158 (1936).

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Tolentino vs. Secretary of Finance

We are told, however, that the power of judicial review is not so


much power as it is duty imposed on this Court by the Constitution
and that we would be remiss in the performance of that duty if we
decline to look behind the barriers set by the principle of separation
of powers. Art. VIII, § 1, ¶ 2 is cited in support of this view:

Judicial power includes the duty of the courts of justice to settle actual
controversies involving rights which are legally demandable and
enforceable, and to determine whether or not there has been a grave abuse
of discretion amounting to lack or excess of jurisdiction on the part of any
branch or instrumentality of the Government.

To view the judicial power of review as a duty is nothing new. Chief


Justice Marshall said so in 1803, to justify the assertion of this
power in Marbury v. Madison:

It is emphatically the province and duty of the judicial department to say


what the law is. Those who apply the rule to particular cases must of
necessity expound and interpret that rule. If two laws 50
conflict with each
other, the courts must decide on the operation of each.

Justice Laurel echoed this justification in 1936 in Angara v.


Electoral Commission:

And when the judiciary mediates to allocate constitutional boundaries, it


does not assert any superiority over the other departments; it does not in
reality nullify or invalidate an act of the legislature, but only asserts the
solemn and sacred obligation assigned to it by the Constitution to determine
conflicting claims of authority under the Constitution and to establish for the
parties in an actual 51controversy the rights which that instrument secures and
guarantees to them.

This 52conception of the judicial power has been affirmed in several


cases of this Court following Angara.

_______________

50 1 Cranch 137, 2 L.Ed. 60(1803) (emphasis added).


51 Supra note 49 (emphasis added).
52 People v. Vera, 65 Phil. 56, 94 (1937); Tañada v. Cuenco, 103 Phil. 1051, 1061-
2 (1957); Macias v. COMELEC, 3 SCRA 1, 7-8 (1961).

688

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Tolentino vs. Secretary of Finance

It does not add anything, therefore, to invoke this “duty” to justify


this Court’s intervention in what is essentially a case that at best is
not ripe for adjudication. That duty must still be performed in the
context of a concrete case or controversy, as Art. VIII, § 5(2) clearly
defines our jurisdiction in terms of “cases,” and nothing but “cases.”
That the other departments of the government may have committed
a grave abuse of discretion is not an independent ground for
exercising our power. Disregard of the essential limits imposed by
the case and controversy requirement can in the long run only result
in undermining our authority as a court of law. For, as judges, what
we are called upon to render is judgment according to law, not
according to what may appear to be the opinion of the day.

____________________________________

In the preceding pages we have endeavored to discuss, within limits,


the validity of Republic Act No. 7716 in its formal and substantive
aspects as this has been raised in the various cases before us. To sum
up, we hold:
That the procedural requirements of the Constitution have
(1) 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 in these cases are DISMISSED.

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Tolentino vs. Secretary of Finance

Bidin, Quiason and Kapunan, JJ., concur.


Narvasa (C.J.) and Melo, J., Concur in separate opinions.
Cruz, Padilla and Vitug, JJ., See separate opinions.
Feliciano, J., I join in both the majority opinion by
Mendoza, J. and the concurring opinion of Narvasa, C.J.
Regalado, Davide, Jr., Romero, Bellosillo and Puno, JJ., See
dissenting opinions.

SEPARATE OPINION

NARVASA, C.J.:

I fully concur with the conclusions set forth in the scholarly opinion
of my learned colleague, Mr. Justice Vicente V. Mendoza. I write
this separate opinion to express my own views relative to the
procedural issues raised by the various petitions and dealt with by
some other Members of the Court in their separate opinions.
By their very nature, it would seem, discussions of constitutional
issues prove fertile ground for a not uncommon phenomenon: debate
marked by passionate partisanship amounting sometimes to
impatience with adverse views, an eagerness on the part of the
proponents on each side to assume the role of, or be perceived as,
staunch defenders of constitutional principles, manifesting itself in
flights of rhetoric, even hyperbole. The peril in this, obviously, is a
diminution of objectivity—that quality which, on the part of those
charged with the duty and authority of interpreting the fundamental
law, is of the essence of their great function. For the Court, more
perhaps than for any other person or group, it is necessary to
maintain that desirable objectivity. It must make certain that on this
as on any other occasion, the judicial function is meticulously
performed, the facts ascertained as comprehensively and as
accurately as possible, all the issues particularly identified, all the
arguments clearly understood; else, it may itself be accused, by its
own members or by others, of a lack of adherence to, or a careless
observance of, its own procedures, the signatures of its individual
members on its enrolled verdicts notwithstanding.

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Tolentino vs. Secretary of Finance

In the matter now before the Court, and whatever reservations some
people may entertain about their intellectual limitations or moral
scruples, I cannot bring myself to accept the thesis which necessarily
implies that the members of our august Congress, in enacting the
expanded VAT law, exposed their ignorance, or indifference to the
observance, of the rules of procedure set down by the Constitution
or by their respective chambers, or what is worse, deliberately
ignored those rules for some yet undiscovered purpose nefarious in
nature, or at least some purpose other than the public weal; or that a
few of their fellows, acting as a bicameral conference committee, by
devious schemes and cunning maneuvers, and in conspiracy with
officials of the Executive Department and others, succeeded in
“pulling the wool over the eyes” of all their other colleagues and
foisting on them a bill containing provisions that neither chamber of
our bicameral legislature conceived or contemplated. This is the
thesis that the petitioners would have this Court approve. It is a
thesis I consider bereft of any factual or logical foundation.
Other than the bare declarations of some of the petitioners, or
arguments from the use and import of the language employed in the
relevant documents and records, there is no evidence before the
Court adequate to support a finding that the legislators concerned,
whether of the upper or lower chamber, acted otherwise than in good
faith, in the honest discharge of their functions, in the sincere belief
that the established procedures were being regularly observed or, at
least, that there occurred no serious or fatal deviation therefrom.
There is no evidence on which reasonably to rest a conclusion that
any executive or other official took part in or unduly influenced the
proceedings before the bicameral conference committee, or that the
members of the latter were motivated by a desire to surreptitiously
introduce improper revisions in the bills which they were required to
reconcile, or that after agreement had been reached on the mode and
manner of reconciliation of the “disagreeing provisions,” had
resorted to stratagems or employed under-handed ploys to ensure
their approval and adoption by either House. Neither is there any
proof that in voting on the Bicameral Conference Committee (BCC)
version of the reconciled bills, the members of the Senate and the
House did so in ignorance of, or without understanding, the contents
thereof or the bills therein reconciled.

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Tolentino vs. Secretary of Finance

Also unacceptable is the theory that since the Constitution requires


appropriation and revenue bills to originate exclusively in the House
of Representatives, it is improper if not unconstitutional for the
Senate to formulate, or even think about formulating, its own draft
of this type of measure in anticipation of receipt of one transmitted
by the lower Chamber. This is specially cogent as regards much-
publicized suggestions for legislation (like the expanded VAT Law)
emanating from one or more legislators, or from the Executive
Department, or the private sector, etc. which understandably could
be expected to forthwith generate much Congressional cogitation.
Exclusive origination, I submit, should have no reference to time
of conception. As a practical matter, origination should refer to the
affirmative act which effectively puts the bicameral legislative
procedure in motion, i.e., the transmission by one chamber to the
other of a bill for its adoption. This is the purposeful act which sets
the legislative machinery in operation to effectively lead to the
enactment of a statute. Until this transmission takes place, the
formulation and discussions, or the reading for three or more times
of proposed measures in either chamber, would be meaningless in
the context of the activity leading towards concrete legislation.
Unless transmitted to the other chamber, a bill prepared by either
house cannot possibly become law. In other words, the first
affirmative, efficacious step, the operative act as it were, leading to
actual enactment of a statute, is the transmission of a bill from one
house to the other for action by the latter. This is the origination that
is spoken of in the Constitution in its Article VI, Section 24, in
reference to appropriation, revenue, or tariff bills, etc.
It may be that in the Senate, revenue or tax measures are
discussed, even drafted, and this before a similar activity takes place
in the House. This is of no moment, so long as those measures or
bills remain in the Senate and are not sent over to the House. There
is no origination of revenue or tax measures by the Senate in this
case. However, once the House completes the drawing up of a
similar tax measure in accordance with the prescribed procedure,
even if this is done subsequent to the Senate’s own measure—
indeed, even if this be inspired by information that a measure of the
same nature or on the same subject has been formulated in the
Senate—and after third

692

692 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

reading transmits its bill to the Senate, there is origination by (or in)
the House within the contemplation of the Constitution.
So it is entirely possible, as intimated, that in expectation of the
receipt of a revenue or tax bill from the House of Representatives,
the Senate commences deliberations on its own concept of such a
legislative measure. This, possibly to save time, so that when the
House bill reaches it, its thoughts and views on the matter are
already formed and even reduced to writing in the form of a draft
statute. This should not be thought illegal, as interdicted by the
Constitution. What the Constitution prohibits is for the Senate to
begin the legislative process first, by sending its own revenue bill to
the House of Representatives for its consideration and action. This is
the initiation that is prohibited to the Senate.
But petitioners claim that this last was what in fact happened, that
the bill that went through the legislative mill and was finally
approved as R.A. No. 7716, was the Senate version, SB 1630. This
is disputed by the respondents. They claim it was House Bill 11197
that, after being transmitted to the Senate, was referred after first
reading to its Committee on Ways and Means; was reported out by
said Committee; underwent second and third readings, was sent to
the bicameral conference committee and then, after appropriate
proceedings therein culminating in extensive amendments thereof,
was finally approved by both Houses and became the Expanded
VAT Law.
On whose side does the truth lie? If it is not possible to make that
determination from the pleadings and records before this Court, shall
it require evidence to be presented? No, on both law and principle.
The Court will reject a case where the legal issues raised, whatever
they may be, depend for their resolution on still unsettled questions
of fact. Petitioners may not, by raising what are concededly novel
and weighty constitutional questions, compel the Court to assume
the role of a trier of facts. It is on the contrary their obligation,
before raising those questions to this Court, to see to it that all issues
of fact are settled in accordance with the procedures laid down by
law for proof of facts. Failing this, petitioners would have only
themselves to blame for a peremptory dismissal.
Now, what is really proven about what happened to HB 11197
after it was transmitted to the Senate? It seems to be admitted on

693

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Tolentino vs. Secretary of Finance

all sides that after going through first reading, HB 11197 was
referred to the Committee on Ways and Means chaired by Senator
Ernesto Herrera.
It is however surmised that after this initial step, HB 11197 was
never afterwards deliberated on in the Senate, that it was there given
nothing more than a “passing glance,” and that it never went through
a proper second and third reading. There is no competent proof to
substantiate this claim. What is certain is that on February 7, 1994,
the Senate Committee on Ways and Means submitted its Report (No.
349) stating that HB 11197 was considered, and recommending that
SB 1630 be approved “in substitution
1
of S.B. No. 1129, taking into
consideration P.S. Res. No. 734 and H.B. No. 11197.” This Report
made known to the Senate, and clearly indicates, that H.B. No.
11197 was indeed deliberated on by the Committee; in truth, as
Senator Herrera pointed out, the BCC later “agreed to adopt (a
broader coverage of the VAT) which is closely adhering to the
Senate version ** ** with some new provisions or amendments.”
The plain implication is that the Senate Committee had indeed
discussed HB 11197 in comparison with the inconsistent parts of SB
1129 and afterwards proposed amendments to the former in the form
of a new bill (No. 1630) more closely akin to the Senate bill (No.
1129).
And it is as reasonable to suppose as not that later, during the
second and third readings on March 24, 1994, the Senators,
assembled as a body, had before them copies of HB 11197 and SB
1129, as well as of the Committee’s new “SB 1630” that had been
recommended for their approval, or at the very least were otherwise
perfectly aware that they were considering the particular provisions
of these bills. That there was such a deliberation in the Senate on HB
11197 in light of inconsistent portions of SB 1630, may further be
necessarily inferred from the request, made by the Senate on the
same day, March 24, 1994, for the convocation of a bicameral
conference committee to reconcile “the disagreeing provisions of
said bill (SB 1630) and House Bill No. 11197,” a

________________
1 Resolution “Urging the Senate Committee on Ways and Means to Study the
Proposal to Exempt Local Movie Producers from the Payment of the Value-Added
Tax as an Incentive to the Production of Quality and Wholesome Filipino Movies
Whenever they Feature an All-Filipino Cast of Actors and Actresses.”

694

694 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

request that could not have been made had not the Senators more or
less closely examined the provisions of HB 11197 and compared
them with those of the counterpart Senate measures.
Were the proceedings before the bicameral conference committee
fatally flawed? The affirmative is suggested because the committee
allegedly overlooked or ignored the fact that SB 1630 could not
validly originate in the Senate, and that HB 11197 and SB 1630
never properly passed both chambers. The untenability of these
contentions has already been demonstrated. Now, demonstration of
the indefensibility of other arguments purporting to establish the
impropriety of the BCC proceedings will be attempted.
There is the argument, for instance, that the conference
committee never used HB 11197 even as “frame of reference”
because it does not appear that the suggestion therefor (made by
House Panel Chairman Exequiel Javier at the bicameral conference
committee’s meeting on April 19, 1994, with the concurrence of
Senator Maceda) was ever resolved, the minutes being regrettably
vague as to what occurred after that suggestion was made. It is,
however, as reasonable to assume that it was, as it was not, given the
vagueness of the minutes already alluded to. In fact, a reading of the
BCC Report persuasively demonstrates that HB 11197 was not only
utilized as a “frame of reference” but actually discussed and
deliberated on. 2
Said BCC Report pertinently states:

“CONFERENCE COMMITTEE REPORT

The Conference Committee on the disagreeing provisions of House Bill No.


11197, entitled:
AN ACT RESTRUCTURING THE VALUE ADDED TAX (VAT)
SYSTEM TO WIDEN ITS TAX BASE AND ENHANCE ITS
ADMINISTRATION, AMENDING FOR THESE PURPOSES SECTIONS
99, 100, 102, 103, 104, 105, 106, 107, 108 AND 110 OF TITLE IV, 112,
115 AND 116 OF TITLE V, AND 236, 237, AND 238 OF TITLE IX,
AND REPEALING SECTIONS 113SD AND 114 OF TITLE V, ALL OF
THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED

________________
2 Italics supplied.

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Tolentino vs. Secretary of Finance

and Senate Bill No. 1630 entitled:


AN ACT RESTRUCTURING THE VALUE ADDED TAX (VAT)
SYSTEM TO WIDEN ITS TAX BASE AND ENHANCE ITS
ADMINISTRATION, AMENDING FOR THESE PURPOSES SECTIONS
99, 100, 102, 103, 104, 105, 106, 107, 108 AND 110 OF TITLE IV, 112,
115, 117 AND 121 OF TITLE V, AND 236, 237, AND 238 OF TITLE IX,
AND REPEALING SECTIONS 113, 114, 116, 119 AND 120 OF TITLE V,
ALL OF THE NATIONAL INTERNAL REVENUE CODE, AS
AMENDED AND FOR OTHER PURPOSES
having met, after full and free conference, has agreed to recommend and
do hereby recommend to their respective Houses that House Bill No. 11197,
in consolidation with Senate Bill No. 1630, be approved in accordance with
the attached copy of the bill as reconciled and approved by the conferees.
Approved.”

The Report, it will be noted, explicitly adverts to House Bill No.


11197, it being in fact mentioned ahead of Senate Bill No. 1630;
graphically shows the very close identity of the subjects of both bills
(indicated in their respective titles); and clearly says that the
committee met in “full and free conference” on the “disagreeing
provisions” of both bills (obviously in an effort to reconcile them);
and that reconciliation of said “disagreeing provisions” had been
effected, the BCC having agreed that “House Bill No. 11197, in
consolidation with Senate Bill No. 1630, be approved in accordance
with the attached copy of the bill as reconciled and approved by the
conferees.”
It may be concluded, in other words, that, conformably to the
procedure provided in the Constitution with which all the Members
of the bicameral conference committee cannot but be presumed to be
familiar, and no proof to the contrary having been adduced on the
point, it was the original bill (HB 11197) which said body had
considered and deliberated on in detail, reconciled or harmonized
with SB 1630, and used as basis for drawing up the amended version
eventually reported out and submitted to both houses of Congress.
It is further contended that the BCC was created and convoked
prematurely, that SB 1630 should first have been sent to the House
of Representatives for concurrence. It is maintained, in

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other words, that the latter chamber should have refused the Senate
request for a bicameral conference committee to reconcile the
“disagreeing provisions” of both bills, and should have required that
SB 1630 be first transmitted to it. This, seemingly, is nit-picking
given the urgency of the proposed legislation as certified by the
President (to both houses, in fact). Time was of the essence,
according to the President’s best judgment—as regards which
absolutely no one in either chamber of Congress took exception,
general acceptance being on the contrary otherwise manifested—and
that judgment the Court will not now question. In light of that
urgency, what was so vital or indispensable about such a transmittal
that its absence would invalidate all else that had been done towards
enactment of the law, completely escapes me, specially considering
that the House had immediately acceded without demur to the
request for convocation of the conference committee.
What has just been said should dispose of the argument that the
statement in the enrolled bill, that “This Act which is a consolidation
of House Bill No. 11197 and Senate Bill No. 1630 was finally
passed by the House of Representatives and the Senate on April 27,
1994 and May 2, 1994,” necessarily signifies that there were two (2)
bills separately introduced, retaining their independent existence
until they reached the bicameral conference committee where they
were consolidated, and therefore, the VAT law did not originate
exclusively in the House having originated in part in the Senate as
SB 1630, which bill was not embodied in but merely merged with
HB 11197, retaining its separate identity until it was joined by the
BCC with the house measure. The more logical, and fairer, course is
to construe the expression, “consolidation of House Bill No. 11197
and Senate Bill No. 1630” in the context of accompanying and
contemporaneous statements, i.e.: (a) the declaration in the BCC
Report, supra, that the committee met to reconcile the disagreeing
provisions of the two bills, “and after full and free conference” on
the matter, agreed and so recommended that “House Bill No. 11197,
in consolidation with Senate Bill No. 1630, be approved in
accordance with the attached copy of the bill as reconciled and
approved by the conferees;” and (b) the averment of Senator
Herrera, in the Report of the Ways and Means Committee, supra,
that the committee had actually “considered” (discussed)
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HB No. 11197 and taken it “into consideration” in recommending


that its own version of the measure (SB 1630) be the one approved.
That the Senate might have drawn up its own version of the
expanded VAT bill, contemporaneously with or even before the
House did, is of no moment. It bears repeating in this connection
that no VAT bill ever originated in the Senate; neither its SB 1129 or
SB 1630 or any of its drafts was ever officially transmitted to the
House as an initiating bill which, as already pointed out, is what the
Constitution forbids; it was HB 11197 that was first sent to the
Senate, underwent first reading, was referred to Committee on Ways
and Means and there discussed in relation to and in comparison with
the counterpart Senate version or versions—the mere formulation of
which was, as also already discussed, not prohibited to it—and
afterwards considered by the Senate itself, also in connection with
SB 1630, on second and third readings. HB 11197 was in the truest
sense, the originating bill.
An issue has also arisen respecting the so-called “enrolled bill
doctrine” which, it is said, whatever sacrosanct status it might
originally have enjoyed, is now in bad odor with modern scholars on
account of its imputed rigidity and unrealism; it being also submitted
that the ruling in “Mabanag v. Lopez Vito (78 Phil. 1) and the cases
reaffirming it, is no longer good
3
law, it being based on a provision of
the Code of Civil Procedure long since stricken from the statute
books.
I would myself consider the “enrolled bill” theory as laying down
a presumption of so strong a character as to be well nigh absolute or
conclusive, fully in accord with the familiar and fundamental
philosophy of separation of powers. The result, as far as I am
concerned, is to make discussion of the enrolled bill principle purely
academic; for as already pointed out, there is no proof worthy of the
name of any facts to justify its reexamination and, possibly,
disregard.
The other question is, what is the nature of the power given to a
bicameral conference committee of reconciling differences

_________________

3 Giving “conclusive” character to copies of Acts of the Philippine Commission


which have been signed by its presiding officers and secretaries.

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between, or “disagreeing provisions” in, a bill originating from the


House in relation to amendments proposed by the Senate—whether
as regards some or all of its provisions? Is the mode of
reconciliation, subject to fixed procedure and guidelines? What
exactly can the committee do, or not do? Can it only clarify or revise
provisions found in either Senate or House bill? Is it forbidden to
propose additional or new provisions, even on matters necessarily or
reasonably connected with or germane to items in the bills being
reconciled?
In answer, it is postulated that the reconciliation function is quite
limited. In these cases, the conference committee should have
confined itself to reconciliation of differences or inconsistencies
only by (a) restoring provisions of HB 11197 eliminated by SB
1630, or (b) sustaining wholly or partly the Senate amendments, or
(c) as a compromise, agreeing that neither provisions nor
amendments be carried into the final form of HB 11197 for
submission to both chambers of the legislature.
The trouble is, it is theorized, the committee incorporated
activities or transactions which were not within the contemplation of
both bills; it made additions and deletions which did not enjoy the
enlightenment of initial committee studies; it exercised what is
known as an “ex post veto power” granted to it by no law, rule or
regulation, a power that in truth is denied to it by the rules of both
the Senate and the House. In substantiation, the Senate rule is cited,
similar to that of the House, providing that “differences shall be
settled by a conference committee” whose report shall contain
“detailed and sufficiently explicit statement of the changes in or
amendments to the subject measure, ** (to be) signed by the
conferees;” as well as the “Jefferson’s Manual,” adopted by the
Senate as supplement to its own rules, directing that the managers of
the conference must confine themselves to differences submitted to
them; they may not include subjects not within the disagreements
even though germane to a question in issue.”
It is significant that the limiting proviso in the relevant rules has
been construed and applied as directory, not mandatory. During the
oral argument, counsel for petitioners admitted that the practice for
decades has been for bicameral conference committees to include
such provisions in the reconciled bill as they believed to be germane
or necessary and acceptable to both

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chambers, even if not within any of the “disagreeing provisions,”


and the reconciled bills, containing such provisions had invariably
been approved and adopted by both houses of Congress. It is a
practice, they say, that should be stopped. But it is a practice that
establishes in no uncertain manner the prevailing concept in both
houses of Congress of the permissible and acceptable modes of
reconciliation that their conference committees may adopt, one
whose undesirability is not all that patent if not, indeed, incapable of
unquestionable demonstration. The fact is that conference
committees only take up bills which have already been freely and
fully discussed in both chambers of the legislature, but as to which
there is need of reconciliation in view of “disagreeing provisions”
between them; and both chambers entrust the function of reconciling
the bills to their delegates at a conference committee with full
awareness, and tacit consent, that conformably with established
practice unquestioningly observed over many years, new provisions
may be included even if not within the “disagreeing provisions” but
of which, together with other changes, they will be given detailed
and sufficiently explicit information prior to voting on the
conference committee version.
In any event, a fairly recent decision written for the Court by
Senior Associate Justice Isagani A. Cruz, promulgated on November
11, 1993 (G.R. No. 105371, The Philippine Judges Association, etc.,
et al. v. Hon. Pete Prado, etc., et al.), should leave no doubt of the
continuing vitality of the enrolled bill doctrine and give an insight
into the nature of the reconciling function of bicameral conference
committees. In that case, a bilateral conference committee was
constituted and met to reconcile Senate Bill No. 720 and House Bill
No. 4200. It adopted a “reconciled” measure that was submitted to
and approved by both chambers of Congress and ultimately signed
into law by the President, as R.A. No. 7354. A provision in this
statute (removing the franking privilege from the courts, among
others) was assailed as being an invalid amendment because it was
not included in the original version of either the senate or the house
bill and hence had generated no disagreement between them which
had to be reconciled. The Court held:

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“While it is true that a conference committee is the mechanism for


compromising differences between the Senate and the House, it is not
limited in its jurisdiction to this question. Its broader function is described
thus:

A conference committee may deal generally with the subject matter or it may be
limited to resolving the precise differences between the two houses. Even where the
conference committee is not by rule limited in its jurisdiction, legislative custom
severely limits the freedom with which new subject matter can be inserted into the
conference bill. But occasionally a conference committee produces unexpected
results, results beyond its mandate. These excursions occur even where the rules
impose strict limitations on conference committee jurisdiction. This is symptomatic
of the authoritarian power of conference committee (Davies, Legislative Law and
Process: In A Nutshell, 1987 Ed., p. 81).
It is a matter of record that the Conference Committee Report on the
bill in question was returned to and duly approved by both the
Senate and the House of Representatives. Thereafter, the bill was
enrolled with its certification by Senate President Neptali A.
Gonzales and Speaker Ramon V. Mitra of the House of
Representatives as having been duly passed by both Houses of
Congress. It was then presented to and approved by President
Corazon C. Aquino on April 3, 1992.
Under the doctrine of separation of powers, the Court may not
inquire beyond the certification of the approval of a bill from the
presiding officers of Congress. Casco Philippine Chemical Co. v.
Gimenez (7 SCRA 347) laid down the rule that the enrolled bill is
conclusive upon the Judiciary (except in matters that have to be
entered in the journals like the yeas and nays on the final reading of
the bill) (Mabanag v. Lopez Vito, 78 Phil. 1). The journals are
themselves also binding on the Supreme Court, as we held in the old
(but still valid) case of U.S. v. Pons (34 Phil. 729), where we
explained the reason thus:

To inquire into the veracity of the journals of the Philippine legislature when
they are, as we have said, clear and explicit, would be to violate both the
letter and spirit of the organic laws by which the Philippine Government
was brought into existence, to invade a coordinate and independent
department of the Government, and to interfere with the legitimate powers
and functions of the Legislature. Applying these principles, we shall decline
to look into the petitioners’

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charges that an amendment was made upon the last reading of the bill that
eventually R.A. No. 7354 and that copies thereof in its final form were not
distributed among the members of each House. Both the enrolled bill and
the legislative journals certify that the measure was duly enacted i.e., in
accordance with Article VI, Sec. 26 (2) of the Constitution. We are bound
by such official assurances from a coordinate department of the government,
to which we owe, at the very least, a becoming courtesy.”

Withal, an analysis of the changes made by the conference


committee in HB 11197 and SB 1630 by way of reconciling their
“disagreeing provisions,”—assailed by petitioners as unauthorized
or incongruous—reveals that many of the changes related to actual
“disagreeing provisions,” and that those that might perhaps be
considered as entirely new are nevertheless necessarily or logically
connected with or germane to particular matters in the bills being
reconciled.
For instance, the change made by the bicameral conference
committee (BCC) concerning amendments to Section 99 of the
National Internal Revenue Code (NIRC)—the addition of “lessors
of goods or properties and importers of goods”—is really a
reconciliation of disagreeing provisions, for while HB 11197
mentions as among those subject to tax, “one who sells, barters, or
exchanges goods or properties and any person who leases personal
properties,” SB 1630 does not. The change also merely clarifies the
provision by providing that the contemplated taxpayers includes
“importers.” The revision as regards the amendment to Section 100,
NIRC, is also simple reconciliation, being nothing more than the
adoption by the BCC of the provision in HB 11197 governing the
sale of gold to Bangko Sentral, in contrast to SB 1630 containing no
such provision. Similarly, only simple reconciliation was involved as
regards approval by the BCC of a provision declaring as not exempt,
the sale of real properties primarily held for sale to customers or
held for lease in the ordinary course of trade or business, which
provision is found in HB 11197 but not in SB 1630; as regards the
adoption by the BCC of a provision on life insurance business,
contained in SB 1630 but not found in HB 11197; as regards
adoption by the BCC of the provision in SB 1630 for deferment of
tax on certain goods and services for no longer than 3 years, as to
which there was no counterpart provision in SB 11197; and as
regards the fixing of a

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period for the adoption of implementing rules, a period being


prescribed in SB 1630 and none in HB 11197.
In respect of other revisions, it would seem that questions
logically arose in the course of the discussion of specific
“disagreeing provisions” to which answers were given which,
because believed acceptable to both houses of Congress, were
placed in the BCC draft. For example, during consideration of radio
and television time (Sec. 100, NIRC) dealt with in both House and
Senate bills, the question apparently came up, the relevance of
which is apparent on its face, relative to satellite transmission and
cable television time. Hence, a provision in the BCC bill on the
matter. Again, while deliberating on the definition of goods or
properties in relation to the provision subjecting sales thereof to tax,
a question apparently arose, logically relevant, about real properties
intended to be sold by a person in economic difficulties, or because
he wishes to buy a car, i.e., not as part of a business, the BCC
evidently resolved 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 the course of
consideration of the term, sale or exchange of services (Sec. 102,
NIRC), the inquiry most probably was posed as to whether the term
should be understood as including other services: e.g., services of
lessors of property whether real or personal, of warehousemen, of
keepers of resthouses, pension houses, inns, resorts, or of common
carriers, etc., and presumably the BCC resolved to clarify the matter
by including the services just mentioned. Surely, changes of this
nature are obviously to be expected in proceedings before bicameral
conference committees and may even be considered grist for their
mill, given the history of such BCCs and their general practice here
and abroad.
In any case, all the changes and revisions, and deletions, made by
the conference committee were all subsequently considered by and
approved by both the Senate and the House, meeting and voting
separately. It is an unacceptable theorization, to repeat, that when the
BCC report and its proposed bill were submitted to the Senate and
the House, the members thereof did not bother to read, or what is
worse, having read did not understand, what was before them, or did
not realize that there were new provisions in the reconciled version
unrelated to any “disagreeing provisions,” or that said new
provisions or revisions were effectively concealed

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from them.
Moreover, it certainly was entirely within the power and
prerogative of either legislative chamber to reject the BCC bill and
require the organization of a new bicameral conference committee.
That this option was not exercised by either house only proves that
the BCC measure was found to be acceptable as in fact it was
approved and adopted by both chambers.
I vote to DISMISS the petitions for lack of merit.

SEPARATE OPINION

CRUZ, J.:

It is a curious and almost incredible fact that at the hearing of these


cases on July 7, 1994, the lawyers who argued for the petitioners—
two of them former presidents of the Senate and the third also a
member of that body—all asked this Court to look into the internal
operations of their Chamber and correct the irregularities they
claimed had been committed there as well as in the House of
Representatives and in the bicameral conference committee.
While a member of the legislature would normally resist such
intervention and invoke the doctrine of separation of powers to
protect Congress from what he would call judicial intrusion, these
counsel practically implored the Court to examine the questioned
proceedings and to this end go beyond the journals of each House,
scrutinize the minutes of the committee, and investigate all other
matters relating to the passage of the bill (or bills) that eventually
became R.A. No. 7716.
In effect, the petitioners would have us disregard the time-
honored inhibitions laid down by the Court upon itself in the
landmark case of U.S. v. Pons (34 Phil. 725), where it refused to
consider extraneous evidence to disprove the recitals in the journals
of the Philippine Legislature that it had adjourned sine die at
midnight of February 28, 1914. Although it was generally known
then that the special session had actually exceeded the deadline fixed
by the Governor-General in his proclamation, the Court chose to be
guided solely by the legislative journals, holding significantly as
follows:

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Tolentino vs. Secretary of Finance

* * * From their very nature and object, the records of the legislature are as
important as those of the judiciary, and to inquire into the veracity of the
journals of the Philippine Legis-lature, when they are, as we have said, clear
and explicit, would be to violate both the letter and the spirit of the organic
laws by which the Philippine Government was brought into existence, to
invade a coordinate and independent department of the Govern-ment, and to
interfere with the legitimate powers and functions of the Legislature. But
counsel in his argument says that the public knows that the Assembly’s
clock was stopped on February 28, 1914, at midnight and left so until the
determination of the discussion of all pending matters. Or, in other words,
the hands of the clock were stayed in order to enable the Assembly to effect
an adjournment apparently within the fixed time by the Governor’s
proclamation for the expiration of the special session, in direct violation of
the Act of Congress of July 1, 1902. If the clock was, in fact, stopped, as
here suggested, “the resultant evil might be slight as compared with that of
altering the probative force and character of legislative records, and making
the proof of legislative action depend upon uncertain oral evidence, liable to
loss by death or absence, and so imperfect on account of the treachery of
memory.”
* * * The journals say that the Legislature adjourned at 12 midnight on
February 28, 1914. This settles the question, and the court did not err in
declining to go beyond the journals.
As one who has always respected the rationale of the separation of
powers, I realize only too well the serious implications of the
relaxation of the doctrine except only for the weightiest of reasons.
The lowering of the barriers now dividing the three major branches
of the government could lead to invidious incursions by one
department into the exclusive domains of the other departments to
the detriment of the proper discharge of the functions assigned to
each of them by the Constitution.
Still, while acknowledging the value of tradition and the reasons
for judicial non-interference announced in Pons, I am not disinclined
to take a second look at the ruling from a more pragmatic viewpoint
and to tear down, if we must, the iron curtain it has hung, perhaps
improvidently, around the proceedings of the legislature.
I am persuaded even now that where a specific procedure is fixed
by the Constitution itself, it should not suffice for Congress to
simply say that the rules have been observed and flatly consider the
matter closed. It does not have to be as final as that.

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I would imagine that the judiciary, and particularly this Court,


should be able to verify that statement and determine for itself,
through the exercise of its own powers, if the Constitution has,
indeed, been obeyed.
In fact, the Court has already said that the question of whether
certain procedural rules have been followed is justiciable rather than
political because what is involved is the legality and not the wisdom
of the act in question. So we ruled in Sanidad v. Commission on
Elections (73 SCRA 333) on the amendment of the Constitution; in
Daza v. Singson (180 SCRA 496) on the composition of the
Commission on Appointments; and in the earlier case of Tañada v.
Cuenco (103 Phil. 1051) on the organization of the Senate Electoral
Tribunal, among several other cases.
By the same token, the ascertainment of whether a bill underwent
the obligatory three readings in both Houses of Congress should not
be considered an invasion of the territory of the legislature as this
would not involve an inquiry into its discretion in approving the
measure but only the manner in which the measure was enacted.
These views may upset the conservatives among us who are most
comfortable when they allow themselves to be petrified by
precedents instead of venturing into uncharted waters. To be sure,
there is much to be said of the wisdom of the past expressed by
vanished judges talking to the future. Via trita est tuttisima. Except
when there is a need to revise them because of an altered situation or
an emergent idea, precedents should tell us that, indeed, the trodden
path is the safest path.
It could be that the altered situation has arrived to welcome the
emergent idea. The jurisdiction of this Court has been expanded by
the Constitution, to possibly include the review the petitioners would
have us make of the congressional proceedings being questioned.
Perhaps it is also time to declare that the activities of Congress can
no longer be smoke-screened in the inviolate recitals of its journals
to prevent examination of its sacrosanct records in the name of the
separation of powers.
But then again, perhaps all this is not yet necessary at this time
and all these observations are but wishful musings for a more
activist judiciary. For I find that this is not even necessary, at least
for me, to leave the trodden path in the search for new

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Tolentino vs. Secretary of Finance

adventures in the byways of the law. The answer we seek, as I see it,
is not far afield. It seems to me that it can be found through a study
of the enrolled bill alone and that we do not have to go beyond that
measure to ascertain if R.A. No. 7716 has been validly enacted.
It is settled in this jurisdiction that in case of conflict between the
enrolled bill and the legislative journals, it is the former that should
prevail except only as to matters that the Constitution requires to be
entered in the journals. (Mabanag v. Lopez Vito, 78 Phil. 1). These
are the yeas and nays on the final reading of a bill or on any question
at the request of at least one-fifth of the members of the House
(Constitution, Art. VI, Sec. 16 [4]), the objections of the President to
a vetoed bill or item (Ibid, Sec. 27 [1]), and the names of the
members voting for or against the overriding of his veto (Id. Section
27 [1]). The origin of a bill is not specifically required by the
Constitution to be entered in the journals. Hence, on this particular
matter, it is the recitals in the enrolled bill and not in the journals
that must control.
Article VI, Section 24, of the Constitution provides:

Sec. 24. All appropriation, revenue or tariff bills, bills authorizing increase
of the public debt, bills of local application, and private bills shall originate
exclusively in the House of Representatives, but the Senate may propose or
concur with amendments.

The enrolled bill submitted to and later approved by the President of


the Philippines as R.A. No. 7716 was signed by the President of the
Senate and the Speaker of the House of Representatives. It carried
the following certification over the signatures of the Secretary of
the Senate and the Acting Secretary of the House of
Representatives:

This Act which is a consolidation of House Bill No. 11197 and Senate Bill
No. 1630 was finally passed by the House of Representatives and the Senate
on April 27, 1994, and May 2, 1994.

Let us turn to Webster for the meaning of certain words:


To “originate” is “to bring into being; to create something
(original); to invent; begin; start.” The word “exclusively” means
“excluding all others” and is derived from the word “exclusive,”
meaning “not shared or divided; sole; single.” Applying these

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meanings, I would read Section 24 as saying that the bills mentioned


therein must be brought into being, or created, or invented, or begun
or started, only or singly or by no other body than the House of
Representatives.
According to the certification, R.A. No . 7716 “is a consolidation
of House Bill No. 11197 and Senate Bill No. 1630.” Again giving
the words used their natural and ordinary sense conformably to an
accepted canon of construction, I would read the word
“consolidation” as a “combination or merger” and derived from the
word “consolidate,” meaning “to combine into one; merge; unite.”
The two bills were separately introduced in their respective
Chambers. Both retained their independent existence until they
reached the bicameral conference committee where they were
consolidated. It was this consolidated measure that was finally
passed by Congress and submitted to the President of the Philippines
for his approval.
House Bill No. 11197 originated in the House of Representatives
but this was not the bill that eventually became R.A. No. 7716. The
measure that was signed into law by President Ramos was the
consolidation of that bill and another bill, viz., Senate Bill No. 1630,
which was introduced in the Senate. The resultant enrolled bill thus
did not originate exclusively in the House of Representatives. The
enrolled bill itself says that part of it (and it does not matter to what
extent) originated in the Senate.
It would have been different if the only participation of the
Senate was in the amendment of the measure that was originally
proposed in the House of Representatives. But this was not the case.
The participation of the Senate was not in proposing or concurring
with amendments that would have been incorporated in House Bill
No. 11197. Its participation was in originating its own Senate Bill
No. 1630, which was not embodied in but merged with House Bill
No. 11197.
Senate Bill No. 1630 was not even an amendment by
substitution, assuming this was permissible. To “substitute” means
“to take the place of; to put or use in place of another.” Senate Bill
No. 1630 did not, upon its approval, replace (and thus eliminate)
House Bill No. 11197. Both bills retained their separate identities
until they were joined or united into what became the enrolled bill
and ultimately R.A. No. 7716.

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The certification in the enrolled bill says it all. It is clear that R.A.
No. 7716 did not originate exclusively in the House of
Representatives.
To go back to my earlier observations, this conclusion does not
require the reversal of U.S. vs. Pons and an inquiry by this Court
into the proceedings of the legislature beyond the recitals of its
journals. All we need to do is consider the certification in the
enrolled bill and, without entering the precincts of Congress, declare
that by its own admission it has, indeed, not complied with the
Constitution.
While this Court respects the prerogatives of the other
departments, it will not hesitate to rise to its higher duty to require
from them, if they go astray, full and strict compliance with the
fundamental law. Our fidelity to it must be total. There is no loftier
principle in our democracy than the supremacy of the Constitution,
to which all must submit.
I vote to invalidate R.A. No. 7716 for violation of Article VI,
Sec. 24, of the Constitution.

SEPARATE OPINION

PADILLA, J.:

The original VAT law and the expanded VAT law


1
In Kapatiran v. Tan, where the ponente was the writer of this
Separate Opinion, a unanimous Supreme Court en banc upheld the
validity of the original VAT law (Executive Order No. 273, approved
on 25 July 1987). It will, in my view, be pointless at this time to re-
open arguments advanced 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 the validity of the
VAT law as a tax measure. And yet, the same arguments are, in
effect, marshalled against the merits and substance of the expanded
VAT law (Rep. Act No. 7716, approved on 5 May 1994). The same
Supreme Court decision should

_________________

1 G.R. No. 81311, 30 June 1988, 163 SCRA 371.

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therefore dispose, in the main, of such arguments, for the expanded


VAT law is predicated basically on the same principles as the
original VAT law, except that now the tax base of the VAT
imposition has been expanded or broadened.
It only needs to be stated—what actually should be obvious—
that a tax measure, like the expanded VAT law (Republic Act No.
7716), is enacted by Congress and approved by the President in the
exercise of the State’s power to tax, which is an attribute of
sovereignty. And while the power to tax, if exercised without limit,
is a power to destroy, and should, therefore, not be allowed in such
form, it has to be equally recognized that the power to tax is an
essential right of government. Without taxes, basic services to the
people can come to a halt; economic progress will be stunted, and, in
the long run, the people will suffer the pains of stagnation and
retrogression.
Consequently, upon careful deliberation, I have no difficulty in
reaching the conclusion that the expanded VAT law comes within
the legitimate power of the state to tax. And as I had occasion to
previously state:

“Constitutional Law, to begin with, is concerned with power not political


convenience, wisdom, exigency, or even necessity. Neither the Executive
nor the Legislative (Commission2
on Appointments) can create power where
the Constitution confers none.”

Likewise, in the first VAT case, I said:

“In any event, if petitioners seriously believe that the adoption and
continued application of the VAT are prejudicial to the general welfare or
the interests of the majority of the people, they should seek recourse and
relief from the political branches of the government. The Court, following
the time-honored doctrine of separation of powers, cannot substitute its
judgment for that of the President (and Congress)
3
as to the wisdom, justice
and advisability of the adoption of the VAT.”

________________

2 Bautista v. Salonga, G.R. No. 86439, 13 April 1989, 172 SCRA 160.
3 Kapatiran, supra at 385.

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710 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

This Court should not, as a rule, concern itself with questions of


policy, much less, economic policy. That is better left to the two (2)
political branches of government. That the expanded VAT law is
unwise, unpopular and even anti-poor, among other things said
against it, are arguments and considerations within the realm of
policy-debate, which only Congress and the Executive have the
authority to decisively confront, alleviate, remedy and resolve.

II
The procedure followed in the approval of Rep. Act No. 7716
Petitioners however posit that the present case raises a far-reaching
constitutional question which the Court is duty-bound4 to decide
under its expanded jurisdiction in the 1987 Constitution. Petitioners
more specifically question and impugn the manner by which the
expanded VAT law (Rep. Act No. 7716) was approved by Congress.
They contend that it was approved in violation of the Constitution
from which fact it follows, as a consequence, that the law is null and
void. Main reliance of the petitioners in their assault is Section 24,
Art. VI of the Constitution which provides:

“Sec. 24. All appropriation, revenue or tariff bills, bills authorizing increase
of the public debt, bill of local application, and private bills shall originate
exclusively in the House of Representatives, but the Senate may propose or
concur with amendments.”

While it should be admitted at the outset that there was no rigorous


and strict adherence to the literal command of the above provision, it
may however be said, after careful reflection, that there was
substantial compliance with the provision.
There is no question that House Bill No. 11197 expanding the
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

________________
4 Sec. 1, Art. VIII.

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Tolentino vs. Secretary of Finance

is undeniably a Senate measure which, in point of time, actually


antedated House Bill No. 11197.
But it is of record that when House Bill No. 11197 was, after
approval by the House, sent to the Senate, it was referred to, and
considered by the Senate Committee on Ways and Means (after first
reading) together with Senate Bill No. 1129, and the Committee
came out with Senate Bill No. 1630 in substitution of Senate Bill
No. 1129 but after expressly taking into consideration House Bill
No. 11197.
Since the Senate is, under the above-quoted constitutional
provision, empowered to concur with a revenue measure exclusively
originating from the House, or to propose amendments thereto, to
the extent of proposing amendments by SUBSTITUTION to the
House measure, the approval by the Senate of Senate Bill No. 1630,
after it had considered House Bill No. 11197, may be taken, in my
view, as an AMENDMENT BY SUBSTITUTION by the Senate not
only of Senate Bill No. 1129 but of House Bill No. 11197 as well
which, it must be remembered, originated exclusively from the
House.
But then, in recognition of the fact that House Bill No. 11197
which originated exclusively from the House and Senate Bill No.
1630 contained conflicting provisions, both bills (House Bill No.
11197 and Senate Bill No. 1630) were referred to the Bicameral
Conference Committee for joint consideration with a view to
reconciling their conflicting provisions.
The Conference Committee came out eventually with a
Conference Committee Bill which was submitted to both chambers
of Congress (the Senate and the House). The Conference Committee
reported out a bill consolidating provisions in House Bill No. 11197
and Senate Bill No. 1630. What transpired in both chambers after
the Conference Committee Report was submitted to them is not
clear from the records in this case. What is clear however is that
both chambers voted separately on the bill reported out by the
Conference Committee and both chambers approved the bill of the
Conference Committee.
To me then, what should really be important is that both
chambers of Congress approved the bill reported out by the
Conference Committee. In my considered view, the act of both
chambers of Congress in approving the Conference Committee bill,
should put an end to any inquiry by this Court as to how the
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712 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

bill came about. What is more, such separate approvals CURED


whatever constitutional infirmities may have arisen in the
procedures leading to such approvals. For, if such infirmities were
serious enough to impugn the very validity of the measure itself,
there would have been an objection or objections from members of
both chambers to the approval. The Court has been shown no such
objection on record in both chambers.
Petitioners contend that there were violations of Sec. 26
paragraph 2, Article VI of the Constitution which provides:

“SEC. 26. x x x
(2) No bill passed by either House shall become a law unless it has
passed three readings on separate days, and printed copies thereof in its final
form have been distributed to its Members three days before its passage,
except when the President certifies to the necessity of its immediate
enactment to meet a public calamity or emergency. Upon the last reading of
a bill, no amendment thereto shall be allowed, and the vote thereon shall be
taken immediately thereafter, and the yeas and nays entered in the Journal.”

in that, when Senate Bill No. 1630 (the Senate counterpart of House
Bill No. 11197) was approved by the Senate, after it had been
reported out by the Senate Committee on Ways and Means, the bill
went through second and third readings on the same day (not
separate days) and printed copies thereof in its final form were not
distributed to the members of the Senate at least three (3) days
before its passage by the Senate. But we are told by the respondents
that the reason for this “short cut” was that the President had
certified to the necessity of the bill’s immediate enactment to meet
an emergency—a certification that, by leave of the same
constitutional provision, dispensed with the second and third
readings on separate days and the printed form at least three (3) days
before its passage.
We have here then a situation where the President did certify to
the necessity of Senate Bill No. 1630’s immediate enactment to meet
an emergency and the Senate responded accordingly. While I would
be the last to say that this Court cannot review the exercise of such
power by the President in appropriate cases ripe for judicial review, I
am not prepared however to say that the President gravely abused
his discretion in the exercise of such power as to require that this
Court overturn his action. We have
713
VOL. 235, AUGUST 25, 1994 713
Tolentino vs. Secretary of Finance

been shown no fact or circumstance which would impugn the


judgment of the President, concurred in by the Senate, that there was
an emergency that required the immediate enactment of Senate Bill
No. 1630. On the other hand, a becoming respect for a co-equal and
coordinate department of government points that weight and
credibility be given to such Presidential judgment.
The authority or power of the Conference Committee to make
insertions in and deletions from the bills referred to it, namely,
House Bill No. 11197 and Senate Bill No. 1630 is likewise assailed
by petitioners. Again, what appears important here is that both
chambers approved and ratified the bill as reported out by the
Conference Committee (with the reported insertions and deletions).
This is perhaps attributable to the known legislative practice of
allowing a Conference Committee to make insertions in and
deletions from bills referred to it for consideration, as long as they
are germane to the subject matter of the bills under consideration.
Besides, when the Conference Committee made the insertions and
deletions complained of by petitioners, was it not actually
performing the task assigned to it of reconciling conflicting
provisions in House Bill No. 11197 and Senate Bill No. 1630?
This Court impliedly if not expressly recognized the fact of such
legislative practice
5
in Philippine Judges Association, etc. vs. Hon.
Peter Prado, etc.. In said case, we stated thus:

“The petitioners also invoke Sec. 74 of the Rules of the House of


Representatives, requiring that amendment to any bill when the House and
the Senate shall have differences thereon may be settled by a conference
committee of both chambers. They stress that Sec. 35 was never a subject of
any disagreement between both Houses and so the second paragraph could
not have been validly added as an amendment.
These arguments are unacceptable.
While it is true that a conference committee is the mechanism for
compromising differences between the Senate and the House, it is not
limited in its jurisdiction to this question. Its broader function is described
thus:

‘A conference committee may deal generally with the subject matter or it may be
limited to resolving the precise differences

_______________

5 G.R. No. 103371, 11 November 1993.

714

714 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

between the two houses. Even where the conference committee is not by rule limited
in its jurisdiction, legislative custom severely limits the freedom with which new
subject matter can be inserted into the conference bill. But occasionally a conference
committee produces unexpected results, results beyond its mandate. These
excursions occur even where the rules impose strict limitations on conference
committee jurisdiction. This is symptomatic of the authoritarian power of conference
committee (Davies, Legislative Law and Process: In A Nutshell, 1986 Ed., p. 81).’

It is a matter of record that the Conference Committee Report on the bill


in question was returned to and duly approved by both the Senate and the
House of Representatives. Thereafter, the bill was enrolled with its
certification by Senate President Neptali A. Gonzales and Speaker Ramon
V. Mitra of the House of Representatives as having been duly passed by
both Houses of Congress. It was then presented to and approved by
President Corazon C. Aquino on April 3, 1992.”

It would seem that if corrective measures are in order to clip the


powers of the Conference Committee, the remedy should come from
either or both chambers of Congress, not from this Court, under the
time-honored doctrine of separation of powers.
Finally, as certified by the Secretary of the Senate and the
Secretary General of the House of Representatives—

“This Act (Rep. Act No. 7716) is a consolidation of House Bill No. 11197
and Senate Bill No. 1630 (w)as finally passed by the House of
Representatives and the Senate on April 27, 1994 and May 2, 1994
respectively.”

Under the long-accepted doctrine of the “enrolled bill,” the Court in


deference to a co-equal and coordinate branch of government is held
to a recognition of Rep. Act No. 7716 as a law validly enacted by
Congress and, thereafter, approved by the President on 5 May 1994.
Again, we quote from our recent decision in Philippine Judges
Association, supra:

“Under the doctrine of separation of powers, the Court may not inquire
beyond the certification of the approval of a bill from the presiding officers
of Congress. Casco Philippine Chemical Co. v. Gimenez6

_______________

6 7 SCRA 347.

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VOL. 235, AUGUST 25, 1994 715


Tolentino vs. Secretary of Finance
laid down the rule that the enrolled bill is conclusive upon the Judiciary
(except in matters that have to be entered
7
in the journals like the yeas and
nays on the final reading of the bill). The journals are themselves also
binding on the8 Supreme Court, as we held in the old (but still valid) case of
U.S. vs. Pons, where we explained the reason thus:

‘To inquire into the veracity of the journals of the Philippine legislature when they
are, as we have said, clear and explicit, would be to violate both the letter and spirit
of the organic laws by which the Philippine Government was brought into existence,
to invade a coordinate and independent department of the Government, and to
interfere with the legitimate powers and functions of the Legislature.’

Applying these principles, we shall decline to look into the petitioners’


charges that an amendment was made upon the last reading of the bill that
eventually became R.A. No. 7354 and that copies thereof in its final form
were not distributed among the members of each House. Both the enrolled
bill and the legislative journals certify that the measure was duly enacted
i.e., in accordance with Article VI, Sec. 26(2) of the Constitution. We are
bound by such official assurances from a coordinate department of the
government, to which we owe, at the very least, a becoming courtesy.”

III

Press Freedom and Religious Freedom and Rep. Act No. 7716

The validity of the passage of Rep. Act No. 7716 notwithstanding,


certain provisions of the law have to be examined separately and
carefully.
Rep. Act No. 7716 in imposing a value-added tax on circulation
income of newspapers and similar publications and9 on income
derived from publishing advertisements in newspapers, to my mind,
violates Sec. 4, Art. III of the Constitution. Indeed, even the
Executive Department has tried to cure this defect by the issuance of
BIR Regulation No. 11-94 precluding implementation of the tax in
this area. It should be clear, however, that the BIR

_______________

7 Mabanag v. Lopez Vito, 78 Phil. 1.


8 34 Phil. 729.
9 Executive Order No. 273, in Sec. 103 (f), had exempted this kind of income from
the VAT. Rep. Act. No. 7716 removed the exemption.

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716 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance
regulation cannot amend the law (Rep. Act No. 7716). Only
legislation (as distinguished from administration regulation) can
amend an existing law.
Freedom of the press was virtually unknown in the Philippines
before 1900. In fact, a prime cause of the revolution against Spain at
the turn of the 19th century was the repression of the freedom of
speech and expression and of the press. No less than our national
hero, Dr. Jose P. Rizal, in “Filipinas Despues de Cien Anos” (The
Philippines a Century Hence) describing the reforms sine quibus non
which the Filipinos were insisting upon, stated: “The minister x x x
who wants his reforms to be reforms, 10
must begin by declaring the
press in the Philippines free x x x.”
Press freedom in the Philippines has met repressions, most
notable of which was the closure of almost all forms of existing
mass media upon the imposition of martial law on 21 September
1972.
Section 4, Art. III of the Constitution maybe traced to the United
States Federal Constitution. The guarantee of freedom of expression
was planted in the Philippines by President McKinley in the Magna
Carta of Philippine Liberty, Instructions to the Second Philippine
Commission on 7 April 1900.
The present constitutional provision which reads:

“Sec. 4. No law shall be passed abridging the freedom of speech, of


expression, or of the press, or the right of the people peaceably to assemble
and petition the government for redress of grievances.”

is essentially the same as that guaranteed in the U.S. Federal


Constitution, for which reason, American case law giving judicial
expression as to its meaning is highly persuasive in the Philippines.
The plain words of the provision reveal the clear intention that no
prior restraint can be imposed on the exercise of free speech and
expression if they are to remain effective and meaningful.
The U.S. Supreme Court 11
in the leading case of Grosjean v.
American Press Co., Inc. declared a statute imposing a gross

________________

10 United States v. Bustos, 37 Phil. 731.


11 297 U.S. 233.

717

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Tolentino vs. Secretary of Finance

receipts license tax of 2% on circulation and advertising income of


newspaper publishers as constituting a prior restraint which is
contrary to the guarantee of freedom of the 12
press.
In Bantam Books, Inc. v. Sullivan, the U.S. Supreme Court
stated: “Any system of prior restraint of expression comes to this
Court bearing a heavy presumption against its constitutionality.” In
this jurisdiction, prior restraint on the exercise of free expression can
be justified only on the ground that there is a clear and present13
danger of a substantive evil which the State has the right to prevent.
In the present case, the tax imposed on circulation and
advertising income of newspaper publishers is in the nature of a
prior restraint on circulation and free expression and, absent a clear
showing that the requisite for prior restraint is present, the
constitutional flaw in the law is at once apparent and should not be
allowed to proliferate.
Similarly, the imposition of the VAT on the sale and distribution
of religious articles must be struck down for being contrary to Sec.
5, Art. III of the Constitution which provides:

“Sec. 5. No law shall be made respecting an establishment of religion, or


prohibiting the free exercise thereof. The free exercise and enjoyment of
religious profession and worship, without discrimination or preference, shall
forever be allowed. No religious test shall be required for the exercise of
civil or political rights.”

That such a tax on the sale and distribution of religious articles is


unconstitutional, has been long settled in American Bible Society,
supra.
Insofar, therefore, as Rep. Act No. 7716 imposes a value-added
tax on the exercise of the above-discussed two (2) basic
constitutional rights, Rep. Act No. 7716 should be declared
unconstitutional and of no legal force and effect.

IV
Petitions of CREBA and PAL and Rep. Act No. 7716

_______________

12 372 U.S. 58.


13 American Bible Society v. City of Manila, 101 Phil. 386.

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718 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

The Chamber of Real Estate and Builder’s Association, Inc.


(CREBA) filed its own petition (GR No. 11574) arguing that the
provisions of Rep. Act No. 7716 imposing a 10% value-added tax
on the gross selling price or gross value in money of every sale,
barter or exchange of goods or properties (Section 2) and a 10%
value-added tax on gross receipts derived from the sale or exchange
of services, including the use or lease of properties (Section 3),
violate the equal protection, due process and non-impairment
provisions of the Constitution as well as the rule that taxation should
be uniform, equitable and progressive.
The issue of whether or not the value-added tax is uniform,
equitable and progressive has been settled in Kapatiran.
CREBA which specifically assails the 10% value-added tax on
the gross selling price of real properties, fails to distinguish between
a sale of real properties primarily held for sale to customers or held
for lease in the ordinary course of trade or business and isolated
sales by individual real property owners (Sec. 103[s]). That those
engaged in the business of real estate development realize great
profits is of common knowledge and need not be discussed at length
here. The qualification in the law that the 10% VAT covers only
sales of real property primarily held for sale to customers, i.e. for
trade or business thus takes into consideration a taxpayer’s capacity
to pay. There is no showing that the consequent distinction in real
estate sales is arbitrary and in violation of the equal protection
clause of the Constitution. The inherent power to tax of the State,
which is vested in the legislature, includes the power to determine
whom or what to tax, as well as how much to tax. In the absence of a
clear showing that the tax violates the due process and equal
protection clauses of the Constitution, this Court, in keeping with the
doctrine of separation of powers, has to defer to the discretion and
judgment of Congress on this point.
Philippine Airlines (PAL) in a separate petition (G.R. No.
115852) claims that its franchise under PD No. 1590 which makes it
liable for a franchise tax of only 2% of gross revenues “in lieu of all
the other fees and charges of any kind, nature or description,
imposed, levied, established, assessed or collected by any municipal,
city, provincial, or national authority or government agency, now or
in the future,” cannot be amended by Rep. Act No. 7716 as to make
it (PAL) liable for a 10% value-added tax

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VOL. 235, AUGUST 25, 1994 719


Tolentino vs. Secretary of Finance

on revenues, because Sec. 24 of PD No. 1590 provides that PAL’s


franchise can only be amended, modified or repealed by a special
law specifically for that purpose.
The validity of PAL’s above argument can be tested by
ascertaining the true intention of Congress in enacting Rep. Act No.
7716. Sec. 4 thereof dealing with Exempt Transactions states:
“Section 103. Exempt Transactions.—The following shall be exempt from
the value-added tax:
xxx
(q) Transactions which are exempt under special laws, except those
granted under Presidential Decrees No. 66 , 529, 972, 1491, 1590, x x x”
(emphasis supplied)

The repealing clause of Rep. Act No. 7716 further reads:

“Sec. 20. Repealing clauses.—The provisions of any special law relative to


the rate of franchise taxes are hereby expressly repealed.
xxx
All other laws, orders, issuances, rules and regulations or parts thereof
inconsistent with this Act are hereby repealed, amended or modified
accordingly” (emphasis supplied)

There can be no dispute, in my mind, that the clear intent of


Congress was to modify PAL’s franchise with respect to the taxes it
has to pay. To this extent, Rep. Act No. 7716 can be considered as a
special law amending PAL’s franchise and its tax liability
thereunder. That Rep. Act No. 7716 imposes the value-added taxes
on other subjects does not make it a general law which cannot
amend PD No. 1590.
To sum up: it is my considered view that Rep. Act No. 7716 (the
expanded value-added tax) is a valid law, viewed from both
substantive and procedural standards, except only insofar as it
violates Secs. 4 and 5, Art. III of the Constitution (the guarantees of
freedom of expression and the free exercise of religion). To that
extent, it is, in its present form, unconstitutional.
I, therefore, vote to DISMISS the petitions, subject to the above
qualification.

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720 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

SEPARATE OPINION

VITUG, J.:

Lest we be lost by a quagmire of trifles, the real threshold and


prejudicial issue, to my mind, is whether or not this Court is ready to
assume and to take upon itself with an overriding authority the
awesome responsibility of overseeing the entire bureaucracy. Far
from it, ours is merely to construe and to apply the law regardless of
its wisdom and salutariness, and to strike it down only when it
clearly disregards constitutional proscriptions. It is what the
fundamental law mandates, and it is what the Court must do.
I cannot yet concede to the novel theory, so challengingly
provocative as it might be, that under the 1987 Constitution the
Court may now at good liberty intrude, in the guise of the people’s
imprimatur, into every affair of government. What significance can
still then remain, I ask, of the time honored and widely acclaimed
principle of separation of powers, if at every turn the Court allows
itself to pass upon, at will, the disposition of a co-equal, independent
and coordinate branch in our system of government. I dread to think
of the so varied uncertainties that such an undue interference can
lead to. The respect for long standing doctrines in our jurisprudence,
nourished through time, is one of maturity not timidity, of stability
rather than quiescence.
It has never occurred to me, and neither do I believe it has been
intended, that judicial tyranny is envisioned, let alone
institutionalized, by our people in the 1987 Constitution. The test of
tyranny is not solely on how it is wielded but on how, in the first
place, it can be capable of being exercised. It is time that any such
perception of judicial omnipotence is corrected.
Against all that has been said, I see, in actuality in these cases at
bench, neither a constitutional infringement of substance, judging
from precedents already laid down by this Court in previous cases,
nor a justiciability even now of the issues raised, more than an
attempt to sadly highlight the perceived short comings in the
procedural enactment of laws, a matter which is internal to Congress
and an area that is best left to its own basic concern. The fact of the
matter is that the legislative enactment,

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Tolentino vs. Secretary of Finance

in its final form, has received the ultimate approval of both houses
of Congress. The finest rhetoric, indeed fashionable in the early part
of this closing century, would still be a poor substitute for tangibility.
I join, nonetheless, some of my colleagues in respectfully inviting
the kind attention of the honorable members of our Congress in the
suggested circumspect observance of their own rules.
A final remark. I should like to make it clear that this opinion
does not necessarily foreclose the right, peculiar to any taxpayer
adversely affected, to pursue at the proper time, in appropriate
proceedings, and in proper fora, the specific remedies prescribed
therefor by the National Internal Revenue Code, Republic Act 1125,
and other laws, as well as rules of procedure, such as may be
pertinent. Some petitions filed with this Court are, in essence,
although styled differently, in the nature of declaratory relief over
which this Court is bereft of original jurisdiction.
All considered, I, therefore, join my colleagues who are voting
for the dismissal of the petitions.

DISSENTING OPINION

REGALADO, J.:

It would seem like an inconceivable irony that Republic Act No.


7716 which, so respondents claim, was conceived by the collective
wisdom of a bicameral Congress and crafted with sedulous care by
two branches of government should now be embroiled in challenges
to its validity for having been enacted in disregard of mandatory
prescriptions of the Constitution itself. Indeed, such impugnment by
petitioners goes beyond merely the procedural flaws in the
parturition of the law. Creating and regulating as it does definite
rights to property, but with its own passage having been violative of
explicit provisions of the organic law, even without going into the
intrinsic merits of the provisions of Republic Act No. 7716 its
substantive invalidity is pro facto necessarily entailed.
How it was legislated into its present statutory existence is not in
serious dispute and need not detain us except for a recital of some
salient and relevant facts. The House of Representatives

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722 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance
1
passed House Bill No. 11197 on third reading on November 17,
1993 and, the following day, it transmitted the same to the Senate for
concurrence. On its part, the Senate approved Senate Bill No. 1630
on second and third readings on March 24, 1994. It is important to
note in this regard that on March 22, 1994, said S.B. No. 1630 had
been certified by President Fidel V. Ramos for immediate enactment
to meet a public emergency, that is, a growing budgetary deficit.
There was no such certification for H.B. No. 11197 although it was
the initiating revenue bill.
It is, therefore, not only a curious fact but, more importantly, an
invalid procedure since that Presidential certification was
erroneously made for and confined to S.B. No. 1630 which was
indisputably a tax bill and, under the Constitution, could not validly
originate in the Senate. Whatever is claimed in favor of S.B. No.
1630 under the blessings of that certification, such as its alleged
exemption from the three separate readings requirement, is
accordingly negated and rendered inutile by the inefficacious nature
of said certification as it could lawfully have been issued only for a
revenue measure originating exclusively from the lower House. To
hold otherwise would be to validate a Presidential certification of a
bill initiated in the Senate despite the Constitutional prohibition
against its originating therefrom.
Equally of serious significance is the fact that S.B. No. 1630 was
reported out in Committee Report No. 349 submitted to the Senate
on February 7, 1994 and approved by that body “in substitution of
S.B. No. 1129,” while merely 2
“taking into consideration P.S. No.
734 and H.B. No. 11197.” S.B. No. 1630, therefore, was never filed
in substitution of either P.S. No. 734 or, more emphatically, of H.B.
No. 11197 as these two legislative issuances were merely taken
account of, at the most, as referential bases or materials.
This is not a play on misdirection for, in the first instance, the
respondents assure us that H.B. No. 11197 was actually the sole

_______________

1 In substitution of H.B. Nos. 253, 771, 2450, 7033, 8086, 9030, 9210, 9297,
10012 and 10100 which were filed over the period from July 22, 1992 to August 3,
1993.
2 P.S. Res. No. 734 had earlier been filed in the Senate on September 10, 1992,
while S.B. No. 1129 was filed on March 1, 1993.

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Tolentino vs. Secretary of Finance

source of and started the whole legislative process which culminated


in Republic Act No. 7716. The participation of the Senate in
enacting S.B. No. 1630 was, it is claimed, justified as it was merely
in pursuance of its power to concur in or propose amendments to
H.B.3 No. 11197. Citing the 83-year old case of Flint vs. Stone Tracy
Co., it is blithely announced that such power to amend includes an
amendment by substitution, that is, even to the extent of substituting
the entire H.B. No. 11197 by an altogether completely new measure
of Senate provenance. Ergo, so the justification goes, the Senate
acted perfectly in accordance with its amending power under
Section 24, Article VI of the Constitution since it merely proposed
amendments through a bill allegedly prepared in advance.
This is a mode of argumentation which, by reason of factual
inaccuracy and logical implausibility, both astounds and confounds.
For, it is of official record that S.B. No. 1630 was filed, certified and
enacted in substitution of S.B. No. 1129 which in itself was likewise
in derogation of the Constitutional prohibition against such initiation
of a tax bill in the Senate. In any event, S.B. No. 1630 was neither
intended as a bill to be adopted by the Senate nor to be referred to
the bicameral conference committee as a substitute for H.B. No.
11197. These indelible facts appearing in official documents cannot
be erased by any amount of strained convolutions or incredible
pretensions that S.B. No. 1630 was supposedly enacted in
anticipation of H.B. No. 11197.
On that score alone, the invocation by the Solicitor General of the
hoary concept of amendment by substitution falls flat on its face.
Worse, his concomitant citation of Flint to recover from that prone
position only succeeded in turning the same postulation over, this
time supinely flat on its back. As elsewhere noted by some
colleagues, which I will just refer to briefly to avoid duplication,
respondents initially sought sanctuary in that doctrine supposedly
laid down in Flint, thus: “It has, in fact, been held that the
substitution of an entirely new measure for the one4 originally
proposed can be supported as a valid amendment.” (Emphasis
supplied.) During the interpellation by the writer at

_______________

3 220 U.S. 107, 55 L.Ed. 389 (1911).


4 Consolidated Comment, 36-37.

724

724 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

the oral argument held in these cases, the attention of the Solicitor
General was called to the fact that the amendment in Flint consisted
only of a single item, that is, the substitution of a corporate tax for an
inheritance tax proposed in a general revenue bill; and that the text
of the decision therein nowhere contained the supposed doctrines he
quoted and ascribed to the court, as those were merely summations
of arguments of counsel therein. It is indeed a source of
disappointment for us, but an admission of desperation on his part,
that, instead of making a clarification or a defense of his contention,
5
the Solicitor General merely reproduced all over again the same
quotations as they appeared in his original consolidated comment,
without venturing any explanation or justification.
The aforestated dissemblance, thus unmasked, has further
undesirable implications on the contentions advanced by
respondents in their defense. For, even indulging respondents ex
gratia argumenti in their pretension that S.B. No. 1630 substituted
or replaced H.B. No. 11197, aside from muddling the issue of the
true origination of the disputed law, this would further enmesh
respondents in a hopeless contradiction.
In a publication authorized by the Senate and from which the
Solicitor General has liberally quoted, it is reported as an accepted
rule therein that “(a)n amendment by substitution when approved6
takes the place of the principal bill. C.R. March 19, 1963, p. 943.”
Stated elsewise, the principal bill is supplanted and goes out of
actuality. Applied to the present situation, and following
respondents’ submission that H.B. No. 11197 had been substituted
or replaced in its entirety, then in law it had no further existence for
purposes of the subsequent stages of legislation except, possibly, for
referential data.
Now, the enrolled bill thereafter submitted to the President of the
Philippines, signed by the President of the Senate and the Speaker of
the House of Representatives, carried this solemn certification over
the signatures of the respective secretaries of

________________

5 Consolidated Memorandum for Respondents, 56-57.


6 Orquiola, H. M., Annotated Rules of the Senate and Procedure, Precedents and
Practices of the Senate of the Republic of the Philippines since 1946, 1991 Ed., 108.

725

VOL. 235, AUGUST 25, 1994 725


Tolentino vs. Secretary of Finance

both chambers: “This Act which is a consolidation of House Bill No.


11197 and Senate Bill No. 1630 was finally passed by the House of
Representatives and the Senate on April 27, 1994, and May 2,
1994.” (Italics mine.) In reliance thereon, the Chief Executive signed
the same into law as Republic Act No. 7716.
The confusion to which the writer has already confessed is now
compounded by that official text of the aforequoted certification
which speaks, and this cannot be a mere lapsus calami, of two
independent and existing bills (one of them being H.B. No. 11197)
which were consolidated to produce the enrolled bill. In
parliamentary
7
usage, to consolidate two bills, is to unite them into
one and which, in the case at bar, necessarily assumes that H.B. No.
11197 never became legally inexistent. But did not the Solicitor
General, under the theory of amendment by substi-tution of the
entire H.B. No. 11197 by S.B. No. 1630, thereby premise the same
upon the replacement, hence the total elimination from the
legislative process, of H.B. 11197?
It results, therefore, that to prove compliance with the
requirement for the exclusive origination of H.B. No. 11197, two
alternative but inconsistent theories had to be espoused and
defended by respondents’ counsel. To justify the introduction and
passage of S.B. No. 1630 in the Senate, it was supposedly enacted
only as an amendment by substitution, hence on that theory H.B.
No. 11197 had to be considered as displaced and terminated from its
role or existence. Yet, likewise for the same purpose but this time on
the theory of origination by consolidation, H.B. No. 11197 had to be
resuscitated so it could be united or merged with S.B. No. 1630.
This latter alternative theory, unfortunately, also exacerbates the
constitutional defect for then it is an admission of a dual origination
of the two tax bills, each respectively initiated in and coming from
the lower and upper chambers of Congress.
Parenthetically, it was also this writer who pointedly brought this
baffling situation to the attention of the Solicitor General during the
aforesaid oral argument, to the extent of reading aloud the
certification in full. We had hoped thereby to be clarified on these
vital issue in respondents’ projected memo-

_______________

7 Black’s Law Dictionary, 4th Ed. (1951), 381, citing Fairview vs. Durham, 45
Iowa 56.

726

726 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

randum, but we have not been favored with an explanation


unraveling this dilemma. Verily, by passing sub silentio on these
intriguing submissions, respondents have wreaked havoc on both
logic and law just to gloss over their non-compliance with the
Constitutional mandate for exclusive origination of a revenue bill.
The procedure required therefor, we emphatically add, can be
satisfied only by complete and strict compliance since this is laid
down by the Constitution itself and not by a mere statute.
This writer consequently agrees with the clearly tenable
proposition of petitioners that when the Senate passed and approved
S.B. No. 1630, had it certified by the Chief Executive, and thereafter
caused its consideration by the bicameral conference committee in
total substitution of H.B. No. 11197, it clearly and deliberately
violated the requirements of the Constitution not only in the
origination of the bill but in the very enactment of Republic Act No.
7716. Contrarily, the shifting sands of inconsistency in the
arguments adduced for respondents betray such lack of intellectual
rectitude as to give the impression of being mere rhetorics in defense
of the indefensible.
We are told, however, that by our discoursing on the foregoing
issues we are intruding into non-justiciable areas long declared
verboten by such time-honored doctrines as those on political
questions, the enrolled bill theory and the respect due to two co-
equal and coordinate branches of Government, all derived from the
separation of powers inherent in republicanism. We appreciate the
lectures,
8
but we are not exactly unaware
9
of the teachings in U.S. vs.
Pons, Mabanag vs. Lopez Vito,10 Casco Philippine Chemical11 Co.,
Inc. vs. Gimenez, etc., et al., Morales vs. Subido, etc., 12and
Philippine Judges Association, etc., et al. vs. Prado,13 etc., et al., on
the one hand, and Tañada, et al. vs.14 Cuenco, et al., Sanidad, et al.
vs. Commission on Elections, et al., and

________________

8 34 Phil. 729 (1916).


9 78 Phil. 1 (1947).
10 L-17931, February 28, 1963, 7 SCRA 347.
11 L-29658, February 27, 1969, 27 SCRA 131.
12 G.R. No. 105371, November 11, 1993, 227 SCRA 703.
13 103 Phil. 1051 (1957).
14 L-46640, October 12, 1976, 73 SCRA 333.

727

VOL. 235, AUGUST 25, 1994 727


Tolentino vs. Secretary of Finance
15
Daza vs. Singson, et al., on the other, to know which would be
applicable to the present controversy and which should be rejected.
But, first, a positional exordium. The writer of this opinion would
be among the first to acknowledge and enjoin not only courtesy to,
but respect for, the official acts of the Executive and Legislative
departments, but only so long as the same are in accordance with or
are defensible under the fundamental charter and the statutory law.
He would readily be numbered in the ranks of those who would
preach a reasoned sermon on the separation of powers, but with the
qualification that the same are not contained in tripartite
compartments separated by imper-meable membranes. He also
ascribes to the general validity of American constitutional doctrines
as a matter of historical and legal necessity, but not to the extent of
being oblivious to political changes or unmindful of the fallacy of
undue generalization arising from myopic disregard of the factual
setting of each particular case.
These ruminations have likewise been articulated and dissected
by my colleagues, hence it is felt that the only issue which must be
set aright in this dissenting opinion is the so-called enrolled bill
doctrine to which we are urged to cling with reptilian tenacity. It will
be preliminarily noted that the official certification appearing right
on the face of Republic Act No. 7716 would even render
unnecessary any further judicial inquiry into the proceedings which
transpired in the two legislative chambers and, on a parody of
tricameralism, in the bicameral conference committee. Moreover, we
have the excellent dissertations of some of my colleagues on these
matters, but respondents insist en contra that the congressional
proceedings cannot properly be inquired into by this Court. Such
objection confirms a suppressive pattern aimed at sacrificing the rule
of law to the fiat of expediency.
Respondents thus emplaced on their battlements the
pronouncement of this Court 16in the aforecited case of Philippine
Judges Association vs. Prado. Their reliance thereon falls into the
same error committed by their seeking refuge in the Flint case, ante.,
which, as has earlier been demonstrated (aside from

________________

15 G.R. No. 86344, December 21, 1989, 180 SCRA 496.


16 Consolidated Memorandum for Respondents, 79-82.

728

728 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

the quotational misrepresentation), could not be on par with the


factual situation in the present case. Flint, to repeat, involved a mere
amendment on a single legislative item, that is, substituting the
proposal therein of an inheritance tax by one on corporate tax. Now,
in their submission based on Philippine Judges Association,
respondents studiously avoid mention of the fact that the questioned
insertion referred likewise to a single item, that is, the repeal of the
franking privilege theretofore granted to the judiciary. That both
cases cannot be equated with those at bar, considering the multitude
of items challenged and the plethora of constitutional violations
involved, is too obvious to belabor. Legal advocacy and judicial
adjudication must have a becoming sense of qualitative proportion,
instead of lapsing into the discredited and maligned practice of
yielding blind adherence to precedents.
The writer unqualifiedly affirms his respect for valid official acts
of the two branches of government and eschews any unnecessary
intrusion into their operational management and internal affairs.
These, without doubt, are matters traditionally protected by the
republican principle of separation of powers. Where, however, there
is an overriding necessity for judicial intervention in light of the
pervasive magnitude of the problems presented and the gravity of
the constitutional violations alleged, but this Court cannot perform
its constitutional duty expressed in Section 1, Article VIII of the
Constitution unless it makes the inescapable inquiry, then the
confluence of such factors should compel an exception to the rule as
an ultimate recourse. The cases now before us present both the
inevitable challenge and the inescapable exigency for judicial
review. For the Court to now shirk its bounden duty would not only
project it as a citadel of the timorous and the slothful, but could even
undermine its raison d’etre as the highest and ultimate tribunal.
Hence, this dissenting opinion has touched on events behind and
which transpired prior to the presentation of the enrolled bill for
approval into law. The details of that law which resulted from the
legislative action followed by both houses of Congress, the
substantive validity of whose provisions and the procedural validity
of which legislative process are here challenged as unconstitutional,
have been graphically presented by petitioners and admirably
explained in the respective opinions of my brethren. The writer
concurs in the conclusions drawn therefrom and

729

VOL. 235, AUGUST 25, 1994 729


Tolentino vs. Secretary of Finance

rejects the contention that we have unjustifiably breached the dike of


the enrolled bill doctrine.
Even in the land of its source, the so-called conclusive
presumption of validity originally attributed to that doctrine has long
been revisited and qualified, if not altogether rejected. On the
competency of judicial inquiry, it has been held that “(u)nder the
‘enrolled bill rule’ by which an enrolled bill is sole expository of its
contents and conclusive evidence of its existence and valid
enactment, it is nevertheless competent for courts to inquire as to
what prerequisites are fixed by the Constitution of which journals of
respective 17 houses of Legislature are required to furnish the
evidence.” 18
In fact, in Gwynn vs. Hardee, etc., et al., the Supreme Court of
Florida declared:

“(1) While the presumption is that the enrolled bill, as signed by the
legislative officers and filed with the secretary of state, is the bill as it
passed, yet this presumption is not conclusive, and when it is shown from
the legislative journals that a bill though engrossed and enrolled, and signed
by the legislative officers, contains provisions that have not passed both
houses, such provisions will be held spurious and not a part of the law. As
was said by Mr. Justice Cockrell in the case of Wade vs. Atlantic Lumber
Co., 51 Fla. 628, text 633, 41 So. 72, 73:

‘This Court is firmly committed to the holding that when the journals speak they
control, and against such proof the enrolled bill is not conclusive.’ ”

More enlightening and apropos to the present controversy is the


decision promulgated on May 13, 1980 by the Supreme Court of
Kentucky
19
in D & W Auto Supply, et al. vs. Department of Revenue,
et al., pertinent excerpts wherefrom are extensively reproduced
hereunder:
_______________

17 Brailsford vs. Walker, 31 S.E. 2d 385, 387, 388, 205 S.C. 228.
18 110 So. 343, 346.
19 602 South Western Reporter, 2d Series, 402-425, jointly deciding Carrollton
Wholesale Tobaccos, Inc. et al. vs. Department of Revenue, et al., and Bluegrass
Provisions Co., Inc., et al. vs. Department of Revenue, et al.

730

730 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

“x x x In arriving at our decision we must, perforce, reconsider the validity


of a long line of decisions of this court which created and nurtured the so-
called ‘enrolled bill’ doctrine.
xxx
“[1] Section 46 of the Kentucky Constitution sets out certain procedures
that the legislature must follow before a bill can be considered for final
passage. x x x.
xxx
“x x x Under the enrolled bill doctrine as it now exists in Kentucky, a
court may not look behind such a bill, enrolled and certified by the
appropriate officers, to determine if there are any defects.
xxx
“x x x In Lafferty, passage of the law in question violated this provision,
yet the bill was properly enrolled and approved by the governor. In
declining to look behind the law to determine the propriety of its enactment,
the court enunciated three reasons for adopting the enrolled bill rule. First,
the court was reluctant to scrutinize the processes of the legislature, an equal
branch of government. Second, reasons of convenience prevailed, which
discouraged requiring the legislature to preserve its records and anticipated
considerable complex litigation if the court ruled otherwise. Third, the court
acknowledged the poor record-keeping abilities of the General Assembly
and expressed a preference for accepting the final bill as enrolled, rather
than opening up the records of the legislature. x x x.
xxx
“Nowhere has the rule been adopted without reason, or as a result of
judicial whim. There are four historical bases for the doctrine. (1) An
enrolled bill was a ‘record’ and, as such, was not subject to attack at
common law. (2) Since the legislature is one of the three branches of
government, the courts, being coequal, must indulge in every presumption
that legislative acts are valid. (3) When the rule was originally formulated,
record-keeping of the legislatures was so inadequate that a balancing of
equities required that the final act, the enrolled bill, be given efficacy. (4)
There were theories of convenience as expressed by the Kentucky court in
Lafferty.
“The rule is not unanimous in the several states, however, and it has not
been without its critics. From an examination of cases and treaties, we can
summarize the criticisms as follows: (1) Artificial presumptions, especially
conclusive ones, are not favored. (2) Such a rule frequently (as in the
present case) produces results which do not accord with facts or
constitutional provisions. (3) The rule is conducive to fraud, forgery,
corruption and other wrongdoings. (4) Modern automatic and electronic
record-keeping devices now used by legislatures

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VOL. 235, AUGUST 25, 1994 731


Tolentino vs. Secretary of Finance

remove one of the original reasons for the rule. (5) The rule disregards the
primary obligation of the courts to seek the truth and to provide a remedy
for a wrong committed by any branch of government. In light of these
considerations, we are convinced that the time has come to re-examine the
enrolled bill doctrine.
“[2] This court is not unmindful of the admonition of the doctrine of
stare decisis. The maxim is “Stare decisis et non quieta movere,” which
simply suggests that we stand by precedents and not disturb settled points of
law. Yet, this rule is not inflexible, nor is it of such a nature as to require
perpetuation of error or logic. As we stated in Daniel’s Adm’r v. Hoofnel,
287 Ky 834, 155 S.W.2d 469, 471-72 (1941) (citations omitted):

The force of the rule depends upon the nature of the question to be decided and the
extent of the disturbance of rights and practices which a change in the interpretation
of the law or the course of judicial opinions may create. Cogent considerations are
whether there is clear error and urgent reasons ‘for neither justice nor wisdom
requires a court to go from one doubtful rule to another,’ and whether or not the evils
of the principle that has been followed will be more injurious than can possibly
result from a change.

Certainly, when a theory supporting a rule of law is not grounded on


facts, or upon sound logic, or is unjust, or has been discredited by actual
experience, it should be discarded, and with it the rule it supports.
“[3] It is clear to us that the major premise of the Lafferty decision, the
poor record-keeping of the legislature, has disappeared. Modern equipment
and technology are the rule in record-keeping by our General Assembly.
Tape recorders, electric typewriters, duplicating machines, recording
equipment, printing presses, computers, electronic voting machines, and the
like remove all doubts and fears as to the ability of the General Assembly to
keep accurate and readily accessible records.
“It is also apparent that the ‘convenience’ rule is not appropriate in
today’s modern and developing judicial philosophy. The fact that the
number and complexity of lawsuits may increase is not persuasive if one is
mindful that the overriding purpose of our judicial system is to discover the
truth and see that justice is done. The existence of difficulties and
complexities should not deter this pursuit and we reject any doctrine or
presumption that so provides.
“Lastly, we address the premise that the equality of the various branches
of government requires that we shut our eyes to constitutional failings and
other errors of our coparceners in government. We simply do not agree.
Section 26 of the Kentucky Constitution provides that any

732

732 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

law contrary to the constitution is ‘void.’ The proper exercise of judicial


authority requires us to recognize any law which is unconstitutional and to
declare it void. Without belaboring the point, we believe that under section
228 of the Kentucky Constitution it is our obligation to ‘support . . . the
Constitution of the commonwealth.’ We are sworn to see that violations of
the constitution—by any person, corporation, state agency or branch of
government—are brought to light and corrected. To countenance an
artificial rule of law that silences our voices when confronted with
violations of our constitution is not acceptable to this court.
“We believe that a more reasonable rule is the one which Professor
Sutherland describes as the ‘extrinsic evidence’ rule. x x x. Under this
approach there is a prima facie presumption that an enrolled bill is valid, but
such presumption may be overcome by clear, satisfactory and convincing
evidence establishing that constitutional requirements have not been met.
“We therefore overrule Lafferty v. Huffman and all other cases following
the so-called enrolled bill doctrine, to the extent that there is no longer a
conclusive presumption that an enrolled bill is valid. x x x” (Emphases
mine.)

Undeniably, the value-added tax system may have its own merits to
commend its continued adoption, and the proposed widening of its
base could achieve laudable governmental objectives if properly
formulated and conscientiously implemented. We would like to
believe, however, that ours is not only an enlightened democracy
nurtured by a policy of transparency but one where the edicts of the
fundamental law are sacrosanct for all, barring none. While the
realization of the lofty ends of this administration should indeed be
the devout wish of all, likewise barring none, it can never be
justified by methods which, even if unintended, are suggestive of
Machiavellism.
Accordingly, I vote to grant the instant petitions and to invalidate
Republic Act No. 7716 for having been enacted in violation of
Section 24, Article VI of the Constitution.

DISSENTING OPINION
DAVIDE, JR., J.:

The legislative history of R.A. No. 7716, as highlighted in the


Consolidated Memorandum for the public respondents submitted

733

VOL. 235, AUGUST 25, 1994 733


Tolentino vs. Secretary of Finance

by the Office of the Solicitor General, demonstrates beyond doubt


that it was passed in violation or deliberate disregard of mandatory
provisions of the Constitution and of the rules of both chambers of
Congress relating to the enactment of bills.
I therefore vote to strike down R.A. No. 7716 as unconstitutional
and as having been enacted with grave abuse of discretion.
The Constitution provides for a bicameral Congress. Therefore,
no bill can be enacted into law unless it is approved by both
chambers—the Senate and the House of Representatives (hereinafter
House). Otherwise stated, each chamber may propose and approve a
bill, but until it is submitted to the other chamber and passed by the
latter, it cannot be submitted to the President for its approval into
law.
Paragraph 2, Section 26, Article VI of the Constitution provides:

“No bill passed by either House shall become a law unless it has passed
three readings on separate days, and printed copies thereof in its final form
have been distributed to its Members three days before its passage, except
when the President certifies to the necessity of its immediate enactment to
meet a public calamity or emergency. Upon the last reading of a bill, no
amendment thereto shall be allowed, and the vote thereon shall be taken
immediately thereafter, and the yeas and nays entered in the Journal.”

The “three readings” refer to the three readings in both chambers.


There are, however, bills which must originate exclusively in the
House. Section 24, Article VI of the Constitution enumerates them:

“SEC. 24. All appropriation, revenue or tariff bills, bills authorizing increase
of the public debt, bills of local application, and private bills shall originate
exclusively in the House of Representatives, but the Senate may propose or
concur with amendments.”
1
Webster’s Third New International Dictionary defines originate as
follows:

“vt 1: to cause the beginning of: give rise to: INITIATE . . . 2. to start (a
person or thing) on a course of journey . . . vi: to take or have

________________
1 1971 ed., 1592.

734

734 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

origin: be derived: ARISE, BEGIN, START . . .”


2
Black’s Law Dictionary defines the word exclusively in this wise:

“Apart from all others; only; solely; substantially all or for the greater part.
To the exclusion of all others; without admission of others to participation;
in a manner to exclude.”
3
In City Mayor vs. The Chief of Philippine Constabulary, this Court
said:

“The term ‘exclusive’ in its usual and generally accepted sense, means
possessed to the exclusion of others; appertaining to the subject alone, not
including, admitting or pertaining to another or others, undivided, sole. (15
Words and Phrases, p. 510, citing Mitchel v. Tulsa Water, Light, Heat and
Power Co., 95 P. 961, 21 Okl. 243; and p. 513, citing Commonwealth v.
Superintendent of House of Correction, 64 Pa. Super. 613, 615).”

Indisputably then, only the House can cause the beginning or initiate
the passage of any appropriation, revenue, or tariff bill, any bill
increasing the public debt, any bill of local application, or any
private bill. The Senate can only “propose or concur with
amendments.”
Under the Rules of the Senate, the first reading is the reading of
the title of the bill and its referral to the corresponding committee;
the second reading consists of the reading of the bill in the form
recommended by the corresponding committee; and the third
reading is the reading
4
of the bill in the form it will be after approval
on second reading. During the second reading, the following takes
place:

(1) Second reading of the bill;


(2) Sponsorship by the Committee Chairman or any member
designated by the corresponding committee;

_______________

2 Sixth Edition (1990), 565, citing Standard Oil Co. of Texas vs. State, Tex. Civ.
App., 142 S.W.2d 519, 521, 522, 523.
3 21 SCRA 665, 673 [1967].
4 Sections 52 and 53, Rule XXIII.

735
VOL. 235, AUGUST 25, 1994 735
Tolentino vs. Secretary of Finance

(3) If a debate ensues, turns for and against the bill shall be
taken alternately;
(4) The sponsor of the bill closes the debate;
(5) After the close of the debate, the period of amendments
follows;
(6) Then, after the period of amendments
5
is closed, the voting
on the bill on second reading.

After approval on second reading, printed copies thereof in its final


form shall be distributed to the Members of the Senate at least three
days prior to the third reading, except in cases of certified bills. At
the third reading, the final vote6 shall be taken and the yeas and nays
shall be entered in the Journal.
Under the Rules of the House, the first reading of a bill consists
of a reading of the number, title,7
and author followed by the referral
to the appropriate committees; the second reading consists of the
reading in full of8 the bill with the amendments proposed by the
committee, if any; and the third reading is the reading of the bill in
the form as approved on second reading and takes place only after
printed copies thereof in its final form have been distributed to9 the
Members at least three days before, unless the bill is certified. At
the second reading, the following takes place:

(1) Reading of the bill;


(2) Sponsorship;
(3) Debates;
(4) Period of Amendments; and
10
(5) Voting on Second Reading.

At the third reading, the votes shall11 be taken immediately and the
yeas and nays entered in the Journal.

_______________

5 Section 57, Rule XXV.


6 Section 26(2), Article VI, Constitution; paragraph (7), Section 57, Rule XXV.
7 Section 69, Rule XIV.
8 Section 77, Id.
9 Section 82, Rule XIV.
10 Sections 77-81, Id.
11 Section 82, Id., in relation to Section 26(2), Article VI, Constitution.

736
736 SUPREME COURT REPORTS ANNOTATED
Tolentino vs. Secretary of Finance

Clearly, whether in the Senate or in the House, every bill must pass
the three readings on separate days, except when the bill is certified.
Amendments 12
to the bill on third reading are constitutionally
prohibited.
After its passage by one chamber, the bill should then be
transmitted to the other chamber for its concurrence. Section 83,
Rule XIV of the Rules of the House expressly provides:

“SEC. 83. Transmittal to Senate.—The Secretary General, without need of


express order, shall transmit to the Senate for its concurrence all the bills
and joint or concurrent resolutions approved by the House or the
amendments of the House to the bills or resolutions of the Senate, as the
case may be. If the measures approved without amendments are bills or
resolutions of the Senate, or if amendments of the Senate to bills of the
House are accepted, he shall forthwith notify the Senate of the action
taken.”

Simplified, this rule means that:

1. As to a bill originating in the House:

(a) Upon its approval by the House, the bill shall be transmitted
to the Senate;
(b) The Senate may approve it with or without amendments;
(c) The Senate returns the bill to the House;
(d) The House may accept the Senate amendments; if it does
not, the Secretary General shall notify the Senate of that
action. As hereinafter be shown, a request for conference
shall then be in order.

2. As to bills originating in the Senate:

(a) Upon its approval by the Senate, the bill shall be


transmitted to the House;
(b) The House may approve it with or without amendments;
(c) The House then returns it to the Senate, informing it of the
action taken;
(d) The Senate may accept the House amendments; if it does
not, it shall notify the House and make a request for
conference.

The transmitted bill shall then pass three readings in the other
chamber on separate days. Section 84, Rule XIV of the
________________

12 Section 26(2), Article VI, Constitution.

737

VOL. 235, AUGUST 25, 1994 737


Tolentino vs. Secretary of Finance

Rules of the House states:

“SEC. 84. Bills from the Senate.—The bills, resolutions and


communications of the Senate shall be referred to the corresponding
committee in the same manner as bills presented by Members of the
House.”

and Section 51, Rule XXIII of the Rules of the Senate provides:

“SEC. 51. Prior to their final approval, bills and joint resolutions shall be
read at least three times.”

It is only when the period of disagreement is reached, i.e.,


amendments proposed by one chamber to a bill originating from the
other are not accepted by the latter, that a request for conference is
made or is in order. The request for conference is specifically
covered by Section 26, Rule XII of the Rules of the Senate which
reads:

“SEC. 26. In the event that the Senate does not agree with the House of
Representatives on the provision of any bill or joint resolution, the
differences shall be settled by a conference committee of both Houses which
shall meet within ten days after its composition.”

and Section 85, Rule XIV of the Rules of the House which reads:

“SEC. 85. Conference Committee Reports.—In the event that the House
does not agree with the Senate on the amendments to any bill or joint
resolution, the differences may be settled by conference committees of both
Chambers.”

The foregoing provisions of the Constitution and the Rules of both


chambers of Congress are mandatory. 13
In his Treatise On The Constitutional Limitations, more
particularly on enactment of bills, Cooley states:

_________________

13 Volume I, Eight Edition, Chapter VI, 267. See Miller vs. Mardo, 2 SCRA 898
[1961]; Everlasting Pictures, Inc. vs. Fuentes, 3 SCRA 539 [1961].

738
738 SUPREME COURT REPORTS ANNOTATED
Tolentino vs. Secretary of Finance

“Where, for an instance, the legislative power is to be exercised by two


houses, and by settled and well-understood parliamentary law these two
houses are to hold separate sessions for their deliberations, and the
determination of the one upon a proposed law is to be submitted to the
separate determination of the other, the constitution, in providing for two
houses, has evidently spoken in reference to this settled custom,
incorporating it as a rule of constitutional interpretation; so that it would
require no prohibitory clause to forbid the two houses from combining in
one, and jointly enacting laws by the vote of a majority of all. All those
rules which are of the essentials of law-making must be observed and
followed; and it is only the customary rules of order and routine, such as in
every deliberative body are always understood to be under its control, and
subject to constant change at its will, that the constitution can be understood
to have left as matters of discretion, to be established, modified, or
abolished by the bodies for whose government in non-essential matters they
exist.”

In respect of appropriation, revenue, or tariff bills, bills increasing


the public debt, bills of local application, or private bills, the return
thereof to the House after the Senate shall have “proposed or
concurred with amendments” for the former either to accept or reject
the amendments would not only be in conformity with the foregoing
rules but is also implicit from Section 24 of Article VI.
With the foregoing as our guiding light, I shall now show the
violations of the Constitution and of the Rules of the Senate and of
the House in the passage of R.A. No. 7716.

VIOLATIONS OF SECTION 24, ARTICLE VI OF THE


CONSTITUTION:

First violation.—Since R.A. No. 7716 is a revenue measure, it must


originate exclusively in the House—not in the Senate. As correctly
asserted by petitioner Tolentino, on the face of the enrolled copy of
R.A. No. 7716, it is a “CONSOLIDATION OF HOUSE BILL NO.
11197 AND SENATE BILL NO. 1630.” In short, it is an illicit
marriage of a bill which originated in the House and a bill which
originated in the Senate. Therefore, R.A. No. 7716 did not originate
exclusively in the House.
The only bill which could serve as a valid basis for R.A. No.
7716 is House Bill (HB) No. 11197. This bill, which is the substitute
bill recommended by the House Committee on Ways

739

VOL. 235, AUGUST 25, 1994 739


Tolentino vs. Secretary of Finance

and Means in substitution of House Bills Nos. 253, 771, 2450, 7033,
8086,9030, 9210, 9397, 10012, 14
and 10100, and covered by its
Committee Report No. 367, was 15
approved on third reading16 by the
House on 17 November 1993. Interestingly, HB No. 9210, which
was filed by Representative Exequiel B. Javier on 19 May 1993, was
certified by the President
17
in his letter to Speaker Jose de Venecia, Jr.
of 1 June 1993. Yet, HB No. 11197, which substituted HB No.
9210 and the others abovestated, was not. Its certification seemed to
have been entirely forgotten.
On 18 November 1993, the Secretary-General of the House,
pursuant to Section 83, Rule XIV of the Rules of the House,
transmitted to the President of the Senate HB18 No. 11197 and
requested the concurrence of the Senate therewith.
However, HB No. 11197 had passed only its first reading in the
Senate by its referral to its Committee on Ways and Means. That
Committee never deliberated on HB No. 11197 19
as it should have. It
acted only on Senate Bill (SB) No. 1129 introduced by Senator
Ernesto F. Herrera on 1 March 1993. It then prepared and 20
proposed
SB No. 1630, and in its Committee Report21No. 349 which was
submitted to the Senate on 7 February 1994, it recommended that
SB No. 1630 be approved “in substitution of S.B. No. 1129, 22
taking
into consideration P.S. Res. No. 734 and H.B. No. 11197.” It must
be carefully noted that SB No. 1630 was proposed and submitted for
approval by the Senate in SUBSTITUTION of SB No. 1129, and not
HB No. 11197. Obviously, the principal measure which the
Committee deliberated

________________

14 Consolidated Memorandum for Respondents, Annexes “2” to “12,” inclusive.


15 Consolidated Memorandum for Respondents, 18.
16 Id., Annex “9.”
17 Id., Annex “1.”
18 Id., 18.
19 Id., Annex “15.” Entitled “An Act Restructuring the Value-Added Tax (VAT)
System By Expanding Its Tax Base, Amending Sections 103, 113, 114 of the National
Internal Revenue Code, as Amended.”
20 Id., Annex “17.”
21 Id., 20.
22 Emphasis supplied.

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740 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance
on and acted upon was SB No. 1129 and not HB No. 11197. The
latter, instead of being the only measure to be taken up, deliberated
upon, and reported back to the Senate for its consideration on second
reading and, eventually, on third reading, was, at the most, merely
given by the Committee a passing glance.
This specific unequivocal action of the Senate Committee on
Ways and Means, i.e., proposing and recommending approval of SB
No. 1630 as a substitute for or in substitution of SB No. 1129
demolishes at once the thesis of the Solicitor General that:

“Assuming that SB 1630 is distinct from HB 11197, amendment by


substitution is within the purview of Section 24, Article VI of the
Constitution.”

because, according to him, (a) “Section 68, Rule XXIX of the Rules
of the Senate authorizes an amendment by substitution and the only
condition required is that ‘the text thereof is submitted in writing’;
and (b) ‘[I]n Flint vs. Stone Tracy Co. (220 U.S. 107) the United
States Supreme Court, interpreting the provision in the United States
Constitution similar to Section 24, Article VI of the Philippine
Constitution, stated that the power of the Senate to amend a revenue
bill includes substitution of an entirely new measure23 for the one
originally proposed by the House of Representatives.’ ”
This thesis is utterly without merit. In the first place, it reads into
the Committee Report something which it had not contemplated,
that is, to propose SB No. 1630 in substitution of HB No. 11197; or
speculates that the Committee may have committed an error in
stating that it is SB No. 1129, and not HB No. 11197, which is to be
substituted by SB No. 1630. Either, of course, is unwarranted
because the words of the Report, solemnly signed by the Chairman,
Vice-Chairman
24
(who dissented), seven members, and three ex-officio
members, leave no room for doubt that although SB No. 1129, P.S.
Res No. 734, and HB No. 11197 were referred to and considered by
the Committee, it had prepared the attached SB No. 1630 which it
recommends for approval “in

________________

23 Consolidated Memorandum for Respondents, 55-56.


24 Consolidated Memorandum for Respondents, Annex “17.” Two signed with
reservations and four signed subject to amendments.

741

VOL. 235, AUGUST 25, 1994 741


Tolentino vs. Secretary of Finance
substitution of S.B. No. 11197, taking into consideration P.S. No. 734
and H.B. No. 11197 with Senators Herrera, Angara, Romulo, Sotto,
Ople and Shahani as authors.” To do as suggested would be to
substitute the judgment of the Committee with another that is
completely inconsistent with it, or, simply, to capriciously ignore the
facts.
In the second place, the Office of the Solicitor General
intentionally made it appear, to mislead
25
rather than to persuade us,
that in Flint vs. Stone Tracy Co. the U.S. Supreme Court ruled, as
quoted by26
it in the Consolidated Memorandum for Respondents, as
follows:

“The Senate has the power to amend a revenue bill. This power to amend is
not confined to the elimination of provisions contained in the original act,
but embraces as well the addition of such provisions thereto as may render
the original act satisfactory to the body which is called upon to support it. It
has, in fact, been held that the substitution of an entirely new measure for
the one originally proposed can be supported as a valid amendment.
xxx xxx xxx
It is contended in the first place that this section of the act is
unconstitutional, because it is a revenue measure, and originated in the
Senate in violation of section 7 of article 1 of the Constitution, providing
that ‘all bills for raising revenue shall originate in the House of
Representatives, but the Senate may propose or concur with the
amendments, as on other bills.’ ”

The first part is not a statement of the Court, but a summary of the
arguments of counsel in one of the companion cases (No. 425,
entitled, “Gay vs. Baltic Mining Co.”). The second part is the
second paragraph of the opinion of the Court delivered by Mr.
Justice Day. The misrepresentation that the first part is a statement
of the Court is highly contemptuous. To show such deliberate
misrepresentation, it is well to quote what actually are found in 55
L.Ed. 408, 410, to wit:

“Messrs. Charles A. Snow and Joseph H. Knight filed a brief for appellees
in No. 425:

_______________

25 And companion cases, 220 U.S. 107, 55 L.Ed. 389 [1911].


26 Page 56.

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742 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

x x x
The Senate has the power to amend a revenue bill. This power to amend
is not confined to the elimination of provisions contained in the original act,
but embraces as well the addition of such provisions thereto as may render
the original act satisfactory to the body which is called upon to support it. It
has, in fact, been held that the substitution of an entirely new measure for
the one originally proposed can be supported as a valid amendment.
Brake v. Collison, 122 Fed. 722.
Mr. James L. Quackenbush filed a statement for appellees in No. 442.
Solicitor General Lehmann (by special leave) argued the cause for the
United States on reargument.
Mr. Justice Day delivered the opinion of the court:

These cases involve the constitutional validity of § 38 of the act of Congress


approved August 5, 1909, known as ‘the corporation tax’ law. 36 Stat. at L. 11, 112-
117, chap. 6, U.S. Comp. Stat. Supp. 1909, pp. 659, 844-849.
It is contended in the first place that this section of the act is unconstitutional,
because it is a revenue measure, and originated in the Senate in violation of § 7 of
article 1 of the Constitution, providing that ‘all bills for raising revenue shall
originate in the House of Representatives, but the Senate may propose or concur
with the amendments, as on other bills.’ The history of the act is contained in the
government’s brief, and is accepted as correct, no objection being made to its
accuracy.
This statement shows that the tariff bill of which the section under consideration
is a part, originated in the House of Representatives, and was there a general bill for
the collection of revenue. As originally introduced, it contained a plan of inheritance
taxation. In the Senate the proposed tax was removed from the bill, and the
corporation tax, in a measure, substituted therefor. The bill having properly
originated in the House, we perceive no reason in the constitutional provision relied
upon why it may not be amended in the Senate in the manner which it was in this
case. The amendment was germane to the subject-matter of the bill, and not beyond
the power of the Senate to propose.” (Emphasis supplied)
x x x

As shown above, the underlined portions were deliberately omitted


in the quotation made by the Office of the Solicitor General.

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VOL. 235, AUGUST 25, 1994 743


Tolentino vs. Secretary of Finance

In the third place, a Senate amendment by substitution with an


entirely new bill of a bill, which under Section 24, Article VI of the
Constitution can only originate exclusively in the House, is not
authorized by said Section 24. Flint vs. Stone Tracy Co. cannot be
invoked in favor of such a view. As pointed out by Mr. Justice
Florenz D. Regalado during the oral arguments of these cases and
during the initial deliberations thereon by the Court, Flint involves a
Senate amendment to a revenue bill which, under the United States
Constitution, should originate from the House of Representatives.
The amendment consisted of the substitution of a corporation tax in
lieu of the plan of inheritance taxation contained in a general bill for
the collection of revenue as it came from the House of
Representatives where the bill originated. The constitutional
provision in question is Section 7, Article I of the United States
Constitution which reads:

“Section 7. Bills and Resolutions.—All Bills for raising Revenue shall


originate in the House of Representatives; but the Senate may propose or
concur with Amendments, as on other Bills.”

This provision, contrary to the misleading claim of the Solicitor


General, is not similar to Section 24, Article VI of our Constitution,
which for easy comparison is hereunder quoted again:

“All appropriation, revenue or tariff bills, bills authorizing increase of the


public debt, bills of local application, and private bills shall originate
exclusively in the House of Representatives, but the Senate may propose or
concur with amendments.”

Note that in the former the word exclusively does not appear. And, in
the latter, the phrase “as on other Bills,” which is found in the
former, does not appear. These are very significant in determining
the authority of the upper chamber over the bills enumerated in
Section 24. Since the origination is not exclusively vested in the
House of Representatives of the United States, the Senate’s authority
to propose or concur with amendments is necessarily broader. That
broader authority is further confirmed by the phrase “as on other
Bills,” i.e., its power to propose or concur with amendments thereon
is the same as in ordinary bills. The absence of this phrase in our
Constitution was clearly intended to restrict or limit the Philippine
Senate’s power to
744

744 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

propose or concur with amendments. In the light of the exclusivity of


origination and the absence of the phrase “as on other Bills,” the
Philippine Senate cannot amend by substitution with an entirely new
bill of its own any bill covered by Section 24 of Article VI which the
House of Representatives transmitted to it because such substitution
would indirectly violate Section 24.
These obvious substantive differences between Section 7, Article
I of the U.S. Constitution and Section 24, Article VI of our
Constitution are enough reasons why this Court should neither allow
itself to be misled
27
by Flint vs. Stone nor be awed by28Rainey vs.
United States and the opinion of Messrs. Ogg and Ray which the
majority cites to support the view that the power of the U.S. Senate
to amend a revenue measure is unlimited. Rainey concerns the Tariff
Act of 1909 of the United States of America and specifically
involved was its Section 37 which was an amendment introduced by
the U.S. Senate. It was claimed by the petitioners that the said
section is a revenue measure which should originate in the House of
Representatives. The U.S. Supreme Court, however, adopted and
approved the finding of the court a quo that:

“the section in question is not void as a bill for raising revenue originating
in the Senate, and not in the House of Representatives. It appears that the
section was proposed by the Senate as an amendment to a bill for raising
revenue which originated in the House. That is sufficient.”

Messrs. Ogg and Ray, who are professors emeritus of political


science, based their statement not even on a case decided by the U.S.
Supreme Court but on their perception of what Section 7, Article I
of the U.S. Constitution permits. In the tenth edition (1951) of their
work, they state:

“Any bill may make its first appearance in either house, except only that
bills for raising revenue are required by the constitution to ‘originate’ in the
House of Representatives. Indeed, through its right to amend revenue bills,
even to the extent of substituting new ones, the

________________

27 232 U.S. 309, 58 L ed. 117 [1914].


28 Introduction to American Government, 309, n. 2 [1945].

745

VOL. 235, AUGUST 25, 1994 745


Tolentino vs. Secretary of Finance
29
Senate may, in effect, originate them also.”

Their “in effect” conclusion is, of course, logically correct because


the word exclusively does not appear in said Section 7, Article I of
the U.S. Constitution.
Neither can I find myself in agreement with the view of the
majority that the Constitution does not 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, thereby stating, in effect, that S.B.
No. 1129 was such an anticipatory substitute bill, which,
nevertheless, does not seem to have been considered by the Senate
except only after its receipt of H.B. No. 11197 on 23 November
1993 when the process of legislation in respect of it began with a
referral to the Senate Committee on Ways and Means. Firstly, to say
that the Constitution does not prohibit it is to render meaningless
Section 24 of Article VI or to sanction its blatant disregard through
the simple expedient of filing in the Senate of a so-called
anticipatory substitute bill. Secondly, it suggests that S.B. No. 1129
was filed as an anticipatory measure to substitute for H.B. No.
11197. This is a speculation which even the author of S.B. No. 1129
may not have indulged in. S.B. No. 1129 was filed in the Senate by
Senator Herrera on 1 March 1993. H.B. No. 11197 was approved by
the House on third reading only on 17 November 1993. Frankly, I
cannot believe that Senator Herrera was able to prophesy that the
House would pass any VAT bill, much less to know its provisions.
That “it does not seem that the Senate even considered” the latter not
until after its receipt of H.B. No. 11197 is another speculation. As
stated earlier, S.B. No. 1129 was filed in the Senate on 1 March
1993, while H.B. No. 11197 was transmitted to the Senate only on
18 November 1993. There is no evidence on record to show that
both were referred to the Senate Committee on Ways and Means at
the same time. Finally, in respect of H.B. No. 11197, its legislative
process did not begin with its referral to the Senate’s Ways and
Means Committee. It begin upon its filing, as a Committee Bill of
the House Committee on Ways and Means, in the House.

_______________

29 At 317.

746

746 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

Second violation.—Since SB No. 1129 is a revenue measure, it could


not even be validly introduced or initiated in the Senate. It follows
too, that the Senate cannot validly act thereon.
Third violation.—Since SB No. 1129 could not have been validly
introduced in the Senate and could not have been validly acted on by
the Senate, then it cannot be substituted by another revenue measure,
SB No. 1630, which the Senate Committee on Ways and Means
introduced in substitution of SB No. 1129. The filing or introduction
in the Senate of SB No. 1630 also violated Section 24, Article VI of
the Constitution.

VIOLATIONS OF SECTION 26(2), ARTICLE VI OF THE


CONSTITUTION:
First violation.—The Senate, despite its lack of constitutional
authority to consider SB No. 1630 or SB No. 1129 which the former
substituted, opened deliberations on second reading of SB No. 1630
on 8 February 1994. On 24 March 1994, 30
the Senate approved it on
second reading and on third reading. That approval on the same
day violated Section 26(2), Article VI of the Constitution. The
justification therefor was that on 24 February 1994 the President
certified to “the necessity 31of the enactment of SB No. 1630 . . . to
meet a public emergency.”
I submit, however, that the Presidential certification is void ab
initio not necessarily for the reason adduced by petitioner
Kilosbayan, Inc., but because it was addressed to the Senate for a
bill which is prohibited from originating therein. The only bill which
could be properly certified on permissible constitutional grounds
even if it had already been transmitted to the Senate is HB No.
11197. As earlier observed, this was not so certified, although HB
No. 9210 (one of those 32
consolidated into HB No. 11197) was
certified on 1 June 1993.
Also, the certification of SB No. 1630 cannot, by any stretch of
the imagination, be extended to HB No. 11197 because SB No. 1630
did not substitute HB No. 11197 but SB No. 1129.

_______________

30 Consolidated Memorandum for Respondents, 20-21.


31 Id., Annex “14.”
32 Id., Annex “1.”

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VOL. 235, AUGUST 25, 1994 747


Tolentino vs. Secretary of Finance

Considering that the certification of SB No. 1630 is void, its


approval on second and third readings in one day violated Section
26(2), Article VI of the Constitution.
Second violation.—It further appears that on 24 June 1994, after
the approval of SB No. 1630, the Secretary of the Senate, upon
directive of the Senate President, formally notified the House
Speaker of the Senate’s approval thereof and its request for a
bicameral conference “in view 33of the disagreeing provisions of said
bill and House Bill No. 11197.”
It must be stressed again that HB No. 11197 was never submitted
for or acted on second and third readings in the Senate, and SB No.
1630 was never sent to the House for its concurrence. Elsewise
stated, both were only half-way through the legislative mill. Their
submission to a conference committee was not only anomalously
premature, but violative of the constitutional rule on three readings.
The suggestion that SB No. 1630 was not required to be
submitted to the House for otherwise the procedure would be
endless, is unacceptable for, firstly, it violates Section 26, Rule XII
of the Rules of the Senate and Section 85, Rule XIV of the Rules of
the House, and, secondly, it is never endless. If the chamber of
origin refuses to accept the amendments of the other chamber, the
request for conference shall be made.

VIOLATIONS OF THE RULES OF BOTH CHAMBERS;


GRAVE ABUSE OF DISCRETION.

The erroneous referral to the conference committee needs further


discussion. Since S.B. No. 1630 was not a substitute bill for H.B.
No. 11197 but for S.B. No. 1129, it (S.B. No. 1630) remained a bill
which originated in the Senate. Even assuming arguendo that it
could be validly initiated in the Senate, it should have been first
transmitted to the House where it would undergo three readings. On
the other hand, since HB No. 11197 was never acted upon by the
Senate on second and third readings, no differences or
inconsistencies could as yet arise so as to warrant a request for a
conference. It should be noted that under Section

_______________

33 Consolidated Memorandum for Respondents, Annex “18.”

748

748 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

83, Rule XIV of the Rules of the House, it is only when the Senate
shall have approved with amendments HB No. 11197 and the House
declines to accept the amendments after having been notified thereof
that the request for a conference may be made by the House, not by
the Senate. Conversely, the Senate’s request for a conference would
only be proper if, following the transmittal of SB No. 1630 to the
House, it was approved by the latter with amendments but the
Senate rejected the amendments.
Indisputably then, when the request for a bicameral conference
was made by the Senate, SB No. 1630 was not yet transmitted to the
House for consideration on three readings and HB No. 11197 was
still in the Senate awaiting consideration on second and third
readings. Their referral to the bicameral conference committee was
palpably premature and, in so doing, both the Senate and the House
acted without authority or with grave abuse of discretion. Nothing,
and absolutely nothing, could have been validly acted upon by the
bicameral conference committee.
GRAVE ABUSE OF DISCRETION COMMITTED BY THE
BICAMERAL CONFERENCE COMMITTEE.

Serious irregularities amounting to lack of jurisdiction or grave


abuse of discretion were committed by the bicameral conference
committee.
First, it assumed, and took for granted that SB No. 1630 could
validly originate in the Senate. This assumption is erroneous.
Second, it assumed that HB No. 11197 and SB No. 1630 had
properly passed both chambers of Congress and were properly and
regularly submitted to it. As earlier discussed, the assumption is
unfounded in fact.
Third, per the bicameral conference committee’s proceedings of
19 April 1994, Representative Exequiel Javier, Chairman of the
panel from the House, initially suggested that HB No. 11197 should
be the “frame of reference,” because it is a revenue measure, to
which Senator Ernesto Maceda concurred. However, after an
incompletely recorded reaction of Senator Ernesto Herrera,
Chairman of the Senate panel, Representative Javier seemed to agree
that “all amendments will be coming from the Senate.” The issue of
what should be the “frame of reference” does not appear to have
been resolved. These facts are recorded

749

VOL. 235, AUGUST 25, 1994 749


Tolentino vs. Secretary of Finance

in this wise,34 as quoted in the Consolidated Memorandum for


Respondents:

Yes. That’s true for every revenue measure. There’s no other way.
The House Bill has got to be the base. Of course, for the record,
we know that this is an administration; this is certified by the
President and I was about to put into the recordsas I am saying
now that your problem about the impact on prices on the people
was already decided when the President and the administration
sent this to us and certified it. They have already gotten over that
political implication of this bill and the economic impact on
prices.
“CHAIRMAN JAVIER.
Yes. That’s true for every revenue measure. There’s no other way.
The House Bill has got to be the base. Of course, for the record,
we know that this is an administration; this is certified by the
President and I was about to put into the recordsas I am saying
now that your problem about the impact on prices on the people
was already decided when the President and the administration
sent this to us and certified it. They have already gotten over that
political implication of this bill and the economic impact on
prices.
First of all, what would be the basis, no, or framework para huwag
naman mawala yung personality namin dito sa bicameral, no,
because the bill originates from the House because this is a
revenue bill, so we would just want to ask, we make the House Bill
as the frame of reference, and then everything will just be
inserted?
HON. MACEDA.
CHAIRMAN HERRERA.
Yung concern mo about the bill as the reference in this discussion
is something that we can just . . .
CHAIRMAN JAVIER.
We will just . . . all the amendments will be coming from the
Senate.
(BICAMERAL CONFERENCE ON MAJOR DIFFERENCES
BETWEEN HB NO. 11197 AND SB NO. 1630 [Cte. on Ways &
Means] APRIL 19, 1994, II-6 and II-7; italics supplied)”

These exchanges would suggest that Representative Javier had


wanted HB No. 11197 to be the principal measure on which
reconciliation of the differences should be based. However, since the
Senate did not act on this Bill on second and third readings because
its Committee on Ways and Means did not deliberate on it but
instead proposed SB No. 1630 in substitution of SB No. 1129, the
suggestion has no factual basis. Then, when finally he agreed that
“all amendments will be coming from the Senate,” he

_______________

34 Page 22.

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750 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

in fact withdrew the former suggestion and agreed that SB No. 1630,
which is the Senate version of the Value Added Tax (VAT) measure,
should be the “frame of reference.” But then SB No. 1630 was never
transmitted to the House for the latter’s concurrence. Hence, it
cannot serve as the “frame of reference” or as the basis for
deliberation. The posture taken by Representative Javier also
indicates that SB No. 1630 should be taken as the amendment to HB
No. 11197. This, too, is unfounded because SB No. 1630 was not
proposed in substitution of HB No. 11197.
Since SB No. 1630 did not pass three readings in the House and
HB No. 11197 did not pass second and third readings in the Senate,
it logically follows that no disagreeing provisions had as yet arisen.
The bicameral conference committee erroneously assumed the
contrary.
Even granting arguendo that both HB No. 11197 and SB No.
1630 had been validly approved by both chambers of Congress and
validly referred to the bicameral conference committee, the latter
had very limited authority thereon. It was
35
created “in view of the
disagreeing provisions of” the two bills. Its duty was limited to the
reconciliation of disagreeing provisions or the resolution of
differences or inconsistencies. The committee recognized 36
that
limited authority in the opening paragraph of its Report when it
said:

“The Conference Committee on the disagreeing provisions of House Bill


No. 11197 x x x and Senate Bill No. 1630 x x x.”

Under such limited authority, it could only either (a) restore, wholly
or partly, the specific provisions of HB No. 11197 amended by SB
No. 1630, (b) sustain, wholly or partly, the Senate’s amendments, or
(c) by way of a compromise, to agree that neither provisions in HB
No. 11197 amended by the Senate nor the latter’s amendments
thereto be carried into the final form of the former.
But as pointed out by petitioners Senator Raul Roco and
Kilosbayan, Inc., the bicameral conference committee not only

_______________

35 Consolidated Memorandum for Respondents, Annex “18.”


36 Id., Annex, “19.”

751

VOL. 235, AUGUST 25, 1994 751


Tolentino vs. Secretary of Finance

struck out non-disagreeing provisions of HB No. 11197 and SB No.


1630, i.e., provisions where both bills are in full agreement; it added
more activities or transactions to be covered by VAT, which were not
within the contemplation of both bills. Since both HB No. 11197 and
SB No. 1630 were still half-cooked in the legislative vat, and were
not ready for referral to a conference, the bicameral conference
committee clearly acted without jurisdiction or with grave abuse of
discretion when it consolidated both into one bill which became
R.A. No. 7716.

APPROVAL BY BOTH CHAMBERS OF CONFERENCE


COMMITTEE REPORT AND PROPOSED BILL DID NOT
CURE CONSTITUTIONAL INFIRMITIES.

I cannot agree with the suggestion that since both the Senate and the
House had approved the bicameral conference committee report and
the bill proposed by it in substitution of HB No. 11197 and SB No.
1630, whatever infirmities may have been committed by it were
cured by ratification. This doctrine of ratification may apply to
minor procedural flaws or tolerable breaches of the parameters of
the bicameral conference committee’s limited powers but never to
violations of the Constitution. Congress is not above the
Constitution. In the instant case, since SB No. 1630 was introduced
in violation of Section 24, Article VI of the Constitution, was passed
in the Senate in violation of the “three readings” rule, and was not
transmitted to the House for the completion of the constitutional
process of legislation, and HB No. 11197 was not likewise passed by
the Senate on second and third readings, neither the Senate nor the
House could validly approve the bicameral conference committee
report and the proposed bill.
In view of the foregoing, the conclusion is inevitable that for
non-compliance with mandatory provisions of the Constitution and
of the Rules of the Senate and of the House on the enactment of
laws, R.A. No. 7716 is unconstitutional and, therefore, null and
void. A discussion then of the intrinsic validity of some of its
provisions would be unnecessary.
The majority opinion, however, invokes the enrolled bill doctrine
and wants this Court to desist from looking behind the copy of the
assailed measure as certified by the Senate President and the

752

752 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

Speaker of the House. I respectfully submit that the invocation is


misplaced. First, as to the issue of origination, the certification in
this case explicitly states that R.A. No. 7716 is a “consolidation of
House Bill No. 11197 and Senate Bill No. 1630.” This is conclusive
evidence that the measure did not originate exclusively in the House.
Second, the enrolled bill doctrine is of American origin, and
unquestioned fealty to37 it may no longer be justified in view of the
37
expanded jurisdiction of this Court under Section 1, Article VIII of
our Constitution which now expressly grants authority to this Court
to:

“determine whether or not there has been a grave abuse of discretion


amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government.”

Third, even under the regime of the 1935 Constitution which did not
contain the above provision, this Court,
38
through Mr. Chief Justice
Makalintal, in Astorga vs. Villegas,39 declared that it cannot be truly
said that Mabanag vs. Lopez Vito has laid to rest the question of
whether the enrolled bill doctrine or the journal entry rule should be
adhered to in this jurisdiction, and stated:

“As far as Congress itself is concerned, there is nothing sacrosanct in the


certification made by the presiding officers. It is merely a mode of
authentication. The lawmaking process in Congress ends when the bill is
approved by both Houses, and the certification does not add to the validity
of the bill or cure any defect already present upon its passage. In other
words, it is the approval of Congress and not the signatures of the presiding
officers that is essential. Thus the (1935) Constitution says that ‘[e]very bill
passed by the Congress shall, before it becomes law, be presented to the
President.’ In Brown vs. Morris, supra, the Supreme Court of Missouri,
interpreting a similar provision in the

_______________

37 ISAGANI A. CRUZ, Philippine Political Law, 1991 ed., 226; Daza vs. Singson, 180
SCRA 496 [1989]; Coseteng vs. Mitra, 187 SCRA 377 [1990]; Gonzales vs. Macaraig, 191
SCRA 452 [1990]; Llamas vs. Orbos, 202 SCRA 844 [1991]; Bengzon vs. Senate Blue Ribbon
Com- mittee, 203 SCRA 767 [1991]; Oposa vs. Factoran, 224 SCRA 792 [1993].
38 56 SCRA 714, 719, 723 [1974].
39 78 Phil. 1 [1947].

753

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Tolentino vs. Secretary of Finance

State Constitution, said that the same ‘makes it clear that the indispensable
step in the passage’ and it follows that if a bill, otherwise fully enacted as a
law, is not attested by the presiding officer, other proof that it has ‘passed
both houses will satisfy the constitutional requirement.’ ”

Fourth, even in the United States, the enrolled bill doctrine has been
substantially undercut. This is shown in the disquisitions of Mr.
Justice Reynato S. Puno in his dissenting opinion, citing Sutherland,
Statutory Construction.
Last, the pleadings of the parties have established beyond doubt
that HB No. 11197 was not acted on second and third readings in the
Senate and SB No. 1630, which was approved by the Senate on
second and third readings in substitution of SB No. 1129, was never
transmitted to the House for its passage. Otherwise stated, they were
only passed in their respective chamber of origin but not in the other.
In no way can each become a law under paragraph 2, Section 26,
Article VI of the Constitution. For the Court to close its eyes to this
fact because of the enrolled bill doctrine is to shirk
40
its duty to hold
“inviolate what is decreed by the Constitution.”
I vote then to GRANT these petitions and to declare R.A. No.
7716 as unconstitutional.

DISSENTING OPINION

ROMERO, J.:

Few issues brought before this Court for resolution have roiled the
citizenry as much as the instant case brought by nine petitioners
which challenges the constitutionality of Republic Act No. 7716 (to
be referred to herein as the “Expanded Value Added Tax” or EVAT
law to distinguish it from Executive Order No. 273 which is the VAT
law proper) that was enacted on May 5, 1994. A visceral issue, it has
galvanized the populace into mass action and strident protest even as
the EVAT proponents have taken to podia and media in a post facto
information campaign.

________________

40 Mutuc vs. COMELEC, 36 SCRA 228 [1970].

754

754 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

The Court is confronted here with an atypical case. Not only is it a


vatful of seething controversy but some unlikely petitioners invoke
unorthodox remedies. Three Senator-petitioners would nullify a
statute that bore the indispensable stamp of approval of their own
Chamber with two of them publicly repudiating what they had
earlier endorsed. With two former colleagues, one of them an
erstwhile Senate President, making common cause with them, they
would stay the implementation by the Executive Department of a
law which they themselves have initiated. They address a prayer to a
co-equal Department to probe their official acts for any procedural
irregularities they have themselves committed lest the effects of
these aberrations inflict such damage or irreparable loss as would
bring down the wrath of the people on their heads.
To the extent that they perceive that a vital cog in the internal
machinery of the Legislature has malfunctioned from having
operated in blatant violation of the enabling Rules they have
themselves laid down, they would now plead that this other Branch
of Government step in, invoking the exercise of what is at once a
delicate and awesome power. Undoubtedly, the case at bench is as
much a test for the Legislature as it is for the Judiciary.
A backward glance on the Value Added Tax (VAT) is in order at
this point.
The first codification of the country’s internal revenue laws was
effected with the enactment of Commonwealth Act No. 466,
commonly known as the ‘National Internal Revenue Code’ which
was approved on June 15, 1939 and took effect on July 1, 1939,
although the provisions on the income tax were made retroactive to
January 1, 1939.
“Since 1939 when the turnover tax was replaced by the
manufacturer’s sales tax, the Tax Code had provided for a single-
stage value-added tax on original sales by manufacturers, producers
and importers computed on the ‘cost deduction method’ and later, on
the basis of the ‘tax credit method.’ The turnover tax was re-
introduced in 1985 by Presidential1
Decree No. 1991 (as amended by
Presidential Decree No. 2006).”

_______________

1 Vitug, Jose C., COMPENDIUM OF TAX LAW AND JURISPRUDENCE, Third


Revised Edition, 1993 at 201.

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Tolentino vs. Secretary of Finance

In 1986, a tax reform package was approved by the Aquino Cabinet.


It contained twenty-nine measures, one of which proposed the
adoption of the VAT, as well as the simplification of the sales tax
structure and the abolition of the turnover tax.
“Up until 1987, the system of taxing goods consisted of (a) an
excise tax on certain selected articles (b) fixed and percentage taxes
on original and subsequent sales, on importations and on milled
articles and (c) mining taxes on mineral products. Services2 were
subjected to percentage taxes based mainly on gross receipts.”
On July 25, 1987, President Corazon C. Aquino signed into law
Executive Order No. 273 which adopted the VAT. From the former
single-stage value-added tax, it introduced the multi-stage VAT
system where “the value-added tax is imposed on the sale of and
distribution process culminating in sale, to the final consumer.
Generally described, the taxpayer (the seller) determines his tax
liability by computing the tax on the gross selling price or gross
receipt (“output tax”) and subtracting or crediting the earlier VAT on
the purchase or importation of goods or on3 the sale of service (“input
tax”) against the tax due on his own sale.”
On January 1, 1988, implementing rules and regulations for the
VAT were promulgated. President Aquino then issued Proclamation
No. 219 on February 12, 1988 urging the public and private sectors
to join the nationwide consumers’ education campaign for VAT.
Soon after the implementation of Executive Order No. 273, its
constitutionality was assailed before this Court in the case of
Kapatiran ng 4
mga Naglilingkod sa Pamahalaan ng Pilipinas, Inc.,
et al. v. Tan. The four petitioners sought to nullify the VAT law “for
being unconstitutional in that its enactment is not allegedly within
the powers of the President; that the VAT is oppressive,
discriminatory, regressive, and violates the due process and equal
protection clauses and other provisions of the 1987

_______________

2 Ibid.
3 Ibid.
4 L-81311, June 30, 1988, 163 SCRA 371 with Justice Teodoro R. Padilla as
ponente.

756

756 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance
5
Constitution.” In dismissing the consolidated petitions, this Court
stated:

“The Court, following the time-honored doctrine of separation of powers


cannot substitute its judgment for that of the President as to the wisdom,
justice and advisability of the VAT. The Court can only look into and
determine whether or not Executive Order No. 273 was enacted and made
effective as law, in the manner required by and consistent with, the
Constitution, and to make sure that it was not issued in grave abuse of
discretion amounting to lack or excess of jurisdiction; and, in this regard,
the Court finds6 no reason to impede its application or continued
implementation.”

Although declared constitutional, the VAT law was sought to be


amended from 1992 on by a series of bills filed in both Houses of
Congress. In chronological sequence, these were:

HB/SB No. Date Filed in Congress


HB No. 253 — July 22, 1992
HB No. 771 — August 10, 1992
HB No. 2450 — September 9, 1992
7
Senate Res. No. 734 — September 10, 1992
HB No. 7033 — February 3, 1993
8
SB No. 1129 — March 1, 1993
HB No. 8086 — March 9, 1993
HB No. 9030 — May 11, 1993

_______________

5 Ibid at 378.
6 Ibid at 385.
7 Senate Resolution No. 734 filed on September 10, 1992 was entitled “Resolution
Urging the House Committee on Ways and Means to Study the Proposal to Exempt
Local Movie Producers from the Payment of the Value-Added Tax as an Incentive to
the Production of Quality and Wholesome Filipino Movies, Whenever They Feature
an All-Filipino Cast of Actors and Actresses.”
8 SB No. 1129 sought to include under the VAT Law such items as lease of real
properties, excluding agricultural lands and residential properties with monthly
rentals of less than P10,000.00; hotels; restaurants, eating places, caterers; services by
persons in the exercise of their professions; actors, actresses, talents, singers and
professional athletes; and lawyers, accountants, doctors and other professionals
registered with the Philippine Regulatory Commission.

757

VOL. 235, AUGUST 25, 1994 757


Tolentino vs. Secretary of Finance
9
HB No. 9210 — May 19,
1993
HB No. 9297 — May 25,
1993
HB No. 10012 — July 28,
1993
HB No. 10100 — August 3,
1993
HB No. 11197 in substitution of HB Nos. 253, 771, — November
2450, 107033, 8086, 9030, 9210, 9297, 10012 and 5, 1993
10100

We now trace the course taken by H.B. No. 11197 and S.B. No.
1129.
HB/SB No.
HB No. 11197 was approved in the Lower House on — November
second reading 11, 1993
HB No. 11197 was approved in the Lower House on — November
third reading and voted upon with 114 Yeas and 12 17, 1993
Nays —
November
18, 1993
HB No. 11197 was transmitted to the Senate Senate — February
Committee on Ways and Means submitted Com. 7, 1994
Report No. 349 recommending for approval SB No.
1630 in substitution of SB No. 1129, taking into 11
consideration PS Res. No. 734 and HB No. 11197

_______________

9 On June 1, 1993, President Fidel V. Ramos certified for immediate enactment


House Bill No. 9210 entitled “An Act Amending Title IV and Sections 237 and 238
of the National Internal Revenue Code, as amended, to meet a public emergency.”
10 House Bill No. 11197 is entitled “An Act Restructuring the Value-Added Tax
(VAT) System to Widen its Tax Base and Enhance Its Administration, Amending for
these Purposes Sections 99, 100, 102, 103, 104, 105, 106, 107, 108 and 110 of Title
IV, 112, 115 and 116 of Title V, and 236, 237, and 238 of Title IX and Repealing
Sections 113 and 114 of Title V, all of the National Internal Revenue Code, as
Amended.”
11 Senate Bill No. 1630 is entitled “An Act Restructuring The Value-Added Tax
(VAT) System to Widen its Tax Base and Enhance Its Administration, Amending for
these Purposes Sections 99, 100, 102, 103, 104, 105, 107, 108 and 110 of Title IV,
112 of Title V, and 236, 237 and 238 of Title IX, and Repealing Sections 113, 114 and
116 of Title V, all of the National Internal Revenue Code, as Amended, and for other
Purposes.”

758

758 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

Certification by President Fidel V. Ramos of Senate Bill — March


No. 1630 for immediate enactment to meet a public 22,
emergency 1994
SB No. 1630 was approved by the Senate on second and — March
third readings and subsequently voted upon with 13 24,
yeas, none against and one abstention 1994
Transmittal by the Senate to the Lower House of a — March
request for a conference in view of disagreeing 24,
provisions of SB No. 1630 and HB No. 11197 1994
The Bicameral Conference Committee conducted — April
various meetings to reconcile the proposals on the VAT 13,
19,
20,
21, 25
The House agreed on the Conference Committee Report — April
27,
1994
The Senate agreed on the Conference Committee Report — May
2,
1994
The President signed12 Republic Act No. 7716—The — May
Expanded VAT Law 5,
1994
Republic Act No. 7716 was published in two newspapers — May
of general circulation 12,
1994
Republic Act No. 7716 became effective — May
28,
1994

Republic Act No. 7716 merely expanded the base of the VAT law
even as the tax retained its multi-stage character.
At the oral hearing held on July 7, 1994, this Court delimited
petitioners’ arguments to the following issues culled from their
respective petitions.

PROCEDURAL ISSUES
Does Republic13
Act No. 7716 violate Article VI, Section 24, of the
Constitution?

________________

12 Republic Act No. 7716 is entitled “An Act Restructuring The Value-Added Tax
(VAT) System, Widening Its Tax Base And Enhancing Its Administration, And For
These Purposes Amending And Repealing The Relevant Provisions Of The National
Internal Revenue Code, as amended, and for other purposes.”
13 Article VI, Section 24: “All appropriation, revenue or tariff bills authorizing
increase of the public debt, bills of local application, and

759

VOL. 235, AUGUST 25, 1994 759


Tolentino vs. Secretary of Finance

Does it violate
14
Article VI, Section 26, paragraph 2, of the
Constitution?
What is the extent of the power of the Bicameral Conference
Committee?

SUBSTANTIVE ISSUES
Does the law violate the following provisions in Article III (Bill of
Rights) of the Constitution:
15
1. Section 1
16
2. Section 4
17
3. Section 5
18
4. Section 10

_______________

private bills shall originate exclusively in the House of Representatives, but the
Senate may propose or concur with amendments.”
14 Article VI, Section 26, paragraph 2: “No bill passed by either House shall
become a law unless it has passed three readings on separate days, and printed copies
thereof in its final form have been distributed to its Members three days before its
passage, except when the president certifies to the necessity of its immediate
enactment to meet a public calamity or emergency. Upon the last reading of a bill, no
amendment thereto shall be allowed, and the vote thereon shall be taken immediately
thereafter, and the yeas and nays entered in the Journal.”
15 Article III, Section 1: “No person shall be deprived of life, liberty, or property
without due process of law, nor shall any person be denied the equal protection of the
laws.”
16 Article III, Section 4: “No law shall be passed abridging the freedom of speech,
of expression, or of the press, or the right of the people peaceably to assemble and
petition the government for redress of grievances.”
17 Article III, Section 5: “No law shall be made respecting an establishment of
religion, or prohibiting the free exercise and enjoyment of religious profession and
worship, without discrimination or preference, shall forever be allowed. No religious
test shall be required for the exercise of civil or political rights.”
18 Article III, Section 10: “No law impairing the obligation of contracts shall be
passed.”

760

760 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

Does the law violate the following other provisions of the


Constitution?
19
1. Article VI, Section 28, paragraph 1
20
2. Article VI, Section 28, paragraph 3
As a result of the unedifying experience of the past where the Court
had the propensity to steer clear of questions it perceived to be
“political” in nature, the present Constitution, in contrast, has
explicitly expanded judicial power to include the duty of the courts,
especially the Supreme Court, “to determine whether or not there
has been a grave abuse of discretion amounting to lack or excess of
jurisdiction on21 the part of any branch or instrumentality of the
Government.” I submit that under this explicit mandate, the Court
is empowered to rule upon acts of other Government entities for the
purpose of determining whether there may have been, in fact,
irregularities committed tantamount to violation of the Constitution,
which case would clearly constitute a grave abuse of discretion on
their part.
In the words of the sponsor of the above-quoted Article of the
Constitution on the Judiciary, the former Chief Justice Roberto R.
Concepcion, “the judiciary is the final arbiter on the question of
whether or not a branch of government or any of its officials has
acted without jurisdiction or in excess of jurisdiction, or so
capriciously as to constitute an abuse of discretion amounting to
excess of jurisdiction or lack of jurisdiction. This is not only a
judicial power but a duty to pass judgment on matters of this nature.
This is the background of paragraph 2 of Section 1, which means
that the courts cannot hereafter exhibit its wonted reticence

_______________

19 Article VI, Section 28, paragraph 1: “The rule of taxation shall be uniform and
equitable. The Congress shall evolve a progressive system of taxation.”
20 Article VI, Section 28, paragraph 3: “Charitable institutions, churches and
parsonages or convents appurtenant thereto, mosques, non-profit cemeteries, and all
lands, buildings, and improvements, actually, directly, and exclusively used for
religious, charitable, or educational purposes shall be exempt from taxation.”
21 Constitution, Article VIII, Section 1.

761

VOL. 235, AUGUST 25, 1994 761


Tolentino vs. Secretary of Finance
22
by claiming that such matters constitute a political question.”
In the instant petitions, this Court is called upon, not so much to
exercise its traditional power of judicial review as to determine
whether or not there has indeed been a grave abuse of discretion on
the part of the Legislature amounting to lack or excess of
jurisdiction.
Where there are grounds to resolve a case without touching on its
constitutionality, the Court will do so with utmost alacrity in due
deference to the doctrine of separation of powers anchored on the
respect that must be accorded to the other branches of government
which are coordinate, coequal and, as far as practicable, independent
of one another.
Once it is palpable that the constitutional issue is unavoidable,
then it is time to assume jurisdiction, provided that the following
requisites for a judicial inquiry are met: that there must be an actual
and appropriate case; a personal and substantial interest of the party
raising the constitutional question; the constitutional question must
be raised at the earliest possible opportunity and the decision of the
constitutional question must be necessary to the determination
23
of the
case itself, the same being the lis mota of the case.
Having assured ourselves that the above-cited requisites are
present in the instant petitions, we proceed to take them up.

ARTICLE VI, SECTION 24


Some petitioners assail the constitutionality of Republic Act No.
7716 as being in violation of Article VI, Section 24 of the
Constitution which provides:

“All appropriation, revenue or tariff bills, bills authorizing increase of the


public debt, bills of local application, and private bills, shall originate
exclusively in the House of Representatives, but the Senate may propose or
concur with amendments.”

_______________

22 Volume One, CONCOM RECORD, p. 436.


23 Luz Farms v. The Hon. Secretary of the Department of Agrarian Reform, G.R.
No. 86889, December 4, 1990, 192 SCRA 51; Dumlao, et al. v. Commission on
Elections, G.R. No. 52245, January 22, 1980, 95 SCRA 392; People v. Vera, 65 Phil.
56 (1937).

762

762 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

In G.R. Nos. 115455 and 115781, petitioners argue:

(a) The bill which became Republic Act No. 7716 did not
originate exclusively in the House of Representatives. The
Senate, after receiving H.B. No. 11197, submitted its own
bill, S.B. No. 1630, and proceeded to vote and approve the
same after second and third readings.
(b) The Senate exceeded its authority to “propose or concur
with amendments” when it submitted its own bill, S.B. No.
1630, recommending its approval “in substitution of S.B.
No. 1129, taking into consideration P.S. Res. No. 734 and
H.B. No. 11197.”
(c) H.B. No. 11197 was not deliberated upon by the Senate.
Neither was it voted upon by the Senate on second and third
readings, as what was voted upon was S.B. No. 1630.

Article VI, Section 24 is taken word for word from Article VI,
Section 18 of the 1935 Constitution which was, in turn, patterned
after Article I, Section 7 (1) of the Constitution of the United States,
which states:

“All bills for raising revenue shall originate in the House of Representatives,
but the Senate may propose or concur with amendments as on other bills.”

The historical precedent for requiring revenue bills to originate


24
in
Congress is explained in the U.S. case of Morgan v. Murray:

“The constitutional requirement that all bills for raising revenue shall
originate in the House of Representatives stemmed from a remedial
outgrowth of the historic conflict between Parliament (i.e., Commons) and
the Crown, whose ability to dominate the monarchially appointive and
hereditary Lords was patent. See 1 Story, Constitution, S 875 et seq., 5th
Ed.; 1 Cooley, Constitutional Limitations, pp. 267, 268, 8th Ed., 1
Sutherland, Statutory Construction, S 806, 3d Ed. There was a measure of
like justification for the insertion of the provision of articles I, S 7, cl. 1, of
the Federal Constitution. At that time (1787) and thereafter until the
adoption (in 1913) of the Seventeenth Amendment providing for the direct
election of senators, the members of the United States Senate were elected
for each state by the joint vote of both houses of the Legislature of the
respective states, and hence, were removed from the people. x x x”

________________

24 328 P. 2d 644 (1958).

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VOL. 235, AUGUST 25, 1994 763


Tolentino vs. Secretary of Finance

The legislative authority under the 1935 Constitution being


unicameral, in the form of the National Assembly, it served no
purpose to include the subject provision in the draft submitted by the
1934 Constitutional Convention to the Filipino people for
ratification.
In 1940, however, the Constitution was amended to establish a
bicameral Congress of the Philippines composed of a House of
Representatives and a Senate.
In the wake of the creation of a new legislative machinery, new
provisions were enacted regarding the law-making power of
Congress. The National Assembly explained how the final
formulation of the subject provision came about:

“The concurrence of both houses would be necessary to the enactment of a


law. However, all appropriation, revenue or tariff bills, bills authorizing an
increase of the public debt, bills of local application, and private bills,
should originate exclusively in the House of Representatives, although the
Senate could propose or concur with amendments.
In one of the first drafts of the amendments, it was proposed to give both
houses equal powers in lawmaking. There was, however, much opposition
on the part of several members of the Assembly. In another draft, the
following provision, more restrictive than the present provision in the
amendment, was proposed and for sometime was seriously considered:

‘All bills appropriating public funds, revenue or tariff bills, bills of local application,
and private bills shall originate exclusively in the Assembly, but the Senate may
propose or concur with amendments. In case of disapproval by the Senate of any
such bills, the Assembly may repass the same by a two-thirds vote of all its
members, and thereupon, the bill so repassed shall be deemed enacted and may be
submitted to the President for corresponding action. In the event that the Senate
should fail to finally act on any such bills, the Assembly may, after thirty days from
the opening of the next regular sessions of the same legislative term, reapprove the
same with a vote of two-thirds of all the members of the Assembly. And upon such
reapproval, the bill shall be deemed enacted and may be submitted to the president
for corresponding action.’

However, the special committee voted finally to report the present


amending provision as it is now worded; and in that form it was approved
by the National Assembly with the approval of Resolution No.

764

764 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

25
38 and later of Resolution No. 73.” (Italics supplied)

Thus, the present Constitution is identically worded as its 1935


precursor: “All appropriation, revenue or tariff bills, bills
authorizing increase of the public debt, bills of local application, and
private bills, shall originate exclusively in the House of
Representatives, but the Senate may propose or concur with
amendments.” (Italics supplied)
That all revenue bills, such as Republic Act No. 7716, should
“originate exclusively in the House of Representatives” logically
flows from the more representative and broadly-based character of
this Chamber.
“It is said that the House of Representatives being the more
popular branch of the legislature, being closer to the people, and
having more frequent contacts with them than the Senate, should
have the privilege of taking the initiative in the proposals of revenue
and tax projects, the disposal of the people’s money, and the
contracting of public indebtedness.
These powers of initiative in the raising and spending of public
funds enable the House of Representatives not only to implement
but even to determine the fiscal policies of the government. They
place on its shoulders much of the responsibility of solving the
financial problems of the government, which are so closely related
to the economic life of the country, and of deciding on the proper
distribution26
of revenues for such uses as may best advance public
interests.”
The popular nature of the Lower House has been more
pronounced with the inclusion of Presidentially-appointed sectoral
representatives, as provided in Article VI, Section 5(2), of the
Constitution, thus: “The party-list representatives shall constitute
twenty per centum of the total number of representatives including
those under the party list. For three consecutive terms after the
ratification of this Constitution, one-half of the seats allocated to
party-list representatives shall be filled, as provided by law, by

________________

25 Aruego, Jose M., PHILIPPINE POLITICAL LAW, KNOW YOUR


CONSTITUTION, University Publishing Co., 1950, pp. 65-66.
26 Sinco, Vicente G., PHILIPPINE POLITICAL LAW, Eleventh Edition, p. 196.

765

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Tolentino vs. Secretary of Finance

selection or election from the labor, peasant, urban poor, indigenous


cultural communities, women, youth, and such other sectors as may
be provided by law, except the religious sector.” (Italics supplied)
This novel provision which was implemented 27
in the Batasang
Pambansa during the martial law regime was eventually
incorporated in the present Constitution in order to give those from

_______________

27 Remarks of Commissioner Eulogio Lerum: “At a time when we did not have a
lawmaking body after martial law was declared, there were tripartite conferences
called by the President for the purpose of acting as a recommendatory body regarding
settlement of labor and management disputes. During the said conferences, labor had
shown that it can act with maturity. As a result, in 1976, an amendment was
introduced in the Constitution providing for sectoral representation. In the
Constitution that was approved, the number of sectors was not indicated. However, in
the Election Code of 1978, it provided for three sectors; namely, industrial labor,
agricultural labor and the youth. The agricultural labor was given four seats; two for
Luzon, one for the Visayas and one for Mindanao. The same is true with the industrial
labor sector. As far as the youth are concerned, they were also given four seats: two
for Luzon, one for Mindanao and one for the Visayas, with the condition that there
will be an additional two at large. And so, the youth had six representatives plus four
from the agricultural labor sector and four from the industrial labor sector—we had
14 seats.
In 1981, the Constitution was again amended. In the course of the amendment, the
labor representatives in the Batasang Pambansa proposed that sectoral representation
be included as a permanent addition to the lawmaking body.
Again, in that Constitution which was approved in 1981, the number and the name
of the sectors were not indicated. However, in the Election Code that was approved
before the 1984 election, there was really a definition of who will constitute the
sectors and how they will be appointed. Let me quote from that law that was passed in
1984. Under Section 27 of Batas Pambansa Blg. 881, the scope of the sectors has
been defined as follows:
The agricultural labor sector covers all persons who personally and physically till
the land as their principal occupation. It includes agricultural tenants and lessees,
rural workers and farm employees, owner-cultivators, settlers and small fishermen.
The industrial labor sector includes all nonagricultural workers and employees.

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the marginalized and often deprived sector, an opportunity to have


their voices heard in the halls of the Legislature, thus giving
substance and meaning to the concept of “people empowerment.”
That the Congressmen indeed have access to, and consult their
constituencies has been demonstrated often enough by the fact that
even after a House bill has been transmitted to the Senate for
concurrence, some Congressmen have been known to express their
desire to change their earlier official position or reverse themselves
after having heard their constituents’ adverse reactions to their
representations.
In trying to determine whether the mandate of the Constitution
with regard to the initiation of revenue bills has been preserved
inviolate, we have recourse to the tried and tested method of
definition of terms. The term “originate” is defined by Webster’s
New International Dictionary (3rd Edition, 1986) as follows: “v.i., to
come into being; begin; to start.”
On the other hand, the word “exclusively” is defined by the same
Webster’s Dictionary as “in an exclusive manner; to the exclusion of
all others; only; as, it is his, exclusively.” Black’s Law Dictionary
has this definition: “apart from all others; only; solely; substantially
all or for the greater part. To the exclusion of all others; without
admission of others to participation; in a manner to exclude.
Standard Oil Co. of Texas v. State, Tex. Civ. App., 142 S.W. 2d 519,
521, 522, 523.”
This Court had occasion to define the term “exclusive” as
follows:

“. . . In its usual and generally accepted sense, the term means possessed to
the exclusion of others; appertaining to the subject alone; 28not including,
admitting or pertaining to another or others; undivided, sole.”

When this writer, during the oral argument of July 7, 1994, asked the
petitioner in G.R. No. 115455 whether he considers the

________________

The youth sector embraces persons not more than twenty-five years of age.”
(Volume Two, CONCOM RECORD, p. 564).
28 City Mayor, et al. v. The Chief, Philippine Constabulary and Col. Nicanor
Garcia, L-20346, October 31, 1967, 21 SCRA 673.

767

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Tolentino vs. Secretary of Finance

word “exclusively”
29
to be synonymous with “solely,” he replied in
the affirmative.
A careful examination of the legislative history traced earlier in
this decision shows that the original VAT law, Executive Order No.
273, was sought to be amended by ten House bills which finally
culminated in House Bill No. 11197, as well as two Senate bills. It is
to be noted that the first House Bill No. 253 was filed on July 22,
1992, and two other House bills followed in quick succession on
August 10 and September 9, 1992 before a Senate Resolution,
namely, Senate Res. No. 734, was filed on September 10, 1992 and
much later, a Senate Bill proper, viz., Senate Bill No. 1129 on March
1, 1993. Undoubtedly, therefore, these bills originated or had their
start in the House and before any Senate bill amending the VAT law
was filed. In point of time and venue, the conclusion is ineluctable
that Republic Act No. 7716, which is indisputably a revenue
measure, originated in the House of Representatives in the form of
House Bill No. 253, the first EVAT bill.
Additionally, the content and substance of the ten amendatory
House Bills filed over the roughly one-year period from July 1992 to
August 1993 reenforce the position that these revenue bills,
pertaining as they do, to Executive Order No. 273, the prevailing
VAT law, originated in the Lower House.

________________

29 Transcript of the Stenographic Notes (TSN) on the Hearing Had on Thursday,


July 7, 1994, pp. 18-19: JUSTICE FLERIDA RUTH P. ROMERO:

Q—Mr. Counsel, may I interrupt at this stage?

When you say that according to the Constitution such Revenue Bills should originate
exclusively from the House. In this instance, did it not originally originate exclusively from the
House?
The word used was not “solely”; if there were Bills later also introduced, let us say in the
Senate, but the House Bill came ahead.
So, are you using the two (2) words originate “exclusively” and “solely” synonymously?

SENATOR TOLENTINO:

A—The verb “originate” remains the same, Your Honor, but the word “exclusively,” as I
said, means “solely.” x x x

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Tolentino vs. Secretary of Finance

House Bill Nos. 253, 771, 2450, 7033, 8086, 9030, 9210, 9297,
10012 and 10100 were intended to restructure the VAT system by
exempting or imposing the tax on certain items or 30 otherwise
introducing reforms in the mechanics of implementation. Of these,
House Bill No. 9210 was favored with a Presidential certification on
the need for its immediate enactment to meet a public emergency.
Easily the most comprehensive, it noted that the revenue
performance of the VAT, being far from satisfactory since the
collections have always fallen short of projections, “the system is
rendered inefficient, inequitable and less comprehensive.” Hence,
the Bill proposed several amendments designed 31
to widen the tax
base of the VAT and enhance its administration.
That House Bill No. 11197 being a revenue bill, originated from
the Lower House was acknowledged, in fact was virtually taken for
granted, by the Chairmen of the Committee on Ways and Means of
both the House of Representatives and the Senate. Consequently, at
the April 19, 1994 meeting of the Bicameral Conference Committee,
the Members agreed to make the House Bill as the “frame of
reference” or “base” of the discussions of the Bicameral Conference
Committee with
32
the “amendments” or “insertions to emanate from
the Senate.”
________________

30 H.B. 771—exempting the sale of copra from VAT coverage; H.B. 2450—
exempting the lessors or distributors of cinematographic films from paying the VAT;
H.B. 7033—amending Sec. 103 of the National Internal Revenue Code, as amended
by EO 273; H.B. 8086—exempting packaging materials of export products from the
VAT; H.B. 9030—amending Sec. 120 of the NIRC, as renumbered by EO 273; H.B.
9210—amending Title IV and Sections 237 and 238 of the NIRC; H.B. 9297—
restructuring the VAT system by expanding its tax base, and amending Sections 99,
100 (A), 102 (A), 103, 113, 114, 115 and 116 of the NIRC; H.B. 10012—reducing the
rate of VAT imposed on sale and importation of goods, and sale of services; H.B.
10100—amending certain provisions of the NIRC on VAT.
31 Explanatory Note of House Bill No. 9210.
32 Excerpts from the April 19, 1994 meeting of the Bicameral Conference
Committee: “CHAIRMAN Javier. First of all, what would be the basis, no, or
framework para huwag naman mawala yung personality namin dito sa bicameral, no,
because the bill originates from the House because this is a revenue bill, so we would
just want to ask, we make the House Bill as the frame of reference, and then

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Tolentino vs. Secretary of Finance

As to whether the bills originated exclusively in the Lower House is


altogether a different matter. Obviously, bills amendatory of VAT did
not originate solely in the House to the exclusion of all others for
there were P.S. Res. No. 734 filed in the Senate on September 10,
1992 followed by Senate Bill No. 1129 which was filed on March 1,
1993. About a year later, this was substituted by Senate Bill No.
1630 that eventually became the EVAT law, namely, Republic Act
No. 7716.
Adverting to the passage of the amendatory VAT bills in the
Lower House, it is to be noted that House Bill No. 11197 which
substituted all the prior bills introduced in said House complied with
the required readings, that is, the first reading consisting of the
reading of the title and referral to the appropriate Committee,
approval on second reading on November 11, 1993 and on third
reading on November 17, 1993 before being finally transmitted to
the Senate. In the Senate, its identity was preserved and its
provisions were taken into consideration when the Senate
Committee on Ways and Means submitted Com. Report No. 349
which recommended for approval “S.B. No 1630 in substitution of
S.B. No. 1129, taking into consideration P.S. Res. No. 734 and H.B.
No. 11197.” At this stage, the subject bill may be considered to have
passed first reading in the Senate with the submission of said
Committee Report No. 349 by the Senate Committee on Ways and
Means to which it had been referred earlier. What
_______________

everything will just be inserted?

“HON. MACEDA. Yes, That’s true for every revenue measure. There’s no
other way. The House Bill has got to be the base. Of course, for the record, we
know that this is an administration bill; this is certified by the president and I was
about to put into the records as I am saying now that your problem about the
impact on prices on the people was already decided when the President and the
administration sent this to us and certified it. They have already gotten over that
political implication of this bill and the economic impact on prices.
“CHAIRMAN HERRERA. Yung concern mo about the bill as the reference in
this discussion is something that we can just. . . .
“CHAIRMAN JAVIER. We will just . . . all the amendments will be coming
from the Senate.”

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Tolentino vs. Secretary of Finance

remained, therefore, was no longer House Bill No. 11197 but Senate
Bill No. 1630. Thence, the Senate, instead of transmitting the bill to
the Lower House for its concurrence and amendments, if any, took a
“shortcut,” bypassed the Lower House and instead, approved Senate
Bill No. 1630 on both second and third readings on the same day,
March 24, 1994.
The first irregularity, that is, the failure to return Senate Bill No.
1630 to the Lower House for its approval is fatal inasmuch as the
other chamber of legislature was not afforded the opportunity to
deliberate and make known its views. It is no idle dictum that no less
than the Constitution ordains: “The legislative power shall be vested
in the Congress of the Philippines33 which shall consist of a Senate
and a House of Representatives ...” (Italics supplied)
It is to be pointed out too, that inasmuch as Senate Bill No. 1630
which had “taken into consideration” House Bill No. 11197 was not
returned to the Lower House for deliberation, the latter Chamber had
no opportunity at all to express its views thereon or to introduce any
amendment. The customary practice is, after the Senate has
considered the Lower House Bill, it returns the same to the House of
origin with its amendments. In the event that there may be any
differences between the two, the same shall then be referred to a
Conference Committee composed of members from both Chambers
which shall then proceed to reconcile said differences.
In the instant case, the Senate transmitted to the Lower House on
March 24, 1994, a letter informing the latter that it had “passed S.
No. 1630 entitled . . . (and) in view of the disagreeing provisions of
said bill and House Bill No. 11197, entitled . . . the Senate requests a
conference . . .” This, in spite of the fact that Com. Report No. 349
of the Senate Committee on Ways and Means had already
recommended for approval on February 7, 1994 “S.B. No. 1630 . . .
taking into consideration H.B. No. 11197.” Clearly, the Conference
Committee could only have acted upon Senate Bill No. 1630, for
House Bill No. 11197 had already been fused into the former.
At the oral hearing of July 7, 1994, petitioner in G.R. No. 115455
admitted, in response to this writer’s query, that he had

_______________

33 Article VI, Section 1.

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Tolentino vs. Secretary of Finance

attempted to rectify some of the perceived irregularities by


presenting a motion in the Senate to recall the bill from the
Conference Committee so that it could revert to the 34
period of
amendment, but he was outvoted, in fact “slaughtered.”
In accordance with the Rules of the House of Representatives and
the Senate, Republic Act No. 7716 was duly authenticated after it
was signed by the President of the Senate and the Speaker of the
House of Representatives followed by the certifications of the
Secretary of the Senate and
35
the Acting Secretary General of the
House of Representatives. With the signature of

________________

34 Transcript of the Stenographic Notes (TSN) on the Hearing Had on Thursday,


July 7, 1994, pp. 45-46:

“Justice Romero: Q: Mr. Counsel, is it not a fact that in the Bicameral


Conference Committee, you presented a Motion to return the Bill as it was to the
Lower House with also your proposal that this be referred to a Referendum for the
entire nation to vote upon, then Senator Wigberto Tañada amended your Motion
and convinced you to drop that portion about referral to a Referendum and you
agreed.
So that Motion of yours to return to the House was the one voted upon by the
Bicameral Conference Committee and it lost.
What can you say to that?
Senator Tolentino: A: No, No, if Your Honor please. My Motion was voted
upon by the Senate itself because I presented that said motion in order to recall the
Bill from the Bicameral Conference Committee so that the Senate could go back
to the period of amendment and see if we could amend the House Bill itself, but
that was defeated. So, it became academic. Thus, what we did we proceeded with
the procedure already being followed by the Senate.
I thought, as a matter of fact, that was the one way of correcting this procedural
error, but I was only one (1), or two (2), or three (3) of us only, then we were defeated
in the voting, if Your Honor please.
Justice Romero: Q: You mean you were outvoted?
Senator Tolentino: A: Yes, Your Honor; we were actually slaughtered in the
voting, so to speak, if Your Honor please.”

35 The certification states: “This Act which is a consolidation of House Bill No.
11197 and Senate Bill No. 1630 was finally passed by the House of Representatives
and the Senate on April 7, 1994 and May 2, 1994, respectively.”

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772 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

President Fidel V. Ramos under the words “Approved: 5 May 1994,”


it was finally promulgated.
Its legislative journey ended, Republic Act No. 7716 attained the
status of an enrolled bill which is defined as one “which has been
duly introduced, finally passed by both houses, signed by the proper
officers of each, approved 36
by the governor (or president) and filed
by the secretary of state.”
Stated differently:

“It is a declaration by the two houses, through their presiding officers, to the
president, that a bill, thus attested, has received in due form, the sanction of
the legislative branch of the government, and that it is delivered to him in
obedience to the constitutional requirement that all bills which pass
Congress shall be presented to him. And when a bill, thus attested, receives
his approval, and is deposited in the public archives, its authentication as a
bill that has passed Congress should be deemed complete and
unimpeachable. As the President has no authority to approve a bill not
passed by Congress, an enrolled Act in the custody of the Secretary of State,
and having the official attestations of the Speaker of the House of
Representatives, of the President of the Senate, and of the President of the
United States, carries, on its face, a solemn assurance by the legislative and
executive departments of the government, charged, respectively, with the
duty of enacting and executing the laws, that it was passed by Congress. The
respect due to coequal and independent departments requires the judicial
department to act upon that assurance, and to accept, as having passed
Congress, all bills authenticated in the manner stated; leaving the courts to
determine, when the question properly arises, whether 37
the Act, so
authenticated, is in conformity with the Constitution.”

The enrolled bill assumes importance when there is some variance


between what actually transpired in the halls of Congress, as
reflected in its journals, and as shown in the text of the law as finally
enacted. But suppose the journals of either or both Houses fail to
disclose that the law was passed in accordance with what was
certified to by their respective presiding officers and the President.
Or that certain constitutional requirements regarding its passage
were not observed, as in the instant case.

_______________

36 BLACK’S LAW DICTIONARY, 5th Ed. (1979).


37 Field v. Clark, 143 U.S. 649, 36 L ed. 294.

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Tolentino vs. Secretary of Finance

Which shall prevail: the journal or the enrolled bill?


A word on the journal.
“The journal is the official record of the acts of a legislative body.
It should be a true record of the proceedings arranged in
chronological order. It should be a record of what is done rather than
what is said. The journal should be a clear, concise, unembellished
statement of all proposals made and all actions taken complying
with all requirements of constitutions, statutes, charters or 38rules
concerning what is to be recorded and how it is to be recorded.”
Article VI, Section 16 (4) of the Constitution ordains:

“Each house shall keep a Journal of its proceedings, and from time to time
publish the same, excepting such parts as may, in its judgment, affect
national security; and the yeas and nays on any question shall, at the request
of one-fifth of the Members present, be entered in the Journal.
Each House shall also keep a Record of its proceedings.” (Italics
supplied)

The rationale behind the above provision and of the “journal entry
rule” is as follows:

“It is apparent that the object of this provision is to make the legislature
show what it has done, leaving nothing whatever to implication. And, when
the legislature says what it has done, with regard to the passage of any bill,
it negatives the idea that it has done anything else in regard thereto. Silence
proves nothing where one is commanded to speak. . . . Our constitution
commands certain things to be done in regard to the passage of a bill, and
says that no bill shall become a law unless these things are done. It seems a
travesty upon our supreme law to say that it guaranties to the people the
right to have their laws made in this manner only, and that there is no way of
enforcing this right, or for the court to say that this is law when the
constitution says it is not law. There is one safe course which is in harmony
with the constitution, and that is to adhere to the rule that the legislature
must show, as commanded by the constitution, that it has done everything
required by the constitution to be done in the serious and important matter
of making laws. This is the rule of evidence

_______________

38 Mason, Paul, MASON’s MANUAL OF LEGISLATIVE PROCEDURE, 1953.

774

774 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

provided by the constitution. It is not presumptuous in the courts, nor


disrespectful
39
to the legislature, to judge the acts of the legislature by its own
evidence.”

Confronted with a discrepancy between the journal proceedings and


the law as duly enacted, courts have indulged in different theories.
The “enrolled bill” and “journal entry” rules, being rooted deep in
the Parliamentary practices of England where there is no written
constitution, and then transplanted to the United States, it may be
instructive to examine which rule prevails in the latter country
through which, by a process of legislative osmosis, we adopted them
in turn.

“There seems to be three distinct and different rules as applicable to the


enrolled bill recognized by the various courts of this country. The first of
these rules appears to be that the enrolled bill is the ultimate proof and
exclusive and conclusive evidence that the bill passed the legislature in
accordance with the provisions of the Constitution. Such has been the
holding in California, Georgia, Kentucky, Texas, Washington, New Mexico,
Mississippi, Indiana, South Dakota, and may be some others.
The second of the rules seems to be that the enrolled bill is a verity and
resort cannot be had to the journals of the Legislature to show that the
constitutional mandates were not complied with by the Legislature, except
as to those provisions of the Constitu-tion, compliance with which is
expressly required to be shown on the journal. This rule has been adopted in
South Carolina, Montana, Oklahoma, Utah, Ohio, New Jersey, United States
Supreme Court, and others.
The third of the rules seems to be that the enrolled bill raises only a
prima facie presumption that the mandatory provisions of the Constitution
have been complied with and that resort may be had to the journals to refute
that presumption, and if the constitutional provision is one, compliance with
which is expressly required by the Constitution to be shown on the journals,
then the mere silence of the journals to show a compliance therewith will
refute the presumption. This rule has been adopted in Illinois, Florida,
Kansas, Louisiana, Tennessee, Arkansas, Idaho, 40Minnesota, Nebraska,
Arizona, Oregon, New Jersey, Colorado, and others.”

_______________

39 Cohn v. Kingsley, 49 P. 985 (1897).


40 Smith v. Thompson, 258 N.W. 190.

775

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Tolentino vs. Secretary of Finance

In the 1980 case of D & W Auto Supply v. Department of Revenue,


the Supreme Court of Kentucky which had subscribed in the past to
the first of the three theories, made the pronouncement that it had
shifted its stand and would henceforth adopt the third. It justified its
changed stance, thus:

“We believe that a more reasonable rule is the one which Professor
Sutherland describes as the ‘extrinsic evidence’ rule . . . . Under this
approach there is a prima facie presumption that an enrolled bill is valid, but
such presumption may be over-come by clear satisfactory and convincing 41
evidence establishing that constitutional requirements have not been met.”

What rule, if any, has been adopted in this jurisdiction?


Advocates42of the “journal entry rule” cite the 1916 decision in
U.S. v. Pons where this Court placed reliance on the legislative
journals to determine whether Act No. 2381 was passed on February
28, 1914 which is what appears in the Journal, or on March 1, 1914
which was closer to the truth. The confusion was caused by the
adjournment sine die at midnight of February 28, 1914 of the
Philippine Commission.
A close examination of the decision reveals that the Court did not
apply the “journal entry rule” vis-a-vis the “enrolled bill rule” but
the former as against what are “behind the legislative journals.”

“Passing over the question of whether the printed Act (No. 2381), published
by authority of law, is conclusive evidence as to the date when it was
passed, we will inquire whether the courts may go behind the legislative
journals for the purpose of determining
43
the date of adjournment when such
journals are clear and explicit.”

It is to be noted from the above that the Court “passed over” the
probative value to be accorded to the enrolled bill. Opting for the
journals, the Court proceeded to explain:

________________
41 602 S.W. 2d 420 (1980).
42 34 Phil. 729 (1916).
43 Ibid at 733.

776

776 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

“From their very nature and object, the records of the Legislature are as
important as those of the judiciary, and to inquire into the veracity of the
journals of the Philippine Legislature, when they are, as we have said clear
and explicit, would be to violate both the letter and the spirit of the organic
laws by which the Philippine Government was brought into existence, to
invade a coordinate and independent department of the Government, 44and to
interfere with the legitimate powers and functions of the Legislature.”

Following the courts in the United States since the Constitution of


the Philippine Government is modeled after that of the Federal
Government, the Court did not hesitate to follow the courts in said
country, i.e., to consider the journals decisive of the point at issue.
Thus: “The journals say that the Legislature adjourned at 12
midnight on February 28, 1914. This settles the question 45
and the
court did not err in declining to go behind these journals.”
The Court made a categorical stand for the “enrolled bill 46
rule” for
the first time in the 1947 case of Mabanag v. Lopez Vito where it
held that an enrolled bill imports absolute verity and is binding on
the courts. This Court held itself bound by an authenticated
resolution, despite the fact that the vote of three-fourths of the
Members of the Congress (as required by the Constitution to
approve proposals for constitutional amendments) was not actually
obtained on account of the suspension of some members of the
House of Representatives and the Senate. In this connection, the
Court invoked the “enrolled bill rule” in this wise: “If a political
question conclusively binds the judges out of respect to the political
departments, a duly certified law or resolution also 47
binds the judges
under the ‘enrolled bill rule’ born of that respect.”
Mindful that the U.S. Supreme Court is on the side of those who
favor the rule and for no other reason than that it conforms to the
expressed policy of our law making body (i.e., Sec. 313 of the old
Code of Civil Procedure, as amended by Act No. 2210), the Court
said that “duly certified copies shall be conclusive proof of

_______________

44 Ibid at 733-734.
45 Ibid at 735.
46 78 Phil. 1 (1947).
47 Ibid at 3.

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VOL. 235, AUGUST 25, 1994 777


Tolentino vs. Secretary of Finance

the provisions of such Acts and of the due enactment thereof.”


Without pulling the legal underpinnings from U.S. v. Pons, it
justified its position by saying that if the Court at the time looked
into the journals, “in all probability, those were the documents
offered in evidence” and that “even if both the journals and
authenticated copy of the Act had been presented, the disposal of the
issue by the Court on the basis of the journals does not imply
rejection of the enrolled theory; for as already stated, the due
enactment of a law may be proved in either of the two 48
ways
specified in Section 313 of Act No. 190 as amended.” Three
Justices voiced their dissent from the majority decision.
Again, the Court made its position plain in the 1963 49
case of
Casco Philippine Chemical Co., Inc. v. Gimenez when a
unanimous Court ruled that: “The enrolled bill is conclusive upon
the courts as regards the tenor of the measure passed by Congress
and approved by the President. If there has been any mistake in the
printing of a bill before it was certified by the officers of Congress
and approved by the Executive, the remedy is by amendment or
curative legislation not by judicial decree.” According to Webster’s
New 20th Century Dictionary, 2nd ed., 1983, the word “tenor”
means, among others, “the general drift of something spoken or
written; intent, purport, substance.”
Thus, the Court upheld the respondent Auditor General’s
interpretation that Republic Act No. 2609 really exempted from the
margin fee on foreign exchange transactions “urea formaldehyde”
as found in the law and not “urea and formaldehyde” which
petitioner insisted were the words contained in the bill and were so
intended by Congress.
In 1969, the Court similarly placed the weight of its authority
behind the conclusiveness of the enrolled bill. In denying the motion
for reconsideration, the Court ruled in Morales v. Subido that “the
enrolled Act in the office of the legislative secretary of the President
of the Philippines shows that Section 10 is exactly as it is in the
statute as officially published in slip form by the Bureau of Printing.
x x x Expressed elsewise, this is a matter worthy of the attention not
of an Oliver Wendell Holmes but of a

_______________

48 Ibid at 18.
49 117 Phil. 363 (1963).
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778 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance
50
Sherlock Holmes.” The alleged omission of a phrase in the final
Act was made, not at any stage of the legislative proceedings, but
only in the course of the engrossment of the bill, more specifically in
the proofreading thereof.
But the Court did include a caveat that qualified the absoluteness
of the “enrolled bill” rule stating:

“By what we have essayed above we are not of course to be understood as


holding that in all cases the journals must yield to the enrolled bill. To be
sure there are certain matters which the Constitution (Art. VI, secs. 10 [4],
20 [1], and 21 [1]) expressly requires must be entered on the journal of each
house. To what extent the validity of a legislative act may be affected by a
failure to have such matters entered on the journal, is a question which we
do not now decide (Cf. e.g., Wilkes Country Comm’rs. v. Coler, 180 U.S.
506 [1900]). All we hold is that with respect to matters not expressly
required to be entered
51
on the journal, the enrolled bill prevails in the event
of any discrepancy.”

More recently,
52
in the 1993 case of Philippine Judges Association v.
Prado, this Court, in ruling on the unconstitutionality of Section 35
of Republic Act No. 7354 withdrawing the franking privilege from
the entire hierarchy of courts, did not so much adhere to the enrolled
bill rule alone as to both “enrolled bill and legislative journals.”
Through Mr. Justice Isagani A. Cruz, we stated: “Both the enrolled
bill and the legislative journals certify that the measure was duly
enacted, i.e., in accordance with Article VI, Sec. 26 (2) of the
Constitution. We are bound by such official assurances from a
coordinate department of the government, to which we owe, at the
very least, a becoming courtesy.”
Aware of the shifting sands on which the validity and continuing
relevance of the “enrolled bill” theory rests, I have taken pains to
trace the history of its applicability in this jurisdiction, as influenced
in varying degrees by different Federal rulings.
As applied to the instant petition, the issue posed is whether or
not the procedural irregularities that attended the passage of House
Bill No. 11197 and Senate Bill No. 1630, outside of the

_______________

50 136 Phil. 405, 409 (1969).


51 Ibid at 412.
52 G.R. No. 105371, November 11, 1993, 227 SCRA 703.
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Tolentino vs. Secretary of Finance

reading and printing requirements which were exempted by the


Presidential certification, may no longer be impugned, having been
“saved” by the conclusiveness on us of the enrolled bill. I see no
cogent reason why we cannot continue to place reliance on the
enrolled bill, but only with respect to matters pertaining to the
procedure followed in the enactment of bills in Congress and their
subsequent engrossment, printing errors, omission of words and
phrases and similar relatively minor matters relating more to form
and factual issues which do not materially alter the essence and
substance of the law itself.
Certainly, “courts cannot claim greater ability to judge procedural
legitimacy, since constitutional rules on legislative procedure are
easily mastered. Procedural disputes are over facts—whether or not
the bill had enough votes, or three readings, or whatever—not over
the meaning of the constitution. Legislators, as eyewitnesses, are in
a better position than a court to rule on the facts. The argument is
also made that legislatures
53
would be offended if courts examined
legislative procedure.
Such a rationale, however, cannot conceivably apply to
substantive changes in a bill introduced towards the end of its
tortuous trip through Congress, catching both legislators and the
public unawares and altering the same beyond recognition even by
its sponsors.
This issue I wish to address forthwith.

EXTENT OF THE POWER OF THE BICAMERAL


CONFERENCE COMMITTEE

One of the issues raised in these petitions, especially in G.R. Nos.


115781, 115543 and 115754, respectively, is whether or not—

“Congress violated Section 26, par. 2, Article VI (of the 1987 Constitution)
when it approved the Bicameral Conference Committee Report which
embodied, in violation of Rule XII of the Rules of the Senate, a radically
altered tax measure containing provisions not reported out or discussed in
either House as well as provisions on which

_______________

53 Davies, Jack, LEGISLATIVE LAW AND PROCESS, 2nd ed., 1986.

780
780 SUPREME COURT REPORTS ANNOTATED
Tolentino vs. Secretary of Finance

there was no disagreement between the House and the Senate and, worse,
provisions contrary to what
54
the House and the Senate had approved after
three separate readings.”

and

“By adding or deleting provisions, when there was no conflicting provisions


between the House and Senate versions, the BICAM acted in excess of its
jurisdiction or with such grave abuse of discretion as to amount to loss of
jurisdiction. x x x In adding to the bill and thus subjecting to VAT, real
properties, media and cooperatives despite the contrary decision of both
Houses, the BICAM exceeded its jurisdiction or55 acted with such abuse of
discretion as to amount to loss of jurisdiction ....”

I wish to consider this issue in light of Article VIII, Sec. 1 of the


Constitution which provides that “(j)udicial power includes the duty
of the courts of justice x x x to determine whether or not there has
been a grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of any branch or instrumentality of the
Government.” We are also guided by the principle that a court may
interfere with the internal56 procedures of its coordinate branch only to
uphold the Constitution.
A conference committee has been defined:

“. . . unlike the joint committee is two committees, one appointed by each


house. It is normally appointed for a specific bill and its function is to gain
accord between the two houses either by the recession of one house from its
bill or its amendments or by the further amendment of the existing
legislation or by the substitution of an entirely new bill. Obviously, the
conference committee is always a special committee and normally includes
the member who introduced the bill and the chairman of the committee
which considered it together with such other representatives of the houses as
seem expedient. (Horack, Cases and Materials on Legislation [1940] 220.
See also Zinn, Conference Procedure in Congress, 38 ABAJ 864 [1952];
Steiner, 57The Congressional Conference Committee [U of Ill. Press,
1951]).”

________________

54 Petition in G.R. No. 115781, p. 18.


55 Petition in G.R. No. 115543, pp. 2-3.
56 Davies, Jack, supra at 90.
57 Sutherland, J.G., STATUTES AND STATUTORY CONSTRUCTION, Vol. I,
4th ed., pp. 293-294.

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Tolentino vs. Secretary of Finance

From the foregoing definition, it is clear that a bicameral conference


committee is a creature, not of the Constitution, but of the legislative
body under its power to determine rules of its proceedings under
Article VI, Sec. 16 (3) of the Constitution. Thus, it draws its life and
vitality from the rules governing its creation. The why, when, how
and wherefore of its operations, in other words, the parameters
within which it is to function, are to be found in Section 26, Rule
XII of the Rules of the Senate and Section 85 of the Rules of the
House of Representatives, respectively, which provide:
Rule XII, Rules of the Senate

“SEC. 26. In the event that the Senate does not agree with the House of
Representatives on the provision of any bill or joint resolution, the
differences shall be settled by a conference committee of both Houses which
shall meet within ten days after their composition.
The President shall designate the members of the conference committee
in accordance with subparagraph (c), Section 8 of Rule III.
Each Conference Committee Report shall contain a detailed and
sufficiently explicit statement of the changes in or amendments to the
subject measure, and shall be signed by the conferees.
The consideration of such report shall not be in order unless the report
has been filed with the Secretary of the Senate and copies thereof have been
distributed to the Members.”

Rules of the House of Representatives

“SEC. 85. Conference Committee Reports.—In the event that the House
does not agree with the Senate on the amendments to any bill or joint
resolution, the differences may be settled by conference committee of both
Chambers.
The consideration of conference committee reports shall always be in
order, except when the journal is being read, while the roll is being called or
the House is dividing on any question. Each of the pages of such reports
shall contain a detailed, sufficiently explicit statement of the changes in or
amendments to the subject measure.
The consideration of such report shall not be in order unless copies
thereof are distributed to the Members: Provided, That in the last fifteen
days of each session period it shall be deemed sufficient that three copies of
the report, signed as above provided, are deposited in the office of the
Secretary General.”

782

782 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance
Under these Rules, a bicameral conference committee comes into
being only when there are disagreements and differences between
the Senate and the House with regard to certain provisions of a
particular legislative act which have to be reconciled.
Jefferson’s Manual, which, according to Section 112, Rule XLIX
of the Senate Rules, supplements it, states that a conference
committee is usually called “on the occasion of amendments
between the Houses” and “in all cases of difference of opinion58
between the two Houses on matters pending between them.” It
further states:

“The managers of a conference must confine themselves to the differences


committed to them, and may not include subjects not within the
disagreements, even though germane to a question in issue. But they may
perfect amendments committed to them if they do not in so doing go beyond
the differences. x x x59 Managers may not change the text to which both
Houses have agreed.” (Italics supplied.)

Mason’s Manual of Legislative Procedures which is also considered


as controlling authority
60
for any situation not covered by a specific
legislative rule, states that either House may “request a conference
with the other on any matter of difference or dispute between them”
and that in such 61a request, “the subject of the conference should
always be stated.”
In the Philippines, as in the United States, the Conference
Committee exercises such a wide range of authority that they
virtually constitute a third House in the Legislature. As admitted by
the Solicitor General, “It was the practice in past Congresses for
Conference Committees to insert in bills approved by the two
Houses62 new provisions that were not originally contemplated by
them.”
In Legislative Procedure, Robert Luce gives a graphic
description of the milieu and the circumstances which have
conspired to

________________

58 Page 261.
59 Page 268.
60 Davies, supra, at 65.
61 Sec. 764, p. 541.
62 Consolidated Memorandum for Respondents, p. 71.

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Tolentino vs. Secretary of Finance
transform an initially innocuous mechanism designed to facilitate
legislative action into an all-powerful Frankenstein that brooks no
challenge to its authority even from its own members.

“Their power lies chiefly in the fact that reports of conference committees
must be accepted without amendment or else rejected in toto. The impulse is
to get done with the matters and so the motion to accept has undue
advantage, for some members are sure to prefer swallowing unpalatable
provisions rather than prolong controversy. This is the more likely if the
report comes in the rush of business toward the end of a session, when to
seek further conference might result in the loss of the measure altogether. At
any time in the session there is some risk of such a result following the
rejection of a conference report, for it may not be possible to secure a
second conference, or delay may give opposition to the main proposal
chance to develop more strength.
xxx xxx xxx
Entangled in a network of rule and custom, the Representative who
resents and would resist this theft of his rights, finds himself helpless.
Rarely can he vote, rarely can he voice his mind, in the matter of any
fraction of the bill. Usually he cannot even record himself as protesting
against some one feature while accepting the measure as whole. Worst of
all, he cannot by argument or suggested change, try to improve what the
other branch has done.
This means more than the subversion of individual rights. It means to a
degree the abandonment of whatever advantage the bicameral system may
have. By so much it in effect transfers the lawmaking power to a small
group of members who work out in private a decision that almost always
prevails. What is worse, these men are not chosen in a way to ensure the
wisest choice. It has become the practice to name as conferees the ranking
members of the committee, so that the accident of seniority determines.
Exceptions are made, but in general it is not a question of who are most
competent to serve. Chance governs, sometimes giving way to favor, rarely
to merit.
xxx xxx xxx
Speaking broadly, the system of legislating by conference committee is
unscientific and therefore defective. Usually it forfeits the benefit of
scrutiny and judgment by all the wisdom available. Uncontrolled, it is
inferior to that process by which
63
every amendment is secured independent
discussion and vote. x x x.” (Italics supplied)

________________

63 Pages 404-405 and 407.

784

784 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance
Not surprisingly has it been said: “Conference Committee action is
the most undemocratic procedure in the64legislative process; it is an
appropriate target for legislative critics.”
In the case at bench, petitioners insist that the Conference
Committee to which Senate Bill No. 1630 and House Bill No. 11197
were referred for the purpose of harmonizing their differences,
overreached themselves in not confining their “reconciliation”
function to those areas of disagreement in the two bills but actually
making “surreptitious insertions” and deletions which amounted to a
grave abuse of discretion.
At this point, it becomes imperative to focus on the errant
provisions which found their way into Republic Act No. 7716.
Below is a breakdown to facilitate understanding the grounds for
petitioners’ objections:

INSERTIONS MADE BY BICAMERAL CONFERENCE


COMMITTEE (BICAM) TO SENATE BILL (SB) NO. 1630
AND HOUSE BILL (HB) NO. 11197

1. Sec. 99 of the National Internal Revenue Code (NIRC)

(1) Under the HB, this section includes any person who, in the
course of trade or business, sells, barters or exchanges
goods OR PROPERTIES and any person who LEASES
PERSONAL PROPERTIES.
(2) The SB completely changed the said section and defined a
number of words and phrases. Also, Section 99-A was
added which included one who sells, exchanges, barters
PROPERTIES and one who imports PROPERTIES.
(3) The BICAM version makes LESSORS of goods OR
PROPERTIES and importers of goods LIABLE to VAT
(subject of petition in G.R. No. 115754).

2. Section 100 (VAT on Sale of Goods)

The term “goods” or “properties” includes the following, which


were not found in either the HB or the SB:

________________

64 Davies, supra, at 81.

785

VOL. 235, AUGUST 25, 1994 785


Tolentino vs. Secretary of Finance
—In addition to radio and television time;
SATELLITE TRANSMISSION AND CABLE
TELEVISION TIME.
—The term “Other similar properties” was deleted,
which was present in the HB and the SB.
—Real properties held primarily for sale to customers
or held for lease in the ordinary course or business
were included, which was neither in the HB nor the
SB (subject of petition in G.R. No. 115754).

3. Section 102

On what are included in the term “sale or exchange of services,” as


to make them subject to VAT, the BICAM included/inserted the
following (not found in either House or Senate Bills):

1. Services of lessors of property, whether personal or real


(subject of petition in G.R. No. 115754);
2. Warehousing services;
3. Keepers of resthouses, pension houses, inns, resorts;
4. Common carriers by land, air and sea;
5. Services of franchise grantees of telephone and telegraph;
6. Radio and television broadcasting;
7. All other franchise grantees except those under Section 117
of this Code (subject of petition in G.R. No. 115852);
8. Services of surety, fidelity, indemnity, and bonding com-
panies;
9. Also inserted by the BICAM (on page 8 thereof) is the lease
or use of or the right to use of satellite transmission and
cable television time.

4. Section 103 (Exempt Transactions)

The BICAM deleted subsection (f) in its entirety, despite its


inclusion in both the House and Senate Bills. Therefore, under
Republic Act No. 7716, the “printing, publication, importation or
sale of books and any newspaper, magazine, review, or bulletin
which appears at regular intervals with fixed prices for subscription
and sale and which is not devoted principally to the publication of
advertisements” is subject to VAT (subject of petition in G.R. No.
115931 and G.R. No. 115544).
The HB and SB did not touch Subsection (g) but it was amended
by the BICAM by changing the word TEN to FIVE.

786

786 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

Thus, importation of vessels with tonnage of more than five


thousand tons is VAT exempt.
Subsection L, which was identical in the HB and the SB that
stated that medical, dental, hospital and veterinary services were
exempted from the VAT was amended by the BICAM by adding the
qualifying phrase: EXCEPT THOSE RENDERED BY
PROFESSIONALS, thus subjecting doctors, dentists and
veterinarians to the VAT.
Subsection U which exempts from VAT “transactions which are
exempt under special laws,” was amended by the BICAM by adding
the phrase: EXCEPT THOSE GRANTED UNDER PD Nos. 66,
529, 972, 1491, AND 1590, AND NON-ELECTRIC
COOPERATIVES UNDER RA 6938 (subject of petition in G.R.
No. 115873), not found in either the HB or the SB, resulting in the
inclusion of all cooperatives to the VAT, except non-electric
cooperatives.
The sale of real properties was included in the exempt
transactions under the House Bill, but the BICAM qualified this
with the provision:

“(S) SALE OF REAL PROPERTIES NOT PRIMARILY HELD FOR


SALE TO CUSTOMERS OR HELD FOR LEASE IN THE ORDINARY
COURSE OF TRADE OR BUSINESS OR REAL PROPERTY UTILIZED
FOR LOW-COST AND SOCIALIZED HOUSING AS DEFINED BY RA
NO. 7279 OTHERWISE KNOWN AS THE URBAN DEVELOPMENT
AND HOUSING ACT OF 1992 AND OTHER RELATED LAWS.”
(subject of petition in G.R. No. 115754)

The BICAM also exempted the sale of properties, the receipts of


which are not less than P480,000.00 or more than P720,000.00.
Under the SB, no amount was given, but in the HB it was stated that
receipts from the sale of properties not less than P350,000.00 nor
more than P600,000.00 were exempt.
It did not include, as VAT exempt, the sale or transfer of
securities, as defined in the Revised Securities Act (BP 178) which
was contained in both Senate and House Bills.

5. Section 104

Not included in the HB or the SB is the phrase “INCLUDING


PACKAGING MATERIALS” which was inserted by the BICAM

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VOL. 235, AUGUST 25, 1994 787


Tolentino vs. Secretary of Finance
in Section 104 (A) (1) (B), thus excluding from creditable input tax
packaging materials and the phrase “ON WHICH A VALUE-
ADDED TAX HAS BEEN ACTUALLY PAID” in Section 104 (A)
(2).

6. Section 107

Both House and Senate Bills provide for the payment of P500.00
VAT registration fee but this was increased by BICAM to P1,000.00.

7. Section 112

Regarding a person whose sales or receipts are exempt under


Section 103 (w), the BICAM inserted the phrase: “THREE
PERCENT UPON THE EFFECTIVITY OF THIS ACT AND
FOUR PERCENT (4%) TWO YEARS THEREAFTER,” although
the SB and the HB provide only “three percent of his gross quarterly
sales.”

8. Section 115

The BICAM adopted the HB version which subjects common


carriers by land, air or water for the transport of passengers to 3% of
their gross quarterly sales, which is not found in the SB.

9. Section 117

The BICAM amended this section by subjecting franchises on


electric, gas and water utilities to a tax of two percent (2%) on gross
receipts derived x x x, although neither the HB nor the SB has a
similar provision.

10. Section 17 (d)

(a) The BICAM defers for only 2 years the VAT on services of
actors and actresses, although the SB defers it for 3 years.
(b) The BICAM uses the word “EXCLUDE” in the section on
deferment of VAT collection on certain goods and services.
The HB does not contain any counterpart provision and SB
only allows deferment for no longer than 3 years.

788

788 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

11. Section 18 on the Tax Administration Development Fund is


an entirely new provision not contained in the House/Senate
Bills. This fund is supposed to ensure effective
implementation of Republic Act No. 7716.
12. Section 19

No period within which to promulgate the implementing rules and


regulations is found in the HB or the SB but BICAM provided
“within 90 days” which found its way in Republic Act No. 7716.
Even a cursory perusal of the above outline will convince one
that, indeed, the Bicameral Conference Committee (henceforth to be
referred to as BICAM) exceeded the power and authority granted in
the Rules of its creation. Both Senate and House Rules limit the task
of the Conference Committee in almost identical language to the
settlement of differences in the provisions or amendments to any bill
or joint resolution. If it means anything at all, it is that there are
provisions in subject bill, to start with, which differ and, therefore,
need reconciliation. Nowhere in the Rules is it authorized to initiate
or propose completely new matter. Although under certain rules on
legislative procedure, like those in Jefferson’s Manual, a conference
committee may introduce germane matters in a particular bill, such
matters should be circumscribed by the committee’s sole authority
and function to reconcile differences.
Parenthetically, in the Senate and in the House, a matter is
“germane” to a particular bill if there is a common tie between said
matter and the provisions which tend to promote the object and
purpose of the bill it seeks to amend. If it introduces a new subject
matter not
65
within the purview of the bill, then it is not “germane” to
the bill. The test is whether or not the change represented an
amendment or extension of the basic purpose of the original, 66
or the
introduction of an entirely new and different subject matter.

________________

65 See: 18 Words and Phrases 482 citing Kennedy v. Truss, Del. Super., 13 A. 2nd
431, 435, 1 Terry 424 (1940).
66 United States Gypsum Co. v. State, Dept. of Revenue, 110 N.W. 2d 698, 71,
363, Mich. 548 (1961).

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Tolentino vs. Secretary of Finance

In the BICAM, however, the germane subject matter must be within


the ambit of the disagreement between the two Houses. If the
“germane” subject is not covered by the disagreement but it is
reflected in the final version of the bill as reported by the
Conference Committee or, if what appears to be67 a “germane” matter
in the sense that it is “relevant or closely allied” with the purpose of
the bill, was not the subject of a disagreement between the Senate
and the House, it should be deemed an extraneous matter or even a
“rider” which should never be considered legally passed for not
having undergone the three-day reading requirement. Insertion of
new matter on the part of the BICAM is, therefore, an ultra vires act
which makes the same void.
The determination of what is “germane” and what is not may
appear to be a difficult task but the Congress, having been
confronted with the problem before, resolved it in accordance with
the rules. In that case, the Congress approved a Conference
Committee’s insertion of new provisions that were not contemplated
in any of the provisions in question between the Houses simply
because of the provision in Jefferson’s Manual that conferees may
report matters “which are germane modifications of subjects 68
in
disagreement between the Houses and the committee. In other
words, the matter was germane to the points of disagreement
between the House and the Senate.
As regards inserted amendments in the BICAM, therefore, the
task of determining what is germane to a bill is simplified, thus: If
the amendments are not circumscribed by the subjects of
disagreement between the two Houses, then they are not germane to
the purpose of the bill.
In the instant case before us, the insertions and deletions made do
not merely spell an effort at settling conflicting provisions but have
materially altered the bill, thus giving rise to the instant petitions on
the part of those who were caught unawares by the legislative
legerdemain that took place. Going by the definition of the word
“amendment” in Black’s Law Dictionary,

_________________

67 BLACK’s DICTIONARY, 6th ed., p. 687 citing State ex. rel. Riley v. District
Court of Second Judicial Dist. in and for Silver Bow County, 103 Mont. 576, 64 P. 2d
115, 119 (1937).
68 CONGRESSIONAL RECORD, May 3, 1952, p. 885 cited in Orquiola,
Annotated Rules of the Senate, 1991 ed., pp. 40-41.

790

790 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

5th Ed., 1979, which means “to change or modify for the better; to
alter by modification, deletion, or addition,” said insertions and
deletions constitute amendments. Consequently, these violated
Article VI, Section 26 (2) which provides inter alia: “Upon the last
reading of a bill, no amendment thereto shall be allowed . . .” This
proscription is intended to subject all bills and their amendments to
intensive deliberation by the legislators and the ample ventilation of
issues to afford the public an opportunity to express their opinions or
objections issues to afford the public an opportunity to express their
opinions or objections thereon. The same rationale underlies the
three-reading requirement to the end that no surpises may be sprung
on an unsuspecting citizenry.
Provisions of the “now you see it, now you don’t” variety,
meaning those which were either in the House and/or Senate
versions but simply disappeared or were “bracketed out” of
existence in the BICAM Report, were eventually incorporated in
Republic Act No. 7716. Worse, some goods, properties or services
which were not covered by the two versions and, therefore, were
never intended to be so covered, suddenly found their way into the
same Report. No advance notice of such insertions prepared the rest
of the legislators, much less the public who could be adversely
affected, so that they could be given the opportunity to express their
views thereon. Well has the final BICAM report been described,
therefore, as an instance of “taxation without representation.”
That the conferees or delegates in the BICAM representing the
two Chambers could not possibly be charged with bad faith or
sinister motives or, at the very least, unseemly behavior, is of no
moment. The stark fact is that items not previously subjected to the
VAT now fell under its coverage without interested sectors or parties
having been afforded the opportunity to be heard thereon. This is not
to say that the Conference Committee Report should have undergone
the three readings required in Article VI, Section 26(2), for this
clearly refers only to bills which, after having been initially filed in
either House, negotiated the labyrinthine passage therein until its
approval. The composition of the BICAM including as it usually
does, the Chairman of the appropriate Committee, the sponsor of the
bill and other interested members ensures an informed discussion, at
least with respect to the disagreeing provisions. The same does not
obtain as regards completely new

791

VOL. 235, AUGUST 25, 1994 791


Tolentino vs. Secretary of Finance

matter which suddenly spring on the legislative horizon.


It has been pointed out that such extraneous matters
notwithstanding, all Congressmen and Senators were given the
opportunity to approve or turn down the Committee Report in toto,
thus “curing” whatever defect or irregularity it bore. Earlier in this
opinion, I explained that the source of the acknowledged power of
this ad hoc committee stems from the precise fact that, the meetings,
being scheduled “take it or leave it” basis. It has not been
uncommon for legislators who, for one reason or another have been
frustrated in their attempt to pass a pet bill in their own chamber, to
work for its passage in the BICAM where it may enjoy a more
hospitable reception and faster approval. In the instant case, had
there been full, open and unfettered discussion on the bills during
the Committee sessions, there would not have been as much
vociferous objections on this score. Unfortunately, however, the
Committee held two of the five sessions behind closed doors, sans
stenographers, record-takers and interested observers. To that extent,
the proceedings were shrouded in mystery and the public’s right to
information69 on matters of public concern as enshrined in Article III,
Section 7 and the government’s policy of transparency in
transactions 70involving public interest in Article II, Section 28 of the
Constitution are undermined.
Moreover, that which is void ab initio such as the objectionable
provisions in the Conference Committee Report, cannot be “cured”
or ratified. For all intents and purposes, these never existed. Quae ab
initio non valent, ex post facto convalescere non possunt. Things that
are invalid from the beginning are not made valid by a subsequent
act.

________________

69 Article III, Section 7. “The right of the people to information on matters of


public concern shall be recognized. Access to official records, and to documents, and
papers pertaining to official acts, transactions, or decisions, as well as to government
research data used as basis for policy development, shall be afforded the citizen,
subject to such limitations as may be provided by law.”
70 Article II, Section 28. “Subject to reasonable conditions prescribed by law, the
State adopts and implements a policy of full public disclosure of all its transactions
involving public interest.”

792

792 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

Should this argument be unacceptable, the “enrolled bill” doctrine,


in turn, is invoked to support the proposition that the certification by
the presiding officers of Congress, together with the signature of the
President, bars further judicial inquiry into the validity of the law. I
reiterate my submission that the “enrolled bill ruling” may be
applicable but only with respect to questions pertaining to the
procedural enactment, engrossment, printing, the insertion or
deletion of a word or phrase here and there, but would draw a
dividing line with respect to substantial substantive changes, such as
those introduced by the BICAM herein.
We have before us then the spectacle of a body created by the
two Houses of Congress for the very limited purpose of settling
disagreements in provisions between bills emanating therefrom,
exercising the plenary legislative powers of the parent chambers but
holding itself exempt from the mandatory constitutional
requirements that are the hallmarks of legislation under the aegis of
a democratic political system. From the initial filing, through the
three readings which entail detailed debates and discussions in
Committee and plenary sessions, and on to the transmittal to the
other House in a repetition of the entire process to ensure exhaustive
deliberations—all these have been skipped over. In the proverbial
twinkling of an eye, provisions that probably may not have seen the
light of day had they but run their full course through the legislative
mill, sprang into existence and emerged full-blown laws.
Yet our Constitution vests the legislative power in “the Congress
of the Philippines which 71
shall consist of a Senate and a House of
Representatives . . . .” and not in any special, standing or super
committee of its own creation, no matter that these have been
described, accurately enough, as “the eye, the ear, the hand, and very
often the brain of the house.”
Firstly, that usage or custom has sanctioned this abbreviated, if
questionable, procedure does not warrant its being legitimized and
perpetuated any longer. Consuetudo, contra rationem introducta,
potius usurpatio quam consuetudo appellari debet. A custom against
reason is rather an usurpation. In the hierarchy

_______________

71 Article VI, Section 1.

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Tolentino vs. Secretary of Finance

of sources of legislative procedure, constitutional rules, statutory


provisions and adopted rules (as for example, the Senate and House
Rules), rank highest, certainly much ahead of customs and usages.
Secondly, is this Court to assume the role of passive spectator or
indulgent third party, timorous about exercising its power or more
importantly, performing its duty, of making a judicial determination
on the issue of whether there has been grave abuse of discretion by
the other branches or instrumentalities of government, where the
same is properly invoked? The time is past when the Court was not
loathe to raise the bogeyman of the political question to avert a
head-on collision with either the Executive or Legislative
Departments. Even the separation of powers doctrine was burnished
to a bright sheen as often as it was invoked to keep the judiciary
within bounds. No longer does this condition obtain. Article VIII,
Section 2 of the Constitution partly quoted in this paragraph has
broadened the scope of judicial inquiry. This Court can now safely
fulfill its mandate of delimiting the powers of co-equal departments
like the Congress, its officers or its committees which may have no
compunctions about exercising legislative powers in full.
Thirdly, dare we close our eyes to the presumptuous assumption
by a runaway committee of its progenitor’s legislative powers in
derogation of the rights of the people, in the process, subverting the
democratic principles we all are sworn to uphold, when a proper
case is made out for our intervention? The answers to the above
queries are self-evident.
I call to mind this exhortation: “We are sworn to see that
violations of the constitution—by any person, corporation, state
agency or branch of government—are brought to light and corrected.
To countenance an artificial rule of law that silences our voices
when confronted with 72violations of our Constitution is not
acceptable to this Court.”
I am not unaware that a rather recent decision of ours brushed
aside an argument that a provision in subject law regarding the
withdrawal of the franking privilege from the petitioners and this
Court itself, not having been included in the original version

_______________

72 D & W Auto Supply v. Department of Revenue, supra.

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of Senate Bill No. 720 or of House Bill No. 4200 but only in the
Conference Committee Report, was violative of Article VI, Section
26 (2) of the Constitution. Likewise, that said Section 35, never
having been a subject of disagreement between both Houses, could
not have been validly added as an amendment before the Conference
Committee.
The majority opinion in said case explained:
“While it is true that a conference committee is the mechanism
for compromising differences between the Senate and the House, it
is not limited in its jurisdiction to this question. Its broader function
is described thus:

‘A conference committee may deal generally with the subject matter or it


may be limited to resolving the precise differences between the two houses.
Even where the conference committee is not by rule limited in its
jurisdiction, legislative custom severely limits the freedom with which new
subject matter can be inserted into the conference bill. But occasionally a
conference committee produces unexpected results, results beyond its
mandate. These excursions occur even where the rules impose strict
limitations on conference committee jurisdiction. This is symptomatic of the
authoritarian power of conference committee 73
(Davies, Legislative Law and
Process: In a Nutshell, 1986 Ed., p. 81).’ ” (Italics supplied)

At the risk of being repetitious, I wish to point out that the general
rule, as quoted above, is: “Even where the conference committee is
not by rule limited in its jurisdiction, legislative custom severely
limits the freedom with which new subject matter can be inserted
into the conference bill.” What follows, that is, “occasionally a
conference committee produces unexpected results, results beyond
its mandate . . .” is the exception. Then it concludes with a
declaration that: “This is symptomatic of the authoritarian power of
conference committee.” Are we about to reinstall another institution
that smacks of authoritarianism which, after our past experience, has
become anathema to the Filipino people?
The ruling above can hardly be cited in support of the proposition
that a provision in a BICAM report which was not

________________

73 The Philippine Judges Association v. Hon. Pete Prado, G.R. No. 105371,
November 11, 1993, 227 SCRA 703, 709.

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the subject of differences between the House and Senate versions of


a bill cannot be nullified. It submits that such is not authorized in our
Basic Law. Moreover, this decision concerns merely one provision
whereas the BICAM Report that culminated in the EVAT law has a
wider scope as it, in fact, expanded the base of the original VAT law
by imposing the tax on several items which were not so covered
prior to the EVAT.
One other flaw in most BICAM Reports, not excluding this one
under scrutiny, is that, hastily drawn up, it often fails to conform to
the Senate and House Rules requiring no less than a “detailed” and
“sufficiently explicit statement of the changes in or amendments to
the subject measure.” The Report of the committee, as may be
gleaned from the preceding pages, was no more than the final
version of the bill as “passed” by the BICAM. The amendments or
subjects of dissension, as well as the reconciliation made by the
committee, are not even pointed out, much less explained therein.
It may be argued that legislative rules of procedure may properly
be suspended,74
modified, revoked or waived at will by the legislators
themselves. This principle, however, does not come into play in
interpreting what the record of the proceedings shows was, or was
not, done. It is rather designed to test the validity of legislative
action where the record
75
shows a final action in violation or disregard
of legislative rules. Utilizing the Senate and the House Rules as
both guidelines and yardstick, the BICAM here obviously did not
adhere to the rule on what the Report should contain.
Given all these irregularities that have apparently been engrafted
into the BICAM system, and which have been tolerated, if not
accorded outright acceptance by everyone involved in or conversant
with, the institution, it may be asked: Why not leave well enough
alone?

_________________

74 In Osmeña, Jr. v. Pendatun, (109 Phil. 863 [1960]), the Court held that
parliamentary rules are merely procedural and they may be waived or disregarded by
the legislative body. Hence, mere failure to conform to parliamentary usage will not
invalidate the action taken by a deliberative body when the requisite number of
members have agreed to a particular measure.
75 State v. Essling, 128 N.W. 2d 307, 316 (1964).

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That these practices have remained unchallenged in the past does not
justify our closing our eyes and turning a deaf ear to them. Writ
large is the spectacle of a mechanism ensconced in the very heart of
the people’s legislative halls, that now stands indicted with the
charge of arrogating legislative powers unto itself through the use of
dubious “shortcuts.” Here, for the people to judge, is the “mother of
all shortcuts.”
In the petitions at bench, we are confronted with the enactment of
a tax law which was designed to broaden the tax base. It is rote
learning for any law student that as an attribute of sovereignty, the76
power to tax is “the strongest of all the powers of government.”
Admittedly, “for all its 77plenitude, the power to tax is not unconfined.
There are restrictions.” Were there none, then the oft-quoted 1803
dictum of Chief Justice
78
Marshall that “the power to tax involves the
power to destroy” would be a truism. Happily, we can concur with,
and the people can find comfort in, the reassuring words of Mr.
Justice Holmes:79“The power to tax is not the power to destroy while
this Court sits.”
Manakanakâ, mayroóng dumudulóg dito sa Kátaastaasang
Hukuman na may kamangha-mangháng hinaíng. Angkóp na
halimbawà ay ang mga petisyóng iniharáp ngayón sa amin.
Ang ilán sa kanilá ay mga Senadór na nais mapawaláng bisà ang
isáng batás ukol sa buwís na ipinasá mismo nilá. Diumanó itó ay
hindî tumalima sa mga itinatadhana ng Sáligang Batás. Bukód sa
rito, tutol silá sa mga bagong talatà na isiningit ng “Bicameral
Conference Committee” na nagdagdág ng mga bagong bagay bagay
at serbisyo na papatawan ng buwís. Ayon sa kanilá, ginampanán ng
komiténg iyán ang gawain na nauukol sa buóng Kongreso. Kung
kayá’t ang nararapat na mangyari ay ihatol ng Kátaastaasang
Hukuman na malabis na pagsasamantala sa sariling pagpapasiyá ang
ginawâ ng Kongreso.
Bagamá’t bantulót kamíng makialám sa isáng kapantáy na
sangáy ng Pamahalaán, hindî naman nararapat na kamí ay

________________

76 Sarasola v. Trinidad, 40 Phil. 252, 262 (1919).


77 Sison, Jr. v. Ancheta, L-59431, July 25, 1984, 130 SCRA 654, 660.
78 McCullock v. Maryland, 4 Wheaton 316.
79 Quoted in Graves. v. New York, 306 U.S. 466, 490.

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Tolentino vs. Secretary of Finance

tumanggíng gampanán ang tungkulin na iniatas sa amin ng Saligang


Batas. Lalu’t-lalò nang ang batás na kinauukulan ay maaaring
makapinsalá sa nakararami sa sambayanán.
Sa ganang akin, itong batas na inihaharap sa amin ngayón, ay
totoóng labág sa Saligang Batás, samakatuwíd ay waláng bisà.
Nguni’t itó ay nauukol lamang sa mga katiwalián na may kinalaman
sa paraán ng pagpapasabatás nitó. Hindî namin patakarán ang
makialám o humadláng sa itinakdáng gawain ng Saligang Batás sa
Pangulò at sa Kongreso. Ang dalawáng sangáy na iyán ng
Pamahalaán ang higít na maalam ukol sa kung ang anumáng
panukalang batás ay nararapat, kanais-nais o magagampanán; kung
kayá’t hindî kamí nararapat na maghatol o magpapasiyá sa mga
bagay na iyán. Ang makapapataw ng angkop na lunas sa larangan na
iyán ay ang mismong mga kinatawán ng sambayanán sa Kongreso.
Faced with this challenge of protecting the rights of the people by
striking down a law that I submit is unconstitutional and in the
process, checking the wonted excesses of the Bicameral Conference
Committee system, I see in this case a suitable vehicle to discharge
the Court’s Constitutional mandate and duty of declaring that there
has indeed been a grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of the Legislature.
Republic Act No. 7716, being unconstitutional and void, I find
no necessity to rule on the substantive issues as dealt with in the
majority opinion as they have been rendered moot and academic.
These issues pertain to the intrinsic merits of the law. It is axiomatic
that the wisdom, desirability and advisability of enacting certain
laws lie, not within the province of the Judiciary but that of the
political departments, the Executive and the Legislative. The relief
sought by petitioners from what they perceive to be the harsh and
onerous effect of the EVAT on the people is within their reach. For
Congress, of which Senator-petitioners are a part, can furnish the
solution by either repealing or amending the subject law.
For the foregoing reasons, I VOTE to GRANT the petition.

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DISSENTING OPINION

BELLOSILLO, J.:

With a consensus already reached after due deliberations, silence


perhaps should be the better part of discretion, except to vote. The
different views and opinions expressed are so persuasive and
convincing; they are more than enough to sway the pendulum for or
against the subject petitions. The penetrating and scholarly
dissertations of my brethren should dispense with further arguments
which may only confound and confuse even the most learned of
men.
But there is a crucial point, a constitutional issue which, I submit,
has been belittled, treated lightly, if not almost considered
insignificant and purposeless. It is elementary, as much as it is
fundamental. I am referring to the word “exclusively” appearing in
Sec. 24, Art. VI, of our 1987 Constitution. This is regrettable, to say
the least, as it involves a constitutional mandate which, wittingly or
unwittingly, has been cast aside as trivial and meaningless.
A comparison of the particular provision on the enactment of
revenue bills in the U.S. Constitution with its counterpart in the
Philippine Constitution will help explain my position.
Under the U.S. Constitution, “[a]ll bills for raising revenue shall
originate in the House of Representatives; but the Senate may
propose or concur with amendments as on other bills” (Sec. 7, par.
[1], Art. I). In contrast, our 1987 Constitution reads: “All
appropriation, revenue or tariff bills, bills authorizing increase of the
public debt, bills of local application, and private bills shall originate
exclusively in the House of Representatives, but the Senate may
propose or concur with amendments” (Sec. 24, Art. VI; italics
supplied).
As may be gleaned from the pertinent provision of our
Constitution, all revenue bills are required to originate “exclusively”
in the House of Representatives. On the other hand, the U.S.
Constitution does not use the word “exclusively”; it merely says,
“[a]ll bills for raising revenue shall originate in the House of

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Tolentino vs. Secretary of Finance

Representatives.”
Since the term “exclusively” has already been adequately defined
in the various opinions, as to which there seems to be no dispute, I
shall no longer offer my own definition.
Verily, the provision in our Constitution requiring that all revenue
bills shall originate exclusively from the Lower House is mandatory.
The word “exclusively” is an “exclusive word,” 1
which is indicative
of an intent that the provision is mandatory. Hence, all American
authorities expounding on the meaning and application of Sec. 7,
par. (1), Art. I, of the U.S. Constitution cannot be used in the
interpretation of Sec. 24, Art. VI, of our 1987 Constitution which
has a distinct feature of “exclusiveness” all its own. Thus, when our
Constitution absolutely requires—as it is mandatory—that a
particular bill should exclusively emanate from the Lower House,
there is no alternative to the requirement that the bill to become
valid law must originate exclusively from that House.
In the interpretation of constitutions, questions frequently arise as
to whether particular sections are mandatory or directory. The courts
usually hesitate to declare that a constitutional provision is directory
merely in view of the tendency of the legislature to disregard
provisions which are not said to be mandatory. Accordingly, it is the
general rule to regard constitutional provisions as mandatory, and
not to leave any discretion to the will of the legislature to obey or
disregard them. This presumption as to mandatory quality is usually
followed unless it is unmistakably manifest that the provisions are
intended to be merely directory. So strong is the inclination in favor
of giving obligatory force to the terms of the organic law that it has
even been said that neither by the courts nor by any other
department of the government may any provision of the Constitution
be regarded as merely directory, but that each and everyone of its
provisions should be treated as imperative and mandatory, without
reference to the rules and
2
distinguishing between the directory and
the mandatory statutes.
The framers of our 1987 Constitution could not have used the
term “exclusively” if they only meant to replicate and adopt in
_______________

1 See McGee v. Republic, 94 Phil. 821 (1954).


2 See Tañada v. Cuenco , 103 Phil. 1051 (1957).

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toto the U.S. version. By inserting “exclusively” in Sec. 24, Art. VI


of our Constitution, their message is clear: they wanted it different,
strong, stringent. There must be a compelling reason for the
inclusion of the word “exclusively,” which cannot be an act of
retrogression but progression, an improvement on its precursor.
Thus,”exclusively” must be given its true meaning, its purpose
observed and virtue recognized, for it could not have been conceived
to be of minor consequence. That construction is to be sought which
gives effect to the whole of the statute—its every word. Ut magis
valeat quam pereat.
Consequently, any reference to American authorities, decisions
and opinions, however wisely and delicately put, can only mislead in
the interpretation of our own Constitution. To refer to them in
defending the constitutionality of R.A. 7716, subject of the present
petitions, is to argue on a false premise, i.e., that Sec. 24, Art. VI of
our 1987 Constitution is, or means exactly, the same as Sec. 7, par.
(1), Art. I of the U.S. Constitution, which is not correct. Hence, only
a wrong conclusion can be drawn from a wrong premise.
For example, it is argued that in the United States, from where
our own legislature is patterned, the Senate can practically substitute
its own tax measure for that of the Lower House. Thus, according to
the Majority, citing an American case, “the validity of Sec. 37 which
the Senate had inserted in the Tariff Act of 1909 by imposing an ad
valorem tax based on the weight of vessels, was upheld against the
claim that the revenue bill originated in the3 Senate in contravention
of Art. I, Sec. 7, of the U.S. Constitution.” In an effort to be more
convincing, the Majority even quotes the footnote in Introduction to
American Government by F.A. Ogg and P.O. Ray which reads—

Thus in 1883 the upper house struck out everything after the enacting clause
of a tariff bill and wrote its own measure, which the House eventually felt
obliged to accept. It likewise added 847 amendments to the Payne-Aldrich
tariff act of 1909, dictated the schedules of the emergency tariff act of 1921,
rewrote an extensive tax revision bill in the same year, and recast most of
the permanent tariff

________________
3 See Majority Opinion, p. 15, citing Rainey v. United States, 232 U.S., 309, 58 Law Ed.
617.

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VOL. 235, AUGUST 25, 1994 801


Tolentino vs. Secretary of Finance

4
bill of 1922 —

which in fact suggests, very clearly, that the subject revenue bill
actually originated from the Lower House and was only amended,
perhaps considerably, by the Senate after it was passed by the
former and transmitted to the latter.
In the cases cited, where the statutes passed by the U.S. Congress
were upheld, the revenue bills did not actually originate from the
Senate but, in fact, from the Lower House. Thus, the Supreme Court
of the United States,
5
speaking through Chief Justice White in Rainey
v. United States upheld the revenue bill passed by Congress and
adopted the ruling of the lower court that—

x x x the section in question is not void as a bill for raising revenue


originating in the Senate and not in the House of Representatives. It appears
that the section was proposed by the Senate as an amendment to a bill for
raising revenue which originated in the House. That is sufficient.
6
Flint v. Stone Tracy Co., on which the Solicitor General heavily
leans in his Consolidated Comment as well as in his Memorandum,
does not support the thesis of the Majority since the subject bill
therein actually originated from the Lower House and not from the
Senate, and the amendment merely covered a certain provision in
the House bill.
In fine, in the cases cited which were lifted from American
authorities, it appears that the revenue bills in question actually
originated from the House of Representatives and were amended by
the Senate only after they were transmitted to it. Perhaps, if the
factual circumstances in those cases were exactly the same as the
ones at bench, then the subject revenue or tariff bill may be upheld
in this jurisdiction on the principle of substantial compliance, as they
were in the United States, except possibly in instances where the
House bill undergoes what is now referred to as “amendment by
substitution,” for that would be in derogation

_______________

4 Id., citing F.A. Ogg and P.O. Ray, Introduction to American Government, 302, n.
2 (1945).
5 See Note 3.
6 22 U.S. 107.
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of our Constitution which vests solely in the House of


Representatives the power to initiate revenue bills. A Senate
amendment by substitution simply means that the bill in question did
not in effect originate from the lower chamber but from the upper
chamber and now disguises itself as a mere amendment of the House
version.
It is also theorized that in the U.S., amendment by substitution is
recognized. That may be true. But the process may be validly
effective only under the U.S. Constitution. The cases before us
present a totally different factual backdrop. Several months before
the Lower House could even pass HB No. 11197, P.S. Res. No. 734
and SB No. 1129 had already been filed in the Senate. Worse, the
Senate subsequently approved SB No. 1630 “in substitution of SB
No. 1129, taking into consideration P.S. Res. No. 734 and HB No.
11197,” and not HB No. 11197 itself “as amended.” Here, the Senate
could not have proposed or concurred with amendments because
there was nothing to concur with or amend except its own bill. It
must be stressed that the process of concurring or amending
presupposes that there exists a bill upon which concurrence may be
based or amendments introduced. The Senate should have reported
out HB No. 11197, as amended, even if in the amendment it took
into consideration SB No. 1630. It should not have submitted to the
Bicameral Conference Committee SB No. 1630 which, admittedly,
did not originate exclusively from the Lower House.
But even assuming that in our jurisdiction a revenue bill of the
Lower House may be amended by substitution by the Senate—
although I am not prepared to accept it in view of Sec. 24, Art. VI,
of our Constitution—still R.A. 7716 could not have been the result
of amendment by substitution since the Senate had no House bill to
speak of that it could amend when the Senate started deliberating on
its own version.
Be that as it may, I cannot rest easy on the proposition that a
constitutional mandate calling for the exclusive power and
prerogative of the House of Representatives may just be discarded
and ignored by the Senate. Since the Constitution is for the
observance of all—the judiciary as well as the other departments of
government—and the judges are sworn to support its provisions, the
courts are not at liberty to overlook or disregard its commands. And
it is not fair and just to impute to them undue interference if

803
VOL. 235, AUGUST 25, 1994 803
Tolentino vs. Secretary of Finance

they look into the validity of legislative enactments to determine


whether the fundamental law has been faithfully observed in the
process. It is their duty to give effect to the existing Constitution and
to obey all constitutional provisions irrespective of their opinion as
to the wisdom of such provisions.
The rule is fixed that the duty in a proper case to declare a law
unconstitutional cannot be declined and must be performed in
accordance with the deliberate judgment of the tribunal before
which the validity of the enactment is directly drawn into question.
When it is clear that a statute transgresses the authority vested in the
legislature by the Constitution, it is the duty of the courts to declare
the act unconstitutional because they cannot shirk from it without
violating their oaths of office. This duty of the courts to maintain the
Constitution as the fundamental law of the state is imperative and
unceasing; and, as Chief Justice Marshal said, whenever a statute is
in violation of the fundamental law, the courts must so adjudge and
thereby give effect to the Constitution. Any other course would lead
to the destruction of the Constitution. Since the question as to the
constitutionality of a statute is a judicial matter, the courts will not
decline the exercise of jurisdiction upon the suggestion that action
might be taken by political
7
agencies in disregard of the judgment of
the judicial tribunals.
It is my submission that the power and authority to originate
revenue bills under our Constitution is vested exclusively in the
House of Representatives. Its members being more numerous than
those of the Senate, elected more frequently, and more directly
represent the people, are therefore considered better aware of the
economic life of their individual constituencies. It is just proper that
revenue bills originate exclusively from them.
In this regard, we do not have to devote much time delving into
American decisions and opinions and invoke them in the
interpretation of our own Constitution which is different from the
American version, particularly on the enactment of revenue bills. We
have our own Constitution couched in a language our own
legislators thought best. Insofar as revenue bills are concerned, our
Constitution is not American; it is distinctively

_______________

7 11 Am. Jur., pp. 712-13, 713-715.

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Filipino. And no amplitude of legerdemain can detract from our


constitutional requirement that all appropriation, revenue or tariff
bills, bills authorizing increase of the public debt, bills of local
application, and private bills shall originate exclusively in the House
of Representatives, although the Senate may propose or concur with
amendments.
In this milieu, I am left no option but to vote to grant the petitions
and strike down R.A. 7716 as unconstitutional.

DISSENTING OPINION

PUNO, J.:

Petitioners plead that we affirm the self-evident proposition that they


who make law should not break the law. There are many evils whose
elimination can be trusted to time. The evil of lawlessness in
lawmaking cannot. It must be slain on sight for it subverts the
sovereignty of the people.
First, a fast snapshot of the facts. On November 17, 1993, the
House of Representatives passed on third reading House Bill (H.B.)
No. 11197 entitled “An Act Restructuring the Value Added Tax
(VAT) System to Widen its Tax Base and Enhance its
Administration, Amending for These Purposes Sections 99, 100, 102
to 108 and 110 of Title V and 236, 237 and 238 of Title IX, and
Repealing Sections 113 and 114 of Title V, all of the National
Internal Revenue Code as Amended.” The vote was 114 Yeas and 12
Nays. The next day, November 18, 1993, H.B. No. 11197 was
transmitted to the Senate for its concurrence by the Hon. Camilo L.
Sabio, Secretary General of the House of Representatives.
On February 7, 1994, the Senate Committee on Ways and Means
submitted Senate Bill (S.B.) No. 1630, recommending its approval
“in substitution of Senate Bill No. 1129 taking into consideration
P.S. Res. No. 734 and House Bill No. 11197.” On March 24, 1994,
S.B. No. 1630 was approved on second and third readings. On the
same day, the Senate, thru Secretary Edgardo E. Tumangan,
requested the House for a conference “in view of the disagreeing
provisions of S.B. No. 1630 and H.B. No. 11197.” It designated the
following as members of its Committee: Senators Ernesto F.
Herrera, Leticia R. Shahani, Alberto S. Romulo, John H. Osmeña,
Ernesto M. Maceda, Blas F. Ople, Francisco S.

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Tolentino vs. Secretary of Finance
Tatad, Rodolfo G. Biazon, and Wigberto S. Tañada. On the part of
the House, the members of the Committee were: Congressmen
Exequiel B. Javier, James L. Chiongbian, Renato V. Diaz, Arnulfo P.
Fuentebella, Mariano M. Tajon, Gregorio Andolong, Thelma
Almario, and Catalino Figueroa. After five (5) meetings,1 the
Bicameral Conference Committee submitted its Report to the Senate
and the House stating:

“CONFERENCE COMMITTEE REPORT

The Conference Committee on the disagreeing provisions of House Bill No.


11197, entitled:
AN ACT RESTRUCTURING THE VALUE ADDED TAX (VAT)
SYSTEM TO WIDEN ITS TAX BASE AND ENHANCE ITS
ADMINISTRATION, AMENDING FOR THESE PURPOSES SECTIONS
99, 100, 102, 103, 104, 105, 106, 107, 108 AND 110 OF TITLE IV, 112,
115 AND 116 OF TITLE V, AND 236, 237, AND 238 OF TITLE IX, AND
REPEALING SECTIONS 113 AND 114 OF TITLE V, ALL OF THE
NATIONAL INTERNAL REVENUE CODE, AS AMENDED
and Senate Bill No. 1630 entitled:
AN ACT RESTRUCTURING THE VALUE ADDED TAX (VAT)
SYSTEM TO WIDEN ITS TAX BASE AND ENHANCE ITS
ADMINISTRATION, AMENDING FOR THESE PURPOSES SECTIONS
99, 100, 102, 103, 104, 106, 107, 108 AND 110 OF TITLE IV, 112, 115,
117 AND 121 OF TITLE V, AND 236, 237, AND 238 OF TITLE IX, AND
REPEALING SECTIONS 113, 114, 116, 119 AND 120 OF TITLE V, ALL
OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED
AND FOR OTHER PURPOSES
having met, after full and free conference, has agreed to recommend and
do hereby recommend to their respective Houses that House Bill No. 11197,
in consolidation with Senate Bill No. 1630, be approved in accordance with
the attached copy of the bill as reconciled and approved by the conferees.
Approved.”

_______________

1 April 13, 19, 20, 21, and 25, 1994.

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The Report was approved by the House on April 27, 1994. The
Senate approved it on May 2, 1994. On May 5, 1994, the President
signed the bill into law as R.A. No. 7716.
There is no question that the Bicameral Conference Committee
did more than reconcile differences between House Bill No. 11197
and Senate Bill No. 1630. In several instances, it either added new
provisions or deleted provisions already approved in House Bill No.
11197 and Senate Bill No. 1630. These insertions/dele-tions
numbering twenty four2
(24) are specified in detail by petitioner
Tolentino as follows:

“SOME SALIENT POINTS ON THE (AMENDMENTS TO THE VAT


LAW [EO 273]) SHOWING ADDITIONS/INSERTIONS MADE BY
BICAMERAL CONFERENCE COMMITTEE TO SB 1630 & HB 11197

I On Sec. 99 of the NIRC

H.B. 11197 amends this section by including, as liable to VAT, any


person who in the course of trade of business, sells, barters, or exchanges
goods or PROPERTIES and any person who LEASES PERSONAL
PROPERTIES.
Senate Bill 1630 deleted Sec. 99 to give way for a new Section 99—
DEFINITION OF TERMS—where eleven (11) terms were defined. A new
Section, Section 99-A was incorporated which included as subject to VAT,
one who sells, exchanges, barters PROPERTIES and one who imports
PROPERTIES.
The BCC version (R.A. 7716) makes LESSORS of goods OR
PROPERTIES and importers of goods LIABLE to VAT.

II On Section 100 (VAT on sale of goods)

A. The H.B., S.B., and the BCC (R.A. 7716) all included sale of
PROPERTIES as subject to VAT.
The term GOODS or PROPERTIES includes the following:

HB (pls. refer to Sec. 2) SB (pls. refer to BCC (RA 7716


Sec. 1(4) (Sec. 2)
1. Right or the privilege to use patent, 1. The same 1. The same
copyright, de

________________

2 See also Annex “A,” Memorandum of Petitioner Kilosbayan in G.R. No.


115781; also the Petition in G.R. No. 115543, pp. 2-3.

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Tolentino vs. Secretary of Finance

sign, or model, plan, secret


formula or process, goodwill
trademark, tradebrand or other
like property or right.
2. Right or the privilege to use 2. 2. The same
in the Philippines of any The
industrial, commercial, or same
scientific equipment.
3. Right or the privilege to use 3. 3. The same
motion picture films, films, The
tapes and discs. same
4. Radio and Television time 4. 4. In addition to radio and television
The time the following were included:
Same SATELLITE TRANSMISSION and
CABLE TELEVISION TIME
5. Other Similar properties 5. 5. ‘Other similar properties’ was
The deleted
Same
6.— 6.— 6. Real properties held primarily for
sale to customers or held for lease in
the ordinary course or business

B. The HB and the BCC Bills has each a provision which includes
THE SALE OF GOLD TO BANGKO SENTRAL NG PILIPINAS
as falling under the term Export Sales, hence subject to 0% VAT.
The Senate Bill does not contain such provision (See Section 102-
A thereof).

III. On Section 102

This section was amended to include as subject to a 10% VAT the gross
receipts derived from THE SALE OR EXCHANGE OF SERVICES,
INCLUDING THE USE OR LEASE OF PROPERTIES.
The SB, HB, and BCC have the same provisions on this.
However, on what are included in the term SALE OR EXCHANGE OF
SERVICES, the BCC included/inserted the following (not found in either
the House or Senate Bills):

1. Services of lessors of property WHETHER PERSONAL OR


REAL; (See BCC Report/Bill p. 7)
2. WAREHOUSING SERVICES (Ibid.,)

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808 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

3. Keepers of RESTHOUSES, PENSION HOUSES, INNS,


RESORTS (Ibid.,)
4. Common carriers by LAND, AIR AND SEA (Ibid.,)
5. SERVICES OF FRANCHISE GRANTEES OF TELEPHONE
AND TELEGRAPH;
6. RADIO AND TELEVISION BROADCASTING
ALL OTHER FRANCHISE GRANTEES EXCEPT THOSE
7. UNDER SECTION 117 OF THIS CODE

8. SERVICES OF SURETY, FIDELITY, INDEMNITY, AND


BONDING COMPANIES.
9. Also inserted by the BCC (on page B thereof) is the LEASE OR
USE OF OR THE RIGHT TO USE OF SATTELITE
TRANSMISSION AND CABLE TELEVISION TIME

IV. On Section 103 (Exempt Transactions)

The BCC deleted subsection (f) in its entirety, despite its retention in both
the House and Senate Bills, thus under RA 7716, the ‘printing, publication,
importation or sale of books and any newspaper, magazine, review, or
bulletin which appears at regular intervals with fixed prices for subscription
and sale and which is not devoted principally to the publication of
advertisements’ is subject to VAT.
Subsection (g) was amended by the BCC (both Senate and House Bills
did not) by changing the word TEN to FIVE, thus: “Importation of
passenger and/or cargo vessel of more than five thousand ton to ocean
going, including engine and spare parts of said vessel to be used by the
importer himself as operator thereof.” In short, importation of vessels with
tonnage of more than 5 thousand is VAT exempt.
Subsection L, was amended by the BCC by adding the qualifying phrase:
EXCEPT THOSE RENDERED BY PROFESSIONALS.
Subsection U which exempts from VAT “Transactions which are exempt
under special laws,” was amended by BCC by adding the phrase: EXCEPT
THOSE GRANTED UNDER PD Nos. 66, 529, 972, 1491, and 1590, and
NON-ELECTRIC COOPERATIVES under RA 6938. This is the reason
why cooperatives are now subject to VAT.
While the SALE OF REAL PROPERTIES was included in the exempt
transactions under the House Bill, the BCC made a qualification by stating:

‘(S) SALE OF REAL PROPERTIES NOT PRIMARILY HELD FOR SALE TO


CUSTOMERS OR HELD FOR LEASE IN THE ORDINARY COURSE OF
TRADE OR BUSINESS OR REAL PROPERTY UTILIZED FOR LOW-COST
AND SOCIALIZED HOUSING AS DEFINED BY R.A. NO. 7279 OTHERWISE
KNOWN AS THE URBAN DEVELOPMENT AND

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Tolentino vs. Secretary of Finance

HOUSING ACT OF 1992 AND OTHER RELATED LAWS.


Under the Senate Bill, the sale of real property utilized for low-cost and socialized
housing as defined by RA 7279, is one of the exempt transactions.
Under the House Bill, also exempt from VAT, is the SALE OF PROPERTIES
OTHER THAN THE TRANSACTIONS MENTIONED IN THE FOREGOING
PARAGRAPHS WITH A GROSS ANNUAL SALES AND/OR RECEIPTS OF
WHICH DOES NOT EXCEED THE AMOUNT PRESCRIBED IN THE
REGULATIONS TO BE PROMULGATED BY THE SECRETARY OF FINANCE
WHICH SHALL NOT BE LESS THAN P350,000.00 OR HIGHER THAN
P600,000.00 x x x Under the Senate Bill, the amount is P240,000.00. The BCC
agreed at the amount of not less than P480,000.00 or more than P720,000.00
SUBJECT TO TAX UNDER SEC. 112 OF THIS CODE.
The BCC did not include, as VAT exempt, the sale or transfer of securities as
defined in the Revised Securities Act (BP 178) which was contained in both Senate
and House Bills.

V On Section 104

The phrase INCLUDING PACKAGING MATERIALS was included by


the BCC on Section 104 (A) (1) (B), and the phrase ON WHICH A
VALUE-ADDED TAX HAS BEEN ACTUALLY on Section 104 (A) (2).
These phrases are not contained in either House and Senate Bills.

VI On Section 107

Both House and Senate Bills provide for the payment of P500.00 VAT
registration fee. The BCC provides for P1,000.00 VAT fee.

VII On Section 112

While both the Senate and House Bills provide that a person whose sales
or receipts and are exempt under Section 103[w] of the Code, and who are
not VAT registered shall pay a tax equivalent to THREE (3) PERCENT of
his gross quarterly sales or receipts, the BCC inserted the phrase: THREE
PERCENT UPON THE EFFECTIVITY OF THIS ACT AND FOUR
PERCENT (4%) TWO YEARS THEREAFTER.

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Tolentino vs. Secretary of Finance

VIII On Section 115

Sec. 17 of SB 1630, Sec. 12 of House Bill 11197 amends this Section by


clarifying that common carriers by land, air or water FOR THE
TRANSPORT OF PASSENGERS are subject to Percentage Tax equivalent
to 3% of their quarterly gross sales.
The BCC adopted this and the House Bill’s provision that the GROSS
RECEIPTS OF COMMON CARRIERS DERIVED FROM THEIR
INCOMING AND OUTGOING FREIGHT SHALL NOT BE SUBJECTED
TO THE LOCAL TAXES IMPOSED UNDER RA 7160. The Senate Bill
has no similar provision.

IX On Section 117
This Section has not been touched by either Senate and House Bills. But
the BCC amended it by subjecting franchises on ELECTRIC, GAS and
WATER UTILITIES A TAX OF TWO PERCENT (2%) ON GROSS
RECEIPTS DERIVED x x x.

X On Section 121

The BCC adopted the Senate Bills’ amendment to this section by


subjecting to 5% premium tax on life insurance business. The House Bill
does not contain this provision.

XI Others

A) The House Bill does not contain any provision on the deferment of
VAT collection on Certain Goods and Services as does the Senate
Bill (Section 19, SB 1630). But although the Senate Bill authorizes
the deferment on certain goods and services for no longer than 3
years, there is no specific provision that authorizes the President to
EXCLUDE from VAT any of these. The BCC uses the word
EXCLUDE.
B) Moreover, the Senate Bill defers the VAT on services of actors and
actresses etc. for 3 years but the BCC defers it for only 2 years.
C) Section 18 of the BCC Bill (RA 7716) is an entirely new provision
not contained in the House/Senate Bills.
D) The period within which to promulgate the implementing rules and
regulations is within 60 days under SB 1630; No specific period
under the House Bill, within 90 days under RA 7716 (BCC).
E) The House Bill provides for a general repealing clause i.e., all
inconsistent laws etc. are repealed. Section 16 of the Senate Bill
expressly repeals Sections 113, 114, 116, 119 and 120 of the code.
The same Senate Bill however contains a general repealing clause
in Sec. 21

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Tolentino vs. Secretary of Finance

thereof.

RA 7716 (BCC’s Bill) expressly repeals Sections 113, 114 and 116 of the
NIRC; Article 39 (c) (d) and (e) of EO 226 and provides the repeal of Sec.
119 and 120 of the NIRC upon the expiration of two (2) years unless
otherwise excluded by the President.”

The charge that the Bicameral Conference Committee added new


provisions in the bills of the two chambers is hardly disputed by
respondents. Instead, respondents justify them. According to
respondents: (1) the Bicameral Conference Committee has an ex
post veto power or a veto after the fact of approval of the bill by
both Houses; (2) the bill prepared by the Bicameral Conference
Committee, with its additions and deletions, was anyway approved
by both Houses; (3) it was the practice in past Congresses for
conference committees to insert in bills approved by the two Houses
new provisions that were not originally contemplated by them; and
(4) the enrolled bill doctrine precludes inquiry into the regularity of
the proceedings that led to the enactment of R.A. 7716.
With due respect, I reject these contentions which will cave in on
closer examination.
First. There is absolutely no legal warrant for the bold
submission that a Bicameral Conference Committee possesses the
power to add/delete provisions in bills already approved on third
reading by both Houses or an ex post veto power. To support this
postulate that can enfeeble Congress itself, respondents cite no3
constitutional provision, no law, not even any rule or regulation.
Worse, their stance is categorically repudiated by the rules of both
the Senate and the House of Representatives which define with
precision the parameters of power of a Bicameral Conference
Committee.
Thus, Section 209, Rule XII of the Rules of the Senate provides:

“In the event that the Senate does not agree with the House of
Representatives on the provision of any bill or joint resolution, the
differences shall be settled by a conference committee of both Houses

_______________

3 See p. 66 of the Consolidated Memorandum for Respondents where they refer to certain
statements from Canlan, Weightson and Beam but without citing their specific book or article.

812

812 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

which shall meet within ten days after their composition.


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.” (Emphasis supplied)

The counterpart rule of the House of Representatives is cast in near


identical language. Section 85 of the Rules of the House of
Representatives pertinently provides:

“In the event that the House does not agree with the Senate on the
amendments to any bill or joint resolution, the differences may be settled by
a conference committee of both chambers.
x x x. Each report shall contain a detailed, sufficiently explicit statement
of the changes in or amendments to the subject measure.” (Emphasis
supplied)
4
The Jefferson’s Manual has been adopted as a supplement to our
parliamentary rules and practice. Section 456 of Jefferson’s Manual
5
similarly confines the powers of a conference committee, viz:

“The managers of a conference must confine themselves to the differences


committed to them . . . and may not include subjects not within the
disagreements, even though germane to a question in issue.”

This rule of antiquity has been honed and honored in practice by the
Congress of the United States. Thus, it is chronicled by Floyd 6
Biddick, Parliamentarian Emeritus of the United States Senate, viz:

“Committees of conference are appointed for the sole purpose of


compromising and adjusting the differing and conflicting opinions of the
two Houses and the committees of conference alone can grant

________________

4 See Rule 49 of the Rules of the Senate.


5 See p. 22, Memorandum of Petitioners in G.R. No. 115781 citing Jefferson’s Manual and
Rules of the House of Representatives, by Lewis Deschler, Parliamentarian, U.S. Government
Printing Office, 1967, p. 264.
6 Ibid, citing Riddick, Senate Procedure: Precedents and Practices, US Senate, 1981, US
Government Printing Office, pp. 383-384.

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Tolentino vs. Secretary of Finance

compromises and modify propositions of either Houses within the limits of


the disagreement. Conferees are limited to the consideration of differences
between the two Houses.
Conferees shall not insert in their report matters not committed to them
by either House, nor shall they strike from the bill matters agreed to by both
Houses. No matter on which there is nothing in either the Senate or House
passed versions of a bill may be included in the conference report and
actions to the contrary would subject the report to a point of order.”
(Emphasis ours)

In fine, there is neither a sound nor a syllable in the Rules of the


Senate and the House of Representatives to support the thesis of the
respondents that a bicameral conference committee is clothed with
an ex post veto power.
But the thesis that a Bicameral Conference Committee can wield
ex post veto power does not only contravene the rules of both the
Senate and the House. It wages war against our settled ideals of
representative democracy. For the inevitable, catastrophic effect of
the thesis is to install a Bicameral Conference Committee as the
Third Chamber of our Congress, similarly vested with the power to
make laws but with the dissimilarity that its laws are not the subject
of a free and full discussion of both Houses of Congress. With such
a vagrant power, a Bicameral Conference Committee acting as a
Third Chamber will be a constitutional monstrosity.
It needs no omniscience to perceive that our Constitution did not
provide for a Congress composed of three chambers. On the
contrary, section 1, Article VI of the Constitution provides in clear
and certain language: “The legislative power shall be vested in the
Congress of the Philippines which shall consist of a Senate and a
House of Representatives . . . .” Note that in vesting legislative
power exclusively to the Senate and the House, the Constitution
used the word “shall.” Its command for a Congress of two houses is
mandatory. It is not mandatory sometimes.
In vesting legislative power to the Senate, the Constitution means
the Senate “. . . composed of twenty-four Senators x x x7 elected at
large by the qualified voters of the Philippines . . . .” Similarly,
when the Constitution vested the legislative power to

________________

7 Section 2, Article VI.

814

814 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

the House, it means the House “. . . composed of not more than two
hundred and fifty members x x x who shall be elected from
legislative districts x x x and those who x x x shall be elected
through a party-list system of registered
8
national, regional, and
sectoral parties or organizations.” The Constitution thus, did not
vest on a Bicameral Conference Committee with an ad hoc
membership the power to legislate for it exclusively vested
legislative power to the Senate and the House as co-equal bodies. To
be sure, the Constitution does not mention the Bicameral Conference
Committees of Congress. No constitutional status is accorded to
them. They are not even statutory creations. They owe their
existence from the internal rules of the two Houses of Congress. Yet,
respondents peddle the disconcerting idea that they should be
recognized as a Third Chamber of Congress and with ex post veto
power at that.
The thesis that a Bicameral Conference Committee can exercise
law making power with ex post veto power is freighted with
mischief. Law making his a power that can be used for good or for
ill, hence, our Constitution carefully laid out a plan and a procedure
for its exercise. Firstly, it vouchsafed that the power to make laws
should be exercised by no other body except the Senate and the
House. It ought to be indubitable that what is contemplated is the
Senate acting as a full Senate and the House acting as a full House.
It is only when the Senate and the House act as whole bodies that
they truly represent the people. And it is only when they represent
the people that they can legitimately pass laws. Laws that are not
enacted by the people’s rightful representatives subvert the people’s
sovereignty. Bicameral Conference Committees, with their ad hoc
character and limited membership, cannot pass laws for they do not
represent the people. The Constitution does not allow the tyranny of
the majority. Yet, the respondents will impose the worst kind of
tyranny—the tyranny of the minority over the majority. Secondly,
the Constitution delineated in deft strokes the steps to be followed in
making laws. The overriding purpose of these procedural rules is to
assure that only bills that successfully survive the searching scrutiny
of the proper committees of Congress and the full and

________________

8 Section 5(1), Article VI.

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Tolentino vs. Secretary of Finance

unfettered deliberations of both Houses can become laws. For this


reason, a bill has to undergo three (3) mandatory separate readings
in each House. In the case at bench, the additions and deletions
made by the Bicameral Conference Committee did not enjoy the
enlightened studies of appropriate committees. It is meet to note that
the complexities of modern day legislations have made our
committee system a significant part of the legislative process.
Thomas Reed called the committee system as “the eye, the ear, the
hand, and very often the brain of the house.” President Woodrow
Wilson of the United States once referred to the government of the
United States as “a government 9by the Chairmen of the Standing
Committees of Congress . . . .” Neither did these additions and
deletions of the Bicameral Conference Committee pass through the
coils of collective deliberation of the members of the two Houses
acting separately. Due to this shortcircuiting of the constitutional
procedure of making laws, confusion shrouds the enactment of R.A.
No. 7716. Who inserted the additions and deletions remains a
mystery. Why they were inserted is a riddle. To use a Churchillian
phrase, lawmaking should not be a riddle wrapped in an enigma. It
cannot be, for Article II, section 28 of the Constitution mandates the
State to adopt and implement a “policy of full public disclosure of
all its transactions involving public interest.” The Constitution could
not have contemplated a Congress of invisible and unaccountable
John and Mary Does. A law whose rationale is a riddle and whose
authorship is obscure cannot bind the people.
All these notwithstanding, respondents resort to the legal
cosmetology that these additions and deletions should govern the
people as laws because the Bicameral Conference Committee Report
was anyway submitted to and approved by the Senate and the House
of Representatives. The submission may have some merit with
respect to provisions agreed upon by the Committee in the process
of reconciling conflicts between S.B. No. 1630 and H.B. No. 11197.
In these instances, the conflicting provisions had been previously
screened by the proper committees, deliberated upon by both Houses
and approved by them. It is, however, a different matter with respect
to additions and deletions

________________

9 Sutherland, Statutory Construction, 3rd ed., Vol. I, p. 151.

816

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Tolentino vs. Secretary of Finance

which were entirely new and which were made not to reconcile
inconsistencies between S.B. No. 1630 and H.B. No. 11197. The
members of the Bicameral Conference Committee did not have any
authority to add new provisions or delete provisions already
approved by both Houses as it was not necessary to discharge their
limited task of reconciling differences in bills. At that late stage of
law making, the Conference Committee cannot add/ delete
provisions which can become laws without undergoing the study and
deliberation of both chambers given to bills on 1st, 2nd, and 3rd
readings. Even the Senate and the House cannot enact a law which
will not undergo these mandatory three (3) readings required by the
Constitution. If the Senate and the House cannot enact such a law,
neither can the lesser Bicameral Conference Committee.
Moreover, the so-called choice given to the members of both
Houses to either approve or disapprove the said additions and
deletions is more of an optical illusion. These additions and
deletions are not submitted separately for approval. They are tucked
to the entire bill. The vote is on the bill as a package, i.e., together
with the insertions and deletions. And the vote is either “aye” or
“nay,” without any further debate and deliberation. Quite often,
legislators vote “yes” because they approve of the bill as a whole
although they may object to its amendments by the Conference
Committee.
10
This lack of real choice is well observed by Robert
Luce:

“Their power lies chiefly in the fact that reports of conference committees
must be accepted without amendment or else rejected in toto. The impulse is
to get done with the matter and so the motion to accept has undue
advantage, for some members are sure to prefer swallowing unpalatable
provisions rather than prolong controversy. This is the more likely if the
report comes in the rush of business toward the end of a session, when to
seek further conference might result in the loss of the measure altogether. At
any time in the session there is some risk of such a result following the
rejection of a conference report, for it may not be possible to secure a
second conference, or delay may give opposition to the main proposal
chance to develop more strength.”

________________

10 Legislative Procedure, 1922 ed., Riverside Press, p. 404.

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Tolentino vs. Secretary of Finance

In a similar vein, Prof. Jack Davies commented that “conference


reports are returned to assembly and Senate on a take-it or leave-it-
basis, and the bodies are generally placed
11
in the position that to
leave-it is a practical impossibility.” Thus, he concludes that
“conference committee 12action is the most undemocratic procedure in
the legislative process.”
The respondents also contend that the additions and deletions
made by the Bicameral Conference Committee were in accord with
legislative customs and usages. The argument does not persuade for
it misappreciates the value of customs and usages in the hierarchy of
sources of legislative rules of procedure. To be sure, every
legislative assembly has the inherent right to promulgate its own
internal rules. In our jurisdiction, Article VI, section 16(3) of the
Constitution provides that “Each House may determine the rules of
its proceedings x x x.” But it is hornbook law that the sources of
Rules of Procedure are many 13
and hierarchical in character. Mason
laid them down as follows:

“x x x

1. Rules of Procedure are derived from several sources. The principal


sources are as follows:

a. Constitutional rules.
b. Statutory rules or charter provisions.
c. Adopted rules.
d. Judicial decisions.
e. Adopted parliamentary authority.
f. Parliamentary law.
g. Customs and usages.

2. The rules from the different sources take precedence in the order
listed above except that judicial decisions, since they are
interpretations of rules from one of the other sources, take the same
precedence as the source interpreted. Thus, for example, an
interpretation of a constitutional provision takes precedence over a
statute.
3. Whenever there is conflict between rules from these sources the
rule from the source listed earlier prevails over the rule from the
source

_______________

11 Legislative Law and Process in a Nut Shell, West Publishing Co., 1986 ed., p. 81.
12 Ibid.
13 Manual of Legislative Procedure for Legislative and other Governmental Bodies,
McGraw Hill Co., Inc., 1953 ed., pp. 32-33.

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818 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

listed, later. Thus, where the Constitution requires three readings of


bills, this provision controls over any provision of statute, adopted
rules, adopted manual, or of parliamentary law, and a rule of
parliamentary law controls over a local usage but must give way to
any rule from a higher source of authority.” (Emphasis ours)

As discussed above, the unauthorized additions and deletions made


by the Bicameral Conference Committee violated the procedure
fixed by the Constitution in the making of laws. It is reasonless for
respondents therefore to justify these insertions as sanctioned by
customs and usages.
Finally, respondents seek sanctuary in the conclusiveness of an
enrolled bill to bar any judicial inquiry on whether Congress
observed our constitutional procedure in the passage of R.A. No.
7716. The enrolled bill theory is a historical relic that should not
continuously rule us from the fossilized past. It should be
immediately emphasized that the enrolled bill theory originated in
England where there is no written constitution and where Parliament
14
14
is supreme. In this jurisdiction, we have a written constitution and
the legislature is a body of limited powers. Likewise, it must be
pointed out that starting from the decade of the 40’s, even American
courts have veered away from the rigidity and unrealism15of the
conclusiveness of an enrolled bill. Prof. Sutherland observed:

“x x x.
Where the failure of constitutional compliance in the enactment of
statutes is not discoverable from the face of the act itself but may be
demonstrated by recourse to the legislative journals, debates, committee
reports or papers of the governor, courts have used several conflicting
theories with which to dispose of the issue. They have held: (1) that the
enrolled bill is conclusive and like the sheriff’s return cannot be attacked;
(2) that the enrolled bill is prima facie correct and only in case the
legislative journal shows affirmative contradiction of the constitutional
requirement will the bill be held invalid, (3) that although the enrolled bill is
prima facie correct, evidence from the journals, or other extrinsic sources is
admissible to strike the bill down; (4) that the legislative journal is
conclusive and the enrolled bill is valid only if it

_______________

14 82 CJS 136.
15 Statutory Construction, 3rd ed., Vol. I., p. 223.

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Tolentino vs. Secretary of Finance

accords with the recital in the journal and the constitutional procedure.”

Various jurisdictions have adopted these alternative approaches in


view of strong dissent and dissatisfaction against the philosophical
underpinnings of the conclusiveness of an enrolled bill. Prof.
Sutherland further observed:

“x x x Numerous reasons have been given for this rule. Traditionally, an


enrolled bill was ‘a record’ and as such was not subject to attack at common
law. Likewise, the rule of conclusiveness was similar to the common law
rule of the inviolability of the sheriff’s return. Indeed, they had the same
origin, that is, the sheriff was an officer of the king and likewise the
parliamentary act was a regal act and no official might dispute the king’s
word. Transposed to our democratic system of government, courts held that
as the legislature was an official branch of government the court must
indulge every presumption that the legislative act was valid. The doctrine of
separation of powers was advanced as a strong reason why the court should
treat the acts of a co-ordinate branch of government with the same respect as
it treats the action of its own officers; indeed, it was thought that it was
entitled to even greater respect, else the court might be in the position of
reviewing the work of a supposedly equal branch of government. When
these arguments failed, as they frequently did, the doctrine of convenience
was advanced, that is, that it was not only an undue burden upon the
legislature to preserve its records to meet the attack of persons not affected
by the procedure of enactment, but also that it unnecessarily complicated
litigation and confused the trial of substantive issues.
Although many of these arguments are persuasive and are indeed the
basis for the rule in many states today, they are not invulnerable to attack.
The rule most relied on—the sheriff’s return or sworn official rule—did not
in civil litigation deprive the injured party of an action, for always he could
sue the sheriff upon his official bond. Likewise, although collateral attack
was not permitted, direct attack permitted raising the issue of fraud, and at a
later date attack in equity was also available; and that the evidence of the
sheriff was not of unusual weight was demonstrated by the fact that in an
action against the sheriff no presumption of its authenticity prevailed.
The argument that the enrolled bill is a ‘record’ and therefore
unimpeachable is likewise misleading, for the correction of records is a
matter of established judicial procedure. Apparently, the justification is
either the historical one that the king’s word could not be questioned or the
separation of powers principle that one branch of the government must treat
as valid the acts of another.

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Tolentino vs. Secretary of Finance

Persuasive as these arguments are, the tendency today is to avoid reaching


results by artificial presumptions and thus it would seem desirable to insist
that the enrolled bill stand or fall on the basis of the relevant evidence
which may be submitted for or against it.” (Emphasis ours)

Thus, as far back as the 1940’s, Prof. Sutherland confirmed that “x x


x the tendency seems to be toward the abandonment of the
conclusive presumption rule and the adoption of the third rule
leaving only a prima facie presumption of validity16which may be
attacked by any authoritative source of information.”
I am not unaware that this Court has subscribed to the
conclusiveness of an enrolled bill as enunciated in the 1947 lead 17
case of Mabanag v. Lopez Vito, and reiterated in subsequent cases.
With due respect, I submit that these rulings are no longer good
law. Part of the ratiocination in Mabanag states:

“x x x.
If for no other reason than that it conforms to the expressed policy of our
law making body, we choose to follow the rule. Section 313 of the old Code
of Civil Procedure, as amended by Act No. 2210, provides: ‘Official
documents’ may be proved as follows: * * * (2) the proceedings of the
Philippine Commission, or of any legislative body that may be provided for
in the Philippine Islands, or of Congress, by the journals of those bodies or
of either house thereof, or by published statutes or resolutions, or by copies
certified by the clerk or secretary, or printed by their order; Provided, That
in the case of Acts of the Philippine Commission or the Philippine
Legislature, when there is an existence of a copy signed by the presiding
officers and secretaries of said bodies, it shall be conclusive proof of the
provisions of such Acts and of the due enactment thereof.”

________________

16 Op. cit., pp. 224-225 citing Barndall Refining v. Welsh, 64 S.D. 647, 269 N.W.
853, 859 [1936]. Jones, Constitutional Provisions Regulating the Mechanics of
Enactment in Iowa (1935), 21 Iowa Law Rev. 79, Charlton, Constitutional Regulation
of Legislative Procedure (1936), 21 Iowa Law Rev. 538; Note (1936) 21 Iowa Law
Rev. 573.
17 See Mabanag v. Lopez Vito, 78 Phil. Rep. 1 [1947]; Casco Phil. Chemical Co. v.
Gimenez, L-17931, February 28, 1963; Morales v. Subido, No. L-29658, February 27,
1969, 27 SCRA 131; Phil. Judges Association v. Prado, G.R. No. 105371, November
11, 1993.

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Tolentino vs. Secretary of Finance

Suffice to state that section 313 of the Old Code of Civil Procedure
as amended by Act No. 2210 is no longer in our statute books. It has
long been repealed by the Rules of Court. Mabanag also relied on
jurisprudence and authorities in the United States which are under
severe criticisms by modern scholars. Hence, even in the United
States the conclusiveness of an enrolled bill has been junked by
most of the States. It is also true that as late as last year, in the case
of Philippine Judges Association v. Prado, op. cit., this Court still
relied on the conclusiveness of an enrolled bill as it refused to
invalidate a provision of law on the ground that it was merely
inserted by the bicameral conference committee of both Houses.
Prado, however, is distinguishable. In Prado, the alleged insertion
of the second paragraph of section 35 of R.A. No. 7354 repealing
the franking privilege of the judiciary does not appear to be an
uncontested fact. In the case at bench, the numerous
additions/deletions made by the Bicameral Conference Committee
as detailed by petitioners Tolentino and Salonga are not disputed by
the respondents. In Prado, the Court was not also confronted with
the argument that it can no longer rely on the conclusiveness of an
enrolled bill in light of the new provision in the Constitution
defining judicial power. More specifically, section 1 of Article VIII
now provides:

“Section 1. The judicial power shall be vested in one Supreme Court and in
such lower courts as may be established by law. Judicial power includes the
duty of the courts of justice to settle actual controversies involving rights
which are legally demandable and enforceable, and to determine whether or
not there has been a grave abuse of discretion amounting to lack or excess
of jurisdiction on the part of any branch or instrumentality of the
Government.” (Emphasis supplied)

Former Chief Justice Roberto R. Concepcion, the sponsor of this


provision in the Constitutional Commission
18
explained the sense and
the reach of judicial power as follows:

_______________

18 Record, Constitutional Commission, Vol. I, p. 436; see also, Bernas, The


Constitution of the Republic of the Philippines. A Commentary, 1988 ed., p. 255.

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822 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

“x x x.
x x x In other words, the judiciary is the final arbiter on the question of
whether or not a branch of government or any of its officials has acted
without jurisdiction or in excess of jurisdiction, or so capriciously as to
constitute an abuse of discretion amounting to excess of jurisdiction. This is
not only a judicial power but a duty to pass judgment on matters of this
nature.
This is the background of paragraph 2 of Section 1, which means that the
courts cannot hereafter evade the duty to settle matters of this nature, by
claiming that such matters constitute political question.” (Emphasis ours)

The Constitution cannot be any clearer. What it granted to this Court


is not a mere power which it can decline to exercise. Precisely to
deter this disinclination, the Constitution imposed it as a duty of this
Court to strike down any act of a branch or instrumentality of
government or any of its officials done with grave abuse of
discretion amounting to lack or excess of jurisdiction. Rightly or
wrongly, the Constitution has elongated the checking powers of this
Court against the other branches of government despite their more
democratic character, the President and the legislators being elected
by the
19
people. It is, however, theorized that this provision is nothing
new. I beg to disagree for the view misses the significant changes
made in our constitutional canvass to cure the legal deficiencies we
discovered during martial law. One of the areas radically changed by
the framers of the 1987 Constitution is the imbalance of power
between and among the three great branches of our government—
the Executive, the Legislative and the Judiciary. To upgrade the
powers of the Judiciary, the Constitutional Commission strengthened
some more the independence of courts. Thus, it further protected the
security of tenure of the members of the Judiciary by providing “No
law shall be passed reorganizing the Judiciary
20
when it undermines
the security of tenure of 21its Members.” It also guaranteed fiscal
autonomy to the Judiciary.
More, it depoliticalized appointments in the judiciary by creating
the Judicial and Bar Council which was tasked with

_______________

19 Citing Marbury v. Madison, 1 Cranch 137 L. ed [1803].


20 Article VIII, section 2.
21 Article VIII, section 3.

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VOL. 235, AUGUST 25, 1994 823


Tolentino vs. Secretary of Finance
22
screening the list of prospective appointees to the judiciary. The
power of confirming 23appointments to the judiciary was also taken
away from Congress. The President was likewise given a specific
time to fill up vacancies in the judiciary—ninety (90) days 24
from the
occurrence of the vacancy in case of the Supreme Court and ninety
(90) days from the submission of the list of recommendees by the 25
Judicial and Bar Council in case of vacancies in the lower courts.
To further insulate appointments in the judiciary from the virus of
politics, the Supreme Court was given the power to “appoint all
officials and employees
26
of the Judiciary in accordance with the Civil
Service Law.” And to make the separation of the judiciary from the
other branches of government more watertight, it prohibited
members of the judiciary to be “. . . designated to 27any agency
performing quasi judicial or administrative functions.” While the
Constitution strengthened the sinews of the Supreme Court, it
reduced the powers of the two other branches of government,
especially the Executive. Notable of the powers of the President
clipped by the Constitution is his power to suspend the writ of
habeas corpus and to proclaim martial law. The exercise of this
power is now subject to revocation by Congress. Likewise, the
sufficiency of the factual basis for the exercise of said power may be
reviewed28
by this Court in an appropriate proceeding filed by any
citizen.
The provision defining judicial power as including the “duty of
the courts of justice . . . to determine whether or not there has been a
grave abuse of discretion amounting to lack or excess of jurisdiction
on the part of any branch or instrumentality of the Government”
constitutes the capstone of the efforts of the Constitutional
Commission to upgrade the powers of this Court vis-a-vis the other
branches of government. This provision was dictated by our
experience under martial law which taught us that a stronger and
more independent judiciary is needed to abort

_______________

22 Article VIII, section 8.


23 Article VIII, section 9.
24 Article VIII, section 4(1).
25 Article VIII, section 9.
26 Article VIII, section 6.
27 Article VIII, section 12.
28 Article VII, section 18.

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824 SUPREME COURT REPORTS ANNOTATED


Tolentino vs. Secretary of Finance

abuses in government. As sharply stressed by petitioner Salonga,


this provision is distinctly Filipino and its interpretation should not
be depreciated by undue reliance on inapplicable foreign
jurisprudence. It is thus crystal clear that unlike other Supreme
Courts, this Court has been mandated by our new Constitution to be
a more active agent in annulling acts of grave abuse of discretion
committed by a branch of government or any of its officials. This
new role, however, will not compel the Court, appropriately defined
by Prof. A. Bickel as the least dangerous branch of government, to
assume imperial powers and run roughshod over the principle of
separation of power for that is judicial tyranny by any language. But
while respecting the essentials of the principle of separation of
power, the Court is not to be restricted by its non-essentials. Applied
to the case at bench, by voiding R.A. No. 7716 on the ground that its
enactment violated the procedure imposed by the Constitution in
lawmaking, the Court is not by any means wrecking the wall
separating the powers between the legislature and the judiciary. For
in so doing, the Court is not engaging in lawmaking which is the
essence of legislative power. But the Court’s interposition of power
should not be defeated by the conclusiveness of the enrolled bill. A
resort to this fiction will result in the enactment of laws not properly
deliberated upon and passed by Congress. Certainly, the enrolled bill
theory was not conceived to cover up violations of the constitutional
procedure in law making, a procedure intended to assure the passage
of good laws. The conclusiveness of the enrolled bill can, therefore,
be disregarded for it is not necessary to preserve the principle of
separation of powers.
In sum, I submit that in imposing to this Court the duty to annul
acts of government committed with grave abuse of discretion, the
new Constitution transformed this Court from passivity to activism.
This transformation, dictated by our distinct experience as a nation,
is not merely evolutionary but revolutionary. Under the 1935 and
1973 Constitutions, this Court approached constitutional violations
by initially determining what it cannot do; under the 1987
Constitution, there is a shift in stress—this Court is mandated to
approach constitutional violations not by finding out what it should
not do but what it must do. The Court must discharge this solemn
duty by not resuscitating a past that petrifies the present.

825

VOL. 235, AUGUST 25, 1994 825


Tolentino vs. Secretary of Finance

I vote to declare R.A. No. 7716 unconstitutional.


Petitions dismissed.

Notes.—Despite the inhibitions pressing upon the Court when


confronted with constitutional issues, it will not hesitate to declare a
law or act invalid when it is convinced that this must be done. In
arriving at this conclusion, its only criterion will be the Constitution
and God as its conscience gives it in the light to probe its meaning
and discover its purpose. Personal motives and political
considerations are irrelevancies that cannot influence its decisions.
(Luz Farms vs. Secretary of the Department of Agrarian Reform,
192 SCRA 51 [1990])
We start with the established principle that the exclusive nature
of any public franchise is not favored. We may interpret in favor of
exclusiveness only when the statute grants it in express, clear, and
unmistakable terms. In all grants by the government to private
corporations, the interpretation of rights, privileges, or franchises is
taken against the grantee. Whatever is not clearly and expressly
granted is withheld. (Alger Electric, Inc. vs. Court of Appeals, 135
SCRA 37 [1985])

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