Occena

Petition for prohibition seeking to restrain respondents from implementing Batas Pambansa Big. 51
(providing for the elective and/or appointive positions in various local governments), 52 (governing
the election of local government officials scheduled on January 30, 1980), 53 (defining the rights and
privileges of accredited parties), and 54 (providing for a plebiscite, simultaneously with the election
of local officials on January 30, 1980, regarding the proposed amendment of Article X, Section 7, of
the 1973 Constitution).

The constitutional issues raised are:

(1) whether or not the Interim Batasang Pambansa has the power to authorize the holding of local
elections;

(2) assuming it has such power, whether it can authorize said elections without enacting a local
government code;

(3) as g it may validly perform the foregoing, whether it can schedule such elections less than ninety,
(90) days from the passage of the enabling law; and;

(4), assuming further that the proposed amendment to Article X, Section 7 of the Constitution is
valid, whether the plebiscite con be legally held together with the local elections. The thrust of
Petitioner's arguments is that these issues should be resolved in the negative.

After deliberating on the memoranda and arguments adduced by both parties at the hearing as
January 15, 1980, the Court finds no merit in the petition.

1. The leguslative power granted by Section 1, Artcle VIII of the Constitution to the National
Assembly has been explicitly vested during the period of transition on the Interim Batasang
Pambansa by Amendment No. 2 to the constitution. The only station is that it shall not exercise its
treaty ratification powers provided in Article VIII, Section 14(1) of the Constitution. The legislative
power has described generally as being a power to make, alter and laws.  It is the peculiar province
1

of the legislature to probe general rules for the government of society. The e of the legislative
function is the determination of the legislative policy and its formulation and promulgation as a
defined and binding rule of conduct.   It is a recognized principle in constitutional law that the
2

legislative body possesses Plenary power for all purposes of civil government The 1egislative power
of the Interim Batasang Pambansa is, therefore, Complete, subject only to the limitation that the
interim Batasang Pambansa shall not exercise the power of the National Assembly in the ratification
of treaties.   The power to regulate the manner of conducting elections, to Prescribe the form of the
3

official ballot, and to provide for the Manner in which candidates shall be chosen is inherently and
historically legislative. Petitioner has. not cited any provision of the Constitution, as amended by the
Amendments of 1976, which expressly or by implication deny to the Interim Batasang Pambansa the
authority to call for local elections. It is a well established rule that where no exception is made in
terms, none will be made by mere implication or construction. The wordings of a constitutional
provision do not have a narrow or contracted meaning, but are used in a broad sense, with a view of
covering all contingencies. Petitioner's invocation of the Report of the Committee on Transitory
Provisions of October 13, 1972 does not. support his contention that the Interim Batasang
Pambansa has no power to call local elections. The purported report refers to the interim National
Assembly in Article XVII, the convening of which was rejected by the Filipino people. As We stated
in Peralta v. Commission on Elections:  4
 It should be recalled that under the terms of the Transitory Provisions of the
Constitution, the membership of the interim National Assembly would consist of the
Incumbent President and Vice-President, the Senators and the Representatives of
the old Congress and the Delegates to the Constitutional Convention who have
opted to serve therein. The Filipino people rejected the convening of
the interim National Assembly, and for a perfectly justifiable reason.

By September of 1976, the consensus had emerged for a referendum partaking of

the character of a plebiscite which would be held to establish the solid foundation for
the next step towards normalizing the political process. By the will of the people, as
expressed overwhelmingly in the plebiscite of October 15 and 16, 1976,
Amendments Nos. 1 to 9 were approved, abolishing the interim National Assembly
and creating in its stead an interim Batasang Pambansa. This was intended as a
preparatory and experimental step toward the establishment of full parliamentary
government as provided for in the Constitution. (at p. 61).

In the search for the meaning of the language of the Constitution, reference may be made to the
historical basis of the provisions. The historical events and circumstances which led to the ratification
of Amendments Nos. I to 9 of the constitution show the manifest intent and desire of the people to
establish, during the period of transition, a government that can effectively provide for the nation's
peaceful and orderly transition from a crisis to a full parliament system of government.

2. Neither can We find in Section 1, Article XI of the Constitution any requirement that the enactment
of a local government code is a condition sine qua non for the calling of the local elections by the
Interim Batasang Pambansa. Indeed, the holding of local elections does not, in any manner,
preclude the enactment of a local government code by the Batasang Pambansa at some later
period. There cannot be any doubt that our local governments are basic and fundamental units in
our democratic institutions, To strengthen these institutions, the election of local officials should be
periodically held.   Accordingly, this Court is not inclined to adopt such a technical or strained
5

construction as will unduly impair the efficiency of the Interim Batasang Pambansa in meeting the
challenges and discharging its responsibilities in response to the problems arising in a modernizing
and dynamic society. The legislative decision to call for local elections in order to enable the Filipino
people to exercise their sovereign right to choose their local officials cannot, therefore, be faulted as
a violation of the Constitution.

3. Section 6 of Article XII of the Constitution does not fix an unalterable period of ninety (90) days for
an election campaign. This provision must be construed in relation to Section 5 of Article XII thereof
which grants to the Commission on Elections the power to supervise or regulate the operation of
transportation public utilities, media of communication, etc. during the "election period". Section 6
fixes the "election period" by stating that unless fixed by the Commission in special cases,
the election period shall commence ninety (90) days before the day of election and shall end thirty
(30) days thereafter. In Peralta v. Commission on Elections, supra, We resolved, in effect, this issue
by holding that the forty-five day period of campaign prescribed in Section 4 of the 1978 Election
Code was not violative of Section 6 of Article XII of the Constitution.

4. Considering that the proposed amendment to Section 7 of Article X of the Constitution extending
the retirement of members of the Supreme Court and judges of inferior courts from sixty-five (65) to
seventy (70) years is but a restoration of the age of retirement provided in the 1935 Constitution and
has been intensively and extensively discussed at the Interim Batasang Pambansa, as well as
through the mass media, it cannot, therefore, be said that our people are unaware of the advantages
and disadvantages of the proposed amendment.
ACCORDINGLY, the petition is DISMISSED. This decision is immediately executory.

SO ORDERED.

Arroyo

This is a petition for certiorari and/or prohibition challenging the validity of Republic Act No. 8240,
which amends certain provisions of the National Internal Revenue Code by imposing so-called "sin
taxes" (actually specific taxes) on the manufacture and sale of beer and cigarettes.

Petitioners are members of the House of Representatives. They brought this suit against
respondents Jose de Venecia, Speaker of the House of Representatives, Deputy Speaker Raul
Daza, Majority Leader Rodolfo Albano, the Executive Secretary, the Secretary of Finance, and the
Commissioner of Internal Revenue, charging violation of the rules of the House which petitioners
claim are "constitutionally mandated" so that their violation is tantamount to a violation of the
Constitution.

The law originated in the House of Representatives as H. No. 7198. This bill was approved on third
reading on September 12, 1996 and transmitted on September 16, 1996 to the Senate which
approved it with certain amendments on third reading on November 17, 1996. A bicameral
conference committee was formed to reconcile the disagreeing provisions of the House and Senate
versions of the bill.

The bicameral conference committee submitted its report to the House at 8 a.m. on November 21,
1996. At 11:48 a.m., after a recess, Rep. Exequiel Javier, chairman of the Committee on Ways and
Means, proceeded to deliver his sponsorship speech, after which he was interpellate. Rep. Rogelio
Sarmiento was first to interpellate. He was interrupted when Rep. Arroyo moved to adjourn for lack
of quorum. Rep. Antonio Cuenco objected to the motion and asked for a head count. After a roll call,
the Chair (Deputy Speaker Raul Daza) declared the presence of a quorum.  Rep. Arroyo appealed
1

the ruling of the Chair, but his motion was defeated when put to a vote. The interpellation of the
sponsor thereafter proceeded.

Petitioner Rep. Joker Arroyo registered to interpellate. He was fourth in the order, following Rep.
Rogelio Sarmiento, Rep. Edcel C. Lagman and Rep. Enrique Garcia. In the course of his
interpellation, Rep. Arroyo announced that he was going to raise a question on the quorum, although
until the end of his interpellation he never did. What happened thereafter is shown in the following
transcript of the session on November 21, 1996 of the House of Representatives, as published by
Congress in the newspaper issues of December 5 and 6, 1996:

MR. ALBANO. MR. Speaker, I move that we now approved and ratify the conference
committee report.

THE DEPUTY SPEAKER (Mr. Daza). Any objection to the motion?

MR. ARROYO. What is that, Mr. Speaker?

THE DEPUTY SPEAKER (Mr. Daza). There being none, approved.

(Gavel)
 MR. ARROYO. No, no, no, wait a minute, Mr. Speaker, I stood up. I want to know what is the
question that the Chair asked the distinguished sponsor.

THE DEPUTY SPEAKER (Mr. Daza). The session is suspended for one minute.

(It was 3:01 p.m.)

(3:40 p.m., the session was resumed)

THE DEPUTY SPEAKER (Mr. Daza). The session is resumed.

MR. ALBANO. Mr. Speaker, I move to adjourn until four o'clock, Wednesday, next week.

THE DEPUTY SPEAKER (Mr. Daza). The session is adjourned until four o'clock,
Wednesday, next week.
(It was 3:40 p.m.)

On the same day, the bill was signed by the Speaker of the House of Representatives and the
President of the Senate and certified by the respective secretaries of both Houses of Congress as
having been finally passed by the House of Representatives and by the Senate on November 21,
1996. The enrolled bill was signed into law by President Fidel V. Ramos on November 22, 1996.

Petitioners claim that there are actually four different version of the transcript of this portion of Rep.
Arroyo's interpellation: (1) the transcript of audio-sound recording of the proceedings in the session
hall immediately after the session adjourned at 3:40 p.m. on November 21, 1996, which petitioner
Rep. Edcel C. Lagman obtained from he operators of the sound system; (2) the transcript of the
proceedings from 3:00 p.m. to 3:40 p.m. of November 21, 1996, as certified by the Chief of the
Transcription Division on November 21, 1996, also obtained by Rep. Lagman; (3) the transcript of
the proceedings from 3:00 p.m. to 3:40 p.m. of November 21, 1996 as certified by the Chief of the
Transcription Division on November 28, 1996, also obtained by Rep. Lagman; and (4) the published
version abovequoted. According to petitioners, the four versions differ on three points, to wit: (1) in
the audio-sound recording the word "approved," which appears on line 13 in the three other
versions, cannot be heard; (2) in the transcript certified on November 21, 1996 the world "no" on line
17 appears only once, while in the other versions it is repeated three times; and (3) the published
version does not contain the sentence "(Y)ou better prepare for a quorum because I will raise the
question of the quorum," which appears in the other versions.

Petitioners' allegations are vehemently denied by respondents. However, there is no need to discuss
this point as petitioners have announced that, in order to expedite the resolution of this petition, they
admit, without conceding, the correctness of the transcripts relied upon by the respondents.
Petitioners agree that for purposes of this proceeding the word "approved" appears in the
transcripts.

Only the proceedings of the House of Representatives on the conference committee report on H.
No. 7198 are in question. Petitioners' principal argument is that R.A. No. 8240 is null and void
because it was passed in violation of the rules of the House; that these rules embody the
"constitutional mandate" in Art. VI, §16(3) that "each House may determine the rules of its
proceedings" and that, consequently, violation of the House rules is a violation of the Constitution
itself. They contend that the certification of Speaker De Venecia that the law was properly passed is
false and spurious.
More specifically, petitioners charge that (1) in violation of Rule VIII, §35 and Rule XVII, §103 of the
rules of the House,   the Chair, in submitting the conference committee report to the House, did not
2

call for the years or nays,but simply asked for its approval by motion in order to prevent petitioner
Arroyo from questioning the presence of a quorum; (2) in violation of Rule XIX, §112,   the Chair
3

deliberately ignored Rep. Arroyo's question, "What is that . . . Mr. Speaker?" and did not repeat Rep.
Albano's motion to approve or ratify; (3) in violation of Rule XVI, §97,  the Chair refused to recognize
4

Rep. Arroyo and instead proceeded to act on Rep. Albano's motion and afterward declared the
report approved; and (4) in violation of Rule XX, §§121-122, Rule XXI, §123, and Rule XVIII,
§109,  the Chair suspended the session without first ruling on Rep. Arroyo's question which, it is
5

alleged, is a point of order or a privileged motion. It is argued that Rep. Arroyo's query should have
been resolved upon the resumption of the session on November 28, 1996, because the
parliamentary situation at the time of the adjournment remained upon the resumption of the session.

Petitioners also charge that the session was hastily adjourned at 3:40 p.m. on November 21, 1996
and the bill certified by Speaker Jose De Venecia to prevent petitioner Rep. Arroyo from formally
challenging the existence of a quorum and asking for a reconsideration.

Petitioners urge the Court not to feel bound by the certification of the Speaker of the House that the
law had been properly passed, considering the Court's power under Art. VIII, §1 to pass on claims of
grave abuse of discretion by the other departments of the government, and they ask for a
reexamination of Tolentino v. Secretary of Finance,  which affirmed the conclusiveness of an
6

enrolled bill, in view of the changed membership of the Court.

The Solicitor General filed a comment in behalf of all respondents. In addition, respondent De
Venecia filed a supplemental comment. Respondents' defense is anchored on the principle of
separation of powers and the enrolled bill doctrine. They argue that the Court is not the proper forum
for the enforcement of the rules of the House and that there is no justification for reconsidering the
enrolled bill doctrine. Although the Constitution provides in Art. VI, §16(3) for the adoption by each
House of its rules of proceedings, enforcement of the rules cannot be sought in the courts except
insofar as they implement constitutional requirements such as that relating to three readings on
separate days before a bill may be passed. At all events, respondents contend that, in passing the
bill which became R.A. No. 8240, the rules of the House, as well as parliamentary precedents for
approval of conference committee reports on mere motion, were faithfully observed.

In his supplemental comment, respondent De Venecia denies that his certification of H. No. 7198 is
false and spurious and contends that under the journal entry rule, the judicial inquiry sought by the
petitioners is barred. Indeed, Journal No. 39 of the House of Representatives, covering the sessions
of November 20 and 21, 1996, shows that "On Motion of Mr. Albano, there being no objection, the
Body approved the Conference Committee Report on House Bill No. 7198."   This Journal was
7

approved on December 2, 1996 over the lone objection of petitioner Rep. Lagman.  8

After considering the arguments of the parties, the Court finds no ground for holding that Congress
committed a grave abuse of discretion in enacting R.A. No. 8240. This case is therefore dismissed.

First. It is clear from the foregoing facts that what is alleged to have been violated in the enactment
of R.A. No. 8240 are merely internal rules of procedure of the House rather than constitutional
requirements for the enactment of a law, i.e., Art. VI, §§26-27. Petitioners do not claim that there
was no quorum but only that, by some maneuver allegedly in violation of the rules of the House,
Rep. Arroyo was effectively prevented from questioning the presence of a quorum.

Petitioners contend that the House rules were adopted pursuant to the constitutional provision that
"each House may determine the rules of its proceedings"   and that for this reason they are judicially
9
enforceable. To begin with, this contention stands the principle on its head. In the decided
cases,   the constitutional provision that "each House may determine the rules of its proceedings"
10

was invoked by parties, although not successfully, precisely to support claims of autonomy of the
legislative branch to conduct its business free from interference by courts. Here petitioners cite the
provision for the opposite purpose of invoking judicial review.

But the cases, both here and abroad, in varying forms of expression, all deny to the courts the power
to inquire into allegations that, in enacting a law, a House of Congress failed to comply with its own
rules, in the absence of showing that there was a violation of a constitutional provision or the rights
of private individuals. In Osmeña v.Pendatun,   it was held: "At any rate, courts have declared that
11

'the rules adopted by deliberative bodies are subject to revocation, modification or waiver at the
pleasure of the body adopting them.' And it has been said that 'Parliamentary rules are merely
procedural, and with their observance, the courts have no concern. They may be waived or
disregarded by the legislative body.' Consequently, '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.'"

In United States v. Ballin, Joseph & Co.,   the rules was stated thus: "The Constitution empowers
12

each house to determine its rules of proceedings. It may not by its rules ignore constitutional
restraints or violate fundamental rights, and there should be a reasonable relation between the mode
or method of proceeding established by the rule and the result which is sought to be attained. But
within these limitations all matters of method are open to the determination of the House, and it is no
impeachment of the rule to say that some other way would be better, more accurate, or even more
just. It is no objection to the validity of a rule that a different one has been prescribed and in force for
a length of time. The power to make rules is not one which once exercised is exhausted. It is a
continuous power, always subject to be exercised by the House, and within the limitations
suggested, absolute and beyond the challenge of any other body or tribunal."

In Crawford v. Gilchrist,   it was held: "The provision that each House shall determine the rules of its
13

proceedings does not restrict the power given to a mere formulation of standing rules, or to the
proceedings of the body in ordinary legislative matters; but in the absence of constitutional restraints,
and when exercised by a majority of a constitutional quorum, such authority extends to a
determination of the propriety and effect of any action as it is taken by the body as it proceeds in the
exercise of any power, in the transaction of any business, or in the performance of any duty
conferred upon it by the Constitution."

In State ex rel. City Loan & Savings Co. v. Moore,   the Supreme Court of Ohio stated: "The
14

provision for reconsideration is no part of the Constitution and is therefore entirely within the control
of the General Assembly. Having made the rule, it should be regarded, but a failure to regard it is
not the subject-matter of judicial inquiry. It has been decided by the courts of last resort of many
states, and also by the United States Supreme Court, that a legislative act will not be declared
invalid for noncompliance with rules."

In State v. Savings Bank,   the Supreme Court of Errors of Connecticut declared itself as follows:
15

"The Constitution declares that each house shall determine the rules of its own proceedings and
shall have all powers necessary for a branch of the Legislature of a free and independent state.
Rules of proceedings are the servants of the House and subject to its authority. This authority may
be abused, but when the House has acted in a matter clearly within its power, it would be an
unwarranted invasion of the independence of the legislative department for the court to set aside
such action as void because it may think that the House has misconstrued or departed from its own
rules of procedure."
In McDonald v. State,   the Wisconsin Supreme Court held: "When it appears that an act was so
16

passed, no inquiry will be permitted to ascertain whether the two houses have or have not complied
strictly with their own rules in their procedure upon the bill, intermediate its introduction and final
passage. The presumption is conclusive that they have done so. We think no court has ever
declared an act of the legislature void for non-compliance with the rules of procedure made by itself ,
or the respective branches thereof, and which it or they may change or suspend at will. If there are
any such adjudications, we decline to follow them."

Schweizer v. Territory   is illustrative of the rule in these cases. The 1893 Statutes of Oklahoma
17

provided for three readings on separate days before a bill may be passed by each house of the
legislature, with the proviso that in case of an emergency the house concerned may, by two-thirds
vote, suspend the operation of the rule. Plaintiff was convicted in the district court of violation of a
law punishing gambling. He appealed contending that the gambling statute was not properly passed
by the legislature because the suspension of the rule on three readings had not been approved by
the requisite two-thirds vote. Dismissing this contention, the State Supreme Court of Oklahoma held:

We have no constitutional provision requiring that the legislature should read a bill in any
particular manner. It may, then, read or deliberate upon a bill as it sees fit. either in
accordance with its own rules, or in violation thereof, or without making any rules. The
provision of section 17 referred to is merely a statutory provision for the direction of the
legislature in its action upon proposed measures. It receives its entire force from legislative
sanction, and it exists only at legislative pleasure. The failure of the legislature to properly
weigh and consider an act, its passage through the legislature in a hasty manner, might be
reasons for the governor withholding his signature thereto; but this alone, even though it is
shown to be a violation of a rule which the legislature had made to govern its own
proceedings, could be no reason for the court's refusing its enforcement after it was actually
passed by a majority of each branch of the legislature, and duly signed by the governor. The
courts cannot declare an act of the legislature void on account of noncompliance with rules
of procedure made by itself to govern its deliberations. McDonald v. State, 80 Wis. 407, 50
N.W. 185; In re Ryan, 80 Wis. 414, 50 N.W. 187; State v. Brown, 33 S.C. 151, 11 S.E. 641;
Railway Co. v. Gill, 54 Ark. 101, 15 S.W. 18.

We conclude this survey with the useful summary of the rulings by former Chief Justice Fernando,
commenting on the power of each House of Congress to determine its rules of proceedings. He
wrote:

Rules are hardly permanent in character. The prevailing view is that they are subject to
revocation, modification or waiver at the pleasure of the body adopting them as they are
primarily procedural. Courts ordinary have no concern with their observance. They may be
waived or disregarded by the legislative body. Consequently, mere failure to conform to them
does not have the effect of nullifying the act taken if the requisite number of members have
agreed to a particular measure. The above principle is subject, however, to this qualification.
Where the construction to be given to a rule affects person other than members of the
legislative body the question presented is necessarily judicial in character. Even its validity is
open to question in a case where private rights are involved.  18

In this case no rights of private individuals are involved but only those of a member who, instead of
seeking redress in the House, chose to transfer the dispute to this Court. We have no more power to
look into the internal proceedings of a House than members of that House have to look over our
shoulders, as long as no violation of constitutional provisions is shown.
Petitioners must realize that each of the three departments of our government has its separate
sphere which the others may not invade without upsetting the delicate balance on which our
constitutional order rests. Due regard for the working of our system of government, more than mere
comity, compels reluctance on our part to enter upon an inquiry into an alleged violation of the rules
of the House. We must accordingly decline the invitation to exercise our power.

Second. Petitioners, quoting former Chief Justice Roberto Concepcion's sponsorship in the
Constitutional Commission, contend that under Art. VIII, §1, "nothing involving abuse of discretion
[by the other branches of the government] amounting to lack or excess of jurisdiction is beyond
judicial review."   Implicit in this statement of the former Chief Justice, however, is an
19

acknowledgment that the jurisdiction of this Court is subject to the case and controversy requirement
of Art. VIII. §5 and, therefore, to the requirement of a justiciable controversy before courts can
adjudicate constitutional questions such as those which arise in the field of foreign relations. For
while Art. VIII, §1 has broadened the scope of judicial inquiry into areas normally left to the political
departments to decide, such as those relating to national security,   it has not altogether done away
20

with political questions such as those which arise in the field of foreign relations. As we have already
held, under Art. VIII, §1, this Court's function

is merely [to] check whether or not the governmental branch or agency has gone beyond the
constitutional limits of its jurisdiction, not that it erred or has a different view. In the absence
of a showing . . . [of] grave abuse of discretion amounting to lack of jurisdiction, there is no
occasion for the Court to exercise its corrective power. . . . It has no power to look into what it
thinks is apparent error. 21

If, then, the established rule is that courts cannot declare an act of the legislature void on account
merely of noncompliance with rules of procedure made by itself, it follows that such a case does not
present a situation in which a branch of the government has "gone beyond the constitutional limits of
its jurisdiction" so as to call for the exercise of our Art. VIII. §1 power.

Third. Petitioners claim that the passage of the law in the House was "railroaded." They claim that
Rep. Arroyo was still making a query to the Chair when the latter declared Rep. Albano's motion
approved.

What happened is that, after Rep. Arroyo's interpellation of the sponsor of the committee report,
Majority Leader Rodolfo Albano moved for the approval and ratification of the conference committee
report. The Chair called out for objections to the motion. Then the Chair declared: "There being
none, approved." At the same time the Chair was saying this, however, Rep. Arroyo was asking,
"What is that . . . Mr. Speaker?" The Chair and Rep. Arroyo were talking simultaneously. Thus,
although Rep. Arroyo subsequently objected to the Majority Leader's motion, the approval of the
conference committee report had by then already been declared by the Chair, symbolized by its
banging of the gavel.

Petitioners argue that, in accordance with the rules of the House, Rep. Albano's motion for the
approval of the conference committee report should have been stated by the Chair and later the
individual votes of the members should have been taken. They say that the method used in this case
is a legislator's nightmare because it suggests unanimity when the fact was that one or some
legislators opposed the report.

No rule of the House of Representative has been cited which specifically requires that in case such
as this involving approval of a conference committee report, the Chair must restate the motion and
conduct a viva voce or nominal voting. On the other hand, as the Solicitor General has pointed out,
the manner in which the conference committee report on H. No. 7198 was approval was by no
means a unique one. It has basis in legislative practice. It was the way the conference committee
report on the bills which became the Local Government Code of 1991 and the conference committee
report on the bills amending the Tariff and Customs Code were approved.

In 1957, the practice was questioned as being contrary to the rules of the House. The point was
answered by Majority Leader Arturo M. Tolentino and his answer became the ruling of the Chair Mr.
Tolentino said:

Mr. TOLENTINO. The fact that nobody objects means a unanimous action of the House.
Insofar as the matter of procedure is concerned, this has been a precedent since I came
here seven years ago, and it has been the procedure in this House that if somebody objects,
then a debate follows and after the debate, then the voting comes in.

xxx xxx xxx

Mr. Speaker, a point of order was raised by the gentleman from Leyte, and I wonder what his
attitude is nor on his point of order. I should just like to state that I believe that we have had a
substantial compliance with the Rules. The Rule invoked is not one that refers to statutory or
constitutional requirement, and a substantial compliance, to my mind, is sufficient. When the
Chair announces the vote by saying "Is there any objection?" and nobody objects, then the
Chair announces "The bill is approved on second reading." If there was any doubt as to the
vote, any motion to divide would have been proper. So, if that motion is not presented, we
assume that the House approves the measure. So I believe there is substantial compliance
here, and if anybody wants a division of the House he can always ask for it, and the Chair
can announce how many are in favor and how many are against.  22

Indeed, it is no impeachment of the method to say that some other way would be better, more
accurate and even more just.   The advantages or disadvantages, the wisdom or folly of a method
23

do not present any matter for judicial consideration.   In the words of the U.S. Circuit Court of
24

Appeals, "this Court cannot provide a second opinion on what is the best procedure. Notwithstanding
the deference and esteem that is properly tendered to individual congressional actors, our deference
and esteem for the institution as a whole and for the constitutional command that the institution be
allowed to manage its own affairs precludes us from even attempting a diagnosis of the problem."  25

Nor does the Constitution require that the yeas and the nays of

the Members be taken every time a House has to vote, except only in the following instances; upon
the last and third readings of a bill,   at the request of one-fifth of the Members present,   and in
26 27

repassing a bill over the veto of the President.   Indeed, considering the fact that in the approval of
28

the original bill the votes of the members byyeas and nays had already been taken, it would have
been sheer tedium to repeat the process.

Petitioners claim that they were prevented from seeking reconsideration allegedly as a result of the
precipitate suspension and subsequent adjournment of the session.   It would appear, however, that
29

the session was suspended to allow the parties to settle the problem, because when it resumed at
3:40 p.m. on that day Rep. Arroyo did not say anything anymore. While it is true that the Majority
Leader moved for adjournment until 4 p.m. of Wednesday of the following week, Rep. Arroyo could
at least have objected if there was anything he wanted to say. The fact, however, is that he did not.
The Journal of November 21, 1996 of the House shows.

ADJOURNMENT OF SESSION
 On motion of Mr. Albano, there being no objection, the Chair declared the session adjourned
until four o'clock in the afternoon of Wednesday, November 27, 1996.

It was 3:40 p.m. Thursday, November 21, 1996. (emphasis added)

This Journal was approved on December 3, 1996. Again, no one objected to its approval except
Rep. Lagman.

It is thus apparent that petitioners' predicament was largely of their own making. Instead of
submitting the proper motions for the House to act upon, petitioners insisted on the pendency of
Rep. Arroyo's question as an obstacle to the passage of the bill. But Rep. Arroyo's question was not,
in form or substance, a point of order or a question of privilege entitled to precedence.  And even if
30

Rep. Arroyo's question were so, Rep. Albano's motion to adjourn would have precedence and would
have put an end to any further consideration of the question.  31

Given this fact, it is difficult to see how it can plausibly be contended that in signing the bill which
became R.A. No. 8240, respondent Speaker of the House be acted with grave abuse of his
discretion. Indeed, the phrase "grave abuse of discretion amounting to lack or excess of jurisdiction"
has a settled meaning in the jurisprudence of procedure. It means such capricious and whimsical
exercise of judgment by a tribunal exercising judicial or quasi judicial power as to amount to lack of
power. As Chief Justice Concepcion himself said in explaining this provision, the power granted to
the courts by Art. VIII. §1 extends to cases where "a branch of the 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."  32

Here, the matter complained of concerns a matter of internal procedure of the House with which the
Court should not he concerned. To repeat, the claim is not that there was no quorum but only that
Rep. Arroyo was effectively prevented from questioning the presence of a quorum. Rep. Arroyo's
earlier motion to adjourn for lack of quorum had already been defeated, as the roll call established
the existence of a quorum. The question of quorum cannot be raised repeatedly — especially when
the quorum is obviously present — for the purpose of delaying the business of the House.   Rep. 33

Arroyo waived his objection by his continued interpellation of the sponsor for in so doing he in effect
acknowledged the presence of a quorum.  34

At any rate it is noteworthy that of the 111 members of the House earlier found to be present on
November 21, 1996, only the five, i.e., petitioners in this case, are questioning the manner by which
the conference committee report on H. No. 7198 was approved on that day. No one, except Rep.
Arroyo, appears to have objected to the manner by which the report was approved. Rep. John Henry
Osmeña did not participate in the bicameral conference committee proceedings.   Rep. Lagman and
35

Rep. Zamora objected to the report   but not to the manner it was approved; while it is said that, if
36

voting had been conducted. Rep. Tañada would have voted in favor of the conference committee
report. 37

Fourth. Under the enrolled bill doctrine, the signing of H. No. 7198 by the Speaker of the House and
the President of the Senate and the certification by the secretaries of both Houses of Congress that
it was passed on November 21, 1996 are conclusive of its due enactment. Much energy and
learning is devoted in the separate opinion of Justice Puno, joined by Justice Davide, to disputing
this doctrine. To be sure, there is no claim either here or in the decision in the EVAT cases
[Tolentino v. Secretary of Finance] that the enrolled bill embodies a conclusive presumption. In one
case   we "went behind" an enrolled bill and consulted the Journal to determine whether certain
38

provisions of a statute had been approved by the Senate.

But, where as here there is no evidence to the contrary, this Court will respect the certification of the
presiding officers of both Houses that a bill has been duly passed. Under this rule, this Court has
refused to determine claims that the three-fourths vote needed to pass a proposed amendment to
the Constitution had not been obtained, because "a duly authenticated bill or resolution imports
absolute verify and is binding on the courts."   This Court quoted from Wigmore on Evidence the
39

following excerpt which embodies good, if old-fashioned, democratic theory:

The truth is that many have been carried away with the righteous desire to check at any cost
the misdoings of Legislatures. They have set such store by the Judiciary for this purpose that
they have almost made them a second and higher Legislature. But they aim in the wrong
direction. Instead of trusting a faithful Judiciary to check an inefficient Legislature, they
should turn to improve the Legislature. The sensible solution is not to patch and mend casual
errors by asking the Judiciary to violate legal principle and to do impossibilities with the
Constitution; but to represent ourselves with competent, careful, and honest legislators, the
work of whose hands on the statute-roll may come to reflect credit upon the name of popular
government.  40

This Court has refused to even look into allegations that the enrolled bill sent to the President
contained provisions which had been "surreptitiously" inserted in the conference committee:

[W]here 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.  41

It has refused to look into charges that an amendment was made upon the last reading of a bill in
violation of Art. VI. §26(2) of the Constitution that "upon the last reading of a bill, no amendment shall
be allowed." 42

In other cases,   this Court has denied claims that the tenor of a bill was otherwise than as certified
43

by the presiding officers of both Houses of Congress.

The enrolled bill doctrine, as a rule of evidence, is well established. It is cited with approval by text
writers here and abroad.   The enrolled bill rule rests on the following considerations:
44

. . . 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
court to determine, when the question properly arises, whether the Act, so authenticated, is
in conformity with the Constitution.  45

To overrule the doctrine now, as the dissent urges, is to repudiate the massive teaching of our cases
and overthrow an established rule of evidence.
Indeed, petitioners have advanced no argument to warrant a departure from the rule, except to say
that, with a change in the membership of the Court, the three new members may be assumed to
have an open mind on the question of the enrolled bill rule Actually, not three but four (Cruz,
Feliciano, Bidin, and Quiason, JJ.) have departed from the Court since our decision in the EVAT
cases and their places have since been taken by four new members (Francisco, Hermosisima,
Panganiban, and Torres, JJ.) Petitioners are thus simply banking on the change in the membership
of the Court.

Moreover, as already noted, the due enactment of the law in question is confirmed by the Journal of
the House of November 21, 1996 which shows that the conference committee report on H. No.
7198, which became R.A. No. 8740, was approved on that day. The keeping of the Journal is
required by the Constitution, Art. VI, §16(4) provides:

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.

The Journal is regarded as conclusive with respect to matters that are required by the Constitution to
be recorded therein.   With respect to other matters, in the absence of evidence to the contrary, the
46

Journals have also been accorded conclusive effect. Thus, in United States v. Pons,   this Court
47

spoke of the imperatives of public policy for regarding the Journals as "public memorials of the most
permanent character," thus: "They should be public, because all are required to conform to them;
they should be permanent, that rights acquired today upon the faith of what has been declared to be
law shall not be destroyed tomorrow, or at some remote period of time, by facts resting only in the
memory of individuals." As already noted, the bill which became R.A. No. 8240 is shown in the
Journal. Hence its due enactment has been duly proven.

It would be an unwarranted invasion of the prerogative of a coequal department for this Court either
to set aside a legislative action as void because the Court thinks the House has disregarded its own
rules of procedure, or to allow those defeated in the political arena to seek a rematch in the judicial
forum when petitioners can find their remedy in that department itself. The Court has not been
invested with a roving commission to inquire into complaints, real or imagined, of legislative
skullduggery. It would be acting in excess of its power and would itself be guilty of grave abuse of its
discretion were it to do so. The suggestion made in a case   may instead appropriately be made
48

here: petitioners can seek the enactment of a new law or the repeal or amendment of R.A. No. 8240.
In the absence of anything to the contrary, the Court must assume that Congress or any House
thereof acted in the good faith belief that its conduct was permitted by its rules, and deference rather
than disrespect is due the judgment of that body.  49

WHEREFORE, the petition for certiorari and prohibition is DISMISSED.

SO ORDERED.

Mirasol

This is a petition for review on certiorari of the decision of the Court of Appeals dated July 22, 1996,
in CA-G.R. CY No. 38607, as well as of its resolution of January 23, 1997, denying petitioners'
motion for reconsideration. The challenged decision reversed the judgment of the Regional Trial
Court of Bacolod City, Branch 42 in Civil Case No. 14725.

The factual background of this case, as gleaned from the records, is as follows:

The Mirasols are sugarland owners and planters. In 1973-1974, they produced 70,501.08 piculs 1 of
sugar, 25,662.36 of which were assigned for export. The following crop year, their acreage planted
to the same crop was lower, yielding 65,100 piculs of sugar, with 23,696.40 piculs marked for export.

Private respondent Philippine National Bank (PNB) financed the Mirasols' sugar production venture
for crop years, 1973-1974 and 1974-1975 under a crop loan financing scheme. Under said scheme,
the Mirasols signed Credit Agreements, a Chattel Mortgage on Standing Crops, and a Real Estate
Mortgage in favor of PNB. The Chattel Mortgage empowered PNB as the petitioners' attorney-in-fact
to negotiate and to sell the latter's sugar in both domestic and export markets and to apply the
proceeds to the payment of their obligations to it.

Exercising his law-making powers under Martial Law, then President Ferdinand Marcos issued
Presidential Decree (P.D.) No. 5792 in November, 1974. The decree authorized private respondent
Philippine Exchange Co., Inc. (PHILEX) to purchase sugar allocated for export to the United States
and to other foreign markets. The price and quantity was determined by the Sugar Quota
Administration, PNB, the Department of Trade and Industry, and finally, by the Office of the
President. The decree further authorized PNB to finance PHILEX's purchases. Finally, the decree
directed that whatever profit PHILEX might realize from sales of sugar abroad was to be remitted to
a special fund of the national government, after commissions, overhead expenses and liabilities had
been deducted. The government offices and entities tasked by existing laws and administrative
regulations to oversee the sugar export pegged the purchase price of export sugar in crop years
1973-1974 and 1974-1975 at P180.00 per picul.

PNB continued to finance the sugar production of the Mirasols for crop years 1975-1976 and 1976-
1977. These crop loans and similar obligations were secured by real estate mortgages over several
properties of the Mirasols and chattel mortgages over standing crops. Believing that the proceeds of
their sugar sales to PNB, if properly accounted for, were more than enough to pay their obligations,
petitioners asked PNB for an accounting of the proceeds of the sale of their export sugar. PNB
ignored the request. Meanwhile, petitioners continued to avail of other loans from PNB and to make
unfunded withdrawals from their current accounts with said bank. PNB then asked petitioners to
settle their due and demandable accounts. As a result of these demands for payment, petitioners on
August 4, 1977, conveyed to PNB real properties valued at P1,410,466.00 by way of dacion en
pago, leaving an unpaid overdrawn account of P1,513,347.78.

On August 10, 1982, the balance of outstanding sugar crop and other loans owed by petitioners to
PNB stood at P15,964,252.93. Despite demands, the Mirasols failed to settle said due anti
demandable accounts. PNB then proceeded to extrajudicially for close the mortgaged properties.
After applying the proceeds of the auction sale of the mortgaged realties, PNB still had a deficiency
claim of P12,551,252.93.

Petitioners continued to ask PNB to account for the proceeds of the sale of their export sugar for
crop years 1973-1974 and 1974-1975, insisting that said proceeds, if properly liquidated, could offset
their outstanding obligations with the batik. PNB remained adamant in its stance that under P.D. No.
579, there was nothing to account since under said law, all earnings from the export sales of sugar
pertained to the National Government and were subject to the disposition of the President of the
Philippines for public purposes.1âwphi1.nêt
On August 9, 1979, the Mirasols filed a suit for accounting, specific performance, and damages
against PNB with the Regional Trial Court of Bacolod City, docketed as Civil Case No. 14725.

On June 16, 1987, the complaint was amended to implead PHILEX as party-defendant.

The parties agreed at pre-trial to limit the issues to the following:

"1. The constitutionality and/or legality of Presidential Decrees numbered 338, 579, and
1192;

"2. The determination of the total amount allegedly due the plaintiffs from the defendants
corresponding to the allege(d) unliquidated cost price of export sugar during crop years
1973-1974 and 1974-1975."3

After trial on the merits, the trial court decided as follows:

"WHEREFORE, the foregoing premises considered, judgment is hereby rendered in favor of

the plaintiffs and against the defendants Philippine National Bank (PNB) and Philippine
Exchange Co., Inc. (PHILEX):

(1) Declaring Presidential Decree 579 enacted on November 12, 1974 and all circulars, as
well as policies, orders and other issuances issued in furtherance thereof, unconstitutional
and therefore, NULL and VOID being in gross violation of the Bill of Rights;

(2) Ordering defendants PNB and PHILEX to pay, jointly and severally, plaintiffs the whole
amount corresponding to the residue of the unliquidated actual cost price of 25,662 piculs in
export sugar for crop year 1973-1974 at an average price of P300.00 per picul, deducting
therefrom however, the amount of P180.00 already paid in advance plus the allowable
deductions in service fees and other charges;

(3) And also, for the same defendants to pay, jointly and severally, same plaintiffs the whole
amount corresponding to the unpaid actual price of 14,596 piculs of export sugar for crop
year 1974-1975 at an average rate of P214.14 per picul minus however, the sum of P180.00
per picul already paid by the defendants in advance and the allowable deducting (sic) in
service fees and other charges.

"The unliquidated amount of money due the plaintiffs but withheld by the defendants, shall
earn the legal rate of interest at 12% per annum computed from the date this action was
instituted until fully paid; and, finally -

(4) Directing the defendants PNB and PHILEX to pay, jointly and severally, plaintiffs the sum
of P50,000.00 in moral damages and the amount of P50,000.00 as attorney's fees, plus the
costs of this litigation.

"SO ORDERED."4

The same was, however, modified by a Resolution of the trial court dated May 14, 1992, which
added the following paragraph:

"This however whatever benefits that may have accrued in favor of the plaintiffs with the
massage and approval of Republic Act. 7202 otherwise known as the 'Sugar Restitution
 Law,' authorizing the restitution of losses suffered by the plaintiffs from Crop year 1974-1975
to Crop year 1984-1985 occasioned by the actuations of government-owned and controlled
agencies. (Underscoring in the original).

"SO ORDERED."5

The Mirasols then filed an appeal with the respondent court, docketed as CA-G.R. CY No. 38607,
faulting the trial court for not nullifying the dacion en pago and the mortgage contracts, as well as the
foreclosure of their mortgaged properties. Also faulted was the trial court's failure to award them the
full money claims and damages sought from both PNB and PHILEX.

On July 22, 1996, the Court of Appeals reversed the trial court as follows:

"WHEREFORE, this Court renders judgment REVERSING the appealed Decision and entering the
following verdict:

"1. Declaring the dacion en pago and the foreclosure of the mortgaged properties valid;

"2. Ordering the PNB to render an accounting of the sugar account of the Mirasol[s]
specifically stating the indebtedness of the latter to the former and the proceeds of Mirasols'
1973-1974 and 1974-1975 sugar production sold pursuant to and in accordance with P.D.
579 and the issuances therefrom;

"3. Ordering the PNB to recompute in accordance with RA 7202 Mirasols' indebtedness to it
crediting to the latter payments already made as well as the auction price of their foreclosed
real estate and stipulated value of their properties ceded to PNB in the dacon (sic) en pago;

"4. Whatever the result of the recomputation of Mirasols' account, the outstanding balance or
the excess payment shall be governed by the pertinent provisions of RA 7202.

"SO ORDERED."6

On August 28, 1996, petitioners moved for reconsideration, which the appellate court denied on
January 23, 1997.

Hence, the instant petition, with petitioners submitting the following issues for our resolution:

"1. Whether the Trial Court has jurisdiction to declare a statute unconstitutional without
notice to the Solicitor General where the parties have agreed to submit such issue for the
resolution of the Trial Court.

"2. Whether PD 579 and subsequent issuances7 thereof are unconstitutional.

"3. Whether the Honorable Court of Appeals committed manifest error in not applying the
doctrine of piercing the corporate veil between respondents PNB and PHILEX.

"4. Whether the Honorable Court of Appeals committed manifest error in upholding the
validity of the foreclosure on petitioners property and in upholding the validity of
the dacion en pago in this case.
 "5. Whether the Honorable Court of Appeals committed manifest error in not awarding
damages to petitioners grounds relied upon the allowance of the petition. (Underscored in
the original)"8

On the first issue. It is settled that Regional Trial Courts have the authority and jurisdiction to
consider the constitutionality of a statute, presidential decree, or executive order. 9 The Constitution
vests the power of judicial review or the power to declare a law, treaty, international or executive
agreement, presidential decree, order, instruction, ordinance, or regulation not. only in this Court, but
in all Regional Trial Courts.10 In J.M. Tuason and Co. v. Court of Appeals, 3 SCRA 696 (1961) we
held:

"Plainly, the Constitution contemplates that the inferior courts should have jurisdiction in
cases involving constitutionality of any treaty or law, for it speaks of appellate review of final
judgments of inferior courts in cases where such constitutionality happens to be in issue." 11

Furthermore, B.P. BIg. 129 grants Regional Trial Courts the authority to rule on the conformity of
laws or treaties with the Constitution, thus:

"SECTION 19. Jurisdiction in civil cases. - Regional Trial Courts shall exercise exclusive
original jurisdiction:

(1) In all civil actions in which the subject of the litigations is incapable of pecuniary
estimation;"

The pivotal issue, which we must address, is whether it was proper for the trial court to have
exercised judicial review.

Petitioners argue that the Court of Appeals erred in finding that it was improper for the trial court to
have declared P.D. No. 57912 unconstitutional, since petitioners had not complied with Rule 64,
Section 3, of the Rules of Court. Petitioners contend that said Rule specifically refers only to actions
for declaratory relief and not to an ordinary action for accounting, specific performance, and
damages.

Petitioners' contentions are bereft of merit. Rule 64, Section 3 of the Rules of Court provides:

"SEC. 3. Notice to Solicitor General. - In any action which involves the validity of a statute, or
executive order or regulation, the Solicitor General shall be notified by the party attacking the
statute, executive order, or regulation, and shall be entitled to be heard upon such question."

This should be read in relation to Section 1 [c] of P.D. No. 478, 13 which states in part:

"SECTION 1. Functions and Organizations - (1) The Office of the Solicitor General
shall...have the following specific powers and functions:

xxx

"[c] Appear in any court in any action involving the validity of any treaty, law, executive order
or proclamation, rule or regulation when in his judgment his intervention is necessary or
when requested by the court."
It is basic legal construction that where words of command such as "shall," "must," or "ought" are
employed, they are generally and ordinarily regarded as mandatory. 14 Thus, where, as in Rule 64,
Section 3 of the Rules of Court, the word "shall" is used, a mandatory duty is imposed, which the
courts ought to enforce.

The purpose of the mandatory Notice in Rule 64, Section 3 is to enable the Solicitor General to
decide whether or not his intervention in the action assailing the validity of a law or treaty is
necessary. To deny the Solicitor General such notice would be tantamount to depriving him of his
day in court. We must stress that, contrary to petitioners' stand, the mandatory notice requirement is
not limited to actions involving declaratory relief and similar remedies. The rule itself provides that
such notice is required in "any action" and not just actions involving declaratory relief. Where there is
no ambiguity in the words used in the true, there is no room for constnlction. 15 In all actions assailing
the validity of a statute, treaty, presidential decree, order, or proclamation, notice to the Solicitor
General is mandatory.

In this case, the Solicitor General was never notified about Civil Case No. 14725. Nor did the trial
court ever require him to appear in person or by a representative or to file any pleading or
memorandum on the constitutionality of the assailed decree. Hence, the Court of Appeals did not err
in holding that lack of the required notice made it improper for the trial court to pass upon the
constitutional validity of the questioned presidential decrees.

As regards the second issue, petitioners contend that P.D. No. 579 and its implementing issuances
are void for violating the due process clause and the prohibition against the taking of private property
without just compensation. Petitioners now ask this Court to exercise its power of judicial review.

Jurisprudence has laid down the following requisites for the exercise of this power: First, there must
be before the Court an actual case calling for the exercise of judicial review. Second, the question
before the Court must be ripe for adjudication. Third, the person challenging the validity of the act
must have standing to challenge. Fourth, the question of constitutionality must have been raised at
the earliest opportunity, and lastly, the issue of constitutionality must be the very lis mota of the
case.16

As a rule, the courts will not resolve the constitutionality of a law, if the controversy can be settled on
other grounds.17 The policy of the courts is to avoid ruling on constitutional questions and to presume
that the acts of the political departments are valid, absent a clear and unmistakable showing to the
contrary. To doubt is to sustain. This presumption is based on the doctrine of separation of powers.
This means that the measure had first been carefully studied by the legislative and executive
departments and found to be in accord with the Constitution before it was finally enacted and
approved.18

The present case was instituted primarily for accounting and specific performance. The Court of
Appeals correctly ruled that PNB's obligation to render an accounting is an issue, which can be
determined, without having to rule on the constitutionality of P.D. No. 579. In fact there is nothing in
P.D. No. 579, which is applicable to PNB's intransigence in refusing to give an accounting. The
governing law should be the law on agency, it being undisputed that PNB acted as petitioners' agent.
In other words, the requisite that the constitutionality of the law in question be the very lis mota of
the case is absent. Thus we cannot rule on the constitutionality of P.D. No. 579.

Petitioners further contend that the passage of R.A. No. 720219 rendered P.D. No. 579
unconstitutional, since R.A. No. 7202 affirms that under P.D. 579, the due process clause of the
Constitution and the right of the sugar planters not to be deprived of their property without just
compensation were violated.
A perusal of the text of R.A. No. 7202 shows that the repealing clause of said law merely reads:

"SEC. 10. All laws, acts, executive orders and circulars in conflict herewith are hereby
repealed or modified accordingly."

The settled rule of statutory construction is that repeals by implication are not favored. 20 R.A. No.
7202 cannot be deemed to have repealed P.D. No. 579. In addition, the power to declare a law
unconstitutional does not lie with the legislature, but with the courts. 21 Assuming arguendo that R.A.
No. 7202 did indeed repeal P.D. No. 579, said repeal is not a legislative declaration finding the
earlier law unconstitutional.

To resolve the third issue, petitioners ask us to apply the doctrine of piercing the veil of corporate
fiction with respect to PNB and PHILEX. Petitioners submit that PHILEX was a wholly-owned
subsidiary of PNB prior to the latter's privatization.

We note, however, that the appellate court made the following finding of fact:

"1. PNB and PHILEX are separate juridical persons and there is no reason to pierce the veil
of corporate personality. Both existed by virtue of separate organic acts. They had separate
operations and different purposes and powers."22

Findings of fact by the Court of Appeals are conclusive and binding upon this Court unless said
findings are not supported by the evidence. 23 Our jurisdiction in a petition for review under Rule 45 of
the Rules of Court is limited only to reviewing questions of law and factual issues are not within its
province.24 In view of the aforequoted finding of fact, no manifest error is chargeable to the
respondent court for refusing to pierce the veil of corporate fiction.

On the fourth issue, the appellate court found that there were two sets of accounts between
petitioners and PNB, namely:

"1. The accounts relative to the loan financing scheme entered into by the Mirasols with PNB
(PNB's Brief, p. 16) On the question of haw much the PNB lent the Mirasols for crop years
1973-1974 and 1974-1975, the evidence recited by the lower court in its decision was
deficient. We are offered (sic) PNB the amount of FIFTEEN MILLION NINE HUNDRED
SIXTY FOUR THOUSAND TWO HUNDRED FIFTY TWO PESOS and NINETY THREE
Centavos (Ps15,964,252.93) but this is the alleged balance the Mirasols owe PNB covering
the years 1975 to 1982.

"2. The account relative to the Mirasol's current account Numbers 5186 and 5177 involving
the amount of THREE MILLION FOUR HUNDRED THOUSAND Pesos (P3,400,000.00).
PNB claims against the Mirasols. (PNB's Brief, p. 17)

"In regard to the first set of accounts, besides the proceeds from PNB's sale of sugar
(involving the defendant PHILEX in relation to the export portion of tile stock), the PNB
foreclosed the Mirasols' mortgaged properties realizing therefrom in 1981 THREE MILLION
FOUR HUNDRED THIRTEEN THOUSAND pesos (P3,413,000.00), the PNB itself having
acquired the properties as the highest bidder.

"As to the second set of accounts, PNB proposed, and the Mirasols accepted, a dacion en
pago scheme by which the Mirasols conveyed to PNB pieces of property valued at ONE
 MILLION FOUR HUNDRED TEN THOUSAND FOUR HUNDRED SIXTY-SIX Pesos
(Ps1,410,466.00) (PNB's Brief, pp. 16-17)."25

Petitioners now claim that the dacion en pago and the foreclosure of their mortgaged properties
were void for want of consideration. Petitioners insist that the loans granted them by PNB from 1975
to 1982 had been fully paid by virtue of legal compensation. Hence, the foreclosure was invalid and
of no effect, since the mortgages were already fully discharged. It is also averred that they agreed to
the dacion only by virtue of a martial law Arrest, Search, and Seizure Order (ASSO).

We find petitioners' arguments unpersuasive. Both the lower court and the appellate court found that
the Mirasols admitted that they were indebted to PNB in the sum stated in the latter's
counterclaim.26 Petitioners nonetheless insist that the same can be offset by the unliquidated
amounts owed them by PNB for crop years 1973-74 and 1974-75. Petitioners' argument has no
basis in law. For legal compensation to take place, the requirements set forth in Articles 1278 and
1279 of the Civil Code must be present. Said articles read as follows:

"Art. 1278. Compensation shall take place when two persons, in their own right, are creditors
and debtors of each other.

Art. 1279. In order that compensation may be proper, it is necessary:

(1) That each one of the obligors be bound principally, and that he be at the same time a
principal creditor of the other;

(2) That both debts consist in a sum of money, or if the things due are consumable, they be
of the same kind, and also of the same quality if the latter has been stated;

(3) That the two debts are due;

(4) That they be liquidated and demandable;

(5) That over neither of them there be any retention or controversy, commenced by third
persons and communicated in due time to the debtor."

In the present case, set-off or compensation cannot take place between the parties because: First,
neither of the parties are mutually creditors and debtors of each other. Under P.D. No. 579, neither
PNB nor PHILEX could retain any difference claimed by the Mirasols in the price of sugar sold by the
two firms. P.D. No. 579 prescribed where the profits from the sales are to be paid, to wit:

"SECTION 7. x x x After deducting its commission of two and one-half (2-1/2%) percent of
gross sales, the balance of the proceeds of sugar trading operations for every crop year shall
be set aside by the Philippine Exchange Company, Inc,. as profits which shall be paid to a
special fund of the National Government subject to the disposition of the President for public
purposes."

Thus, as correctly found by the Court of Appeals, "there was nothing with which PNB was supposed
to have off-set Mirasols' admitted indebtedness."27

Second, compensation cannot take place where one claim, as in the instant case, is still the subject
of litigation, as the same cannot be deemed liquidated. 28
With respect to the duress allegedly employed by PNB, which impugned petitioners' consent to
the dacion en pago, both the trial court and the Court of Appeals found that there was no evidence
to support said claim. Factual findings of the trial court, affirmed by the appellate court, are
conclusive upon this Court.29

On the fifth issue, the trial court awarded petitioners P50,000.00 in moral damages and P50,000.00
in attorney's fees. Petitioners now theorize that it was error for the Court of Appeals to have deleted
these awards, considering that the appellate court found PNB breached its duty as an agent to
render an accounting to petitioners.

An agent's failure to render an accounting to his principal is contrary to Article 1891 of the Civil
Code.30 The erring agent is liable for damages under Article 1170 of the Civil Code, which states:

"Those who in the performance of their obligations are guilty of fraud, negligence, or delay,
and those who in any manner contravene the tenor thereof, are liable for damages."

Article 1170 of the Civil Code, however, must be construed in relation to Article 2217 of said Code
which reads:

"Moral damages include physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation, and similar
injury .Though incapable of pecuniary computation, moral damages may be recovered if they
are the proximate result of the defendant's wrongful act or omission."

Moral damages are explicitly authorized in breaches of contract where the defendant acted
fraudulently or in bad faith.31 Good faith, however, is always presumed and any person who seeks to
be awarded damages due to the acts of another has the burden of proving that the latter acted in
bad faith, with malice, or with ill motive. In the instant case, petitioners have failed to show malice or
bad faith32 on the part of PNB in failing to render an accounting. Absent such showing, moral
damages cannot be awarded.

Nor can we restore the award of attorney's fees and costs of suit in favor of petitioners. Under Article
2208 (5) of the Civil Code, attorney's fees are allowed in the absence of stipulation only if "the
defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff s plainly valid, just,
and demandable claim." As earlier stated, petitioners have not proven bad faith on the part of PNB
and PHILEX.  1âwphi1.nêt

WHEREFORE, the instant petition is DENIED and the assailed decision of the respondent court in
CA-G.R. CY 38607 AFFIRMED. Costs against petitioners.

SO ORDERED.

Tolentino

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:

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 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 dates between July 22, 1992 and August 31, 1993, several bills   were
1

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.

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 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 although Art. VI, SS 24 was adopted from the American Federal
Constitution,   it is notable in two respects: the verb "shall originate" is qualified in the Philippine
2

Constitution by the word "exclusively" and the phrase "as on other bills" in the American version is
omitted. This means, according to them, that to be considered as having originated in the House,
Republic Act No. 7716 must retain the essence of H. No. 11197.

This argument will not bear analysis. To begin with, it is not the law — but the revenue bill — which
is required by the Constitution to "originate exclusively" in the House of Representatives. It is
important to emphasize this, because a bill originating in the House may undergo such extensive
changes in the Senate that the result may be a rewriting of the whole. The possibility of a third
version by the conference committee will be discussed later. At this point, what is important to note
is that, as a result of the Senate action, a distinct bill may be produced. To insist that a revenue
statute — and not only the bill which initiated the legislative process culminating in the enactment of
the law — must substantially be the same as the House bill would be to deny the Senate's power not
only to "concur with amendments" but also to "propose amendments." It would be to violate the
coequality of legislative power of the two houses of Congress and in fact make the House superior to
the Senate.

The contention that the constitutional design is to limit the Senate's power in respect of revenue bills
in order to compensate for the grant to the Senate of the treaty-ratifying power   and thereby
3

equalize its powers and those of the House overlooks the fact that the powers being compared are
different. We are dealing here with the legislative power which under the Constitution is vested not in
any particular chamber but in the Congress of the Philippines, consisting of "a Senate and a House
of Representatives."   The exercise of the treaty-ratifying power is not the exercise of legislative
4

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
5

Representatives.

In the United States, the validity of a provision (§ 37) imposing an ad valorem tax based on the
weight of vessels, which the U.S. Senate had inserted in the Tariff Act of 1909, was upheld against
the claim that the provision was a revenue bill which originated in the Senate in contravention of Art.
I, § 7 of the U.S. Constitution.   Nor is the power to amend limited to adding a provision or two in a
6

revenue bill emanating from the House. The U.S. Senate has gone so far as changing the whole of
bills following the enacting clause and substituting its own versions. In 1883, for example, it struck
out everything after the enacting clause of a tariff bill and wrote in its place its own measure, and the
House subsequently accepted the amendment. The U.S. Senate likewise added 847 amendments to
what later became the Payne-Aldrich Tariff Act of 1909; it dictated the schedules of the Tariff Act of
1921; it rewrote an extensive tax revision bill in the same year and recast most of the tariff bill of
1922.   Given, then, the power of the Senate to propose amendments, the Senate can propose its
7

own version even with respect to bills which are required by the Constitution to originate in the
House.

It is insisted, however, that S. No. 1630 was passed not in substitution of H. No. 11197 but of
another Senate bill (S. No. 1129) earlier filed and that what the Senate did was merely to "take [H.
No. 11197] into consideration" in enacting S. No. 1630. There is really no difference between the
Senate preserving H. No. 11197 up to the enacting clause and then writing its own version following
the enacting clause (which, it would seem, petitioners admit is an amendment by substitution), and,
on the other hand, separately presenting a bill of its own on the same subject matter. In either case
the result are two bills 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.

Second. Enough has been said to show that it was within the power of the Senate to propose S. No.
1630. We now pass to the next argument of petitioners that S. No. 1630 did not pass three readings
on separate days as required by the Constitution   because the second and third readings were done
8

on the same day, March 24, 1994. But this was because on February 24, 1994   and again on March
9

22, 1994,   the President had certified S. No. 1630 as urgent. The presidential certification
10

dispensed with the requirement not only of printing but also that of reading the bill on separate days.
The phrase "except when the President certifies to the necessity of its immediate enactment, etc." in
Art. VI, § 26(2) qualifies the two stated conditions before a bill can become a law: (i) the bill has
passed three readings on separate days and (ii) it has been printed in its final form and distributed
three days before it is finally approved.

In other words, the "unless" clause must be read in relation to the "except" clause, because the two
are really coordinate clauses of the same sentence. To construe the "except" clause as simply
dispensing with the second requirement in the "unless" clause (i.e., printing and distribution three
days before final approval) would not only violate the rules of grammar. It would also negate the very
premise of the "except" clause: the necessity of securing the immediate enactment of a bill which is
certified in order to meet a public calamity or emergency. For if it is only the printing that is
dispensed with by presidential certification, the time saved would be so negligible as to be of any
use in insuring immediate enactment. It may well be doubted whether doing away with the necessity
of printing and distributing copies of the bill three days before the third reading would insure speedy
enactment of a law in the face of an emergency requiring the calling of a special election for
President and Vice-President. Under the Constitution such a law is required to be made within seven
days of the convening of Congress in emergency session.  11

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, 1968) after the bill had been certified by
the President as urgent.  12

There is, therefore, no merit in the contention that presidential certification dispenses only with the
requirement for the printing of the bill and its distribution three days before its passage but not with
the requirement of three readings on separate days, also.

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

It is noteworthy that no member of the Senate saw fit to controvert the reality of the factual basis of
the certification. To the contrary, by passing S. No. 1630 on second and third readings on March 24,
1994, the Senate accepted the President's certification. Should such certification be now reviewed
by this Court, especially when no evidence has been shown that, because S. No. 1630 was taken up
on second and third readings on the same day, the members of the Senate were deprived of the
time needed for the study of a vital piece of legislation?

The sufficiency of the factual basis of the suspension of the writ of habeas 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 the pending in the House.

Third. Finally it is contended that the bill which became Republic Act No. 7716 is the bill which the
Conference Committee prepared by consolidating H. No. 11197 and S. No. 1630. It is claimed that
the Conference Committee report included provisions not found in either the House bill or the Senate
bill and that these provisions were "surreptitiously" inserted by the Conference Committee. Much is
made of the fact that in the last two days of its session on April 21 and 25, 1994 the Committee met
behind closed doors. We are not told, however, whether the provisions were not the result of the
give and take that often mark the proceedings of conference committees.

Nor is there anything unusual or extraordinary about the fact that the Conference Committee met in
executive sessions. Often the only way to reach agreement on conflicting provisions is to meet
behind closed doors, with only the conferees present. Otherwise, no compromise is likely to be
made. The Court is not about to take the suggestion of a cabal or sinister motive attributed to the
conferees on the basis solely of their "secret meetings" on April 21 and 25, 1994, nor read anything
into the incomplete remarks of the members, marked in the transcript of stenographic notes by
ellipses. The incomplete sentences are probably due to the stenographer's own limitations or to the
incoherence that sometimes characterize conversations. William Safire noted some such lapses in
recorded talks even by recent past Presidents of the United States.

In any event, in the United States conference committees had been customarily held in executive
sessions with only the conferees and their staffs in attendance.   Only in November 1975 was a new
13

rule adopted requiring open sessions. Even then a majority of either chamber's conferees may vote
in public to close the meetings.  14

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

Under congressional rules of procedure, conference committees are not expected to

make any material change in the measure at issue, either by deleting provisions to
which both houses have already 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. . . . 
15

The result is a third version, which is considered an "amendment in the nature of a substitute," the
only requirement for which being that the third version be germane to the subject of the House and
Senate bills. 
16

Indeed, this Court recently held that it is within the power of a conference committee to include in its
report an entirely new provision that is not found either in the House bill or in the Senate bill.   If the
17

committee can propose an amendment consisting of one or two provisions, there is no reason why it
cannot propose several provisions, collectively considered as an "amendment in the nature of a
substitute," so long as such amendment is germane to the subject of the bills before the committee.
After all, its report was not final but needed the approval of both houses of Congress to become valid
as an act of the legislative department. The charge that in this case the Conference Committee
acted as a third legislative chamber is thus without any basis.  18

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

Rules of the Senate

Rule XII:

§ 26. In the event that the Senate does not agree with the House of Representatives
on the provision of any bill or joint resolution, 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 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. . . ."
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
19

the procedural requirements of the Constitution for the enactment of laws. As far as these
requirements are concerned, we are satisfied that they have been faithfully observed in these cases.

Nor is there any reason for requiring that the Committee's Report in these cases must have
undergone three readings in each of the two houses. If that be the case, there would be no end to
negotiation since each house may seek modifications of the compromise bill. The nature of the bill,
therefore, requires that it be acted upon by each house on a "take it or leave it" basis, with the only
alternative that if it is not approved by both houses, another conference committee must be
appointed. But then again the result would still be a compromise measure that may not be wholly
satisfying to both houses.

Art. VI, § 26(2) must, therefore, be construed as referring only to bills introduced for the first time in
either house of Congress, not to the conference committee report. For if the purpose of requiring
three readings is to give members of Congress time to study bills, it cannot be gainsaid that H. No.
11197 was passed in the House after three readings; that in the Senate it was considered on first
reading and then referred to a committee of that body; that although the Senate committee did not
report out the House bill, it submitted a version (S. No. 1630) which it had prepared by "taking into
consideration" the House bill; that for its part the Conference Committee consolidated the two bills
and prepared a compromise version; that the Conference Committee Report was thereafter
approved by the House and the Senate, presumably after appropriate study by their members. We
cannot say that, as a matter of fact, the members of Congress were not fully informed of the
provisions of the bill. The allegation that the Conference Committee usurped the legislative power of
Congress is, in our view, without warrant in fact and in law.

Fourth. Whatever doubts there may be as to the formal validity of Republic Act No. 7716 must be
resolved in its favor. Our cases   manifest firm adherence to the rule that an enrolled copy of a bill is
20

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
21 22

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 made that the "enrolled bill" rule is absolute. In fact in one case   we "went behind"
23

an enrolled bill and consulted the Journal to determine whether certain provisions of a statute had
been approved by the Senate in view of the fact that the President of the Senate himself, who had
signed the enrolled bill, admitted a mistake and withdrew his signature, so that in effect there was no
longer an enrolled bill to consider.

But where allegations that the constitutional procedures for the passage of bills have not been
observed have no more basis than another allegation that the Conference Committee
"surreptitiously" inserted provisions into a bill which it had prepared, we should decline the invitation
to go behind the enrolled copy of the bill. To disregard the "enrolled bill" rule in such cases would be
to disregard the respect due the other two departments of our government.
Fifth. An additional attack on the formal validity of Republic Act No. 7716 is made by the Philippine
Airlines, Inc., petitioner in G.R. No. 11582, namely, that it violates Art. VI, § 26(1) which provides that
"Every bill passed by Congress shall embrace only one subject which shall be expressed in the title
thereof." It is contended that neither H. No. 11197 nor S. No. 1630 provided for removal of
exemption of PAL transactions from the payment of the VAT and that this was made only in the
Conference Committee bill which became Republic Act No. 7716 without reflecting this fact in its
title.

The title of Republic Act No. 7716 is:

AN ACT RESTRUCTURING THE VALUE- ADDED TAX (VAT) SYSTEM,

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

Among the provisions of the NIRC amended is § 103, which originally read:

§ 103. Exempt transactions. — The following shall be exempt from the value-added
tax:

....

(q) Transactions which are exempt under special laws or international agreements to
which the Philippines is a signatory. Among the transactions exempted from the VAT
were those of PAL because it was exempted under its franchise (P.D. No. 1590) from
the payment of all "other taxes . . . now or in the near future," in consideration of the
payment by it either of the corporate income tax or a franchise tax of 2%.

As a result of its amendment by Republic Act No. 7716, § 103 of the NIRC now provides:

§ 103. Exempt transactions. — The following shall be exempt from the value-added
tax:

....

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

The effect of the amendment is to remove the exemption granted to PAL, as far as the VAT is
concerned.

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

AN ACT GRANTING A NEW FRANCHISE TO PHILIPPINE AIRLINES, INC. TO

ESTABLISH, OPERATE, AND MAINTAIN AIR-TRANSPORT SERVICES IN THE
PHILIPPINES AND BETWEEN THE PHILIPPINES AND OTHER COUNTRIES.

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

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

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

This provision is evidently intended to prevent the amendment of the franchise by mere implication
resulting from the enactment of a later inconsistent statute, in consideration of the fact that a
franchise is a contract which can be altered only by consent of the parties. Thus in Manila Railroad
Co. v.
Rafferty,   it was held that an Act of the U.S. Congress, which provided for the payment of tax on
25

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 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 and requires for its exercise the vote of a majority of
all its members   and (2) the Secretary's duty is to execute the law.
26

§ 103 of the NIRC contains a list of transactions exempted from VAT. Among the transactions
previously granted exemption were:

(f) Printing, publication, importation or sale of books and any newspaper, magazine,
review, or bulletin which appears at regular intervals with fixed prices for subscription
and sale and which is devoted principally to the publication of advertisements.

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

It is unnecessary to pass upon the contention that the exemption granted is beyond the authority of
the Secretary of Finance to give, in view of PPI's contention that even with the exemption of the
circulation revenue of print media there is still an unconstitutional abridgment of press freedom
because of the imposition of the VAT on the gross receipts of newspapers from advertisements and
on their acquisition of paper, ink and services for publication. Even on the assumption that no
exemption has effectively been granted to print media transactions, we find no violation of press
freedom in these cases.

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, he must
pay equitable and nondiscriminatory taxes on his business. . . .  27

The PPI does not dispute this point, either.

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

The situation in the case at bar is indeed a far cry from those cited by the PPI in support of its claim
that Republic Act No. 7716 subjects the press to discriminatory taxation. In the cases cited, the
discriminatory purpose was clear either from the background of the law or from its operation. For
example, in Grosjean v. American Press Co.,   the law imposed a license tax equivalent to 2% of the
28

gross receipts derived from advertisements only on newspapers which had a circulation of more
than 20,000 copies per week. Because the tax was not based on the volume of advertisement alone
but was measured by the extent of its circulation as well, the law applied only to the thirteen large
newspapers in Louisiana, leaving untaxed four papers with circulation of only slightly less than
20,000 copies a week and 120 weekly newspapers which were in serious competition with the
thirteen newspapers in question. It was well known that the thirteen newspapers had been critical of
Senator Huey Long, and the Long-dominated legislature of Louisiana respondent by taxing what
Long described as the "lying newspapers" by imposing on them "a tax on lying." The effect of the tax
was to curtail both their revenue and their circulation. As the U.S. Supreme Court noted, the tax was
"a deliberate and calculated device in the guise of a tax to limit the circulation of information to which
the public is entitled in virtue of the constitutional guaranties."   The case is a classic illustration of
29

the warning that the power to tax is the power to destroy.

In the other case   invoked by the PPI, the press was also found to have been singled out because
30

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 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 any tax at all and even fewer pay any significant amount
of tax."   The discriminatory purpose was thus very clear.
31

More recently, in Arkansas Writers' Project, Inc. v. Ragland,   it was held that a law which taxed
32

general interest magazines but not newspapers and religious, professional, trade and sports journals
was discriminatory because while the tax did not single out the press as a whole, it targeted a small
group within the press. What is more, by differentiating on the basis of contents (i.e., between
general interest and special interests such as religion or sports) the law became "entirely
incompatible with the First Amendment's guarantee of freedom of the press."

These cases come down to this: that unless justified, the differential treatment of the press creates
risks of suppression of expression. In contrast, in the cases at bar, the statute applies to a wide
range of goods and services. The argument that, by imposing the VAT only on print media whose
gross sales exceeds P480,000 but not more than P750,000, the law discriminates   is without merit
33

since it has not been shown that as a result the class subject to tax has been unreasonably
narrowed. The fact is that this limitation does not apply to the press along but to all sales. Nor is
impermissible motive shown by the fact that print media and broadcast media are treated differently.
The press is taxed on its transactions involving printing and publication, which are different from the
transactions of broadcast media. There is thus a reasonable basis for the classification.

The cases canvassed, it must be stressed, eschew any suggestion that "owners of newspapers are
immune from any forms of ordinary taxation." The license tax in the Grosjean case was declared
invalid because it was "one single in kind, with a long history of hostile misuse against the freedom
of the
press."   On the other hand, Minneapolis Star acknowledged that "The First Amendment does not
34

prohibit all regulation of the press [and that] the States and the Federal Government can subject
newspapers to generally applicable economic regulations without creating constitutional problems."  35

What has been said above also disposes of the allegations of the PBS that the removal of the
exemption of printing, publication or importation of books and religious articles, as well as their
printing and publication, likewise violates freedom of thought and of conscience. For as the U.S.
Supreme Court unanimously held in Jimmy Swaggart Ministries v. Board of Equalization,   the Free
36

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 us to the question whether the registration provision of the law,   although of general
37

applicability, nonetheless is invalid when applied to the press because it lays a prior restraint on its
essential freedom. The case of American Bible Society v. City of Manila   is cited by both the PBS
38

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 other
religious literature. This Court relied on Murdock v. Pennsylvania,   in which it was held that, as a
39

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 of press and religion and inevitably tends to suppress their exercise."  40

But, in this case, the fee in § 107, although a fixed amount (P1,000), is not imposed for the exercise
of a privilege 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.

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 that 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."  41

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 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 [and] Congress shall evolve a progressive
system of taxation."   Petitioners in G.R. No. 115781 quote from a paper, entitled "VAT Policy
42

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, according to respondents, removes from the coverage of the law
some 30,000 business establishments. On the other hand, an occasional paper   of the Center for
43

Research and Communication cities a NEDA study that the VAT has minimal impact on inflation and
income distribution and that while additional expenditure for the lowest income class is only P301 or
1.49% a year, that for a family earning P500,000 a year or more is P8,340 or 2.2%.

Lacking empirical data on which to base any conclusion regarding these arguments, any discussion
whether the VAT is regressive in the sense that it will hit the "poor" and middle-income group in
society harder than it will the "rich," as the Cooperative Union of the Philippines (CUP) claims in G.R.
No. 115873, is largely an academic exercise. On the other hand, the CUP's contention that
Congress' withdrawal of exemption of producers cooperatives, marketing cooperatives, and service
cooperatives, while maintaining that granted to electric cooperatives, not only goes against the
constitutional policy to promote cooperatives as instruments of social justice (Art. XII, § 15) but also
denies such cooperatives the equal protection of the law is actually a policy argument. The
legislature is not required to adhere to a policy of "all or none" in choosing the subject of taxation. 44

Nor is the contention of the Chamber of Real 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 "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.

At all events, our 1988 decision in Kapatiran   should have laid to rest the questions now raised
45

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 adequate authority to secure the peace and good order
of society. 
46

In truth, the Contract Clause has never been thought as a limitation on the exercise of the State's
power of taxation save only where a tax exemption has been granted for a valid
consideration.   Such is not the case of PAL in G.R. No. 115852, and we do not understand it to
47

make this claim. Rather, its position, as discussed above, is that the removal of its tax exemption
cannot be made by a general, but only by a specific, law.

The substantive issues raised in some of the cases are presented in abstract, hypothetical form
because of the lack of a concrete record. We accept that this Court does not only adjudicate private
cases; that public actions by "non-Hohfeldian"   or ideological plaintiffs are now cognizable provided
48

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.
49

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.

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 conflict with each other, the courts must decide on the
operation of each.  50

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 controversy the rights
which that instrument secures and guarantees to them.  51

This conception of the judicial power has been affirmed in several

cases   of this Court following Angara.
52

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

(1) That the procedural requirements of the Constitution have been complied with by Congress in the
enactment of the statute;
(2) That judicial inquiry whether the formal requirements for the enactment of statutes — beyond
those prescribed by the Constitution — have been observed is precluded by the principle of
separation of 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.

Phil Cons Association

Once again this Court is called upon to rule on the conflicting claims of authority between the
Legislative and the Executive in the clash of the powers of the purse and the sword. Providing the
focus for the contest between the President and the Congress over control of the national budget are
the four cases at bench. Judicial intervention is being sought by a group of concerned taxpayers on
the claim that Congress and the President have impermissibly exceeded their respective authorities,
and by several Senators on the claim that the President has committed grave abuse of discretion or
acted without jurisdiction in the exercise of his veto power.

House Bill No. 10900, the General Appropriation Bill of 1994 (GAB of 1994), was passed and
approved by both houses of Congress on December 17, 1993. As passed, it imposed conditions and
limitations on certain items of appropriations in the proposed budget previously submitted by the
President. It also authorized members of Congress to propose and identify projects in the "pork
barrels" allotted to them and to realign their respective operating budgets.

Pursuant to the procedure on the passage and enactment of bills as prescribed by the Constitution,
Congress presented the said bill to the President for consideration and approval.

On December 30, 1993, the President signed the bill into law, and declared the same to have
become Republic Act No. 7663, entitled "AN ACT APPROPRIATING FUNDS FOR THE
OPERATION OF THE GOVERNMENT OF THE PHILIPPINES FROM JANUARY ONE TO
DECEMBER THIRTY ONE, NINETEEN HUNDRED AND NINETY-FOUR, AND FOR OTHER
PURPOSES" (GAA of 1994). On the same day, the President delivered his Presidential Veto
Message, specifying the provisions of the bill he vetoed and on which he imposed certain conditions.

No step was taken in either House of Congress to override the vetoes.

In G.R. No. 113105, the Philippine Constitution Association, Exequiel B. Garcia and Ramon A.
Gonzales as taxpayers, prayed for a writ of prohibition to declare as unconstitutional and void: (a)
Article XLI on the Countrywide Development Fund, the special provision in Article I entitled
Realignment of Allocation for Operational Expenses, and Article XLVIII on the Appropriation for Debt
Service or the amount appropriated under said Article XLVIII in excess of the P37.9 Billion allocated
for the Department of Education, Culture and Sports; and (b) the veto of the President of the Special
Provision of 
Article XLVIII of the GAA of 1994 (Rollo, pp. 88-90, 104-105)

In G.R. No. 113174, sixteen members of the Senate led by Senate President Edgardo J. Angara,
Senator Neptali A. Gonzales, the Chairman of the Committee on Finance, and Senator Raul S.
Roco, sought the issuance of the writs of certiorari, prohibition and mandamus against the Executive
Secretary, the Secretary of the Department of Budget and Management, and the National Treasurer.

Suing as members of the Senate and taxpayers, petitioners question: (1) the constitutionality of the
conditions imposed by the President in the items of the GAA of 1994: (a) for the Supreme Court, (b)
Commission on Audit (COA), (c) Ombudsman, (d) Commission on Human Rights (CHR), (e) Citizen
Armed Forces Geographical Units (CAFGU'S) and (f) State Universities and Colleges (SUC's); and
(2) the constitutionality of the veto of the special provision in the appropriation for debt service.

In G.R. No. 113766, Senators Alberto G. Romulo and Wigberto Tañada (a co-petitioner in G.R. No.
113174), together with the Freedom from Debt Coalition, a non-stock domestic corporation, sought
the issuance of the writs of prohibition and mandamus against the Executive Secretary, the
Secretary of the Department of Budget and Management, the National Treasurer, and the COA.

Petitioners Tañada and Romulo sued as members of the Philippine Senate and taxpayers, while
petitioner Freedom from Debt Coalition sued as a taxpayer. They challenge the constitutionality of
the Presidential veto of the special provision in the appropriations for debt service and the automatic
appropriation of funds therefor.

In G.R. No. 11388, Senators Tañada and Romulo sought the issuance of the writs of prohibition and
mandamus against the same respondents in G.R. No. 113766. In this petition, petitioners contest the
constitutionality of: (1) the veto on four special provision added to items in the GAA of 1994 for the
Armed Forces of the Philippines (AFP) and the Department of Public Works and Highways (DPWH);
and (2) the conditions imposed by the President in the implementation of certain appropriations for
the CAFGU's, the DPWH, and the National Housing Authority (NHA).

Petitioners also sought the issuance of temporary restraining orders to enjoin respondents Secretary
of Budget and Management, National Treasurer and COA from enforcing the questioned provisions
of the GAA of 1994, but the Court declined to grant said provisional reliefs on the time- honored
principle of according the presumption of validity to statutes and the presumption of regularity to
official acts.

In view of the importance and novelty of most of the issues raised in the four petitions, the Court
invited former Chief Justice Enrique M. Fernando and former Associate Justice Irene Cortes to
submit their respective memoranda as Amicus curiae, which they graciously did.

II

Locus Standi

When issues of constitutionality are raised, the Court can exercise its power of judicial review only if
the following requisites are compresent: (1) the existence of an actual and appropriate case; (2) a
personal and substantial interest of the party raising the constitutional question; (3) the exercise of
judicial review is pleaded at the earliest opportunity; and (4) the constitutional question is the lis
mota of the case (Luz Farms v. Secretary of the Department of Agrarian Reform, 192 SCRA 51
[1990]; Dumlao v. Commission on Elections, 95 SCRA 392 [1980]; People v. Vera, 65 Phil. 56
[1937]).

While the Solicitor General did not question the locus standi of petitioners in G.R. No. 113105, he
claimed that the remedy of the Senators in the other petitions is political (i.e., to override the vetoes)
in effect saying that they do not have the requisite legal standing to bring the suits.

The legal standing of the Senate, as an institution, was recognized in Gonzales v. Macaraig, Jr., 191
SCRA 452 (1990). In said case, 23 Senators, comprising the entire membership of the Upper House
of Congress, filed a petition to nullify the presidential veto of Section 55 of the GAA of 1989. The
filing of the suit was authorized by Senate Resolution No. 381, adopted on February 2, 1989, and
which reads as follows:

Authorizing and Directing the Committee on Finance to Bring in the Name of the
Senate of the Philippines the Proper Suit with the Supreme Court of the Philippines
contesting the Constitutionality of the Veto by the President of Special and General
Provisions, particularly Section 55, of the General Appropriation Bill of 1989 (H.B.
No. 19186) and For Other Purposes.

In the United States, the legal standing of a House of Congress to sue has been recognized (United
States v. American Tel. & Tel. Co., 551 F. 2d 384, 391 [1976]; Notes: Congressional Access To The
Federal Courts, 90 Harvard Law Review 1632 [1977]).

While the petition in G.R. No. 113174 was filed by 16 Senators, including the Senate President and
the Chairman of the Committee on Finance, the suit was not authorized by the Senate itself.
Likewise, the petitions in 
G.R. Nos. 113766 and 113888 were filed without an enabling resolution for the purpose.

Therefore, the question of the legal standing of petitioners in the three cases becomes a preliminary
issue before this Court can inquire into the validity of the presidential veto and the conditions for the
implementation of some items in the GAA of 1994.

We rule that a member of the Senate, and of the House of Representatives for that matter, has the
legal standing to question the validity of a presidential veto or a condition imposed on an item in an
appropriation bill.

Where the veto is claimed to have been made without or in excess of the authority vested on the
President by the Constitution, the issue of an impermissible intrusion of the Executive into the
domain of the Legislature arises (Notes: Congressional Standing To Challenge Executive
Action, 122 University of Pennsylvania Law Review 1366 [1974]).

To the extent the power of Congress are impaired, so is the power of each member thereof, since
his office confers a right to participate in the exercise of the powers of that institution (Coleman v.
Miller, 307 U.S. 433 [1939]; Holtzman v. Schlesinger, 484 F. 2d 1307 [1973]).

An act of the Executive which injures the institution of Congress causes a derivative but nonetheless
substantial injury, which can be questioned by a member of Congress (Kennedy v. Jones, 412 F.
Supp. 353 [1976]). In such a case, any member of Congress can have a resort to the courts.

Former Chief Justice Enrique M. Fernando, as Amicus Curiae, noted:

 This is, then, the clearest case of the Senate as a whole or individual Senators as
such having a substantial interest in the question at issue. It could likewise be said
that there was the requisite injury to their rights as Senators. It would then be futile to
raise any locus standi issue. Any intrusion into the domain appertaining to the Senate
is to be resisted. Similarly, if the situation were reversed, and it is the Executive
Branch that could allege a transgression, its officials could likewise file the
corresponding action. What cannot be denied is that a Senator has standing to
maintain inviolate the prerogatives, powers and privileges vested by the Constitution
in his office (Memorandum, p. 14).

It is true that the Constitution provides a mechanism for overriding a veto (Art. VI, Sec. 27 [1]). Said
remedy, however, is available only when the presidential veto is based on policy or political
considerations but not when the veto is claimed to be ultra vires. In the latter case, it becomes the
duty of the Court to draw the dividing line where the exercise of executive power ends and the
bounds of legislative jurisdiction begin.

III

G.R. No. 113105

1. Countrywide Development Fund

Article XLI of the GAA of 1994 sets up a Countrywide Development Fund of P2,977,000,000.00 to
"be used for infrastructure, purchase of ambulances and computers and other priority projects and
activities and credit facilities to qualified beneficiaries." Said Article provides:

COUNTRYWIDE DEVELOPMENT FUND

For Fund requirements of countrywide 

development projects P 2,977,000,000
———————

New Appropriations, by Purpose

Current Operating Expenditures

A. PURPOSE

Personal Maintenance Capital Total

Services and Other Outlays
Operating
Expenses

1. For Countrywide
Developments Projects P250,000,000 P2,727,000,000 P2,977,000,000

TOTAL NEW
APPROPRIATIONS P250,000,000 P2,727,000,000 P2,977,000,000

Special Provisions
 1. Use and Release of Funds. The amount herein appropriated shall be used for
infrastructure, purchase of ambulances and computers and other priority projects and
activities, and credit facilities to qualified beneficiaries as proposed and identified by
officials concerned according to the following allocations: Representatives,
P12,500,000 each; Senators, P18,000,000 each; Vice-President,
P20,000,000; PROVIDED, That, the said credit facilities shall be constituted as a
revolving fund to be administered by a government financial institution (GFI) as a
trust fund for lending operations. Prior years releases to local government units and
national government agencies for this purpose shall be turned over to the
government financial institution which shall be the sole administrator of credit
facilities released from this fund.

The fund shall be automatically released quarterly by way of Advice of Allotments

and Notice of Cash Allocation directly to the assigned implementing agency not later
than five (5) days after the beginning of each quarter upon submission of the list of
projects and activities by the officials concerned.

2. Submission of Quarterly Reports. The Department of Budget and Management

shall submit within thirty (30) days after the end of each quarter a report to the
Senate Committee on Finance and the House Committee on Appropriations on the
releases made from this Fund. The report shall include the listing of the projects,
locations, implementing agencies and the endorsing officials (GAA of 1994, p. 1245).

Petitioners claim that the power given to the members of Congress to propose and identify the
projects and activities to be funded by the Countrywide Development Fund is an encroachment by
the legislature on executive power, since said power in an appropriation act in implementation of a
law. They argue that the proposal and identification of the projects do not involve the making of laws
or the repeal and amendment thereof, the only function given to the Congress by the Constitution
(Rollo, pp. 78- 86).

Under the Constitution, the spending power called by James Madison as "the power of the purse,"
belongs to Congress, subject only to the veto power of the President. The President may propose
the budget, but still the final say on the matter of appropriations is lodged in the Congress.

The power of appropriation carries with it the power to specify the project or activity to be funded
under the appropriation law. It can be as detailed and as broad as Congress wants it to be.

The Countrywide Development Fund is explicit that it shall be used "for infrastructure, purchase of
ambulances and computers and other priority projects and activities and credit facilities to qualified
beneficiaries . . ." It was Congress itself that determined the purposes for the appropriation.

Executive function under the Countrywide Development Fund involves implementation of the priority
projects specified in the law.

The authority given to the members of Congress is only to propose and identify projects to be
implemented by the President. Under Article XLI of the GAA of 1994, the President must perforce
examine whether the proposals submitted by the members of Congress fall within the specific items
of expenditures for which the Fund was set up, and if qualified, he next determines whether they are
in line with other projects planned for the locality. Thereafter, if the proposed projects qualify for
funding under the Funds, it is the President who shall implement them. In short, the proposals and
identifications made by the members of Congress are merely recommendatory.
The procedure of proposing and identifying by members of Congress of particular projects or
activities under Article XLI of the GAA of 1994 is imaginative as it is innovative.

The Constitution is a framework of a workable government and its interpretation must take into
account the complexities, realities and politics attendant to the operation of the political branches of
government. Prior to the GAA of 1991, there was an uneven allocation of appropriations for the
constituents of the members of Congress, with the members close to the Congressional leadership
or who hold cards for "horse-trading," getting more than their less favored colleagues. The members
of Congress also had to reckon with an unsympathetic President, who could exercise his veto power
to cancel from the appropriation bill a pet project of a Representative or Senator.

The Countrywide Development Fund attempts to make equal the unequal. It is also a recognition
that individual members of Congress, far more than the President and their congressional
colleagues are likely to be knowledgeable about the needs of their respective constituents and the
priority to be given each project.

2. Realignment of Operating Expenses

Under the GAA of 1994, the appropriation for the Senate is P472,000,000.00 of which
P464,447,000.00 is appropriated for current operating expenditures, while the appropriation for the
House of Representatives is P1,171,924,000.00 of which P1,165,297,000.00 is appropriated for
current operating expenditures (GAA of 1994, pp. 2, 4, 9, 12).

The 1994 operating expenditures for the Senate are as follows:

Personal Services

Salaries, Permanent 153,347

Salaries/Wage, Contractual/Emergency 6,870
————
Total Salaries and Wages 160,217
=======

Other Compensation

Step Increments 1,073

Honoraria and Commutable Allowances 3,731
Compensation Insurance Premiums 1,579
Pag-I.B.I.G. Contributions 1,184
Medicare Premiums 888
Bonus and Cash Gift 14,791
Terminal Leave Benefits 2,000
Personnel Economic Relief Allowance 10,266
Additional Compensation of P500 under A.O. 53 11,130
Others 57,173
————
Total Other Compensation 103,815
————
 01 Total Personal Services 264,032
=======

Maintenance and Other Operating Expenses

02 Traveling Expenses 32,841

03 Communication Services 7,666
04 Repair and Maintenance of Government Facilities 1,220
05 Repair and Maintenance of Government Vehicles 318
06 Transportation Services 128
07 Supplies and Materials 20,189
08 Rents 24,584
14 Water/Illumination and Power 6,561
15 Social Security Benefits and Other Claims 3,270
17 Training and Seminars Expenses 2,225
18 Extraordinary and Miscellaneous Expenses 9,360
23 Advertising and Publication
24 Fidelity Bonds and Insurance Premiums 1,325
29 Other Services 89,778
————
Total Maintenance and Other Operating Expenditures 200,415
————
Total Current Operating Expenditures 464,447
=======

(GAA of 1994, pp. 3-4)

The 1994 operating expenditures for the House of Representatives are as follows:

Personal Services

Salaries, Permanent 261,557

Salaries/Wages, Contractual/Emergency 143,643
————
Total Salaries and Wages 405,200
=======

Other Compensation

Step Increments 4,312

Honoraria and Commutable
Allowances 4,764
Compensation Insurance
Premiums 1,159
Pag-I.B.I.G. Contributions 5,231
Medicare Premiums 2,281

Bonus and Cash Gift 35,669

Terminal Leave Benefits 29
Personnel Economic Relief
Allowance 21,150
Additional Compensation of P500 under A.O. 53
 Others 106,140
————
Total Other Compensation 202,863
————
01 Total Personal Services 608,063
=======

Maintenance and Other Operating Expenses

02 Traveling Expenses 139,611

03 Communication Services 22,514
04 Repair and Maintenance of Government Facilities 5,116
05 Repair and Maintenance of Government Vehicles 1,863
06 Transportation Services 178
07 Supplies and Materials 55,248
10 Grants/Subsidies/Contributions 940
14 Water/Illumination and Power 14,458
15 Social Security Benefits and Other Claims 325
17 Training and Seminars Expenses 7,236
18 Extraordinary and Miscellaneous Expenses 14,474
20 Anti-Insurgency/Contingency Emergency Expenses 9,400
23 Advertising and Publication 242
24 Fidelity Bonds and Insurance Premiums 1,420
29 Other Services 284,209
————
Total Maintenance and Other Operating Expenditures 557,234
————
Total Current Operating Expenditures 1,165,297
=======

(GAA of 1994, pp. 11-12)

The Special Provision Applicable to the Congress of the Philippines provides:

4. Realignment of Allocation for Operational Expenses. A member of Congress may

realign his allocation for operational expenses to any other expenses category
provide the total of said allocation is not exceeded. (GAA of 1994, p. 14).

The appropriation for operating expenditures for each House is further divided into expenditures for
salaries, personal services, other compensation benefits, maintenance expenses and other
operating expenses. In turn, each member of Congress is allotted for his own operating expenditure
a proportionate share of the appropriation for the House to which he belongs. If he does not spend
for one items of expense, the provision in question allows him to transfer his allocation in said item to
another item of expense.

Petitioners assail the special provision allowing a member of Congress to realign his allocation for
operational expenses to any other expense category (Rollo, pp. 82-92), claiming that this practice is
prohibited by Section 25(5), Article VI of the Constitution. Said section provides:

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 proviso of said Article of the Constitution grants the President of the Senate and the Speaker of
the House of Representatives the power to augment items in an appropriation act for their respective
offices from savings in other items of their appropriations, whenever there is a law authorizing such
augmentation.

The special provision on realignment of the operating expenses of members of Congress is

authorized by Section 16 of the General Provisions of the GAA of 1994, which provides:

Expenditure Components. Except by act of the Congress of the Philippines, no

change or modification shall be made in the expenditure items authorized in this Act
and other appropriation laws unless in cases 
of augmentations from savings in appropriations as authorized under Section 25(5)
of Article VI of the Constitution (GAA of 1994, p. 1273).

Petitioners argue that the Senate President and the Speaker of the House of Representatives, but
not the individual members of Congress are the ones authorized to realign the savings as
appropriated.

Under the Special Provisions applicable to the Congress of the Philippines, the members of
Congress only determine the necessity of the realignment of the savings in the allotments for their
operating expenses. They are in the best position to do so because they are the ones who know
whether there are savings available in some items and whether there are deficiencies in other items
of their operating expenses that need augmentation. However, it is the Senate President and the
Speaker of the House of Representatives, as the case may be, who shall approve the realignment.
Before giving their stamp of approval, these two officials will have to see to it that:

(1) The funds to be realigned or transferred are actually savings in the items of expenditures from
which the same are to be taken; and

(2) The transfer or realignment is for the purposes of augmenting the items of expenditure to which
said transfer or realignment is to be made.

3. Highest Priority for Debt Service

While Congress appropriated P86,323,438,000.00 for debt service (Article XLVII of the GAA of
1994), it appropriated only P37,780,450,000.00 for the Department of Education Culture and Sports.
Petitioners urged that Congress cannot give debt service the highest priority in the GAA of 1994
(Rollo, pp. 93-94) because under the Constitution it should be education that is entitled to the
highest funding. They invoke Section 5(5), Article XIV thereof, which provides:

(5) The State shall assign the highest budgetary priority to education and ensure that
teaching will attract and retain its rightful share of the best available talents through
adequate remuneration and other means of job satisfaction and fulfillment.

This issue was raised in Guingona, Jr. v. Carague, 196 SCRA 221 (1991), where this Court held
that Section 5(5), Article XIV of the Constitution, is merely directory, thus:
 While it is true that under Section 5(5), Article XIV of the Constitution, Congress is
mandated to "assign the highest budgetary priority to education" in order to "insure
that teaching will attract and retain its rightful share of the best available talents
through adequate remuneration and other means of job satisfaction and fulfillment," it
does not thereby follow that the hands of Congress are so hamstrung as to deprive it
the power to respond to the imperatives of the national interest and for the attainment
of other state policies or objectives.

As aptly observed by respondents, since 1985, the budget for education has tripled
to upgrade and improve the facility of the public school system. The compensation of
teachers has been doubled. The amount of P29,740,611,000.00 set aside for the
Department of Education, Culture and Sports under the General Appropriations Act
(R.A. No. 6381), is the highest budgetary allocation among all department budgets.
This is a clear compliance with the aforesaid constitutional mandate according
highest priority to education.

Having faithfully complied therewith, Congress is certainly not without any power,
guided only by its good judgment, to provide an appropriation, that can reasonably
service our enormous debt, the greater portion of which was inherited from the
previous administration. It is not only a matter of honor and to protect the credit
standing of the country. More especially, the very survival of our economy is at stake.
Thus, if in the process Congress appropriated an amount for debt service bigger than
the share allocated to education, the Court finds and so holds that said appropriation
cannot be thereby assailed as unconstitutional.

G.R. No. 113105
G.R. No. 113174

Veto of Provision on Debt Ceiling

The Congress added a Special Provision to Article XLVIII (Appropriations for Debt Service) of the
GAA of 1994 which provides:

Special Provisions

1. Use of the Fund. The appropriation authorized herein shall be used for payment of
principal and interest of foreign and domestic indebtedness; PROVIDED, That any
payment in excess of the amount herein appropriated shall be subject to the approval
of the President of the Philippines with the concurrence of the Congress of the
Philippines; PROVIDED, FURTHER, That in no case shall this fund be used to pay
for the liabilities of the Central Bank Board of Liquidators.

2. Reporting Requirement. The Bangko Sentral ng Pilipinas and the Department of

Finance shall submit a quarterly report of actual foreign and domestic debt service
payments to the House Committee on Appropriations and Senate Finance
Committee within one (1) month after each quarter (GAA of 1944, pp. 1266).

The President vetoed the first Special Provision, without vetoing the P86,323,438,000.00
appropriation for debt service in said Article. According to the President's Veto Message:

IV. APPROPRIATIONS FOR DEBT SERVICE

 I would like to emphasize that I concur fully with the desire of Congress to reduce the
debt burden by decreasing the appropriation for debt service as well as the inclusion
of the Special Provision quoted below. Nevertheless, I believe that this debt
reduction scheme cannot be validly done through the 1994 GAA. This must be
addressed by revising our debt policy by way of innovative and comprehensive debt
reduction programs conceptualized within the ambit of the Medium-Term Philippine
Development Plan.

Appropriations for payment of public debt, whether foreign or domestic, are

automatically appropriated pursuant to the Foreign Borrowing Act and Section 31 of
P.D. No. 1177 as reiterated under Section 26, Chapter 4, Book VI of E.O. No. 292,
the Administrative Code of 1987. I wish to emphasize that the constitutionality of
such automatic provisions on debt servicing has been upheld by the Supreme Court
in the case of "Teofisto T. Guingona, Jr., and Aquilino Q. Pimentel, Jr. v. Hon.
Guillermo N. Carague, in his capacity as Secretary of Budget and Management, et
al.," G.R. No. 94571, dated April 22, 1991.

I am, therefore vetoing the following special provision for the reason that the GAA is
not the appropriate legislative measure to amend the provisions of the Foreign
Borrowing Act, P.D. No. 1177 and E.O. No. 292:

Use of the Fund. The appropriation authorized herein shall be used

for payment of principal and interest of foreign and domestic
indebtedness: PROVIDED, That any payment in excess of the
amount herein appropriated shall be subject to the approval of the
President of the Philippines with the concurrence of the Congress of
the Philippines: PROVIDED, FURTHER, That in no case shall this
fund be used to pay for the liabilities of the Central Bank Board of
Liquidators (GAA of 1994, p. 1290).

Petitioners claim that the President cannot veto the Special Provision on the appropriation for debt
service without vetoing the entire amount of P86,323,438.00 for said purpose (Rollo, G.R. No.
113105, pp. 93-98; Rollo, G.R. No. 113174, pp. 16-18). The Solicitor General counterposed that the
Special Provision did not relate to the item of appropriation for debt service and could therefore be
the subject of an item veto (Rollo, G.R. No. 113105, pp. 54-60; Rollo, G.R. No. 113174, pp. 72-82).

This issue is a mere rehash of the one put to rest in Gonzales v. Macaraig, Jr., 191 SCRA 452
(1990). In that case, the issue was stated by the Court, thus:

The fundamental issue raised is whether or not the veto by the President of Section
55 of the 1989 Appropriations Bill (Section 55 
FY '89), and subsequently of its counterpart Section 16 of the 1990 Appropriations
Bill (Section 16 FY '90), is unconstitutional and without effect.

The Court re-stated the issue, just so there would not be any misunderstanding about it, thus:

The focal issue for resolution is whether or not the President exceeded the item-veto
power accorded by the Constitution. Or differently put, has the President the power
to veto "provisions" of an Appropriations Bill?

The bases of the petition in Gonzales, which are similar to those invoked in the present case, are
stated as follows:
 In essence, petitioners' cause is anchored on the following grounds: (1) the
President's line-veto power as regards appropriation bills is limited to item/s and
does not cover provision/s; therefore, she exceeded her authority when she vetoed
Section 55 (FY '89) and Section 16 (FY '90) which are provisions; (2) when the
President objects to a provision of an appropriation bill, she cannot exercise the item-
veto power but should veto the entire bill; (3) 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 (4) 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.

The restrictive interpretation urged by 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.

The Court went one step further and ruled that even assuming arguendo that "provisions" are
beyond the executive power to veto, and Section 55 
(FY '89) and Section 16 (FY '90) were not "provisions" in the budgetary sense of the term, they are
"inappropriate provisions" that should be treated as "items" for the purpose of the President's veto
power.

The Court, citing Henry v. Edwards, La., 346 So. 2d 153 (1977), said that Congress cannot include
in a general appropriations bill matters that should be more properly enacted in separate legislation,
and if it does that, the inappropriate provisions inserted by it must be treated as "item", which can be
vetoed by the President in the exercise of his item-veto power.

It is readily apparent that the Special Provision applicable to the appropriation for debt service
insofar as it refers to funds in excess of the amount appropriated in the bill, is an "inappropriate"
provision referring to funds other than the P86,323,438,000.00 appropriated in the General
Appropriations Act of 1991.

Likewise the vetoed provision is clearly an attempt to repeal Section 31 of P.D. No. 1177 (Foreign
Borrowing Act) and E.O. No. 292, and to reverse the debt payment policy. As held by the Court
in Gonzales, the repeal of these laws should be done in a separate law, not in the appropriations
law.

The Court will indulge every intendment in favor of the constitutionality of a veto, the same as it will
presume the constitutionality of an act of Congress (Texas Co. v. State, 254 P. 1060; 31 Ariz, 485,
53 A.L.R. 258 [1927]).

The veto power, while exercisable by the President, is actually a part of the legislative process
(Memorandum of Justice Irene Cortes as Amicus Curiae, pp. 3-7). That is why it is found in Article VI
on the Legislative Department rather than in Article VII on the Executive Department in the
Constitution. There is, therefore, sound basis to indulge in the presumption of validity of a veto. The
burden shifts on those questioning the validity thereof to show that its use is a violation of the
Constitution.

Under his general veto power, the President has to veto the entire bill, not merely parts thereof
(1987 Constitution, Art. VI, Sec. 27[1]). The exception to the general veto power is the power given
to the President to veto any particular item or items in a general appropriations bill (1987
Constitution, Art. VI, 
Sec. 27[2]). In so doing, the President must veto the entire item.

A general appropriations bill is a special type of legislation, whose content is limited to specified
sums of money dedicated to a specific purpose or a separate fiscal unit (Beckman, The Item Veto
Power of the Executive, 
31 Temple Law Quarterly 27 [1957]).

The item veto was first introduced by the Organic Act of the Philippines passed by the U.S.
Congress on August 29, 1916. The concept was adopted from some State Constitutions.

Cognizant of the legislative practice of inserting provisions, including conditions, restrictions and
limitations, to items in appropriations bills, the Constitutional Convention added the following
sentence to Section 20(2), Article VI of the 1935 Constitution:

. . . When a provision of an appropriation bill affect one or more items of the same,
the President cannot veto the provision without at the same time vetoing the
particular item or items to which it relates . . . .

In short, under the 1935 Constitution, the President was empowered to veto separately not only
items in an appropriations bill but also "provisions".

While the 1987 Constitution did not retain the aforementioned sentence added to Section 11(2) of
Article VI of the 1935 Constitution, it included the following provision:

No provision or enactment shall be embraced in the general appropriations bill

unless it relates specifically to some particular appropriation therein. Any such
provision or enactment shall be limited in its operation to the appropriation to which it
relates (Art. VI, Sec. 25[2]).

In Gonzales, we made it clear that the omission of that sentence of Section 16(2) of the 1935
Constitution in the 1987 Constitution should not be interpreted to mean the disallowance of the
power of the President to veto a "provision".

As the Constitution is explicit that the provision which Congress can include in an appropriations bill
must "relate specifically to some particular appropriation therein" and "be limited in its operation to
the appropriation to which it relates," it follows that any provision which does not relate to any
particular item, or which extends in its operation beyond an item of appropriation, is considered "an
inappropriate provision" which can be vetoed separately from an item. Also to be included in the
category of "inappropriate provisions" are unconstitutional provisions and provisions which are
intended to amend other laws, because clearly these kind of laws have no place in an appropriations
bill. These are matters of general legislation more appropriately dealt with in separate enactments.
Former Justice Irene Cortes, as Amicus Curiae, commented that Congress cannot by law establish
conditions for and regulate the exercise of powers of the President given by the Constitution for that
would be an unconstitutional intrusion into executive prerogative.
The doctrine of "inappropriate provision" was well elucidated in Henry v. Edwards, supra., thus:

Just as the President may not use his item-veto to usurp constitutional powers
conferred on the legislature, neither can the legislature deprive the Governor of the
constitutional powers conferred on him as chief executive officer of the state by
including in a general appropriation bill matters more properly enacted in separate
legislation. The Governor's constitutional power to veto bills of general legislation . . .
cannot be abridged by the careful placement of such measures in a general
appropriation bill, thereby forcing the Governor to choose between approving
unacceptable substantive legislation or vetoing "items" of expenditures essential to
the operation of government. The legislature cannot by location of a bill give it
immunity from executive veto. Nor can it circumvent the Governor's veto power over
substantive legislation by artfully drafting general law measures so that they appear
to be true conditions or limitations on an item of appropriation. Otherwise, the
legislature would be permitted to impair the constitutional responsibilities and
functions of a co-equal branch of government in contravention of the separation of
powers doctrine . . . We are no more willing to allow the legislature to use its
appropriation power to infringe on the Governor's constitutional right to veto matters
of substantive legislation than we are to allow the Governor to encroach on the
Constitutional powers of the legislature. In order to avoid this result, we hold
that, when the legislature inserts inappropriate provisions in a general appropriation
bill, such provisions must be treated as "items" for purposes of the Governor's item
veto power over general appropriation bills.

xxx xxx xxx

. . . Legislative control cannot be exercised in such a manner as to encumber the

general appropriation bill with veto-proof "logrolling measures", special interest
provisions which could not succeed if separately enacted, or "riders", substantive
pieces of legislation incorporated in a bill to insure passage without veto . . .
(Emphasis supplied).

Petitioners contend that granting arguendo that the veto of the Special Provision on the ceiling for
debt payment is valid, the President cannot automatically appropriate funds for debt payment without
complying with the conditions for automatic appropriation under the provisions of R.A. No. 4860 as
amended by P.D. No. 81 and the provisions of P.D. No. 1177 as amended by the Administrative
Code of 1987 and P.D. No. 1967 (Rollo, G.R. No. 113766, pp. 9-15).

Petitioners cannot anticipate that the President will not faithfully execute the laws. The writ of
prohibition will not issue on the fear that official actions will be done in contravention of the laws.

The President vetoed the entire paragraph one of the Special Provision of the item on debt service,
including the provisions that the appropriation authorized in said item "shall be used for payment of
the principal and interest of foreign and domestic indebtedness" and that "in no case shall this fund
be used to pay for the liabilities of the Central Bank Board of Liquidators." These provisions are
germane to and have a direct connection with the item on debt service. Inherent in the power of
appropriation is the power to specify how the money shall be spent (Henry v. Edwards, LA, 346 So.,
2d., 153). The said provisos, being appropriate provisions, cannot be vetoed separately. Hence the
item veto of said provisions is void.

We reiterate, in order to obviate any misunderstanding, that we are sustaining the veto of the Special
Provision of the item on debt service only with respect to the proviso therein requiring that "any
payment in excess of the amount herein, appropriated shall be subject to the approval of the
President of the Philippines with the concurrence of the Congress of the Philippines . . ."

G.R. NO. 113174
G.R. NO. 113766
G.R. NO. 11388

1. Veto of provisions for revolving funds of SUC's.

In the appropriation for State Universities and Colleges (SUC's), the President vetoed special
provisions which authorize the use of income and the creation, operation and maintenance of
revolving funds. The Special Provisions vetoed are the following:

(H. 7) West Visayas State University

Equal Sharing of Income. Income earned by the University subject to Section 13 of

the special provisions applicable to all State Universities and Colleges shall be
equally shared by the University and the University Hospital (GAA of 1994, p. 395).

xxx xxx xxx

(J. 3) Leyte State College

Revolving Fund for the Operation of LSC House and Human Resources
Development Center (HRDC). The income of Leyte State College derived from the
operation of its LSC House and HRDC shall be constituted into a Revolving Fund to
be deposited in an authorized government depository bank for the operational
expenses of these projects/services. The net income of the Revolving Fund at the
end of the year shall be remitted to the National Treasury and shall accrue to the
General Fund. The implementing guidelines shall be issued by the Department of
Budget and Management (GAA of 1994, p. 415).

The vetoed Special Provisions applicable to all SUC's are the following:

12. Use of Income from Extension Services. State Universities and Colleges are
authorized to use their income from their extension services. Subject to the approval
of the Board of Regents and the approval of a special budget pursuant to Sec. 35,
Chapter 5, Book VI of E.O. 
No. 292, such income shall be utilized solely for faculty development, instructional
materials and work study program (GAA of 1994, p. 490).

xxx xxx xxx

13. Income of State Universities and Colleges. The income of State Universities and
Colleges derived from tuition fees and other sources as may be imposed by
governing boards other than those accruing to revolving funds created under LOI
Nos. 872 and 1026 and those authorized to be recorded as trust receipts pursuant to
Section 40, Chapter 5, Book VI of E.O. No. 292 shall be deposited with the National
Treasury and recorded as a Special Account in the General Fund pursuant to P.D.
No. 1234 and P.D. No. 1437 for the use of the institution, subject to Section 35,
Chapter 5, Book VI of E.O. No. 292L PROVIDED, That disbursements from the
 Special Account shall not exceed the amount actually earned and
deposited: PROVIDED, FURTHER, That a cash advance on such income may be
allowed State half of income actually realized during the preceding year and this
cash advance shall be charged against income actually earned during the budget
year: AND PROVIDED, FINALLY, That in no case shall such funds be used to create
positions, nor for payment of salaries, wages or allowances, except as may be
specifically approved by the Department of Budge and Management for income-
producing activities, or to purchase equipment or books, without the prior approval of
the President of the Philippines pursuant to Letter of Implementation No. 29.

All collections of the State Universities and Colleges for fees, charges and receipts
intended for private recipient units, including private foundations affiliated with these
institutions shall be duly acknowledged with official receipts and deposited as a trust
receipt before said income shall be subject to Section 35, Chapter 5, Book VI of E.O.
No. 292 
(GAA of 1994, p. 490).

The President gave his reason for the veto thus:

Pursuant to Section 65 of the Government Auditing Code of the Philippines, Section

44, Chapter 5, Book VI of E.O. No. 292, s. 1987 and Section 22, Article VII of the
Constitution, all income earned by all Government offices and agencies shall accrue
to the General Fund of the Government in line with the One Fund Policy enunciated
by Section 29 (1), Article VI and Section 22, Article VII of the Constitution. Likewise,
the creation and establishment of revolving funds shall be authorized by substantive
law pursuant to Section 66 of the Government Auditing Code of the Philippines and
Section 45, Chapter 5, Book VI of E.O. No. 292.

Notwithstanding the aforementioned provisions of the Constitution and existing law, I

have noted the proliferation of special provisions authorizing the use of agency
income as well as the creation, operation and maintenance of revolving funds.

I would like to underscore the facts that such income were already considered as
integral part of the revenue and financing sources of the National Expenditure
Program which I previously submitted to Congress. Hence, the grant of new special
provisions authorizing the use of agency income and the establishment of revolving
funds over and above the agency appropriations authorized in this Act shall
effectively reduce the financing sources of the 1994 GAA and, at the same time,
increase the level of expenditures of some agencies beyond the well-coordinated,
rationalized levels for such agencies. This corresponding increases the overall deficit
of the National Government (Veto Message, p. 3).

Petitioners claim that the President acted with grave abuse of discretion when he disallowed by his
veto the "use of income" and the creation of "revolving fund" by the Western Visayas State
University and Leyte State Colleges when he allowed other government offices, like the National
Stud Farm, to use their income for their operating expenses (Rollo, G.R. No. 113174, pp. 15-16).

There was no undue discrimination when the President vetoed said special provisions while allowing
similar provisions in other government agencies. If some government agencies were allowed to use
their income and maintain a revolving fund for that purpose, it is because these agencies have been
enjoying such privilege before by virtue of the special laws authorizing such practices as exceptions
to the "one-fund policy" (e.g., R.A. No. 4618 for the National Stud Farm, P.D. No. 902-A for the
Securities and Exchange Commission; E.O. No. 359 for the Department of Budget and
Management's Procurement Service).

2. Veto of provision on 70% (administrative)/30% (contract) ratio for road maintenance.

In the appropriation for the Department of Public Works and Highways, the President vetoed the
second paragraph of Special Provision No. 2, specifying the 30% maximum ration of works to be
contracted for the maintenance of national roads and bridges. The said paragraph reads as follows:

2. Release and Use of Road Maintenance Funds. Funds allotted for the maintenance
and repair of roads which are provided in this Act for the Department of Public Works
and Highways shall be released to the respective Engineering District, subject to
such rules and regulations as may be prescribed by the Department of Budget and
Management. Maintenance funds for roads and bridges shall be exempt from
budgetary reserve.

Of the amount herein appropriated for the maintenance of national roads and
bridges, a maximum of thirty percent (30%) shall be contracted out in accordance
with guidelines to be issued by the Department of Public Works and Highways. The
balance shall be used for maintenance by force account.

Five percent (5%) of the total road maintenance fund appropriated herein to be
applied across the board to the allocation of each region shall be set aside for the
maintenance of roads which may be converted to or taken over as national roads
during the current year and the same shall be released to the central office of the
said department for eventual 
sub-allotment to the concerned region and district: PROVIDED, That any balance of
the said five percent (5%) shall be restored to the regions on a pro-rata basis for the
maintenance of existing national roads.

No retention or deduction as reserves or overhead expenses shall be made, except

as authorized by law or upon direction of the President 
(GAA of 1994, pp. 785-786; Emphasis supplied).

The President gave the following reason for the veto:

While I am cognizant of the well-intended desire of Congress to impose certain

restrictions contained in some special provisions, I am equally aware that many
programs, projects and activities of agencies would require some degree of flexibility
to ensure their successful implementation and therefore risk their completion.
Furthermore, not only could these restrictions and limitations derail and impede
program implementation but they may also result in a breach of contractual
obligations.

D.1.a. A study conducted by the Infrastructure Agencies show that for practical intent
and purposes, maintenance by contract could be undertaken to an optimum of
seventy percent (70%) and the remaining thirty percent (30%) by force account.
Moreover, the policy of maximizing implementation through contract maintenance is
a covenant of the Road and Road Transport Program Loan from the Asian
Development Bank (ADB Loan No. 1047-PHI-1990) and Overseas Economic
Cooperation Fund (OECF Loan No. PH-C17-199). The same is a covenant under the
 World Bank (IBRD) Loan for the Highway Management Project (IBRD Loan 
No. PH-3430) obtained in 1992.

In the light of the foregoing and considering the policy of the government to
encourage and maximize private sector participation in the regular repair and
maintenance of infrastructure facilities, I am directly vetoing the underlined second
paragraph of Special Provision No. 2 of the Department of Public Works and
Highways (Veto Message, p. 11).

The second paragraph of Special Provision No. 2 brings to fore the divergence in policy of Congress
and the President. While Congress expressly laid down the condition that only 30% of the total
appropriation for road maintenance should be contracted out, the President, on the basis of a
comprehensive study, believed that contracting out road maintenance projects at an option of 70%
would be more efficient, economical and practical.

The Special Provision in question is not an inappropriate provision which can be the subject of a
veto. It is not alien to the appropriation for road maintenance, and on the other hand, it specified how
the said item shall be expended — 70% by administrative and 30% by contract.

The 1987 Constitution allows the addition by Congress of special provisions, conditions to items in
an expenditure bill, which cannot be vetoed separately from the items to which they relate so long as
they are "appropriate" in the budgetary sense (Art. VII, Sec. 25[2]).

The Solicitor General was hard put in justifying the veto of this special provision. He merely argued
that the provision is a complete turnabout from an entrenched practice of the government to
maximize contract maintenance (Rollo, G.R. No. 113888, pp. 85-86). That is not a ground to veto a
provision separate from the item to which it refers.

The veto of the second paragraph of Special Provision No. 2 of the item for the DPWH is therefore
unconstitutional.

3. Veto of provision on purchase of medicines by AFP.

In the appropriation for the Armed Forces of the Philippines (AFP), the President vetoed the special
provision on the purchase by the AFP of medicines in compliance with the Generics Drugs Law
(R.A. No. 6675). The vetoed provision reads:

12. Purchase of Medicines. The purchase of medicines by all Armed Forces of the
Philippines units, hospitals and clinics shall strictly comply with the formulary
embodied in the National Drug Policy of the Department of Health (GAA of 1994, p.
748).

According to the President, while it is desirable to subject the purchase of medicines to a standard
formulary, "it is believed more prudent to provide for a transition period for its adoption and smooth
implementation in the Armed Forces of the Philippines" (Veto Message, p. 12).

The Special Provision which requires that all purchases of medicines by the AFP should strictly
comply with the formulary embodied in the National Drug Policy of the Department of Health is an
"appropriate" provision. it is a mere advertence by Congress to the fact that there is an existing law,
the Generics Act of 1988, that requires "the extensive use of drugs with generic names through a
rational system of procurement and distribution." The President believes that it is more prudent to
provide for a transition period for the smooth implementation of the law in the case of purchases by
the Armed Forces of the Philippines, as implied by Section 11 (Education Drive) of the law itself.
This belief, however, cannot justify his veto of the provision on the purchase of medicines by the
AFP.

Being directly related to and inseparable from the appropriation item on purchases of medicines by
the AFP, the special provision cannot be vetoed by the President without also vetoing the said item
(Bolinao Electronics Corporation v. Valencia, 11 SCRA 486 [1964]).

4. Veto of provision on prior approval of Congress for purchase of military equipment.

In the appropriation for the modernization of the AFP, the President vetoed the underlined proviso of
Special Provision No. 2 on the "Use of Fund," which requires the prior approval of Congress for the
release of the corresponding modernization funds, as well as the entire Special Provisions 
No. 3 on the "Specific Prohibition":

2. Use of the Fund. Of the amount herein appropriated, priority shall be given for the
acquisition of AFP assets necessary for protecting marine, mineral, forest and other
resources within Philippine territorial borders and its economic zone, detection,
prevention or deterrence of air or surface intrusions and to support diplomatic moves
aimed at preserving national dignity, sovereignty and patrimony: PROVIDED, That
the said modernization fund shall not be released until a Table of Organization and
Equipment for FY 1994-2000 is submitted to and approved by Congress.

3. Specific Prohibition. The said Modernization Fund shall not be used for payment of
six (6) additional S-211 Trainer planes, 18 SF-260 Trainer planes and 150 armored
personnel carriers (GAA of 1994, p. 747).

As reason for the veto, the President stated that the said condition and prohibition violate the
Constitutional mandate of non-impairment of contractual obligations, and if allowed, "shall effectively
alter the original intent of the AFP Modernization Fund to cover all military equipment deemed
necessary to modernize the Armed Forces of the Philippines" (Veto Message, p. 12).

Petitioners claim that Special Provision No. 2 on the "Use of Fund" and Special Provision No. 3 are
conditions or limitations related to the item on the AFP modernization plan.

The requirement in Special Provision No. 2 on the "Use of Fund" for the AFP modernization program
that the President must submit all purchases of military equipment to Congress for its approval, is an
exercise of the "congressional or legislative veto." By way of definition, a congressional veto is a
means whereby the legislature can block or modify administrative action taken under a statute. It is a
form of legislative control in the implementation of particular executive actions. The form may be
either negative, that is requiring disapproval of the executive action, or affirmative, requiring approval
of the executive action. This device represents a significant attempt by Congress to move from
oversight of the executive to shared administration (Dixon, The Congressional Veto and Separation
of Powers: The Executive on a Leash, 
56 North Carolina Law Review, 423 [1978]).

A congressional veto is subject to serious questions involving the principle of separation of powers.

However the case at bench is not the proper occasion to resolve the issues of the validity of the
legislative veto as provided in Special Provisions Nos. 2 and 3 because the issues at hand can be
disposed of on other grounds. Any provision blocking an administrative action in implementing a law
or requiring legislative approval of executive acts must be incorporated in a separate and
substantive bill. Therefore, being "inappropriate" provisions, Special Provisions Nos. 2 and 3 were
properly vetoed.

As commented by Justice Irene Cortes in her memorandum as Amicus Curiae: "What Congress
cannot do directly by law it cannot do indirectly by attaching conditions to the exercise of that power
(of the President as Commander-in-Chief) through provisions in the appropriation law."

Furthermore, Special Provision No. 3, prohibiting the use of the Modernization Funds for payment of
the trainer planes and armored personnel carriers, which have been contracted for by the AFP, is
violative of the Constitutional prohibition on the passage of laws that impair the obligation of
contracts (Art. III, Sec. 10), more so, contracts entered into by the Government itself.

The veto of said special provision is therefore valid.

5. Veto of provision on use of savings to augment AFP pension funds.

In the appropriation for the AFP Pension and Gratuity Fund, the President vetoed the new provision
authorizing the Chief of Staff to use savings in the AFP to augment pension and gratuity funds. The
vetoed provision reads:

2. Use of Savings. The Chief of Staff, AFP, is authorized, subject to the approval of
the Secretary of National Defense, to use savings in the appropriations provided
herein to augment the pension fund being managed by the AFP Retirement and
Separation Benefits System as provided under Sections 2(a) and 3 of P.D. No. 361
(GAA of 1994, 
p. 746).

According to the President, the grant of retirement and separation benefits should be covered by
direct appropriations specifically approved for the purpose pursuant to Section 29(1) of Article VI of
the Constitution. Moreover, he stated that the authority to use savings is lodged in the officials
enumerated in Section 25(5) of Article VI of the Constitution (Veto Message, pp. 7-8).

Petitioners claim that the Special Provision on AFP Pension and Gratuity Fund is a condition or
limitation which is so intertwined with the item of appropriation that it could not be separated
therefrom.

The Special Provision, which allows the Chief of Staff to use savings to augment the pension fund
for the AFP being managed by the AFP Retirement and Separation Benefits System is violative of
Sections 25(5) and 29(1) of the Article VI of the Constitution.

Under Section 25(5), no law shall be passed authorizing any transfer of appropriations, and under
Section 29(1), no money shall be paid out of 
the Treasury except in pursuance of an appropriation made by law. While Section 25(5) allows as an
exception the realignment of savings to augment items in the general appropriations law for the
executive branch, such right must and can be exercised only by the President pursuant to a specific
law.

6. Condition on the deactivation of the CAFGU's.

Congress appropriated compensation for the CAFGU's, including the payment of separation benefits
but it added the following Special Provision:

1. CAFGU Compensation and Separation Benefit. The appropriation authorized

herein shall be used for the compensation of CAFGU's including the payment of their
separation benefit not exceeding one (1) year subsistence allowance for the 11,000
members who will be deactivated in 1994. The Chief of Staff, AFP, shall, subject to
the approval of the Secretary of National Defense, promulgate policies and
procedures for the payment of separation benefit (GAA of 1994, p. 740).

The President declared in his Veto Message that the implementation of this Special Provision to the
item on the CAFGU's shall be subject to prior Presidential approval pursuant to P.D. No. 1597 and
R.A.. No. 6758. He gave the following reasons for imposing the condition:

I am well cognizant of the laudable intention of Congress in proposing the

amendment of Special Provision No. 1 of the CAFGU. However, it is premature at
this point in time of our peace process to earmark and declare through special
provision the actual number of CAFGU members to be deactivated in CY 1994. I
understand that the number to be deactivated would largely depend on the result or
degree of success of the on-going peace initiatives which are not yet precisely
determinable today. I have desisted, therefore, to directly veto said provisions
because this would mean the loss of the entire special provision to the prejudice of
its beneficient provisions. I therefore declare that the actual implementation of this
special provision shall be subject to prior Presidential approval pursuant to the
provisions of P.D. No. 1597 and 
R.A. No. 6758 (Veto Message, p. 13).

Petitioners claim that the Congress has required the deactivation of the CAFGU's when it
appropriated the money for payment of the separation pay of the members of thereof. The President,
however, directed that the deactivation should be done in accordance to his timetable, taking into
consideration the peace and order situation in the affected localities.

Petitioners complain that the directive of the President was tantamount to an administrative embargo
of the congressional will to implement the Constitution's command to dissolve the CAFGU's (Rollo,
G.R. No. 113174, 
p. 14; G.R. No. 113888, pp. 9, 14-16). They argue that the President cannot impair or withhold
expenditures authorized and appropriated by Congress when neither the Appropriations Act nor
other legislation authorize such impounding (Rollo, G.R. No. 113888, pp. 15-16).

The Solicitor General contends that it is the President, as Commander-in-Chief of the Armed Forces
of the Philippines, who should determine when the services of the CAFGU's are no longer needed
(Rollo, G.R. No. 113888, 
pp. 92-95.).

This is the first case before this Court where the power of the President to impound is put in issue.
Impoundment refers to a refusal by the President, for whatever reason, to spend funds made
available by Congress. It is the failure to spend or obligate budget authority of any type
(Notes: Impoundment of Funds, 86 Harvard Law Review 1505 [1973]).

Those who deny to the President the power to impound argue that once Congress has set aside the
fund for a specific purpose in an appropriations act, it becomes mandatory on the part of the
President to implement the project and to spend the money appropriated therefor. The President has
no discretion on the matter, for the Constitution imposes on him the duty to faithfully execute the
laws.

In refusing or deferring the implementation of an appropriation item, the President in effect exercises
a veto power that is not expressly granted by the Constitution. As a matter of fact, the Constitution
does not say anything about impounding. The source of the Executive authority must be found
elsewhere.

Proponents of impoundment have invoked at least three principal sources of the authority of the
President. Foremost is the authority to impound given to him either expressly or impliedly by
Congress. Second is the executive power drawn from the President's role as Commander-in-Chief.
Third is the Faithful Execution Clause which ironically is the same provision invoked by petitioners
herein.

The proponents insist that a faithful execution of the laws requires that the President desist from
implementing the law if doing so would prejudice public interest. An example given is when through
efficient and prudent management of a project, substantial savings are made. In such a case, it is
sheer folly to expect the President to spend the entire amount budgeted in the law
(Notes: Presidential Impoundment: Constitutional Theories and Political Realities, 61 Georgetown
Law Journal 1295 [1973]; Notes; Protecting the Fisc: Executive Impoundment and Congressional
Power, 82 Yale Law Journal 1686 [1973).

We do not find anything in the language used in the challenged Special Provision that would imply
that Congress intended to deny to the President the right to defer or reduce the spending, much less
to deactivate 11,000 CAFGU members all at once in 1994. But even if such is the intention, the
appropriation law is not the proper vehicle for such purpose. Such intention must be embodied and
manifested in another law considering that it abrades the powers of the Commander-in-Chief and
there are existing laws on the creation of the CAFGU's to be amended. Again we state: a provision
in an appropriations act cannot 
be used to repeal or amend other laws, in this case, P.D. No. 1597 and R.A. No. 6758.

7. Condition on the appropriation for the Supreme Court, etc.

(a) In the appropriations for the Supreme Court, Ombudsman, COA, and CHR, the Congress added
the following provisions:

The Judiciary

xxx xxx xxx

Special Provisions

1. Augmentation of any Item in the Court's Appropriations. Any savings in the

appropriations for the Supreme Court and the Lower Courts may be utilized by the
Chief Justice of the Supreme Court to augment any item of the Court's
appropriations for (a) printing of decisions and publication of "Philippine Reports"; (b)
Commutable terminal leaves of Justices and other personnel of the Supreme Court
and payment of adjusted pension rates to retired Justices entitled thereto pursuant to
Administrative Matter No. 91-8-225-C.A.; (c) repair, maintenance, improvement and
other operating expenses of the courts' libraries, including purchase of books and
periodicals; (d) purchase, maintenance and improvement of printing equipment; (e)
necessary expenses for the employment of temporary employees, contractual and
casual employees, for judicial administration; (f) maintenance and improvement of
the Court's Electronic Data 
Processing System; (g) extraordinary expenses of the Chief Justice, attendance in
international conferences and conduct of training programs; (h) commutable
transportation and representation allowances and fringe benefits for Justices, Clerks
of Court, Court Administrator, Chiefs of Offices and other Court personnel in
accordance with the rates prescribed by law; and (i) compensation of attorney-de-
officio: PROVIDED, That as mandated by LOI No. 489 any increase in salary and
allowances shall be subject to the usual procedures and policies as provided for
under 
P.D. No. 985 and other pertinent laws (GAA of 1994, p. 1128; Emphasis supplied).

xxx xxx xxx

Commission on Audit

xxx xxx xxx

5. Use of Savings. The Chairman of the Commission on Audit is hereby authorized,

subject to appropriate accounting and auditing rules and regulations, to use savings
for the payment of fringe benefits as may be authorized by law for officials and
personnel of the Commission (GAA of 1994, p. 1161; Emphasis supplied).

xxx xxx xxx

Office of the Ombudsman

xxx xxx xxx

6. Augmentation of Items in the appropriation of the Office of the Ombudsman. The

Ombudsman is hereby authorized, subject to appropriate accounting and auditing
rules and regulations to augment items of appropriation in the Office of the
Ombudsman from savings in other items of appropriation actually released, for: (a)
printing and/or publication of decisions, resolutions, training and information
materials; (b) repair, maintenance and improvement of OMB Central and
Area/Sectoral facilities; (c) purchase of books, journals, periodicals and equipment; 
(d) payment of commutable representation and transportation allowances of officials
and employees who by reason of their positions are entitled thereto and fringe
benefits as may be authorized specifically by law for officials and personnel of OMB
pursuant to Section 8 of Article IX-B of the Constitution; and (e) for other official
purposes subject to accounting and auditing rules and regulations (GAA of 1994, p.
1174; Emphasis supplied).

xxx xxx xxx

Commission on Human Rights

xxx xxx xxx

 1. Use of Savings. The Chairman of the Commission on Human Rights (CHR) is
hereby authorized, subject to appropriate accounting and auditing rules and
regulations, to augment any item of appropriation in the office of the CHR from
savings in other items of appropriations actually released, for: (a) printing and/or
publication of decisions, resolutions, training materials and educational publications;
(b) repair, maintenance and improvement of Commission's central and regional
facilities; (c) purchase of books, journals, periodicals and equipment, (d) payment of
commutable representation and transportation allowances of officials and employees
who by reason of their positions are entitled thereto and fringe benefits, as may be
authorized by law for officials and personnel of CHR, subject to accounting and
auditing rules and regulations (GAA of 1994, p. 1178; Emphasis supplied).

In his Veto Message, the President expressed his approval of the conditions included in the GAA of
1994. He noted that:

The said condition is consistent with the Constitutional injunction prescribed under
Section 8, Article IX-B of the Constitution which states that "no elective or appointive
public officer or employee shall receive additional, double, or indirect compensation
unless specifically authorized by law." I am, therefore, confident that the heads of the
said offices shall maintain fidelity to the law and faithfully adhere to the well-
established principle on compensation standardization (Veto Message, p. 10).

Petitioners claim that the conditions imposed by the President violated the independence and fiscal
autonomy of the Supreme Court, the Ombudsman, the COA and the CHR.

In the first place, the conditions questioned by petitioners were placed in the GAB by Congress itself,
not by the President. The Veto Message merely highlighted the Constitutional mandate that
additional or indirect compensation can only be given pursuant to law.

In the second place, such statements are mere reminders that the disbursements of appropriations
must be made in accordance with law. Such statements may, at worse, be treated as superfluities.

(b) In the appropriation for the COA, the President imposed the condition that the implementation of
the budget of the COA be subject to "the guidelines to be issued by the President."

The provisions subject to said condition reads:

xxx xxx xxx

3. Revolving Fund. The income of the Commission on Audit derived from sources
authorized by the Government Auditing Code of the Philippines (P.D. No. 1445) not
exceeding Ten Million Pesos (P10,000,000) shall be constituted into a revolving fund
which shall be used for maintenance, operating and other incidental expenses to
enhance audit services and audit-related activities. The fund shall be deposited in an
authorized government depository ban, and withdrawals therefrom shall be made in
accordance with the procedure prescribed by law and implementing rules and
regulations: PROVIDED,That any interests earned on such deposit shall be remitted
at the end of each quarter to the national Treasury and shall accrue to the General
Fund: PROVIDED FURTHER, That the Commission on Audit shall submit to the
Department of Budget and Management a quarterly report of income and
expenditures of said revolving fund (GAA of 1994, pp. 1160-1161).
The President cited the "imperative need to rationalize" the implementation, applicability and
operation of use of income and revolving funds. The Veto Message stated:

. . . I have observed that there are old and long existing special provisions
authorizing the use of income and the creation of revolving funds. As a rule, such
authorizations should be discouraged. However, I take it that these authorizations
have legal/statutory basis aside from being already a vested right to the agencies
concerned which should not be jeopardized through the Veto Message. There is,
however, imperative need to rationalize their implementation, applicability and
operation. Thus, in order to substantiate the purpose and intention of said provisions,
I hereby declare that the operationalization of the following provisions during budget
implementation shall be subject to the guidelines to be issued by the
President pursuant to Section 35, Chapter 5, Book VI of E.O. No. 292 and Sections
65 and 66 of P.D. No. 1445 in relation to Sections 2 and 3 of the General Provisions
of this Act (Veto Message, p. 6; Emphasis Supplied.)

(c) In the appropriation for the DPWH, the President imposed the condition that in the
implementation of DPWH projects, the administrative and engineering overhead of 5% and 3% "shall
be subject to the necessary administrative guidelines to be formulated by the Executive pursuant to
existing laws." The condition was imposed because the provision "needs further study" according to
the President.

The following provision was made subject to said condition:

9. Engineering and Administrative Overhead. Not more than five percent (5%) of the
amount for infrastructure project released by the Department of Budget and
Management shall be deducted by DPWH for administrative overhead, detailed
engineering and construction supervision, testing and quality control, and the like,
thus insuring that at least ninety-five percent (95%) of the released fund is available
for direct implementation of the project. PROVIDED, HOWEVER, That for school
buildings, health centers, day-care centers and barangay halls, the deductible
amount shall not exceed three percent (3%).

Violation of, or non-compliance with, this provision shall subject the government
official or employee concerned to administrative, civil and/or criminal sanction under
Sections 43 and 80, Book VI of E.O. 
No. 292 (GAA of 1994, p. 786).

(d) In the appropriation for the National Housing Authority (NHA), the President imposed the
condition that allocations for specific projects shall be released and disbursed "in accordance with
the housing program of the government, subject to prior Executive approval."

The provision subject to the said condition reads:

3. Allocations for Specified Projects. The following allocations for the specified
projects shall be set aside for corollary works and used exclusively for the repair,
rehabilitation and construction of buildings, roads, pathwalks, drainage, waterworks
systems, facilities and amenities in the area: PROVIDED, That any road to be
constructed or rehabilitated shall conform with the specifications and standards set
by the Department of Public Works and Highways for such kind of
road: PROVIDED, FURTHER, That savings that may be available in the future shall
be used for road repair, rehabilitation and construction:
 (1) Maharlika Village Road — Not less than
P5,000,000

(2) Tenement Housing Project (Taguig) — Not less

than P3,000,000

(3) Bagong Lipunan Condominium Project (Taguig) —

Not less than P2,000,000

4. Allocation of Funds. Out of the amount appropriated for the implementation of

various projects in resettlement areas, Seven Million Five Hundred Thousand Pesos
(P7,500,000) shall be allocated to the Dasmariñas Bagong Bayan resettlement area,
Eighteen Million Pesos (P18,000,000) to the Carmona Relocation Center Area (Gen.
Mariano Alvarez) and Three Million Pesos (P3,000,000) to the Bulihan Sites and
Services, all of which will be for the cementing of roads in accordance with DPWH
standards.

5. Allocation for Sapang Palay. An allocation of Eight Million Pesos (P8,000,000)

shall be set aside for the asphalting of seven (7) kilometer main road of Sapang
Palay, San Jose Del Monte, Bulacan 
(GAA of 1994, p. 1216).

The President imposed the conditions: (a) that the "operationalization" of the special provision on
revolving funds of the COA "shall be subject to guidelines to be issued by the President pursuant to
Section 35, Chapter 5, 
Book VI of E.O. 292 and Sections 65 and 66 of P.D. No. 1445 in relation to Sections 2 and 3 of the
General Provisions of this Act" (Rollo, G.R. 
No. 113174, pp. 5,7-8); (b) that the implementation of Special Provision No. 9 of the DPWH on the
mandatory retention of 5% and 3% of the amounts released by said Department "be subject to the
necessary administrative guidelines to be formulated by the Executive pursuant to existing law"
(Rollo, G.R. No. 113888; pp. 10, 14-16); and (c) that the appropriations authorized for the NHA can
be released only "in accordance with the housing program of the government subject to prior
Executive approval" (Rollo, G.R. No. 113888, pp. 10-11; 
14-16).

The conditions objected to by petitioners are mere reminders that the implementation of the items on
which the said conditions were imposed, should be done in accordance with existing laws,
regulations or policies. They did not add anything to what was already in place at the time of the
approval of the GAA of 1994.

There is less basis to complain when the President said that the expenditures shall be subject to
guidelines he will issue. Until the guidelines are issued, it cannot be determined whether they are
proper or inappropriate. The issuance of administrative guidelines on the use of public funds
authorized by Congress is simply an exercise by the President of his constitutional duty to see that
the laws are faithfully executed (1987 Constitution, Art. VII, Sec. 17; Planas v. Gil 67 Phil. 62 [1939]).
Under the Faithful Execution Clause, the President has the power to take "necessary and proper
steps" to carry into execution the law (Schwartz, On Constitutional Law, p. 147 [1977]). These steps
are the ones to be embodied in the guidelines.

IV
Petitioners chose to avail of the special civil actions but those remedies can be used only when
respondents have acted "without or in excess" of jurisdiction, or "with grave abuse of discretion,"
(Revised Rules of Court, 
Rule 65, Section 2). How can we begrudge the President for vetoing the Special Provision on the
appropriation for debt payment when he merely followed our decision in Gonzales? How can we say
that Congress has abused its discretion when it appropriated a bigger sum for debt payment than
the amount appropriated for education, when it merely followed our dictum in Guingona?

Article 8 of the Civil Code of Philippines, provides:

Judicial decisions applying or interpreting the laws or the constitution shall from a
part of the legal system of the Philippines.

The Court's interpretation of the law is part of that law as of the date of its enactment since the
court's interpretation merely establishes the contemporary legislative intent that the construed law
purports to carry into effect (People v. Licera, 65 SCRA 270 [1975]). Decisions of the Supreme Court
assume the same authority as statutes (Floresca v. Philex Mining Corporation, 136 SCRA 141
[1985]).

Even if Guingona and Gonzales are considered hard cases that make bad laws and should be
reversed, such reversal cannot nullify prior acts done in reliance thereof.

WHEREFORE, the petitions are DISMISSED, except with respect to 

(1) G.R. Nos. 113105 and 113766 only insofar as they pray for the annulment of the veto of the
special provision on debt service specifying that the fund therein appropriated "shall be used for
payment of the principal and interest of foreign and domestic indebtedness" prohibiting the use of
the said funds "to pay for the liabilities of the Central Bank Board of Liquidators", and (2) G.R. No.
113888 only insofar as it prays for the annulment of the veto of: (a) the second paragraph of Special
Provision No. 2 of the item of appropriation for the Department of Public Works and Highways (GAA
of 1994, pp. 785-786); and (b) Special Provision No. 12 on the purchase of medicines by the Armed
Forces of the Philippines (GAA of 1994, p. 748), which is GRANTED.

SO ORDERED.

This is a consolidation of cases which sought to question the veto authority of the president
involving the General Appropriations Bill of 1994 as well as the constitutionality of the pork
barrel. The Philippine Constitution Association (PHILCONSA) questions the countrywide
development fund. PHILCONSA said that Congress can only allocate funds but they cannot
specify the items as to which those funds would be applied for since that is already the
function of the executive.
In G.R. No. 113766, after the vetoing by the president of some provisions of the GAB of
1994, neither house of congress took steps to override the veto. Instead, Senators Wigberto
Tañada and Alberto Romulo sought the issuance of the writs of prohibition and mandamus
against Executive Secretary Teofisto Guingona et al.  Tañada et al contest the
constitutionality of: (1) the veto on four special provisions added to items in the GAB of 1994
for the Armed Forces of the Philippines (AFP) and the Department of Public Works and
Highways (DPWH); and (2) the conditions imposed by the President in the implementation
of certain appropriations for the CAFGU’s, the DPWH, and the National Housing Authority
(NHA).
ISSUE: Whether or not the President’s veto is valid.
HELD: In the PHILCONSA petition, the SC ruled that Congress acted within its power and
that the CDF is constitutional. In the Tañada petitions the SC dismissed the other petitions
and granted the others.
Veto on special provisions
The president did his veto with certain conditions and compliant to the ruling in Gonzales vs
Macaraig. The president particularly vetoed the debt reduction scheme in the GAA of 1994
commenting that the scheme is already taken cared of by other legislation and may be more
properly addressed by revising the debt policy. He, however did not delete the
P86,323,438,000.00 appropriation therefor. Tañada et al averred that the president cannot
validly veto that provision w/o vetoing the amount allotted therefor. The veto of the president
herein is sustained for the vetoed provision is considered “inappropriate”; in fact the Sc
found that such provision if not vetoed would in effect repeal the Foreign Borrowing Act
making the legislation as a log-rolling legislation.
Veto of provisions for revolving funds of SUCs
The appropriation for State Universities and Colleges (SUC’s), the President vetoed special
provisions which authorize the use of income and the creation, operation and maintenance
of revolving funds was likewise vetoed. The reason for the veto is that there were already
funds allotted for the same in the National expenditure Program. Tañada et al claimed this
as unconstitutional. The SC ruled that the veto is valid for it is in compliant to the “One Fund
Policy” – it avoided double funding and redundancy.
Veto of provision on 70% (administrative)/30% (contract) ratio for road maintenance
The President vetoed this provision on the basis that it may result to a breach of contractual
obligations. The funds if allotted may result to abandonment of some existing contracts. The
SC ruled that this Special Provision in question is not an inappropriate provision which can
be the subject of a veto. It is not alien to the appropriation for road maintenance, and on the
other hand, it specifies how the said item shall be expended – 70% by administrative and
30% by contract.  The 1987 Constitution allows the addition by Congress of special
provisions, conditions to items in an expenditure bill, which cannot be vetoed separately
from the items to which they relate so long as they are “appropriate” in the budgetary sense.
The veto herein is then not valid.
Veto of provision on prior approval of Congress for purchase of military equipment
As reason for the veto, the President stated that the said condition and prohibition violate
the Constitutional mandate of non-impairment of contractual obligations, and if allowed,
“shall effectively alter the original intent of the AFP Modernization Fund to cover all military
equipment deemed necessary to modernize the AFP”. The SC affirmed the veto. Any
provision blocking an administrative action in implementing a law or requiring legislative
approval of executive acts must be incorporated in a separate and substantive bill.
Therefore, being “inappropriate” provisions.
Veto of provision on use of savings to augment AFP pension funds
According to the President, the grant of retirement and separation benefits should be
covered by direct appropriations specifically approved for the purpose pursuant to Section
29(1) of Article VI of the Constitution. Moreover, he stated that the authority to use savings
is lodged in the officials enumerated in Section 25(5) of Article VI of the Constitution. The
SC retained the veto per reasons provided by the president.
Condition on the deactivation of the CAFGU’s
Congress appropriated compensation for the CAFGU’s including the payment of separation
benefits. The President declared in his Veto Message that the implementation of this
Special Provision to the item on the CAFGU’s shall be subject to prior Presidential approval
pursuant to P.D. No. 1597 and R.A. No. 6758.
The SC ruled to retain the veto per reasons provided by the president. Further, if this
provision is allowed the it would only lead to the repeal of said existing laws.
Conditions on the appropriation for the Supreme Court, etc
In his veto message: “The said condition is consistent with the Constitutional injunction
prescribed under Section 8, Article IX-B of the Constitutional which states that ‘no elective
or appointive public officer or employee shall receive additional, double, or indirect
compensation unless specifically authorized by law.’ I am, therefore, confident that the
heads of the said offices shall maintain fidelity to the law and faithfully adhere to the well-
established principle on compensation standardization. Tañada et al claim that the
conditions imposed by the President violated the independence and fiscal autonomy of the
Supreme court, the Ombudsman, the COA and the CHR. The SC sustained the veto: In the
first place, the conditions questioned by petitioners were placed in the GAB by Congress
itself, not by the President. The Veto Message merely highlighted the Constitutional
mandate that additional or indirect compensation can only be given pursuant to law. In the
second place, such statements are mere reminders that the disbursements of
appropriations must be made in accordance with law. Such statements may, at worse, be
treated as superfluities.
Pork Barrel Constitutional
The pork barrel makes the unequal equal. The Congressmen, being representatives of their
local districts know more about the problems in their constituents areas than the national
government or the president for that matter. Hence, with that knowledge, the Congressmen
are in a better position to recommend as to where funds should be allocated.
 
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