SEC.

26 – SUBJECT AND TITLE OF BILLS; READING AND JOURNAL

ASTORGA V. VILLEGAS
G.R NO. – 23475
FACTS:
House bill No. 9266 was filed in the HOR and was filed without amendments on its third
reading.
When the bill wa discussed on the floor of the Senate on the second reading, substantial
amendments to Section 1 were introduced by Senator Arturo Tolentino and was approved in toto
by the Senate. However, the amendment recommended by Senator Roxas did not appear in the
journal of the Senate proceedings as having been acted upon.
The House bill no. 9266 was approved and thereafter became RA No. 4065 “An Act Defining
the Powers, Rights and Duties of the Vice-Mayor of the City of Manila, further amending for the
purpose sections 10 and 11 of RA No. 409, as amended, otherwise known as the Revised Charter
City of Manila”
Senator Tolentino issued a press statement that the enrolled copy of the said bill signed into law
by the President of the Philippines was a wrong version of the bill actually passed by the Senate
because it did not embody the amendments that were introduced by him and approved on the
Senate floor.
As a consequence, the Senate President, through the Secretary of the Senate addressed a letter to
the President of the Philippines explaining that the enrolled copy of the House Bill no. 9266
signed by the secretaries of both Houses as well as by the presiding officers thereof was not the
bill that was duly approved by the Congress and that he considered his signature on the enrolled
bill as invalid and no effect.
A subsequent letter dated made the further clarification that the invalidation by the Senate
President of his signature meant that the bill on which his signature appeared had never been
approved by the Senate and therefore the fact that he and the Senate Secretary had signed it did
not make the bill a valid enactment. The President then withdrew his signature on the House Bill
and averred that “it would be untenable and against public policy to convert into law what was
actually not approved by both houses of the Congress.
Respondent Antonio Villegas issued circulars to the dept. heads and chiefs of offices et al. to
disregard the provisions of RA No. 4065.
Reacting to the steps taken by the defendant, petitioner and then Vice-Mayor Herminio Astorga
filed a petition for Mandamus, Injunction etc. to compel respondents Mayor of Manila Mayor of
Manila, the Executive Secretary, the Commissioner of Civil Service, the Manila Chief of Police,
the Manila City Treasurer and the members of the municipal board to comply with the provisions
of Republic Act 4065.
Respondents' position is that the so-called Republic Act 4065 never became law since it was not
the bill actually passed by the Senate, and that the entries in the journal of that body and not the
enrolled bill itself should be decisive in the resolution of the issue
Issue: Whether or not RA 4065 was validly passed into law
Held:
No.
ENROLLED BILL DOCTRINE
The enrolled bill theory is based mainly on “the respect due to coequal and independent
departments. which requires the judicial department to accept, as having passed Congress, all
bills authenticated in the manner stated. If the attestation is absent and the same is not required
for the validity of a statute, the courts may resort to the journals and other records of Congress
for proof of its due enactment.
That attestation of the presiding officers of Congress is conclusive proof of due enactment of the
law cannot apply in this case because the Senate President himself had already declared his
signature on the bill to be invalid. Thus, the enrolled bill doctrine cannot apply.
CERTIFICATION OF BILLS
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
by Congress and not the signatures of the presiding officers that is essential.
LEGISLATIVE JOURNALS
While it is true that the journal is not authenticated and is subject to the risks of misprinting and
other errors, the point is irrelevant in this case. The Court is merely asked to inquire whether the
text of House Bill No. 9266 signed by the chief Executive was the same text passed by both
Houses of Congress. Under the specific facts and circumstances of this case, this Court can do
this and resort to the Senate journal for the purpose.
Wherefore, the law in question was declared as not have been duly enacted and therefore did not
become law.
PHILCONSA V. GIMENEZ
GR. NO – 23326
FACTS:
Petitioner Philippine Constitution Association In. (Philconsa) filed a petition for prohibition with
preliminary injunction to restrain the Auditor General of the Philippines and the disbursing
officers of both Houses of the Congress from passing in audit the vouchers and from
countersigning the checks or treasury warrants for the payment to any former Senator or Member
of the HOT of retirement and vacation pursuant to RA No. 3836 and also from restraining the
respondent restraining the respondent disbursing officers of the House and Senate, respectively,
and their successors in office from paying the said retirement and vacation gratuities.
The petitioner challenged the constitutionality of such law because the provision for the
retirement of the members and officers of the Congress is not expressed in the title of the bill, in
violation of section 21 of Art. VI of the Constitution.
The Solicitor General’s Office in representation of the respondent, Pedro Gimenez filed its
answer and contended that the title of the law in question sufficiently complies with the
provisions of Section 21, Article VI of the Constitution which provides that “no bill may be
enacted into law shall embrace more than one subject which shall be expressed in the bill”
Issue:  Whether or not the title of Republic Act No. 3836 is germane to the subject matter
expressed in the act.
Held:

No. It is to be observed that under Republic Act 3836, amending the first paragraph of section
12, subsection (c) of Commonwealth Act 186, as amended by Republic Acts Nos. 660 and. 3096,
the retirement benefits are granted to members of the Government Service Insurance System,
who have rendered at least twenty years of service regardless of age. This paragraph is related
and germane to the subject of Commonwealth Act No. 186.

On the other hand, the succeeding paragraph of Republic Act 3836 refers to members of
Congress and to elective officers thereof who are not members of the Government Service
Insurance System. To provide retirement benefits, therefore, for these officials, would relate to
subject matter which is not germane to Commonwealth Act No. 186. In other words, this portion
of the amendment (re retirement benefits for Members of Congress and elected officers, such as
the Secretary and Sergeants-at-arms for each House) is not related in any manner to the subject
of Commonwealth Act 186 establishing the Government Service Insurance System and which
provides for both retirement and insurance benefits to its members.

Parenthetically, it may be added that the purpose of the requirement that the subject of an Act
should be expressed in its title is fully explained by Cooley, thus: (1) to prevent surprise or fraud
upon the Legislature; and (2) to fairly apprise the people, through such publication of legislation
that are being considered, in order that they may have the opportunity of being heard thereon by
petition or otherwise, if they shall so desire (Cooley, Constitutional Limitations, 8th ed., Vol. 1,
p. 162; See also Martin, Political Law Reviewer, Book One [1965], p. 119)

With respect to sufficiency of title this Court has ruled in two cases:

The Constitutional requirement with respect to titles of statutes as sufficient to reflect

their contents is satisfied if all parts of a law relate to the subject expressed in its title, and
it is not necessary that the title be a complete index of the content. (People v. Carlos, 78
Phil. 535)

The Constitutional requirement that the subject of an act shall be expressed in its title
should be reasonably construed so as not to interfere unduly with the enactment of
necessary legislation. It should be given a practical, rather than technical, construction. It
should be a sufficient compliance with such requirement if the title expresses the general
 subject and all the provisions of the statute are germane to that general subject.
(Sumulong v. The Commission on Elections, 73 Phil. 288, 291)

In the light of the history and analysis of Republic Act 3836, We conclude that the title of said
Republic Act 3836 is void as it is not germane to the subject matter and is a violation of the
aforementioned paragraph 1, section 21, Article VI of the Constitution.

In short, Republic Act 3836 violates three constitutional provisions, namely: first, the prohibition
regarding increase in the salaries of Members of Congress; second, the equal protection clause;
and third, the prohibition that the title of a bill shall not embrace more than one subject.

IN VIEW OF THE FOREGOING CONSIDERATIONS, Republic Act No. 3836 is hereby

declared null and void, in so far as it refers to the retirement of Members of Congress and the
elected officials thereof, as being unconstitutional.

INSULAR LUMBER COMPANY V. CTA

GR. NO – 31057
FACTS:
Petitioner Insular Lumber Company, a corporation organized and existing under the laws of New
York and duly authorized to do business in the Philippines is a licensed forest concessionaire.
The Company purchase manufactured oil and motor fuel which it used in the operation of the
forest concession, sawmill, planning mills etc. on which specific tax was paid.
The Company filed with the Commissioner of Internal Revenue a claim of refund of P19,921
representing 25% of the specific tax paid on the manufactured oil and fuel used in its operations
pursuant to the provisions of Section 5, RA. No. 1435.
However, the commissioner denied the Company’s claim for refund on the ground that the
privilege tax refund granted by Section 5, RA. No. 1435 to those using oil in the operation of
forest and mining concessions is only limited to a period of after 5 years from the date of the
effectivity if the Act (July 14,1956). Consequently, oil used in concession after 1962 are subject
to full tax prescribed in Section 142 of the National Internal Revenue Code.
 Respondent court, however, did not allow the refund of the full amount of P14,598.08 because
the Company's right to claim the refund of a portion thereof, particularly those paid during the
period from January 1, 1963 to April 29, 1963 had already prescribed. Hence, the Company was
credited the refund of P10,560.20 only. Both parties appealed from the decision of the Court of
Tax Appeals.
In his appeal, respondent commissioner contended that the first proviso in Section 5 of RA. No.
1435 is unconstitutional in violation of Art. VI Section 21 of the Constitution which read:
“No bill which may be enacted into law shall embrace more than one subject which shall be
expressed in the title”
The title of that Act in question read “An Act to Provide Means for Increasing the Highway
Special Fund”. However, Section 5 of the same Act dealt with another subject which is the
partial exemption of miners and loggers. And tills partial exemption on which the Company
based its claim for refund is clearly not expressed in the title of the aforesaid Act. More
importantly, Section 5 provides for a decrease rather than an increase of the Highway Special
Fund.
Issue: Whether or not RA, No. 1435 violates one title clause as provided by the Constitution
Held:
No. the law in question only dealt with one subject and proclaims just one policy which is the
necessity for increasing the Highway Special Fund through the imposition of an increased
special tax on manufactured oil. The primary purpose of the quoted constitutional provision is to
prohibit duplicity in legislation the title of which might completely fail to apprise the legislators
or the public of the nature, scope and consequences of the law or its operation.  This does not
seem to this Court to have been ignored in the passage of Republic Act No. 1435 since, as the
records of its proceedings bear out, a full debate on precisely the issue of whether its title reflects
its complete subject was held by Congress which passed it.  Furthermore, in deciding the
constitutionality of a statute alleged to be defectively titled, every presumption favors the validity
of the Act. As is true republic in cases presenting other constitutional issues, the courts avoid
declaring an Act unconstitutional whenever possible. Where there is any doubt as to the
insufficiency of either the title, or the Art, the legislation should be sustained.  In the incident on
hand, this Court does not even have any doubt.
On the question of claim of refund
the Company is not entitled to the claim for refund for the oils used from January 1, 1963 to
April 29, 1963, on the ground that the right to claim refund of the tax in question paid during the
said periods has prescribed, the petition for review having been filed with the respondent court
only on April 29, 1965, which was beyond the two-year prescriptive period provided for in
Section 306 of the Tax Code. The partial refund of specific tax paid for oils used in agriculture
and aviation is limited to only 5 years while there is not time for the partial refund of specific tax
paid for oils used by miners and forest concessionaries. We find no basis in applying the
limitation of the operative period provided for oils used in agriculture and aviation to the
provision on the refund to miners and forest concessionaires. It should be noted that Section 5
makes reference to subparagraphs 1 and 2 of Section 1 only for the purpose of prescribing the
procedure for refund. This express reference cannot be expanded in scope to include the
limitation of the period of refund. If the limitation of the period of refund of specific taxes paid
on oils used in aviation and agriculture is intended to cover similar taxes paid on oil used by
miners and forest concessionaires there would have been no need of dealing with oil used in
mining and forest concessions separately and Section 5 should very well have been included in
Section 1 of Republic Act No. 1435, notwithstanding the different rate of exemption.
Wherefore, the judgement is rendered affirming the decision of the Court of Tax Appeals.
Franking Privilege – free charge of postage/ sending mail without payment
PHIL JUDGES ASSOCIATION V. PRADO
1993
GR. NO – 105371
FACTS:
The petitioners Philippine Judges Association as members of the lower courts felt that their
official functions as judges will be prejudiced by the measures pursuant to Section 35 of RA No.
7354 “An Act Creating the Philippine Postal Corporation, Defining its Powers , Functions and
Responsibilities, Providing for Regulation of the Industry and for Other Purposes Connected
Therewith” as implemented by the Philippine Postal Corporation through its Circular No. 92-28
which withdrew the franking privilege from the SC, CA, RTC, MTC, the Land Registration
Commission and its Register of Deeds along with certain other government offices. The National
Land Registration Authority has also taken a common cause with them insofar as its own
activities, such as sending of requisite notices in registration cases, affect judicial proceedings.
The petition assailed the constitutionality of RA No. 7354 on the grounds that:
 Its title embraced more than one subject and does not express its purposes
 It did not pass the required readings in both Houses of the Congress and the printed
copies of the bill in its final form were not distributed among the members before its
passage
 It is discriminatory and encroached the independence of the judiciary
Issue: Whether or not RA. No 7354 is constitutional
Held: No.
On the question of the one subject rule: It only contained one subject
The purposes of this rule are: (Additional info)
(1) to prevent hodge-podge or "log-rolling" legislation;
(2) to prevent surprise or fraud upon the legislature by means of provisions in bills of which the
title gives no intimation, and which might therefore be overlooked and carelessly and
unintentionally adopted
(3) to fairly apprise the people, through such publication of legislative proceedings as is usually
made, of the subject of legislation that is being considered, in order that they may have
opportunity of being heard thereon, by petition or otherwise, if they shall so desire.
R.A. No. 7354 is entitled "An Act Creating the Philippine Postal Corporation, defining its
Powers, Functions and Responsibilities, Providing for Regulation of the Industry and for Other
Purposes Connected Therewith. Its main objectives centered on the speedy and economical
transfer of mail, international interchange, wide range of postal services etc.

Section 35 of its repealing clause of the same Act contained: All franking privileges authorized
by law are hereby repealed. Sec. 35. Repealing Clause. — All acts, decrees, orders, executive
orders, instructions, rules and regulations or parts thereof inconsistent with the provisions of this
Act are repealed or modified accordingly
The title of the bill is not required to be an index to the body of the act or to be as comprehensive
as to cover every single detail of the measure. It should be noted that if the title fairly indicates
the general subject, and reasonably covers all the provisions of the act, and is not calculated to
mislead the legislature or the people, then there is sufficient compliance with the constitutional
requirement. We are convinced that the withdrawal of the franking privilege from some agencies
is germane to the accomplishment of the principal objective of R.A. No. 7354, which is the
creation of a more efficient and effective postal service system. Our ruling is that, by virtue of its
nature as a repealing clause, Section 35 did not have to be expressly included in the title of the
said law
On the question of It did not pass the required readings in both Houses of the Congress and the
printed copies of the bill in its final form were not distributed among the members before its
passage
The court held that it is not within its jurisdiction to settle such argument based on the doectrin of
separation of powers. They affirmed that both the enrolled bill and the legislative journals
certified that the measure was duly enacted.
On the question of its constitutionality:

The court was unable to agree with the respondents that Section 35 of R.A. No. 7354 represents a
valid exercise of discretion by the Legislature under the police power. On the contrary, we find
its repealing clause to be a discriminatory provision that denies the Judiciary the equal protection
of the laws guaranteed for all persons or things similarly situated. The distinction made by the
law is superficial. It is not based on substantial distinctions that make real differences between
the Judiciary and the grantees of the franking privilege.

This is not a question of wisdom or power into which the Judiciary may not intrude. It is a matter
of arbitrariness that this Court has the duty and power to correct

Wherefore, RA No. 7354 was declared as unconstitutional

 PRESIDENTIAL VETO
iiib2) Partial veto. As a rule, a partial veto is invalid. It is allowed only for particular items in an
appropriation, revenue or tariff bill.
The President cannot veto part of an item in an appropriation bill while approving the remaining
portion of the item. Furthermore, the President cannot set aside a judgment of the Supreme
Court; neither can the veto power be exercised as a means of repealing R.A. 1797. The veto also
impairs the fiscal autonomy of the Judiciary, and deprives retired justices of the right to a
pension vested under R.A. 1797.

GONZALES V. MACARAIG
1990
GR. NO 87636
FACTS:

Congress passed House Bill no. 19186 “General Appropriations Bill for the Fiscal Year 1989
which the President subsequently signed into law and declared it RA No. 6688. In the process,
seven special provisions and section 55 (a general provision) were vetoed.
The petitioners Neptali Gonzales et. Al filed a petition for prohibition / mandamus with a prayer
for the issuance of writ of preliminary Injunction and Restraining Order assailing the
constitutionality of the Presidential Veto of Section 55 of the law in question and seeked to
enjoin the respondents Macaraig et al. from implementing RA. No 6688.
(vetoed section) Section 55 – Prohibition Against the Restoration or Increase of Recommended
Appropriations Disapproved and or Reduced by Congress
Reason for its veto – Such provision violates Section 25 Art. VI

1. “No law shall be passed authorizing any transfer of appropriations; however, the
President, the President of the Senate, the Speaker of the House of Representatives, the
Chief Justice of the Supreme Court, and the heads of Constitutional Commissions may,
by law, be authorized to augment any item in the general appropriations law for their
respective offices from savings in other items of their respective appropriations”

 The petitioners contended that:

  The President’s veto power with appropriation bills is limited to item/s and does not
cover provisions; therefore, exceeding her authority when she vetoed Section 55
  the item-veto power does not carry with it the power to strike out conditions or
restrictions for that would be legislation, in violation of the doctrine of separation of
powers; and
 the power of augmentation in Article VI, Section 25 [5] of the 1987 Constitution, has to
be provided for by law and, therefore, Congress is also vested with the prerogative to
impose restrictions on the exercise of that power.
Issue: Whether or not the President exceeded the item-veto power accorded by the Constitution
Held:
No. As specified in accordance to the Constitution, the President may not veto less than all of an
item of an Appropriation Bill. The power given the Executive to disapprove any item or items in
the Appropriation Bill does not grant the authority to veto a part of an item and to approve the
remaining portion of the same item.
However, the interpretation urged by the petitioners that the President may not veto a provision
without vetoing the entire bill not only disregards the basic principle that a distinct and severable
part of a bill may be the subject of a separate veto but also overlooks the Constitutional mandate
that any provision in the general appropriations bill shall relate specifically to some particular
appropriation therein and that any such provision shall be limited in its operation to the
appropriation to which it relates (1987 Constitution, Article VI, Section 25 [2]). In other words,
in the true sense of the term, a provision in an Appropriations Bill is limited in its operation to
some particular appropriation to which it relates, and does not relate to the entire bill.
As to the question of the validity of the veto:
The President vetoed Section 55 and 16 simply because it nullified the authority of the Chief
Executive and heads of different branches of the government to augment any item in the General
Appropriations Law for their respective offices from savings in other items of their respective
appropriations pursuant to Art. VI Section 25 of the Constitution which reads:
"Sec. 25. No law shall be passed authorizing any transfer of appropriations; however, the
President, the President of the Senate, the Speaker of the House of Representatives, the Chief
Justice of the Supreme Court, and the heads of Constitutional Commissions may, by law, be
authorized to augment any item in the general appropriations law for their respective offices
from savings in other items of their respective appropriations.”
If, indeed, the legislature believed that the exercise of the veto powers by the executive were
unconstitutional, the remedy laid down by the Constitution is crystal clear. A Presidential veto
may be overriden by the votes of two-thirds of members of Congress (1987 Constitution, Article
VI, Section 27[1], supra). But Congress made no attempt to override the Presidential veto.
Petitioners’ argument that the veto is ineffectual so that there is "nothing to override" (citing
Bolinao) has lost force and effect with the executive veto having been herein upheld.
As we see it, there need be no future conflict if the legislative and executive branches of
government adhere to the spirit of the Constitution, each exercising its respective powers with
due deference to the constitutional responsibilities and functions of the other. Thereby, the
delicate equilibrium of governmental powers remains on even keel.

WHEREFORE, the constitutionality of the assailed Presidential veto is UPHELD and this
Petition is hereby DISMISSED
BENGZON V. DRILON
G.R. NO – 103524
1992
FACTS:
Petitioners Bengzon et al. were retired justices of the SC and CA who were receiving monthly
pensions under RA No. 910 as amended by RA No. 1797. They filed a petition assailing the
constitutionality of the veto of the President of certain provisions in the General Appropriations
Act for the Fiscal Year 1992 relating to the adjusted pensions of the petitioners. They also
contended that PD. No 664 repealing RA. No 1797 did not become law because there was no
valid publication pursuant to Tanada v. Tuvera. Presidential Decree 644 promulgated on January
24, 1975 appeared for the first time only in the supplemental issue of the Official Gazette,
purportedly dated April 4, 1977 but published only on September 5, 1983. Since Presidential
Decree 644 has no binding force and effect of law, it therefore did not repeal Republic Act No.
1797
RA no. 910 was enacted to provide the pensions of Justices of the SC and the CA who have
rendered at least 20 years of service either in the Judiciary or in the other branches, having
attained the age of 70 or who resigned by reasons of incapacity to discharge their duties.
RA No. 910 was amended by RA No. 1797 which provided that:
Sec. 3-A. In case the salary of Justices of the Supreme Court or of the Court of Appeals is
increased or decreased, such increased or decreased salary shall, for purposes of this Act, be
deemed to be the salary or the retirement pension which a Justice who as of June twelve,
nineteen hundred fifty-four had ceased to be such to accept another position in the Government
or who retired was receiving at the time of his cessation in office. Provided, that any benefits that
have already accrued prior to such increase or decrease shall not be affected thereby.
President Marcos repealed Section 3A of RA No. 1797 and amended RA NO. 1568 which
adjusted the pension of the retired Justices of the Supreme Court, CA, Chairman and members of
the Constitutional Commissions and the officers and members of the Armed Forces to the
prevailing rates of salaries.
The Congress approved a bill for the reenactment of the repealed provisions of RA No. 1797
after they’ve realized the unfairness and discrimination against the parties affected.
President Aquino vetoed HB. No 16297 on the ground that it would erode the very foundation of
the Government’s collective effort to adhere faithfully to and enforce strictly the policy on
standardization of compensation as actuated in RA No. 6758 “Compensation and Position
Classification Act of 1989. She further added that the Government should not grant distinct
privileges to select group of officials whose retirement benefits under existing laws already enjoy
preferential treatment over those of the vast majority of our civil service servants."
Issue: Whether or not the subject veto is not an item veto
Held: No. The act of the Executive in vetoing the particular provisions is an exercise of a
constitutionally vested power. However, it also provides limitations as to its exercise. The veto
power is not absolute.
The President shall have the power to veto any particular item or items in an appropriation,
revenue or tariff bill but the veto shall not affect the item or items to which he does not object.
(Section 27(2), Article VI, Constitution)

The OSG is correct when it states that the Executive must veto a bill in its entirety or not at all.
He or she cannot act like an editor crossing out specific lines, provisions, or paragraphs in a bill
that he or she dislikes. In the exercise of the veto power, it is generally all or nothing. However,
when it comes to appropriation, revenue or tariff bills, the Administration needs the money to
run the machinery of government and it cannot veto the entire bill even if it may contain
objectionable features. The President is, therefore, compelled to approve into law the entire bill,
including its undesirable parts. It is for this reason that the Constitution has wisely provided the
"item veto power" to avoid inexpedient riders being attached to an indispensable appropriation or
revenue measure.

The Constitution provides that only a particular item or items may be vetoed. The power to
disapprove any item or items in an appropriate bill does not grant the authority to veto a part of
an item and to approve the remaining portion of the same item. (Gonzales v. Macaraig, Jr., 191
SCRA 452, 464 [1990])

We distinguish an item from a provision in the following manner:

The terms item and provision in budgetary legislation and practice are concededly

different. An item in a bill refers to the particulars, the details, the distinct and
severable parts . . . of the bill (Bengzon, supra, at 916.) It is an indivisible sum of
money dedicated to a stated purpose (Commonwealth v. Dodson, 11 S.E. 2d 120,
124, 125, etc., 176 Va. 281) The United States Supreme Court, in the case
of Bengzon v. Secretary of Justice (299 U.S. 410, 414, 57 Ct. 252, 81 L. Ed,
312) declared "that an "tem" of an appropriation bill obviously means an
item which in itself is a specific appropriation of money, not some general
provision of law, which happens to be put into an appropriation bill."

Wherefore, the questioned veto is set aside as illegal and unconstitutional. The vetoed provisions
of the 1992 Appropriations Act are declared valid and subsisting.
 SEC. 28 – TAXATION
Power of Taxation.
Limitations:
i) Rule of taxation shall be uniform and equitable.
Congress shall evolve a progressive system of taxation.
ii) Charitable institutions, etc., and all lands, building and improvements actually,
directly and exclusively used for religious, charitable or educational purposes
shall be exempt from taxation [Sec. 28(3), Art. VI]. See Lladoc v. Commissioner
of Internal Revenue, 14 SCRA 292; Province of Abra v. Hernando, 107 SCRA
104.
iii) All revenues and assets of non-stock, non-profit educational institutions used
actually, directly and exclusively for educational purposes shall be exempt from
taxes and duties [Sec. 4(3), Art. XIV]. See Abra Valley College v. Aquino, 162
SCRA 106. iv) Law granting tax exemption shall be passed only with the
concurrence of the majority of all the members of Congress [Sec. 29(4), Art. VI].
THE COMMISSIONER OF INTERNAL REVENUE V. LINGAYEN GULF ELECTRIC
POWER
G.R. NO – 23771
1988
FACTS:
Petitioner The Bureau of Internal Revenue (BIR) assessed against and demanded from the
private respondent Lingayen Gulf Electric Power (operated an electric power plant in Lingayen
and Pangasinan)the total amount of P19,293 representing deficiency franchise taxes and
surcharges for the years 1946 to 1954 applying the franchise tax rate of 5% as prescribed in
Section 259 of the National Internal Revenue Code instead of the lower rates as provided in the
municipal franchises.
The private respondent requested for a reinvestigation on the case on the ground that instead of
incurring a deficiency liability, it made an overpayment of the franchise tax.
The Commissioner then demanded from the private respondent the payment of P3,616.86
representing the deficiency franchise tax and surcharges for the years 1959 to 1961 again
applying the franchise tax rate of 5% on gross receipts as prescribed in Section 259 of the
National Internal Revenue Code in which the private respondent protested and requested its
reconsideration.
RA. No 3834 was then passed which granted the private respondent a legislative franchise for the
operation of the electric light, heat and power system in the same municipalities of Pangasinan.
The respondent court ruled that the provisions of RA No. 3834 should apply and dismissed the
claim of the petitioner Commissioner of Internal Revenue

Issue:
 Whether or not the 5% franchise tax prescribed in Section 259 of the National Internal
Revenue Code assessed against the private respondent on its gross receipts realized
before the effectivity of RA No. 3843 is collectible.
 Whether or not Section 4 of RA. No. 3843 is unconstitutional for being violative of the
“uniformity and equality of taxation” clause of the Constitution.

Held:
 No. The private respondent was liable to pay only 2% franchise tax, effective from the
date of the original municipal franchise was granted. RA No. 3843 granted the private
respondent a legislative franchise amending, altering or even repealing the original
municipal franchises and providing that the private respondent should pay only a 2% on
its gross receipts "in lieu of any and all taxes and/or licenses of any kind, nature or
description levied, established, or collected by any authority whatsoever, municipal,
provincial, or national, now or in the future ... and effective further upon the date the
original franchise was granted, no other tax and/or licenses other than the franchise tax of
two per centum on the gross receipts ... shall be collected, any provision of law to the
contrary notwithstanding.”
 No. A tax is uniform when it operates the same force and effect in every place where the
subject is found. Uniformity means that all property belonging to the same class shall be
taxed alike. The Legislature has the inherent power to not only select the subjects of
taxation but also to grant exemptions which have never been violative of the equal
protection clause. The respondents were granted subject to the terms and conditions
established in Act No. 3836 as amended by C.A. No. 132 and such conditions identify the
private respondent’s power plant as falling within the class of power plants created by the
aforementioned Act. R.A-No. 3843 merely transferred the petitioner's power plant from
that class provided for in Act No. 667, as amended, to which it belonged until the
approval of R.A- No. 3843, and placed it within the class falling under Act No. 3636, as
amended. Thus, it only effected the transfer of a taxable property from one class to
another.
Wherefore, the appealed decision of the respondent Court of Tax Appeals is affirmed.

ii) Charitable institutions, etc., and all lands, building and improvements actually, directly
and exclusively used for religious, charitable or educational purposes shall be exempt from
taxation [Sec. 28(3), Art. VI]. See Lladoc v. Commissioner of Internal Revenue

LLADOC V. CIR
G.R NO – 19201
1965
FACTS:
The M.B Estate Inc. of Bacolod City donated P10,000 in cash to Rev. Fr. Crispin Ruiz who
was then the parish priest of Victorias in Negros Occidental and the predecessor of the
petitioner Rev. Fr. Casimiro Lladoc for the construction of a new Catholic Church in the
locality. The amount was used for the purpose intended.
The donor, M.B. Estate, Inc. filed the donor’s gift tax return. The respondent Commissioner
of Internal Revenue issued an assessment for the donee’s gift tax against the Parish of
Victorias of which the petitioner was the priest. The tax amounted to P1370 including the
surcharged, interests of 1% monthly and the compromise foe the late filing of the return.
The petitioner filed for a protest to the assessment and requested for the withdrawal thereof
contending that at the time of the donation, he was not the parish priest of Victorias and
therefore, he should not be liable for the donee’s gift tax. He also contended that the
assessment of the gift tax, even against the Roman Catholic Church would not be valid
because of its violation to the Constitution.
The protest was denied by the respondent Commission on Internal Revenue.
Issue: Whether or not the petitioner is liable for the donee’s gift tax on the P10,000 donated
for the construction of the Victorias Parish Church
Held:
Yes.
Section 22 (3), Art. VI of the Constitution of the Philippines, exempts from taxation
cemeteries, churches and parsonages or convents, appurtenant thereto, and
all lands, buildings, and improvements used exclusively for religious purposes. The
exemption is only from the payment of taxes assessed on such properties enumerated, as
property taxes, as contra distinguished from excise taxes.
 In the case at bar, the Collector assed a donee’s gift tax and not the property gift tax
enumerated in the aforementioned provision. gift tax is not within the exempting provisions
of the section just mentioned. A gift tax is not a property tax, but an excise tax imposed on
the transfer of property by way of gift inter vivo, the imposition of which on property used
exclusively for religious purposes, does not constitute an impairment of the Constitution. As
well observed by the learned respondent Court, the phrase "exempt from taxation," as
employed in the Constitution should not be interpreted to mean exemption from all kinds of
taxes. And there being no clear, positive or express grant of such privilege by law, in favor of
petitioner, the exemption herein must be denied.
The Head of the Diocese, to which the Parish Victorias pertains is liable for the payment
thereof.
THE PROVINCE OF ABRA V. HERNANDO
G.R NO – 49336
1981
FACTS:
The petitioner the Province of Abra represented by Lancheta filed a petition for certiorari and
mandamus against the respondent Judge Harold Hernando.
A tax assessment was made by the Provincial Assessor on the properties of the respondent
Roman Catholic Bishop, the petitioner failed to exhaust the administrative remedies available
under PD. 464 before filing such court action.
Further, it was pointed out to respondent Judge that he failed to abide by the pertinent
provision of such Presidential Decree which provides as follows: "No court shall entertain
any suit assailing the validity of a tax assessed under this Code until the taxpayer, shall have
paid, under protest, the tax assessed against him nor shall any court declare any tax invalid by
reason of irregularities or informalities in the proceedings of the officers charged with the
assessment or collection of taxes, or of failure to perform their duties within this time herein
specified for their performance unless such irregularities, informalities or failure shall have
impaired the substantial rights of the taxpayer; nor shall any court declare any portion of the
tax assessed under the provisions of this Code invalid except upon condition that the taxpayer
shall pay the just amount of the tax, as determined by the court in the pending proceeding."
 The respondent judge averred that the properties of the respondent Roman Catholic Bishop
of Bangued are the real properties to be sought which was subject to be taxed by the Province
of Abra. He also stated that Likewise, there is no dispute that the properties including their
procedure are actually, directly and exclusively used by the Roman Catholic Bishop of
Bangued, Inc. for religious or charitable purposes." 8 For him then: "The proper remedy of
the petitioner is appeal and not this special civil action."
Issue: Whether or not the properties of the Bishop of Bangued are tax exempt
Held:
No. The judge would not have been erred if he had compared the provisions of the previous
and the present Constitution.
The present Constitution added “charitable institutions, mosques and non-profit cemeteries”
required for the exemption of “lands buildings and improvements”. They should not only be
exclusively but also “actually” and “directly” used for religious or charitable purposes.
There must be proof therefore of the actual and direct use of the lands, buildings, and
improvements for religious or charitable purposes to be exempt from taxation. iI has been the
constant and uniform holding that exemption from taxation is not favored and is never
presumed, so that if granted it must be strictly construed against the taxpayer. Affirmatively
put, the law frowns on exemption from taxation, hence, an exempting provision should be
construed strictissimi juris." All that was alleged in the petition for declaratory relief filed by
private respondents, after mentioning certain parcels of land owned by it, are that they are
used "actually, directly and exclusively" as sources of support of the parish priest and his
helpers and also of private respondent Bishop. 
It clearly appears, therefore, that in failing to accord a hearing to petitioner Province of Abra
and deciding the case immediately in favor of private respondent, respondent Judge failed to
abide by the constitutional command of procedural due process.
Wherefore, the petition is granted.
iii) All revenues and assets of non-stock, non-profit educational institutions used actually,
directly and exclusively for educational purposes shall be exempt from taxes and duties [Sec.
4(3), Art. XIV]. See Abra Valley College v. Aquino, 162 SCRA 106.
ABRA VALLEY COLLEGE V. AQUINO
GR. NO 39086
1988
FACTS:
Petitioner Abra Valley College, an educational corporation and institution of higher learning
filed a complaint to annul and declared void the “Notice of Seizure” and the “Notice of Sale” pf
its lot and building in Bangued Abra for non-payment of real estate taxes and penalties
amounting to P5,140. The Notice of Sale was caused to be served upon by the petitioner by
respondents Municipal and Provincial Treasurer for the sale at public auction of said college and
building. Dr. Millare, then municipal Mayor of Bangued offered the highest bid which was duly
accepted.
The petitioners contended that the notice of seizure and sale were void because:
 The lot and property in question was used for educational purposes of the college
 As the permanent residence of the President and Director Mr. Borgonioa including his
family
 or commercial purposes because the ground floor of the college building is being used
and rented by a commercial establishment, the Northern Marketing Corporation
Issue: Whether or not the lot and the building in question are used exclusively for educational
purposes
Held: No.
  Section 22, paragraph 3, Article VI, of the then 1935 Philippine Constitution, expressly grants
exemption from realty taxes for cemeteries, churches and parsonages or convents appurtenant
thereto, and all lands, buildings, and improvements used exclusively for religious, charitable or
educational purposes. Reasonable emphasis has always been made that the exemption extends to
facilities which are incidental to and reasonably necessary for the accomplishment of the main
purposes. The use of the school building or lot for commercial purposes is neither contemplated
by law, nor by jurisprudence. In the case at bar, the lease of the first floor of the building to the
Northern Marketing Corporation cannot by any stretch of the imagination be considered
incidental to the purpose of education. The test of exemption from taxation is the use of the
property for purposes mentioned in the Constitution.

Under the 1935 Constitution, the trial court correctly arrived at the conclusion that the school
building as well as the lot where it is built, should be taxed, not because the second floor of the
same is being used by the Director and his family for residential purposes, but because the first
floor thereof is being used for commercial purposes. However, since only a portion is used for
purposes of commerce, it is only fair that half of the assessed tax be returned to the school
involved.

  The decision of the CFI Abra (Branch I) is affirmed subject to the modification that half of the
assessed tax be returned to the petitioner. The modification is derived from the fact that the
ground floor is being used for commercial purposes (leased) and the second floor being used as
incidental to education (residence of the director).

SEC. 29 – RESTRICTIONS ON USE OF PUBLIC FUNDS

FISCAL POWERS OF CONGRESS

SECTION 29. (1) No money shall be paid out of the Treasury except in pursuance of an
appropriation made by law.
(2) No public money or property shall be appropriated, applied, paid, or employed, directly or
indirectly, for the use, benefit, or support of any sect, church, denomination, sectarian institution,
or system of religion, or of any priest, preacher, minister, or other religious teacher, or dignitary
as such, except when such priest, preacher, minister, or dignitary is assigned to the armed forces,
or to any penal institution, or government orphanage or leprosarium.

(3) All money collected on any tax levied for a special purpose shall be treated as a special fund
and paid out for such purpose only. If the purpose for which a special fund was created has been
fulfilled or abandoned, the balance, if any, shall be transferred to the general funds of the
Government.

GUINGONA V. CARAGUE
1991
GR. NO – 94571
FACTS:
PD No. 81 – Amending Certain Provisions of the Foreign Borrowing Act by PD No. 1177
“Revising the Budget Process in Order to Institutionalize the Budgetary Innovations of the New
Society”
 P.D. No. 1967, entitled "An Act Strengthening the Guarantee and Payment Positions of the
Republic of the Philippines on Its Contingent Liabilities Arising out of Relent and Guaranteed
Loan by Appropriating Funds For The Purpose
The petitioners Guingona and Pimentel sought for the declaration of unconstitutionality of
certain Presidential Decrees and also for the restrain of the disbursement for debt service under
the 1990 budget pursuant to such decrees.
However, the respondents contend that the petition involves a pure political question which is the
repeal or amendment of the said decrees.
Issue: Whether or not such decrees are violative of Section 29 Article VI of the Constitution
which pertains that no money shall be paid out of the Treasury except in pursuance of an
appropriation made by law
Held:

No. More significantly, there is no provision in our Constitution that provides or

prescribes any particular form of words or religious recitals in which an authorization or
appropriation by Congress shall be made, except that it be "made by law," such as
precisely the authorization or appropriation under the questioned presidential decrees. In
other words, in terms of time horizons, an appropriation may be made impliedly (as by
past but subsisting legislations) as well as expressly for the current fiscal year (as by
 enactment of laws by the present Congress), just as said appropriation may be made in
general as well as in specific terms. The Congressional authorization may be embodied in
annual laws, such as a general appropriations act or in special provisions of laws of
general or special application which appropriate public funds for specific public
purposes, such as the questioned decrees. An appropriation measure is sufficient if the
legislative intention clearly and certainly appears from the language employed (In re
Continuing Appropriations, 32 P. 272), whether in the past or in the present.17

Thus, in accordance with Section 22, Article VII of the 1987 Constitution, President Corazon C.
Aquino submitted to Congress the Budget of Expenditures and Sources of Financing for the
Fiscal Year 1990.

The Court, therefor, finds that R.A. No. 4860, as amended by P.D. No. 81, Section 31 of P.D.
1177 and P.D. No. 1967 constitute lawful authorizations or appropriations, unless they are
repealed or otherwise amended by Congress. The Executive was thus merely complying with the
duty to implement the same.

GOVERNMENT BUDGET PROCESS

The Government budgeting process consists of four major phases:

1. Budget preparation. The first step is essentially tasked upon the Executive Branch and covers
the estimation of government revenues, the determination of budgetary priorities and activities
within the constraints imposed by available revenues and by borrowing limits, and the translation
of desired priorities and activities into expenditure levels.

Budget preparation starts with the budget call issued by the Department of Budget and
Management. Each agency is required to submit agency budget estimates in line with the
requirements consistent with the general ceilings set by the Development Budget Coordinating
Council (DBCC).

With regard to debt servicing, the DBCC staff, based on the macro-economic projections of
interest rates (e.g. LIBOR rate) and estimated sources of domestic and foreign financing,
estimates debt service levels. Upon issuance of budget call, the Bureau of Treasury computes for
the interest and principal payments for the year for all direct national government borrowings
and other liabilities assumed by the same.

2. Legislative authorization. –– At this stage, Congress enters the picture and deliberates
or acts on the budget proposals of the President, and Congress in the exercise of its own
judgment and wisdom formulates an appropriation act precisely following the process
established by the Constitution, which specifies that no money may be paid from the Treasury
except in accordance with an appropriation made by law.

Debt service is not included in the General Appropriation Act, since authorization therefor
already exists under RA No. 4860 and 245, as amended and PD 1967. Precisely in the fight of
this subsisting authorization as embodied in said Republic Acts and PD for debt service,
Congress does not concern itself with details for implementation by the Executive, but largely
with annual levels and approval thereof upon due deliberations as part of the whole obligation
program for the year. Upon such approval, Congress has spoken and cannot be said to have
delegated its wisdom to the Executive, on whose part lies the implementation or execution of the
legislative wisdom.

3. Budget Execution. Tasked on the Executive, the third phase of the budget process covers the
various operational aspects of budgeting. The establishment of obligation authority ceilings, the
evaluation of work and financial plans for individual activities, the continuing review of
government fiscal position, the regulation of funds releases, the implementation of cash payment
schedules, and other related activities comprise this phase of the budget cycle.

Release from the debt service fired is triggered by a request of the Bureau of the Treasury for
allotments from the Department of Budget and Management, one quarter in advance of payment
schedule, to ensure prompt payments. The Bureau of Treasury, upon receiving official billings
from the creditors, remits payments to creditors through the Central Bank or to the Sinking Fund
established for government security issues (Annex F).

4. Budget accountability. The fourth phase refers to the evaluation of actual performance and
initially approved work targets, obligations incurred, personnel hired and work accomplished are
compared with the targets set at the time the agency budgets were approved.