VIII.

Presidents Veto Power on Appropriation, Revenue, Tarif

G.R. No. L-4742 !a" 4, ##$
%&!!I''I&N(R &) INT(RNAL R(V(N*(, petitioner,
vs.
+&N. %&*RT &) TA, APP(AL' and !ANILA G&L) - %&*NTR. %L*/, IN%., respondents.
Bito, Misa & Lozada for private respondent.

!(0IAL0(A, J.:
In Commissioner of Internal Revenue v. Manila Hotel Corporation, et al., G.R. No. 83250, Septemer 2!,
"#8#, $e overruled a de%ision of t&e Court of 'a( )ppeals *&i%& de%lared t&e %olle%tion of %aterer+s ta(
under Se%tion "#",) of Repuli% )%t No. !""0 ille-al e%ause Se%. .2 of House /ill No. "083#, *&i%&
%arries t&at proviso, *as vetoed 1 t&en 2resident 3erdinand 4. Mar%os *&en t&e ill *as presented to
&im and Con-ress &ad not ta5en an1 step to override t&e presidential veto. $e &eld t&us6
'&e po*er of t&e State to impose t&e 37 %aterer+s ta( is not deatale. '&e Court of
'a( )ppeals erred, &o*ever, in &oldin- t&at t&e ta( *as aolis&ed as a result of t&e
presidential veto of )u-ust ., "#!#. It failed to e(amine t&e la* t&en, and up to no*,
e(istin- on t&e su8e%t *&i%& &as al*a1s imposed a 37 %aterer+s ta( on operators of
restaurants. Sin%e t&e Manila Hotel operates restaurants in its premises, it is liale to
pa1 t&e ta( provided in para-rap& 9":, Se%tion 20! of t&e 'a( Code. 9Commissioner of
Internal Revenue v. Manila Hotel Corporation and t&e Court of 'a( )ppeals, G.R. No.
83250, Septemer 2!, "#8#:
'&e petition no* efore ;s presents an identi%al <uestion6 *&et&er t&e presidential veto referred to t&e
entire se%tion or merel1 to t&e imposition of 207 ta( on -ross re%eipts of operators or proprietors of
restaurants, refres&ment parlors, ars and ot&er eatin- pla%es *&i%& are maintained *it&in t&e
premises or %ompound of a &otel, motel or rest&ouses. Referen%e to t&e Manila Hotel %ase, t&erefore,
mi-&t &ave een su=%ient to dispose of t&is petition *ere it not for t&e position of t&e C') t&at a %&ief
e(e%utive &as no po*er to veto part of an item in a ill> eit&er &e vetoes an entire se%tion or approves
it ut not a fra%tion t&ereof.
Herein private respondent, Manila Golf ? Countr1 Clu, In%. is a non,sto%5 %orporation. 'rue, it
maintains a -olf %ourse and operates a %lu&ouse *it& a loun-e, ar and dinin- room, ut t&ese
fa%ilities are for t&e e(%lusive use of its memers and a%%ompanied -uests, and it %&ar-es on %ost,
plus,e(pense asis. )s su%&, it %laims it s&ould &ave een e(empt from pa1ment of privile-e ta(es
*ere it not for t&e last para-rap& of Se%tion "#",) of R.). No. !""0, ot&er*ise 5no*n as t&e @Amnius
'a( Ba*.@ Se%tion "#",) reads6
Se%. "#",). Caterer. C ) %aterer+s ta( is &ere1 imposed as follo*s6
9": An proprietors or operators of restaurants, refres&ment parlors and ot&er eatin-
pla%es, in%ludin- %lus, and %aterers, t&ree per %ent of t&eir -ross re%eipts.
92: An proprietors or operators of restaurants, ars, %afes and ot&er eatin- pla%es,
in%ludin- %lus, *&ere distilled spirits, fermented li<uors, or *ines are served, t&ree
per %ent of t&eir -ross re%eipts from sale of food or refres&ments and seven per %ent of
t&eir -ross re%eipts from sale of distilled spirits, fermented li<uors or *ines. '*o sets of
%ommer%ial invoi%es or re%eipts seriall1 numered in dupli%ate s&all e separatel1
prepared and issued, one for sale of refres&ments served, and anot&er for ea%& sale of
distilled spirits, fermented li<uors or *ines served, t&e ori-inals of t&e invoi%es or
re%eipts to e issued to t&e pur%&aser or %ustomer.
93: An proprietors or operators of restaurants, refres&ment parlors, ars, %afes and
ot&er eatin- pla%es *&i%& are maintained *it&in t&e preferen%es or %ompound of
a hotel, motel, resthouse, %o%5pit, ra%e tra%5, 8ai,alai, %aaret, ni-&t or da1 %lu 1
means of a %onne%tin- door or passa-e t*ent1 per %ent of t&eir -ross re%eipts.
Where the establishments are operated or maintained by clubs of any kind or nature
(irrespective of the disposition of their net income and hether or not they cater
e!clusively to members or their "uests# the keepers of the establishments shall pay
the correspondin" ta! at the rate $!ed above. 94mp&asis supplied:
Repuli% )%t No. !""0 too5 eDe%t on Septemer ", "#!#. /1 t&is virtue, petitioners assessed t&e %lu
E(ed ta(es as operators of -olf lin5s and restaurants, and also per%enta-e ta( 9%aterer+s ta(: for its
sale of foods and fermented li<uorsF*ines for t&e period %overin- Septemer "#!# to Ge%emer "#00
in t&e amount of 232,50..#!. '&e %lu protested %laimin- t&e assessment to e *it&out asis e%ause
Se%tion .2 *as vetoed 1 t&en 2resident Mar%os. '&e veto messa-e reads6
M)B)C)H)NG
Manila
)u-ust ., "#!#
Gentlemen of t&e House
of Representatives6
I &ave t&e &onor to inform 1ou t&at I &ave t&is da1 si-ned H./. No. "083#, entitled6
)N )C' )M4NGING C4R')IN
2RAIISIANS A3 'H4 N)'IAN)B IN'4RN)B
R4I4N;4 CAG4, )S )M4NG4G
2ursuant to t&e provisions of Se%tion 20,93:, )rti%le II, of t&e Constitution, &o*ever, %
have vetoed the folloin" items in this bill6
((( ((( (((
pp. .., S4C. .2. Insertin- a ne* Se%tion "#",) *&i%& imposes a %aterer+s ta( of t&ree
per%ent of t&e -ross re%eipts of proprietors or operators of restaurants, refres&ment
parlors and ot&er eatin- pla%es> t&ree per%ent of -ross re%eipts from sale of food or
refres&ment and seven per%ent on -ross re%eipts from t&e sale of distilled spirits,
fermented li<uors or *ines, on proprietors or operators of restaurants, ars, %afes and
ot&er eatin- pla%es, in%ludin- %lus, *&ere distilled spirits, fermented li<uors, or *ines
are served> and t*ent1 per%ent of -ross re%eipts on proprietor or operators of
restaurants, refres&ment parlors, ars, %afes and ot&er eatin- pla%es maintained *it&in
t&e premises or %ompound of a &otel, motel, rest&ouse, %o%5pit, ra%e tra%5, 8ai,alai,
%aaret, ni-&t or da1 %lu, or *&i%& are a%%essile to patrons of said estalis&ments 1
means of a %onne%tin- door or passa-e.
'&e urden of petition *ill e s&ifted to t&e %onsumin- puli%.
'&e development of &otels, essential to our tourist industr1, ma1 e
restrained %onsiderin- t&at a i- portion of &otel earnin-s %omes from
food sale. . . .
'&is ill, H./. No. "083#, &as e%ome Repuli% )%t No. !""0.
Respe%t
full1,
9SGG.:
34RGIN
)NG 4.
M)RCA
S
J4mp&asis oursK
'&e protestation of t&e %lu *as denied 1 t&e petitioner *&o maintains t&at Se%tion .2 *as not
entirel1 vetoed ut merel1 t&e *ords @&otels, motels, rest&ouses@ on t&e -round t&at it mi-&t restrain
t&e development of &otels *&i%& is essential to t&e tourism industr1. '&is in fa%t *as t&e position of t&e
House $a1s and Means Committee *&i%& reported, to *it6
$&en Con-ress de%ided to split Se%tion "#" into t*o parts, one dealin- *it&
%ontra%tors, and t&e ot&er dealin- *it& t&ose *&o serve food and drin5s, t&e intention
*as to %lassif1 and to improve. $&ile t&e Con-ress e(panded t&e %overa-e of ot& "#"
and "#",), it also provided for %ertain e(emptions. '&e veto messa-e seems to o8e%t
to %ertain additions to "#",). $&at additions are o8e%tionales %an e -leaned from
t&e reasons -iven6 a -eneral reason t&at t&is sort of ta( is passed on to t&e %onsumin-
puli%, and a parti%ular reason t&at &otel developments, so essential to t&e tourist
industr1, ma1 e restrained. '&ese reasons &ave een ta5en to-et&er in t&e
interpretations of t&e veto messa-e and t&e deletions of su%& enterprises as are
%onne%ted *it& t&e tourist industr1 &as t&erefore een re%ommended.
'o interpret t&e veto. messa-e ot&er*ise *ould result in t&e e(emption of entities
alread1 su8e%t of ta(. '&is *ould e asurd. $&ere t&e Con-ress *anted to e(empt, it
*as so provided in t&e ill. $&ile t&e 2resident ma1 veto an1 item or items in a
revenue ill t&e %onstitution does not -ive &im t&e po*er to repeal an e(istin- ta(.
92nd Indorsement dated Ge%emer #, "#!#, C&airman on $a1s and Means, Si(t&
Con-ress of t&e Repuli% of t&e 2&il.: 94(&s. "., p. 85, /.I.R. re%.:. 9pp. 20,2", &ollo:
It *as 1 reason of t&is interpretation of t&e Committee t&at R.). No. !""0 *as pulis&ed in Iolume
!!, No. "8, p. .53" of t&e A=%ial GaLette 9Ma1 ., "#00: in su%& a *a1 t&at Se%tion "#",) *as in%luded
in t&e te(t save for t&e *ords @&otels, motels, rest&ouses.@
)s alread1 mentioned, t&e Court of 'a( )ppeals, upon petition 1 t&e %lu, sustained t&e latter+s
position reasonin- t&at t&e veto messa-e *as %lear and un<ualiEed, as in fa%t it *as %onErmed t&ree
1ears later, after mu%& %ontrovers1, 1 t&e A=%e of t&e 2resident, t&us6
Mr. )ntero M. Sison, Mr.
San Martin /uildin-, "5!.,
). Maini, 2.A. /o( 2288
Manila, 2&ilippines
Gear Sir6
$it& referen%e to 1our letter dated Mul1 "., "#02, *e *is& to inform 1ou t&at Se%tion
.2 9*&i%& %ontains Se%. "#",): of House /ill No. "083#, no* R.). !""0 *as one of t&e
Se%tions vetoed 1 t&e 2resident in &is veto messa-e dated )u-ust ., "#!#, vetoin-
%ertain se%tions of t&e said revenue ill.
Ier1
'rul1
Nours,
9SGG.:
IRIN4A
'.
)G;IRR
4, MR.
2reside
ntial
StaD
)ssistan
t
9p. .#, &ollo:
)s mentioned earlier, $e &ave alread1 ruled t&at t&e presidential veto referred merel1 to t&e in%lusion
of &otels, motels and rest&ouses in t&e 207 %aterer+s ta( ra%5et ut not to t&e *&ole se%tion. /ut, as
mentioned earlier also, t&e C') opined t&at t&e 2resident %ould not veto *ords or p&rases in a ill ut
onl1 an entire item. Aviousl1, *&at t&e C') meant 1 @item@ *as an entire se%tion. $e do not a-ree.
/ut even assumin- it to e so, it *ould also e to petitioner+s favor. '&e ineDe%tual veto 1 t&e
2resident rendered t&e *&ole se%tion "#",) as not &avin- een vetoed at all and it, t&erefore, e%ame
la* as an un%onstitutional veto &as no eDe%t, *&atsoever. 9See /olinao 4le%troni%s Corp. v. Ialeria No.
B,200.0, Mune 30, "#!., "" SCR) .8!:.
Ho*ever, $e a-ree *it& t&en Soli%itor General 4stelito MendoLa and &is asso%iates t&at in%lusion of
&otels, motels and rest&ouses in t&e 207 %aterer+s ta( ra%5et are @items@ in t&emselves *it&in t&e
meanin- of Se%. 2093:, )rt. II of t&e "#35 Constitution *&i%&, t&erefore, t&e 2resident &as t&e po*er to
veto. )n @item@ in a revenue ill does not refer to an entire se%tion imposin- a parti%ular 5ind of ta(,
ut rat&er to t&e su8e%t of t&e ta( and t&e ta( rate. In t&e portion of a revenue ill *&i%& a%tuall1
imposes a ta(, a se%tion identiEes t&e ta( and enumerates t&e persons liale t&erefor *it& t&e
%orrespondin- ta( rate. 'o %onstrue t&e *ord @item@ as referrin- to t&e *&ole se%tion *ould tie t&e
2resident+s &and in %&oosin- eit&er to approve t&e *&ole se%tion at t&e e(pense of also approvin- a
provision t&erein *&i%& &e deems una%%eptale or veto t&e entire se%tion at t&e e(pense of fore-oin-
t&e %olle%tion of t&e 5ind of ta( alto-et&er. '&e evil *&i%& *as sou-&t to e prevented in -ivin- t&e
2resident t&e po*er to disapprove items in a revenue ill *ould e perpetrated renderin- t&at po*er
inutile 9See Common*ealt& e( rel. 4l5in v. /arnett, "## 2a. "!", 55 BR) 882 J"#0"K:.
)CCARGINGBN, t&e petition is GR)N'4G and t&e de%ision of t&e Court of 'a( )ppeals in C') Case No.
2!30 is set aside. Se%tion "#",) of R) No. !""0 is valid and enfor%eale and, &en%e, t&e Manila Golf ?
Countr1 Clu In%. is liale for t&e amount assessed a-ainst it.
SA ARG4R4G.
I,. Ta1es Levied 2or 'pe3ia4 Purpose 5re2er to t6e a7ove 3ase8
,I. )4e1i74e Tarif %4ause
G.R. No. 7$9: ;u4" :, 2$$<
A=/A.AN %ITI>(N' A%TI&N PART. 5?A=/A.AN?8, PA!/AN'ANG =ATIP*NAN NG !GA
'A!A+AN 'A =ANA.*NAN 5?P='=?8, ALLIAN%( &) PR&GR(''IV( LA/&R 5?APL?8, VI%(NT(
A. )A/(, ANG(LIT& R. !(N0&>A, !AN*(L P. @*IA!/A&, R&'( /(ATRI, %R*>-ANG(L(',
%&NG. L&R(N>& R. TANA0A III, %&NG. !ARI& ;&.& AG*;A, %&NG. L&R(TA ANN P. R&'AL(',
%&NG. ANA T+(R('IA +&NTIV(R&'-/ARA@*(L, AN0 %&NG. (!!AN*(L ;&(L ;.
VILLAN*(VA, 2etitioners,
vs.
T+&!A' G. A@*IN&, in 6is 3apa3it" as *nderse3retar" o2 t6e 0epartAent o2 Trade and
Industr" 50TI8 and %6airAan and %6ie2 0e4eBate o2 t6e P6i4ippine %oordinatinB %oAAittee
5P%%8 2or t6e ;apan-P6i4ippines (3onoAi3 Partners6ip ABreeAent, (0'(L T. %*'T&0I&, in
6is 3apa3it" as *nderse3retar" o2 t6e 0epartAent o2 )oreiBn Afairs 50)A8 and %o-%6air o2
t6e P%% 2or t6e ;P(PA, (0GAR0& A/&N, in 6is 3apa3it" as %6airAan o2 t6e Tarif
%oAAission and 4ead neBotiator 2or %oApetition Po4i3" and (AerBen3" !easures o2 t6e
;P(PA, !ARGARITA '&NG%&, in 6er 3apa3it" as Assistant 0ire3tor-Genera4 o2 t6e Nationa4
(3onoAi3 0eve4opAent Aut6orit" 5N(0A8 and 4ead neBotiator 2or Trade in 'ervi3es and
%ooperation o2 t6e ;P(PA, !AL&* !&NT(R&, in 6er 3apa3it" as )oreiBn 'ervi3e &C3er I,
&C3e o2 t6e *nderse3retar" 2or Internationa4 (3onoAi3 Re4ations o2 t6e 0)A and 4ead
neBotiator 2or t6e Genera4 and )ina4 Provisions o2 t6e ;P(PA, (RLIN0A AR%(LLANA, in 6er
3apa3it" as 0ire3tor o2 t6e /oard o2 InvestAents and 4ead neBotiator 2or Trade in Goods
5Genera4 Ru4es8 o2 t6e ;P(PA, RA@*(L (%+AG*(, in 6er 3apa3it" as 4ead neBotiator 2or
Ru4es o2 &riBin o2 t6e ;P(PA, GALLANT '&RIAN&, in 6is oC3ia4 3apa3it" as 0eput"
%oAAissioner o2 t6e /ureau o2 %ustoAs and 4ead neBotiator 2or %ustoAs Pro3edures and
Paper4ess TradinB o2 t6e ;P(PA, !A. L*I'A GIG(TT( I!P(RIAL, in 6er 3apa3it" as 0ire3tor o2
t6e /ureau o2 Lo3a4 (Ap4o"Aent o2 t6e 0epartAent o2 La7or and (Ap4o"Aent 50&L(8 and
4ead neBotiator 2or !oveAent o2 Natura4 Persons o2 t6e ;P(PA, PA'%*AL 0( G*>!AN, in 6is
3apa3it" as 0ire3tor o2 t6e /oard o2 InvestAents and 4ead neBotiator 2or InvestAent o2 t6e
;P(PA, ;('*' !&T&&!*LL, in 6is 3apa3it" as 0ire3tor 2or t6e /ureau o2 Produ3t 'tandards
o2 t6e 0TI and 4ead neBotiator 2or !utua4 Re3oBnition o2 t6e ;P(PA, L&*I( %ALVARI&, in 6is
3apa3it" as 4ead neBotiator 2or Inte44e3tua4 Propert" o2 t6e ;P(PA, (L!(R +. 0&RA0&, in 6is
3apa3it" as &C3er-in-%6arBe o2 t6e GovernAent Pro3ureAent Po4i3" /oard Te36ni3a4
'upport &C3e, t6e BovernAent aBen3" t6at is 4eadinB t6e neBotiations on GovernAent
Pro3ureAent o2 t6e ;P(PA, RI%AR0& V. PARA', in 6is 3apa3it" as %6ie2 'tate %ounse4 o2 t6e
0epartAent o2 ;usti3e 50&;8 and 4ead neBotiator 2or 0ispute Avoidan3e and 'ett4eAent o2
t6e ;P(PA, A0&NI' '*LIT, in 6is 3apa3it" as 4ead neBotiator 2or t6e Genera4 and )ina4
Provisions o2 t6e ;P(PA, (0*AR0& R. (R!ITA, in 6is 3apa3it" as (1e3utive 'e3retar", and
AL/(RT& R&!*L&, in 6is 3apa3it" as 'e3retar" o2 t6e 0)A,
D
Respondents.
G 4 C I S I A N
%ARPI& !&RAL(', J.E
2etitioners O non,-overnment or-aniLations, Con-resspersons, %itiLens and ta(pa1ers O see5 via t&e
present petition for mandamus and pro&iition to otain from respondents t&e full te(t of t&e Mapan,
2&ilippines 4%onomi% 2artners&ip )-reement 9M242): in%ludin- t&e 2&ilippine and Mapanese oDers
sumitted durin- t&e ne-otiation pro%ess and all pertinent atta%&ments and anne(es t&ereto.
2etitioners Con-ressmen BorenLo R. 'aPada III and Mario Mo1o )-u8a Eled on Manuar1 25, 2005 House
Resolution No. 55" %allin- for an in<uir1 into t&e ilateral trade a-reements t&en ein- ne-otiated 1
t&e 2&ilippine -overnment, parti%ularl1 t&e M242). '&e Resolution e%ame t&e asis of an in<uir1
suse<uentl1 %ondu%ted 1 t&e House Spe%ial Committee on GloaliLation 9t&e House Committee: into
t&e ne-otiations of t&e M242).
In t&e %ourse of its in<uir1, t&e House Committee re<uested &erein respondent ;nderse%retar1 'omas
)<uino 9;se%. )<uino:, C&airman of t&e 2&ilippine Coordinatin- Committee %reated under 4(e%utive
Arder No. 2"3 9@Creation of ) 2&ilippine Coordinatin- Committee to Stud1 t&e 3easiilit1 of t&e Mapan,
2&ilippines 4%onomi% 2artners&ip )-reement@:
"
to stud1 and ne-otiate t&e proposed M242), and to
furnis& t&e Committee *it& a %op1 of t&e latest draft of t&e M242). ;se%. )<uino did not &eed t&e
re<uest, &o*ever.
Con-ressman )-u8a later re<uested for t&e same do%ument, ut ;se%. )<uino, 1 letter of Novemer
2, 2005, replied t&at t&e Con-ressman s&all e provided *it& a %op1 t&ereof @on%e t&e ne-otiations are
%ompleted and as soon as a t&orou-& le-al revie* of t&e proposed a-reement &as een %ondu%ted.@
In a separate move, t&e House Committee, t&rou-& Con-ressman Herminio G. 'eves, re<uested
4(e%utive Se%retar1 4duardo 4rmita to furnis& it *it& @all do%uments on t&e su8e%t in%ludin- t&e latest
draft of t&e proposed a-reement, t&e re<uests and oDers et%.@
2
)%tin- on t&e re<uest, Se%retar1
4rmita, 1 letter of Mune 23, 2005, *rote Con-ressman 'eves as follo*s6
In its letter dated "5 Mune 2005 9%op1 en%losed:, Jt&eK GJepartment ofK 3Jorei-nK )JDairsK e(plains
t&at t6e %oAAittees reFuest to 7e 2urnis6ed a44 do3uAents on t6e ;P(PA Aa" 7e diC3u4t to
a33oAp4is6 at t6is tiAe, sin3e t6e proposed ABreeAent 6as 7een a worG in proBress 2or
a7out t6ree "ears. ) %op1 of t&e draft M242) *ill &o*ever e for*arded to t&e Committee as soon as
t&e te(t t&ereof is settled and %omplete. 94mp&asis supplied:
Con-ressman )-u8a also re<uested N4G) Gire%tor,General Romulo Neri and 'ariD Commission
C&airman 4d-ardo )on, 1 letter of Mul1 ", 2005, for %opies of t&e latest te(t of t&e M242).
C&airman )on replied, &o*ever, 1 letter of Mul1 "2, 2005 t&at t&e 'ariD Commission does not &ave a
%op1 of t&e do%uments ein- re<uested, aleit &e *as %ertain t&at ;se%. )<uino *ould provide t&e
Con-ressman *it& a %op1 @on%e t&e ne-otiation is %ompleted.@ )nd 1 letter of Mul1 "8, 2005, N4G)
)ssistant Gire%tor,General Mar-arita R. Son-%o informed t&e Con-ressman t&at &is re<uest addressed
to Gire%tor,General Neri &ad een for*arded to ;se%. )<uino *&o *ould e @in t&e est position to
respond@ to t&e re<uest.
In its t&ird &earin- %ondu%ted on )u-ust 3", 2005, t&e House Committee resolved to issue a supoena
for t&e most re%ent draft of t&e M242), ut t&e same *as not pursued e%ause 1 Committee C&airman
Con-ressman 'evesQ information, t&en House Spea5er Mose de Iene%ia &ad re<uested &im to &old in
ae1an%e t&e issuan%e of t&e supoena until t&e 2resident -ives &er %onsent to t&e dis%losure of t&e
do%uments.
3
)mid spe%ulations t&at t&e M242) mi-&t e si-ned 1 t&e 2&ilippine -overnment *it&in Ge%emer
2005, t&e present petition *as Eled on Ge%emer #, 2005.
.
'&e a-reement *as to e later si-ned on
Septemer #, 200! 1 2resident Gloria Ma%apa-al,)rro1o and Mapanese 2rime Minister Muni%&iro
RoiLumi in Helsin5i, 3inland, follo*in- *&i%& t&e 2resident endorsed it to t&e Senate for its %on%urren%e
pursuant to )rti%le III, Se%tion 2" of t&e Constitution. 'o date, t&e M242) is still ein- delierated upon
1 t&e Senate.
'&e M242), *&i%& *ill e t&e Erst 7i4atera4 free trade a-reement to e entered into 1 t&e 2&ilippines
*it& anot&er %ountr1 in t&e event t&e Senate -rants its %onsent to it, %overs a road ran-e of topi%s
*&i%& respondents enumerate as follo*s6 trade in -oods, rules of ori-in, %ustoms pro%edures,
paperless tradin-, trade in servi%es, investment, intelle%tual propert1 ri-&ts, -overnment pro%urement,
movement of natural persons, %ooperation, %ompetition poli%1, mutual re%o-nition, dispute avoidan%e
and settlement, improvement of t&e usiness environment, and -eneral and Enal provisions.
5
$&ile t&e Enal te(t of t&e M242) &as no* een made a%%essile to t&e puli% sin%e Septemer "",
200!,
!
respondents do not dispute t&at, at t&e time t&e petition *as Eled up to t&e Elin- of petitionersQ
Repl1 O *&en t&e M242) *as still ein- ne-otiated O t&e initial drafts t&ereof *ere 5ept from puli% vie*.
/efore delvin- on t&e sustantive -rounds relied upon 1 petitioners in support of t&e petition, t&e
Court Ends it ne%essar1 to Erst resolve some material pro%edural issues.
'tandinB
3or a petition for mandamus su%& as t&e one at ar to e -iven due %ourse, it must e instituted 1 a
part1 a--rieved 1 t&e alle-ed ina%tion of an1 triunal, %orporation, oard or person *&i%& unla*full1
e(%ludes said part1 from t&e en8o1ment of a le-al ri-&t.
0
Respondents den1 t&at petitioners &ave su%&
standin- to sue. @JIKn t&e interest of a speed1 and deEnitive resolution of t&e sustantive issues
raised,@ &o*ever, respondents %onsider it su=%ient to %ite a portion of t&e rulin- in 'imentel v. ()ce
of *!ecutive +ecretary
8
*&i%& emp&asiLes t&e need for a @personal sta5e in t&e out%ome of t&e
%ontrovers1@ on <uestions of standin-.
In a petition an%&ored upon t&e ri-&t of t&e people to information on matters of puli% %on%ern, *&i%&
is a puli% ri-&t 1 its ver1 nature, petitioners need not s&o* t&at t&e1 &ave an1 le-al or spe%ial
interest in t&e result, it ein- su=%ient to s&o* t&at t&e1 are %itiLens and, t&erefore, part of t&e
-eneral puli% *&i%& possesses t&e ri-&t.
#
)s t&e present petition is an%&ored on t&e ri-&t to
information and petitioners are all suin- in t&eir %apa%it1 as %itiLens and -roups of %itiLens in%ludin-
petitioners,memers of t&e House of Representatives *&o additionall1 are suin- in t&eir %apa%it1 as
su%&, t&e standin- of petitioners to Ele t&e present suit is -rounded in 8urispruden%e.
!ootness
Considerin-, &o*ever, t&at @JtK&e prin%ipal relief petitioners are pra1in- for is t&e dis%losure of t&e
%ontents of t&e M242) prior to its EnaliLation et*een t&e t*o States parties,@
"0
puli% dis%losure of t&e
te(t of t&e M242) after its si-nin- 1 t&e 2resident, durin- t&e penden%1 of t&e present petition, &as
een lar-el1 rendered moot and a%ademi%.
$it& t&e Senate delierations on t&e M242) still pendin-, t&e a-reement as it no* stands %annot 1et e
%onsidered as Enal and indin- et*een t&e t*o States. )rti%le "!. of t&e M242) itself provides t&at t&e
a-reement does not ta5e eDe%t immediatel1 upon t&e si-nin- t&ereof. 3or it must still -o t&rou-& t&e
pro%edures re<uired 1 t&e la*s of ea%& %ountr1 for its entr1 into for%e, viL6
)rti%le "!.
4ntr1 into 3or%e
'&is )-reement s&all enter into for%e on t&e t&irtiet& da1 after t&e date on *&i%& t&e Governments of
t&e 2arties e(%&an-e diplomati% notes informin- ea%& ot&er t6at t6eir respe3tive 4eBa4 pro3edures
ne3essar" 2or entr" into 2or3e o2 t6is ABreeAent 6ave 7een 3oAp4eted. It s&all remain in for%e
unless terminated as provided for in )rti%le "!5.
""
94mp&asis supplied:
2resident )rro1oQs endorsement of t&e M242) to t&e Senate for %on%urren%e is part of t&e le-al
pro%edures *&i%& must e met prior to t&e a-reementQs entr1 into for%e.
'&e te(t of t&e M242) &avin- t&en een made a%%essile to t&e puli%, t&e petition &as e%ome moot
and a%ademi% to t&e e(tent t&at it see5s t&e dis%losure of t&e @full te(t@ t&ereof.
'&e petition is not entirel1 moot, &o*ever, e%ause petitioners see5 to otain, not merel1 t&e te(t of
t&e M242), ut also t&e 2&ilippine and Mapanese oDers in t&e %ourse of t&e ne-otiations.
"2
) dis%ussion of t&e sustantive issues, insofar as t&e1 impin-e on petitionersQ demand for a%%ess to
t&e 2&ilippine and Mapanese oDers, is t&us in order.
Grounds re4ied upon 7" petitioners
2etitioners assert, Erst, t&at t&e refusal of t&e -overnment to dis%lose t&e do%uments earin- on t&e
M242) ne-otiations violates t&eir ri-&t to information on matters of puli% %on%ern
"3
and %ontravenes
ot&er %onstitutional provisions on transparen%1, su%& as t&at on t&e poli%1 of full puli% dis%losure of all
transa%tions involvin- puli% interest.
".
Se%ond, t&e1 %ontend t&at non,dis%losure of t&e same
do%uments undermines t&eir ri-&t to eDe%tive and reasonale parti%ipation in all levels of so%ial,
politi%al, and e%onomi% de%ision,ma5in-.
"5
Bastl1, t&e1 proDer t&at divul-in- t&e %ontents of t&e M242)
onl1 after t&e a-reement &as een %on%luded *ill eDe%tivel1 ma5e t&e Senate into a mere ruer
stamp of t&e 4(e%utive, in violation of t&e prin%iple of separation of po*ers.
Si-niE%antl1, t&e -rounds relied upon 1 petitioners for t&e dis%losure of t&e 4atest te1t of t&e M242)
are, e(%ept for t&e last, t&e same as t&ose %ited for t&e dis%losure of t&e 2&ilippine and
Mapanese ofers.
'&e Erst t*o -rounds relied upon 1 petitioners *&i%& ear on t&e merits of respondentsQ %laim of
privile-e s&all e dis%ussed. '&e last, ein- purel1 spe%ulator1 -iven t&at t&e Senate is still
delieratin- on t&e M242), s&all not.
T6e ;P(PA is a Aatter o2 pu74i3 3on3ern
'o e %overed 1 t&e ri-&t to information, t&e information sou-&t must meet t&e t&res&old re<uirement
t&at it e a matter of puli% %on%ern. )propos is t&e tea%&in- of Le"aspi v. Civil +ervice Commission6
In determinin- *&et&er or not a parti%ular information is of puli% %on%ern t&ere is no ri-id test *&i%&
%an e applied. S2uli% %on%ernQ li5e Spuli% interestQ is a term t&at eludes e(a%t deEnition. /ot& terms
emra%e a road spe%trum of su8e%ts *&i%& t&e puli% ma1 *ant to 5no*, eit&er e%ause t&ese
dire%tl1 aDe%t t&eir lives, or simpl1 e%ause su%& matters naturall1 arouse t&e interest of an ordinar1
%itiLen. In t&e Enal anal1sis, it is for t&e %ourts to determine on a %ase 1 %ase asis *&et&er t&e
matter at issue is of interest or importan%e, as it relates to or aDe%ts t&e puli%.
"!
9;nders%orin-
supplied:
3rom t&e nature of t&e M242) as an international trade a-reement, it is evident t&at t&e 2&ilippine and
Mapanese oDers sumitted durin- t&e ne-otiations to*ards its e(e%ution are matters of puli% %on%ern.
'&is, respondents do not dispute. '&e1 onl1 %laim t&at diplomati% ne-otiations are %overed 1 t&e
do%trine of e1e3utive privi4eBe, t&us %onstitutin- an e(%eption to t&e ri-&t to information and t&e
poli%1 of full puli% dis%losure.
Respondents 34aiA o2 privi4eBe
It is *ell,estalis&ed in 8urispruden%e t&at neit&er t&e ri-&t to information nor t&e poli%1 of full puli%
dis%losure is asolute, t&ere ein- matters *&i%&, aleit of puli% %on%ern or puli% interest, are
re%o-niLed as privile-ed in nature. '&e t1pes of information *&i%& ma1 e %onsidered privile-ed &ave
een elu%idated in ,lmonte v. -as.uez,
"0
Chavez v. 'C//,
"8
Chavez v. 'ublic *state0s ,uthority,
"#
and
most re%entl1 in +enate v. *rmita
20
*&ere t&e Court rea=rmed t&e validit1 of t&e do%trine of e(e%utive
privile-e in t&is 8urisdi%tion and d*elt on its s%ope.
$&et&er a %laim of e(e%utive privile-e is valid depends on t&e -round invo5ed to 8ustif1 it and
t&e %onte(t in *&i%& it is made.
2"
In t&e present %ase, t&e -round for respondentsQ %laim of privile-e is
set fort& in t&eir %oAAent, viL6
( ( ( '&e %ate-ories of information t&at ma1 e %onsidered privile-ed in%ludes matters of diplomati%
%&ara%ter and under ne-otiation and revie*. In t&is %ase, t&e privile-ed %&ara%ter of t&e diplomati%
ne-otiations &as een %ate-ori%all1 invo5ed and %learl1 e(plained 1 respondents parti%ularl1
respondent G'I Senior ;nderse%retar1.
'&e do%uments on t&e proposed M242) as *ell as t&e te(t *&i%& is su8e%t to ne-otiations and le-al
revie* 1 t&e parties fall under t&e e(%eptions to t&e ri-&t of a%%ess to information on matters of
puli% %on%ern and poli%1 of puli% dis%losure. '&e1 %ome *it&in t&e %overa-e of e(e%utive privile-e. )t
t&e time *&en t&e Committee *as re<uestin- for %opies of su%& do%uments, t&e ne-otiations *ere
on-oin- as t&e1 are still no* and t&e te(t of t&e proposed M242) is still un%ertain and su8e%t to
%&an-e. Considerin- t&e status and nature of su%& do%uments t&en and no*, t&ese are evidentl1
%overed 1 e(e%utive privile-e %onsistent *it& e(istin- le-al provisions and settled 8urispruden%e.
2ra%ti%al and strate-i% %onsiderations li5e*ise %ounsel a-ainst t&e dis%losure of t&e @rollin- te(ts@
*&i%& ma1 under-o radi%al %&an-e or portions of *&i%& ma1 e totall1 aandoned. 3urt&ermore,
t&e neBotiations o2 t6e representatives o2 t6e P6i4ippines as we44 as o2 ;apan Aust 7e
a44owed to e1p4ore a4ternatives in t6e 3ourse o2 t6e neBotiations in t6e saAe Aanner as
Hudi3ia4 de4i7erations and worGinB dra2ts o2 opinions are a33orded stri3t
3onIdentia4it".
22
94mp&asis and unders%orin- supplied:
'&e -round relied upon 1 respondents is t&us not simpl1 t&at t&e information sou-&t involves a
diplomati% matter, ut t&at it pertains to diplomati% ne-otiations t&en in pro-ress.
Privi4eBed 36ara3ter o2 dip4oAati3 neBotiations
'&e privile-ed %&ara%ter of diplomati% ne-otiations &as een re%o-niLed in t&is 8urisdi%tion. In
dis%ussin- valid limitations on t&e ri-&t to information, t&e Court in Chavez v. 'C// &eld t&at
@information on inter,-overnment e(%&an-es prior to t&e %on%lusion of treaties and e(e%utive
a-reements ma1 e su8e%t to reasonale safe-uards for t&e sa5e of national interest.@
23
4ven earlier,
t&e same privile-e *as up&eld in 'eople0s Movement for 'ress 1reedom ('M'1# v. Man"lapus
2.
*&erein
t&e Court dis%ussed t&e reasons for t&e privile-e in more pre%ise terms.
In 'M'1 v. Man"lapus, t&e t&erein petitioners *ere see5in- information from t&e 2residentQs
representatives on t&e state of t&e t&en on,-oin- ne-otiations of t&e R2,;S Militar1 /ases
)-reement.
25
'&e Court denied t&e petition, stressin- t&at @se3re3" o2 neBotiations wit6 2oreiBn
3ountries is not vio4ative of t&e %onstitutional provisions of freedom of spee%& or of t&e press nor o2
t6e 2reedoA o2 a33ess to in2orAation.@ '&e Resolution *ent on to state, t&us6
T6e nature o2 dip4oAa3" reFuires 3entra4iJation o2 aut6orit" and e1pedition o2 de3ision
w6i36 are in6erent in e1e3utive a3tion. Anot6er essentia4 36ara3teristi3 o2 dip4oAa3" is its
3onIdentia4 nature.)lt&ou-& mu%& &as een said aout @open@ and @se%ret@ diploma%1, *it&
dispara-ement of t&e latter, Se%retaries of State Hu-&es and Stimson &ave %learl1 anal1Led and
8ustiEed t&e pra%ti%e. In t&e *ords of Mr. Stimson6
@A 3oAp4i3ated neBotiation . . . 3annot 7e 3arried t6rouB6 wit6out Aan", Aan" private ta4Gs
and dis3ussion, Aan to AanK Aan" tentative suBBestions and proposa4s. 0e4eBates 2roA
ot6er 3ountries 3oAe and te44 "ou in 3onIden3e o2 t6eir trou74es at 6oAe and o2 t6eir
diferen3es wit6 ot6er 3ountries and wit6 ot6er de4eBatesK t6e" te44 "ou o2 w6at t6e" wou4d
do under 3ertain 3ir3uAstan3es and wou4d not do under ot6er 3ir3uAstan3es. . . I2 t6ese
reports . . . s6ou4d 7e3oAe pu74i3 . . . w6o wou4d ever trust AAeri3an 0e4eBations in
anot6er 3on2eren3eL 9;nited States Gepartment of State, 2ress Releases, Mune 0, "#30, pp. 282,
28..:.@
( ( ( (
T6ere is 2reFuent 3riti3isA o2 t6e se3re3" in w6i36 neBotiation wit6 2oreiBn powers on
near4" a44 su7He3ts is 3on3erned. T6is, it is 34aiAed, is in3oApati74e wit6 t6e su7stan3e o2
deAo3ra3". )s e(pressed 1 one *riter, @It %an e said t&at t&ere is no more ri-id s1stem of silen%e
an1*&ere in t&e *orld.@ 94.M. Noun-, Boo5in- /e&ind t&e Censors&ip, M. /. Bippin%ott Co., "#38:
2resident $ilson in startin- &is eDorts for t&e %on%lusion of t&e $orld $ar de%lared t&at *e must &ave
@open %ovenants, openl1 arrived at.@ He <ui%5l1 aandoned &is t&ou-&t.
No one *&o &as studied t&e <uestion elieves t&at su%& a met&od of puli%it1 is possile. In t6e
AoAent t6at neBotiations are started, pressure Broups atteApt to ?Aus34e in.? An i44-tiAed
spee36 7" one o2 t6e parties or a 2ranG de34aration o2 t6e 3on3ession w6i36 are e1a3ted or
ofered on 7ot6 sides wou4d Fui3G4" 4ead to widespread propaBanda to 74o3G t6e
neBotiations. A2ter a treat" 6as 7een dra2ted and its terAs are 2u44" pu74is6ed, t6ere is
aAp4e opportunit" 2or dis3ussion 7e2ore it is approved. 9'&e Ne* )meri%an Government and Its
$or5s, Mames '. Noun-, .t& 4dition, p. "#.: 94mp&asis and unders%orin- supplied:
Still in 2M23 v. Man-lapus, t&e Court adopted t&e do%trine in 2.+. v. Curtiss3Wri"ht *!port Corp.
2!
t&at
t&e 2resident is t&e sole or-an of t&e nation in its ne-otiations *it& forei-n %ountries, viL6
@( ( ( In t&is vast e(ternal realm, *it& its important, %ompli%ated, deli%ate and manifold prolems, t&e
2resident alone &as t&e po*er to spea5 or listen as a representative of t&e nation. He ma5es treaties
*it& t&e advi%e and %onsent of t&e Senate> ut &e alone ne-otiates. Into t&e Eeld of ne-otiation t&e
Senate %annot intrude> and Con-ress itself is po*erless to invade it. )s Mars&all said in &is -reat
ar-ument of Mar%& 0, "800, in t&e House of Representatives,?T6e President is t6e so4e orBan o2
t6e nation in its e1terna4 re4ations, and its so4e representative wit6 2oreiBn nations.? )nnals,
!t& Con-., %ol. !"3. . . 94mp&asis supplied> unders%orin- in t&e ori-inal:
)ppl1in- t&e prin%iples adopted in 2M23 v. Man-lapus, it is %lear t&at *&ile t&e Enal te(t of t&e M242)
ma1 not e 5ept perpetuall1 %onEdential O sin%e t&ere s&ould e @ample opportunit1 for dis%ussion
efore Ja treat1K is approved@ O t&e oDers e(%&an-ed 1 t&e parties durin- t&e ne-otiations %ontinue to
e privile-ed even after t&e M242) is pulis&ed. It is reasonale to %on%lude t&at t&e Mapanese
representatives sumitted t&eir oDers *it& t&e understandin- t&at @6istori3 3onIdentia4it"@
20
*ould
-overn t&e same. Gis%losin- t&ese oDers %ould impair t&e ailit1 of t&e 2&ilippines to deal not onl1 *it&
Mapan ut *it& ot&er forei-n -overnments in 2uture ne-otiations.
) rulin- t&at 2&ilippine oDers in treat1 ne-otiations s&ould no* e open to puli% s%rutin1 *ould
dis%oura-e future 2&ilippine representatives from fran5l1 e(pressin- t&eir vie*s durin- ne-otiations.
$&ile, on Erst impression, it appears *ise to deter 2&ilippine representatives from enterin- into
%ompromises, it ears notin- t&at treat1 ne-otiations, or an1 ne-otiation for t&at
matter, normall1 involve a pro%ess of <uid pro <uo, and o2tentiAes neBotiators 6ave to 7e wi44inB
to Brant 3on3essions in an area o2 4esser iAportan3e in order to o7tain Aore 2avora74e
terAs in an area o2 Breater nationa4 interest. )propos are t&e follo*in- oservations of /en8amin
S. Guval, Mr.6
( ( ( J'K&ose involved in t&e pra%ti%e of ne-otiations appear to e in a-reement t&at puli%it1 leads to
@-randstandin-,@ tends to freeLe ne-otiatin- positions, and in&iits t&e -ive,and,ta5e essential to
su%%essful ne-otiation. )s Sissela /o5 points out, if @ne-otiators &ave more to -ain from ein-
approved 1 t&eir o*n sides t&an 1 ma5in- a reasoned a-reement *it& %ompetitors or adversaries,
t&en t&e1 are in%lined to +pla1 to t&e -aller1 . . .++ In fa%t, t6e pu74i3 rea3tion Aa" 4eave t6eA 4itt4e
option. It *ould e a rave, or foolis&, )ra leader *&o e(pressed puli%l1 a *illin-ness for pea%e *it&
Israel t&at did not involve t&e return of t&e entire $est /an5, or Israeli leader *&o stated puli%l1 a
*illin-ness to remove Israel+s e(istin- settlements from Mudea and Samaria in return for
pea%e.
28
94mp&asis supplied:
Indeed, 1 &amperin- t&e ailit1 of our representatives to %ompromise, *e ma1 e 8eopardiLin- &i-&er
national -oals for t&e sa5e of se%urin- less %riti%al ones.
Giplomati% ne-otiations, t&erefore, are re%o-niLed as privile-ed in t&is 8urisdi%tion, t&e M242)
ne-otiations %onstitutin- no e(%eption. It ears emp&asis, &o*ever, t&at su%& privile-e is
onl1 presuAptive. 3or as +enate v. *rmita &olds, re%o-niLin- a t1pe of information as privile-ed does
not mean t&at it *ill e %onsidered privile-ed in all instan%es. Anl1 after a %onsideration of t&e %onte(t
in *&i%& t&e %laim is made ma1 it e determined if t&ere is a puli% interest t&at %alls for t&e dis%losure
of t&e desired information, stron- enou-& to over%ome its traditionall1 privile-ed status.
$&et&er petitioners &ave estalis&ed t&e presen%e of su%& a puli% interest s&all e dis%ussed later.
3or no*, t&e Court s&all Erst pass upon t&e ar-uments raised 1 petitioners a-ainst t&e appli%ation
of 'M'1 v. Man"lapus to t&e present %ase.
ArBuAents profered 7" petitioners aBainst t6e app4i3ation o2 PMPF v. Manglapus
2etitioners ar-ue t&at 'M'1 v. Man"lapus %annot e applied in toto to t&e present %ase, t&ere
ein- sustantial fa%tual distin%tions et*een t&e t*o.
'o petitioners, t&e Erst and most fundamental distin%tion lies in t&e nature of t&e treat1 involved. '&e1
stress t&at'M'1 v. Man"lapus involved t&e Militar1 /ases )-reement *&i%& ne%essaril1 pertained to
matters aDe%tin- national se%urit1> *&ereas t&e present %ase involves an e%onomi% treat1 t&at see5s
to re-ulate trade and %ommer%e et*een t&e 2&ilippines and Mapan, matters *&i%&, unli5e t&ose
%overed 1 t&e Militar1 /ases )-reement, are not so vital to national se%urit1 to disallo* t&eir
dis%losure.
2etitionersQ ar-ument etra1s a fault1 assumption t&at information, to e %onsidered privile-ed, must
involve national se%urit1. '&e re%o-nition in +enate v. *rmita
2#
t&at e(e%utive privile-e &as
en%ompassed %laims of var1in- 5inds, su%& t&at it ma1 even e more a%%urate to spea5 of @e(e%utive
privile-es,@ %autions a-ainst su%& -eneraliLation.
$&ile t&ere %ertainl1 are privile-es -rounded on t&e ne%essit1 of safe-uardin- national se%urit1 su%&
as t&ose involvin- militar1 se%rets, not all are founded t&ereon. Ane e(ample is t&e @informerQs
privile-e,@ or t&e privile-e of t&e Government not to dis%lose t&e identit1 of a person or persons *&o
furnis& information of violations of la* to o=%ers %&ar-ed *it& t&e enfor%ement of t&at la*.
30
'&e
suspe%t involved need not e so notorious as to e a t&reat to national se%urit1 for t&is privile-e to
appl1 in an1 -iven instan%e. At&er*ise, t&e privile-e *ould e inappli%ale in all ut t&e most &i-&,
proEle %ases, in *&i%& %ase not onl1 *ould t&is e %ontrar1 to lon-,standin- pra%ti%e. It *ould also e
&i-&l1 pre8udi%ial to la* enfor%ement eDorts in -eneral.
)lso illustrative is t&e privile-e a%%orded to presidential %ommuni%ations, *&i%& are presumed
privile-ed *it&out distin-uis&in- et*een t&ose *&i%& involve matters of national se%urit1 and t&ose
*&i%& do not, t&e rationale for t&e privile-e ein- t&at
( ( ( JaK 2ranG e136anBe of e(plorator1 ideas and assessments, free from t&e -lare of puli%it1 and
pressure 1 interested parties, is essential to prote%t t6e independen3e o2 de3ision-AaGinB of
t&ose tas5ed to e(er%ise 2residential, Be-islative and Mudi%ial po*er. ( ( (
3"
94mp&asis supplied:
In t&e same *a1 t&at t&e privile-e for 8udi%ial delierations does not depend on t&e nature of t&e %ase
delierated upon, so presidential %ommuni%ations are privile-ed *&et&er t&e1 involve matters of
national se%urit1.
It ears emp&asis, &o*ever, t&at t&e privile-e a%%orded to presidential %ommuni%ations is not
asolute, one si-niE%ant <ualiE%ation ein- t&at @t&e 4(e%utive %annot, an1 more t&an t&e ot&er
ran%&es of -overnment, invo5e a -eneral %onEdentialit1 privile-e to s&ield its o=%ials and emplo1ees
from investi-ations 1 t&e proper -overnmental institutions into possile %riminal *ron-doin-.@
32
'&is
<ualiE%ation applies *&et&er t&e privile-e is ein- invo5ed in t&e %onte(t of a 8udi%ial trial or a
%on-ressional investi-ation %ondu%ted in aid of le-islation.
33
Closel1 related to t&e @presidential %ommuni%ations@ privile-e is t&e delierative pro%ess privile-e
re%o-niLed in t&e ;nited States. )s dis%ussed 1 t&e ;.S. Supreme Court in 4L&B v. +ears, &oebuck &
Co,
3.
delierative pro%ess %overs do%uments reTe%tin- advisor1 opinions, re%ommendations and
delierations %omprisin- part of a pro%ess 1 *&i%& -overnmental de%isions and poli%ies are
formulated. Notal1, t&e privile-ed status of su%& do%uments rests,not on t6e need to prote3t
nationa4 se3urit" ut, on t&e @ovious realiLation t&at o=%ials *ill not %ommuni%ate %andidl1 amon-
t&emselves if ea%& remar5 is a potential item of dis%over1 and front pa-e ne*s,@ t&e o8e%tive of t&e
privile-e ein- to en&an%e t&e <ualit1 of a-en%1 de%isions&ttp6FF*e2.*estla*.%omFEndFdefault.*lU
rsV$B$0.00?serialnumV"#05"2#002?fnVWtop?svVSplit?t%V,"?Endt1peVN?tfV,"?dV008?utidV
70532)!G/3,#/.C,.)5),83"!,C20G#/))3!C.70d?vrV2.0?rpV72=nd
72fdefault.*l?mtV$BIGeneralSus%ription.
35
'&e diplomati% ne-otiations privile-e ears a %lose resemlan%e to t&e delierative pro%ess and
presidential %ommuni%ations privile-e. It ma1 e readil1 per%eived t&at t&e rationale for t&e
%onEdential %&ara%ter of diplomati% ne-otiations, delierative pro%ess, and presidential
%ommuni%ations is similar, if not identi%al.
'&e earlier dis%ussion on 'M'1 v. Man"lapus
3!
s&o*s t&at t&e privile-e for diplomati% ne-otiations is
meant to en%oura-e a fran5 e(%&an-e of e(plorator1 ideas et*een t&e ne-otiatin- parties 1
s&ieldin- su%& ne-otiations from puli% vie*. Similar to t&e privile-e for presidential %ommuni%ations,
t&e diplomati% ne-otiations privile-e see5s, t&rou-& t&e same means, to prote%t t&e independen%e in
de%ision,ma5in- of t&e 2resident, parti%ularl1 in its %apa%it1 as @t&e sole or-an of t&e nation in its
e(ternal relations, and its sole representative *it& forei-n nations.@ )nd, as *it& t&e delierative
pro%ess privile-e, t&e privile-e a%%orded to diplomati% ne-otiations arises, not on a%%ount of t&e
%ontent of t&e information per se, ut e%ause t&e information is part of a pro%ess of delieration
*&i%&, in pursuit of t&e puli% interest, must e presumed %onEdential.
'&e de%ision of t&e ;.S. Gistri%t Court, Gistri%t of Columia in 1ulbri"ht & 5aorski v. 6epartment of the
7reasury
30
enli-&tens on t&e %lose relation et*een diplomati% ne-otiations and delierative pro%ess
privile-es. '&e plaintiDs in t&at %ase sou-&t a%%ess to notes ta5en 1 a memer of t&e ;.S. ne-otiatin-
team durin- t&e ;.S.,3ren%& ta1treat" ne-otiations. )mon- t&e points noted t&erein *ere t&e issues
to e dis%ussed, positions *&i%& t&e 3ren%& and ;.S. teams too5 on some points, t&e draft lan-ua-e
a-reed on, and arti%les *&i%& needed to e amended. ;p&oldin- t&e %onEdentialit1 of t&ose notes,
Mud-e Green ruled, t&us6
NeBotiations 7etween two 3ountries to dra2t a treat" represent a true e1aAp4e o2 a
de4i7erative pro3ess. !u36 Bive-and-taGe Aust o33ur 2or t6e 3ountries to rea36 an
a33ord. ) des%ription of t&e ne-otiations at an1 one point *ould not provide an onloo5er a summar1
of t&e dis%ussions *&i%& %ould later e relied on as la*. It *ould not e @*or5in- la*@ as t&e points
dis%ussed and positions a-reed on *ould e su8e%t to %&an-e at an1 date until t&e treat1 *as si-ned
1 t&e 2resident and ratiEed 1 t&e Senate.
T6e po4i3ies 7e6ind t6e de4i7erative pro3ess privi4eBe support non-dis34osure. !u36 6arA
3ou4d a33rue to t6e neBotiations pro3ess i2 t6ese notes were revea4ed. (1posure o2 t6e pre-
aBreeAent positions o2 t6e )ren36 neBotiators AiB6t we44 ofend 2oreiBn BovernAents and
wou4d 4ead to 4ess 3andor 7" t6e *. '. in re3ordinB t6e events o2 t6e neBotiations
pro3ess. )s several mont&s pass in et*een ne-otiations, t&is la%5 of re%ord %ould &inder readil1 t&e
;. S. ne-otiatin- team. 3urt&er dis%losure *ould reveal prematurel1 adopted poli%ies. If t&ese poli%ies
s&ould e %&an-ed, puli% %onfusion *ould result easil1.
)ina44", re4easinB t6ese snaps6ot views o2 t6e neBotiations wou4d 7e 3oApara74e to
re4easinB dra2ts o2 t6e treat", parti3u4ar4" w6en t6e notes state t6e tentative provisions
and 4anBuaBe aBreed on. As dra2ts o2 reBu4ations t"pi3a44" are prote3ted 7" t6e
de4i7erative pro3ess privi4eBe, )rt&ur )ndersen ? Co. v. Internal Revenue Servi%e, C.). No. 80,005
9G.C.Cir., Ma1 2", "#82:, dra2ts o2 treaties s&ould 7e a33orded t6e saAe prote3tion. 94mp&asis
and unders%orin- supplied:
Clearl1, t&e privile-e a%%orded to diplomati% ne-otiations follo*s as a lo-i%al %onse<uen%e from t&e
privile-ed %&ara%ter of t&e delierative pro%ess.
'&e Court is not una*are t&at in Center for %nternational *nvironmental La (C%*L#, et al. v. ()ce of
2.+. 7rade &epresentative
38
O *&ere t&e plaintiDs sou-&t information relatin- to t&e 8ust,%ompleted
ne-otiation of a ;nited States,C&ile 3ree 'rade )-reement O t&e same distri%t %ourt, t&is time under
Mud-e 3riedman, %ons%iousl1 refrained from appl1in- t&e do%trine in 1ulbri"ht and ordered t&e
dis%losure of t&e information ein- sou-&t.
Sin%e t&e fa%tual milieu in C%*L seemed to %all for t&e strai-&t appli%ation of t&e do%trine in 1ulbri"ht, a
dis%ussion of *&1 t&e distri%t %ourt did not appl1 t&e same *ould &elp illumine t&is CourtQs o*n
reasons for de%idin- t&e present %ase alon- t&e lines of 1ulbri"ht.
In ot& 1ulbri"ht and C%*L, t&e ;.S. -overnment %ited a statutor1 asis for *it&&oldin- information,
namel1, 4(emption 5 of t&e 3reedom of Information )%t 93AI):.
3#
In order to <ualif1 for prote%tion under
4(emption 5, a do%ument must satisf1 t*o %onditions6 9": it must e eit&er inter-aBen3" or intra-
aBen3" in nature, and 92: it must e ot& pre-de3isiona4 and part o2 t6e aBen3"Ms de4i7erative
or de3ision-AaGinB pro3ess.
.0
Mud-e 3riedman, in CI4B, &imself %o-niLant of a @superE%ial similarit1 of %onte(t@ et*een t&e t*o
%ases, ased &is de%ision on *&at &e per%eived to e a si-niE%ant distin%tion6 &e found t&e
ne-otiatorQs notes t&at *ere sou-&t in1ulbri"ht to e @%learl1 internal,@ *&ereas t&e do%uments ein-
sou-&t in C%*L *ere t&ose produ%ed 1 or e(%&an-ed *it& an outside part1, i.e. C&ile. '&e do%uments
su8e%t of 3ulri-&t ein- %learl1 internal in %&ara%ter, t&e <uestion of dis%losure t&erein turned not on
t&e t&res&old re<uirement of 4(emption 5 t&at t&e do%ument e inter,a-en%1, ut on *&et&er t&e
do%uments *ere part of t&e a-en%1+s pre,de%isional delierative pro%ess. An t&is asis, Mud-e 3riedman
found t&at @Mud-e Green+s dis%ussion Jin 3ulri-&tK of t&e &arm t&at %ould result from dis%losure
t&erefore is irrelevant, sin3e t6e do3uAents at issue Nin CIELO are not inter-aBen3", and t6e
%ourt does not rea36 t6e Fuestion o2 de4i7erative pro3ess.@ 94mp&asis supplied:
In Ene, 1ulbri"ht *as not overturned. '&e %ourt in C%*L merel1 found t&e same to e irrelevant in li-&t
of its distin%t fa%tual settin-. $&et&er t&is %on%lusion *as valid O a <uestion on *&i%& t&is Court *ould
not pass O t&e rulin- in1ulbri"ht t&at @JnKe-otiations et*een t*o %ountries to draft a treat1 represent
a true e(ample of a delierative pro%ess@ *as left standin-, sin%e t&e C%*L %ourt e(pli%itl1 stated t&at it
did not rea%& t&e <uestion of delierative pro%ess.
Goin- a%5 to t&e present %ase, t&e Court re%o-niLes t&at t&e information sou-&t 1 petitioners
in%ludes do%uments produ%ed and %ommuni%ated 1 a part1 e(ternal to t&e 2&ilippine -overnment,
namel1, t&e Mapanese representatives in t&e M242) ne-otiations, and to t&at e(tent t&is %ase is %loser to
t&e fa%tual %ir%umstan%es ofC%*L t&an t&ose of 1ulbri"ht.
Nonet&eless, for reasons *&i%& s&all e dis%ussed s&ortl1, t&is Court e%&oes t&e prin%iple arti%ulated
in 1ulbri"htt&at t&e puli% poli%1 underl1in- t&e delierative pro%ess privile-e re<uires t&at diplomati%
ne-otiations s&ould also e a%%orded privile-ed status, even if t&e do%uments su8e%t of t&e present
%ase %annot e des%ried as purel1 internal in %&ara%ter.
It need not e stressed t&at in C%*L, t&e %ourt ordered t&e dis%losure of information ased on its Endin-
t&at t&e Erst re<uirement of 3AI) 4(emption 5 O t&at t&e do%uments e inter,a-en%1 O *as not met. In
determinin- *&et&er t&e -overnment ma1 validl1 refuse dis%losure of t&e e(%&an-es et*een t&e ;.S.
and C&ile, it ne%essaril1 &ad to deal *it& t&is re<uirement, it ein- laid do*n 1 a statute indin- on
t&em.
In t&is 8urisdi%tion, &o*ever, t&ere is no %ounterpart of t&e 3AI), nor is t&ere an1 statutor1 re<uirement
similar to 3AI) 4(emption 5 in parti%ular. Hen%e, 2&ilippine %ourts, *&en assessin- a %laim of privile-e
for diplomati% ne-otiations, are more free to fo%us dire%tl1 on t&e issue of *&et&er t&e privile-e ein-
%laimed is indeed supported 1 puli% poli%1, *it&out &avin- to %onsider O as t&e CI4B %ourt did O if
t&ese ne-otiations fulEll a formal re<uirement of ein- @inter,a-en%1.@ Important t&ou-& t&at
re<uirement ma1 e in t&e %onte(t of domesti% ne-otiations, it need not e a%%orded t&e same
si-niE%an%e *&en dealin- *it& international ne-otiations.
'&ere ein- a puli% poli%1 supportin- a privile-e for diplomati% ne-otiations for t&e reasons e(plained
aove, t&e Court sees no reason to modif1, mu%& less aandon, t&e do%trine in 'M'1 v. Man"lapus.
) se%ond point petitioners proDer in t&eir attempt to diDerentiate 'M'1 v. Man"lapus from t&e present
%ase is t&e fa%t t&at t&e petitioners t&erein %onsisted entirel1 of memers of t&e mass media, *&ile
petitioners in t&e present %ase in%lude memers of t&e House of Representatives *&o invo5e t&eir ri-&t
to information not 8ust as %itiLens ut as memers of Con-ress.
2etitioners t&us %on%lude t&at t&e present %ase involves t&e ri-&t of memers of Con-ress to demand
information on ne-otiations of international trade a-reements from t&e 4(e%utive ran%&, a matter
*&i%& *as not raised in'M'1 v. Man"lapus.
$&ile indeed t&e petitioners in 'M'1 v. Man"lapus %onsisted onl1 of memers of t&e mass media, it
*ould e in%orre%t to %laim t&at t&e do%trine laid do*n t&erein &as no earin- on a %ontrovers1 su%& as
t&e present, *&ere t&e demand for information &as %ome from memers of Con-ress, not onl1 from
private %itiLens.
T6e privi4eBed 36ara3ter a33orded to dip4oAati3 neBotiations does not ipso 2a3to 4ose a44
2or3e and efe3t siAp4" 7e3ause t6e saAe privi4eBe is now 7einB 34aiAed under diferent
3ir3uAstan3es. '&eproailit1 of t&e %laim su%%eedin- in t&e ne* %onte(t mi-&t diDer, ut to sa1
t&at t&e privile-e, as su%&, &as no validit1 at all in t&at %onte(t is anot&er matter alto-et&er.
'&e CourtQs statement in +enate v. *rmita t&at @presidential refusals to furnis& information ma1 e
a%tuated 1 an1 of at least t&ree distin%t 5inds of %onsiderations Jstate se%rets privile-e, informerQs
privile-e, and a -eneri% privile-e for internal delierationsK, and ma1 e asserted, wit6 diferinB
deBrees o2 su33ess, in t&e %onte(t of eit&er 8udi%ial or le-islative investi-ations,@
."
implies t&at a
privile-e, on%e re%o-niLed, ma1 e invo5ed under diDerent pro%edural settin-s. '&at t&is prin%iple
&olds true parti%ularl1 *it& respe%t to diplomati% ne-otiations ma1 e inferred from 'M'1 v.
Man"lapus itself, *&ere t&e Court &eld t&at it is t&e 2resident alone *&o ne-otiates treaties, and not
even t&e Senate or t&e House of Representatives, unless as5ed, ma1 intrude upon t&at pro%ess.
Clearl1, t&e privile-e for diplomati% ne-otiations ma1 e invo5ed not onl1 a-ainst %itiLensQ demands for
information, ut also in t&e %onte(t of le-islative investi-ations.
Hen%e, t&e re%o-nition -ranted in 'M'1 v. Man"lapus to t&e privile-ed %&ara%ter of diplomati%
ne-otiations %annot e %onsidered irrelevant in resolvin- t&e present %ase, t&e %onte(tual diDeren%es
et*een t&e t*o %ases not*it&standin-.
)s t&ird and last point raised a-ainst t&e appli%ation of 'M'1 v. Man"lapus in t&is %ase, petitioners
proDer t&at @t&e so%io,politi%al and &istori%al %onte(ts of t&e t*o %ases are *orlds apart.@ '&e1 %laim
t&at t&e %onstitutional traditions and %on%epts prevailin- at t&e time 'M'1 v. Man"lapus %ame aout,
parti%ularl1 t&e s%&ool of t&ou-&t t&at t&e re<uirements of forei-n poli%1 and t&e ideals of
transparen%1 *ere in%ompatile *it& ea%& ot&er or t&e @in%ompatiilit1 &1pot&esis,@ *&ile valid *&en
international relations *ere still -overned 1 po*er, politi%s and *ars, are no lon-er so in t&is a-e of
international %ooperation.
.2
$it&out delvin- into petitionersQ assertions respe%tin- t&e @in%ompatiilit1 &1pot&esis,@ t&e Court notes
t&at t&e rulin- in 'M'1 v. Man"lapus is -rounded more on t&e nature of treat1 ne-otiations as su%&
t&an on a parti%ular so%io,politi%al s%&ool of t&ou-&t. If petitioners are su--estin- t&at t&e nature of
treat1 ne-otiations &ave so %&an-ed t&at @JaKn ill,timed spee%& 1 one of t&e parties or a fran5
de%laration of t&e %on%ession *&i%& are e(a%ted or oDered on ot& sides@ no lon-er @leadJsK to
*idespread propa-anda to lo%5 t&e ne-otiations,@ or t&at parties in treat1 ne-otiations no
lon-er e(pe%t t&eir %ommuni%ations to e -overned 1 &istori% %onEdentialit1, t&e urden is on t&em
to sustantiate t&e same. '&is petitioners failed to dis%&ar-e.
P6et6er t6e privi4eBe app4ies on4" at 3ertain staBes o2 t6e neBotiation pro3ess
2etitioners admit t&at @diplomati% ne-otiations on t&e M242) are entitled to a reasonale amount of
%onEdentialit1 so as not to 8eopardiLe t&e diplomati% pro%ess.@ '&e1 ar-ue, &o*ever, t&at t&e same is
privile-ed @onl1 at %ertain sta-es of t&e ne-otiatin- pro%ess, after *&i%& su%& information must
ne%essaril1 e revealed to t&e puli%.@
.3
'&e1 add t&at t&e dut1 to dis%lose t&is information *as vested
in t&e -overnment *&en t&e ne-otiations moved from t&e formulation and e(plorator1 sta-e to t&e
Ermin- up of deEnite propositions or o=%ial re%ommendations, %itin-Chavez v. 'C//
..
and Chavez v.
'*,.
.5
'&e follo*in- statement in Chavez v. '*,, &o*ever, su=%es to s&o* t&at t&e do%trine in ot& t&at %ase
and Chavez v. 'C// *it& re-ard to t&e dut1 to dis%lose @deEnite propositions of t&e -overnment@ does
not appl1 to diplomati% ne-otiations6
$e rule, t&erefore, t&at t&e %onstitutional ri-&t to information in%ludes o=%ial information on on,-oin-
ne-otiationsefore a Enal %ontra%t. T6e in2orAation, 6owever, Aust 3onstitute deInite
propositions 7" t6e BovernAent and s6ou4d not 3over re3oBniJed e13eptions 4iGe privi4eBed
in2orAation, Ai4itar" and dip4oAati3 se3rets and siAi4ar Aatters afe3tinB nationa4 se3urit"
and pu74i3 order. ( ( (
.!
94mp&asis and unders%orin- supplied:
It follo*s from t&is rulin- t&at even deEnite propositions of t&e -overnment ma1 not e dis%losed if
t&e1 fall under @re%o-niLed e(%eptions.@ '&e privile-e for diplomati% ne-otiations is %learl1 amon- t&e
re%o-niLed e(%eptions, for t&e footnote to t&e immediatel1 <uoted rulin- %ites 'M'1 v. Man"lapus itself
as an aut&orit1.
P6et6er t6ere is suC3ient pu74i3 interest to over3oAe t6e 34aiA o2 privi4eBe
It ein- estalis&ed t&at diplomati% ne-otiations en8o1 a presumptive privile-e a-ainst dis%losure, even
a-ainst t&e demands of memers of Con-ress for information, t&e Court s&all no* determine *&et&er
petitioners &ave s&o*n t&e e(isten%e of a puli% interest su=%ient to over%ome t&e privile-e in t&is
instan%e.
'o %larif1, t&ere are at least t*o 5inds of puli% interest t&at must e ta5en into a%%ount. Ane is t&e
presumed puli% interest in 2avor o2 GeepinB t6e su7He3t in2orAation 3onIdentia4, *&i%& is t&e
reason for t&e privile-e in t&e Erst pla%e, and t&e ot&er is t&e puli% interest in 2avor o2 dis34osure,
t&e e(isten%e of *&i%& must e s&o*n 1 t&e part1 as5in- for information.
.0
'&e %riteria to e emplo1ed in determinin- *&et&er t&ere is a su=%ient puli% interest in favor of
dis%losure ma1 e -at&ered from %ases su%& as 2.+. v. 4i!on,
.8
+enate +elect Committee on
'residential Campai"n ,ctivities v. 4i!on,
.#
and %n re +ealed Case.
50
2.+. v. 4i!on, *&i%& involved a %laim of t&e presidential %ommuni%ations privile-e a-ainst t&e
supoena duces tecum of a distri%t %ourt in a %riminal %ase, emp&asiLed t&e need to alan%e su%&
%laim of privile-e a-ainst t&e %onstitutional dut1 of %ourts to ensure a fair administration of %riminal
8usti%e.
( ( ( t6e a44owan3e o2 t6e privi4eBe to *it&&old eviden%e t&at is demonstral1 relevant in a %riminal
trial wou4d 3ut deep4" into t6e Buarantee o2 due pro3ess o2 4aw and Brave4" iApair t6e 7asi3
2un3tion o2 t6e 3ourts. A Presidents a3Gnow4edBed need 2or 3onIdentia4it" in t6e
3oAAuni3ations o2 6is oC3e is Benera4 in nature, w6ereas t6e 3onstitutiona4 need 2or
produ3tion o2 re4evant eviden3e in a 3riAina4 pro3eedinB is spe3iI3 and 3entra4 to t6e 2air
adHudi3ation o2 a parti3u4ar 3riAina4 3ase in t6e adAinistration o2 Husti3e.$it&out a%%ess to
spe%iE% fa%ts a %riminal prose%ution ma1 e totall1 frustrated. '&e 2residentQs road interest in
%onEdentialit1 of %ommuni%ations *ill not e vitiated 1 dis%losure of a limited numer of
%onversations preliminaril1 s&o*n to &ave some earin- on t&e pendin- %riminal %ases. 94mp&asis,
itali%s and unders%orin- supplied:
Similarl1, +enate +elect Committee v. 4i!on,
5"
*&i%& involved a %laim of t&e presidential
%ommuni%ations privile-e a-ainst t&e supoena duces tecum of a Senate %ommittee, spo5e of t&e
need to alan%e su%& %laim *it& t&e dut1 of Con-ress to perform its le-islative fun%tions.
'&e sta-ed de%isional stru%ture estalis&ed in 4i!on v. +irica *as desi-ned to ensure t&at t&e 2resident
and t&ose upon *&om &e dire%tl1 relies in t&e performan%e of &is duties %ould %ontinue to *or5 under
a -eneral assuran%e t&at t&eir delierations *ould remain %onEdential. So lon- as t6e presuAption
t6at t6e pu74i3 interest 2avors 3onIdentia4it" 3an 7e de2eated on4" 7" a stronB s6owinB o2
need 7" anot6er institution o2 BovernAent-a s6owinB t6at t6e responsi7i4ities o2 t6at
institution 3annot responsi74" 7e 2u4I44ed wit6out a33ess to re3ords o2 t6e PresidentMs
de4i7erations, *e elieved in 4i!on v. +irica, and %ontinue to elieve, t&at t&e eDe%tive fun%tionin- of
t&e presidential o=%e *ill not e impaired. ( ( (
( ( ( (
T6e suC3ien3" o2 t6e %oAAitteeMs s6owinB o2 need 6as 3oAe to depend, t6ere2ore,
entire4" on w6et6er t6e su7poenaed Aateria4s are 3riti3a4 to t6e per2orAan3e o2 its
4eBis4ative 2un3tions. ( ( ( 94mp&asis and unders%orin- supplied:
%n re +ealed Case
52
involved a %laim of t&e delierative pro%ess and presidential %ommuni%ations
privile-es a-ainst a supoena duces tecum of a -rand 8ur1. An t&e %laim of delierative pro%ess
privile-e, t&e %ourt stated6
'&e delierative pro%ess privile-e is a <ualiEed privile-e and 3an 7e over3oAe 7" a suC3ient
s6owinB o2 need. T6is need deterAination is to 7e Aade Qe1i74" on a 3ase-7"-3ase, ad 6o3
7asis. @J4Ka%& time Jt&e delierative pro%ess privile-eK is asserted t&e distri%t %ourt must underta5e a
fres& alan%in- of t&e %ompetin- interests,@ taGinB into a33ount 2a3tors su36 as ?t6e re4evan3e
o2 t6e eviden3e,? ?t6e avai4a7i4it" o2 ot6er eviden3e,? ?t6e seriousness o2 t6e 4itiBation,?
?t6e ro4e o2 t6e BovernAent,? and t6e ?possi7i4it" o2 2uture tiAidit" 7" BovernAent
eAp4o"ees. ( ( ( 94mp&asis, itali%s and unders%orin- supplied:
2etitioners &ave failed to present t&e stron- and @su=%ient s&o*in- of need@ referred to in t&e
immediatel1 %ited %ases. '&e ar-uments t&e1 proDer to estalis& t&eir entitlement to t&e su8e%t
do%uments fall s&ort of t&is standard.
2etitioners -o on to assert t&at t&e non,involvement of t&e 3ilipino people in t&e M242) ne-otiation
pro%ess eDe%tivel1 results in t&e ar-ainin- a*a1 of t&eir e%onomi% and propert1 ri-&ts *it&out t&eir
5no*led-e and parti%ipation, in violation of t&e due pro%ess %lause of t&e Constitution. '&e1 %laim,
moreover, t&at it is essential for t&e people to &ave a%%ess to t&e initial oDers e(%&an-ed durin- t&e
ne-otiations sin%e onl1 t&rou-& su%& dis%losure %an t&eir %onstitutional ri-&t to eDe%tivel1 parti%ipate
in de%ision,ma5in- e rou-&t to life in t&e %onte(t of international trade a-reements.
$&et&er it %an a%%uratel1 e said t&at t&e 3ilipino people *ere not involved in t&e M242) ne-otiations is
a <uestion of fa%t *&i%& t&is Court need not resolve. Su=%e it to state t&at respondents &ad presented
do%uments purportin- to s&o* t&at puli% %onsultations *ere %ondu%ted on t&e M242). 2arent&eti%all1,
petitioners %onsider t&ese @alle-ed %onsultations@ as @*oefull1 sele%tive and inade<uate.@
53
)' )BB 4I4N'S, sin%e it is not disputed t&at t&e oDers e(%&an-ed 1 t&e 2&ilippine and Mapanese
representatives &ave not een dis%losed to t&e puli%, t&e Court s&all pass upon t&e issue of *&et&er
a%%ess to t&e do%uments earin- on t&em is, as petitioners %laim, essential to t&eir ri-&t to parti%ipate
in de%ision,ma5in-.
'&e %ase for petitioners &as, of %ourse, een immensel1 *ea5ened 1 t&e dis%losure of t&e full te(t of
t&e M242) to t&e puli% sin%e Septemer "", 200!, even as it is still ein- delierated upon 1 t&e
Senate and, t&erefore, not 1et indin- on t&e 2&ilippines. $ere t&e Senate to %on%ur *it& t&e validit1
of t&e M242) at t&is moment, t&ere &as alread1 een, in t&e *ords of 'M'1 v. Man"lapus, @ample
opportunit1 for dis%ussion efore Jt&e treat1K is approved.@
'&e te(t of t&e M242) &avin- een pulis&ed, petitioners &ave failed to %onvin%e t&is Court t&at t&e1
*ill not e ale to meanin-full1 e(er%ise t&eir ri-&t to parti%ipate in de%ision,ma5in- unless t&e initial
oDers are also pulis&ed.
It is of puli% 5no*led-e t&at various non,-overnment se%tors and private %itiLens &ave alread1
puli%l1 e(pressed t&eir vie*s on t&e M242), t&eir %omments not ein- limited to -eneral oservations
t&ereon ut on its spe%iE% provisions. Numerous arti%les and statements %riti%al of t&e M242) &ave een
posted on t&e Internet.
5.
Given t&ese developments, t&ere is no asis for petitionersQ %laim t&at a%%ess
to t&e 2&ilippine and Mapanese oDers is essential to t&e e(er%ise of t&eir ri-&t to parti%ipate in de%ision,
ma5in-.
2etitioner,memers of t&e House of Representatives additionall1 an%&or t&eir %laim to &ave a ri-&t to
t&e su8e%t do%uments on t&e asis of Con-ressQ in&erent po*er to re-ulate %ommer%e, e it domesti%
or international. '&e1 alle-e t&at Con-ress %annot meanin-full1 e(er%ise t&e po*er to re-ulate
international trade a-reements su%& as t&e M242) *it&out ein- -iven %opies of t&e initial oDers
e(%&an-ed durin- t&e ne-otiations t&ereof. In t&e same vein, t&e1 ar-ue t&at t&e 2resident %annot
e(%lude Con-ress from t&e M242) ne-otiations sin%e *&atever po*er and aut&orit1 t&e 2resident &as to
ne-otiate international trade a-reements is derived onl1 1 dele-ation of Con-ress, pursuant to )rti%le
II, Se%tion 2892: of t&e Constitution and Se%tions .0" and .02 of 2residential Ge%ree No. ".!..
55
'&e su8e%t of )rti%le II Se%tion 2892: of t&e Constitution is not t&e po*er to ne-otiate treaties and
international a-reements, ut t&e po*er to E( tariD rates, import and e(port <uotas, and ot&er ta(es.
'&us it provides6
92: '&e Con-ress ma1, 1 la*, aut&oriLe t&e 2resident to E( *it&in spe%iEed limits, and su8e%t to su%&
limitations and restri%tions as it ma1 impose, tariD rates, import and e(port <uotas, tonna-e and
*&arfa-e dues, and ot&er duties or imposts *it&in t&e frame*or5 of t&e national development
pro-ram of t&e Government.
)s to t&e po*er to ne-otiate treaties, t&e %onstitutional asis t&ereof is Se%tion 2" of )rti%le III O t&e
arti%le on t&e 4(e%utive Gepartment O *&i%& states6
No treat1 or international a-reement s&all e valid and eDe%tive unless %on%urred in 1 at least t*o,
t&irds of all t&e Memers of t&e Senate.
'&e do%trine in 2M23 v. Man-lapus t&at t&e treat1,ma5in- po*er is e(%lusive to t&e 2resident, ein-
t&e sole or-an of t&e nation in its e(ternal relations, *as e%&oed in B,8,4 v. *!ecutive
+ecretary
5!
*&ere t&e Court &eld6
/" %onstitutional Eat and 1 t&e intrinsi% nature of &is o=%e, t&e 2resident, as &ead of State, is
t&e sole or-an and aut&orit1 in t&e e(ternal aDairs of t&e %ountr1. In man1 *a1s, t&e 2resident is t&e
%&ief ar%&ite%t of t&e nation+s forei-n poli%1> &is @dominan%e in t&e Eeld of forei-n relations is 9t&en:
%on%eded.@ $ieldin- vast po*ers and inTuen%e, &is %ondu%t in t&e e(ternal aDairs of t&e nation, as
MeDerson des%ries, is @e(e%utive alto-et&er.@
As reBards t6e power to enter into treaties or internationa4 aBreeAents, t6e %onstitution
vests t6e saAe in t6e President, su7He3t on4" to t6e 3on3urren3e o2 at 4east two t6irds vote
o2 a44 t6e AeA7ers o2 t6e 'enate. In t&is li-&t, t&e ne-otiation of t&e I3) and t&e suse<uent
ratiE%ation of t&e a-reement are e(%lusive a%ts *&i%& pertain solel1 to t&e 2resident, in t&e la*ful
e(er%ise of 6is vast e1e3utive and dip4oAati3 powersBranted 6iA no 4ess t6an 7" t6e
2undaAenta4 4aw itse42. Into t6e Ie4d o2 neBotiation t6e 'enate 3annot intrude, and
%onBress itse42 is power4ess to invade it. ( ( ( 9Itali%s in t&e ori-inal> emp&asis and unders%orin-
supplied:
'&e same do%trine *as reiterated even more re%entl1 in 'imentel v. *!ecutive +ecretary
50
*&ere t&e
Court ruled6
In our s1stem of -overnment, t&e 2resident, ein- t&e &ead of state, is re-arded as t6e so4e
orBan and aut6orit" in e1terna4 re4ations and is t6e 3ountr"Ms so4e representative wit6
2oreiBn nations. )s t&e %&ief ar%&ite%t of forei-n poli%1, t&e 2resident a%ts as t&e %ountr1+s
mout&pie%e *it& respe%t to international aDairs. Hen%e, t6e President is vested wit6 t6e aut6orit"
to deal *it& forei-n states and -overnments, e(tend or *it&&old re%o-nition, maintain diplomati%
relations, enter into treaties, and ot&er*ise transa%t t&e usiness of forei-n relations. In t6e rea4A
o2 treat"-AaGinB, t6e President 6as t6e so4e aut6orit" to neBotiate wit6 ot6er states.
Nonet6e4ess, w6i4e t6e President 6as t6e so4e aut6orit" to neBotiate and enter into
treaties, t6e %onstitution provides a 4iAitation to 6is power 7" reFuirinB t6e 3on3urren3e o2
2RS o2 a44 t6e AeA7ers o2 t6e 'enate 2or t6e va4idit" o2 t6e treat" entered into 7" 6iA. ( ( (
94mp&asis and unders%orin- supplied:
$&ile t&e po*er t&en to E( tariD rates and ot&er ta(es %learl1 elon-s to Con-ress, and is e(er%ised 1
t&e 2resident onl1 1 dele-ation of t&at od1, it &as lon- een re%o-niLed t&at t&e po*er to enter into
treaties is vested dire%tl1 and e(%lusivel1 in t&e 2resident, su8e%t onl1 to t&e %on%urren%e of at least
t*o,t&irds of all t&e Memers of t&e Senate for t&e validit1 of t&e treat1. In t&is li-&t, t&e aut&orit1 of
t&e 2resident to enter into trade a-reements *it& forei-n nations provided under 2.G. ".!.
58
ma1 e
interpreted as an a%5no*led-ment of a po*er alread1 in&erent in its o=%e. It ma1 not e used as asis
to &old t&e 2resident or its representatives a%%ountale to Con-ress for t&e %ondu%t of treat1
ne-otiations.
'&is is not to sa1, of %ourse, t&at t&e 2residentQs po*er to enter into treaties is unlimited ut for t&e
re<uirement of Senate %on%urren%e, sin%e t&e 2resident must still ensure t&at all treaties *ill
sustantivel1 %onform to all t&e relevant provisions of t&e Constitution.
It follo*s from t&e aove dis%ussion t&at Con-ress, *&ile possessin- vast le-islative po*ers, ma1 not
interfere in t&e Eeld of treat1 ne-otiations. $&ile )rti%le III, Se%tion 2" provides for Senate
%on%urren%e, su%& pertains onl1 to t&e validit1 of t&e treat1 under %onsideration, not to t&e %ondu%t of
ne-otiations attendant to its %on%lusion. Moreover, it is not even Con-ress as a *&ole t&at &as een
-iven t&e aut&orit1 to %on%ur as a means of %&e%5in- t&e treat1,ma5in- po*er of t&e 2resident,
ut onl1 t&e Senate.
'&us, as in t&e %ase of petitioners suin- in t&eir %apa%it1 as private %itiLens, petitioners,memers of
t&e House of Representatives fail to present a @su=%ient s&o*in- of need@ t&at t&e information sou-&t
is %riti%al to t&e performan%e of t&e fun%tions of Con-ress, fun%tions t&at do not in%lude treat1,
ne-otiation.
Respondents a44eBed 2ai4ure to tiAe4" 34aiA e1e3utive privi4eBe
An respondentsQ invo%ation of e(e%utive privile-e, petitioners End t&e same defe%tive, not &avin- een
done seasonal1 as it *as raised onl1 in t&eir Comment to t&e present petition and not durin- t&e
House Committee &earin-s.
'&at respondents invo5ed t&e privile-e for t&e Erst time onl1 in t&eir Comment to t&e present petition
does not mean t&at t&e %laim of privile-e s&ould not e %redited. 2etitionersQ position presupposes t&at
an assertion of t&e privile-e s&ould &ave een made durin- t&e House Committee investi-ations,
failin- *&i%& respondents are deemed to &ave *aived it.
$&en t&e House Committee and petitioner,Con-ressman )-u8a re<uested respondents for %opies of
t&e do%uments su8e%t of t&is %ase, respondents replied t&at t&e ne-otiations *ere still on,-oin- and
t&at t&e draft of t&e M242) *ould e released on%e t&e te(t t&ereof is settled and %omplete. '&ere *as
no intimation t&at t&e re<uested %opies are %onEdential in nature 1 reason of puli% poli%1. '&e
response ma1 not t&us e deemed a %laim of privile-e 1 t&e standards of +enate v. *rmita, *&i%&
re%o-niLes as %laims of privile-e onl1 t&ose *&i%& are a%%ompanied 1 pre3ise and 3ertain
reasons for preservin- t&e 3onIdentia4it" of t&e information ein- sou-&t.
RespondentsQ failure to %laim t&e privile-e durin- t&e House Committee &earin-s ma1 not, &o*ever, e
%onstrued as a *aiver t&ereof 1 t&e 4(e%utive ran%&. )s t&e immediatel1 pre%edin- para-rap&
indi%ates, *&at respondents re%eived from t&e House Committee and petitioner,Con-ressman )-u8a
*ere mere re<uests for information. )nd as priorl1 stated, t&e House Committee itself refrained from
pursuin- its earlier resolution to issue a supoena du%es te%um on a%%ount of t&en Spea5er Mose de
Iene%iaQs alle-ed re<uest to Committee C&airperson Con-ressman 'eves to &old t&e same in
ae1an%e.
$&ile it is a salutar1 and nole pra%ti%e for Con-ress to refrain from issuin- supoenas to e(e%utive
o=%ials O out of respe%t for t&eir o=%e O until resort to it e%omes ne%essar1, t&e fa%t remains t&at
su%& re<uests are not a %ompulsor1 pro%ess. /ein- mere re<uests, t&e1 do not stri%tl1 %all for an
assertion of e(e%utive privile-e.
'&e privile-e is an e(emption to Con-ressQ po*er of in<uir1.
5#
So lon- as Con-ress itself Ends no %ause
to enfor%e su%& po*er, t&ere is no stri%t ne%essit1 to assert t&e privile-e. In t&is li-&t, respondentsQ
failure to invo5e t&e privile-e durin- t&e House Committee investi-ations did not amount to a *aiver
t&ereof.
'&e Court oserves, &o*ever, t&at t&e %laim of privile-e appearin- in respondentsQ Comment to t&is
petition fails to satisf1 in full t&e re<uirement laid do*n in Senate v. 4rmita t&at t&e %laim s&ould e
invo5ed 1 t&e 2resident or t&rou-& t&e 4(e%utive Se%retar1 @1 order of t&e
2resident.@
!0
RespondentsQ %laim of privile-e is ein- sustained, &o*ever, its Ta* not*it&standin-,
e%ause of %ir%umstan%es pe%uliar to t&e %ase.
'&e assertion of e(e%utive privile-e 1 t&e 4(e%utive Se%retar1, *&o is one of t&e respondents &erein,
*it&out &im addin- t&e p&rase @1 order of t&e 2resident,@ s&all e %onsidered as partiall1 %ompl1in-
*it& t&e re<uirement laid do*n in Senate v. 4rmita. '&e re<uirement t&at t&e p&rase @1 order of t&e
2resident@ s&ould a%%ompan1 t&e 4(e%utive Se%retar1Qs %laim of privile-e is a ne* rule laid do*n for
t&e Erst time in +enate v. *rmita, *&i%& *as not 1et Enal and e(e%utor1 at t&e time respondents Eled
t&eir Comment to t&e petition.
!"
) stri%t appli%ation of t&is re<uirement *ould t&us e un*arranted in
t&is %ase.
Response to t6e 0issentinB &pinion o2 t6e %6ie2 ;usti3e
$e are a*are t&at e&ind t&e dissent of t&e C&ief Musti%e lies a -enuine Leal to prote%t our peopleQs
ri-&t to information a-ainst an1 ause of e(e%utive privile-e. It is a Leal t&at $e full1 s&are.
'&e Court, &o*ever, in its endeavor to -uard a-ainst t&e ause of e(e%utive privile-e, s&ould e
%areful not to veer to*ards t&e opposite e(treme, to t&e point t&at it *ould stri5e do*n as invalid even
a le-itimate e(er%ise t&ereof.
$e respond onl1 to t&e salient ar-uments of t&e Gissentin- Apinion *&i%& &ave not 1et een
su=%ientl1 addressed aove.
". )fter its &istori%al dis%ussion on t&e allo%ation of po*er over international trade a-reements in t&e
;nited States, t&e dissent %on%ludes t&at @it *ill e turnin- somersaults *it& &istor1 to %ontend t&at
t&e 2resident is t&e sole or-an for e(ternal relations@ in t&at 8urisdi%tion. $it& re-ard to t&is opinion,
$e ma5e onl1 t&e follo*in- oservations6
'&ere is, at least, a %ore meanin- of t&e p&rase @sole or-an of t&e nation in its e(ternal relations@
*&i%& is not ein- disputed, namel1, t&at t&e po*er to dire%tl1 ne-otiate treaties and international
a-reements is vested 1 our Constitution onl1 in t&e 4(e%utive. '&us, t&e dissent states t&at @Con-ress
&as t&e po*er to re-ulate %ommer%e *it& forei-n nations 7ut does not 6ave t6e power to
neBotiate internationa4 aBreeAents dire3t4".@
!2
$&at is disputed is &o* t&is prin%iple applies to t&e %ase at ar.
'&e dissent opines t&at petitioner,memers of t&e House of Representatives, 1 as5in- for t&e su8e%t
M242) do%uments, are not see5in- to dire%tl1 parti%ipate in t&e ne-otiations of t&e M242), &en%e, t&e1
%annot e prevented from -ainin- a%%ess to t&ese do%uments.
An t&e ot&er &and, $e &old t&at t&is is one o%%asion *&ere t&e follo*in- rulin- in ,"an v. '%,7C(
!3
O
and in ot&er %ases ot& efore and sin%e O s&ould e applied6
T6is %ourt 6as 4onB and 3onsistent4" ad6ered to t6e 4eBa4 Aa1iA t6at t6ose t6at 3annot 7e
done dire3t4" 3annot 7e done indire3t4". 7o declare the '%,7C( contracts valid despite the clear
statutory prohibition a"ainst a direct "overnment "uarantee ould not only make a mockery of hat
the B(7 La seeks to prevent 33 hich is to e!pose the "overnment to the risk of incurrin" a monetary
obli"ation resultin" from a contract of loan beteen the pro9ect proponent and its lenders and to hich
the /overnment is not a party to 33 but ould also render the B(7 La useless for hat it seeks to
achieve :3 to make use of the resources of the private sector in the ;$nancin", operation and
maintenance of infrastructure and development pro9ects; hich are necessary for national "roth and
development but hich the "overnment, unfortunately, could ill3a<ord to $nance at this point in time.
!.
Similarl1, *&ile &erein petitioners,memers of t&e House of Representatives ma1 not &ave een
aimin- to parti%ipate in t&e ne-otiations dire%tl1, openin- t&e M242) ne-otiations to t&eir s%rutin1 O
even to t&e point of -ivin- t&em a%%ess to t&e oDers e(%&an-ed et*een t&e Mapanese and 2&ilippine
dele-ations O *ould &ave made a mo%5er1 of *&at t&e Constitution sou-&t to prevent and rendered it
useless for *&at it sou-&t to a%&ieve *&en it vested t&e po*er of dire%t ne-otiation solel1 *it& t&e
2resident.
$&at t&e ;.S. Constitution sou-&t to prevent and aimed to a%&ieve in deEnin- t&e treat1,ma5in-
po*er of t&e 2resident, *&i%& our Constitution similarl1 deEnes, ma1 e -at&ered from HamiltonQs
e(planation of *&1 t&e ;.S. Constitution e(%ludes t&e House of Representatives from t&e treat1,ma5in-
pro%ess6
( ( ( '&e Tu%tuatin-, and ta5in- its future in%rease into a%%ount, t&e multitudinous %omposition of t&at
od1, forid us to e(pe%t in it t&ose <ualities *&i%& are essential to t&e proper e(e%ution of su%& a
trust. )%%urate and %ompre&ensive 5no*led-e of forei-n politi%s> a stead1 and s1stemati% ad&eren%e
to t&e same vie*s> a ni%e and uniform sensiilit1 to national %&ara%ter,
de%ision, secrecy and dispat36> are in%ompatile *it& a od1 so variale and so numerous. '&e ver1
%ompli%ation of t&e usiness 1 introdu%in- a ne%essit1 of t&e %on%urren%e of so man1 diDerent odies,
*ould of itself aDord a solid o8e%tion. '&e -reater fre<uen%1 of t&e %alls upon t&e &ouse of
representatives, and t&e -reater len-t& of time *&i%& it *ould often e ne%essar1 to 5eep t&em
to-et&er *&en %onvened, to otain t&eir san%tion in t&e pro-ressive sta-es of a treat1, *ould e
sour%e of so -reat in%onvenien%e and e(pense, as alone ou-&t to %ondemn t&e pro8e%t.
!5
'&ese %onsiderations a fortiori appl1 in t&is 8urisdi%tion, sin%e t&e 2&ilippine Constitution, unli5e t&at of
t&e ;.S., does not even -rant t6e 'enate t&e po*er to advise t&e 4(e%utive in t&e ma5in- of treaties,
ut onl1 vests in t&at od1 t&e po*er to %on%ur in t&e validit1 of t&e treat1 after ne-otiations &ave
een %on%luded.
!!
Mu%& less, t&erefore, s&ould it e inferred t&at t&e House of Representatives &as t&is
po*er.
Sin%e allo*in- petitioner,memers of t&e House of Representatives a%%ess to t&e su8e%t M242)
do%uments *ould set a pre%edent for future ne-otiations, leadin- to t&e %ontravention of t&e puli%
interests arti%ulated aove *&i%& t&e Constitution sou-&t to prote%t, t&e su8e%t do%uments s&ould not
e dis%losed.
2. '&e dissent also asserts t&at respondents %an no lon-er %laim t&e diplomati% se%rets privile-e over
t&e su8e%t M242) do%uments no* t&at ne-otiations &ave een %on%luded, sin%e t&eir reasons for
nondis%losure %ited in t&e Mune 23, 2005 letter of Se%. 4rmita, and later in t&eir Comment, ne%essaril1
appl1 onl1 for as lon- as t&e ne-otiations *ere still pendin->
In t&eir Comment, respondents %ontend t&at @t&e ne-otiations of t&e representatives of t&e 2&ilippines
as *ell as of Mapan must e allo*ed to e(plore alternatives in t&e %ourse of t&e ne-otiations in t&e
same manner as 8udi%ial delierations and *or5in- drafts of opinions are a%%orded stri%t
%onEdentialit1.@ T6at respondents 4iGen t6e do3uAents invo4ved in t6e ;P(PA neBotiations to
Hudi3ia4 de4i7erations and worGinB dra2ts o2 opinions evin3es, 7" itse42, t6at t6e" were
34aiAinB 3onIdentia4it" not on4" unti4, 7ut even a2ter, t6e 3on34usion o2 t6e neBotiations.
Mudi%ial delierations do not lose t&eir %onEdential %&ara%ter on%e a de%ision &as een promul-ated 1
t&e %ourts. '&e same &olds true *it& respe%t to *or5in- drafts of opinions, *&i%& are %omparale to
intra,a-en%1re%ommendations. Su%& intra,a-en%1 re%ommendations are privile-ed even after t&e
position under %onsideration 1 t&e a-en%1 &as developed into a deEnite proposition, &en%e, t&e rule
in t&is 8urisdi%tion t&at a-en%ies &ave t&e dut1 to dis%lose onl1 deEnite propositions, and not t&e inter,
a-en%1 and intra,a-en%1 %ommuni%ations durin- t&e sta-e *&en %ommon assertions are still ein-
formulated.
!0
3. '&e dissent %laims t&at petitioner,memers of t&e House of Representatives &ave su=%ientl1 s&o*n
t&eir need for t&e same do%uments to over%ome t&e privile-e. )-ain, $e disa-ree.
'&e House Committee t&at initiated t&e investi-ations on t&e M242) did not pursue its earlier intention
to supoena t&e do%uments. '&is stron-l1 undermines t&e assertion t&at a%%ess to t&e same
do%uments 1 t&e House Committee is %riti%al to t&e performan%e of its le-islative fun%tions. If t&e
do%uments *ere indeed %riti%al, t&e House Committee s&ould &ave, at t&e ver1 least, issued
a subpoena duces tecum or, li5e *&at t&e Senate did in +enate v. *rmita, Eled t&e present petition as a
le-islative od1, rat&er t&an leavin- it to t&e dis%retion of individual Con-ressmen *&et&er to pursue
an a%tion or not. Su%& a%ts *ould &ave served as stron- indi%ia t&at Con-ress itself Ends t&e su8e%t
information to e %riti%al to its le-islative fun%tions.
3urt&er, -iven t&at respondents &ave %laimed e(e%utive privile-e, petitioner,memers of t&e House of
Representatives s&ould &ave, at least, s&o*n &o* its la%5 of a%%ess to t&e 2&ilippine and Mapanese
oDers *ould &inder t&e intelli-ent %raftin- of le-islation. Mere assertion t&at t&e M242) %overs a su8e%t
matter over *&i%& Con-ress &as t&e po*er to le-islate *ould not su=%e. )s +enate +elect Committee
v. 4i!on
!8
&eld, t&e s&o*in- re<uired to over%ome t&e presumption favorin- %onEdentialit1 turns, not
onl1 on t&e nature and appropriateness of t&e fun%tion in t&e performan%e of *&i%& t&e material *as
sou-&t, ut also t&e de-ree to *&i%& t&e material *as ne%essar1 to its fulEllment. '&is petitioners
failed to do.
3urt&ermore, from t&e time t&e Enal te(t of t&e M242) in%ludin- its anne(es and atta%&ments *as
pulis&ed, petitioner,memers of t&e House of Representatives &ave een free to use it for an1
le-islative purpose t&e1 ma1 see Et. Sin%e su%& puli%ation, petitionersQ need, if an1, spe%iE%all1 for
t&e 2&ilippine and Mapanese oDers leadin- to t&e Enal version of t&e M242), &as e%ome even less
apparent.
In assertin- t&at t&e alan%e in t&is instan%e tilts in favor of dis%losin- t&e M242) do%uments, t&e
dissent %ontends t&at t&e 4(e%utive &as failed to s&o* &o* dis%losin- t&em after t&e %on%lusion of
ne-otiations *ould impair t&e performan%e of its fun%tions. '&e %ontention, *it& due respe%t,
mispla%es t&e onus proandi. $&ile, in 5eepin- *it& t&e -eneral presumption of transparen%1, t&e
urden is initiall1 on t&e 4(e%utive to provide pre%ise and %ertain reasons for up&oldin- its %laim of
privile-e, on%e t&e 4(e%utive is ale to s&o* t&at t&e do%uments ein- sou-&t are %overed 1 a
re%o-niLed privile-e, t&e urden s&ifts to t&e part1 see5in- information to over%ome t&e privile-e 1 a
stron- s&o*in- of need.
$&en it *as t&us estalis&ed t&at t&e M242) do%uments are %overed 1 t&e privile-e for diplomati%
ne-otiations pursuant to 'M'1 v. Man"lapus, t&e presumption arose t&at t&eir dis%losure *ould impair
t&e performan%e of e(e%utive fun%tions. It *as t&en in%ument on petitioner, re<uestin- parties to
s&o* t&at t&e1 &ave a stron- need for t&e information su=%ient to over%ome t&e privile-e. '&e1 &ave
not, &o*ever.
.. Respe%tin- t&e failure of t&e 4(e%utive Se%retar1 to e(pli%itl1 state t&at &e is %laimin- t&e privile-e
@1 order of t&e 2resident,@ t&e same ma1 not e stri%tl1 applied to t&e privile-e %laim su8e%t of t&is
%ase.
$&en t&e Court in +enate v. *rmita limited t&e po*er of invo5in- t&e privile-e to t&e 2resident alone, it
*as la1in- do*n a ne* rule for *&i%& t&ere is no %ounterpart even in t&e ;nited States from *&i%& t&e
%on%ept of e(e%utive privile-e *as adopted. )s &eld in t&e 200. %ase of 5udicial Watch, %nc. v.
6epartment of 5ustice,
!#
%itin- %n re +ealed Case,
00
@t&e issue of *&et&er a 2resident must personall1
invo5e t&e Jpresidential %ommuni%ationsK privile-e remains an open <uestion.@ 2.+. v. &eynolds,
0"
on
t&e ot&er &and, &eld t&at @JtK&ere must e a formal %laim of privile-e, lod-ed 1 t&e &ead of t&e
department *&i%& &as %ontrol over t&e matter, after a%tual personal %onsideration 1 t&at o=%er.@
'&e rule *as t&us laid do*n 1 t&is Court, not in ad&eren%e to an1 estalis&ed pre%edent, ut *it& t&e
aim of preventin- t&e ause of t&e privile-e in li-&t of its &i-&l1 e(%eptional nature. '&e CourtQs
re%o-nition t&at t&e 4(e%utive Se%retar1 also ears t&e po*er to invo5e t&e privile-e, provided &e does
so @1 order of t&e 2resident,@ is meant to avoid la1in- do*n too ri-id a rule, t&e Court ein- a*are
t&at it *as la1in- do*n a ne* restri%tion on e(e%utive privile-e. It is *it& t&e same spirit t&at t&e Court
s&ould not e overl1 stri%t *it& appl1in- t&e same rule in t&is pe%uliar instan%e, *&ere t&e %laim of
e(e%utive privile-e o%%urred efore t&e 8ud-ment in +enate v. *rmitae%ame Enal.
5. 'o s&o* t&at 'M'1 v. Man"lapus ma1 not e applied in t&e present %ase, t&e dissent implies t&at t&e
Court t&erein erred in %itin- 2+ v. Curtiss Wri"ht
02
and t&e oo5 entitled 7he 4e ,merican
/overnment and %ts Work
03
sin%e t&ese aut&orities, so t&e dissent %laims, ma1 not e used to %alirate
t&e importan%e of t&e ri-&t to information in t&e 2&ilippine settin-.
'&e dissent ar-ues t&at sin%e Curtiss3Wri"ht referred to a %onTi%t et*een t&e e(e%utive and
le-islative ran%&es of -overnment, t&e fa%tual settin- t&ereof *as diDerent from t&at of 'M'1 v.
Man"lapus *&i%& involved a %ollision et*een -overnmental po*er over t&e %ondu%t of forei-n aDairs
and t&e %itiLenQs ri-&t to information.
'&at t&e Court %ould freel1 %ite Curtiss,$ri-&t O a %ase t&at up&olds t&e se%re%1 of diplomati%
ne-otiations a-ainst%on-ressional demands for information O in t&e %ourse of la1in- do*n a rulin- on
t&e puli% ri-&t to information onl1 serves to unders%ore t&e prin%iple mentioned earlier t&at t&e
privile-ed %&ara%ter a%%orded to diplomati% ne-otiations does not ipso facto lose all for%e and eDe%t
simpl1 e%ause t&e same privile-e is no* ein- %laimedunder diDerent %ir%umstan%es.
'M'1 v. Man"lapus indeed involved a demand for information from private %itiLens and not an
e(e%utive,le-islative %onTi%t, ut so did Chavez v. '*,
0.
*&i%& &eld t&at @t&e Jpuli%QsK ri-&t to
information . . . does not e(tend to matters re%o-niLed as privile-ed information under t&e separation
of po*ers.@ $&at %ounts as privile-ed information in an e(e%utive,le-islative %onTi%t is t&us also
re%o-niLed as su%& in %ases involvin- t&e puli%Qs ri-&t to information.
Chavez v. 'C//
05
also involved t&e puli%Qs ri-&t to information, 1et t&e Court re%o-niLed as a valid
limitation to t&at ri-&t t&e same privile-ed information ased on separation of po*ers O %losed,door
Cainet meetin-s, e(e%utive sessions of eit&er &ouse of Con-ress, and t&e internal delierations of t&e
Supreme Court.
'&ese %ases s&o* t&at t&e Court &as al*a1s re-arded %laims of privile-e, *&et&er in t&e %onte(t of an
e(e%utive,le-islative %onTi%t or a %itiLenQs demand for information, as %losel1 intert*ined, su%& t&at t&e
prin%iples appli%ale to one are also appli%ale to t&e ot&er.
'&e reason is ovious. If t&e validit1 of %laims of privile-e *ere to e assessed 1 entirel1 diDerent
%riteria in ea%& %onte(t, t&is ma1 -ive rise to t&e asurd result *&ere %onBress *ould e denied
a%%ess to a parti%ular information e%ause of a %laim of e(e%utive privile-e, ut t6e Benera4
pu74i3 *ould &ave a%%ess to t&e same information, t&e %laim of privile-e not*it&standin-.
)surdit1 *ould e t&e ultimate result if, for instan%e, t&e Court adopts t&e @%lear and present dan-er@
test for t&e assessment of %laims of privile-e a-ainst %itiLensQ demands for information. If e(e%utive
information, *&en demanded 1 a %itiLen, is privile-ed onl1 *&en t&ere is a %lear and present dan-er
of a sustantive evil t&at t&e State &as a ri-&t to prevent, it *ould e ver1 di=%ult for t&e 4(e%utive to
estalis& t&e validit1 of its %laim in ea%& instan%e. In %ontrast, if t&e demand %omes from Con-ress, t&e
4(e%utive merel1 &as to s&o* t&at t&e information is %overed 1 a re%o-niLed privile-e in order to s&ift
t&e urden on Con-ress to present a stron- s&o*in- of need. '&is *ould lead to a situation *&ere it
*ould e more di=%ult for Con-ress to a%%ess e(e%utive information t&an it *ould e for private
%itiLens.
$e maintain t&en t&at *&en t&e 4(e%utive &as alread1 s&o*n t&at an information is %overed 1
e(e%utive privile-e, t&e part1 demandin- t&e information must present a @stron- s&o*in- of
need,@ *&et&er t&at part1 is Con-ress or a private %itiLen.
'&e rule t&at t&e same @s&o*in- of need@ test applies in ot& t&ese %onte(ts, &o*ever, s&ould not e
%onstrued as a denial of t&e importan%e of anal1Lin- t&e %onte(t in *&i%& an e(e%utive privile-e
%ontrovers1 ma1 &appen to e pla%ed. Rat&er, it a=rms it, for it means t&at t&e spe%iE% need ein-
s&o*n 1 t&e part1 see5in- information in ever1 parti%ular instan%e is &i-&l1 si-niE%ant in determinin-
*&et&er to up&old a %laim of privile-e. T6is ?need? is, pre3ise4", part o2 t6e 3onte1t in 4iB6t o2
w6i36 ever" 34aiA o2 privi4eBe s6ou4d 7e assessed.
Sin%e, as demonstrated aove, t&ere are %ommon prin%iples t&at s&ould e applied to e(e%utive
privile-e %ontroversies a%ross diDerent %onte(ts, t&e Court in 'M'1 v. Man"lapus did not err *&en it
%ited t&e Curtiss3Wri"ht%ase.
'&e %laim t&at t&e oo5 %ited in 'M'1 v. Man"lapus entitled 7he 4e ,merican /overnment and %ts
Work %ould not &ave ta5en into a%%ount t&e e(panded statutor1 ri-&t to information in t&e 3AI)
assumes t&at t&e oservations in t&at oo5 in support of t&e %onEdentialit1 of treat1
ne-otiations *ould e diDerent &ad it een *ritten after t&e 3AI). Su%& assumption is, *it& due
respe%t, at est, spe%ulative.
)s to t&e %laim in t&e dissent t&at @JiKt is more doutful if t&e same oo5 e used to %alirate t&e
importan%e of t&e ri-&t of a%%ess to information in t&e 2&ilippine settin- %onsiderin- its elevation as a
%onstitutional ri-&t,@ *e sumit t&at t&e elevation of su%& ri-&t as a %onstitutional ri-&t did not set it
free from t&e le-itimate restri%tions of e(e%utive privile-e *&i%& is itself %onstitutionall1,
ased.
0!
Hen%e, t&e %omments in t&at oo5 *&i%& *ere %ited in 'M'1 v. Man"lapus remain valid
do%trine.
!. '&e dissent furt&er asserts t&at t&e Court &as never used @need@ as a test to up&old or allo* inroads
into ri-&ts -uaranteed under t&e Constitution. $it& due respe%t, *e assert ot&er*ise. '&e Court &as
done so efore, aleit *it&out usin- t&e term @need.@
In e(e%utive privile-e %ontroversies, t&e re<uirement t&at parties present a @su=%ient s&o*in- of
need@ onl1 means, in sustan%e, t&at t&e1 s&ould s&o* a puli% interest in favor of dis%losure su=%ient
in de-ree to over%ome t&e %laim of privile-e.
00
Ieril1, t&e Court in su%& %ases en-a-es in a 7a4an3inB
o2 interests. Su%& a alan%in- of interests is %ertainl1 not ne* in %onstitutional ad8udi%ation involvin-
fundamental ri-&ts. +ecretary of 5ustice v. Lantion,
08
*&i%& *as %ited in t&e dissent, applied 8ust su%& a
test.
Given t&at t&e dissent &as %lariEed t&at it does not see5 to appl1 t&e @%lear and present dan-er@ test to
t&e present %ontrovers1, ut t&e alan%in- test, t&ere seems to e no sustantial dispute et*een t&e
position laid do*n in t&isponencia and t&at reTe%ted in t&e dissent as to *&at test to appl1. It *ould
appear t&at t&e onl1 disa-reement is on t&e results of appl1in- t&at test in t&is instan%e.
'&e dissent, nonet&eless, maintains t&at @it su=%es t&at information is of puli% %on%ern for it to e
%overed 1 t&e ri-&t, re-ardless of t&e puli%Qs need for t&e information,@ and t&at t&e same *ould
&old true even @if t&e1 simpl1 *ant to 5no* it e%ause it interests t&em.@ )s &as een stated earlier,
&o*ever, t&ere is no dispute t&at t&e information su8e%t of t&is %ase is a matter of puli% %on%ern. '&e
Court &as earlier %on%luded t&at it is a matter of puli% %on%ern, not on t&e asis of an1 spe%iE% need
s&o*n 1 petitioners, ut from t&e ver1 nature of t&e M242) as an international trade a-reement.
+owever, *&en t&e 4(e%utive &as O as in t&is %ase O invo5ed t&e privile-e, and it &as een estalis&ed
t&at t&e su8e%t information is indeed %overed 1 t&e privile-e ein- %laimed, %an a part1 over%ome
t&e same 1 merel1 assertin- t&at t&e information ein- demanded is a matter of puli% %on%ern,
*it&out an1 furt&er s&o*in- re<uiredU Certainl1 not, for t&at *ould render t&e do%trine of e(e%utive
privile-e of no for%e and eDe%t *&atsoever as a limitation on t&e ri-&t to information, e%ause t&en t&e
sole test in su%& %ontroversies *ould e *&et&er an information is a matter of puli% %on%ern.
Moreover, in vie* of t&e earlier dis%ussions, *e must ear in mind t&at, 1 dis%losin- t&e do%uments of
t&e M242) ne-otiations, t&e 2&ilippine -overnment runs t&e -rave ris5 of etra1in- t&e trust reposed in
it 1 t&e Mapanese representatives, indeed, 1 t&e Mapanese -overnment itself. Ho* *ould t&e
2&ilippine -overnment t&en e(plain itself *&en t&at &appensU Surel1, it %annot ear to sa1 t&at it
8ust 6ad to release t&e information e%ause %ertain persons simpl1 *anted to 5no* it @e%ause it
interests t&em.@
'&us, t&e Court &olds t&at, in determinin- *&et&er an information is %overed 1 t&e ri-&t to
information, a spe%iE% @s&o*in- of need@ for su%& information is not a relevant %onsideration, ut onl1
*&et&er t&e same is a matter ofpuli% %on%ern. $&en, &o*ever, t&e -overnment &as %laimed
e(e%utive privile-e, and it &as estalis&ed t&at t&e information is indeed %overed 1 t&e same, t&en
t&e part1 demandin- it, if it is to over%ome t&e privile-e, must s&o* t&at t&at t&e information is vital,
not simpl1 for t&e satisfa%tion of its %uriosit1, ut for its ailit1 to eDe%tivel1 and reasonal1 parti%ipate
in so%ial, politi%al, and e%onomi% de%ision,ma5in-.
0#
0. '&e dissent maintains t&at @JtK&e treat1 &as t&us entered t&e ultimate sta-e *&ere t&e people %an
e(er%ise t&eirriB6t to parti3ipate in t&e dis%ussion *&et&er t&e Senate s&ould %on%ur in its
ratiE%ation or not.@ 94mp&asis supplied: It adds t&at t&is ri-&t @*ill e diluted unless t&e people %an
&ave a%%ess to t&e su8e%t M242) do%uments@. $&at, to t&e dissent, is a dilution of t&e ri-&t to
parti%ipate in de%ision,ma5in- is, to ;s, simpl1 a re%o-nition of t&e <ualiEed nature of t&e puli%Qs ri-&t
to information. It is e1ond dispute t&at t&e ri-&t to information is not asolute and t&at t&e do%trine of
e(e%utive privile-e is a re%o-niLed limitation on t&at ri-&t.
Moreover, %ontrar1 to t&e sumission t&at t&e ri-&t to parti%ipate in de%ision,ma5in- *ould e diluted,
$e reiterate t&at our people &ave een e(er%isin- t&eir ri-&t to parti%ipate in t&e dis%ussion on t&e
issue of t&e M242), and t&e1 &ave een ale to arti%ulate t&eir diDerent opinions *it&out need of
a%%ess to t&e M242) ne-otiation do%uments.
'&us, *e &old t&at t&e alan%e in t&is %ase tilts in favor of e(e%utive privile-e.
8. )-ainst our rulin- t&at t&e prin%iples applied in 2.+. v. 4i!on, t&e +enate +elect Committee %ase,
and %n re +ealed Case, are similarl1 appli%ale to t&e present %ontrovers1, t&e dissent %ites t&e %aveat
in t&e 4i!on %ase t&at t&e ;.S. Court *as t&ere addressin- onl1 t&e 2residentQs assertion of privile-e in
t&e %onte(t of a %riminal trial, not a %ivil liti-ation nor a %on-ressional demand for information. $&at
t&is %aveat means, &o*ever, is onl1 t&at %ourts must e %areful not to &astil1 appl1 t&e rulin- t&erein
to ot&er %onte(ts. It does not, &o*ever, asolutel1 mean t&at t&e prin%iples applied in t&at %ase ma1
never e applied in su%& %onte(ts.
Hen%e, ;.S. %ourts &ave %ited 2.+. v. 4i!on in support of t&eir rulin-s on %laims of e(e%utive privile-e in
%onte(ts ot&er t&an a %riminal trial, as in t&e %ase of 4i!on v. ,dministrator of /eneral +ervices
80
O
*&i%& involved former 2resident Ni(onQs invo%ation of e(e%utive privile-e to %&allen-e t&e
%onstitutionalit1 of t&e @2residential Re%ordin-s and Materials 2reservation )%t@
8"
O and t&e aove,
mentioned %n re +ealed Case *&i%& involved a %laim of privile-e a-ainst a subpoena duces
tecum issued in a -rand 8ur1 investi-ation.
Indeed, in appl1in- to t&e present %ase t&e prin%iples found in 2.+. v. 4i!on and in t&e ot&er %ases
alread1 mentioned, $e are merel1 a=rmin- *&at t&e C&ief Musti%e stated in &is Gissentin- Apinion
in 4eri v. +enate Committee on ,ccountability
82
O a %ase involvin- an e(e%utive,le-islative %onTi%t over
e(e%utive privile-e. '&at dissentin- opinion stated t&at, *&ile 4i!on *as not %on%erned *it& t&e
alan%e et*een t&e 2residentQs -eneraliLed interest in %onEdentialit1 and %on-ressional demands for
information, @NnOonet6e4ess t6e N*.'.O %ourt 4aid down prin3ip4es and pro3edures t6at 3an
serve as tor36 4iB6ts to i44uAine us on t6e s3ope and use o2 Presidentia4 3oAAuni3ation
privi4eBe in t6e 3ase at 7ar.@
83
$&ile t&e Court *as divided in 4eri, t&is opinion of t&e C&ief Musti%e
*as not amon- t&e points of disa-reement, and $e similarl1 &old no* t&at t&e 4i!on %ase is a useful
-uide in t&e proper resolution of t&e present %ontrovers1, not*it&standin- t&e diDeren%e in %onte(t.
Veri4", w6i4e t6e %ourt s6ou4d Buard aBainst t6e a7use o2 e1e3utive privi4eBe, it s6ou4d a4so
Bive 2u44 re3oBnition to t6e va4idit" o2 t6e privi4eBe w6enever it is 34aiAed wit6in t6e proper
7ounds o2 e1e3utive power, as in t6is 3ase. At&er*ise, t&e Court *ould undermine its o*n
%rediilit1, for it *ould e per%eived as no lon-er aimin- to stri5e a alan%e, ut see5in- merel1 to
*ater do*n e(e%utive privile-e to t&e point of irrelevan%e.
%on34usion
'o re%apitulate, petitionersQ demand to e furnis&ed *it& a %op1 of t&e full te(t of t&e M242) &as
e%ome moot and a%ademi%, it &avin- een made a%%essile to t&e puli% sin%e Septemer "", 200!.
)s for t&eir demand for %opies of t&e 2&ilippine and Mapanese oDers sumitted durin- t&e M242)
ne-otiations, t&e same must e denied, respondentsQ %laim of e(e%utive privile-e ein- valid.
Giplomati% ne-otiations &ave, sin%e t&e Court promul-ated its Resolution in 2M23 v. Man-lapus on
Septemer "3, "#88, een re%o-niLed as privile-ed in t&is 8urisdi%tion and t&e reasons proDered 1
petitioners a-ainst t&e appli%ation of t&e rulin- t&erein to t&e present %ase &ave not persuaded t&e
Court. Moreover, petitioners O ot& private %itiLens and memers of t&e House of Representatives O
&ave failed to present a @su=%ient s&o*in- of need@ to over%ome t&e %laim of privile-e in t&is %ase.
'&at t&e privile-e *as asserted for t&e Erst time in respondentsQ Comment to t&e present petition, and
not durin- t&e &earin-s of t&e House Spe%ial Committee on GloaliLation, is of no moment, sin%e it
%annot e interpreted as a *aiver of t&e privile-e on t&e part of t&e 4(e%utive ran%&.
3or reasons alread1 e(plained, t&is Ge%ision s&all not e interpreted as departin- from t&e rulin-
in +enate v. *rmita t&at e(e%utive privile-e s&ould e invo5ed 1 t&e 2resident or t&rou-& t&e
4(e%utive Se%retar1 @1 order of t&e 2resident.@
$H4R43AR4, t&e petition is GISMISS4G.
'& &R0(R(0.
G.R. No. 9<94$ ;u4" <, 2$$4
'&*T+(RN %R&'' %(!(NT %&RP&RATI&N, petitioner,
vs.
T+( P+ILIPPIN( %(!(NT !AN*)A%T*R(R' %&RP., T+( '(%R(TAR. &) T+( 0(PART!(NT &)
TRA0( - IN0*'TR., T+( '(%R(TAR. &) T+( 0(PART!(NT &) )INAN%(, and T+(
%&!!I''I&N(R &) T+( /*R(A* &) %*'T&!', respondents.
G 4 C I S I A N
TINGA, J.E
@Good fen%es ma5e -ood nei-&ors,@ so oserved Roert 3rost, t&e ar%&et1pe of traditional Ne*
4n-land deta%&ment. '&e 1rost et&os &as een &eeded 1 nations ad8ustin- to t&e eDe%ts of t&e
lieraliLed -loal mar5et.
"
'&e 2&ilippines, for one, ena%ted Repuli% )%t 9Rep. )%t: No. 805" 9on t&e
imposition of %ountervailin- duties:, Rep. )%t No. 8052 9on t&e imposition of anti,dumpin- duties: and,
Enall1, Rep. )%t No. 8800, also 5no*n as t&e Safe-uard Measures )%t 9@SM)@:
2
soon after it 8oined t&e
General )-reement on 'ariD and 'rade 9G)'': and t&e $orld 'rade Ar-aniLation 9$'A: )-reement.
3
'&e SM) provides t&e stru%ture and me%&ani%s for t&e imposition of emer-en%1 measures, in%ludin-
tariDs, to prote%t domesti% industries and produ%ers from in%reased imports *&i%& inTi%t or %ould inTi%t
serious in8ur1 on t&em.
.
'&e *isdom of t&e poli%ies e&ind t&e SM), &o*ever, is not put into <uestion
1 t&e petition at ar. '&e <uestions sumitted to t&e Court relate to t&e means and t&e pro%edures
ordained in t&e la* to ensure t&at t&e determination of t&e imposition or non,imposition of a safe-uard
measure is proper.
,ntecedent 1acts
2etitioner Sout&ern Cross Cement Corporation 9@Sout&ern Cross@: is a domesti% %orporation en-a-ed in
t&e usiness of %ement manufa%turin-, produ%tion, importation and e(portation. Its prin%ipal
sto%5&olders are 'ai&ei1o Cement Corporation and 'o5u1ama Corporation, purportedl1 t&e lar-est
%ement manufa%turers in Mapan.
5
2rivate respondent 2&ilippine Cement Manufa%turers Corporation
!
9@2&il%em%or@: is an asso%iation of
domesti% %ement manufa%turers. It &as ei-&teen 9"8: memers,
0
per &ecord. $&ile 2&il%em%or &eralds
itself to e an asso%iation of domesti% %ement manufa%turers, it appears t&at %onsiderale e<uit1
&oldin-s, if not %ontrollin- interests in at least t*elve 9"2: of its memer,%orporations, *ere a%<uired
1 t&e t&ree lar-est %ement manufa%turers in t&e *orld, namel1 3inan%iere Bafar-e S.). of 3ran%e,
Ceme( S.). de C.I. of Me(i%o, and Hol%im Btd. of S*itLerland 9formerl1 Holderan5 3inan%iere Glaris,
Btd., t&en HolderEn /.I.:.
8
An 22 Ma1 200", respondent Gepartment of 'rade and Industr1 9@G'I@: a%%epted an appli%ation from
2&il%em%or, alle-in- t&at t&e importation of -ra1 2ortland %ement
#
in in%reased <uantities &as %aused
de%lines in domesti% produ%tion, %apa%it1 utiliLation, mar5et s&are, sales and emplo1ment> as *ell as
%aused depressed lo%al pri%es. )%%ordin-l1, 2&il%em%or sou-&t t&e imposition at Erst of provisional,
t&en later, deEnitive safe-uard measures on t&e import of %ement pursuant to t&e SM). 2&il%em%or
Eled t&e appli%ation in e&alf of t*elve 9"2: of its memer,%ompanies.
"0
)fter preliminar1 investi-ation, t&e /ureau of Import Servi%es of t&e G'I, determined t&at %riti%al
%ir%umstan%es e(isted 8ustif1in- t&e imposition of provisional measures.
""
An 0 Novemer 200", t&e
G'I issued an (rder,imposin- a provisional measure e<uivalent to '*ent1 2esos and Si(t1 Centavos
9220.!0: per fort1 9.0: 5ilo-ram a- on all importations of -ra1 2ortland %ement for a period not
e(%eedin- t*o &undred 9200: da1s from t&e date of issuan%e 1 t&e /ureau of Customs 9/AC: of t&e
implementin- Customs Memorandum (rder.
"2
'&e %orrespondin- Customs Memorandum (rder *as
issued on "0 Ge%emer 200", to ta5e eDe%t t&at same da1 and to remain in for%e for t*o &undred
9200: da1s.
"3
In t&e meantime, t&e 'ariD Commission, on "# Novemer 200", re%eived a re<uest from t&e G'I for a
formal investi-ation to determine *&et&er or not to impose a deEnitive safe-uard measure on imports
of -ra1 2ortland %ement, pursuant to Se%tion # of t&e SM) and its Implementin- Rules and Re-ulations.
) noti%e of %ommen%ement of formal investi-ation *as pulis&ed in t&e ne*spapers on 2" Novemer
200". Individual noti%es *ere li5e*ise sent to %on%erned parties, su%& as 2&il%em%or, various importers
and e(porters, t&e 4massies of Indonesia, Mapan and 'ai*an, %ontra%torsFuilders asso%iations,
industr1 asso%iations, %ement *or5ers+ -roups, %onsumer -roups, non,-overnment or-aniLations and
%on%erned -overnment a-en%ies.
".
) preliminar1 %onferen%e *as &eld on 20 Novemer 200", attended
1 several %on%erned parties, in%ludin- Sout&ern Cross.
"5
Suse<uentl1, t&e 'ariD Commission re%eived
several position papers ot& in support and a-ainst 2&il%em%or+s appli%ation.
"!
'&e 'ariD Commission
also visited t&e %orporate o=%es and manufa%turin- fa%ilities of ea%& of t&e appli%ant %ompanies, as
*ell as t&at of Sout&ern Cross and t*o ot&er %ement importers.
"0
An "3 Mar%& 2002, t&e 'ariD Commission issued its 3ormal Investi-ation Report 9@Report@:. )mon- t&e
fa%tors studied 1 t&e 'ariD Commission in its Report *ere t&e mar5et s&are of t&e domesti%
industr1,
"8
produ%tion and sales,
"#
%apa%it1 utiliLation,
20
Enan%ial performan%e and proEtailit1,
2"
and
return on sales.
22
'&e 'ariD Commission arrived at t&e follo*in- %on%lusions6
". '&e %ir%umstan%es provided in )rti%le XIX of G)'' "##. need not e demonstrated sin%e t&e
produ%t under %onsideration 9-ra1 2ortland %ement: is not t&e su8e%t of an1 2&ilippine
oli-ation or tariD %on%ession under t&e $'A )-reement. Nonet&eless, su%& in<uir1 is
-overned 1 t&e national le-islation 9R.). 8800: and t&e terms and %onditions of t&e
)-reement on Safe-uards.
2. '&e %olle%tive output of t&e t*elve 9"2: appli%ant %ompanies %onstitutes a ma8or proportion
of t&e total domesti% produ%tion of -ra1 2ortland %ement and lended 2ortland %ement.
3. Bo%all1 produ%ed -ra1 2ortland %ement and lended 2ortland %ement 92oLLolan: are @li5e@ to
imported -ra1 2ortland %ement.
.. Gra1 2ortland %ement is ein- imported into t&e 2&ilippines in in%reased <uantities, ot& in
asolute terms and relative to domesti% produ%tion, startin- in 2000. '&e in%rease in volume of
imports is re%ent, sudden, s&arp and si-niE%ant.
5. '&e industr1 &as not suDered and is not suDerin- si-niE%ant overall impairment in its
%ondition, i.e., serious in8ur1.
!. '&ere is no t&reat of serious in8ur1 t&at is imminent from imports of -ra1 2ortland %ement.
0. Causation &as e%ome moot and a%ademi% in vie* of t&e ne-ative determination of t&e
elements of serious in8ur1 and imminent t&reat of serious in8ur1.
23
)%%ordin-l1, t&e 'ariD Commission made t&e follo*in- re%ommendation, to *it6
'&e elements of serious in8ur1 and imminent t&reat of serious in8ur1 not &avin- een
estalis&ed, it is &ere1 re%ommended t&at no deEnitive -eneral safe-uard measure e
imposed on t&e importation of -ra1 2ortland %ement.
2.
'&e G'I re%eived t&e Report on ". Mar%& 2002. )fter revie*in- t&e report, t&en G'I Se%retar1 Manuel
Ro(as II 9@G'I Se%retar1@: disa-reed *it& t&e %on%lusion of t&e 'ariD Commission t&at t&ere *as no
serious in8ur1 to t&e lo%al %ement industr1 %aused 1 t&e sur-e of imports.
25
In vie* of t&is
disa-reement, t&e G'I re<uested an opinion from t&e Gepartment of Musti%e 9@GAM@: on t&e G'I
Se%retar1+s s%ope of options in a%tin- on t&e Commission+s re%ommendations. Suse<uentl1, t&en GAM
Se%retar1 Hernando 2ereL rendered an opinion statin- t&at Se%tion "3 of t&e SM) pre%luded a revie*
1 t&e G'I Se%retar1 of t&e 'ariD Commission+s ne-ative Endin-, or Endin- t&at a deEnitive safe-uard
measure s&ould not e imposed.
2!
An 5 )pril 2002, t&e G'I Se%retar1 promul-ated a 6ecision. )fter <uotin- t&e %on%lusions of t&e 'ariD
Commission, t&e G'I Se%retar1 noted t&e G'I+s disa-reement *it& t&e %on%lusions. Ho*ever, &e also
%ited t&e GAM Apinion advisin- t&e G'I t&at it *as ound 1 t&e ne-ative Endin- of t&e 'ariD
Commission. '&us, &e ruled as follo*s6
'&e G'I &as no alternative ut to aide 1 t&e J'ariDK Commission+s re%ommendations.
IN VI(P &) T+( )&R(G&ING, and in a%%ordan%e *it& Se%tion "3 of R) 8800 *&i%& states6
"In the event of a negative fnal deterination! or if the cash "ond is in
e#cess of the defnitive safeguard duty assessed$ the %ecretary shall
iediately issue$ through the %ecretary of Finance$ a &ritten instruction to
the Coissioner of Custos$ authori'ing the return of the cash "ond or the
reainder thereof$ as the case ay "e$ previously collected as provisional
general safeguard easure &ithin ten ()*+ days fro the date a fnal
decision has "een ade! Provided$ that the governent shall not "e lia"le
for any interest on the aount to "e returned. ,he %ecretary shall not
accept for consideration another petition fro the sae industry$ &ith
respect to the sae iports of the product under consideration &ithin one
()+ year after the date of rendering such a decision."
'&e G'I &ere1 issues t&e follo*in-6
'&e appli%ation for safe-uard measures a-ainst t&e importation of -ra1 2ortland %ement Eled
1 2HIBC4MCAR 9Case No. 02,200": is &ere1 denied.
20
94mp&asis in t&e ori-inal:
2&il%em%or re%eived a %op1 of t&e G'I 6ecision on "2 )pril 2002. 'en da1s later, it Eled *it& t&e Court
of )ppeals a 'etition for Certiorari, 'rohibition and Mandamus
28
see5in- to set aside t&e
G'I 6ecision, as *ell as t&e 'ariD Commission+s Report. 2&il%em%or li5e*ise applied for a 7emporary
&estrainin" (rder=%n9unction to en8oin t&e G'I and t&e /AC from implementin- t&e
<uestioned 6ecision and Report. It pra1ed t&at t&e Court of )ppeals dire%t t&e G'I Se%retar1 to
disre-ard t&e Report and to render 8ud-ment independentl1 of t&e Report. 2&il%em%or ar-ued t&at t&e
G'I Se%retar1, vested as &e is under t&e la* *it& t&e po*er of revie*, is not ound to adopt t&e
re%ommendations of t&e 'ariD Commission> and, t&at t&e Report is void, as it is predi%ated on a Ta*ed
frame*or5, in%onsistent inferen%es and erroneous met&odolo-1.
2#
An "0 Mune 2002, Sout&ern Cross Eled its Comment.
30
It ar-ued t&at t&e Court of )ppeals &ad no
8urisdi%tion over 2&il%em%or+s 'etition, for it is on t&e Court of 'a( )ppeals 9@C')@: t&at t&e SM)
%onferred 8urisdi%tion to revie* rulin-s of t&e Se%retar1 in %onne%tion *it& t&e imposition of a
safe-uard measure. It li5e*ise ar-ued t&at 2&il%em%or+s resort to t&e spe%ial %ivil a%tion of %ertiorari is
improper, %onsiderin- t&at *&at 2&il%em%or sou-&t to re%tif1 is an error of 8ud-ment and not an error
of 8urisdi%tion or -rave ause of dis%retion, and t&at a petition for revie* *it& t&e C') *as availale as
a plain, speed1 and ade<uate remed1. 3inall1, Sout&ern Cross e%&oed t&e GAM Apinion t&at Se%tion "3
of t&e SM) pre%ludes a revie* 1 t&e G'I Se%retar1 of a ne-ative Endin- of t&e 'ariD Commission.
)fter %ondu%tin- a &earin- on "# Mune 2002 on 2&il%em%or+s appli%ation for preliminar1 in8un%tion, t&e
Court of )ppeals+ '*elft& Givision
3"
-ranted t&e *rit sou-&t in its &esolution dated 2" Mune
2002.
32
Seven da1s later, on 28 Mune 2002, t&e t*o,&undred 9200:,da1 period for t&e imposition of t&e
provisional measure e(pired. Gespite t&e lapse of t&e period, t&e /AC %ontinued to impose t&e
provisional measure on all importations of 2ortland %ement made 1 Sout&ern Cross. '&e
uninterrupted assessment of t&e tariD, a%%ordin- to Sout&ern Cross, *or5ed to its detriment to t&e
point t&at t&e %ontinued imposition *ould eventuall1 lead to its %losure.
33
Sout&ern Cross timel1 Eled a Motion for &econsideration of t&e &esolution on # Septemer 2002.
)lle-in- t&at 2&il%em%or *as not entitled to provisional relief, Sout&ern Cross li5e*ise sou-&t a
%lariE%ator1 order as to *&et&er t&e -rant of t&e *rit of preliminar1 in8un%tion %ould e(tend t&e earlier
imposition of t&e provisional measure e1ond t&e t*o &undred 9200:,da1 limit imposed 1 la*. '&e
appeals+ %ourt failed to ta5e immediate a%tion on Sout&ern Cross+s motion despite t&e four 9.: motions
for earl1 resolution t&e latter Eled et*een Septemer of 2002 and 3eruar1 of 2003. )fter si( 9!:
mont&s, on "# 3eruar1 2003, t&e Court of )ppeals dire%ted 2&il%em%or to %omment on Sout&ern
Cross+s Motion for &econsideration.
3.
)fter 2&il%em%or Eled its (pposition
35
on "3 Mar%& 2003, Sout&ern
Cross Eled anot&er set of four 9.: motions for earl1 resolution.
Gespite t&e eDorts of Sout&ern Cross, t&e Court of )ppeals failed to dire%tl1 resolve t&e Motion for
&econsideration. Instead, on 5 Mune 2003, it rendered a 6ecision,
3!
-rantin- in part 2&il%em%or+s
petition. '&e appellate %ourt ruled t&at it &ad 8urisdi%tion over t&e petition for %ertiorari sin%e it alle-ed
-rave ause of dis%retion. It refused to annul t&e Endin-s of t&e 'ariD Commission, %itin- t&e rule t&at
fa%tual Endin-s of administrative a-en%ies are indin- upon t&e %ourts and its %orollar1, t&at %ourts
s&ould not interfere in matters addressed to t&e sound dis%retion and %omin- under t&e spe%ial
te%&ni%al 5no*led-e and trainin- of su%& a-en%ies.
30
Nevert&eless, it &eld t&at t&e G'I Se%retar1 is not
ound 1 t&e fa%tual Endin-s of t&e 'ariD Commission sin%e su%& Endin-s are merel1 re%ommendator1
and t&e1 fall *it&in t&e amit of t&e Se%retar1+s dis%retionar1 revie*. It determined t&at t&e le-islative
intent is to -rant t&e G'I Se%retar1 t&e po*er to ma5e a Enal de%ision on t&e 'ariD Commission+s
re%ommendation.
38
'&e dispositive portion of t&e 6ecision reads6
P+(R()&R(, ased on t&e fore-oin- premises, petitioner+s pra1er to set aside t&e Endin-s of
t&e 'ariD Commission in its assailed Report dated Mar%& "3, 2002 is 0(NI(0. An t&e ot&er
&and, t&e assailed )pril 5, 2002 Ge%ision of t&e Se%retar1 of t&e Gepartment of 'rade and
Industr1 is &ere1 '(T A'I0(. Conse<uentl1, t&e %ase is R(!AN0(0 to t&e puli% respondent
Se%retar1 of Gepartment of 'rade and Industr1 for a Enal de%ision in a%%ordan%e *it& R) 8800
and its Implementin- Rules and Re-ulations.
'& &R0(R(0.
3#
An 23 Mune 2003, Sout&ern Cross Eled t&e present petition, assailin- t&e appellate %ourt+s 6ecision for
departin- from t&e a%%epted and usual %ourse of 8udi%ial pro%eedin-s, and not de%idin- t&e sustantial
<uestions in a%%ordan%e *it& la* and 8urispruden%e. '&e petition ar-ues in t&e main t&at t&e Court of
)ppeals &as no 8urisdi%tion over 2&il%em%or+s petition, t&e proper remed1 ein- a petition for revie*
*it& t&e C') %onformal1 *it& t&e SM), and> t&at t&e fa%tual Endin-s of t&e 'ariD Commission on t&e
e(isten%e or non,e(isten%e %onditions *arrantin- t&e imposition of -eneral safe-uard measures are
indin- upon t&e G'I Se%retar1.
'&e timel1 Elin- of Sout&ern Cross+s petition efore t&is Court ne%essaril1 prevented t&e Court of
)ppeals6ecision from e%omin- Enal.
.0
Net on 25 Mune 2003, t&e G'I Se%retar1 issued a ne* 6ecision,
rulin- t&is time t&at t&at in li-&t of t&e appellate %ourt+s 6ecision t&ere *as no lon-er an1 le-al
impediment to &is de%idin- 2&il%em%or+s appli%ation for deEnitive safe-uard measures.
."
He made a
determination t&at, %ontrar1 to t&e Endin-s of t&e 'ariD Commission, t&e lo%al %ement industr1 &ad
suDered serious in8ur1 as a result of t&e import sur-es.
.2
)%%ordin-l1, &e imposed a deEnitive
safe-uard measure on t&e importation of -ra1 2ortland %ement, in t&e form of a deEnitive safe-uard
dut1 in t&e amount of 220.!0F.0 5-. a- for t&ree 1ears on imported -ra1 2ortland Cement.
.3
An 0 Mul1 2003, Sout&ern Cross Eled *it& t&e Court a @-ery 2r"ent ,pplication for a 7emporary
&estrainin" (rder and=or , Writ of 'reliminary %n9unction@ 9@'RA ,pplication@:, see5in- to en8oin t&e G'I
Se%retar1 from enfor%in- &is6ecision of 25 Mune 2003 in vie* of t&e pendin- petition efore t&is Court.
2&il%em%or Eled an opposition, %laimin-, amon- ot&ers, t&at it is not t&is Court ut t&e C') t&at &as
8urisdi%tion over t&e appli%ation under t&e la*.
An " )u-ust 2003, Sout&ern Cross Eled *it& t&e C') a 'etition for &evie, assailin- t&e G'I Se%retar1+s
25 Mune 2003 6ecision *&i%& imposed t&e deEnite safe-uard measure. 2res%indin- from t&is a%tion,
2&il%em%or Eled *it& t&is Court a Manifestation and Motion to 6ismiss in re-ard to Sout&ern Cross+s
petition, alle-in- t&at it delieratel1 and *illfull1 resorted to forum,s&oppin-. It points out t&at
Sout&ern Cross+s 'RA ,pplication see5s to en8oin t&e G'I Se%retar1+s se%ond de%ision, *&ile
its 'etition efore t&e C') pra1s for t&e annulment of t&e same de%ision.
..
Reiteratin- its Comment on Sout&ern Cross+s 'etition for &evie, 2&il%em%or also ar-ues t&at t&e C'),
ein- a spe%ial %ourt of limited 8urisdi%tion, %ould onl1 revie* t&e rulin- of t&e G'I Se%retar1 *&en a
safe-uard measure is imposed, and t&at t&e fa%tual Endin-s of t&e 'ariD Commission are not indin-
on t&e G'I Se%retar1.
.5
)fter -ivin- due %ourse to Sout&ern Cross+s 'etition, t&e Court %alled t&e %ase for oral ar-ument on "8
3eruar1 200..
.!
)t t&e oral ar-ument, attended 1 t&e %ounsel for 2&il%em%or and Sout&ern Cross and
t&e A=%e of t&e Soli%itor General, t&e Court simpliEed t&e issues in t&is *ise6 9i: *&et&er
t&e 6ecision of t&e G'I Se%retar1 is appealale to t&e C') or t&e Court of )ppeals> 9ii: assumin- t&at
t&e Court of )ppeals &as 8urisdi%tion, *&et&er its6ecision is in a%%ordan%e *it& la*> and, 9iii: *&et&er
a 7emporary &estrainin" (rder is *arranted.
.0
Gurin- t&e oral ar-uments, %ounsel for Sout&ern Cross manifested t&at due to t&e imposition of t&e
-eneral safe-uard measures, Sout&ern Cross *as for%ed to %ease operations in t&e 2&ilippines in
Novemer of 2003.
.8
'ropriety of the 7emporary &estrainin" (rder
/efore t&e merits of t&e 'etition, a rief %omment on Sout&ern Cross+s appli%ation for provisional relief.
It sou-&t to en8oin t&e G'I Se%retar1 from enfor%in- t&e deEnitive safe-uard measure &e imposed in &is
25 Mune 20036ecision. '&e Court did not -rant t&e provisional relief for it *ould e tantamount to
en8oinin- t&e %olle%tion of ta(es, a peremptor1 8udi%ial a%t *&i%& is traditionall1 fro*ned upon,
.#
unless
t&ere is a %lear statutor1 asis for it.
50
In t&at re-ard, Se%tion 2"8 of t&e 'a( Reform )%t of "##0
pro&iits an1 %ourt from -rantin- an in8un%tion to restrain t&e %olle%tion of an1 national internal
revenue ta(, fee or %&ar-e imposed 1 t&e internal revenue %ode.
5"
) similar p&ilosop&1 is e(pressed 1
Se%tion 2# of t&e SM), *&i%& states t&at t&e Elin- of a petition for revie* efore t&e C') does not stop,
suspend, or ot&er*ise toll t&e imposition or %olle%tion of t&e appropriate tariD duties or t&e adoption of
ot&er appropriate safe-uard measures.
52
'&is evin%es a %lear le-islative intent t&at t&e imposition of
safe-uard measures, despite t&e availailit1 of 8udi%ial revie*, s&ould not e en8oined not*it&standin-
an1 timel1 appeal of t&e imposition.
7he 1orum3+hoppin" %ssue
In t&e same reat&, *e are not %onvin%ed t&at t&e alle-ation of forum,s&oppin- &as een dul1 proven,
or t&at san%tion s&ould efall upon Sout&ern Cross and its %ounsel. '&e standard 1 Se%tion 5, Rule 0
of t&e "##0 Rules of Civil 2ro%edure in order t&at san%tion ma1 e &ad is t&at @t&e a%ts of t&e part1 or
&is %ounsel %learl1 %onstitute *illful and delierate forum s&oppin-.@
53
'&e standard implies a mali%ious
intent to suvert pro%edural rules, and su%& state of mind is not evident in t&is %ase.
7he 5urisdictional %ssue
An to t&e merits of t&e present petition.
In its assailed 6ecision, t&e Court of )ppeals, after assertin- onl1 in rief t&at it &ad 8urisdi%tion over
2&il%em%or+s'etition, dis%ussed t&e issue of *&et&er or not t&e G'I Se%retar1 is ound to adopt t&e
ne-ative re%ommendation of t&e 'ariD Commission on t&e appli%ation for safe-uard measure. '&e
Court of )ppeals maintained t&at it &ad 8urisdi%tion over t&e petition, as it alle-ed -rave ause of
dis%retion on t&e part of t&e G'I Se%retar1, t&us6
) perusal of t&e instant petition reveals alle-ations of -rave ause of dis%retion on t&e part of
t&e G'I Se%retar1 in renderin- t&e assailed )pril 5, 2002 Ge%ision *&erein it *as ruled t&at &e
&ad no alternative ut to aide 1 t&e Endin-s of t&e Commission on t&e matter of safe-uard
measures for t&e lo%al %ement industr1. )use of dis%retion is admittedl1 *it&in t&e amit of
%ertiorari.
Grave ause of dis%retion implies su%& %apri%ious and *&imsi%al e(er%ise of 8ud-ment as is
e<uivalent to la%5 of 8urisdi%tion. It is alle-ed t&at, in t&e assailed Ge%ision, t&e G'I Se%retar1
-ravel1 aused &is dis%retion in *antonl1 evadin- to dis%&ar-e &is dut1 to render an
independent determination or de%ision in imposin- a deEnitive safe-uard measure.
5.
$e do not dout t&at t&e Court of )ppeals+ %ertiorari po*ers e(tend to %orre%tin- -rave ause of
dis%retion on t&e part of an o=%er e(er%isin- 8udi%ial or <uasi,8udi%ial fun%tions.
55
Ho*ever, t&e spe%ial
%ivil a%tion of %ertiorari is availale onl1 *&en t&ere is no plain, speed1 and ade<uate remed1 in t&e
ordinar1 %ourse of la*.
5!
Sout&ern Cross relies on t&is limitation, stressin- t&at Se%tion 2# of t&e SM) is
a plain, speed1 and ade<uate remed1 in t&e ordinar1 %ourse of la* *&i%& 2&il%em%or did not avail of.
'&e Se%tion reads6
Se%tion 2#. 5udicial &evie. O )n1 interested part1 *&o is adversel1 aDe%ted 1 t&e ru4inB o2
t6e 'e3retar" in 3onne3tion wit6 t6e iAposition o2 a sa2eBuard Aeasure ma1 Ele *it&
t&e C'), a petition for revie* of su%& rulin- *it&in t&irt1 930: da1s from re%eipt t&ereof.
2rovided, hoever, t&at t&e Elin- of su%& petition for revie* s&all not in an1 *a1 stop, suspend
or ot&er*ise toll t&e imposition or %olle%tion of t&e appropriate tariD duties or t&e adoption of
ot&er appropriate safe-uard measures, as t&e %ase ma1 e.
'&e petition for revie* s&all %ompl1 *it& t&e same re<uirements and s&all follo* t&e same
rules of pro%edure and s&all e su8e%t to t&e same disposition as in appeals in %onne%tion *it&
adverse rulin-s on ta( matters to t&e Court of )ppeals.
50
94mp&asis supplied:
It is not di=%ult to divine *&1 t&e le-islature sin-led out t&e C') as t&e %ourt *it& 8urisdi%tion to revie*
t&e rulin- of t&e G'I Se%retar1 in %onne%tion *it& t&e imposition of a safe-uard measure. '&e Court
&as lon- re%o-niLed t&e le-islative determination to vest sole and e(%lusive 8urisdi%tion on matters
involvin- internal revenue and %ustoms duties to su%& a spe%ialiLed %ourt.
58
/1 t&e ver1 nature of its
fun%tion, t&e C') is dedi%ated e(%lusivel1 to t&e stud1 and %onsideration of ta( prolems and &as
ne%essaril1 developed an e(pertise on t&e su8e%t.
5#
)t t&e same time, sin%e t&e C') is a %ourt of limited 8urisdi%tion, its 8urisdi%tion to ta5e %o-niLan%e of a
%ase s&ould e %learl1 %onferred and s&ould not e deemed to e(ist on mere impli%ation.
!0
Con%ededl1,
Rep. )%t No. ""25, t&e statute %reatin- t&e C'), does not e(tend to it t&e po*er to revie* de%isions of
t&e G'I Se%retar1 in %onne%tion *it& t&e imposition of safe-uard measures.
!"
Af %ourse, at t&at time
*&i%& *as efore t&e advent of trade lieraliLation t&e notion of safe-uard measures or safet1 nets
*as not 1et in vo-ue.
;ndenial1, &o*ever, t&e SM) e(panded t&e 8urisdi%tion of t&e C') 1 in%ludin- revie* of t&e rulin-s
of t&e G'I Se%retar1 in %onne%tion *it& t&e imposition of safe-uard measures. Ho*ever, 2&il%em%or
and t&e puli% respondents a-ree t&at t&e C') &as appellate 8urisdi%tion over a de%ision of t&e G'I
Se%retar1 imposin- a safe-uard measure, ut not *&en &is rulin- is not to impose su%& measure.
In a related development, Rep. )%t No. #282, ena%ted on 30 Mar%& 200., e(pressl1 vests unto t&e C')
8urisdi%tion over @JdKe%isions of t&e Se%retar1 of 'rade and Industr1, in %ase of nona-ri%ultural produ%t,
%ommodit1 or arti%le ((( involvin- ((( sa2eBuard Aeasures under Repu74i3 A3t No. <<$$, w6ere
eit6er part" Aa" appea4 t6e de3ision to iApose or not to iApose said duties.@
!2
Had Rep. )%t
No. #282 alread1 een in for%e at t&e e-innin- of t&e in%idents su8e%t of t&is %ase, t&ere *ould &ave
een no need to ma5e an1 deeper in<uir1 as to t&e e(tent of t&e C')+s 8urisdi%tion. /ut as Rep. )%t No.
#282 %annot e applied retroa%tivel1 to t&e present %ase, t&e <uestion of *&et&er su%& 8urisdi%tion
e(tends to a de%ision not to impose a safe-uard measure *ill &ave to e settled prin%ipall1 on t&e
asis of t&e SM).
;nder Se%tion 2# of t&e SM), t&ere are t&ree re<uisites to enale t&e C') to a%<uire 8urisdi%tion over
t&e petition for revie* %ontemplated t&erein6 9i: t&ere must e a rulin- 1 t&e G'I Se%retar1> 9ii: t&e
petition must e Eled 1 an interested part1 adversel1 aDe%ted 1 t&e rulin-> and 9iii: su%& rulin- must
e in %onne%tion *it& t&e imposition of a safe-uard measure. '&e Erst t*o re<uisites are %learl1
present. '&e t&ird re<uisite deserves %loser s%rutin1.
Contrar1 to t&e stan%e of t&e puli% respondents and 2&il%em%or, in t&is %ase *&ere t&e G'I Se%retar1
de%ides not to impose a safe-uard measure, it is t&e C') *&i%& &as 8urisdi%tion to revie* &is de%ision.
'&e reasons are as follo*s6
1irst. Split 8urisdi%tion is a&orred.
4ssentiall1, respondents+ position is t&at 8udi%ial revie* of t&e G'I Se%retar1+s rulin- is e(er%ised 1 t*o
diDerent %ourts, dependin- on *&et&er or not it imposes a safe-uard measure, and in eit&er %ase t&e
%ourt e(er%isin- 8urisdi%tion does so to t&e e(%lusion of t&e ot&er. '&us, if t&e G'I de%ision involves t&e
imposition of a safe-uard measure it is t&e C') *&i%& &as appellate 8urisdi%tion> ot&er*ise, it is t&e
Court of )ppeals. Su%& setup is as novel and unusual as it is %umersome and un*ise. 4ssentiall1,
respondents advo%ate t&at Se%tion 2# of t&e SM) &as estalis&ed split appellate 8urisdi%tion over
rulin-s of t&e G'I Se%retar1 on t&e imposition of safe-uard measure.
'&is interpretation %annot e favored, as t&e Court &as %onsistentl1 refused to san%tion split
8urisdi%tion.
!3
'&e po*er of t&e G'I Se%retar1 to adopt or *it&&old a safe-uard measure emanates from
t&e same statutor1 sour%e, and it o--les t&e mind *&1 t&e appeal modalit1 *ould e su%& t&at one
appellate %ourt is <ualiEed if *&at is to e revie*ed is a positive determination, and it is not if *&at is
appealed is a ne-ative determination. In de%idin- *&et&er or not to impose a safe-uard measure,
provisional or -eneral, t&e G'I Se%retar1 *ould e evaluatin- onl1 one od1 of fa%ts and appl1in- t&em
to one set of la*s. '&e revie*in- triunal *ill e %alled upon to e(amine t&e same fa%ts and t&e same
la*s, *&et&er or not t&e determination is positive or ne-ative.
In s&ort, if *e *ere to rule for respondents *e *ould e %onErmin- t&e e(er%ise 1 t*o 8udi%ial odies
of 8urisdi%tion over asi%all1 t&e same su8e%t matterYpre%isel1 t&e split,8urisdi%tion situation *&i%& is
anat&ema to t&e orderl1 administration of 8usti%e.
!.
'&e Court %annot a%%ept t&at su%& *as t&e
le-islative motive espe%iall1 %onsiderin- t&at t&e la* e(pressl1 %onfers on t&e C'), t&e triunal *it&
t&e spe%ialiLed %ompeten%e over ta( and tariD matters, t&e role of 8udi%ial revie* *it&out mention of
an1 ot&er %ourt t&at ma1 e(er%ise %orollar1 or an%illar1 8urisdi%tion in relation to t&e SM). '&e provision
refers to t&e Court of )ppeals ut onl1 in re-ard to pro%edural rules and dispositions of appeals from
t&e C') to t&e Court of )ppeals.
!5
'&e prin%iple enun%iated in 7e9ada v. >omestead 'roperty Corporation
!!
is appli%ale to t&e %ase at
ar6
'&e Court a-rees *it& t&e oservation of t&e Jt&atK *&en an administrative a-en%1 or od1 is
%onferred <uasi,8udi%ial fun%tions, a44 3ontroversies re4atinB to t6e su7He3t Aatter
pertaininB to its spe3ia4iJation are deeAed to 7e in34uded wit6in t6e Hurisdi3tion o2
said adAinistrative aBen3" or 7od". 'p4it Hurisdi3tion is not 2avored.
!0
+econd. '&e interpretation of t&e provisions of t&e SM) favors vestin- untrammeled appellate
8urisdi%tion on t&e C').
) plain readin- of Se%tion 2# of t&e SM) reveals t&at Con-ress did not e(pressl1 ar t&e C') from
revie*in- a ne-ative determination 1 t&e G'I Se%retar1 nor %onferred on t&e Court of )ppeals su%&
revie* aut&orit1. Respondents note, on t&e ot&er &and, t&at neit&er did t&e la* e(pressl1 -rant to t&e
C') t&e po*er to revie* a ne-ative determination. Ho*ever, under t&e %lear te(t of t&e la*, t&e C') is
vested *it& 8urisdi%tion to revie* t&e rulin- of t&e G'I Se%retar1 @ in 3onne3tion wit6 t&e imposition
of a safe-uard measure.@ Had t&e la* een %ou%&ed instead to in%orporate t&e p&rase @t&e rulin-
imposin- a safe-uard measure,@ t&en respondent+s %laim *ould &ave indisputale merit. ;ndoutedl1,
t&e p&rase @in %onne%tion *it&@ not onl1 <ualiEes ut %lariEes t&e su%%eedin- p&rase @imposition of a
safe-uard measure.@ )s e(pounded later, t&e p&rase also en%ompasses t&e opposite or %onverse rulin-
*&i%& is t&e non,imposition of a safe-uard measure.
In t&e )meri%an %ase of +ha v. 6elta ,ir Lines, %nc.,
!8
t&e ;nited States Supreme Court, in interpretin-
a 5e1 provision of t&e 4mplo1ee Retirement Se%urit1 )%t of "#0., %onstrued t&e p&rase @relates to@ in
its normal sense *&i%& is t&e same as @if it &as %onne%tion *it& or referen%e to.@
!#
'&ere is no serious
dispute t&at t&e p&rase @in %onne%tion *it&@ is s1non1mous to @relates to@ or @referen%e to,@ and t&at
all t&ree p&rases are roadl1 e(pansive. '&is is a=rmed not 8ust 1 8urisprudential Eat, ut also t&e
a%<uired %onnotative meanin- of @in %onne%tion *it&@ in %ommon parlan%e. Conse<uentl1, *it& t&e use
of t&e p&rase @in %onne%tion *it&,@ Se%tion 2# allo*s t&e C') to revie* not onl1 t&e rulin- imposin- a
safe-uard measure, ut all ot&er ru4inBs re4ated or 6ave re2eren3e to t6e app4i3ation 2or su36
Aeasure.
No*, let us determine t&e ma(imum s%ope and rea%& of t&e p&rase @in %onne%tion *it&@ as used in
Se%tion 2# of t&e SM). ) literalist readin- or lin-uisti% surve1 ma1 not satisf1. 4ven t&e ;S Supreme
Court in 4e 8ork +tate Blue Cross 'lans v. 7ravelers %ns.
00
%on%eded t&at t&e p&rases @relate to@ or @in
%onne%tion *it&@ ma1 e e(tended to t&e fart&est stret%& of indetermina%1 for, universall1, relations or
%onne%tions are inEnite and stop no*&ere.
0"
'&us, in t&e %ase t&e ;S Hi-& Court, e(aminin- t&e same
p&rase of t&e same provision of la* involved in +ha, resorted to loo5in- at t&e statute and its
o8e%tives as t&e alternative to an @un%riti%al literalism.@
02
) similar in<uir1 into t&e ot&er provisions of
t&e SM) is in order to determine t&e s%ope of revie* a%%orded t&erein to t&e C').
03
'&e aut&orit1 to de%ide on t&e safe-uard measure is vested in t&e G'I Se%retar1 in t&e %ase of non,
a-ri%ultural produ%ts, and in t&e Se%retar1 of t&e Gepartment of )-ri%ulture in t&e %ase of a-ri%ultural
produ%ts.
0.
Se%tion 2# is li5e*ise e(pli%it t&at onl1 t&e rulin-s of t&e G'I Se%retar1 or t&e )-ri%ulture
Se%retar1 ma1 e revie*ed 1 t&e C').
05
'&us, t&e a%ts of ot&er odies t&at *ere -ranted some
po*ers 1 t&e SM), su%& as t&e 'ariD Commission, are not su8e%t to dire%t revie* 1 t&e C').
;nder t&e SM), t&e Gepartment Se%retar1 %on%erned is aut&oriLed to de%ide on several matters.
$it&in t&irt1 930: da1s from re%eipt of a petition see5in- t&e imposition of a safe-uard measure, or
from t&e date &e made motu proprio initiation, t&e Se%retar1 s&all ma5e a preliminar1 determination
on *&et&er t&e in%reased imports of t&e produ%t under %onsideration sustantiall1 %ause or t&reaten to
%ause serious in8ur1 to t&e domesti% industr1.
0!
Su%& rulin- is %ru%ial sin%e onl1 upon t&e Se%retar1+s
positive preliminar1 determination t&at a t&reat to t&e domesti% industr1 e(ists s&all t&e matter e
referred to t&e 'ariD Commission for formal investi-ation, t&is time, to determine *&et&er t&e -eneral
safe-uard measure s&ould e imposed or not.
00
2ursuant to a positive preliminar1 determination, t&e
Se%retar1 ma1 also de%ide t&at t&e imposition of a provisional safe-uard measure *ould e *arranted
under Se%tion 8 of t&e SM).
08
'&e Se%retar1 is also aut&oriLed to de%ide, after re%eipt of t&e report of
t&e 'ariD Commission, *&et&er or not to impose t&e -eneral safe-uard measure, and if in t&e
a=rmative, *&at -eneral safe-uard measures s&ould e applied.
0#
4ven after t&e -eneral safe-uard
measure is imposed, t&e Se%retar1 is empo*ered to e(tend t&e safe-uard measure,
80
or terminate,
redu%e or modif1 &is previous rulin-s on t&e -eneral safe-uard measure.
8"
$it& t&e e(pli%it -rant of %ertain po*ers involvin- safe-uard measures 1 t&e SM) on t&e G'I
Se%retar1, it follo*s t&at &e is empo*ered to rule on several issues. '&ese are t&e issues *&i%& arise in
%onne%tion *it&, or in relation to, t&e imposition of a safe-uard measure. '&e1 ma1 arise at diDerent
sta-es O t&e preliminar1 investi-ation sta-e, t&e post,formal investi-ation sta-e, or t&e post,safe-uard
measure sta-e O 1et all t&ese issues do e%ome ripe for resolution e%ause an initiator1 a%tion &as
een ta5en see5in- t&e imposition of a safe-uard measure. It is t&e initiator1 a%tion for t&e imposition
of a safe-uard measure t&at sets t&e *&eels in motion, allo*in- t&e Se%retar1 to ma5e su%%essive
rulin-s, e-innin- *it& t&e preliminar1 determination.
Clearl1, t&erefore, t&e s%ope and rea%& of t&e p&rase @in %onne%tion *it&,@ as intended 1 Con-ress,
pertain to all rulin-s of t&e G'I Se%retar1 or )-ri%ulture Se%retar1 *&i%& arise from t&e time an
appli%ation or motu proprioinitiation for t&e imposition of a safe-uard measure is ta5en. Indeed, t&e
in%idents *&i%& re<uire resolution %ome to t&e fore onl1 e%ause t&ere is an initial appli%ation or a%tion
see5in- t&e imposition of a safe-uard measure. 3rom t&e le-islative standpoint, it *as a matter of
sense and pra%ti%alit1 to lump up t&e <uestions related to t&e initiator1 appli%ation or a%tion for
safe-uard measure and to assi-n onl1 one %ourt and> t&at is t&e C') to initiall1 revie* all t&e rulin-s
related to su%& initiator1 appli%ation or a%tion. /ot& dire%tions Con-ress put in pla%e 1 emplo1in- t&e
p&rase @in %onne%tion *it&@ in t&e la*.
Given t&e relative e(panse of de%isions su8e%t to 8udi%ial revie* 1 t&e C') under Se%tion 2#, *e do
not dout t&at a ne-ative rulin- refusin- to impose a safe-uard measure falls *it&in t&e s%ope of its
8urisdi%tion. An a literal level, su%& ne-ative rulin- is @a rulin- of t&e Se%retar1 in %onne%tion *it& t&e
imposition of a safe-uard measure,@ as it is one of t&e possile out%omes t&at ma1 result from t&e
initial appli%ation or a%tion for a safe-uard measure. An a more %riti%al level, t&e rulin-s of t&e G'I
Se%retar1 in %onne%tion *it& a safe-uard measure, &o*ever diverse t&e out%ome ma1 e, arise from
t&e same -rant of 8urisdi%tion on t&e G'I Se%retar1 1 t&e SM).
82
'&e refusal 1 t&e G'I Se%retar1 to
-rant a safe-uard measure involves t&e same -rant of aut&orit1, t&e same statutor1 pres%riptions, and
t&e same de-ree of dis%retion as t&e imposition 1 t&e G'I Se%retar1 of a safe-uard measure.
'&e position of t&e respondents is one of @un%riti%al literalism@
83
in%on-ruent *it& t&e animus of t&e
la*. Moreover, a fundamentalist approa%& to Se%tion 2# is not *arranted, %onsiderin- t&e asurdit1 of
t&e %onse<uen%es.
7hird. %nterpretatio 7alis %n ,mbi"uis +emper 1ienda *st, 2t *vitur %nconveniens *t ,bsurdum.
8.
4ven assumin- ar"uendo t&at Se%tion 2# &as not e(pressl1 -ranted t&e C') 8urisdi%tion to revie* a
ne-ative rulin- of t&e G'I Se%retar1, t&e Court is pre%luded from favorin- an interpretation t&at *ould
%ause in%onvenien%e and asurdit1.
85
)doptin- t&e respondents+ position favorin- t&e C')+s minimal
8urisdi%tion *ould unne%essaril1 lead to illo-i%al and onerous results.
Indeed, it is illieral to assume t&at Con-ress &ad intended to provide appellate relief to rulin-s
imposin- a safe-uard measure ut not to t&ose de%linin- to impose t&e measure. Respondents mi-&t
ar-ue t&at t&e ri-&t to relief from a ne-ative rulin- is not lost sin%e t&e appli%ant %ould, as 2&il%em%or
did, <uestion su%& rulin- t&rou-& a spe%ial %ivil a%tion for %ertiorari under Rule !5 of t&e "##0 Rules of
Civil 2ro%edure, in lieu of an appeal to t&e C'). Net t&ese t*o reliefs are of diDerin- natures and
-ravamen. $&ile an appeal ma1 e predi%ated on errors of fa%t or errors of la*, a spe%ial %ivil a%tion
for %ertiorari is -rounded on -rave ause of dis%retion or la%5 of or e(%ess of 8urisdi%tion on t&e part of
t&e de%ider. 3or a spe%ial %ivil a%tion for %ertiorari to su%%eed, it is not enou-& t&at t&e <uestioned a%t
of t&e respondent is *ron-. )s t&e Court %lariEed in +empio v. Court of ,ppeals6
) triunal, oard or o=%er a%ts *it&out 8urisdi%tion if itF&e does not &ave t&e le-al po*er to
determine t&e %ase. '&ere is e(%ess of 8urisdi%tion *&ere, ein- %lot&ed *it& t&e po*er to
determine t&e %ase, t&e triunal, oard or o=%er oversteps itsF&is aut&orit1 as determined 1
la*. )nd t&ere is -rave ause of dis%retion *&ere t&e triunal, oard or o=%er a%ts in a
%apri%ious, *&imsi%al, aritrar1 or despoti% manner in t&e e(er%ise of &is 8ud-ment as to e
said to e e<uivalent to la%5 of 8urisdi%tion. Certiorari is often resorted to in order to %orre%t
errors of 8urisdi%tion. $&ere t&e error is one of la* or of fa%t, *&i%& is a mista5e of 8ud-ment,
appeal is t&e remed1.
8!
It is ver1 %on%eivale t&at t&e G'I Se%retar1, after delierate t&ou-&t and %areful evaluation of t&e
eviden%e, ma1 eit&er ma5e a ne-ative preliminar1 determination as &e is so empo*ered under Se%tion
0 of t&e SM), or refuse to adopt t&e deEnitive safe-uard measure under Se%tion "3 of t&e same la*.
)doptin- t&e respondents+ t&eor1, t&is ne-ative rulin- is sus%eptile to reversal onl1 t&rou-& a spe%ial
%ivil a%tion for %ertiorari, t&us deprivin- t&e aDe%ted part1 t&e %&an%e to elevate t&e rulin- on appeal
on t&e rudimentar1 -rounds of errors in fa%t or in la*. Instead, and despite *&atever indi%ations t&at
t&e G'I Se%retar1 a%ted *it& measure and *it&in t&e ounds of &is 8urisdi%tion are, t&e a--rieved part1
*ill e for%ed to resort to a -1mnasti% e(er%ise, %ontortin- t&e strai-&t and narro* in an eDort to
dis%omoulate t&e %ourts into elievin- t&at *&at *as *it&in *as a%tuall1 e1ond and *&at *as
studied and delierate a%tuall1 *&imsi%al and %apri%ious. $&at t&en *ould e t&e remed1 of t&e part1
a--rieved 1 a ne-ative rulin- t&at simpl1 erred in interpretin- t&e fa%ts or t&e la*U It %ertainl1 %annot
e t&e spe%ial %ivil a%tion for %ertiorari, for as t&e Court &eld in +ilverio v. Court of ,ppeals? @Certiorari
is a remed1 narro* in its s%ope and inTe(ile in its %&ara%ter. It is not a -eneral utilit1 tool in t&e le-al
*or5s&op.@
80
3ortunatel1, t&is t&eoreti%al <uandar1 need not %ome to pass. Se%tion 2# of t&e SM) is *orded in su%&
a *a1 t&at it pla%es under t&e C')+s 8udi%ial revie* all rulin-s of t&e G'I Se%retar1, *&i%& are
%onne%ted *it& t&e imposition of a safe-uard measure. '&is is sound and proper in li-&t of t&e
spe%ialiLed 8urisdi%tion of t&e C') over ta( matters. In t&e same *a1 t&at a <uestion of *&et&er to ta(
or not to ta( is properl1 a ta( matter, so is t&e <uestion of *&et&er to impose or not to impose a
deEnitive safe-uard measure.
An anot&er note, t&e se%ond para-rap& of Se%tion 2# similarl1 reveals t&e le-islative intent t&at rulin-s
of t&e G'I Se%retar1 over safe-uard measures s&ould Erst e revie*ed 1 t&e C') and not t&e Court of
)ppeals. It reads6
'&e petition for revie* s&all %ompl1 *it& t&e same re<uirements and s&all follo* t&e same
rules of pro%edure and s&all e su8e%t to t&e same disposition as in appeals in %onne%tion *it&
adverse rulin-s on ta( matters to t&e Court of )ppeals.
'&is is t&e onl1 passa-e in t&e SM) in *&i%& t&e Court of )ppeals is mentioned. '&e e(press *is& of
Con-ress is t&at t&e petition %onform to t&e re<uirements and pro%edure under Rule .3 of t&e Rules of
Civil 2ro%edure. Sin%e Con-ress mandated t&at t&e form and pro%edure adopted e analo-ous to a
revie* of a C') rulin- 1 t&e Court of )ppeals, t&e le-islative %ontemplation %ould not &ave een t&at
t&e appeal e dire%tl1 ta5en to t&e Court of )ppeals.
%ssue of Bindin" *<ect of 7ari<
Commission@s 1actual 6etermination
on 67% +ecretary.
'&e ne(t issue for resolution is *&et&er t&e fa%tual determination made 1 t&e 'ariD Commission under
t&e SM) is indin- on t&e G'I Se%retar1. At&er*ise stated, t&e <uestion is *&et&er t&e G'I Se%retar1
ma1 impose -eneral safe-uard measures in t&e asen%e of a positive Enal determination 1 t&e 'ariD
Commission.
'&e Court of )ppeals relied upon Se%tion "3 of t&e SM) in rulin- t&at t&e Endin-s of t&e 'ariD
Commission do not ne%essaril1 %onstitute a Enal de%ision. Se%tion "3 details t&e pro%edure for t&e
adoption of a safe-uard measure, as *ell as t&e steps to e ta5en in %ase t&ere is a ne-ative Enal
determination. '&e impli%ation of t&e Court of )ppeals+ &oldin- is t&at t&e G'I Se%retar1 ma1 adopt a
deEnitive safe-uard measure, not*it&standin- a ne-ative determination made 1 t&e 'ariD
Commission.
;ndoutedl1, Se%tion "3 pres%ries %ertain limitations and restri%tions efore -eneral safe-uard
measures ma1 e imposed. Ho*ever, t6e Aost 2undaAenta4 restri3tion on t6e 0TI 'e3retar"Ms
power in t6at respe3t is 3ontained in 'e3tion 9 o2 t6e '!ATt6at t6ere s6ou4d Irst 7e a
positive Ina4 deterAination o2 t6e Tarif %oAAissionY*&i%& t&e Court of )ppeals %uriousl1 all
ut i-nored. Se%tion 5 reads6
Se%. 5. Conditions for the ,pplication of /eneral +afe"uard Measures. : '&e Se%retar1 s6a44
app4" a Benera4 sa2eBuard Aeasure upon a positive Ina4 deterAination o2 t6e
NTarifO %oAAission t&at a produ%t is ein- imported into t&e %ountr1 in in%reased <uantities,
*&et&er asolute or relative to t&e domesti% produ%tion, as to e a sustantial %ause of serious
in8ur1 or t&reat t&ereof to t&e domesti% industr1> &o*ever, in t&e %ase of non,a-ri%ultural
produ%ts, t&e Se%retar1 s&all Erst estalis& t&at t&e appli%ation of su%& safe-uard measures
*ill e in t&e puli% interest. 9emp&asis supplied:
'&e plain meanin- of Se%tion 5 s&o*s t&at it is t&e 'ariD Commission t&at &as t&e po*er to ma5e a
@positive Enal determination.@ '&is po*er lod-ed in t&e 'ariD Commission, must e distin-uis&ed from
t&e po*er to impose t&e -eneral safe-uard measure *&i%& is properl1 vested on t&e G'I Se%retar1.
88
)ll in all, t&ere are t*o %ondition pre%edents t&at must e satisEed efore t&e G'I Se%retar1 ma1
impose a -eneral safe-uard measure on -re1 2ortland %ement. 3irst, t&ere must e a positive Enal
determination 1 t&e 'ariD Commission t&at a produ%t is ein- imported into t&e %ountr1 in in%reased
<uantities 9*&et&er asolute or relative to domesti% produ%tion:, as to e a sustantial %ause of
serious in8ur1 or t&reat to t&e domesti% industr1. Se%ond, in t&e %ase of non,a-ri%ultural produ%ts t&e
Se%retar1 must estalis& t&at t&e appli%ation of su%& safe-uard measures is in t&e puli% interest.
8#
)s
Sout&ern Cross ar-ues, Se%tion 5 is <uite %lear,%ut, and it is impossile to Ena-le a diDerent %on%lusion
even t&rou-& overar%&in- met&ods of statutor1 %onstru%tion. '&ere is no safer nor etter settled %anon
of interpretation t&at *&en lan-ua-e is %lear and unami-uous it must e &eld to mean *&at it plainl1
e(presses6
#0
In t&e <uotale *ords of an illustrious memer of t&is Court, t&us6
JIKf a statute is %lear, plain and free from ami-uit1, it must e -iven its literal meanin- and
applied *it&out attempted interpretation. '&e verba le"is or plain meanin- rule rests on t&e
valid presumption t&at t&e *ords emplo1ed 1 t&e le-islature in a statute %orre%tl1 e(press its
intent or *ill and pre%lude t&e %ourt from %onstruin- it diDerentl1. '&e le-islature is presumed
to 5no* t&e meanin- of t&e *ords, to &ave used *ords advisedl1, and to &ave e(pressed its
intent 1 t&e use of su%& *ords as are found in t&e statute.
#"
Moreover, Rule 5 of t&e Implementin- Rules and Re-ulations of t&e SM),
#2
*&i%& interprets Se%tion 5 of
t&e la*, li5e*ise re<uires a positive Enal determination on t&e part of t&e 'ariD Commission efore t&e
appli%ation of t&e -eneral safe-uard measure.
'&e SM) estalis&es a distin%t allo%ation of fun%tions et*een t&e 'ariD Commission and t&e G'I
Se%retar1. '&e plain meanin- of Se%tion 5 s&o*s t&at it is t&e 'ariD Commission t&at &as t&e po*er to
ma5e a @positive Enal determination.@ '&is po*er, *&i%& elon-s to t&e 'ariD Commission, must e
distin-uis&ed from t&e po*er to impose -eneral safe-uard measure properl1 vested on t&e G'I
Se%retar1. '&e distin%tion is vital, as a @positive Enal determination@ %learl1 ante%edes, as a %ondition
pre%edent, t&e imposition of a -eneral safe-uard measure. )t t&e same time, a positive Enal
determination does not ne%essaril1 result in t&e imposition of a -eneral safe-uard measure. ;nder
Se%tion 5, not*it&standin- t&e positive Enal determination of t&e 'ariD Commission, t&e G'I Se%retar1
is tas5ed to de%ide *&et&er or not t&at t&e appli%ation of t&e safe-uard measures is in t&e puli%
interest.
It is also %lear from Se%tion 5 of t&e SM) t&at t&e positive Enal determination to e underta5en 1 t&e
'ariD Commission does not entail a mere -at&erin- of statisti%al data. In order to arrive at su%&
determination, it &as to estalis& %ausal lin5a-es from t&e statisti%s t&at it %ompiles and evaluates6
after Endin- t&ere is an importation in in%reased <uantities of t&e produ%t in <uestion, t&at su%&
importation is a sustantial %ause of serious t&reat or in8ur1 to t&e domesti% industr1.
'&e Court of )ppeals relies &eavil1 on t&e le-islative re%ord of a %on-ressional deate durin-
delierations on t&e SM) to assert a purported le-islative intent t&at t&e Endin-s of t&e 'ariD
Commission do not ind t&e G'I Se%retar1.
#3
Net as e(plained earlier, t&e plain meanin- of Se%tion 5
emp&asiLes t&at onl1 if t&e 'ariD Commission renders a positive determination %ould t&e G'I Se%retar1
impose a safe-uard measure. Resort to t&e %on-ressional re%ords to as%ertain le-islative intent is not
*arranted if a statute is %lear, plain and free from ami-uit1. '&e le-islature is presumed to 5no* t&e
meanin- of t&e *ords, to &ave used *ords advisedl1, and to &ave e(pressed its intent 1 t&e use of
su%& *ords as are found in t&e statute.
#.
Indeed, t&e le-islative re%ord, if at all to e availed of, s&ould e approa%&ed *it& e(treme %aution, as
le-islative deates and pro%eedin-s are po*erless to var1 t&e terms of t&e statute *&en t&e meanin-
is %lear.
#5
Aur &oldin- in Civil Liberties 2nion v. *!ecutive +ecretary
#!
on t&e resort to delierations of
t&e %onstitutional %onvention to interpret t&e Constitution is li5e*ise appropriate in as%ertainin-
statutor1 intent6
$&ile it is permissile in t&is 8urisdi%tion to %onsult t&e deates and pro%eedin-s of t&e
%onstitutional %onvention in order to arrive at t&e reason and purpose of t&e resultin-
Constitution, resort t&ereto ma1 e &ad onl1 *&en ot&er -uides fail as said pro%eedin-s are
po*erless to var1 t&e terms of t&e Constitution *&en t&e meanin- is %lear. Geates in t&e
%onstitutional %onvention @are of value as s&o*in- t&e vie*s of t&e individual memers, and as
indi%atin- t&e reasons for t&eir votes, ut t&e1 -ive us no li-&t as to t&e vie*s of t&e lar-e
ma8orit1 *&o did not tal5 (((. $e t&in5 it safer to %onstrue t&e %onstitution from *&at appears
upon its fa%e.@
#0
Moreover, it is eas1 to sele%tivel1 %ite passa-es, sometimes out of t&eir proper %onte(t, in order to
assert a misleadin- interpretation. '&e eDe%t %an e dan-erous. Minorit1 or solitar1 vie*s, ane%dotal
ruminations, or even t&e o%%asional %rude *itti%isms, ma1 improperl1 a%<uire t&e mantle of le-islative
intent 1 t&e sole virtue of t&eir puli%ation in t&e aut&oritative %on-ressional re%ord. Hen%e, resort to
le-islative delierations is allo*ale *&en t&e statute is %rafted in su%& a manner as to leave room for
dout on t&e real intent of t&e le-islature.
Se%tion 5 plainl1 evin%es le-islative intent to restri%t t&e G'I Se%retar1+s po*er to impose a -eneral
safe-uard measure 1 pre%onditionin- su%& imposition on a positive determination 1 t&e 'ariD
Commission. Su%& le-islative intent s&ould e -iven full for%e and eDe%t, as t&e e(e%utive po*er to
impose deEnitive safe-uard measures is ut a dele-ated po*erYt&e po*er of ta(ation, 1 nature and
1 %ommand of t&e fundamental la*, ein- a preserve of t&e le-islature.
#8
Se%tion 2892:, )rti%le II of
t&e "#80 Constitution %onErms t&e dele-ation of le-islative po*er, 1et ensures t&at t&e prero-ative of
Con-ress to impose limitations and restri%tions on t&e e(e%utive e(er%ise of t&is po*er6
'&e Con-ress ma1, 1 la*, aut&oriLe t&e 2resident to E( *it&in spe%iEed limits, and su8e%t to
su%& limitations and restri%tions as it ma1 impose, tariD rates, import and e(port <uotas,
tonna-e and *&arfa-e dues, and ot&er duties or imposts *it&in t&e frame*or5 of t&e national
development pro-ram of t&e Government.
##
'&e safe-uard measures *&i%& t&e G'I Se%retar1 ma1 impose under t&e SM) ma1 ta5e t&e follo*in-
variations, to *it6 9a: an in%rease in, or imposition of an1 dut1 on t&e imported produ%t> 9: a de%rease
in or t&e imposition of a tariD,rate <uota on t&e produ%t> 9%: a modiE%ation or imposition of an1
<uantitative restri%tion on t&e importation of t&e produ%t into t&e 2&ilippines> 9d: one or more
appropriate ad8ustment measures, in%ludin- t&e provision of trade ad8ustment assistan%e> and 9e: an1
%omination of t&e aove,des%ried a%tions. 4(%ept for t&e provision of trade ad8ustment assistan%e,
t&e measures enumerated 1 t&e SM) are essentiall1 imposts, *&i%& pre%isel1 are t&e su8e%t of
dele-ation under Se%tion 2892:, )rti%le II of t&e "#80 Constitution.
"00
'&is dele-ation of t&e ta(ation po*er 1 t&e le-islative to t&e e(e%utive is aut&oriLed 1 t&e
Constitution itself.
"0"
)t t&e same time, t&e Constitution also -rants t&e dele-atin- aut&orit1 9Con-ress:
t&e ri-&t to impose restri%tions and limitations on t&e ta(ation po*er dele-ated to t&e 2resident.
"02
'&e
restri%tions and limitations imposed 1 Con-ress ta5e on t&e mantle of a %onstitutional %ommand,
*&i%& t&e e(e%utive ran%& is oli-ed to oserve.
'&e SM) empo*ered t&e G'I Se%retar1, as alter e"o of t&e 2resident,
"03
to impose deEnitive -eneral
safe-uard measures, *&i%& asi%all1 are tariD imposts of t&e t1pe spo5en of in t&e Constitution.
Ho*ever, t&e la* did not -rant &im full, unin&iited dis%retion to impose su%& measures. '&e G'I
Se%retar1 aut&orit1 is derived from t&e SM)> it does not To* from an1 in&erent e(e%utive po*er. '&us,
t&e limitations imposed 1 Se%tion 5 are asolute, *arranted as t&e1 are 1 a %onstitutional Eat.
"0.
2&il%em%or %ites our "#"2 rulin- in Lamb v. 'hipps
"05
to assert t&at t&e G'I Se%retar1, &avin- t&e Enal
de%ision on t&e safe-uard measure, &as t&e po*er to evaluate t&e Endin-s of t&e 'ariD Commission
and ma5e an independent 8ud-ment t&ereon. Given t&e %onstitutional and statutor1 limitations
-overnin- t&e present %ase, t&e %itation is mispla%ed. Lamb pertained to t&e dis%retion of t&e Insular
)uditor of t&e 2&ilippine Islands, *&om, as t&e Court re%o-niLed, @JtK&e statutes of t&e ;nited States
re<uireJdK ((( to e(er%ise &is 8ud-ment upon t&e le-alit1 ((( JofK provisions of la* and resolutions of
Con-ress providin- for t&e pa1ment of mone1, t&e means of pro%urin- testimon1 upon *&i%& &e ma1
a%t.@
"0!
'&us in Lamb, *&ile t&e Court re%o-niLed t&e *ide latitude of dis%retion t&at ma1 &ave een vested on
t&e Insular )uditor, it also re%o-niLed t&at su%& latitude To*ed from, and is %onse<uentl1 limited 1,
statutor1 -rant. Ho*ever, in t&is %ase, t&e provision of t&e Constitution in point e(pressl1 re%o-niLes
t&e aut&orit1 of Con-ress to pres%rie limitations in t&e %ase of tariDs, e(portFimport <uotas and ot&er
su%& safe-uard measures. '&us, t&e road dis%retion -ranted to t&e Insular )uditor of t&e 2&ilippine
Islands %annot e analo-ous to t&e dis%retion of t&e G'I Se%retar1 *&i%& is %ir%ums%ried 1 Se%tion 5
of t&e SM).
3or t&at matter, CariAo v. Commissioner on >uman &i"hts,
"00
li5e*ise %ited 1 2&il%em%or, is also
inappli%ale o*in- to t&e diDerent statutor1 re-imes prevailin- over t&at %ase and t&e present petition.
In CariAo, t&e Court ruled t&at t&e %onstitutional po*er of t&e Commission on Human Ri-&ts 9CHR: to
investi-ate &uman ri-&ts+ violations did not e(tend to ad8udi%atin- %laims on t&e merits.
"08
2&il%em%or
%laims t&at t&e fun%tions of t&e 'ariD Commission ein- @onl1 investi-ator1,@ it %ould neit&er de%ide
nor ad8udi%ate.
"0#
'&e appli%ale la* -overnin- t&e issue in CariAo is Se%tion "8, )rti%le XIII of t&e Constitution, *&i%&
delineates t&e po*ers and fun%tions of t&e CHR. '&e provision does not vest on t&e CHR t&e po*er to
ad8udi%ate %ases, ut onl1 to investi-ate all forms of &uman ri-&ts violations.
""0
Net, *it&out modif1in-
t&e t&orou-& dis<uisition of t&e Court in CariAo on t&e -eneral limitations on t&e investi-ator1 po*er,
t&e pre%edent is inappli%ale e%ause of t&e diDeren%e in t&e involved statutor1 frame*or5s. '&e
Constitution does not repose indin- eDe%t on t&e results of t&e CHR+s investi-ation.
"""
An t&e ot&er
&and, t&rou-& Se%tion 5 of t&e SM) and under t&e aut&orit1 of Se%tion 2892:, )rti%le II of t&e
Constitution, Con-ress did intend to ind t&e G'I Se%retar1 to t&e determination made 1 t&e 'ariD
Commission.
""2
It is of no %onse<uen%e t&at su%& determination results from t&e e(er%ise of
investi-ator1 po*ers 1 t&e 'ariD Commission sin%e Con-ress is *ell *it&in its %onstitutional mandate
to limit t&e aut&orit1 of t&e G'I Se%retar1 to impose safe-uard measures in t&e manner t&at it sees Et.
'&e Court of )ppeals and 2&il%em%or also rel1 on Se%tion "3 of t&e SM) and Rule "3 of t&e SM)+s
Implementin- Rules in support of t&e vie* t&at t&e G'I Se%retar1 ma1 de%ide independentl1 of t&e
determination made 1 t&e 'ariD Commission. )dmittedl1, t&ere are %ertain infeli%ities in t&e lan-ua-e
of Se%tion "3 and Rule "3. /ut relian%e s&ould not e pla%ed on t&e te(tual impre%isions. Rat&er,
Se%tion "3 and Rule "3 must e vie*ed in li-&t of t&e fundamental pres%ription imposed 1 Se%tion
5.
""3
Se%tion "3 of t&e SM) la1s do*n t&e pro%edure to e follo*ed after t&e 'ariD Commission renders its
report. '&e provision reads in full6
S4C. "3. ,doption of 6e$nitive Measures. C ;pon its positive determination, t&e Commission
s&all re%ommend to t&e Se%retar1 an appropriate deEnitive measure, in t&e form of6
9a: )n in%rease in, or imposition of, an1 dut1 on t&e imported produ%t>
9: ) de%rease in or t&e imposition of a tariD,rate <uota 9M)I: on t&e produ%t>
9%: ) modiE%ation or imposition of an1 <uantitative restri%tion on t&e importation of t&e
produ%t into t&e 2&ilippines>
9d: Ane or more appropriate ad8ustment measures, in%ludin- t&e provision of trade ad8ustment
assistan%e>
9e: )n1 %omination of a%tions des%ried in supara-rap&s 9a: to 9d:.
'&e Commission ma1 also re%ommend ot&er a%tions, in%ludin- t&e initiation of international
ne-otiations to address t&e underl1in- %ause of t&e in%rease of imports of t&e produ%t, to
alleviate t&e in8ur1 or t&reat t&ereof to t&e domesti% industr1, and to fa%ilitate positive
ad8ustment to import %ompetition.
'&e -eneral safe-uard measure s&all e limited to t&e e(tent of redressin- or preventin- t&e
in8ur1 and to fa%ilitate ad8ustment 1 t&e domesti% industr1 from t&e adverse eDe%ts dire%tl1
attriuted to t&e in%reased imports6 'rovided, hoever, '&at *&en <uantitative import
restri%tions are used, su%& measures s&all not redu%e t&e <uantit1 of imports elo* t&e
avera-e imports for t&e t&ree 93: pre%edin- representative 1ears, unless %lear 8ustiE%ation is
-iven t&at a diDerent level is ne%essar1 to prevent or remed1 a serious in8ur1.
) -eneral safe-uard measure s&all not e applied to a produ%t ori-inatin- from a developin-
%ountr1 if its s&are of total imports of t&e produ%t is less t&an t&ree per%ent 937:6 'rovided,
hoever, '&at developin- %ountries *it& less t&an t&ree per%ent 937: s&are %olle%tivel1
a%%ount for not more t&an nine per%ent 9#7: of t&e total imports.
'&e de%ision imposin- a -eneral safe-uard measure, t&e duration of *&i%& is more t&an one
9": 1ear, s&all e revie*ed at re-ular intervals for purposes of lieraliLin- or redu%in- its
intensit1. '&e industr1 eneEtin- from t&e appli%ation of a -eneral safe-uard measure s&all e
re<uired to s&o* positive ad8ustment *it&in t&e allo*ale period. ) -eneral safe-uard measure
s&all e terminated *&ere t&e eneEtin- industr1 fails to s&o* an1 improvement, as ma1 e
determined 1 t&e Se%retar1.
'&e Se%retar1 s&all issue a *ritten instru%tion to t&e &eads of t&e %on%erned -overnment
a-en%ies to implement t&e appropriate -eneral safe-uard measure as determined 1 t&e
Se%retar1 *it&in Efteen 9"5: da1s from re%eipt of t&e report.
In t&e event of a ne-ative Enal determination, or if t&e %as& ond is in e(%ess of t&e deEnitive
safe-uard dut1 assessed, t&e Se%retar1 s&all immediatel1 issue, t&rou-& t&e Se%retar1 of
3inan%e, a *ritten instru%tion to t&e Commissioner of Customs, aut&oriLin- t&e return of t&e
%as& ond or t&e remainder t&ereof, as t&e %ase ma1 e, previousl1 %olle%ted as provisional
-eneral safe-uard measure *it&in ten 9"0: da1s from t&e date a Enal de%ision &as een
made6 'rovided, '&at t&e -overnment s&all not e liale for an1 interest on t&e amount to e
returned. '&e Se%retar1 s&all not a%%ept for %onsideration anot&er petition from t&e same
industr1, *it& respe%t to t&e same imports of t&e produ%t under %onsideration *it&in one 9":
1ear after t&e date of renderin- su%& a de%ision.
$&en t&e deEnitive safe-uard measure is in t&e form of a tariD in%rease, su%& in%rease s&all
not e su8e%t or limited to t&e ma(imum levels of tariD as set fort& in Se%tion .0"9a: of t&e
'ariD and Customs Code of t&e 2&ilippines.
'o etter %ompre&end Se%tion "3, note must e ta5en of t&e distin%tion et*een t&e investi-ator1 and
re%ommendator1 fun%tions of t&e 'ariD Commission under t&e SM).
'&e *ord @determination,@ as used in t&e SM), pertains to t&e fa%tual Endin-s on *&et&er t&ere are
in%reased imports into t&e %ountr1 of t&e produ%t under %onsideration, and on *&et&er su%& in%reased
imports are a sustantial %ause of serious in8ur1 or t&reaten to sustantiall1 %ause serious in8ur1 to t&e
domesti% industr1.
"".
'&e SM) e(pli%itl1 aut&oriLes t&e G'I Se%retar1 to ma5e a preliminar1
determination,
""5
and t&e 'ariD Commission to ma5e t&e Enal determination.
""!
'&e distin%tion is
fundamental, as t&ese fun%tions are not inter%&an-eale. '&e 'ariD Commission ma5es its
determination onl1 after a formal investi-ation pro%ess, *it& su%& investi-ation initiated onl1 if t&ere is
a positive preliminar1 determination 1 t&e G'I Se%retar1 under Se%tion 0 of t&e SM).
""0
An t&e ot&er
&and, t&e G'I Se%retar1 ma1 impose deEnitive safe-uard measure onl1 if t&ere is a positive Enal
determination made 1 t&e 'ariD Commission.
""8
In %ontrast, a @re%ommendation@ is a su--ested remedial measure sumitted 1 t&e 'ariD Commission
under Se%tion "3 after ma5in- a positive Enal determination in a%%ordan%e *it& Se%tion 5. '&e 'ariD
Commission is not empo*ered to ma5e a re%ommendation asent a positive Enal determination on its
part.
""#
;nder Se%tion "3, t&e 'ariD Commission is re<uired to re%ommend to t&e JG'IK Se%retar1 an
@appropriate deEnitive measure.@
"20
'&e 'ariD Commission @ma1 also re%ommend ot&er a%tions,
in%ludin- t&e initiation of international ne-otiations to address t&e underl1in- %ause of t&e in%rease of
imports of t&e produ%ts, to alleviate t&e in8ur1 or t&reat t&ereof to t&e domesti% industr1 and to
fa%ilitate positive ad8ustment to import %ompetition.@
"2"
'&e re%ommendations of t&e 'ariD Commission, as rendered under Se%tion "3, are not oli-ator1 on
t&e G'I Se%retar1. Not&in- in t&e SM) mandates t&e G'I Se%retar1 to adopt t&e re%ommendations
made 1 t&e 'ariD Commission. In fa%t, t&e SM) re<uires t&at t&e G'I Se%retar1 estalis& t&at t&e
appli%ation of su%& safe-uard measures is in t&e puli% interest, not*it&standin- t&e 'ariD
Commission+s re%ommendation on t&e appropriate safe-uard measure ased on its positive Enal
determination.
"22
'&e non,indin- for%e of t&e 'ariD Commission+s re%ommendations is %on-ruent *it&
t&e %ommand of Se%tion 2892:, )rti%le II of t&e "#80 Constitution t&at onl1 t&e 2resident ma1 e
empo*ered 1 t&e Con-ress to impose appropriate tariD rates, importFe(port <uotas and ot&er similar
measures.
"23
It is t&e G'I Se%retar1, as alter e"o of t&e 2resident, *&o under t&e SM) ma1 impose su%&
safe-uard measures su8e%t to t&e limitations imposed t&erein. ) %ontrar1 %on%lusion *ould in essen%e
undul1 arro-ate to t&e 'ariD Commission t&e e(e%utive po*er to impose t&e appropriate tariD
measures. '&at is *&1 t&e SM) empo*ers t&e G'I Se%retar1 to adopt safe-uard measures ot&er t&an
t&ose re%ommended 1 t&e 'ariD Commission.
;nli5e t&e re%ommendations of t&e 'ariD Commission, its determination &as a diDerent eDe%t on t&e
G'I Se%retar1. Anl1 on t&e asis of a positive Enal determination made 1 t&e 'ariD Commission under
Se%tion 5 %an t&e G'I Se%retar1 impose a -eneral safe-uard measure. Clearl1, t&en t&e G'I Se%retar1
is 7ound 7" t6e deterAinationmade 1 t&e 'ariD Commission.
Some %onfusion ma1 arise e%ause t&e si(t& para-rap& of Se%tion "3
"2.
uses t&e variant *ord
@determined@ in a diDerent %onte(t, as it %ontemplates @t&e appropriate -eneral safe-uard measure as
determined 1 t&e Se%retar1 *it&in Efteen 9"5: da1s from re%eipt of t&e report.@ Zuite plainl1, t&e *ord
@determined@ in t&is %onte(t pertains to t&e G'I Se%retar1+s po*er of %&oi%e of t&e appropriate
safe-uard measure, as opposed to t&e 'ariD Commission+s po*er to determine t&e e(isten%e of
%onditions ne%essar1 for t&e imposition of an1 safe-uard measure. In relation to Se%tion 5, su%& %&oi%e
also relates to t&e mandate of t&e G'I Se%retar1 to estalis& t&at t&e appli%ation of safe-uard
measures is in t&e puli% interest, also *it&in t&e Efteen 9"5: da1 period. Not&in- in Se%tion "3
%ontradi%ts t&e instru%tion in Se%tion 5 t&at t&e G'I Se%retar1 is allo*ed to impose t&e -eneral
safe-uard measures onl1 if t&ere is a positive determination made 1 t&e 'ariD Commission.
;nfortunatel1, Rule "3.2 of t&e Implementin- Rules of t&e SM) is %aptioned @3inal Getermination 1
t&e Se%retar1.@ '&e assailed 6ecision and 2&il%em%or lat%& on t&is p&raseolo-1 to impl1 t&at t&e fa%tual
determination rendered 1 t&e 'ariD Commission under Se%tion 5 ma1 e amended or reversed 1 t&e
G'I Se%retar1. Af %ourse, implementin- rules s&ould %onform, not %las&, *it& t&e la* t&at t&e1 see5 to
implement, for a re-ulation *&i%& operates to %reate a rule out of &armon1 *it& t&e statute is a
nullit1.
"25
Net imperfe%t draftsmans&ip aside, not&in- in Rule "3.2 implies t&at t&e G'I Se%retar1 %an set
aside t&e determination made 1 t&e 'ariD Commission under t&e ae-is of Se%tion 5. '&is %an e seen
1 e(aminin- t&e spe%iE% provisions of Rule "3.2, t&us6
R;B4 "3.2. 3inal Getermination 1 t&e Se%retar1
R;B4 "3.2.a. $it&in Efteen 9"5: %alendar da1s from re%eipt of t&e Report of t&e
Commission, t&e Se%retar1 s&all ma5e a de%ision, ta5in- into %onsideration t&e
measures re%ommended 1 t&e Commission.
R;B4 "3.2.. If t&e determination is a=rmative, t&e Se%retar1 s&all issue, *it&in t*o
92: %alendar da1s after ma5in- &is de%ision, a *ritten instru%tion to t&e &eads of t&e
%on%erned -overnment a-en%ies to immediatel1 implement t&e appropriate -eneral
safe-uard measure as determined 1 &im. 2rovided, &o*ever, t&at in t&e %ase of non,
a-ri%ultural produ%ts, t&e Se%retar1 s&all Erst estalis& t&at t&e imposition of t&e
safe-uard measure *ill e in t&e puli% interest.
R;B4 "3.2.%. $it&in t*o 92: %alendar da1s after ma5in- &is de%ision, t&e Se%retar1
s&all also order its puli%ation in t*o 92: ne*spapers of -eneral %ir%ulation. He s&all
also furnis& a %op1 of &is Arder to t&e petitioner and ot&er interested parties, *&et&er
a=rmative or ne-ative. 94mp&asis supplied.:
Moreover, t&e G'I Se%retar1 does not &ave t&e po*er to revie* t&e Endin-s of t&e 'ariD Commission
for it is not suordinate to t&e Gepartment of 'rade and Industr1 9@G'I@:. It falls under t&e supervision,
not of t&e G'I nor of t&e Gepartment of 3inan%e 9as mista5enl1 asserted 1 Sout&ern Cross:,
"2!
ut of
t&e Nationa4 (3onoAi3 0eve4opAent Aut6orit", an independent p4anninB aBen3" o2 t6e
BovernAent o2 3o-eFua4 ranG as t6e 0TI.
"20
)s t&e supervision and %ontrol of a Gepartment
Se%retar1 is limited to t&e ureaus, o=%es, and a-en%ies under &im,
"28
t&e G'I Se%retar1 -enerall1
%annot e(er%ise revie* aut&orit1 over a%tions of t&e 'ariD Commission. Neit&er does t&e SM)
spe%iE%all1 aut&oriLe t&e G'I Se%retar1 to alter, amend or modif1 in an1 *a1 t&e determination made
1 t&e 'ariD Commission. '&e most t&at t&e G'I Se%retar1 %ould do to e(press displeasure over t&e
'ariD Commission+s a%tions is to i-nore its re%ommendation, ut not its determination.
'&e *ord @determination@ as used in Rule "3.2 of t&e Implementin- Rules is dissonant *it& t&e same
*ord as emplo1ed in t&e SM), *&i%& in t&e latter %ase is undeviatin-l1 in referen%e to t&e
determination made 1 t&e 'ariD Commission. /e1ond t&e resultin- %onfusion, &o*ever, t&e diver-ent
use in Rule "3.2 is e(pli%ale as t&e Rule te(tuall1 pertains to t&e po*er of t&e G'I Se%retar1 to revie*
t&e re%ommendations of t&e 'ariD Commission, not t&e latter+s determination. Indeed, an e(amination
of t&e spe%iE% provisions s&o* t&at t&ere is no real %onTi%t to re%on%ile. Rule "3.2 respe%ts t&e lo-i%al
order imposed 1 t&e SM). '&e Rule does not remove t&e essential re<uirement under Se%tion 5 t&at a
positive Enal determination e made 1 t&e 'ariD Commission efore a deEnitive safe-uard measure
ma1 e imposed 1 t&e G'I Se%retar1.
'&e assailed 6ecision %&ara%teriLes t&e Endin-s of t&e 'ariD Commission as merel1 re%ommendator1
and points to t&e G'I Se%retar1 as t&e aut&orit1 *&o renders t&e Enal de%ision.
"2#
)t t&e same time,
2&il%em%or asserts t&at t&e 'ariD Commission+s fun%tions are merel1 investi-ator1, and as su%& do not
in%lude t&e po*er to de%ide or ad8udi%ate. '&ese %ontentions, vie*ed in t&e %onte(t of t&e
fundamental re<uisite set fort& 1 Se%tion 5, are untenale. '&e1 run %ounter to t&e statutor1
pres%ription t&at a positive Enal determination made 1 t&e 'ariD Commission s&ould Erst e otained
efore t&e deEnitive safe-uard measures ma1 e laid do*n.
$as it anomalous for Con-ress to &ave provided for a s1stem *&ere1 t&e 'ariD Commission ma1
pre%lude t&e G'I, an o=%e of &i-&er ran5, from imposin- a safe-uard measureU Af %ourse, t&is Court
does not in<uire into t&e *isdom of t&e le-islature ut onl1 %&arts t&e oundaries of po*ers and
fun%tions set in its ena%tments. /ut t&en, it is not di=%ult to see t&e internal lo-i% of t&is statutor1
frame*or5.
3or one, as earlier stated, t&e G'I %annot e(er%ise revie* po*ers over t&e 'ariD Commission *&i%& is
not its suordinate o=%e.
Moreover, t&e me%&anism estalis&ed 1 Con-ress estalis&es a measure of %&e%5 and alan%e
involvin- t*o diDerent -overnmental a-en%ies *it& disparate spe%ialiLations. '&e matter of safe-uard
measures is of su%& national importan%e t&at a de%ision eit&er to impose or not to impose t&en %ould
&ave ruinous eDe%ts on %ompanies doin- usiness in t&e 2&ilippines. '&us, it is ideal to put in pla%e a
s1stem *&i%& aDords all due delieration and %alls to fore various -overnmental a-en%ies e(er%isin-
t&eir parti%ular spe%ialiLations.
3inall1, if t&is arran-ement dra*n up 1 Con-ress ma5es it di=%ult to otain a -eneral safe-uard
measure, it is e%ause su%& safe-uard measure is t&e e(%eption, rat&er t&an t&e rule. '&e 2&ilippines
is oli-ed to oserve its oli-ations under t&e G)'', under *&ose frame*or5 trade lieraliLation, not
prote%tionism, is laid do*n. Ieril1, t&e G)'' a%tuall1 pres%ries %onditions efore a memer,%ountr1
ma1 impose a safe-uard measure. '&e pertinent portion of t&e G)'' )-reement on Safe-uards reads6
2. ) Memer ma1 onl1 appl1 a safe-uard measure to a produ%t onl1 if t&at memer &as
determined, pursuant to t&e provisions set out elo*, t&at su%& produ%t is ein- imported into
its territor1 in su%& in%reased <uantities, asolute or relative to domesti% produ%tion, and
under su%& %onditions as to %ause or t&reaten to %ause serious in8ur1 to t&e domesti% industr1
t&at produ%es li5e or dire%tl1 %ompetitive produ%ts.
"30
3. 9a: ) Memer ma1 appl1 a safe-uard measure onl1 follo*in- an investi-ation 1 t&e
%ompetent aut&orities of t&at Memer pursuant to pro%edures previousl1 estalis&ed and
made puli% in %onsonan%e *it& )rti%le X of t&e G)'' "##.. '&is investi-ation s&all in%lude
reasonale puli% noti%e to all interested parties and puli% &earin-s or ot&er appropriate
means in *&i%& importers, e(porters and ot&er interested parties %ould present eviden%e and
t&eir vie*s, in%ludin- t&e opportunit1 to respond to t&e presentations of ot&er parties and to
sumit t&eir vie*s, inter alia, as to *&et&er or not t&e appli%ation of a safe-uard measure
*ould e in t&e puli% interest. '&e %ompetent aut&orities s&all pulis& a report settin- fort&
t&eir Endin-s and reasoned %on%lusions rea%&ed on all pertinent issues of fa%t and la*.
"3"
'&e SM) *as desi-ned not to %ontradi%t t&e G)'', ut to %omplement it. '&e t*o re<uisites laid do*n
in Se%tion 5 for a positive Enal determination are t&e same %onditions provided under t&e G)''
)-reement on Safe-uards for t&e appli%ation of safe-uard measures 1 a memer %ountr1. Moreover,
t&e investi-ator1 pro%edure laid do*n 1 t&e SM) %onforms to t&e pro%edure re<uired 1 t&e G)''
)-reement on Safe-uards. Con-ress &as %&osen t&e 'ariD Commission as t&e %ompetent aut&orit1 to
%ondu%t su%& investi-ation. Sout&ern Cross stresses t&at appl1in- t&e provision of t&e G)'' )-reement
on Safe-uards, t&e 'ariD Commission is %learl1 empo*ered to arrive at indin- %on%lusions.
"32
$e
a-ree6 indin- on t&e G'I Se%retar1 is t&e 'ariD Commission+s determinations on *&et&er a produ%t is
imported in in%reased <uantities, asolute or relative to domesti% produ%tion and *&et&er an1 su%&
in%rease is a sustantial %ause of serious in8ur1 or t&reat t&ereof to t&e domesti% industr1.
"33
SatisEed as *e are *it& t&e proper statutor1 paradi-m *it&in *&i%& t&e SM) s&ould e anal1Led, t&e
Ta*s in t&e reasonin- of t&e Court of )ppeals and in t&e ar-uments of t&e respondents e%ome
apparent. 'o etter understand t&e d1nami%s of t&e pro%edure set up 1 t&e la* leadin- to t&e
imposition of deEnitive safe-uard measures, a rief step,1,step re%ount t&ereof is in order.
". )fter t&e initiation of an a%tion involvin- a -eneral safe-uard measure,
"3.
t&e G'I Se%retar1 ma5es a
preliminar1 determination *&et&er t&e in%reased imports of t&e produ%t under %onsideration
sustantiall1 %ause or t&reaten to sustantiall1 %ause serious in8ur1 to t&e domesti% industr1,
"35
and
*&et&er t&e imposition of a provisional measure is *arranted under Se%tion 8 of t&e SM).
"3!
If t&e
preliminar1 determination is ne-ative, it is implied t&at no furt&er a%tion *ill e ta5en on t&e
appli%ation.
2. $&en &is preliminar1 determination is positive, t&e Se%retar1 immediatel1 transmits t&e re%ords
%overin- t&e appli%ation to t&e 'ariD Commission for immediate formal investi-ation.
"30
3. '&e 'ariD Commission %ondu%ts its formal investi-ation, 5e1ed to*ards ma5in- a Enal
determination. In t&e pro%ess, it &olds puli% &earin-s, providin- interested parties t&e opportunit1 to
present eviden%e or ot&er*ise e &eard.
"38
'o repeat, Se%tion 5 enumerates *&at t&e 'ariD Commission
is tas5ed to determine6 9a: *&et&er a produ%t is ein- imported into t&e %ountr1 in in%reased
<uantities, irrespe%tive of *&et&er t&e produ%t is asolute or relative to t&e domesti% produ%tion> and
9: *&et&er t&e importation in in%reased <uantities is su%& t&at it %auses serious in8ur1 or t&reat to t&e
domesti% industr1.
"3#
'&e Endin-s of t&e 'ariD Commission as to t&ese matters %onstitute t&e Enal
determination, *&i%& ma1 e eit&er positive or ne-ative.
.. ;nder Se%tion "3 of t&e SM), if t&e 'ariD Commission ma5es a positive determination, t&e 'ariD
Commission @re%ommends to t&e JG'IK Se%retar1 an appropriate deEnitive measure.@ '&e 'ariD
Commission @ma1 also re%ommend ot&er a%tions, in%ludin- t&e initiation of international ne-otiations
to address t&e underl1in- %ause of t&e in%rease of imports of t&e produ%ts, to alleviate t&e in8ur1 or
t&reat t&ereof to t&e domesti% industr1, and to fa%ilitate positive ad8ustment to import %ompetition.@
".0
5. If t&e 'ariD Commission ma5es a positive Enal determination, t&e G'I Se%retar1 is t&en to de%ide,
*it&in Efteen 9"5: da1s from re%eipt of t&e report, as to *&at appropriate safe-uard measures s&ould
&e impose.
!. Ho*ever, if t&e 'ariD Commission ma5es a ne-ative Enal determination, t&e G'I Se%retar1 %annot
impose an1 deEnitive safe-uard measure. ;nder Se%tion "3, &e is instru%ted instead to return
*&atever %as& ond *as paid 1 t&e appli%ant upon t&e initiation of t&e a%tion for safe-uard measure.
7he *<ect of the Court@s 6ecision
'&e Court of )ppeals erred in remandin- t&e %ase a%5 to t&e G'I Se%retar1, *it& t&e instru%tion t&at
t&e G'I Se%retar1 ma1 impose a -eneral safe-uard measure even if t&ere is no positive Enal
determination from t&e 'ariD Commission. More %ru%iall1, t&e Court of )ppeals %ould not &ave a%<uired
8urisdi%tion over 2&il%em%or+s petition for %ertiorari in t&e Erst pla%e, as Se%tion 2# of t&e SM) properl1
vests 8urisdi%tion on t&e C'). Conse<uentl1, t&e assailed 6ecision is an asolute nullit1, and *e de%lare
it as su%&.
$&at is t&e eDe%t of t&e nullit1 of t&e assailed 6ecision on t&e 5 Mune 2003 6ecision of t&e G'I
Se%retar1 imposin- t&e -eneral safe-uard measureU $e &ave re%o-niLed t&at an1 initial 8udi%ial revie*
of a G'I rulin- in %onne%tion *it& t&e imposition of a safe-uard measure elon-s to t&e C'). )t t&e
same time, t&e Court also re%o-niLes t&e fundamental prin%iple t&at a null and void 8ud-ment %annot
produ%e an1 le-al eDe%t. '&ere is su=%ient %ause to estalis& t&at t&e 5 Mune 2003 6ecision of t&e G'I
Se%retar1 resulted from t&e assailed Court of )ppeals 6ecision, even if t&e latter &ad not 1et e%ome
Enal. Conversel1, it %an e %on%luded t&at it *as e%ause of t&e putative imprimatur of t&e Court of
)ppeals+ 6ecision t&at t&e G'I Se%retar1 issued &is rulin- imposin- t&e safe-uard measure. Sin%e t&e 5
Mune 2003 6ecision derives its le-al eDe%t from t&e void 6ecision of t&e Court of )ppeals, t&is rulin- of
t&e G'I Se%retar1 is %onse<uentl1 void. 7he sprin" cannot rise hi"her than the source.
'&e G'I Se%retar1 &imself a%5no*led-ed t&at &e dre* stimulatin- for%e from t&e appellate
%ourt+s 6ecision for in &is o*n 5 Mune 2003 6ecision, &e de%lared6
3rom t&e aforementioned rulin-, t&e C) &as remanded t&e %ase to t&e G'I Se%retar1 for a Enal
de%ision. '&us, t&ere is no le-al impediment for t&e Se%retar1 to de%ide on t&e appli%ation.
"."
'&e ines%apale %on%lusion is t&at t&e G'I Se%retar1 needed t&e assailed 6ecision of t&e Court of
)ppeals to 8ustif1 &is renderin- a se%ond 6ecision. He e(pli%itl1 invo5ed t&e Court of
)ppeals+ 6ecision as asis for renderin- &is 5 Mune 2003 rulin-, and impli%itl1 re%o-niLed t&at *it&out
su%& 6ecision &e *ould not &ave t&e aut&orit1 to revo5e &is previous rulin- and render a ne*, overse
rulin-.
It is %lear t&en t&at t&e 25 Mune 2003 6ecision of t&e G'I Se%retar1 is a produ%t of t&e void 6ecision, it
ein- an attempt to %arr1 out su%& null 8ud-ment. '&ere is t&erefore no %&oi%e ut to de%lare it void as
*ell, lest *e san%tion t&e perverse e(isten%e of a fruit from a non,e(istent tree. It does not even
matter *&at t&e disposition of t&e 25 Mune 2003 6ecision *as, its nullit1 *ould e *arranted even if
t&e G'I Se%retar1 %&ose to up&old &is earlier rulin- den1in- t&e appli%ation for safe-uard measures.
It is also an unfortunate spe%ta%le to e&old t&e G'I Se%retar1, see5in- to enfor%e a 8udi%ial de%ision
*&i%& is not 1et Enal and a%tuall1 pendin- revie* on appeal. Had it een a 8ud-e *&o attempted to
enfor%e a de%ision t&at is not 1et Enal and e(e%utor1, &e or s&e *ould &ave readil1 een su8e%ted to
san%tion 1 t&is Court. '&e G'I Se%retar1 ma1 e e1ond t&e amit of administrative revie* 1 t&is
Court, ut *e are %apa%itated to allo%ate t&e oundaries set 1 t&e la* of t&e land and to e(a%t fealt1
to t&e le-al order, espe%iall1 from t&e instrumentalities and o=%ials of -overnment.
P+(R()&R(, t&e petition is GR)N'4G. '&e assailed 6ecision of t&e Court of )ppeals is G4CB)R4G
N;BB )NG IAIG and S4' )SIG4. '&e 6ecision of t&e G'I Se%retar1 dated 25 Mune 2003 is also
G4CB)R4G N;BB )NG IAIG and S4' )SIG4. No Costs.
'& &R0(R(0.
,II. (1eAption 2roA Rea4 Propert" Ta1es
G.R. No. L-S#$<: ;une 9, #<<
A/RA VALL(. %&LL(G(, IN%., represented 7" P(0R& V. /&RG&NIA, petitioner,
vs.
+&N. ;*AN P. A@*IN&, ;udBe, %ourt o2 )irst Instan3e, A7raK AR!IN !. %ARIAGA, Provin3ia4
Treasurer, A7raK GA'PAR V. /&'@*(, !uni3ipa4 Treasurer, /anBued, A7raK +(IR' &)
PAT(RN& !ILLAR(,respondents.

PARA', J.:
'&is is a petition for revie* on %ertiorari of t&e de%ision D of t&e defun%t Court of 3irst Instan%e of )ra,
/ran%& I, dated Mune "., "#0., rendered in Civil Case No. !5!, entitled @)ra Ialle1 Munior Colle-e, In%.,
represented 1 2edro I. /or-onia, plaintiD vs. )rmin M. Caria-a as 2rovin%ial 'reasurer of )ra, Gaspar
I. /os<ue as Muni%ipal 'reasurer of /an-ued, )ra and 2aterno Millare, defendants,@ t&e de%retal
portion of *&i%& reads6
IN II4$ A3 )BB 'H4 3AR4GAING, t&e Court &ere1 de%lares6
'&at t&e distraint seiLure and sale 1 t&e Muni%ipal 'reasurer of /an-ued, )ra, t&e
2rovin%ial 'reasurer of said provin%e a-ainst t&e lot and uildin- of t&e )ra Ialle1
Munior Colle-e, In%., represented 1 Gire%tor 2edro /or-onia lo%ated at /an-ued, )ra,
is valid>
'&at sin%e t&e s%&ool is not e(empt from pa1in- ta(es, it s&ould t&erefore pa1 all a%5
ta(es in t&e amount of 25,".0.3" and a%5 ta(es and penalties from t&e promul-ation
of t&is de%ision>
'&at t&e amount deposited 1 t&e plaintaD &im t&e sum of 2!0,000.00 efore t&e trial,
e %onEs%ated to appl1 for t&e pa1ment of t&e a%5 ta(es and for t&e redemption of
t&e propert1 in <uestion, if t&e amount is less t&an 2!,000.00, t&e remainder must e
returned to t&e Gire%tor of 2edro /or-onia, *&o represents t&e plaintiD &erein>
'&at t&e deposit of t&e Muni%ipal 'reasurer in t&e amount of 2!,000.00 also efore t&e
trial must e returned to said Muni%ipal 'reasurer of /an-ued, )ra>
)nd Enall1 t&e %ase is &ere1 ordered dismissed *it& %osts a-ainst t&e plaintiD.
SA ARG4R4G. 9Rollo, pp. 22,23:
2etitioner, an edu%ational %orporation and institution of &i-&er learnin- dul1 in%orporated *it& t&e
Se%urities and 4(%&an-e Commission in "#.8, Eled a %omplaint 9)nne( @"@ of )ns*er 1 t&e
respondents Heirs of 2aterno Millare> Rollo, pp. #5,#0: on Mul1 "0, "#02 in t&e %ourt a .uo to annul and
de%lare void t&e @Noti%e of SeiLure+ and t&e @Noti%e of Sale@ of its lot and uildin- lo%ated at /an-ued,
)ra, for non,pa1ment of real estate ta(es and penalties amountin- to 25,".0.3". Said @Noti%e of
SeiLure@ of t&e %olle-e lot and uildin- %overed 1 Ari-inal CertiE%ate of 'itle No. Z,83 dul1 re-istered
in t&e name of petitioner, plaintiD elo*, on Mul1 !, "#02, 1 respondents Muni%ipal 'reasurer and
2rovin%ial 'reasurer, defendants elo*, *as issued for t&e satisfa%tion of t&e said ta(es t&ereon. '&e
@Noti%e of Sale@ *as %aused to e served upon t&e petitioner 1 t&e respondent treasurers on Mul1 8,
"#02 for t&e sale at puli% au%tion of said %olle-e lot and uildin-, *&i%& sale *as &eld on t&e same
date. Gr. 2aterno Millare, t&en Muni%ipal Ma1or of /an-ued, )ra, oDered t&e &i-&est id of 2!,000.00
*&i%& *as dul1 a%%epted. '&e %ertiE%ate of sale *as %orrespondin-l1 issued to &im.
An )u-ust "0, "#02, t&e respondent 2aterno Millare 9no* de%eased: Eled t&rou-& %ounstel a motion to
dismiss t&e %omplaint.
An )u-ust 23, "#02, t&e respondent 2rovin%ial 'reasurer and Muni%ipal 'reasurer, t&rou-& t&en
2rovin%ial 3is%al Boreto C. Roldan, Eled t&eir ans*er 9)nne( @2@ of )ns*er 1 t&e respondents Heirs of
2atemo Millare> Rollo, pp. #8,"00: to t&e %omplaint. '&is *as follo*ed 1 an amended ans*er 9)nne(
@3,@ ibid, Rollo, pp. "0","03: on )u-ust 3", "#02.
An Septemer ", "#02 t&e respondent 2aterno Millare Eled &is ans*er 9)nne( @5,@ ibid> Rollo, pp. "0!,
"08:.
An A%toer "2, "#02, *it& t&e aforesaid sale of t&e s%&ool premises at puli% au%tion, t&e respondent
Mud-e, Hon. Muan 2. )<uino of t&e Court of 3irst Instan%e of )ra, /ran%& I, ordered 9)nne( @!,@ ibid>
Rollo, pp. "0#,""0: t&e respondents provin%ial and muni%ipal treasurers to deliver to t&e Cler5 of Court
t&e pro%eeds of t&e au%tion sale. Hen%e, on Ge%emer "., "#02, petitioner, t&rou-& Gire%tor /or-onia,
deposited *it& t&e trial %ourt t&e sum of 2!,000.00 eviden%ed 1 2N/ C&e%5 No. #0.3!#.
An )pril "2, "#03, t&e parties entered into a stipulation of fa%ts adopted and emodied 1 t&e trial
%ourt in its <uestioned de%ision. Said Stipulations reads6
S'I2;B)'IAN A3 3)C'S
CAM4 NA$ t&e parties, assisted 1 %ounsels, and to t&is Honorale Court respe%tfull1
enter into t&e follo*in- a-reed stipulation of fa%ts6
". '&at t&e personal %ir%umstan%es of t&e parties as stated in para-rap& " of t&e
%omplaint is admitted> ut t&e parti%ular person of Mr. )rmin M. Caria-a is to e
sustituted, &o*ever, 1 an1one *&o is a%tuall1 &oldin- t&e position of 2rovin%ial
'reasurer of t&e 2rovin%e of )ra>
2. '&at t&e plaintiD )ra Ialle1 Munior Colle-e, In%. is t&e o*ner of t&e lot and uildin-s
t&ereon lo%ated in /an-ued, )ra under Ari-inal CertiE%ate of 'itle No. 0,83>
3. '&at t&e defendant Gaspar I. /os<ue, as Muni%ipal treasurer of /an-ued, )ra
%aused to e served upon t&e )ra Ialle1 Munior Colle-e, In%. a Noti%e of SeiLure on t&e
propert1 of said s%&ool under Ari-inal CertiE%ate of 'itle No. 0,83 for t&e satisfa%tion of
real propert1 ta(es t&ereon, amountin- to 25,".0.3"> t&e Noti%e of SeiLure ein- t&e
one atta%&ed to t&e %omplaint as 4(&iit )>
.. '&at on Mune 8, "#02 t&e aove properties of t&e )ra Ialle1 Munior Colle-e, In%. *as
sold at puli% au%tion for t&e satisfa%tion of t&e unpaid real propert1 ta(es t&ereon and
t&e same *as sold to defendant 2aterno Millare *&o oDered t&e &i-&est id of
2!,000.00 and a CertiE%ate of Sale in &is favor *as issued 1 t&e defendant Muni%ipal
'reasurer.
5. '&at all ot&er matters not parti%ularl1 and spe%iall1 %overed 1 t&is stipulation of
fa%ts *ill e t&e su8e%t of eviden%e 1 t&e parties.
$H4R43AR4, it is respe%tfull1 pra1ed of t&e Honorale Court to %onsider and admit
t&is stipulation of fa%ts on t&e point a-reed upon 1 t&e parties.
/an-ued, )ra, )pril "2, "#03.
S-d.
)-ripin
o
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es
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)ttorne
1 for
2laintiD
S-d.
Boreto
Roldan
'1p
BAR4'
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RABG)
N
2rovin%i
al
3is%al
Counsel
for
Gefend
ants
2rovin%i
al
'reasur
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)ra
and t&e
Muni%ip
al
'reasur
er of
/an-ue
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S-d.
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Gefend
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2aterno
Millare
9Rollo,
pp. "0,
"8:
)side from t&e Stipulation of 3a%ts, t&e trial %ourt amon- ot&ers, found t&e follo*in-6 9a: t&at t&e
s%&ool is re%o-niLed 1 t&e -overnment and is oDerin- 2rimar1, Hi-& S%&ool and Colle-e Courses, and
&as a s%&ool population of more t&an one t&ousand students all in all> 9: t&at it is lo%ated ri-&t in t&e
&eart of t&e to*n of /an-ued, a fe* meters from t&e plaLa and aout "20 meters from t&e Court of
3irst Instan%e uildin-> 9%: t&at t&e elementar1 pupils are &oused in a t*o,store1 uildin- a%ross t&e
street> 9d: t&at t&e &i-& s%&ool and %olle-e students are &oused in t&e main uildin-> 9e: t&at t&e
Gire%tor *it& &is famil1 is in t&e se%ond Toor of t&e main uildin-> and 9f: t&at t&e annual -ross in%ome
of t&e s%&ool rea%&es more t&an one &undred t&ousand pesos.
3rom all t&e fore-oin-, t&e onl1 issue left for t&e Court to determine and as a-reed 1 t&e parties, is
*&et&er or not t&e lot and uildin- in <uestion are used e!clusively for educational purposes. 9Rollo, p.
20:
'&e su%%eedin- 2rovin%ial 3is%al, Hon. Mose ). Solomon and &is )ssistant, Hon. 4usta<uio [. Montero,
Eled a Memorandum for t&e Government on Mar%& 25, "#0., and a Supplemental Memorandum on
Ma1 0, "#0., *&erein t&e1 opined @t&at ased on t&e eviden%e, t&e la*s appli%ale, %ourt de%isions
and 8urispruden%e, t&e s%&ool uildin- and s%&ool lot used for edu%ational purposes of t&e )ra Ialle1
Colle-e, In%., are e(empted from t&e pa1ment of ta(es.@ 9)nne(es @/,@ @/,"@ of 2etition> Rollo, pp. 2.,
.#> .. and .#:.
Nonet&eless, t&e trial %ourt disa-reed e%ause of t&e use of t&e se%ond Toor 1 t&e Gire%tor of
petitioner s%&ool for residential purposes. He t&us ruled for t&e -overnment and rendered t&e assailed
de%ision.
)fter &avin- een -ranted 1 t&e trial %ourt ten 9"0: da1s from )u-ust !, "#0. *it&in *&i%& to perfe%t
its appeal 92er Arder dated )u-ust !, "#0.> )nne( @G@ of 2etition> Rollo, p. 50: petitioner instead
availed of t&e instant petition for revie* on certiorari *it& pra1er for preliminar1 in8un%tion efore t&is
Court, *&i%& petition *as Eled on )u-ust "0, "#0. 9Rollo, p.2:.
In t&e resolution dated )u-ust "!, "#0., t&is Court resolved to -ive G;4 CA;RS4 to t&e petition 9Rollo,
p. 58:. Respondents *ere re<uired to ans*er said petition 9Rollo, p. 0.:.
2etitioner raised t&e follo*in- assi-nments of error6
I
'H4 CA;R' , B2( 4RR4G IN S;S')INING )S I)BIG 'H4 S4I[;R4 )NG S)B4 A3 'H4 CABB4G4 BA' )NG
/;IBGING ;S4G 3AR 4G;C)'IAN)B 2;R2AS4S A3 'H4 24'I'IAN4R.
II
'H4 CA;R' , B2( 4RR4G IN G4CB)RING 'H)' 'H4 CABB4G4 BA' )NG /;IBGING A3 'H4 24'I'IAN4R
)R4 NA' ;S4G 4XCB;SII4BN 3AR 4G;C)'IAN)B 2;R2AS4S M4R4BN /4C);S4 'H4 CABB4G4
2R4SIG4N' R4SIG4S IN AN4 RAAM A3 'H4 CABB4G4 /;IBGING.
III
'H4 CA;R' , B2( 4RR4G IN G4CB)RING 'H)' 'H4 CABB4G4 BA' )NG /;IBGING A3 'H4 24'I'IAN4R
)R4 NA' 4X4M2' 3RAM 2RA24R'N ')X4S )NG IN ARG4RING 24'I'IAN4R 'A 2)N 25,".0.3" )S R4)B'N
')X4S.
II
'H4 CA;R' , B2( 4RR4G IN ARG4RING 'H4 CAN3ISC)'IAN A3 'H4 2!,000.00 G42ASI' M)G4 IN 'H4
CA;R' /N 24'I'IAN4R )S 2)NM4N' A3 'H4 25,".0.3" R4)B'N ')X4S. 9See /rief for t&e 2etitioner, pp.
",2:
'&e main issue in t&is %ase is t&e proper interpretation of t&e p&rase @used e(%lusivel1 for edu%ational
purposes.@
2etitioner %ontends t&at t&e primar1 use of t&e lot and uildin- for edu%ational purposes, and not t&e
in%idental use t&ereof, determines and e(emption from propert1 ta(es under Se%tion 22 93:, )rti%le II
of t&e "#35 Constitution. Hen%e, t&e seiLure and sale of su8e%t %olle-e lot and uildin-, *&i%& are
%ontrar1 t&ereto as *ell as to t&e provision of Common*ealt& )%t No. .00, ot&er*ise 5no*n as t&e
)ssessment Ba*, are *it&out le-al asis and t&erefore void.
An t&e ot&er &and, private respondents maintain t&at t&e %olle-e lot and uildin- in <uestion *&i%&
*ere su8e%ted to seiLure and sale to ans*er for t&e unpaid ta( are used6 9": for t&e edu%ational
purposes of t&e %olle-e> 92: as t&e permanent residen%e of t&e 2resident and Gire%tor t&ereof, Mr.
2edro I. /or-onia, and &is famil1 in%ludin- t&e in,la*s and -rand%&ildren> and 93: for %ommer%ial
purposes e%ause t&e -round Toor of t&e %olle-e uildin- is ein- used and rented 1 a %ommer%ial
estalis&ment, t&e Nort&ern Mar5etin- Corporation 9See p&oto-rap& atta%&ed as )nne( @8@ 9Comment>
Rollo, p. #0K:.
Gue to its time frame, t&e %onstitutional provision *&i%& Ends appli%ation in t&e %ase at ar is Se%tion
22, para-rap& 3, )rti%le II, of t&e t&en "#35 2&ilippine Constitution, *&i%& e(pressl1 -rants e(emption
from realt1 ta(es for @Cemeteries, %&ur%&es and parsona-es or %onvents appurtenant t&ereto, and all
lands, uildin-s, and improvements used e!clusively for reli-ious, %&aritale or edu%ational
purposes ...
Relative t&ereto, Se%tion 5., para-rap& %, Common*ealt& )%t No. .00 as amended 1 Repuli% )%t No.
.0#, ot&er*ise 5no*n as t&e )ssessment Ba*, provides6
'&e follo*in- are e(empted from real propert1 ta( under t&e )ssessment Ba*6
((( ((( (((
9%: %&ur%&es and parsona-es or %onvents appurtenant t&ereto, and all lands, uildin-s,
and improvements used e!clusively for reli-ious, %&aritale, s%ientiE% or edu%ational
purposes.
((( ((( (((
In t&is re-ard petitioner ar-ues t&at t&e primar1 use of t&e s%&ool lot and uildin- is t&e asi% and
%ontrollin- -uide, norm and standard to determine ta( e(emption, and not t&e mere in%idental use
t&ereof.
)s earl1 as "#"! in 8MC, of Manila vs. Collector of lnternal &evenue, 33 2&il. 2"0 J"#"!K, t&is Court
ruled t&at *&ile it ma1 e true t&at t&e NMC) 5eeps a lod-in- and a oardin- &ouse and maintains a
restaurant for its memers, still t&ese do not %onstitute usiness in t&e ordinar1 a%%eptan%e of t&e
*ord, ut an institution used e(%lusivel1 for reli-ious, %&aritale and edu%ational purposes, and as
su%&, it is entitled to e e(empted from ta(ation.
In t&e %ase of /is&op of 4ueva +e"ovia v. 'rovincial Board of %locos 4orte, 5" 2&il. 352 J"#02K, t&is
Court in%luded in t&e e(emption a ve-etale -arden in an ad8a%ent lot and anot&er lot formerl1 used as
a %emeter1. It *as %lariEed t&at t&e term @used e(%lusivel1@ %onsiders in%idental use also. '&us, t&e
e(emption from pa1ment of land ta( in favor of t&e %onvent in%ludes, not onl1 t&e land a%tuall1
o%%upied 1 t&e uildin- ut also t&e ad8a%ent -arden devoted to t&e in%idental use of t&e paris&
priest. '&e lot *&i%& is not used for %ommer%ial purposes ut serves solel1 as a sort of lod-in- pla%e,
also <ualiEes for e(emption e%ause t&is %onstitutes in%idental use in reli-ious fun%tions.
'&e p&rase @e(%lusivel1 used for edu%ational purposes@ *as furt&er %lariEed 1 t&is Court in t&e %ases
of >errera vs. Buezon City Board of assessment ,ppeals, 3 SCR) "8! J"#!"K and Commissioner of
%nternal &evenue vs. Bishop of the Missionary 6istrict, ". SCR) ##" J"#!5K, t&us C
Moreover, t&e e(emption in favor of propert1 used e(%lusivel1 for %&aritale or
edu%ational purposes is +not limited to propert1 a%tuall1 indispensale+ t&erefor 9Coole1
on 'a(ation, Iol. 2, p. ".30:, ut e(tends to fa%ilities *&i%& are in%idental to and
reasonal1 ne%essar1 for t&e a%%omplis&ment of said purposes, su%& as in t&e %ase of
&ospitals, @a s%&ool for trainin- nurses, a nurses+ &ome, propert1 use to provide
&ousin- fa%ilities for interns, resident do%tors, superintendents, and ot&er memers of
t&e &ospital staD, and re%reational fa%ilities for student nurses, interns, and residents+
98. CMS !!2":, su%& as @)t&leti% Eelds@ in%ludin- @a Erm used for t&e inmates of t&e
institution. 9Coole1 on 'a(ation, Iol. 2, p. ".30:.
'&e test of e(emption from ta(ation is t&e use of t&e propert1 for purposes mentioned in t&e
Constitution 9)postoli% 2refe%t v. Cit1 'reasurer of /a-uio, 0" 2&il, 5.0 J"#."K:.
It must e stressed &o*ever, t&at *&ile t&is Court allo*s a more lieral and non,restri%tive
interpretation of t&e p&rase @e(%lusivel1 used for edu%ational purposes@ as provided for in )rti%le II,
Se%tion 22, para-rap& 3 of t&e "#35 2&ilippine Constitution, reasonale emp&asis &as al*a1s een
made t&at e(emption e(tends to fa%ilities *&i%& are in%idental to and reasonal1 ne%essar1 for t&e
a%%omplis&ment of t&e main purposes. At&er*ise stated, t&e use of t&e s%&ool uildin- or lot for
%ommer%ial purposes is neit&er %ontemplated 1 la*, nor 1 8urispruden%e. '&us, *&ile t&e use of t&e
se%ond Toor of t&e main uildin- in t&e %ase at ar for residential purposes of t&e Gire%tor and &is
famil1, ma1 End 8ustiE%ation under t&e %on%ept of in%idental use, *&i%& is %omplimentar1 to t&e main
or primar1 purposeCedu%ational, t&e lease of t&e Erst Toor t&ereof to t&e Nort&ern Mar5etin-
Corporation %annot 1 an1 stret%& of t&e ima-ination e %onsidered in%idental to t&e purpose of
edu%ation.
It *ill e noted &o*ever t&at t&e aforementioned lease appears to &ave een raised for t&e Erst time in
t&is Court. '&at t&e matter *as not ta5en up in t&e to %ourt is reall1 apparent in t&e de%ision of
respondent Mud-e. No mention t&ereof *as made in t&e stipulation of fa%ts, not even in t&e des%ription
of t&e s%&ool uildin- 1 t&e trial 8ud-e, ot& emodied in t&e de%ision nor as one of t&e issues to
resolve in order to determine *&et&er or not said properl1 ma1 e e(empted from pa1ment of real
estate ta(es 9Rollo, pp. "0,23:. An t&e ot&er &and, it is note*ort&1 t&at su%& fa%t *as not disputed
even after it *as raised in t&is Court.
Indeed, it is a(iomati% t&at fa%ts not raised in t&e lo*er %ourt %annot e ta5en up for t&e Erst time on
appeal. Nonet&eless, as an e(%eption to t&e rule, t&is Court &as &eld t&at alt&ou-& a fa%tual issue is
not s<uarel1 raised elo*, still in t&e interest of sustantial 8usti%e, t&is Court is not prevented from
%onsiderin- a pivotal fa%tual matter. @'&e Supreme Court is %lot&ed *it& ample aut&orit1 to revie*
palpale errors not assi-ned as su%& if it Ends t&at t&eir %onsideration is ne%essar1 in arrivin- at a 8ust
de%ision.@ 92ereL vs. Court of )ppeals, "20 SCR) !.5 J"#8.K:.
;nder t&e "#35 Constitution, t&e trial %ourt %orre%tl1 arrived at t&e %on%lusion t&at t&e s%&ool uildin-
as *ell as t&e lot *&ere it is uilt, s&ould e ta(ed, not e%ause t&e se%ond Toor of t&e same is ein-
used 1 t&e Gire%tor and &is famil1 for residential purposes, ut e%ause t&e Erst Toor t&ereof is ein-
used for %ommer%ial purposes. Ho*ever, sin%e onl1 a portion is used for purposes of %ommer%e, it is
onl1 fair t&at &alf of t&e assessed ta( e returned to t&e s%&ool involved.
2R4MIS4S CANSIG4R4G, t&e de%ision of t&e Court of 3irst Instan%e of )ra, /ran%& I, is &ere1
)33IRM4G su8e%t to t&e modiE%ation t&at &alf of t&e assessed ta( e returned to t&e petitioner.
SA ARG4R4G.
G.R. No. L-279<< 0e3eA7er S, #27
T+( R&!AN %AT+&LI% /I'+&P &) N*(VA '(G&VIA, as representative o2 t6e RoAan
%at6o4i3 Aposto4i3 %6ur36, plaintiD,appellant,
vs.
T+( PR&VIN%IAL /&AR0 &) IL&%&' N&RT(, (T AL., defendants,appellants.
-icente Llanes and 'roceso Coloma for plainti<3appellant.
'rovincial 1iscal +antos for defendant3appellants.

AVAN%(UA, J.:
'&e plaintiD, t&e Roman Cat&oli% )postoli% C&ur%&, represented 1 t&e /is&op of Nueva Se-ovia,
possesses and is t&e o*ner of a par%el of land in t&e muni%ipalit1 of San Ni%olas, Ilo%os Norte, all four
sides of *&i%& fa%e on puli% streets. An t&e sout& side is a part of t&e %&ur%&1ard, t&e %onvent and an
ad8a%ent lot used for a ve-etale -arden, %ontainin- an area oD ",!2. s<uare meters, in *&i%& t&ere is
a stale and a *ell for t&e use of t&e %onvent. In t&e %enter is t&e remainder of t&e %&ur%&1ard and t&e
%&ur%&. An t&e nort& is an old %emeter1 *it& t*o of its *alls still standin-, and a portion *&ere
formerl1 stood a to*er, t&e ase of *&i%& still e seen, %ontainin- a total area of 8,#55 s<uare meters.
)s re<uired 1 t&e defendants, on Mul1 3, "#25 t&e plaintiD paid, under protest, t&e land ta( on t&e lot
ad8oinin- t&e %onvent and t&e lot *&i%& formerl1 *as t&e %emeter1 *it& t&e portion *&ere t&e to*er
stood.
'&e plaintiD Eled t&is a%tion for t&e re%over1 of t&e sum paid 1 to t&e defendants 1 *a1 of land ta(,
alle-in- t&at t&e %olle%tion of t&is ta( is ille-al. '&e lo*er %ourt asolved t&e defendants from t&e
%omplaint in re-ard to t&e lot ad8oinin- %onvent and de%lared t&at t&e ta( %olle%ted on t&e lot, *&i%&
formerl1 *as t&e %emeter1 and on t&e portion *&ere t&e lo*er stood, *as ille-al. /ot& parties
appealed from t&is 8ud-ment.
'&e e(emption in favor of t&e %onvent in t&e pa1ment of t&e land ta( 9se%. 3.. J%K )dministrative
Code: refers to t&e &ome of t&e parties *&o presides over t&e %&ur%& and *&o &as to ta5e %are of
&imself in order to dis%&ar-e &is duties. In t&erefore must, in t&e sense, in%lude not onl1 t&e land
a%tuall1 o%%upied 1 t&e %&ur%&, ut also t&e ad8a%ent -round destined to t&e ordinar1 in%idental uses
of man. 4(%ept in lar-e %ities *&ere t&e densit1 of t&e population and t&e development of %ommer%e
re<uire t&e use of lar-er tra%ts of land for uildin-s, a ve-etale -arden elon-s to a &ouse and, in t&e
%ase of a %onvent, it use is limited to t&e ne%essities of t&e priest, *&i%& %omes under t&e
e(emption.laphiC.net
In re-ard to t&e lot *&i%& formerl1 *as t&e %emeter1, *&ile it is no lon-er used as su%&, neit&er is it
used for %ommer%ial purposes and, a%%ordin- to t&e eviden%e, is no* ein- used as a lod-in- &ouse 1
t&e people *&o parti%ipate in reli-ious festivities, *&i%& %onstitutes an in%idental use in reli-ious
fun%tions, *&i%& also %omes *it&in t&e e(emption.
'&e 8ud-ment appealed from is reversed in all it parts and it is &eld t&at ot& lots are e(empt from land
ta( and t&e defendants are ordered to refund to plaintiD *&atever *as paid as su%& ta(, *it&out an1
spe%ial pronoun%ement as to %osts. So ordered.
5ohnson, +treet, -illamor, (strand, 5ohns and -illa3&eal, 55., concur.
G.R. No. 44$4 ;une 2#, 2$$4
L*NG %(NT(R &) T+( P+ILIPPIN(', petitioner,
vs.
@*(>&N %IT. and %&N'TANTIN& P. R&'A', in 6is 3apa3it" as %it" Assessor o2 @ueJon
%it",respondents.
G 4 C I S I A N
%ALL(;&, 'R., J.:
'&is is a petition for revie* on %ertiorari under Rule .5 of t&e Rules of Court, as amended, of t&e
Ge%ision
"
dated Mul1 "0, 2000 of t&e Court of )ppeals in C),G.R. S2 No. 500". *&i%& a=rmed t&e
de%ision of t&e Central /oard of )ssessment )ppeals &oldin- t&at t&e lot o*ned 1 t&e petitioner and
its &ospital uildin- %onstru%ted t&ereon are su8e%t to assessment for purposes of real propert1 ta(.
T6e Ante3edents
'&e petitioner Bun- Center of t&e 2&ilippines is a non,sto%5 and non,proEt entit1 estalis&ed on
Manuar1 "!, "#8" 1 virtue of 2residential Ge%ree No. "823.
2
It is t&e re-istered o*ner of a par%el of
land, parti%ularl1 des%ried as Bot No. R2,3,/,3),",/,", S$A,0.,000.#5, lo%ated at ZueLon )venue
%orner 4llipti%al Road, Central Gistri%t, ZueLon Cit1. '&e lot &as an area of "2",.!3 s<uare meters and
is %overed 1 'ransfer CertiE%ate of 'itle 9'C': No. 2!"320 of t&e Re-istr1 of Geeds of ZueLon Cit1.
4re%ted in t&e middle of t&e aforesaid lot is a &ospital 5no*n as t&e Bun- Center of t&e 2&ilippines. )
i- spa%e at t&e -round Toor is ein- leased to private parties, for %anteen and small store spa%es,
and to medi%al or professional pra%titioners *&o use t&e same as t&eir private %lini%s for t&eir patients
*&om t&e1 %&ar-e for t&eir professional servi%es. )lmost one,&alf of t&e entire area on t&e left side of
t&e uildin- alon- ZueLon )venue is va%ant and idle, *&ile a i- portion on t&e ri-&t side, at t&e %orner
of ZueLon )venue and 4llipti%al Road, is ein- leased for %ommer%ial purposes to a private enterprise
5no*n as t&e 4llipti%al Ar%&ids and Garden Center.
'&e petitioner a%%epts pa1in- and non,pa1in- patients. It also renders medi%al servi%es to out,patients,
ot& pa1in- and non,pa1in-. )side from its in%ome from pa1in- patients, t&e petitioner re%eives
annual susidies from t&e -overnment.
An Mune 0, "##3, ot& t&e land and t&e &ospital uildin- of t&e petitioner *ere assessed for real
propert1 ta(es in t&e amount of 2.,55.,8!0 1 t&e Cit1 )ssessor of ZueLon Cit1.
3
)%%ordin-l1, 'a(
Ge%laration Nos. C,02",0"22! 9"!,25"8: and C,02",0"23" 9"5,25"8,): *ere issued for t&e land and
t&e &ospital uildin-, respe%tivel1.
.
An )u-ust 25, "##3, t&e petitioner Eled a Claim for
4(emption
5
from real propert1 ta(es *it& t&e Cit1 )ssessor, predi%ated on its %laim t&at it is a
%&aritale institution. '&e petitionerQs re<uest *as denied, and a petition *as, t&ereafter, Eled efore
t&e Bo%al /oard of )ssessment )ppeals of ZueLon Cit1 9ZC,B/)), for revit1: for t&e reversal of t&e
resolution of t&e Cit1 )ssessor. '&e petitioner alle-ed t&at under Se%tion 28, para-rap& 3 of t&e "#80
Constitution, t&e propert1 is e(empt from real propert1 ta(es. It averred t&at a minimum of !07 of its
&ospital eds are e(%lusivel1 used for %&arit1 patients and t&at t&e ma8or t&rust of its &ospital
operation is to serve %&arit1 patients. '&e petitioner %ontends t&at it is a %&aritale institution and, as
su%&, is e(empt from real propert1 ta(es. '&e ZC,B/)) rendered 8ud-ment dismissin- t&e petition and
&oldin- t&e petitioner liale for real propert1 ta(es.
!
'&e ZC,B/))Qs de%ision *as, li5e*ise, a=rmed on appeal 1 t&e Central /oard of )ssessment )ppeals
of ZueLon Cit1 9C/)), for revit1:
0
*&i%& ruled t&at t&e petitioner *as not a %&aritale institution and
t&at its real properties *ere not a%tuall1, dire%tl1 and e(%lusivel1 used for %&aritale purposes> &en%e,
it *as not entitled to real propert1 ta( e(emption under t&e %onstitution and t&e la*. '&e petitioner
sou-&t relief from t&e Court of )ppeals, *&i%& rendered 8ud-ment a=rmin- t&e de%ision of t&e C/)).
8
;ndaunted, t&e petitioner Eled its petition in t&is Court %ontendin- t&at6
). 'H4 CA;R' , B2( 4RR4G IN G4CB)RING 24'I'IAN4R )S NA' 4N'I'B4G 'A R4)B'N ')X
4X4M2'IANS AN 'H4 GRA;NG 'H)' I'S B)NG, /;IBGING )NG IM2RAI4M4N'S, S;/M4C' A3
)SS4SSM4N', )R4 NA' )C';)BBN, GIR4C'BN )NG 4XCB;SII4BN G4IA'4G 3AR CH)RI')/B4
2;R2AS4S.
/. $HIB4 24'I'IAN4R IS NA' G4CB)R4G )S R4)B 2RA24R'N ')X 4X4M2' ;NG4R I'S CH)R'4R,
2G "823, S)IG 4X4M2'IAN M)N N4I4R'H4B4SS /4 4X'4NG4G ;2AN 2RA24R )22BIC)'IAN.
'&e petitioner avers t&at it is a %&aritale institution *it&in t&e %onte(t of Se%tion 2893:, )rti%le II of
t&e "#80 Constitution. It asserts t&at its %&ara%ter as a %&aritale institution is not altered 1 t&e fa%t
t&at it admits pa1in- patients and renders medi%al servi%es to t&em, leases portions of t&e land to
private parties, and rents out portions of t&e &ospital to private medi%al pra%titioners from *&i%& it
derives in%ome to e used for operational e(penses. '&e petitioner points out t&at for t&e 1ears "##5
to "###, "007 of its out,patients *ere %&arit1 patients and of t&e &ospitalQs 282,ed %apa%it1, !07
t&ereof, or "00 eds, is allotted to %&arit1 patients. It asserts t&at t&e fa%t t&at it re%eives susidies
from t&e -overnment attests to its %&ara%ter as a %&aritale institution. It %ontends t&at t&e
@e(%lusivit1@ re<uired in t&e Constitution does not ne%essaril1 mean @solel1.@ Hen%e, even if a portion of
its real estate is leased out to private individuals from *&om it derives in%ome, it does not lose its
%&ara%ter as a %&aritale institution, and its e(emption from t&e pa1ment of real estate ta(es on its
real propert1. '&e petitioner %ited our rulin- in >errera v. BC3B,,
#
to olster its pose. '&e petitioner
furt&er %ontends t&at even if 2.G. No. "823 does not e(empt it from t&e pa1ment of real estate ta(es, it
is not pre%luded from see5in- ta( e(emption under t&e "#80 Constitution.
In t&eir %omment on t&e petition, t&e respondents aver t&at t&e petitioner is not a %&aritale entit1.
'&e petitionerQs real propert1 is not e(empt from t&e pa1ment of real estate ta(es under 2.G. No. "823
and even under t&e "#80 Constitution e%ause it failed to prove t&at it is a %&aritale institution and
t&at t&e said propert1 is a%tuall1, dire%tl1 and e(%lusivel1 used for %&aritale purposes. '&e
respondents noted t&at in a ne*spaper report, it appears t&at -raft %&ar-es *ere Eled *it& t&e
Sandi-ana1an a-ainst t&e dire%tor of t&e petitioner, its administrative o=%er, and [enaida Rivera, t&e
proprietress of t&e 4llipti%al Ar%&ids and Garden Center, for enterin- into a lease %ontra%t over
0,!!3."3 s<uare meters of t&e propert1 in "##0 for onl1 220,000 a mont&, *&en t&e mont&l1 rental
s&ould e2350,000 a mont& as determined 1 t&e Commission on )udit> and t&at instead of %ompl1in-
*it& t&e dire%tive of t&e CA) for t&e %an%ellation of t&e %ontra%t for ein- -rossl1 pre8udi%ial to t&e
-overnment, t&e petitioner rene*ed t&e same on Mar%& "3, "##5 for a mont&l1 rental of onl1 22.,000.
'&e1 assert t&at t&e petitioner uses t&e susidies -ranted 1 t&e -overnment for %&arit1 patients and
uses t&e rest of its in%ome from t&e propert1 for t&e eneEt of pa1in- patients, amon- ot&er purposes.
'&e1 aver t&at t&e petitioner failed to addu%e sustantial eviden%e t&at "007 of its out,patients and
"00 eds in t&e &ospital are reserved for indi-ent patients. '&e respondents furt&er assert, t&us6
"3. '&at t&e %laimsFalle-ations of t&e 2etitioner BC2 do not spea5 *ell of its re%ord of servi%e.
'&at efore a patient is admitted for treatment in t&e Center, Erst impression is t&at it is pa1,
patient and re<uired to pa1 a %ertain amount as deposit. '&at even if a patient is livin- elo*
t&e povert1 line, &e is %&ar-ed *it& &i-& &ospital ills. )nd, *it&out t&ese ills ein- Erst
settled, t&e poor patient %annot e allo*ed to leave t&e &ospital or e dis%&ar-ed *it&out Erst
pa1in- t&e &ospital ills or issue a promissor1 note -uaranteed and indorsed 1 an inTuential
a-en%1 or person 5no*n onl1 to t&e Center> t&at even t&e remains of de%eased poor patients
suDered t&e same fate. Moreover, efore a patient is admitted for treatment as free or %&arit1
patient, one must under-o a series of intervie*s and must sumit all t&e re<uirements needed
1 t&e Center, usuall1 a%%ompanied 1 endorsement 1 an inTuential a-en%1 or person 5no*n
onl1 to t&e Center. '&ese fa%ts *ere &eard and admitted 1 t&e 2etitioner BC2 durin- t&e
&earin-s efore t&e Honorale ZC,/)) and Honorale C/)). '&ese are t&e reasons of indi-ent
patients, instead of see5in- treatment *it& t&e Center, t&e1 prefer to e treated at t&e ZueLon
Institute. Can su%& pra%ti%e 1 t&e Center e %alled %&aritaleU
"0
T6e Issues
'&e issues for resolution are t&e follo*in-6 9a: *&et&er t&e petitioner is a %&aritale institution *it&in
t&e %onte(t of 2residential Ge%ree No. "823 and t&e "#03 and "#80 Constitutions and Se%tion 23.9:
of Repuli% )%t No. 0"!0> and 9: *&et&er t&e real properties of t&e petitioner are e(empt from real
propert1 ta(es.
T6e %ourts Ru4inB
'&e petition is partiall1 -ranted.
An t&e Erst issue, *e &old t&at t&e petitioner is a %&aritale institution *it&in t&e %onte(t of t&e "#03
and "#80 Constitutions. 'o determine *&et&er an enterprise is a %&aritale institutionFentit1 or not, t&e
elements *&i%& s&ould e %onsidered in%lude t&e statute %reatin- t&e enterprise, its %orporate
purposes, its %onstitution and 1,la*s, t&e met&ods of administration, t&e nature of t&e a%tual *or5
performed, t&e %&ara%ter of t&e servi%es rendered, t&e indeEniteness of t&e eneE%iaries, and t&e use
and o%%upation of t&e properties.
""
In t&e le-al sense, a %&arit1 ma1 e full1 deEned as a -ift, to e applied %onsistentl1 *it& e(istin- la*s,
for t&e eneEt of an indeEnite numer of persons, eit&er 1 rin-in- t&eir minds and &earts under t&e
inTuen%e of edu%ation or reli-ion, 1 assistin- t&em to estalis& t&emselves in life or ot&er*ise
lessenin- t&e urden of -overnment.
"2
It ma1 e applied to almost an1t&in- t&at tend to promote t&e
*ell,doin- and *ell,ein- of so%ial man. It emra%es t&e improvement and promotion of t&e &appiness
of man.
"3
'&e *ord @%&aritale@ is not restri%ted to relief of t&e poor or si%5.
".
'&e test of a %&arit1 and
a %&aritale or-aniLation are in la* t&e same. '&e test *&et&er an enterprise is %&aritale or not is
*&et&er it e(ists to %arr1 out a purpose reor-aniLed in la* as %&aritale or *&et&er it is maintained for
-ain, proEt, or private advanta-e.
;nder 2.G. No. "823, t&e petitioner is a non,proEt and non,sto%5 %orporation *&i%&, su8e%t to t&e
provisions of t&e de%ree, is to e administered 1 t&e A=%e of t&e 2resident of t&e 2&ilippines *it& t&e
Ministr1 of Healt& and t&e Ministr1 of Human Settlements. It *as or-aniLed for t&e *elfare and eneEt
of t&e 3ilipino people prin%ipall1 to &elp %omat t&e &i-& in%iden%e of lun- and pulmonar1 diseases in
t&e 2&ilippines. '&e raison d0etre for t&e %reation of t&e petitioner is stated in t&e de%ree, viz6
$&ereas, for de%ades, respirator1 diseases &ave een a priorit1 %on%ern, &avin- een t&e
leadin- %ause of illness and deat& in t&e 2&ilippines, %omprisin- more t&an .57 of t&e total
annual deat&s from all %auses, t&us, e(a%tin- a tremendous toll on &uman resour%es, *&i%&
ailments are li5el1 to in%rease and de-enerate into serious lun- diseases on a%%ount of
unaated pollution, industrialiLation and un%&e%5ed %i-arette smo5in- in t&e %ountr1>lavvphD
l.net
$&ereas, t&e more %ommon lun- diseases are, to a -reat e(tent, preventale, and %urale
*it& earl1 and ade<uate medi%al %are, immuniLation and t&rou-& prompt and intensive
prevention and &ealt& edu%ation pro-rams>
$&ereas, t&ere is an ur-ent need to %onsolidate and reinfor%e e(istin- pro-rams, strate-ies
and eDorts at preventin-, treatin- and re&ailitatin- people aDe%ted 1 lun- diseases, and to
underta5e resear%& and trainin- on t&e %ure and prevention of lun- diseases, t&rou-& a Bun-
Center *&i%& *ill &ouse and nurture t&e aove and related a%tivities and provide tertiar1,level
%are for more di=%ult and prolemati%al %ases>
$&ereas, to a%&ieve t&is purpose, t&e Government intends to provide material and Enan%ial
support to*ards t&e estalis&ment and maintenan%e of a Bun- Center for t&e *elfare and
eneEt of t&e 3ilipino people.
"5
'&e purposes for *&i%& t&e petitioner *as %reated are spelled out in its )rti%les of In%orporation, t&us6
S4CANG6 '&at t&e purposes for *&i%& su%& %orporation is formed are as follo*s6
". 'o %onstru%t, estalis&, e<uip, maintain, administer and %ondu%t an inte-rated
medi%al institution *&i%& s&all spe%ialiLe in t&e treatment, %are, re&ailitation andFor
relief of lun- and allied diseases in line *it& t&e %on%ern of t&e -overnment to assist
and provide material and Enan%ial support in t&e estalis&ment and maintenan%e of a
lun- %enter primaril1 to eneEt t&e people of t&e 2&ilippines and in pursuan%e of t&e
poli%1 of t&e State to se%ure t&e *ell,ein- of t&e people 1 providin- t&em spe%ialiLed
&ealt& and medi%al servi%es and 1 minimiLin- t&e in%iden%e of lun- diseases in t&e
%ountr1 and else*&ere.
2. 'o promote t&e nole underta5in- of s%ientiE% resear%& related to t&e prevention of
lun- or pulmonar1 ailments and t&e %are of lun- patients, in%ludin- t&e &oldin- of a
series of relevant %on-resses, %onventions, seminars and %onferen%es>
3. 'o stimulate and, *&enever possile, under*rite s%ientiE% resear%&es on t&e
iolo-i%al, demo-rap&i%, so%ial, e%onomi%, eu-eni% and p&1siolo-i%al aspe%ts of lun- or
pulmonar1 diseases and t&eir %ontrol> and to %olle%t and pulis& t&e Endin-s of su%&
resear%& for puli% %onsumption>
.. 'o fa%ilitate t&e dissemination of ideas and puli% a%%eptan%e of information on lun-
%ons%iousness or a*areness, and t&e development of fa%t,Endin-, information and
reportin- fa%ilities for and in aid of t&e -eneral purposes or o8e%ts aforesaid,
espe%iall1 in &uman lun- re<uirements, -eneral &ealt& and p&1si%al Etness, and ot&er
relevant or related Eelds>
5. 'o en%oura-e t&e trainin- of p&1si%ians, nurses, &ealt& o=%ers, so%ial *or5ers and
medi%al and te%&ni%al personnel in t&e pra%ti%al and s%ientiE% implementation of
servi%es to lun- patients>
!. 'o assist universities and resear%& institutions in t&eir studies aout lun- diseases,
to en%oura-e advan%ed trainin- in matters of t&e lun- and related Eelds and to support
edu%ational pro-rams of value to -eneral &ealt&>
0. 'o en%oura-e t&e formation of ot&er or-aniLations on t&e national, provin%ial andFor
%it1 and lo%al levels> and to %oordinate t&eir various eDorts and a%tivities for t&e
purpose of a%&ievin- a more eDe%tive pro-rammati% approa%& on t&e %ommon
prolems relative to t&e o8e%tives enumerated &erein>
8. 'o see5 and otain assistan%e in an1 form from ot& international and lo%al
foundations and or-aniLations> and to administer -rants and funds t&at ma1 e -iven
to t&e or-aniLation>
#. 'o e(tend, *&enever possile and e(pedient, medi%al servi%es to t&e puli% and, in
-eneral, to promote and prote%t t&e &ealt& of t&e masses of our people, *&i%& &as lon-
een re%o-niLed as an e%onomi% asset and a so%ial lessin->
"0. 'o &elp prevent, relieve and alleviate t&e lun- or pulmonar1 a\i%tions and
maladies of t&e people in an1 and all *al5s of life, in%ludin- t&ose *&o are poor and
need1, all *it&out re-ard to or dis%rimination, e%ause of ra%e, %reed, %olor or politi%al
elief of t&e persons &elped> and to enale t&em to otain treatment *&en su%&
disorders o%%ur>
"". 'o parti%ipate, as %ir%umstan%es ma1 *arrant, in an1 a%tivit1 desi-ned and %arried
on to promote t&e -eneral &ealt& of t&e %ommunit1>
"2. 'o a%<uire andFor orro* funds and to o*n all funds or e<uipment, edu%ational
materials and supplies 1 pur%&ase, donation, or ot&er*ise and to dispose of and
distriute t&e same in su%& manner, and, on su%& asis as t&e Center s&all, from time
to time, deem proper and est, under t&e parti%ular %ir%umstan%es, to serve its -eneral
and non,proEt purposes and o8e%tives>lavvphil.net
"3. 'o u1, pur%&ase, a%<uire, o*n, lease, &old, sell, e(%&an-e, transfer and dispose of
properties, *&et&er real or personal, for purposes &erein mentioned> and
".. 'o do ever1t&in- ne%essar1, proper, advisale or %onvenient for t&e
a%%omplis&ment of an1 of t&e po*ers &erein set fort& and to do ever1 ot&er a%t and
t&in- in%idental t&ereto or %onne%ted t&ere*it&.
"!
Hen%e, t&e medi%al servi%es of t&e petitioner are to e rendered to t&e puli% in -eneral in an1 and all
*al5s of life in%ludin- t&ose *&o are poor and t&e need1 *it&out dis%rimination. )fter all, an1 person,
t&e ri%& as *ell as t&e poor, ma1 fall si%5 or e in8ured or *ounded and e%ome a su8e%t of %&arit1.
"0
)s a -eneral prin%iple, a %&aritale institution does not lose its %&ara%ter as su%& and its e(emption
from ta(es simpl1 e%ause it derives in%ome from pa1in- patients, *&et&er out,patient, or %onEned in
t&e &ospital, or re%eives susidies from t&e -overnment, so lon- as t&e mone1 re%eived is devoted or
used alto-et&er to t&e %&aritale o8e%t *&i%& it is intended to a%&ieve> and no mone1 inures to t&e
private eneEt of t&e persons mana-in- or operatin- t&e institution.
"8
In Con"re"ational +unday
+chool, etc. v. Board of &evie,
"#
t&e State Supreme Court of Illinois &eld, t&us6
] J)Kn institution does not lose its %&aritale %&ara%ter, and %onse<uent e(emption from
ta(ation, 1 reason of t&e fa%t t&at t&ose re%ipients of its eneEts *&o are ale to pa1 are
re<uired to do so, *&ere no proEt is made 1 t&e institution and t&e amounts so re%eived are
applied in furt&erin- its %&aritale purposes, and t&ose eneEts are refused to none on a%%ount
of inailit1 to pa1 t&erefor. '&e fundamental -round upon *&i%& all e(emptions in favor of
%&aritale institutions are ased is t&e eneEt %onferred upon t&e puli% 1 t&em, and a
%onse<uent relief, to some e(tent, of t&e urden upon t&e state to %are for and advan%e t&e
interests of its %itiLens.
20
)s aptl1 stated 1 t&e State Supreme Court of Sout& Ga5ota in Lutheran >ospital ,ssociation of +outh
6akota v. Baker6
2"
] J'K&e fa%t t&at pa1in- patients are ta5en, t&e proEts derived from attendan%e upon t&ese
patients ein- e(%lusivel1 devoted to t&e maintenan%e of t&e %&arit1, seems rat&er to en&an%e
t&e usefulness of t&e institution to t&e poor> for it is a matter of %ommon oservation amon-st
t&ose *&o &ave -one aout at all amon-st t&e suDerin- %lasses, t&at t&e deservin- poor %an
*it& di=%ult1 e persuaded to enter an as1lum of an1 5ind %onEned to t&e re%eption of o8e%ts
of %&arit1> and t&at t&eir &onest pride is mu%& less *ounded 1 ein- pla%ed in an institution in
*&i%& pa1in- patients are also re%eived. '&e fa%t of re%eivin- mone1 from some of t&e patients
does not, *e t&in5, at all impair t&e %&ara%ter of t&e %&arit1, so lon- as t&e mone1 t&us
re%eived is devoted alto-et&er to t&e %&aritale o8e%t *&i%& t&e institution is intended to
furt&er.
22
'&e mone1 re%eived 1 t&e petitioner e%omes a part of t&e trust fund and must e devoted to puli%
trust purposes and %annot e diverted to private proEt or eneEt.
23
;nder 2.G. No. "823, t&e petitioner is entitled to re%eive donations. '&e petitioner does not lose its
%&ara%ter as a %&aritale institution simpl1 e%ause t&e -ift or donation is in t&e form of susidies
-ranted 1 t&e -overnment. )s &eld 1 t&e State Supreme Court of ;ta& in 8or"ason v. County Board
of *.ualization of +alt Lake County6
2.
Se%ond, t&e ] -overnment susid1 pa1ments are provided to t&e pro8e%t. '&us, t&ose
pa1ments are li5e a -ift or donation of an1 ot&er 5ind e(%ept t&e1 %ome from t&e -overnment.
In ot& %ntermountain >ealth Careand t&e present %ase, t&e %ru( is t&e presen%e or asen%e of
material re%ipro%it1. It is entirel1 irrelevant to t&is anal1sis t&at t&e -overnment, rat&er t&an a
private enefa%tor, %&ose to ma5e up t&e deE%it resultin- from t&e e(%&an-e et*een St.
Mar5Qs 'o*er and t&e tenants 1 ma5in- a %ontriution to t&e landlord, 8ust as it *ould &ave
een irrelevant in %ntermountain >ealth Care if t&e patientsQ in%ome supplements &ad %ome
from private individuals rat&er t&an t&e -overnment.
'&erefore, t&e fa%t t&at susidiLation of part of t&e %ost of furnis&in- su%& &ousin- is 1 t&e
-overnment rat&er t&an private %&aritale %ontriutions does not di%tate t&e denial of a
%&aritale e(emption if t&e fa%ts ot&er*ise support su%& an e(emption, as t&e1 do &ere.
25
In t&is %ase, t&e petitioner addu%ed sustantial eviden%e t&at it spent its in%ome, in%ludin- t&e
susidies from t&e -overnment for "##" and "##2 for its patients and for t&e operation of t&e &ospital.
It even in%urred a net loss in "##" and "##2 from its operations.
4ven as *e End t&at t&e petitioner is a %&aritale institution, *e &old, anent t&e se%ond issue, t&at
t&ose portions of its real propert1 t&at are leased to private entities are not e(empt from real propert1
ta(es as t&ese are not a%tuall1, dire%tl1 and e(%lusivel1 used for %&aritale purposes.
'&e settled rule in t&is 8urisdi%tion is t&at la*s -rantin- e(emption from ta( are %onstrued strictissimi
9uris a-ainst t&e ta(pa1er and lierall1 in favor of t&e ta(in- po*er. 'a(ation is t&e rule and e(emption
is t&e e(%eption. '&e eDe%t of an e(emption is e<uivalent to an appropriation. Hen%e, a %laim for
e(emption from ta( pa1ments must e %learl1 s&o*n and ased on lan-ua-e in t&e la* too plain to e
mista5en.
2!
)s &eld in +alvation ,rmy v. >oehn6
20
)n intention on t&e part of t&e le-islature to -rant an e(emption from t&e ta(in- po*er of t&e
state *ill never e implied from lan-ua-e *&i%& *ill admit of an1 ot&er reasonale
%onstru%tion. Su%& an intention must e e(pressed in %lear and unmista5ale terms, or must
appear 1 ne%essar1 impli%ation from t&e lan-ua-e used, for it is a *ell settled prin%iple t&at,
*&en a spe%ial privile-e or e(emption is %laimed under a statute, %&arter or a%t of
in%orporation, it is to e %onstrued stri%tl1 a-ainst t&e propert1 o*ner and in favor of t&e
puli%. '&is prin%iple applies *it& pe%uliar for%e to a %laim of e(emption from ta(ation . ]
28
Se%tion 2 of 2residential Ge%ree No. "823, relied upon 1 t&e petitioner, spe%iE%all1 provides t&at t&e
petitioner s&all en8o1 t&e ta( e(emptions and privile-es6
S4C. 2. ')X 4X4M2'IANS )NG 2RIIIB4G4S. /ein- a non,proEt, non,sto%5 %orporation or-aniLed
primaril1 to &elp %omat t&e &i-& in%iden%e of lun- and pulmonar1 diseases in t&e 2&ilippines,
all donations, %ontriutions, endo*ments and e<uipment and supplies to e imported 1
aut&oriLed entities or persons and 1 t&e /oard of 'rustees of t&e Bun- Center of t&e
2&ilippines, In%., for t&e a%tual use and eneEt of t&e Bun- Center, s&all e e(empt from
in%ome and -ift ta(es, t&e same furt&er dedu%tile in full for t&e purpose of determinin- t&e
ma(imum dedu%tile amount under Se%tion 30, para-rap& 9&:, of t&e National Internal
Revenue Code, as amended.
'&e Bun- Center of t&e 2&ilippines s&all e e(empt from t&e pa1ment of ta(es, %&ar-es and
fees imposed 1 t&e Government or an1 politi%al sudivision or instrumentalit1 t&ereof *it&
respe%t to e<uipment pur%&ases made 1, or for t&e Bun- Center.
2#
It is plain as da1 t&at under t&e de%ree, t&e petitioner does not en8o1 an1 propert1 ta( e(emption
privile-es for its real properties as *ell as t&e uildin- %onstru%ted t&ereon. If t&e intentions *ere
ot&er*ise, t&e same s&ould &ave een amon- t&e enumeration of ta( e(empt privile-es under Se%tion
26
It is a settled rule of statutor1 %onstru%tion t&at t&e e(press mention of one person, t&in-, or
%onse<uen%e implies t&e e(%lusion of all ot&ers. '&e rule is e(pressed in t&e familiar
ma(im, e!pressio unius est e!clusio alterius.
'&e rule of e!pressio unius est e!clusio alterius is formulated in a numer of *a1s. Ane
variation of t&e rule is t&e prin%iple t&at *&at is e(pressed puts an end to t&at *&i%& is
implied. *!pressium facit cessare tacitum. '&us, *&ere a statute, 1 its terms, is e(pressl1
limited to %ertain matters, it ma1 not, 1 interpretation or %onstru%tion, e e(tended to ot&er
matters.
...
'&e rule of e!pressio unius est e!clusio alterius and its variations are %anons of restri%tive
interpretation. '&e1 are ased on t&e rules of lo-i% and t&e natural *or5in-s of t&e &uman
mind. '&e1 are predi%ated upon oneQs o*n voluntar1 a%t and not upon t&at of ot&ers. '&e1
pro%eed from t&e premise t&at t&e le-islature *ould not &ave made spe%iEed enumeration in a
statute &ad t&e intention een not to restri%t its meanin- and %onEne its terms to t&ose
e(pressl1 mentioned.
30
'&e e(emption must not e so enlar-ed 1 %onstru%tion sin%e t&e reasonale presumption is t&at t&e
State &as -ranted in e(press terms all it intended to -rant at all, and t&at unless t&e privile-e is limited
to t&e ver1 terms of t&e statute t&e favor *ould e intended e1ond *&at *as meant.
3"
Se%tion 2893:, )rti%le II of t&e "#80 2&ilippine Constitution provides, t&us6
93: C&aritale institutions, %&ur%&es and parsona-es or %onvents appurtenant t&ereto,
mos<ues, non,proEt %emeteries, and all lands, uildin-s, and
improvements, a%tuall1, dire%tl1 and e(%lusivel1 used for reli-ious, %&aritale or edu%ational
purposes s&all e e(empt from ta(ation.
32
'&e ta( e(emption under t&is %onstitutional provision %overs property ta(es onl1.
33
)s C&ief Musti%e
Hilario G. Gavide, Mr., t&en a memer of t&e "#8! Constitutional Commission, e(plained6 @. . . *&at is
e(empted is not t&e institution itself . . .> t&ose e(empted from real estate ta(es are lands, uildin-s
and improvements a%tuall1, dire%tl1 and e(%lusivel1 used for reli-ious, %&aritale or edu%ational
purposes.@
3.
Conse<uentl1, t&e %onstitutional provision is implemented 1 Se%tion 23.9: of Repuli% )%t No. 0"!0
9ot&er*ise 5no*n as t&e Bo%al Government Code of "##": as follo*s6
S4C'IAN 23.. *!emptions from &eal 'roperty 7a!. O '&e follo*in- are e(empted from pa1ment
of t&e real propert1 ta(6
...
9: C&aritale institutions, %&ur%&es, parsona-es or %onvents appurtenant t&ereto,
mos<ues, non,proEt or reli-ious %emeteries and all lands, uildin-s, and
improvements a%tuall1, dire%tl1, ande(%lusivel1 used for reli-ious, %&aritale or
edu%ational purposes.
35
$e note t&at under t&e "#35 Constitution, @... all lands, uildin-s, and improvements used Se(%lusivel1Q
for ] %&aritale ] purposes s&all e e(empt from ta(ation.@
3!
Ho*ever, under t&e "#03 and t&e
present Constitutions, for @lands, uildin-s, and improvements@ of t&e %&aritale institution to e
%onsidered e(empt, t&e same s&ould not onl1 e @e(%lusivel1@ used for %&aritale purposes> it is
re<uired t&at su%& propert1 e used @a%tuall1@ and @dire%tl1@ for su%& purposes.
30
In li-&t of t&e fore-oin- sustantial %&an-es in t&e Constitution, t&e petitioner %annot rel1 on our rulin-
in >errera v. Buezon City Board of ,ssessment ,ppeals *&i%& *as promul-ated on Septemer 30,
"#!" efore t&e "#03 and "#80 Constitutions too5 eDe%t.
38
)s t&is Court &eld in 'rovince of ,bra v.
>ernando6
3#
] ;nder t&e "#35 Constitution6 @Cemeteries, %&ur%&es, and parsona-es or %onvents
appurtenant t&ereto, and all lands, uildin-s, and improvements used e(%lusivel1 for reli-ious,
%&aritale, or edu%ational purposes s&all e e(empt from ta(ation.@ '&e present Constitution
added @%&aritale institutions, mos<ues, and non,proEt %emeteries@ and re<uired t&at for t&e
e(emption of @lands, uildin-s, and improvements,@ t&e1 s&ould not onl1 e @e(%lusivel1@ ut
also @a%tuall1@ and @dire%tl1@ used for reli-ious or %&aritale purposes. '&e Constitution is
*orded diDerentl1. '&e %&an-e s&ould not e i-nored. It must e dul1 ta5en into %onsideration.
Relian%e on past de%isions *ould &ave su=%ed *ere t&e *ords @a%tuall1@ as *ell as @dire%tl1@
not added. '&ere must e proof t&erefore of t&e actual and direct use of t&e lands, uildin-s,
and improvements for reli-ious or %&aritale purposes to e e(empt from ta(ation. ]
;nder t&e "#03 and "#80 Constitutions and Rep. )%t No. 0"!0 in order to e entitled to t&e e(emption,
t&e petitioner is urdened to prove, 1 %lear and une<uivo%al proof, t&at 9a: it is a %&aritale
institution> and 9: its real properties are A%T*ALL., 0IR(%TL. and (,%L*'IV(L. used for %&aritale
purposes. @4(%lusive@ is deEned as possessed and en8o1ed to t&e e(%lusion of ot&ers> dearred from
parti%ipation or en8o1ment> and @e(%lusivel1@ is deEned, @in a manner to e(%lude> as en8o1in- a
privile-e e(%lusivel1.@
.0
If real propert1 is used for one or more %ommer%ial purposes, it is not
e(%lusivel1 used for t&e e(empted purposes ut is su8e%t to ta(ation.
."
'&e *ords @dominant use@ or
@prin%ipal use@ %annot e sustituted for t&e *ords @used e(%lusivel1@ *it&out doin- violen%e to t&e
Constitutions and t&e la*.
.2
Solel1 is s1non1mous *it& e(%lusivel1.
.3
$&at is meant 1 a%tual, dire%t and e(%lusive use of t&e propert1 for %&aritale purposes is t&e dire%t
and immediate and a%tual appli%ation of t&e propert1 itself to t&e purposes for *&i%& t&e %&aritale
institution is or-aniLed. It is not t&e use of t&e in%ome from t&e real propert1 t&at is determinative of
*&et&er t&e propert1 is used for ta(,e(empt purposes.
..
'&e petitioner failed to dis%&ar-e its urden to prove t&at t&e entiret1 of its real propert1 is a%tuall1,
dire%tl1 and e(%lusivel1 used for %&aritale purposes. $&ile portions of t&e &ospital are used for t&e
treatment of patients and t&e dispensation of medi%al servi%es to t&em, *&et&er pa1in- or non,pa1in-,
ot&er portions t&ereof are ein- leased to private individuals for t&eir %lini%s and a %anteen. 3urt&er, a
portion of t&e land is ein- leased to a private individual for &er usiness enterprise under t&e
usiness name @4llipti%al Ar%&ids and Garden Center.@ Indeed, t&e petitionerQs eviden%e s&o*s t&at it
%olle%ted 2","3!,.83..5 as rentals in "##" and 2",!0#,###.28 for "##2 from t&e said lessees.
)%%ordin-l1, *e &old t&at t&e portions of t&e land leased to private entities as *ell as t&ose parts of
t&e &ospital leased to private individuals are not e(empt from su%& ta(es.
.5
An t&e ot&er &and, t&e
portions of t&e land o%%upied 1 t&e &ospital and portions of t&e &ospital used for its patients, *&et&er
pa1in- or non,pa1in-, are e(empt from real propert1 ta(es.
IN LIG+T &) ALL T+( )&R(G&ING, t&e petition is PARTIALL. GRANT(0. '&e respondent ZueLon
Cit1 )ssessor is &ere1 0IR(%T(0 to determine, after due &earin-, t&e pre%ise portions of t&e land
and t&e area t&ereof *&i%& are leased to private persons, and to %ompute t&e real propert1 ta(es due
t&ereon as provided for 1 la*.
'& &R0(R(0.
G.R. No. #9#$# 'epteA7er 2:, 2$2
%&!!I''I&N(R &) INT(RNAL R(V(N*(, 24'I'IAN4R,
vs.
'T. L*=(M' !(0I%AL %(NT(R, IN%., R4S2ANG4N'.
( , , , , , , , , , , , , , , , , , , , , , , , (
G.R. No. #9#:$
'T. L*=(M' !(0I%AL %(NT(R, IN%., 24'I'IAN4R,
vs.
%&!!I''I&N(R &) INT(RNAL R(V(N*(, R4S2ANG4N'.
G 4 C I S I A N
%ARPI&, J.:
'&e Case
'&ese are %onsolidated
"
petitions for revie* on %ertiorari under Rule .5 of t&e Rules of Court assailin-
t&e Ge%ision of "# Novemer 20"0 of t&e Court of 'a( )ppeals 9C'): 4n /an% and its Resolution
2
of "
Mar%& 20"" in C') Case No. !0.!. '&is Court resolves t&is %ase on a pure <uestion of la*, *&i%&
involves t&e interpretation of Se%tion 209/: vis,^,vis Se%tion 3094: and 9G: of t&e National Internal
Revenue Code of t&e 2&ilippines 9NIRC:, on t&e in%ome ta( treatment of proprietar1 non,proEt
&ospitals.
'&e 3a%ts
St. Bu5e+s Medi%al Center, In%. 9St. Bu5e+s: is a &ospital or-aniLed as a non,sto%5 and non,proEt
%orporation. ;nder its arti%les of in%orporation, amon- its %orporate purposes are6
9a: 'o estalis&, e<uip, operate and maintain a non,sto%5, non,proEt C&ristian, enevolent,
%&aritale and s%ientiE% &ospital *&i%& s&all -ive %urative, re&ailitative and spiritual %are to
t&e si%5, diseased and disaled persons> provided t&at purel1 medi%al and sur-i%al servi%es
s&all e performed 1 dul1 li%ensed p&1si%ians and sur-eons *&o ma1 e freel1 and
individuall1 %ontra%ted 1 patients>
9: 'o provide a %areer of &ealt& s%ien%e edu%ation and provide medi%al servi%es to t&e
%ommunit1 t&rou-& or-aniLed %lini%s in su%& spe%ialties as t&e fa%ilities and resour%es of t&e
%orporation ma5e possile>
9%: 'o %arr1 on edu%ational a%tivities related to t&e maintenan%e and promotion of &ealt& as
*ell as provide fa%ilities for s%ientiE% and medi%al resear%&es *&i%&, in t&e opinion of t&e /oard
of 'rustees, ma1 e 8ustiEed 1 t&e fa%ilities, personnel, funds, or ot&er re<uirements t&at are
availale>
9d: 'o %ooperate *it& or-aniLed medi%al so%ieties, a-en%ies of ot& -overnment and private
se%tor> estalis& rules and re-ulations %onsistent *it& t&e &i-&est professional et&i%s>
( ( ( (
3
An "! Ge%emer 2002, t&e /ureau of Internal Revenue 9/IR: assessed St. Bu5e+s deE%ien%1 ta(es
amountin- to20!,0!3,""!.0! for "##8, %omprised of deE%ien%1 in%ome ta(, value,added ta(,
*it&&oldin- ta( on %ompensation and e(panded *it&&oldin- ta(. '&e /IR redu%ed t&e amount
to 2!3,#35,35".50 durin- trial in t&e 3irst Givision of t&e C').
.
An ". Manuar1 2003, St. Bu5e+s Eled an administrative protest *it& t&e /IR a-ainst t&e deE%ien%1 ta(
assessments. '&e /IR did not a%t on t&e protest *it&in t&e "80,da1 period under Se%tion 228 of t&e
NIRC. '&us, St. Bu5e+s appealed to t&e C').
'&e /IR ar-ued efore t&e C') t&at Se%tion 209/: of t&e NIRC, *&i%& imposes a "07 preferential ta(
rate on t&e in%ome of proprietar1 non,proEt &ospitals, s&ould e appli%ale to St. Bu5e+s. )%%ordin- to
t&e /IR, Se%tion 209/:, introdu%ed in "##0, @is a ne* provision intended to amend t&e e(emption on
non,proEt &ospitals t&at *ere previousl1 %ate-oriLed as non,sto%5, non,proEt %orporations under
Se%tion 2! of t&e "##0 'a( Code ( ( (.@
5
It is a spe%iE% provision *&i%& prevails over t&e -eneral
e(emption on in%ome ta( -ranted under Se%tion 3094: and 9G: for non,sto%5, non,proEt %&aritale
institutions and %ivi% or-aniLations promotin- so%ial *elfare.
!
'&e /IR %laimed t&at St. Bu5e+s *as a%tuall1 operatin- for proEt in "##8 e%ause onl1 "37 of its
revenues %ame from %&aritale purposes. Moreover, t&e &ospital+s oard of trustees, o=%ers and
emplo1ees dire%tl1 eneEt from its proEts and assets. St. Bu5e+s &ad total revenues of 2",030,3!0,#!5
or appro(imatel1 2".03 illion from patient servi%es in "##8.
0
St. Bu5e+s %ontended t&at t&e /IR s&ould not %onsider its total revenues, e%ause its free servi%es to
patients *as22"8,"80,.#8 or !5.207 of its "##8 operatin- in%ome 9i.e., total revenues less operatin-
e(penses: of233.,!.2,!"5.
8
St. Bu5e+s also %laimed t&at its in%ome does not inure to t&e eneEt of an1
individual.
St. Bu5e+s maintained t&at it is a non,sto%5 and non,proEt institution for %&aritale and so%ial *elfare
purposes under Se%tion 3094: and 9G: of t&e NIRC. It ar-ued t&at t&e ma5in- of proEt per se does not
destro1 its in%ome ta( e(emption.
'&e petition of t&e /IR efore t&is Court in G.R. No. "#5#0# reiterates its ar-uments efore t&e C')
t&at Se%tion 209/: applies to St. Bu5e+s. '&e petition raises t&e sole issue of *&et&er t&e ena%tment of
Se%tion 209/: ta5es proprietar1 non,proEt &ospitals out of t&e in%ome ta( e(emption under Se%tion 30
of t&e NIRC and instead, imposes a preferential rate of "07 on t&eir ta(ale in%ome. '&e /IR pra1s
t&at St. Bu5e+s e ordered to pa1250,!5#,#8"."# as deE%ien%1 in%ome and e(panded *it&&oldin- ta(
for "##8 *it& sur%&ar-es and interest for late pa1ment.
'&e petition of St. Bu5e+s in G.R. No. "#5#!0 raises fa%tual matters on t&e treatment and *it&&oldin- of
a part of its in%ome,
#
as *ell as t&e pa1ment of sur%&ar-e and delin<uen%1 interest. '&ere is no
-round for t&is Court to underta5e su%& a fa%tual revie*. ;nder t&e Constitution
"0
and t&e Rules of
Court,
""
t&is Court+s revie* po*er is -enerall1 limited to @%ases in *&i%& onl1 an error or <uestion of
la* is involved.@
"2
'&is Court %annot depart from t&is limitation if a part1 fails to invo5e a re%o-niLed
e(%eption.
'&e Rulin- of t&e Court of 'a( )ppeals
'&e C') 4n /an% Ge%ision on "# Novemer 20"0 a=rmed in toto t&e C') 3irst Givision Ge%ision dated
23 3eruar1 200# *&i%& &eld6
$H4R43AR4, t&e )mended 2etition for Revie* J1 St. Bu5e+sK is &ere1 2)R'I)BBN GR)N'4G.
)%%ordin-l1, t&e "##8 deE%ien%1 I)' assessment issued 1 respondent a-ainst petitioner in t&e
amount of 2""0,000.00 is &ere1 C)NC4BB4G and $I'HGR)$N. Ho*ever, petitioner is &ere1
ARG4R4G to 2)N deE%ien%1 in%ome ta( and deE%ien%1 e(panded *it&&oldin- ta( for t&e ta(ale 1ear
"##8 in t&e respe%tive amounts of 25,.#!,#!3.5. and2008,.0!.8. or in t&e sum of 2!,205,300.38, ( (
(.
( ( ( (
In addition, petitioner is &ere1 ARG4R4G to 2)N t*ent1 per%ent 9207: delin<uen%1 interest on t&e
total amount of 2!,205,300.38 %ounted from A%toer "5, 2003 until full pa1ment t&ereof, pursuant to
Se%tion 2.#9C:93: of t&e NIRC of "##0.
SA ARG4R4G.
"3
'&e deE%ien%1 in%ome ta( of 25,.#!,#!3.5., ordered 1 t&e C') 4n /an% to e paid, arose from t&e
failure of St. Bu5e+s to prove t&at part of its in%ome in "##8 9de%lared as @At&er In%ome,Net@:
".
%ame
from %&aritale a%tivities. '&e C') %an%elled t&e remainder of t&e 2!3,""3,#52.0# deE%ien%1 assessed
1 t&e /IR ased on t&e "07 ta( rate under Se%tion 209/: of t&e NIRC, *&i%& t&e C') 4n /an% &eld *as
not appli%ale to St. Bu5e+s.
"5
'&e C') ruled t&at St. Bu5e+s is a non,sto%5 and non,proEt %&aritale institution %overed 1 Se%tion
3094: and 9G: of t&e NIRC. '&is rulin- *ould e(empt all in%ome derived 1 St. Bu5e+s from servi%es to
its patients, *&et&er pa1in- or non,pa1in-. '&e C') reiterated its earlier de%ision in St. Bu5e+s Medi%al
Center, In%. v. Commissioner of Internal Revenue,
"!
*&i%& e(amined t&e primar1 purposes of St. Bu5e+s
under its arti%les of in%orporation and various do%uments
"0
identif1in- St. Bu5e+s as a %&aritale
institution.
'&e C') adopted t&e test in Hospital de San Muan de Gios, In%. v. 2asa1 Cit1,
"8
*&i%& states t&at @a
%&aritale institution does not lose its %&aritale %&ara%ter and its %onse<uent e(emption from ta(ation
merel1 e%ause re%ipients of its eneEts *&o are ale to pa1 are re<uired to do so, *&ere funds
derived in t&is manner are devoted to t&e %&aritale purposes of t&e institution ( ( (.@
"#
'&e
-eneration of in%ome from pa1in- patients does not per se destro1 t&e %&aritale nature of St. Bu5e+s.
Hospital de San Muan %ited Mesus Sa%red Heart Colle-e v. Colle%tor of Internal Revenue,
20
*&i%& ruled
t&at t&e old NIRC 9Common*ealt& )%t No. .!!, as amended:
2"
@positivel1 e(empts from ta(ation t&ose
%orporations or asso%iations *&i%&, ot&er*ise, *ould e su8e%t t&ereto, e%ause of t&e e(isten%e of (
( ( net in%ome.@
22
'&e NIRC of "##0 sustantiall1 reprodu%es t&e provision on %&aritale institutions of
t&e old NIRC. '&us, in re8e%tin- t&e ar-ument t&at ta( e(emption is lost *&enever t&ere is net in%ome,
t&e Court in Mesus Sa%red Heart Colle-e de%lared6 @J4Kver1 responsile or-aniLation must e run to at
least insure its e(isten%e, 1 operatin- *it&in t&e limits of its o*n resour%es, espe%iall1 its re-ular
in%ome. In ot&er *ords, it s&ould al*a1s strive, *&enever possile, to &ave a surplus.@
23
'&e C') &eld t&at Se%tion 209/: of t&e present NIRC does not appl1 to St. Bu5e+s.
2.
'&e C') e(plained
t&at to appl1 t&e "07 preferential rate, Se%tion 209/: re<uires a &ospital to e @non,proEt.@ An t&e
ot&er &and, Con-ress spe%iE%all1 used t&e *ord @non,sto%5@ to <ualif1 a %&aritale @%orporation or
asso%iation@ in Se%tion 3094: of t&e NIRC. )%%ordin- to t&e C'), t&is is uni<ue in t&e present ta( %ode,
indi%atin- an intent to e(empt t&is t1pe of %&aritale or-aniLation from in%ome ta(. Se%tion 209/: does
not re<uire t&at t&e &ospital e @non,sto%5.@ '&e C') stated, @it is %lear t&at non,sto%5, non,proEt
&ospitals operated e(%lusivel1 for %&aritale purpose are e(empt from in%ome ta( on in%ome re%eived
1 t&em as su%&, appl1in- t&e provision of Se%tion 3094: of t&e NIRC of "##0, as amended.@
25
'&e Issue
'&e sole issue is *&et&er St. Bu5e+s is liale for deE%ien%1 in%ome ta( in "##8 under Se%tion 209/: of
t&e NIRC, *&i%& imposes a preferential ta( rate of "07 on t&e in%ome of proprietar1 non,proEt
&ospitals.
'&e Rulin- of t&e Court
St. Bu5e+s 2etition in G.R. No. "#5#!0
)s a preliminar1 matter, t&is Court denies t&e petition of St. Bu5e+s in G.R. No. "#5#!0 e%ause t&e
petition raises fa%tual issues. ;nder Se%tion ", Rule .5 of t&e Rules of Court, @JtK&e petition s&all raise
onl1 <uestions of la* *&i%& must e distin%tl1 set fort&.@ St. Bu5e+s %ites MartineL v. Court of
)ppeals
2!
*&i%& permits fa%tual revie* @*&en t&e Court of )ppeals Jin t&is %ase, t&e C')K manifestl1
overloo5ed %ertain relevant fa%ts not disputed 1 t&e parties and *&i%&, if properl1 %onsidered, *ould
8ustif1 a diDerent %on%lusion.@
20
'&is Court does not see &o* t&e C') overloo5ed relevant fa%ts. St. Bu5e+s itself stated t&at t&e C')
@disre-arded t&e testimon1 of JitsK *itness, Romeo /. Mar1, ein- alle-edl1 self,servin-, to s&o* t&e
nature of t&e +At&er In%ome,Net+ ( ( (.@
28
'&is is not a %ase of overloo5in- or failin- to %onsider
relevant eviden%e. '&e C') oviousl1 %onsidered t&e eviden%e and %on%luded t&at it is self,servin-.
'&e C') de%lared t&at it &as @-one t&rou-& t&e re%ords of t&is %ase and found no ot&er eviden%e aside
from t&e self,servin- a=davit e(e%uted 1 Jt&eK *itnesses Jof St. Bu5e+sK ( ( (.@
2#
'&e deE%ien%1 ta( on @At&er In%ome,Net@ stands. '&us, St. Bu5e+s is liale to pa1 t&e 257 sur%&ar-e
under Se%tion 2.89):93: of t&e NIRC. '&ere is @JfKailure to pa1 t&e deE%ien%1 ta( *it&in t&e time
pres%ried for its pa1ment in t&e noti%e of assessmentJ.K@
30
St. Bu5e+s is also liale to pa1 207
delin<uen%1 interest under Se%tion 2.#9C:93: of t&e NIRC.
3"
)s e(plained 1 t&e C') 4n /an%, t&e
amount of 2!,205,300.38 in t&e dispositive portion of t&e C') 3irst Givision Ge%ision in%ludes onl1
deE%ien%1 interest under Se%tion 2.#9): and 9/: of t&e NIRC and not delin<uen%1 interest.
32
'&e Main Issue
'&e issue raised 1 t&e /IR is a purel1 le-al one. It involves t&e eDe%t of t&e introdu%tion of Se%tion
209/: in t&e NIRC of "##0 vis,^,vis Se%tion 3094: and 9G: on t&e in%ome ta( e(emption of %&aritale
and so%ial *elfare institutions. '&e "07 in%ome ta( rate under Se%tion 209/: spe%iE%all1 pertains to
proprietar1 edu%ational institutions and proprietar1 non,proEt &ospitals. '&e /IR ar-ues t&at Con-ress
intended to remove t&e e(emption t&at non,proEt &ospitals previousl1 en8o1ed under Se%tion 2094: of
t&e NIRC of "#00, *&i%& is no* sustantiall1 reprodu%ed in Se%tion 3094: of t&e NIRC of
"##0.
33
Se%tion 209/: of t&e present NIRC provides6
S4C. 20. Rates of In%ome 'a( on Gomesti% Corporations. ,
( ( ( (
9/: 2roprietar1 4du%ational Institutions and Hospitals. , 2roprietar1 edu%ational institutions and
&ospitals *&i%& are non,proEt s&all pa1 a ta( of ten per%ent 9"07: on t&eir ta(ale in%ome e(%ept
t&ose %overed 1 Suse%tion 9G: &ereof6 2rovided, '&at if t&e -ross in%ome from unrelated trade,
usiness or ot&er a%tivit1 e(%eeds Eft1 per%ent 9507: of t&e total -ross in%ome derived 1 su%&
edu%ational institutions or &ospitals from all sour%es, t&e ta( pres%ried in Suse%tion 9): &ereof s&all
e imposed on t&e entire ta(ale in%ome. 3or purposes of t&is Suse%tion, t&e term +unrelated trade,
usiness or ot&er a%tivit1+ means an1 trade, usiness or ot&er a%tivit1, t&e %ondu%t of *&i%& is not
sustantiall1 related to t&e e(er%ise or performan%e 1 su%& edu%ational institution or &ospital of its
primar1 purpose or fun%tion. ) +proprietar1 edu%ational institution+ is an1 private s%&ool maintained
and administered 1 private individuals or -roups *it& an issued permit to operate from t&e
Gepartment of 4du%ation, Culture and Sports 9G4CS:, or t&e Commission on Hi-&er 4du%ation 9CH4G:,
or t&e 'e%&ni%al 4du%ation and S5ills Gevelopment )ut&orit1 9'4SG):, as t&e %ase ma1 e, in
a%%ordan%e *it& e(istin- la*s and re-ulations. 94mp&asis supplied:
St. Bu5e+s %laims ta( e(emption under Se%tion 3094: and 9G: of t&e NIRC. It %ontends t&at it is a
%&aritale institution and an or-aniLation promotin- so%ial *elfare. '&e ar-uments of St. Bu5e+s fo%us
on t&e *ordin- of Se%tion 3094: e(emptin- from in%ome ta( non,sto%5, non,proEt %&aritale
institutions.
3.
St. Bu5e+s asserts t&at t&e le-islative intent of introdu%in- Se%tion 209/: *as onl1 to
remove t&e e(emption for @proprietar1 non,proEt@ &ospitals.
35
'&e relevant provisions of Se%tion 30
state6
S4C. 30. 4(emptions from 'a( on Corporations. , '&e follo*in- or-aniLations s&all not e ta(ed under
t&is 'itle in respe%t to in%ome re%eived 1 t&em as su%&6
( ( ( (
94: Nonsto%5 %orporation or asso%iation or-aniLed and operated e(%lusivel1 for reli-ious, %&aritale,
s%ientiE%, at&leti%, or %ultural purposes, or for t&e re&ailitation of veterans, no part of its net in%ome
or asset s&all elon- to or inure to t&e eneEt of an1 memer, or-aniLer, o=%er or an1 spe%iE% person>
( ( ( (
9G: Civi% lea-ue or or-aniLation not or-aniLed for proEt ut operated e(%lusivel1 for t&e promotion of
so%ial *elfare>
( ( ( (
Not*it&standin- t&e provisions in t&e pre%edin- para-rap&s, t&e in%ome of *&atever 5ind and
%&ara%ter of t&e fore-oin- or-aniLations from an1 of t&eir properties, real or personal, or from an1 of
t&eir a%tivities %ondu%ted for proEt re-ardless of t&e disposition made of su%& in%ome, s&all e su8e%t
to ta( imposed under t&is Code. 94mp&asis supplied:
'&e Court partl1 -rants t&e petition of t&e /IR ut on a diDerent -round. $e &old t&at Se%tion 209/: of
t&e NIRC does not remove t&e in%ome ta( e(emption of proprietar1 non,proEt &ospitals under Se%tion
3094: and 9G:. Se%tion 209/: on one &and, and Se%tion 3094: and 9G: on t&e ot&er &and, %an e
%onstrued to-et&er *it&out t&e removal of su%& ta( e(emption. '&e eDe%t of t&e introdu%tion of
Se%tion 209/: is to su8e%t t&e ta(ale in%ome of t*o spe%iE% institutions, namel1, proprietar1 non,
proEt edu%ational institutions
3!
and proprietar1 non,proEt &ospitals, amon- t&e institutions %overed 1
Se%tion 30, to t&e "07 preferential rate under Se%tion 209/: instead of t&e ordinar1 307 %orporate
rate under t&e last para-rap& of Se%tion 30 in relation to Se%tion 209):9":.
Se%tion 209/: of t&e NIRC imposes a "07 preferential ta( rate on t&e in%ome of 9": proprietar1 non,
proEt edu%ational institutions and 92: proprietar1 non,proEt &ospitals. '&e onl1 <ualiE%ations for
&ospitals are t&at t&e1 must e proprietar1 and non,proEt. @2roprietar1@ means private, follo*in- t&e
deEnition of a @proprietar1 edu%ational institution@ as @an1 private s%&ool maintained and administered
1 private individuals or -roups@ *it& a -overnment permit. @Non,proEt@ means no net in%ome or asset
a%%rues to or eneEts an1 memer or spe%iE% person, *it& all t&e net in%ome or asset devoted to t&e
institution+s purposes and all its a%tivities %ondu%ted not for proEt.
@Non,proEt@ does not ne%essaril1 mean @%&aritale.@ In Colle%tor of Internal Revenue v. Clu 3ilipino
In%. de Ceu,
30
t&is Court %onsidered as non,proEt a sports %lu or-aniLed for re%reation and
entertainment of its sto%5&olders and memers. '&e %lu *as primaril1 funded 1 memers&ip fees
and dues. If it &ad proEts, t&e1 *ere used for over&ead e(penses and improvin- its -olf %ourse.
38
'&e
%lu *as non,proEt e%ause of its purpose and t&ere *as no eviden%e t&at it *as en-a-ed in a proEt,
ma5in- enterprise.
3#
'&e sports %lu in Clu 3ilipino In%. de Ceu ma1 e non,proEt, ut it *as not %&aritale. '&e Court
deEned @%&arit1@ in Bun- Center of t&e 2&ilippines v. ZueLon Cit1
.0
as @a -ift, to e applied
%onsistentl1 *it& e(istin- la*s, for t&e eneEt of an indeEnite numer of persons, eit&er 1 rin-in-
t&eir minds and &earts under t&e inTuen%e of edu%ation or reli-ion, 1 assistin- t&em to estalis&
t&emselves in life or J1K ot&er*ise lessenin- t&e urden of -overnment.@
."
) non,proEt %lu for t&e
eneEt of its memers fails t&is test. )n or-aniLation ma1 e %onsidered as non,proEt if it does not
distriute an1 part of its in%ome to sto%5&olders or memers. Ho*ever, despite its ein- a ta( e(empt
institution, an1 in%ome su%& institution earns from a%tivities %ondu%ted for proEt is ta(ale, as
e(pressl1 provided in t&e last para-rap& of Se%tion 30.
'o e a %&aritale institution, &o*ever, an or-aniLation must meet t&e sustantive test of %&arit1 in
Bun- Center. '&e issue in Bun- Center %on%erns e(emption from real propert1 ta( and not in%ome ta(.
Ho*ever, it provides for t&e test of %&arit1 in our 8urisdi%tion. C&arit1 is essentiall1 a -ift to an
indeEnite numer of persons *&i%& lessens t&e urden of -overnment. In ot&er *ords, %&aritale
institutions provide for free -oods and servi%es to t&e puli% *&i%& *ould ot&er*ise fall on t&e
s&oulders of -overnment. '&us, as a matter of e=%ien%1, t&e -overnment for-oes ta(es *&i%& s&ould
&ave een spent to address puli% needs, e%ause %ertain private entities alread1 assume a part of t&e
urden. '&is is t&e rationale for t&e ta( e(emption of %&aritale institutions. '&e loss of ta(es 1 t&e
-overnment is %ompensated 1 its relief from doin- puli% *or5s *&i%& *ould &ave een funded 1
appropriations from t&e 'reasur1.
.2
C&aritale institutions, &o*ever, are not ipso fa%to entitled to a ta( e(emption. '&e re<uirements for a
ta( e(emption are spe%iEed 1 t&e la* -rantin- it. '&e po*er of Con-ress to ta( implies t&e po*er to
e(empt from ta(. Con-ress %an %reate ta( e(emptions, su8e%t to t&e %onstitutional provision t&at @JnKo
la* -rantin- an1 ta( e(emption s&all e passed *it&out t&e %on%urren%e of a ma8orit1 of all t&e
Memers of Con-ress.@
.3
'&e re<uirements for a ta( e(emption are stri%tl1 %onstrued a-ainst t&e
ta(pa1er
..
e%ause an e(emption restri%ts t&e %olle%tion of ta(es ne%essar1 for t&e e(isten%e of t&e
-overnment.
'&e Court in Bun- Center de%lared t&at t&e Bun- Center of t&e 2&ilippines is a %&aritale institution for
t&e purpose of e(emption from real propert1 ta(es. '&is rulin- uses t&e same premise as Hospital de
San Muan
.5
and Mesus Sa%red Heart Colle-e
.!
*&i%& sa1s t&at re%eivin- in%ome from pa1in- patients
does not destro1 t&e %&aritale nature of a &ospital.
)s a -eneral prin%iple, a %&aritale institution does not lose its %&ara%ter as su%& and its e(emption
from ta(es simpl1 e%ause it derives in%ome from pa1in- patients, *&et&er out,patient, or %onEned in
t&e &ospital, or re%eives susidies from t&e -overnment, so lon- as t&e mone1 re%eived is devoted or
used alto-et&er to t&e %&aritale o8e%t *&i%& it is intended to a%&ieve> and no mone1 inures to t&e
private eneEt of t&e persons mana-in- or operatin- t&e institution.
.0
3or real propert1 ta(es, t&e in%idental -eneration of in%ome is permissile e%ause t&e test of
e(emption is t&e use of t&e propert1. '&e Constitution provides t&at @J%K&aritale institutions, %&ur%&es
and persona-es or %onvents appurtenant t&ereto, mos<ues, non,proEt %emeteries, and all lands,
uildin-s, and improvements, a%tuall1, dire%tl1, and e(%lusivel1 used for reli-ious, %&aritale, or
edu%ational purposes s&all e e(empt from ta(ation.@
.8
'&e test of e(emption is not stri%tl1 a
re<uirement on t&e intrinsi% nature or %&ara%ter of t&e institution. '&e test re<uires t&at t&e institution
use t&e propert1 in a %ertain *a1, i.e. for a %&aritale purpose. '&us, t&e Court &eld t&at t&e Bun-
Center of t&e 2&ilippines did not lose its %&aritale %&ara%ter *&en it used a portion of its lot for
%ommer%ial purposes. '&e eDe%t of failin- to meet t&e use re<uirement is simpl1 to remove from t&e
ta( e(emption t&at portion of t&e propert1 not devoted to %&arit1.
'&e Constitution e(empts %&aritale institutions onl1 from real propert1 ta(es. In t&e NIRC, Con-ress
de%ided to e(tend t&e e(emption to in%ome ta(es. Ho*ever, t&e *a1 Con-ress %rafted Se%tion 3094: of
t&e NIRC is materiall1 diDerent from Se%tion 2893:, )rti%le II of t&e Constitution. Se%tion 3094: of t&e
NIRC deEnes t&e %orporation or asso%iation t&at is e(empt from in%ome ta(. An t&e ot&er &and, Se%tion
2893:, )rti%le II of t&e Constitution does not deEne a %&aritale institution, ut re<uires t&at t&e
institution @a%tuall1, dire%tl1 and e(%lusivel1@ use t&e propert1 for a %&aritale purpose.
Se%tion 3094: of t&e NIRC provides t&at a %&aritale institution must e6
9": ) non,sto%5 %orporation or asso%iation>
92: Ar-aniLed e(%lusivel1 for %&aritale purposes>
93: Aperated e(%lusivel1 for %&aritale purposes> and
9.: No part of its net in%ome or asset s&all elon- to or inure to t&e eneEt of an1 memer,
or-aniLer, o=%er or an1 spe%iE% person.
'&us, ot& t&e or-aniLation and operations of t&e %&aritale institution must e devoted @e(%lusivel1@
for %&aritale purposes. '&e or-aniLation of t&e institution refers to its %orporate form, as s&o*n 1 its
arti%les of in%orporation, 1,la*s and ot&er %onstitutive do%uments. Se%tion 3094: of t&e NIRC
spe%iE%all1 re<uires t&at t&e %orporation or asso%iation e non,sto%5, *&i%& is deEned 1 t&e
Corporation Code as @one *&ere no part of its in%ome is distriutale as dividends to its memers,
trustees, or o=%ers@
.#
and t&at an1 proEt @otainJedK as an in%ident to its operations s&all, *&enever
ne%essar1 or proper, e used for t&e furt&eran%e of t&e purpose or purposes for *&i%& t&e %orporation
*as or-aniLed.@
50
Ho*ever, under Bun- Center, an1 proEt 1 a %&aritale institution must not onl1 e
plo*ed a%5 @*&enever ne%essar1 or proper,@ ut must e @devoted or used alto-et&er to t&e
%&aritale o8e%t *&i%& it is intended to a%&ieve.@
5"
'&e operations of t&e %&aritale institution -enerall1 refer to its re-ular a%tivities. Se%tion 3094: of t&e
NIRC re<uires t&at t&ese operations e e(%lusive to %&arit1. '&ere is also a spe%iE% re<uirement t&at
@no part of Jt&eK net in%ome or asset s&all elon- to or inure to t&e eneEt of an1 memer, or-aniLer,
o=%er or an1 spe%iE% person.@ '&e use of lands, uildin-s and improvements of t&e institution is ut a
part of its operations.
'&ere is no dispute t&at St. Bu5e+s is or-aniLed as a non,sto%5 and non,proEt %&aritale institution.
Ho*ever, t&is does not automati%all1 e(empt St. Bu5e+s from pa1in- ta(es. '&is onl1 refers to t&e
or-aniLation of St. Bu5e+s. 4ven if St. Bu5e+s meets t&e test of %&arit1, a %&aritale institution is not ipso
fa%to ta( e(empt. 'o e e(empt from real propert1 ta(es, Se%tion 2893:, )rti%le II of t&e Constitution
re<uires t&at a %&aritale institution use t&e propert1 @a%tuall1, dire%tl1 and e(%lusivel1@ for %&aritale
purposes. 'o e e(empt from in%ome ta(es, Se%tion 3094: of t&e NIRC re<uires t&at a %&aritale
institution must e @or-aniLed and operated e(%lusivel1@ for %&aritale purposes. Bi5e*ise, to e
e(empt from in%ome ta(es, Se%tion 309G: of t&e NIRC re<uires t&at t&e institution e @operated
e(%lusivel1@ for so%ial *elfare.
Ho*ever, t&e last para-rap& of Se%tion 30 of t&e NIRC <ualiEes t&e *ords @or-aniLed and operated
e(%lusivel1@ 1 providin- t&at6
Not*it&standin- t&e provisions in t&e pre%edin- para-rap&s, t&e in%ome of *&atever 5ind and
%&ara%ter of t&e fore-oin- or-aniLations from an1 of t&eir properties, real or personal, or from an1 of
t&eir a%tivities %ondu%ted for proEt re-ardless of t&e disposition made of su%& in%ome, s&all e su8e%t
to ta( imposed under t&is Code. 94mp&asis supplied:
In s&ort, t&e last para-rap& of Se%tion 30 provides t&at if a ta( e(empt %&aritale institution %ondu%ts
@an1@ a%tivit1 for proEt, su%& a%tivit1 is not ta( e(empt even as its not,for,proEt a%tivities remain ta(
e(empt. '&is para-rap& <ualiEes t&e re<uirements in Se%tion 3094: t&at t&e @JnKon,sto%5 %orporation or
asso%iation Jmust eK or-aniLed and operated e(%lusivel1 for ( ( ( %&aritale ( ( ( purposes ( ( (.@ It
li5e*ise <ualiEes t&e re<uirement in Se%tion 309G: t&at t&e %ivi% or-aniLation must e @operated
e(%lusivel1@ for t&e promotion of so%ial *elfare.
'&us, even if t&e %&aritale institution must e @or-aniLed and operated e(%lusivel1@ for %&aritale
purposes, it is nevert&eless allo*ed to en-a-e in @a%tivities %ondu%ted for proEt@ *it&out losin- its ta(
e(empt status for its not,for,proEt a%tivities. '&e onl1 %onse<uen%e is t&at t&e @in%ome of *&atever
5ind and %&ara%ter@ of a %&aritale institution @from an1 of its a%tivities %ondu%ted for proEt, re-ardless
of t&e disposition made of su%& in%ome, s&all e su8e%t to ta(.@ 2rior to t&e introdu%tion of Se%tion
209/:, t&e ta( rate on su%& in%ome from for,proEt a%tivities *as t&e ordinar1 %orporate rate under
Se%tion 209):. $it& t&e introdu%tion of Se%tion 209/:, t&e ta( rate is no* "07.
In "##8, St. Bu5e+s &ad total revenues of 2",030,3!0,#!5 from servi%es to pa1in- patients. It %annot e
disputed t&at a &ospital *&i%& re%eives appro(imatel1 2".03 illion from pa1in- patients is not an
institution @operated e(%lusivel1@ for %&aritale purposes. Clearl1, revenues from pa1in- patients are
in%ome re%eived from @a%tivities %ondu%ted for proEt.@
52
Indeed, St. Bu5e+s admits t&at it derived
proEts from its pa1in- patients. St. Bu5e+s de%lared 2",030,3!0,#!5 as @Revenues from Servi%es to
2atients@ in %ontrast to its @3ree Servi%es@ e(penditure of22"8,"80,.#8. In its Comment in G.R. No.
"#5#0#, St. Bu5e+s s&o*ed t&e follo*in- @%al%ulation@ to support its %laim t&at !5.207 of its @in%ome
after e(penses *as allo%ated to free or %&aritale servi%es@ in "##8.
53
R(V(N*(' )R&! '(RVI%(' T&
PATI(NT'
2",030,3!0,#!
5.00
&P(RATING (,P(N'('
2rofessional %are of patients 2",0"!,!08,3#
..00
)dministrative 280,3"#,33..0
0
House&old and 2ropert1 #",0#0,!22.00
2",3#5,025,35
0.00
INCAM4 3RAM A24R)'IANS 233.,!.2,!"5.
00
"007
)ree 'ervi3es -
2<,<7,4#<.
$$
-
:9.2$
V
INCAM4 3RAM A24R)'IANS, Net of 3R44
S4RIIC4S
2""!,.55,""0.
00
3..80
7
A'H4R INCAM4 "0,.82,30..00
(,%('' &) R(V(N*(' &V(R
(,P(N'('
PSS,#S7,42
.$$

In Bun- Center, t&is Court de%lared6
@JeK(%lusive@ is deEned as possessed and en8o1ed to t&e e(%lusion of ot&ers> dearred from
parti%ipation or en8o1ment> and @e(%lusivel1@ is deEned, @in a manner to e(%lude> as en8o1in- a
privile-e e(%lusivel1.@ ( ( ( '&e *ords @dominant use@ or @prin%ipal use@ %annot e sustituted for t&e
*ords @used e(%lusivel1@ *it&out doin- violen%e to t&e Constitution and t&e la*. Solel1 is s1non1mous
*it& e(%lusivel1.
5.
'&e Court %annot e(pand t&e meanin- of t&e *ords @operated e(%lusivel1@ *it&out violatin- t&e NIRC.
Servi%es to pa1in- patients are a%tivities %ondu%ted for proEt. '&e1 %annot e %onsidered an1 ot&er
*a1. '&ere is a @purpose to ma5e proEt over and aove t&e %ost@ of servi%es.
55
'&e 2".03 illion total
revenues from pa1in- patients is not even in%idental to St. Bu5e+s %&arit1 e(penditure of 22"8,"80,.#8
for non,pa1in- patients.
St. Bu5e+s %laims t&at its %&arit1 e(penditure of 22"8,"80,.#8 is !5.207 of its operatin- in%ome in
"##8. Ho*ever, if a part of t&e remainin- 3..807 of t&e operatin- in%ome is reinvested in propert1,
e<uipment or fa%ilities used for servi%es to pa1in- and non,pa1in- patients, t&en it %annot e said t&at
t&e in%ome is @devoted or used alto-et&er to t&e %&aritale o8e%t *&i%& it is intended to
a%&ieve.@
5!
'&e in%ome is plo*ed a%5 to t&e %orporation not entirel1 for %&aritale purposes, ut for
proEt as *ell. In an1 %ase, t&e last para-rap& of Se%tion 30 of t&e NIRC e(pressl1 <ualiEes t&at in%ome
from a%tivities for proEt is ta(ale @re-ardless of t&e disposition made of su%& in%ome.@
Mesus Sa%red Heart Colle-e de%lared t&at t&ere is no o=%ial le-islative re%ord e(plainin- t&e p&rase
@an1 a%tivit1 %ondu%ted for proEt.@ Ho*ever, it <uoted a deposition of Senator Mariano Mesus Cuen%o,
*&o *as a memer of t&e Committee of Conferen%e for t&e Senate, *&i%& introdu%ed t&e p&rase @or
from an1 a%tivit1 %ondu%ted for proEt.@
2. Cuando &a &alado de la ;niversidad de Santo 'om_s <ue tiene un &ospital, no %ree Id. <ue es una
a%tividad esen%ial di%&o &ospital para el fun%ionamiento del %ole-io de medi%ina de di%&a universidadU
( ( ( (
R. Si el &ospital se limita a re%iir enformos pores, mi %ontesta%i`n seria aErmativa> pero
%onsiderando <ue el &ospital tiene %uartos de pa-o, 1 a los mismos -eneralmente van enfermos de
uena posi%i`n so%ial e%on`mi%a, lo <ue se pa-a por estos enfermos dee estar su8eto a +in%ome ta(+,
1 es una de las raLones <ue &emos tenido para insertar las palaras o frase +or from an1 a%tivit1
%ondu%ted for proEt.+
50
'&e <uestion *as *&et&er &avin- a &ospital is essential to an edu%ational institution li5e t&e Colle-e of
Medi%ine of t&e ;niversit1 of Santo 'omas. Senator Cuen%o ans*ered t&at if t&e &ospital &as paid
rooms -enerall1 o%%upied 1 people of -ood e%onomi% standin-, t&en it s&ould e su8e%t to in%ome
ta(. He said t&at t&is *as one of t&e reasons Con-ress inserted t&e p&rase @or an1 a%tivit1 %ondu%ted
for proEt.@
'&e <uestion in Mesus Sa%red Heart Colle-e involves an edu%ational institution.
58
Ho*ever, it is
appli%ale to %&aritale institutions e%ause Senator Cuen%o+s response s&o*s an intent to fo%us on
t&e a%tivities of %&aritale institutions. )%tivities for proEt s&ould not es%ape t&e rea%& of ta(ation.
/ein- a non,sto%5 and non,proEt %orporation does not, 1 t&is reason alone, %ompletel1 e(empt an
institution from ta(. )n institution %annot use its %orporate form to prevent its proEtale a%tivities from
ein- ta(ed.
'&e Court Ends t&at St. Bu5e+s is a %orporation t&at is not @operated e(%lusivel1@ for %&aritale or so%ial
*elfare purposes insofar as its revenues from pa1in- patients are %on%erned. '&is rulin- is ased not
onl1 on a stri%t interpretation of a provision -rantin- ta( e(emption, ut also on t&e %lear and plain
te(t of Se%tion 3094: and 9G:. Se%tion 3094: and 9G: of t&e NIRC re<uires t&at an institution e
@operated e(%lusivel1@ for %&aritale or so%ial *elfare purposes to e %ompletel1 e(empt from in%ome
ta(. )n institution under Se%tion 3094: or 9G: does not lose its ta( e(emption if it earns in%ome from its
for,proEt a%tivities. Su%& in%ome from for,proEt a%tivities, under t&e last para-rap& of Se%tion 30, is
merel1 su8e%t to in%ome ta(, previousl1 at t&e ordinar1 %orporate rate ut no* at t&e preferential "07
rate pursuant to Se%tion 209/:.
) ta( e(emption is eDe%tivel1 a so%ial susid1 -ranted 1 t&e State e%ause an e(empt institution is
spared from s&arin- in t&e e(penses of -overnment and 1et eneEts from t&em. 'a( e(emptions for
%&aritale institutions s&ould t&erefore e limited to institutions eneE%ial to t&e puli% and t&ose
*&i%& improve so%ial *elfare. ) proEt,ma5in- entit1 s&ould not e allo*ed to e(ploit t&is susid1 to t&e
detriment of t&e -overnment and ot&er ta(pa1ers.CEphiC
St. Bu5e+s fails to meet t&e re<uirements under Se%tion 3094: and 9G: of t&e NIRC to e %ompletel1 ta(
e(empt from all its in%ome. Ho*ever, it remains a proprietar1 non,proEt &ospital under Se%tion 209/:
of t&e NIRC as lon- as it does not distriute an1 of its proEts to its memers and su%& proEts are
reinvested pursuant to its %orporate purposes. St. Bu5e+s, as a proprietar1 non,proEt &ospital, is
entitled to t&e preferential ta( rate of "07 on its net in%ome from its for,proEt a%tivities.
St. Bu5e+s is t&erefore liale for deE%ien%1 in%ome ta( in "##8 under Se%tion 209/: of t&e NIRC.
Ho*ever, St. Bu5e+s &as -ood reasons to rel1 on t&e letter dated ! Mune "##0 1 t&e /IR, *&i%& opined
t&at St. Bu5e+s is @a %orporation for purel1 %&aritale and so%ial *elfare purposes@5# and t&us e(empt
from in%ome ta(.
!0
In Mi%&ael M. B&uillier, In%. v. Commissioner of Internal Revenue,
!"
t&e Court said
t&at @-ood fait& and &onest elief t&at one is not su8e%t to ta( on t&e asis of previous interpretation
of -overnment a-en%ies tas5ed to implement t&e ta( la*, are su=%ient 8ustiE%ation to delete t&e
imposition of sur%&ar-es and interest.@
!2
$H4R43AR4, t&e petition of t&e Commissioner of Internal Revenue in G.R. No. "#5#0# is 2)R'BN
GR)N'4G. '&e Ge%ision of t&e Court of 'a( )ppeals 4n /an% dated "# Novemer 20"0 and its
Resolution dated " Mar%& 20"" in C') Case No. !0.! are MAGI3I4G. St. Bu5e+s Medi%al Center, In%. is
ARG4R4G 'A 2)N t&e deE%ien%1 in%ome ta( in "##8 ased on t&e "07 preferential in%ome ta( rate
under Se%tion 209/: of t&e National Internal Revenue Code. Ho*ever, it is not liale for sur%&ar-es and
interest on su%& deE%ien%1 in%ome ta( under Se%tions 2.8 and 2.# of t&e National Internal Revenue
Code. )ll ot&er parts of t&e Ge%ision and Resolution of t&e Court of 'a( )ppeals are )33IRM4G.
'&e petition of St. Bu5e+s Medi%al Center, In%. in G.R. No. "#5#!0 is G4NI4G for violatin- Se%tion ", Rule
.5 of t&e Rules of Court.
SA ARG4R4G.
,VII. Re4iBious )reedoA
G.R. No. 9499 &3to7er S$, ##9
ART*R& !. T&L(NTIN&, petitioner,
vs.
T+( '(%R(TAR. &) )INAN%( and T+( %&!!I''I&N(R &) INT(RNAL R(V(N*(, respondents.
G.R. No. 9929 &3to7er S$, ##9
;*AN T. 0AVI0, petitioner,
vs.
T(&)I'T& T. G*ING&NA, ;R., as (1e3utive 'e3retar"K R&/(RT& 0( &%A!P&, as 'e3retar" o2
)inan3eK LIPA.PA. VIN>&N'-%+AT&, as %oAAissioner o2 Interna4 RevenueK and t6eir
A*T+&RI>(0 AG(NT' &R R(PR('(NTATIV(', respondents.
G.R. No. 994S &3to7er S$, ##9
RA*L '. R&%& and t6e INT(GRAT(0 /AR &) T+( P+ILIPPIN(', petitioners,
vs.
T+( '(%R(TAR. &) T+( 0(PART!(NT &) )INAN%(K T+( %&!!I''I&N(R' &) T+( /*R(A*
&) INT(RNAL R(V(N*( AN0 /*R(A* &) %*'T&!', respondents.
G.R. No. 9944 &3to7er S$, ##9
P+ILIPPIN( PR('' IN'TIT*T(, IN%.K (GP P*/LI'+ING %&., IN%.K =A!A+ALAN P*/LI'+ING
%&RP&RATI&NK P+ILIPPIN( ;&*RNALI'T', IN%.K ;&'( L. PAVIAK and &)(LIA L.
0I!ALANTA, petitioners,
vs.
+&N. LIPA.PA. V. %+AT&, in 6er 3apa3it" as %oAAissioner o2 Interna4 RevenueK +&N.
T(&)I'T& T. G*ING&NA, ;R., in 6is 3apa3it" as (1e3utive 'e3retar"K and +&N. R&/(RT& /.
0( &%A!P&, in 6is 3apa3it" as 'e3retar" o2 )inan3e, respondents.
G.R. No. 9794 &3to7er S$, ##9
%+A!/(R &) R(AL ('TAT( AN0 /*IL0(R' A''&%IATI&N', IN%., 5%R(/A8, petitioner,
vs.
T+( %&!!I''I&N(R &) INT(RNAL R(V(N*(, respondent.
G.R. No. 97< &3to7er S$, ##9
=IL&'/A.AN, IN%., ;&VIT& R. 'AL&NGA, %IRIL& A. RIG&', (R!( %A!/A, (!ILI& %.
%AP*L&NG, ;R., ;&'( T. AP&L&, (P+RAI! T(N0(R&, )(RNAN0& 'ANTIAG&, ;&'( A/%(0(,
%+RI'TIN( TAN, )(LIP( L. G&>&N, RA)A(L G. )(RNAN0&, RA&*L V. VI%T&RIN&, ;&'(
%*NANAN, @*INTIN '. 0&R&!AL, !&V(!(NT &) ATT&RN(.' )&R /R&T+(R+&&0,
INT(GRIT. AN0 NATI&NALI'!, IN%. 5?!A/INI?8, )R((0&! )R&! 0(/T %&ALITI&N, IN%., and
P+ILIPPIN( /I/L( '&%I(T., IN%. and PIG/(RT& TAUA0A,petitioners,
vs.
T+( (,(%*TIV( '(%R(TAR., T+( '(%R(TAR. &) )INAN%(, T+( %&!!I''I&N(R &)
INT(RNAL R(V(N*( and T+( %&!!I''I&N(R &) %*'T&!', respondents.
G.R. No. 9<92 &3to7er S$, ##9
P+ILIPPIN( AIRLIN(', IN%., petitioner,
vs.
T+( '(%R(TAR. &) )INAN%( and %&!!I''I&N(R &) INT(RNAL R(V(N*(, respondents.
G.R. No. 9<7S &3to7er S$, ##9
%&&P(RATIV( *NI&N &) T+( P+ILIPPIN(', petitioner,
vs.
+&N. LIPA.PA. V. %+AT&, in 6er 3apa3it" as t6e %oAAissioner o2 Interna4 Revenue, +&N.
T(&)I'T& T. G*ING&NA, ;R., in 6is 3apa3it" as (1e3utive 'e3retar", and +&N. R&/(RT& /.
0( &%A!P&, in 6is 3apa3it" as 'e3retar" o2 )inan3e, respondents.
G.R. No. 9#S &3to7er S$, ##9
P+ILIPPIN( (0*%ATI&NAL P*/LI'+(R' A''&%IATI&N, IN%. and A''&%IATI&N &) P+ILIPPIN(
/&&= '(LL(R', petitioners,
vs.
+&N. R&/(RT& /. 0( &%A!P&, as t6e 'e3retar" o2 )inan3eK +&N. LIPA.PA. V. %+AT&, as
t6e %oAAissioner o2 Interna4 RevenueK and +&N. G*ILL(R!& PARA.N&, ;R., in 6is 3apa3it"
as t6e %oAAissioner o2 %ustoAs, respondents.
R 4 S A B ; ' I A N

!(N0&>A, J.:
'&ese are motions see5in- re%onsideration of our de%ision dismissin- t&e petitions Eled in t&ese %ases
for t&e de%laration of un%onstitutionalit1 of R.). No. 00"!, ot&er*ise 5no*n as t&e 4(panded Ialue,
)dded 'a( Ba*. '&e motions, of *&i%& t&ere are "0 in all, &ave een Eled 1 t&e several petitioners in
t&ese %ases, *it& t&e e(%eption of t&e 2&ilippine 4du%ational 2ulis&ers )sso%iation, In%. and t&e
)sso%iation of 2&ilippine /oo5sellers, petitioners in G.R. No. ""5#3".
'&e Soli%itor General, representin- t&e respondents, Eled a %onsolidated %omment, to *&i%& t&e
2&ilippine )irlines, In%., petitioner in G.R. No. ""5852, and t&e 2&ilippine 2ress Institute, In%., petitioner
in G.R. No. ""55.., and Muan '. Gavid, petitioner in G.R. No. ""5525, ea%& Eled a repl1. In turn t&e
Soli%itor General Eled on Mune ", "##5 a re8oinder to t&e 22I+s repl1.
An Mune 20, "##5 t&e matter *as sumitted for resolution.
I. 'oer of the +enate to propose amendments to revenue bills. Some of t&e petitioners 9'olentino,
Rilosa1an, In%., 2&ilippine )irlines 92)B:, Ro%o, and C&amer of Real 4state and /uilders )sso%iation
9CR4/):: reiterate previous %laims made 1 t&em t&at R.). No. 00"! did not @ori-inate e(%lusivel1@ in
t&e House of Representatives as re<uired 1 )rt. II, a2. of t&e Constitution. )lt&ou-& t&e1 admit t&at
H. No. """#0 *as Eled in t&e House of Representatives *&ere it passed t&ree readin-s and t&at
after*ard it *as sent to t&e Senate *&ere after Erst readin- it *as referred to t&e Senate $a1s and
Means Committee, t&e1 %omplain t&at t&e Senate did not pass it on se%ond and t&ird readin-s. Instead
*&at t&e Senate did *as to pass its o*n version 9S. No. "!30: *&i%& it approved on Ma1 2., "##..
2etitioner 'olentino adds t&at *&at t&e Senate %ommittee s&ould &ave done *as to amend H. No.
"""#0 1 stri5in- out t&e te(t of t&e ill and sustitutin- it *it& t&e te(t of S. No. "!30. '&at *a1, it is
said, @t&e ill remains a House ill and t&e Senate version 8ust e%omes t&e te(t 9only the te!t: of t&e
House ill.@
'&e %ontention &as no merit.
'&e ena%tment of S. No. "!30 is not t&e onl1 instan%e in *&i%& t&e Senate proposed an amendment to
a House revenue ill 1 ena%tin- its o*n version of a revenue ill. An at least t*o o%%asions durin-
t&e *i"hth Con"ress, t&e Senate passed its o*n version of revenue ills, *&i%&, in %onsolidation *it&
House ills earlier passed, e%ame t&e enrolled ills. '&ese *ere6
R.). No. 03!# 9)N )C' 'A )M4NG 'H4 AMNI/;S INI4S'M4N'S CAG4 A3 "#80 /N 4X'4NGING 3RAM
3II4 95: N4)RS 'A '4N N4)RS 'H4 24RIAG 3AR ')X )NG G;'N 4X4M2'IAN )NG ')X CR4GI' AN
C)2I')B 4Z;I2M4N': *&i%& *as approved 1 t&e 2resident on )pril "0, "##2. '&is )%t is a%tuall1 a
%onsolidation of H. No. 3.25., *&i%& *as approved 1 t&e House on Manuar1 2#, "##2, and S. No. "#20,
*&i%& *as approved 1 t&e Senate on 3eruar1 3, "##2.
R.). No. 05.# 9)N )C' GR)N'ING ')X 4X4M2'IANS 'A $HA4I4R SH)BB GII4 R4$)RG 'A )NN
3IBI2INA )'HB4'4 $INNING ) M4G)B IN ABNM2IC G)M4S: *&i%& *as approved 1 t&e 2resident on Ma1
22, "##2. '&is )%t is a %onsolidation of H. No. 22232, *&i%& *as approved 1 t&e House of
Representatives on )u-ust 2, "#8#, and S. No. 800, *&i%& *as approved 1 t&e Senate on A%toer 2",
"##".
An t&e ot&er &and, t&e 4inth Con"ress passed revenue la*s *&i%& *ere also t&e result of t&e
%onsolidation of House and Senate ills. '&ese are t&e follo*in-, *it& indi%ations of t&e dates on *&i%&
t&e la*s *ere approved 1 t&e 2resident and dates t&e separate ills of t&e t*o %&amers of Con-ress
*ere respe%tivel1 passed6
". R.). NA. 0!.2
)N )C' INCR4)SING 'H4 24N)B'I4S 3AR ')X 4I)SIAN, )M4NGING 3AR 'HIS 2;R2AS4
'H4 24R'IN4N' S4C'IANS A3 'H4 N)'IAN)B IN'4RN)B R4I4N;4 CAG4 9Ge%emer 28,
"##2:.
House /ill No. 2"!5, A%toer 5, "##2
Senate /ill No. 32, Ge%emer 0, "##2
2. R.). NA. 0!.3
)N )C' 'A 4M2A$4R 'H4 CAMMISSIAN4R A3 IN'4RN)B R4I4N;4 'A R4Z;IR4 'H4
2)NM4N' A3 'H4 I)B;4,)GG4G ')X 4I4RN MAN'H )NG 'A )BBA$ BAC)B
GAI4RNM4N' ;NI'S 'A SH)R4 IN I)' R4I4N;4, )M4NGING 3AR 'HIS 2;R2AS4
C4R')IN S4C'IANS A3 'H4 N)'IAN)B IN'4RN)B R4I4N;4 CAG4 9Ge%emer 28, "##2:
House /ill No. "503, Septemer 3, "##2
Senate /ill No. #!8, Ge%emer 0, "##2
3. R.). NA. 0!.!
)N )C' );'HARI[ING 'H4 CAMMISSIAN4R A3 IN'4RN)B R4I4N;4 'A 2R4SCRI/4 'H4
2B)C4 3AR 2)NM4N' A3 IN'4RN)B R4I4N;4 ')X4S /N B)RG4 ')X2)N4RS, )M4NGING
3AR 'HIS 2;R2AS4 C4R')IN 2RAIISIANS A3 'H4 N)'IAN)B IN'4RN)B R4I4N;4 CAG4,
)S )M4NG4G 93eruar1 2., "##3:
House /ill No. ".00, A%toer 20, "##2
Senate /ill No. 35, Novemer "#, "##2
.. R.). NA. 0!.#
)N )C' R4Z;IRING 'H4 GAI4RNM4N' AR )NN A3 I'S 2ABI'IC)B S;/GIIISIANS,
INS'R;M4N')BI'I4S AR )G4NCI4S INCB;GING GAI4RNM4N',A$N4G AR CAN'RABB4G
CAR2AR)'IANS 9GACCS: 'A G4G;C' )NG $I'HHABG 'H4 I)B;4,)GG4G ')X G;4 )'
'H4 R)'4 A3 'HR44 24RC4N' 937: AN GRASS 2)NM4N' 3AR 'H4 2;RCH)S4 A3
GAAGS )NG SIX 24RC4N' 9!7: AN GRASS R4C4I2'S 3AR S4RIIC4S R4NG4R4G /N
CAN'R)C'ARS 9)pril !, "##3:
House /ill No. 52!0, Manuar1 2!, "##3
Senate /ill No. "".", Mar%& 30, "##3
5. R.). NA. 0!5!
)N )C' R4Z;IRING GAI4RNM4N',A$N4G AR CAN'RABB4G CAR2AR)'IANS 'A
G4CB)R4 GIIIG4NGS ;NG4R C4R')IN CANGI'IANS 'A 'H4 N)'IAN)B GAI4RNM4N',
)NG 3AR A'H4R 2;R2AS4S 9Novemer #, "##3:
House /ill No. ""02., Novemer 3, "##3
Senate /ill No. ""!8, Novemer 3, "##3
!. R.). NA. 0!!0
)N )C' R)'IAN)BI[ING 3;R'H4R 'H4 S'R;C';R4 )NG )GMINIS'R)'IAN A3 'H4
GAC;M4N')RN S')M2 ')X, )M4NGING 3AR 'H4 2;R2AS4 C4R')IN 2RAIISIANS A3
'H4 N)'IAN)B IN'4RN)B R4I4N;4 CAG4, )S )M4NG4G, )BBAC)'ING 3;NGS 3AR
S24CI3IC 2RAGR)MS, )NG 3AR A'H4R 2;R2AS4S 9Ge%emer 23, "##3:
House /ill No. 008#, Ma1 3", "##3
Senate /ill No. "330, Novemer "8, "##3
0. R.). NA. 00"0
)N )C' IM2ASING ) ')X AN 'H4 S)B4, /)R'4R AR 4XCH)NG4 A3 SH)R4S A3 S'ACR
BIS'4G )NG 'R)G4G 'HRA;GH 'H4 BAC)B S'ACR 4XCH)NG4 AR 'HRA;GH INI'I)B
2;/BIC A334RING, )M4NGING 3AR 'H4 2;R2AS4 'H4 N)'IAN)B IN'4RN)B R4I4N;4
CAG4, )S )M4NG4G, /N INS4R'ING ) N4$ S4C'IAN )NG R424)BING C4R')IN
S;/S4C'IANS 'H4R4A3 9Ma1 5, "##.:
House /ill No. #"80, Novemer 3, "##3
Senate /ill No. ""20, Mar%& 23, "##.
'&us, t&e ena%tment of S. No. "!30 is not t&e onl1 instan%e in *&i%& t&e Senate, in t&e e(er%ise of its
po*er to propose amendments to ills re<uired to ori-inate in t&e House, passed its o*n version of a
House revenue measure. It is note*ort&1 t&at, in t&e parti%ular %ase of S. No. "!30, petitioners
'olentino and Ro%o, as memers of t&e Senate, voted to approve it on se%ond and t&ird readin-s.
An t&e ot&er &and, amendment 1 sustitution, in t&e manner ur-ed 1 petitioner 'olentino, %on%erns
a mere matter of form. 2etitioner &as not s&o*n *&at sustantial diDeren%e it *ould ma5e if, as t&e
Senate a%tuall1 did in t&is %ase, a separate ill li5e S. No. "!30 is instead ena%ted as a sustitute
measure, @takin" into Consideration . . . >.B. CCCFG.@
Indeed, so far as pertinent, t&e Rules of t&e Senate only provide6
R;B4 XXIX
)M4NGM4N'S
((( ((( (((
a!8. Not more t&an one amendment to t&e ori-inal amendment s&all e %onsidered.
4o amendment by substitution shall be entertained unless the te!t thereof is
submitted in ritin".
)n1 of said amendments ma1 e *it&dra*n efore a vote is ta5en t&ereon.
a!#. No amendment *&i%& see5s t&e in%lusion of a le-islative provision forei-n to t&e
su8e%t matter of a ill 9rider: s&all e entertained.
((( ((( (((
a00,). ) ill or resolution s&all not e amended 1 sustitutin- it *it& anot&er *&i%&
%overs a su8e%t distin%t from t&at proposed in t&e ori-inal ill or resolution. 9emp&asis
added:.
Nor is t&ere merit in petitioners+ %ontention t&at, *it& re-ard to revenue ills, t&e 2&ilippine Senate
possesses less po*er t&an t&e ;.S. Senate e%ause of te(tual diDeren%es et*een %onstitutional
provisions -ivin- t&em t&e po*er to propose or %on%ur *it& amendments.
)rt. I, a0, %l. " of t&e ;.S. Constitution reads6
)ll /ills for raisin- Revenue s&all ori-inate in t&e House of Representatives> ut t&e
Senate ma1 propose or %on%ur *it& amendments as on ot&er /ills.
)rt. II, a2. of our Constitution reads6
)ll appropriation, revenue or tariD ills, ills aut&oriLin- in%rease of t&e puli% det,
ills of lo%al appli%ation, and private ills s&all ori-inate e(%lusivel1 in t&e House of
Representatives, ut t&e Senate ma1 propose or %on%ur *it& amendments.
'&e addition of t&e *ord @e(%lusivel1@ in t&e 2&ilippine Constitution and t&e de%ision to drop t&e p&rase
@as on ot&er /ills@ in t&e )meri%an version, a%%ordin- to petitioners, s&o*s t&e intention of t&e framers
of our Constitution to restri%t t&e Senate+s po*er to propose amendments to revenue ills. 2etitioner
'olentino %ontends t&at t&e *ord @e(%lusivel1@ *as inserted to modif1 @ori-inate@ and @t&e *ords +as in
any ot&er ills+ 9sic: *ere eliminated so as to s&o* t&at t&ese ills *ere not to e li5e ot&er ills ut
must e treated as a spe%ial 5ind.@
'&e &istor1 of t&is provision does not support t&is %ontention. '&e supposed indicia of %onstitutional
intent are not&in- ut t&e reli%s of an unsu%%essful attempt to limit t&e po*er of t&e Senate. It *ill e
re%alled t&at t&e "#35 Constitution ori-inall1 provided for a uni%ameral National )sseml1. $&en it *as
de%ided in "#3# to %&an-e to a i%ameral le-islature, it e%ame ne%essar1 to provide for t&e pro%edure
for la*ma5in- 1 t&e Senate and t&e House of Representatives. '&e *or5 of proposin- amendments to
t&e Constitution *as done 1 t&e National )sseml1, a%tin- as a %onstituent asseml1, some of *&ose
memers, 8ealous of preservin- t&e )sseml1+s la*ma5in- po*ers, sou-&t to %urtail t&e po*ers of t&e
proposed Senate. )%%ordin-l1 t&e1 proposed t&e follo*in- provision6
)ll ills appropriatin- puli% funds, revenue or tariD ills, ills of lo%al appli%ation, and
private ills s&all ori-inate e(%lusivel1 in t&e )sseml1, ut t&e Senate ma1 propose or
%on%ur *it& amendments. In %ase of disapproval 1 t&e Senate of an1 su%& ills, t&e
)sseml1 ma1 repass t&e same 1 a t*o,t&irds vote of all its memers, and t&ereupon,
t&e ill so repassed s&all e deemed ena%ted and ma1 e sumitted to t&e 2resident
for %orrespondin- a%tion. In t&e event t&at t&e Senate s&ould fail to Enall1 a%t on an1
su%& ills, t&e )sseml1 ma1, after t&irt1 da1s from t&e openin- of t&e ne(t re-ular
session of t&e same le-islative term, reapprove t&e same *it& a vote of t*o,t&irds of
all t&e memers of t&e )sseml1. )nd upon su%& reapproval, t&e ill s&all e deemed
ena%ted and ma1 e sumitted to t&e 2resident for %orrespondin- a%tion.
'&e spe%ial %ommittee on t&e revision of la*s of t&e Se%ond National )sseml1 vetoed t&e proposal. It
deleted ever1t&in- after t&e Erst senten%e. )s re*ritten, t&e proposal *as approved 1 t&e National
)sseml1 and emodied in Resolution No. 38, as amended 1 Resolution No. 03. 9M. )R;4GA, RNA$
NA;R CANS'I';'IAN !5,!! 9"#50::. '&e proposed amendment *as sumitted to t&e people and
ratiEed 1 t&em in t&e ele%tions &eld on Mune "8, "#.0.
'&is is t&e &istor1 of )rt. II, a"8 92: of t&e "#35 Constitution, from *&i%& )rt. II, a2. of t&e present
Constitution *as derived. It e(plains *&1 t&e *ord @e(%lusivel1@ *as added to t&e )meri%an te(t from
*&i%& t&e framers of t&e 2&ilippine Constitution orro*ed and *&1 t&e p&rase @as on ot&er /ills@ *as
not %opied. Considerin- t&e defeat of t&e proposal, t&e po*er of t&e Senate to propose amendments
must e understood to e full, plenar1 and %omplete @as on ot&er /ills.@ '&us, e%ause revenue ills
are re<uired to ori-inate e(%lusivel1 in t&e House of Representatives, t&e Senate %annot ena%t revenue
measures of its o*n *it&out su%& ills. )fter a revenue ill is passed and sent over to it 1 t&e House,
&o*ever, t&e Senate %ertainl1 %an pass its o*n version on t&e same su8e%t matter. '&is follo*s from
t&e %oe<ualit1 of t&e t*o %&amers of Con-ress.
'&at t&is is also t&e understandin- of oo5 aut&ors of t&e s%ope of t&e Senate+s po*er to %on%ur is
%lear from t&e follo*in- %ommentaries6
'&e po*er of t&e Senate to propose or %on%ur *it& amendments is apparentl1 *it&out
restri%tion. It *ould seem t&at 1 virtue of t&is po*er, t&e Senate %an pra%ti%all1 re,
*rite a ill re<uired to %ome from t&e House and leave onl1 a tra%e of t&e ori-inal ill.
3or e(ample, a -eneral revenue ill passed 1 t&e lo*er &ouse of t&e ;nited States
Con-ress %ontained provisions for t&e imposition of an in&eritan%e ta( . '&is *as
%&an-ed 1 t&e Senate into a %orporation ta(. '&e amendin- aut&orit1 of t&e Senate
*as de%lared 1 t&e ;nited States Supreme Court to e su=%ientl1 road to enale it
to ma5e t&e alteration. J3lint v. Stone 'ra%1 Compan1, 220 ;.S. "00, 55 B. ed. 38#K.
9B. ')H)G) )NG 3. C)RR4AN, 2ABI'IC)B B)$ A3 'H4 2HIBI22IN4S 2.0 9"#!"::
'&e aove,mentioned ills are supposed to e initiated 1 t&e House of
Representatives e%ause it is more numerous in memers&ip and t&erefore also more
representative of t&e people. Moreover, its memers are presumed to e more familiar
*it& t&e needs of t&e %ountr1 in re-ard to t&e ena%tment of t&e le-islation involved.
'&e Senate is, &o*ever, allo*ed mu%& lee*a1 in t&e e(er%ise of its po*er to propose or
%on%ur *it& amendments to t&e ills initiated 1 t&e House of Representatives. '&us, in
one %ase, a ill introdu%ed in t&e ;.S. House of Representatives *as %&an-ed 1 t&e
Senate to ma5e a proposed in&eritan%e ta( a %orporation ta(. It is also a%%epted
pra%ti%e for t&e Senate to introdu%e *&at is 5no*n as an amendment 1 sustitution,
*&i%& ma1 entirel1 repla%e t&e ill initiated in t&e House of Representatives.
9I. CR;[, 2HIBI22IN4 2ABI'IC)B B)$ "..,".5 9"##3::.
In sum, *&ile )rt. II, a2. provides t&at all appropriation, revenue or tariD ills, ills aut&oriLin-
in%rease of t&e puli% det, ills of lo%al appli%ation, and private ills must @ori-inate e(%lusivel1 in t&e
House of Representatives,@ it also adds, @but the +enate may propose or concur ith amendments.@ In
t&e e(er%ise of t&is po*er, t&e Senate ma1 propose an entirel1 ne* ill as a sustitute measure. )s
petitioner 'olentino states in a &i-& s%&ool te(t, a %ommittee to *&i%& a ill is referred ma1 do an1 of
t&e follo*in-6
9": to endorse t&e ill *it&out %&an-es> 92: to ma5e %&an-es in t&e ill omittin- or
addin- se%tions or alterin- its lan-ua-e> 93: to ma5e and endorse an entirel1 ne* ill
as a sustitute, in *&i%& %ase it *ill e 5no*n as a committee bill> or 9.: to ma5e no
report at all.
9). 'AB4N'INA, 'H4 GAI4RNM4N' A3 'H4 2HIBI22IN4S 258 9"#50::
'o e(%ept from t&is pro%edure t&e amendment of ills *&i%& are re<uired to ori-inate in t&e House 1
pres%riin- t&at t&e numer of t&e House ill and its ot&er parts up to t&e ena%tin- %lause must e
preserved alt&ou-& t&e te(t of t&e Senate amendment ma1 e in%orporated in pla%e of t&e ori-inal
od1 of t&e ill is to insist on a mere te%&ni%alit1. )t an1 rate t&ere is no rule pres%riin- t&is form. S.
No. "!30, as a sustitute measure, is t&erefore as mu%& an amendment of H. No. """#0 as an1 *&i%&
t&e Senate %ould &ave made.
II. +. 4o. CHIJ a mere amendment of >. 4o. CCCFG. 2etitioners+ asi% error is t&at t&e1 assume t&at S.
No. "!30 is an independent and distinct bill. Hen%e t&eir repeated referen%es to its %ertiE%ation t&at it
*as passed 1 t&e Senate @in substitution of +.B. 4o. CCKF, takin" into consideration 2.S. Res. No. 03.
and >.B. 4o. CCCFG,@ impl1in- t&at t&ere is somet&in- sustantiall1 diDerent et*een t&e referen%e to
S. No. ""2# and t&e referen%e to H. No. """#0. 3rom t&is premise, t&e1 %on%lude t&at R.). No. 00"!
ori-inated ot& in t&e House and in t&e Senate and t&at it is t&e produ%t of t*o @&alf,a5ed ills
e%ause neit&er H. No. """#0 nor S. No. "!30 *as passed 1 ot& &ouses of Con-ress.@
In point of fa%t, in several instan%es t&e provisions of S. No. "!30, %learl1 appear to e mere
amendments of t&e %orrespondin- provisions of H. No. """#0. '&e ver1 taular %omparison of t&e
provisions of H. No. """#0 and S. No. "!30 atta%&ed as Supplement ) to t&e asi% petition of petitioner
'olentino, *&ile s&o*in- diDeren%es et*een t&e t*o ills, at t&e same time indi%ates t&at t&e
provisions of t&e Senate ill *ere pre%isel1 intended to e amendments to t&e House ill.
$it&out H. No. """#0, t&e Senate %ould not &ave ena%ted S. No. "!30. /e%ause t&e Senate ill *as a
mere amendment of t&e House ill, H. No. """#0 in its ori-inal form did not &ave to pass t&e Senate on
se%ond and t&ree readin-s. It *as enou-& t&at after it *as passed on Erst readin- it *as referred to t&e
Senate Committee on $a1s and Means. Neit&er *as it re<uired t&at S. No. "!30 e passed 1 t&e
House of Representatives efore t&e t*o ills %ould e referred to t&e Conferen%e Committee.
'&ere is le-islative pre%edent for *&at *as done in t&e %ase of H. No. """#0 and S. No. "!30. $&en
t&e House ill and Senate ill, *&i%& e%ame R.). No. ".05 9)%t pro&iitin- t&e dis%losure of an5
deposits:, *ere referred to a %onferen%e %ommittee, t&e <uestion *as raised *&et&er t&e t*o ills
%ould e t&e su8e%t of su%& %onferen%e, %onsiderin- t&at t&e ill from one &ouse &ad not een passed
1 t&e ot&er and vi%e versa. )s Con-ressman Guran put t&e <uestion6
MR. G;R)N. '&erefore, I raise t&is <uestion of order as to pro%edure6 %f a >ouse bill is
passed by the >ouse but not passed by the +enate, and a +enate bill of a similar
nature is passed in the +enate but never passed in the >ouse, can the to bills be the
sub9ect of a conference, and can a la be enacted from these to billsU I understand
t&at t&e Senate ill in t&is parti%ular instan%e does not refer to investments in
-overnment se%urities, *&ereas t&e ill in t&e House, *&i%& *as introdu%ed 1 t&e
Spea5er, %overs t*o su8e%t matters6 not onl1 investi-ation of deposits in an5s ut
also investi-ation of investments in -overnment se%urities. No*, sin%e t&e t*o ills
diDer in t&eir su8e%t matter, I elieve t&at no la* %an e ena%ted.
Rulin- on t&e point of order raised, t&e %&air 9Spea5er Mose /. Baurel, Mr.: said6
'H4 S24)R4R. '&e report of t&e %onferen%e %ommittee is in order. It is pre%isel1 in
%ases li5e t&is *&ere a %onferen%e s&ould e &ad. If t&e House ill &ad een approved
1 t&e Senate, t&ere *ould &ave een no need of a %onferen%e> ut pre%isel1 e%ause
t&e Senate passed another bill on the same sub9ect matter, t&e %onferen%e %ommittee
&ad to e %reated, and *e are no* %onsiderin- t&e report of t&at %ommittee.
92 CANG. R4C. NA. "3, Mul1 20, "#55, pp. 38.",.2 9emp&asis added::
III. 7he 'resident@s certi$cation. '&e falla%1 in t&in5in- t&at H. No. """#0 and S. No. "!30 are distin%t
and unrelated measures also a%%ounts for t&e petitioners+ 9Rilosa1an+s and 2)B+s: %ontention t&at
e%ause t&e 2resident separatel1 %ertiEed to t&e need for t&e immediate ena%tment of t&ese
measures, &is %ertiE%ation *as ineDe%tual and void. '&e %ertiE%ation &ad to e made of t&e version of
t&e same revenue ill *&i%& at the moment*as ein- %onsidered. At&er*ise, to follo* petitioners+
t&eor1, it *ould e ne%essar1 for t&e 2resident to %ertif1 as man1 ills as are presented in a &ouse of
Con-ress even t&ou-& t&e ills are merel1 versions of t&e ill &e &as alread1 %ertiEed. It is enou-& t&at
&e %ertiEes t&e ill *&i%&, at t&e time &e ma5es t&e %ertiE%ation, is under %onsideration. Sin%e on
Mar%& 22, "##. t&e Senate *as %onsiderin- S. No. "!30, it *as t&at ill *&i%& &ad to e %ertiEed. 3or
t&at matter on Mune ", "##3 t&e 2resident &ad earlier %ertiEed H. No. #2"0 for immediate ena%tment
e%ause it *as t&e one *&i%& at t&at time *as ein- %onsidered 1 t&e House. '&is ill *as later
sustituted, to-et&er *it& ot&er ills, 1 H. No. """#0.
)s to *&at 2residential %ertiE%ation %an a%%omplis&, *e &ave alread1 e(plained in t&e main de%ision
t&at t&e p&rase @e(%ept *&en t&e 2resident %ertiEes to t&e ne%essit1 of its immediate ena%tment, et%.@
in )rt. II, a2! 92: <ualiEes not onl1 t&e re<uirement t&at @printed %opies Jof a illK in its Enal form Jmust
eK distriuted to t&e memers t&ree da1s efore its passa-e@ ut also t&e re<uirement t&at efore a
ill %an e%ome a la* it must &ave passed @t&ree readin-s on separate da1s.@ '&ere is not onl1 te(tual
support for su%& %onstru%tion ut &istori%al asis as *ell.
)rt. II, a2" 92: of t&e "#35 Constitution ori-inall1 provided6
92: No ill s&all e passed 1 eit&er House unless it s&all &ave een printed and %opies
t&ereof in its Enal form furnis&ed its Memers at least t&ree %alendar da1s prior to its
passa-e, e(%ept *&en t&e 2resident s&all &ave %ertiEed to t&e ne%essit1 of its
immediate ena%tment. ;pon t&e last readin- of a ill, no amendment t&ereof s&all e
allo*ed and t&e <uestion upon its passa-e s&all e ta5en immediatel1 t&ereafter, and
t&e yeas and nays entered on t&e Mournal.
$&en t&e "#03 Constitution *as adopted, it *as provided in )rt. IIII, a"# 92:6
92: No ill s&all e%ome a la* unless it &as passed t&ree readin-s on separate da1s,
and printed %opies t&ereof in its Enal form &ave een distriuted to t&e Memers t&ree
da1s efore its passa-e, e(%ept *&en t&e 2rime Minister %ertiEes to t&e ne%essit1 of its
immediate ena%tment to meet a puli% %alamit1 or emer-en%1. ;pon t&e last readin-
of a ill, no amendment t&ereto s&all e allo*ed, and t&e vote t&ereon s&all e ta5en
immediatel1 t&ereafter, and t&e yeas and nays entered in t&e Mournal.
'&is provision of t&e "#03 do%ument, *it& sli-&t modiE%ation, *as adopted in )rt. II, a2! 92: of t&e
present Constitution, t&us6
92: No ill passed 1 eit&er House s&all e%ome a la* unless it &as passed t&ree
readin-s on separate da1s, and printed %opies t&ereof in its Enal form &ave een
distriuted to its Memers t&ree da1s efore its passa-e, e(%ept *&en t&e 2resident
%ertiEes to t&e ne%essit1 of its immediate ena%tment to meet a puli% %alamit1 or
emer-en%1. ;pon t&e last readin- of a ill, no amendment t&ereto s&all e allo*ed,
and t&e vote t&ereon s&all e ta5en immediatel1 t&ereafter, and
t&e yeasand nays entered in t&e Mournal.
'&e e(%eption is ased on t&e prudential %onsideration t&at if in all %ases t&ree readin-s on separate
da1s are re<uired and a ill &as to e printed in Enal form efore it %an e passed, t&e need for a la*
ma1 e rendered a%ademi% 1 t&e o%%urren%e of t&e ver1 emer-en%1 or puli% %alamit1 *&i%& it is
meant to address.
2etitioners furt&er %ontend t&at a @-ro*in- ud-et deE%it@ is not an emer-en%1, espe%iall1 in a %ountr1
li5e t&e 2&ilippines *&ere ud-et deE%it is a %&roni% %ondition. 4ven if t&is *ere t&e %ase, an enormous
ud-et deE%it does not ma5e t&e need for R.). No. 00"! an1 less ur-ent or t&e situation %allin- for its
ena%tment an1 less an emer-en%1.
)pparentl1, t&e memers of t&e Senate 9in%ludin- some of t&e petitioners in t&ese %ases: elieved t&at
t&ere *as an ur-ent need for %onsideration of S. No. "!30, e%ause t&e1 responded to t&e %all of t&e
2resident 1 votin- on t&e ill on se%ond and t&ird readin-s on t&e same da1. $&ile t&e 8udi%ial
department is not ound 1 t&e Senate+s a%%eptan%e of t&e 2resident+s %ertiE%ation, t&e respe%t due
%oe<ual departments of t&e -overnment in matters %ommitted to t&em 1 t&e Constitution and t&e
asen%e of a %lear s&o*in- of -rave ause of dis%retion %aution a sta1 of t&e 8udi%ial &and.
)t an1 rate, *e are satisEed t&at S. No. "!30 re%eived t&orou-& %onsideration in t&e Senate *&ere it
*as dis%ussed for si( da1s. Anl1 its distriution in advan%e in its Enal printed form *as a%tuall1
dispensed *it& 1 &oldin- t&e votin- on se%ond and t&ird readin-s on t&e same da1 9Mar%& 2., "##.:.
At&er*ise, su=%ient time et*een t&e sumission of t&e ill on 3eruar1 8, "##. on se%ond readin-
and its approval on Mar%& 2., "##. elapsed efore it *as Enall1 voted on 1 t&e Senate on t&ird
readin-.
'&e purpose for *&i%& t&ree readin-s on separate da1s is re<uired is said to e t*o,fold6 9": to inform
t&e memers of Con-ress of *&at t&e1 must vote on and 92: to -ive t&em noti%e t&at a measure is
pro-ressin- t&rou-& t&e ena%tin- pro%ess, t&us enalin- t&em and ot&ers interested in t&e measure to
prepare t&eir positions *it& referen%e to it. 9" M. G. S;'H4RB)NG, S')';'4S )NG S')';'ARN
CANS'R;C'IAN a"0.0., p. 282 9"#02::. '&ese purposes *ere sustantiall1 a%&ieved in t&e %ase of R.).
No. 00"!.
II. 'oer of Conference Committee. It is %ontended 9prin%ipall1 1 Rilosa1an, In%. and t&e Movement
of )ttorne1s for /rot&er&ood, Inte-rit1 and Nationalism, In%. 9M)/INI:: t&at in violation of t&e
%onstitutional poli%1 of full puli% dis%losure and t&e people+s ri-&t to 5no* 9)rt. II, a28 and )rt. III, a0:
t&e Conferen%e Committee met for t*o da1s in e(e%utive session *it& onl1 t&e %onferees present.
)s pointed out in our main de%ision, even in t&e ;nited States it *as %ustomar1 to &old su%& sessions
*it& onl1 t&e %onferees and t&eir staDs in attendan%e and it *as onl1 in "#05 *&en a ne* rule *as
adopted re<uirin- open sessions. ;nli5e its )meri%an %ounterpart, t&e 2&ilippine Con-ress &as not
adopted a rule pres%riin- open &earin-s for %onferen%e %ommittees.
It is nevert&eless %laimed t&at in t&e ;nited States, efore t&e adoption of t&e rule in "#05, at least
staD memers *ere present. '&ese *ere staD memers of t&e Senators and Con-ressmen, &o*ever,
*&o ma1 e presumed to e t&eir %onEdential men, not steno-rap&ers as in t&is %ase *&o on t&e last
t*o da1s of t&e %onferen%e *ere e(%luded. '&ere is no s&o*in- t&at t&e %onferees t&emselves did not
ta5e notes of t&eir pro%eedin-s so as to -ive petitioner Rilosa1an asis for %laimin- t&at even in
se%ret diplomati% ne-otiations involvin- state interests, %onferees 5eep notes of t&eir meetin-s. )ove
all, t&e puli%+s ri-&t to 5no* *as full1 served e%ause t&e Conferen%e Committee in t&is %ase
sumitted a report s&o*in- t&e %&an-es made on t&e diDerin- versions of t&e House and t&e Senate.
2etitioners %ite t&e rules of ot& &ouses *&i%& provide t&at %onferen%e %ommittee reports must %ontain
@a detailed, su=%ientl1 e(pli%it statement of t&e %&an-es in or ot&er amendments.@ '&ese %&an-es are
s&o*n in t&e ill atta%&ed to t&e Conferen%e Committee Report. '&e memers of ot& &ouses %ould
t&us as%ertain *&at %&an-es &ad een made in t&e ori-inal ills *it&out t&e need of a statement
detailin- t&e %&an-es.
'&e same <uestion no* presented *as raised *&en t&e ill *&i%& e%ame R.). No. ".00 9Band Reform
)%t of "#55: *as reported 1 t&e Conferen%e Committee. Con-ressman /en-Lon raised a point of
order. He said6
MR. /4NG[AN. M1 point of order is t&at it is out of order to %onsider t&e report of t&e
%onferen%e %ommittee re-ardin- >ouse Bill 4o. KLLG 1 reason of t&e provision of
Se%tion "", )rti%le XII, of t&e Rules of t&is House *&i%& provides spe%iE%all1 t&at t&e
%onferen%e report must e a%%ompanied 1 a detailed statement of t&e eDe%ts of t&e
amendment on t&e ill of t&e House. '&is %onferen%e %ommittee report is not
a%%ompanied 1 t&at detailed statement, Mr. Spea5er. '&erefore it is out of order to
%onsider it.
2etitioner 'olentino, t&en t&e Ma8orit1 3loor Beader, ans*ered6
MR. 'AB4N'INA. Mr. Spea5er, I s&ould 8ust li5e to sa1 a fe* *ords in %onne%tion *it&
t&e point of order raised 1 t&e -entleman from 2an-asinan.
'&ere is no <uestion aout t&e provision of t&e Rule %ited 1 t&e -entleman from
2an-asinan, ut this provision applies to those cases here only portions of the bill
have been amended. %n this case before us an entire bill is presented> therefore, it can
be easily seen from the readin" of the bill hat the provisions are. /esides, this
procedure has been an established practice.
)fter some interruption, &e %ontinued6
MR. 'AB4N'INA. )s I *as sa1in-, Mr. Spea5er, *e &ave to loo5 into t&e reason for t&e
provisions of t&e Rules, and t&e reason for t&e re<uirement in t&e provision %ited 1 t&e
-entleman from 2an-asinan is *&en t&ere are onl1 %ertain *ords or p&rases inserted in
or deleted from t&e provisions of t&e ill in%luded in t&e %onferen%e report, and *e
%annot understand *&at t&ose *ords and p&rases mean and t&eir relation to t&e ill. %n
that case, it is necessary to make a detailed statement on ho those ords and
phrases ill a<ect the bill as a hole> but hen the entire bill itself is copied verbatim
in the conference report, that is not necessary. So *&en t&e reason for t&e Rule does
not e(ist, t&e Rule does not e(ist.
92 CANG. R4C. NA. 2, p. .05!. 9emp&asis added::
Con-ressman 'olentino *as sustained 1 t&e %&air. '&e re%ord s&o*s t&at *&en t&e rulin- *as
appealed, it *as up&eld 1 viva voce and *&en a division of t&e House *as %alled, it *as sustained 1
a vote of .8 to 5. 9%d.,
p. .058:
Nor is t&ere an1 dout aout t&e po*er of a %onferen%e %ommittee to insert ne* provisions as lon- as
t&ese are -ermane to t&e su8e%t of t&e %onferen%e. )s t&is Court &eld in 'hilippine 5ud"es ,ssociation
v. 'rado, 220 SCR) 003 9"##3:, in an opinion *ritten 1 t&en Musti%e CruL, t&e 8urisdi%tion of t&e
%onferen%e %ommittee is not limited to resolvin- diDeren%es et*een t&e Senate and t&e House. It
ma1 propose an entirel1 ne* provision. $&at is important is t&at its report is suse<uentl1 approved
1 t&e respe%tive &ouses of Con-ress. '&is Court ruled t&at it *ould not entertain alle-ations t&at,
e%ause ne* provisions &ad een added 1 t&e %onferen%e %ommittee, t&ere *as t&ere1 a violation
of t&e %onstitutional in8un%tion t&at @upon t&e last readin- of a ill, no amendment t&ereto s&all e
allo*ed.@
)ppl1in- t&ese prin%iples, *e s&all decline to loo5 into t&e petitioners+ %&ar-es that an
amendment as made upon the last readin" of the bill t&at eventuall1 e%ame R.).
No. 035. and t&at copiest&ereof in its Enal form ere not distributed amon- t&e
memers of ea%& House. /ot& t&e enrolled ill and t&e le-islative 8ournals %ertif1 t&at
t&e measure *as dul1 ena%ted i.e., in a%%ordan%e *it& )rti%le II, Se%. 2! 92: of t&e
Constitution. $e are ound 1 su%& o=%ial assuran%es from a %oordinate department
of t&e -overnment, to *&i%& *e o*e, at t&e ver1 least, a e%omin- %ourtes1.
9%d. at 0"0. 9emp&asis added::
It is interestin- to note t&e follo*in- des%ription of %onferen%e %ommittees in t&e 2&ilippines in a "#0#
stud16
Conferen%e %ommittees ma1 e of t*o t1pes6 free or instru%ted. '&ese %ommittees
ma1 e -iven instru%tions 1 t&eir parent odies or t&e1 ma1 e left *it&out
instru%tions. Normall1 t&e %onferen%e %ommittees are *it&out instru%tions, and t&is is
*&1 t&e1 are often %riti%all1 referred to as @t&e little le-islatures.@ An%e ills &ave een
sent to t&em, t&e %onferees &ave almost unlimited aut&orit1 to %&an-e t&e %lauses of
t&e ills and in fa%t sometimes introdu%e ne* measures t&at *ere not in t&e ori-inal
le-islation. No minutes are 5ept, and memers+ a%tivities on %onferen%e %ommittees
are di=%ult to determine. Ane %on-ressman 5no*n for &is idealism put it t&is *a16 @I
5illed a ill on e(port in%entives for m1 interest -roup J%opraK in t&e %onferen%e
%ommittee ut I %ould not &ave done so an1*&ere else.@ '&e %onferen%e %ommittee
sumits a report to ot& &ouses, and usuall1 it is a%%epted. If t&e report is not
a%%epted, t&en t&e %ommittee is dis%&ar-ed and ne* memers are appointed.
9R. Ma%5son, Committees in t&e 2&ilippine Con-ress, in CAMMI''44S )NG
B4GISB)';R4S6 ) CAM2)R)'II4 )N)BNSIS "!3 9M. G. B44S )NG M. SH)$, eds.::.
In %itin- t&is stud1, *e pass no 8ud-ment on t&e met&ods of %onferen%e %ommittees. $e %ite it onl1 to
sa1 t&at %onferen%e %ommittees &ere are no diDerent from t&eir %ounterparts in t&e ;nited States
*&ose vast po*ers *e noted in 'hilippine 5ud"es ,ssociation v. 'rado, supra. )t all events, under )rt.
II, a"!93: ea%& &ouse &as t&e po*er @to determine t&e rules of its pro%eedin-s,@ in%ludin- t&ose of its
%ommittees. )n1 meanin-ful %&an-e in t&e met&od and pro%edures of Con-ress or its %ommittees
must t&erefore e sou-&t in t&at od1 itself.
I. 7he titles of +. 4o. CHIJ and >. 4o. CCCFG. 2)B maintains t&at R.). No. 00"! violates )rt. II, a2! 9":
of t&e Constitution *&i%& provides t&at @4ver1 ill passed 1 Con-ress s&all emra%e onl1 one su8e%t
*&i%& s&all e e(pressed in t&e title t&ereof.@ 2)B %ontends t&at t&e amendment of its fran%&ise 1 t&e
*it&dra*al of its e(emption from t&e I)' is not e(pressed in t&e title of t&e la*.
2ursuant to a"3 of 2.G. No. "5#0, 2)B pa1s a fran%&ise ta( of 27 on its -ross revenue @in lieu of all
ot&er ta(es, duties, ro1alties, re-istration, li%ense and ot&er fees and %&ar-es of an1 5ind, nature, or
des%ription, imposed, levied, estalis&ed, assessed or %olle%ted 1 an1 muni%ipal, %it1, provin%ial or
national aut&orit1 or -overnment a-en%1, no* or in t&e future.@
2)B *as e(empted from t&e pa1ment of t&e I)' alon- *it& ot&er entities 1 a"03 of t&e National
Internal Revenue Code, *&i%& provides as follo*s6
a"03. *!empt transactions. C '&e follo*in- s&all e e(empt from t&e value,added ta(6
((( ((( (((
9<: 'ransa%tions *&i%& are e(empt under spe%ial la*s or international a-reements to
*&i%& t&e 2&ilippines is a si-nator1.
R.). No. 00"! see5s to *it&dra* %ertain e(emptions, in%ludin- t&at -ranted to 2)B, 1 amendin- a"03,
as follo*s6
a"03. *!empt transactions. C '&e follo*in- s&all e e(empt from t&e value,added ta(6
((( ((( (((
9<: 'ransa%tions *&i%& are e(empt under spe%ial la*s, e(%ept t&ose -ranted under
2residential Ge%ree Nos. !!, 52#, #02, ".#", "5#0. . . .
'&e amendment of a"03 is e(pressed in t&e title of R.). No. 00"! *&i%& reads6
)N )C' R4S'R;C';RING 'H4 I)B;4,)GG4G ')X 9I)': SNS'4M, $IG4NING I'S ')X
/)S4 )NG 4NH)NCING I'S )GMINIS'R)'IAN, )NG 3AR 'H4S4 2;R2AS4S )M4NGING
)NG R424)BING 'H4 R4B4I)N' 2RAIISIANS A3 'H4 N)'IAN)B IN'4RN)B R4I4N;4
CAG4, )S )M4NG4G, )NG 3AR A'H4R 2;R2AS4S.
/1 statin- t&at R.). No. 00"! see5s to @JR4S'R;C';R4K 'H4 I)B;4,)GG4G ')X 9I)': SNS'4M J/NK
$IG4NING I'S ')X /)S4 )NG 4NH)NCING I'S )GMINIS'R)'IAN, )NG 3AR 'H4S4 2;R2AS4S
)M4NGING )NG R424)BING 'H4 R4B4I)N' 2RAIISIANS A3 'H4 N)'IAN)B IN'4RN)B R4I4N;4 CAG4,
)S )M4NG4G )NG 3AR A'H4R 2;R2AS4S,@ Con-ress t&ere1 %learl1 e(presses its intention to amend
an1 provision of t&e NIRC *&i%& stands in t&e *a1 of a%%omplis&in- t&e purpose of t&e la*.
2)B asserts t&at t&e amendment of its fran%&ise must e reTe%ted in t&e title of t&e la* 1 spe%iE%
referen%e to 2.G. No. "5#0. It is unne%essar1 to do t&is in order to %ompl1 *it& t&e %onstitutional
re<uirement, sin%e it is alread1 stated in t&e title t&at t&e la* see5s to amend t&e pertinent provisions
of t&e NIRC, amon- *&i%& is a"039<:, in order to *iden t&e ase of t&e I)'. )%tuall1, it is t&e ill *&i%&
e%omes a la* t&at is re<uired to e(press in its title t&e su8e%t of le-islation. '&e titles of H. No.
"""#0 and S. No. "!30 in fa%t spe%iE%all1 referred to a"03 of t&e NIRC as amon- t&e provisions sou-&t
to e amended. $e are satisEed t&at su=%ient noti%e &ad een -iven of t&e penden%1 of t&ese ills in
Con-ress efore t&e1 *ere ena%ted into *&at is no* R.).
No. 00"!.
In 'hilippine 5ud"es ,ssociation v. 'rado, supra, a similar ar-ument as t&at no* made 1 2)B *as
re8e%ted. R.). No. 035. is entitled )N )C' CR4)'ING 'H4 2HIBI22IN4 2AS')B CAR2AR)'IAN, G43INING
I'S 2A$4RS, 3;NC'IANS )NG R4S2ANSI/IBI'I4S, 2RAIIGING 3AR R4G;B)'IAN A3 'H4 ING;S'RN )NG
3AR A'H4R 2;R2AS4S CANN4C'4G 'H4R4$I'H. It %ontained a provision repealin- all fran5in-
privile-es. It *as %ontended t&at t&e *it&dra*al of fran5in- privile-es *as not e(pressed in t&e title of
t&e la*. In &oldin- t&at t&ere *as su=%ient des%ription of t&e su8e%t of t&e la* in its title, in%ludin-
t&e repeal of fran5in- privile-es, t&is Court &eld6
'o re<uire ever1 end and means ne%essar1 for t&e a%%omplis&ment of t&e -eneral
o8e%tives of t&e statute to e e(pressed in its title *ould not onl1 e unreasonale ut
*ould a%tuall1 render le-islation impossile. JCoole1, Constitutional Bimitations, 8t&
4d., p. 2#0K )s &as een %orre%tl1 e(plained6
'&e details of a le-islative a%t need not e spe%iE%all1 stated in its
title, ut matter -ermane to t&e su8e%t as e(pressed in t&e title, and
adopted to t&e a%%omplis&ment of t&e o8e%t in vie*, ma1 properl1 e
in%luded in t&e a%t. '&us, it is proper to %reate in t&e same a%t t&e
ma%&iner1 1 *&i%& t&e a%t is to e enfor%ed, to pres%rie t&e
penalties for its infra%tion, and to remove osta%les in t&e *a1 of its
e(e%ution. If su%& matters are properl1 %onne%ted *it& t&e su8e%t as
e(pressed in t&e title, it is unne%essar1 t&at t&e1 s&ould also &ave
spe%ial mention in t&e title. 9Sout&ern 2a%. Co. v. /artine, "00 3ed. 025:
9220 SCR) at 000,008:
II. Claims of press freedom and reli"ious liberty. $e &ave &eld t&at, as a -eneral proposition, t&e press
is not e(empt from t&e ta(in- po*er of t&e State and t&at *&at t&e %onstitutional -uarantee of free
press pro&iits are la*s *&i%& sin-le out t&e press or tar-et a -roup elon-in- to t&e press for spe%ial
treatment or *&i%& in an1 *a1 dis%riminate a-ainst t&e press on t&e asis of t&e %ontent of t&e
puli%ation, and R.). No. 00"! is none of t&ese.
No* it is %ontended 1 t&e 22I t&at 1 removin- t&e e(emption of t&e press from t&e I)' *&ile
maintainin- t&ose -ranted to ot&ers, t&e la* dis%riminates a-ainst t&e press. )t an1 rate, it is averred,
@even nondis%riminator1 ta(ation of %onstitutionall1 -uaranteed freedom is un%onstitutional.@
$it& respe%t to t&e Erst %ontention, it *ould su=%e to sa1 t&at sin%e t&e la* -ranted t&e press a
privile-e, t&e la* %ould ta5e a%5 t&e privile-e an1time *it&out oDense to t&e Constitution. '&e reason
is simple6 1 -rantin- e(emptions, t&e State does not forever *aive t&e e(er%ise of its soverei-n
prero-ative.
Indeed, in *it&dra*in- t&e e(emption, t&e la* merel1 su8e%ts t&e press to t&e same ta( urden to
*&i%& ot&er usinesses &ave lon- a-o een su8e%t. It is t&us diDerent from t&e ta( involved in t&e
%ases invo5ed 1 t&e 22I. '&e li%ense ta( in /ros9ean v. ,merican 'ress Co., 2#0 ;.S. 233, 80 B. 4d.
!!0 9"#3!: *as found to e dis%riminator1 e%ause it *as laid on t&e -ross advertisin- re%eipts onl1 of
ne*spapers *&ose *ee5l1 %ir%ulation *as over 20,000, *it& t&e result t&at t&e ta( applied onl1 to "3
out of "2. pulis&ers in Bouisiana. '&ese lar-e papers *ere %riti%al of Senator Hue1 Bon- *&o
%ontrolled t&e state le-islature *&i%& ena%ted t&e li%ense ta(. '&e %ensorial motivation for t&e la* *as
t&us evident.
An t&e ot&er &and, in Minneapolis +tar & 7ribune Co. v. Minnesota Comm@r of &evenue, .!0 ;.S. 505,
05 B. 4d. 2d 2#5 9"#83:, t&e ta( *as found to e dis%riminator1 e%ause alt&ou-& it %ould &ave een
made liale for t&e sales ta( or, in lieu t&ereof, for t&e use ta( on t&e privile-e of usin-, storin- or
%onsumin- tan-ile -oods, t&e press *as not. Instead, t&e press *as e(empted from ot& ta(es. It
*as, &o*ever, later made to pa1 a special use ta( on t&e %ost of paper and in5 *&i%& made t&ese
items @t&e onl1 items su8e%t to t&e use ta( t&at *ere %omponent of -oods to e sold at retail.@ '&e
;.S. Supreme Court &eld t&at t&e diDerential treatment of t&e press @su--ests t&at t&e -oal of
re-ulation is not related to suppression of e(pression, and su%& -oal is presumptivel1
un%onstitutional.@ It *ould t&erefore appear t&at even a la* t&at favors t&e press is %onstitutionall1
suspe%t. 9See t&e dissent of Re&n<uist, M. in t&at %ase:
Nor is it true t&at onl1 t*o e(emptions previousl1 -ranted 1 4.A. No. 203 are *it&dra*n @asolutel1
and un<ualiEedl1@ 1 R.). No. 00"!. At&er e(emptions from t&e I)', su%& as t&ose previousl1 -ranted
to 2)B, petroleum %on%essionaires, enterprises re-istered *it& t&e 4(port 2ro%essin- [one )ut&orit1,
and man1 more are li5e*ise totall1 *it&dra*n, in addition to e(emptions *&i%& are partiall1 *it&dra*n,
in an eDort to roaden t&e ase of t&e ta(.
'&e 22I sa1s t&at t&e dis%riminator1 treatment of t&e press is &i-&li-&ted 1 t&e fa%t t&at transa%tions,
*&i%& are proEt oriented, %ontinue to en8o1 e(emption under R.). No. 00"!. )n enumeration of some of
t&ese transa%tions *ill su=%e to s&o* t&at 1 and lar-e t&is is not so and t&at t&e e(emptions are
-ranted for a purpose. )s t&e Soli%itor General sa1s, su%& e(emptions are -ranted, in some %ases, to
en%oura-e a-ri%ultural produ%tion and, in ot&er %ases, for t&e personal eneEt of t&e end,user rat&er
t&an for proEt. '&e e(empt transa%tions are6
9a: Goods for %onsumption or use *&i%& are in t&eir ori-inal state 9a-ri%ultural, marine
and forest produ%ts, %otton seeds in t&eir ori-inal state, fertiliLers, seeds, seedlin-s,
En-erlin-s, Es&, pra*n livesto%5 and poultr1 feeds: and -oods or servi%es to en&an%e
a-ri%ulture 9millin- of pala1, %orn, su-ar %ane and ra* su-ar, livesto%5, poultr1 feeds,
fertiliLer, in-redients used for t&e manufa%ture of feeds:.
9: Goods used for personal %onsumption or use 9&ouse&old and personal eDe%ts of
%itiLens returnin- to t&e 2&ilippines: or for professional use, li5e professional
instruments and implements, 1 persons %omin- to t&e 2&ilippines to settle &ere.
9%: Goods su8e%t to e(%ise ta( su%& as petroleum produ%ts or to e used for
manufa%ture of petroleum produ%ts su8e%t to e(%ise ta( and servi%es su8e%t to
per%enta-e ta(.
9d: 4du%ational servi%es, medi%al, dental, &ospital and veterinar1 servi%es, and
servi%es rendered under emplo1er,emplo1ee relations&ip.
9e: $or5s of art and similar %reations sold 1 t&e artist &imself.
9f: 'ransa%tions e(empted under spe%ial la*s, or international a-reements.
9-: 4(port,sales 1 persons not I)',re-istered.
9&: Goods or servi%es *it& -ross annual sale or re%eipt not e(%eedin- 'LJJ,JJJ.JJ.
9Respondents+ Consolidated Comment on t&e Motions for Re%onsideration, pp. 58,!0:
'&e 22I asserts t&at it does not reall1 matter t&at t&e la* does not dis%riminate a-ainst t&e press
e%ause @even nondis%riminator1 ta(ation on %onstitutionall1 -uaranteed freedom is un%onstitutional.@
22I %ites in support of t&is assertion t&e follo*in- statement in Murdock v. 'ennsylvania, 3"# ;.S. "05,
80 B. 4d. "2#2 9"#.3:6
'&e fa%t t&at t&e ordinan%e is @nondis%riminator1@ is immaterial. '&e prote%tion
aDorded 1 t&e 3irst )mendment is not so restri%ted. ) li%ense ta( %ertainl1 does not
a%<uire %onstitutional validit1 e%ause it %lassiEes t&e privile-es prote%ted 1 t&e 3irst
)mendment alon- *it& t&e *ares and mer%&andise of &u%5sters and peddlers and
treats t&em all ali5e. Su%& e<ualit1 in treatment does not save t&e ordinan%e. 3reedom
of press, freedom of spee%&, freedom of reli-ion are in preferred position.
'&e Court *as spea5in- in t&at %ase of a license ta!, *&i%&, unli5e an ordinar1 ta(, is mainl1 for
re-ulation. Its imposition on t&e press is un%onstitutional e%ause it la1s a prior restraint on t&e
e(er%ise of its ri-&t. Hen%e, alt&ou-& its appli%ation to ot&ers, su%& t&ose sellin- -oods, is valid, its
appli%ation to t&e press or to reli-ious -roups, su%& as t&e Me&ova&+s $itnesses, in %onne%tion *it& t&e
latter+s sale of reli-ious oo5s and pamp&lets, is un%onstitutional. )s t&e ;.S. Supreme Court put it, @it
is one t&in- to impose a ta( on in%ome or propert1 of a prea%&er. It is <uite anot&er t&in- to e(a%t a
ta( on &im for deliverin- a sermon.@
) similar rulin- *as made 1 t&is Court in ,merican Bible +ociety v. City of Manila, "0" 2&il. 38!
9"#50: *&i%& invalidated a %it1 ordinan%e re<uirin- a usiness li%ense fee on t&ose en-a-ed in t&e sale
of -eneral mer%&andise. It *as &eld t&at t&e ta( %ould not e imposed on t&e sale of iles 1 t&e
)meri%an /ile So%iet1 *it&out restrainin- t&e free e(er%ise of its ri-&t to propa-ate.
'&e I)' is, &o*ever, diDerent. It is not a li%ense ta(. It is not a ta( on t&e e(er%ise of a privile-e, mu%&
less a %onstitutional ri-&t. It is imposed on t&e sale, arter, lease or e(%&an-e of -oods or properties or
t&e sale or e(%&an-e of servi%es and t&e lease of properties purel1 for revenue purposes. 'o su8e%t
t&e press to its pa1ment is not to urden t&e e(er%ise of its ri-&t an1 more t&an to ma5e t&e press pa1
in%ome ta( or su8e%t it to -eneral re-ulation is not to violate its freedom under t&e Constitution.
)dditionall1, t&e 2&ilippine /ile So%iet1, In%. %laims t&at alt&ou-& it sells iles, t&e pro%eeds derived
from t&e sales are used to susidiLe t&e %ost of printin- %opies *&i%& are -iven free to t&ose *&o
%annot aDord to pa1 so t&at to ta( t&e sales *ould e to in%rease t&e pri%e, *&ile redu%in- t&e volume
of sale. Grantin- t&at to e t&e %ase, t&e resultin- urden on t&e e(er%ise of reli-ious freedom is so
in%idental as to ma5e it di=%ult to diDerentiate it from an1 ot&er e%onomi% imposition t&at mi-&t ma5e
t&e ri-&t to disseminate reli-ious do%trines %ostl1. At&er*ise, to follo* t&e petitioner+s ar-ument, to
in%rease t&e ta( on t&e sale of vestments *ould e to la1 an impermissile urden on t&e ri-&t of t&e
prea%&er to ma5e a sermon.
An t&e ot&er &and t&e re-istration fee of 2",000.00 imposed 1 a"00 of t&e NIRC, as amended 1 a0 of
R.). No. 00"!, alt&ou-& E(ed in amount, is reall1 8ust to pa1 for t&e e(penses of re-istration and
enfor%ement of provisions su%& as t&ose relatin- to a%%ountin- in a"08 of t&e NIRC. '&at t&e 2/S
distriutes free iles and t&erefore is not liale to pa1 t&e I)' does not e(%use it from t&e pa1ment of
t&is fee e%ause it also sells some %opies. )t an1 rate *&et&er t&e 2/S is liale for t&e I)' must e
de%ided in %on%rete %ases, in t&e event it is assessed t&is ta( 1 t&e Commissioner of Internal
Revenue.
III. ,lle"ed violations of the due process, e.ual protection and contract clauses and the rule on
ta!ation. CR4/) asserts t&at R.). No. 00"! 9": impairs t&e oli-ations of %ontra%ts, 92: %lassiEes
transa%tions as %overed or e(empt *it&out reasonale asis and 93: violates t&e rule t&at ta(es s&ould
e uniform and e<uitale and t&at Con-ress s&all @evolve a pro-ressive s1stem of ta(ation.@
$it& respe%t to t&e Erst %ontention, it is %laimed t&at t&e appli%ation of t&e ta( to e(istin- %ontra%ts of
t&e sale of real propert1 1 installment or on deferred pa1ment asis *ould result in sustantial
in%reases in t&e mont&l1 amortiLations to e paid e%ause of t&e "07 I)'. '&e additional amount, it is
pointed out, is somet&in- t&at t&e u1er did not anti%ipate at t&e time &e entered into t&e %ontra%t.
'&e s&ort ans*er to t&is is t&e one -iven 1 t&is Court in an earl1 %ase6 @)ut&orities from numerous
sour%es are %ited 1 t&e plaintiDs, ut none of t&em s&o* t&at a la*ful ta( on a ne* su8e%t, or an
in%reased ta( on an old one, interferes *it& a %ontra%t or impairs its oli-ation, *it&in t&e meanin- of
t&e Constitution. 4ven t&ou-& su%& ta(ation ma1 aDe%t parti%ular %ontra%ts, as it ma1 in%rease t&e
det of one person and lessen t&e se%urit1 of anot&er, or ma1 impose additional urdens upon one
%lass and release t&e urdens of anot&er, still t&e ta( must e paid unless pro&iited 1 t&e
Constitution, nor %an it e said t&at it impairs t&e oli-ation of an1 e(istin- %ontra%t in its true le-al
sense.@ 9Ba Insular v. Ma%&u%a Go,'au%o and Nula Co,Sion-, 3# 2&il. 5!0, 50. 9"#"#::. Indeed not onl1
e(istin- la*s ut also @the reservation of the essential attributes of soverei"nty, is . . . read into
%ontra%ts as a postulate of t&e le-al order.@ 92&ilippine,)meri%an Bife Ins. Co. v. )uditor General, 22
SCR) "35, ".0 9"#!8:: Contra%ts must e understood as &avin- een made in referen%e to t&e
possile e(er%ise of t&e ri-&tful aut&orit1 of t&e -overnment and no oli-ation of %ontra%t %an e(tend
to t&e defeat of t&at aut&orit1. 9Norman v. /altimore and A&io R.R., 0# B. 4d. 885 9"#35::.
It is ne(t pointed out t&at *&ile a. of R.). No. 00"! e(empts su%& transa%tions as t&e sale of
a-ri%ultural produ%ts, food items, petroleum, and medi%al and veterinar1 servi%es, it -rants no
e(emption on t&e sale of real propert1 *&i%& is e<uall1 essential. '&e sale of real propert1 for
so%ialiLed and lo*,%ost &ousin- is e(empted from t&e ta(, ut CR4/) %laims t&at real estate
transa%tions of @t&e less poor,@ i.e., t&e middle %lass, *&o are e<uall1 &omeless, s&ould li5e*ise e
e(empted.
'&e sale of food items, petroleum, medi%al and veterinar1 servi%es, et%., *&i%& are essential -oods and
servi%es *as alread1 e(empt under a"03, pars. 9: 9d: 9": of t&e NIRC efore t&e ena%tment of R.). No.
00"!. 2etitioner is in error in %laimin- t&at R.). No. 00"! -ranted e(emption to t&ese transa%tions,
*&ile su8e%tin- t&ose of petitioner to t&e pa1ment of t&e I)'. Moreover, t&ere is a diDeren%e et*een
t&e @&omeless poor@ and t&e @&omeless less poor@ in t&e e(ample -iven 1 petitioner, e%ause t&e
se%ond -roup or middle %lass %an aDord to rent &ouses in t&e meantime t&at t&e1 %annot 1et u1 t&eir
o*n &omes. '&e t*o so%ial %lasses are t&us diDerentl1 situated in life. @It is in&erent in t&e po*er to
ta( t&at t&e State e free to sele%t t&e su8e%ts of ta(ation, and it &as een repeatedl1 &eld t&at
+ine<ualities *&i%& result from a sin-lin- out of one parti%ular %lass for ta(ation, or e(emption infrin-e
no %onstitutional limitation.+@ 9ButL v. )raneta, #8 2&il. ".8, "53 9"#55:. ,ccord, Cit1 of /a-uio v. Ge
Beon, "3. 2&il. #"2 9"#!8:> Sison, Mr. v. )n%&eta, "30 SCR) !5., !!3 9"#8.:> Rapatiran n- m-a
Na-lilin-5od sa 2ama&alaan n- 2ilipinas, In%. v. 'an, "!3 SCR) 30" 9"#88::.
3inall1, it is %ontended, for t&e reasons alread1 noted, t&at R.). No. 00"! also violates )rt. II, a289":
*&i%& provides t&at @'&e rule of ta(ation s&all e uniform and e<uitale. '&e Con-ress s&all evolve a
pro-ressive s1stem of ta(ation.@
4<ualit1 and uniformit1 of ta(ation means t&at all ta(ale arti%les or 5inds of propert1 of t&e same
%lass e ta(ed at t&e same rate. '&e ta(in- po*er &as t&e aut&orit1 to ma5e reasonale and natural
%lassiE%ations for purposes of ta(ation. 'o satisf1 t&is re<uirement it is enou-& t&at t&e statute or
ordinan%e applies e<uall1 to all persons, forms and %orporations pla%ed in similar situation. 9Cit1 of
/a-uio v. Ge Beon, supra> Sison, Mr. v. )n%&eta, supra:
Indeed, t&e I)' *as alread1 provided in 4.A. No. 203 lon- efore R.). No. 00"! *as ena%ted. R.). No.
00"! merel1 e(pands t&e ase of t&e ta(. '&e validit1 of t&e ori-inal I)' Ba* *as <uestioned
in Mapatiran n" 4a"lilin"kod sa 'amahalaan n" 'ilipinas, %nc. v. 7an, "!3 SCR) 383 9"#88: on -rounds
similar to t&ose made in t&ese %ases, namel1, t&at t&e la* *as @oppressive, dis%riminator1, un8ust and
re-ressive in violation of )rt. II, a289": of t&e Constitution.@ 9)t 382: Re8e%tin- t&e %&allen-e to t&e
la*, t&is Court &eld6
)s t&e Court sees it, 4A 203 satisEes all t&e re<uirements of a valid ta(. It is
uniform. . . .
'&e sales ta( adopted in 4A 203 is applied similarl1 on all -oods and servi%es sold to
t&e puli%, *&i%& are not e(empt, at t&e %onstant rate of 07 or "07.
'&e disputed sales ta( is also e<uitale. It is imposed onl1 on sales of -oods or
servi%es 1 persons en-a-ed in usiness *it& an a--re-ate -ross annual sales
e(%eedin- 2200,000.00. Small %orner sari,sari stores are %onse<uentl1 e(empt from its
appli%ation. Bi5e*ise e(empt from t&e ta( are sales of farm and marine produ%ts, so
t&at t&e %osts of asi% food and ot&er ne%essities, spared as t&e1 are from t&e
in%iden%e of t&e I)', are e(pe%ted to e relativel1 lo*er and *it&in t&e rea%& of t&e
-eneral puli%.
9)t 382,383:
'&e CR4/) %laims t&at t&e I)' is re-ressive. ) similar %laim is made 1 t&e Cooperative ;nion of t&e
2&ilippines, In%. 9C;2:, *&ile petitioner Muan '. Gavid ar-ues t&at t&e la* %ontravenes t&e mandate of
Con-ress to provide for a pro-ressive s1stem of ta(ation e%ause t&e la* imposes a Tat rate of "07
and t&us pla%es t&e ta( urden on all ta(pa1ers *it&out re-ard to t&eir ailit1 to pa1.
'&e Constitution does not reall1 pro&iit t&e imposition of indire%t ta(es *&i%&, li5e t&e I)', are
re-ressive. $&at it simpl1 provides is t&at Con-ress s&all @evolve a pro-ressive s1stem of ta(ation.@
'&e %onstitutional provision &as een interpreted to mean simpl1 t&at @dire%t ta(es are . . . to e
preferred JandK as mu%& as possile, indire%t ta(es s&ould e minimiLed.@ 94. 34RN)NGA, 'H4
CANS'I';'IAN A3 'H4 2HIBI22IN4S 22" 9Se%ond ed. 9"#00::. Indeed, t&e mandate to Con-ress is not
to prescribe, ut to evolve, a pro-ressive ta( s1stem. At&er*ise, sales ta(es, *&i%& per&aps are t&e
oldest form of indire%t ta(es, *ould &ave een pro&iited *it& t&e pro%lamation of )rt. IIII, a"09": of
t&e "#03 Constitution from *&i%& t&e present )rt. II, a289": *as ta5en. Sales ta(es are also re-ressive.
Resort to indire%t ta(es s&ould e minimized ut not avoided entirel1 e%ause it is di=%ult, if not
impossile, to avoid t&em 1 imposin- su%& ta(es a%%ordin- to t&e ta(pa1ers+ ailit1 to pa1. In t&e
%ase of t&e I)', t&e la* minimiLes t&e re-ressive eDe%ts of t&is imposition 1 providin- for zero
ratin" of %ertain transa%tions 9R.). No. 00"!, a3, amendin- a"02 9: of t&e NIRC:, *&ile
-rantin- e!emptions to ot&er transa%tions. 9R.). No. 00"!, a., amendin- a"03 of t&e NIRC:.
'&us, t&e follo*in- transa%tions involvin- asi% and essential -oods and servi%es are e(empted from
t&e I)'6
9a: Goods for %onsumption or use *&i%& are in t&eir ori-inal state 9a-ri%ultural, marine
and forest produ%ts, %otton seeds in t&eir ori-inal state, fertiliLers, seeds, seedlin-s,
En-erlin-s, Es&, pra*n livesto%5 and poultr1 feeds: and -oods or servi%es to en&an%e
a-ri%ulture 9millin- of pala1, %orn su-ar %ane and ra* su-ar, livesto%5, poultr1 feeds,
fertiliLer, in-redients used for t&e manufa%ture of feeds:.
9: Goods used for personal %onsumption or use 9&ouse&old and personal eDe%ts of
%itiLens returnin- to t&e 2&ilippines: and or professional use, li5e professional
instruments and implements, 1 persons %omin- to t&e 2&ilippines to settle &ere.
9%: Goods su8e%t to e(%ise ta( su%& as petroleum produ%ts or to e used for
manufa%ture of petroleum produ%ts su8e%t to e(%ise ta( and servi%es su8e%t to
per%enta-e ta(.
9d: 4du%ational servi%es, medi%al, dental, &ospital and veterinar1 servi%es, and
servi%es rendered under emplo1er,emplo1ee relations&ip.
9e: $or5s of art and similar %reations sold 1 t&e artist &imself.
9f: 'ransa%tions e(empted under spe%ial la*s, or international a-reements.
9-: 4(port,sales 1 persons not I)',re-istered.
9&: Goods or servi%es *it& -ross annual sale or re%eipt not e(%eedin- 'LJJ,JJJ.JJ.
9Respondents+ Consolidated Comment on t&e Motions for Re%onsideration, pp. 58,!0:
An t&e ot&er &and, t&e transa%tions *&i%& are su8e%t to t&e I)' are t&ose *&i%& involve -oods and
servi%es *&i%& are used or availed of mainl1 1 &i-&er in%ome -roups. '&ese in%lude real properties
&eld primaril1 for sale to %ustomers or for lease in t&e ordinar1 %ourse of trade or usiness, t&e ri-&t or
privile-e to use patent, %op1ri-&t, and ot&er similar propert1 or ri-&t, t&e ri-&t or privile-e to use
industrial, %ommer%ial or s%ientiE% e<uipment, motion pi%ture Elms, tapes and dis%s, radio, television,
satellite transmission and %ale television time, &otels, restaurants and similar pla%es, se%urities,
lendin- investments, ta(i%as, utilit1 %ars for rent, tourist uses, and ot&er %ommon %arriers, servi%es
of fran%&ise -rantees of telep&one and tele-rap&.
'&e prolem *it& CR4/)+s petition is t&at it presents road %laims of %onstitutional violations 1
tenderin- issues not at retail ut at *&olesale and in t&e astra%t. '&ere is no full1 developed re%ord
*&i%& %an impart to ad8udi%ation t&e impa%t of a%tualit1. '&ere is no fa%tual foundation to s&o* in
t&e concrete t&e appli%ation of t&e la* to actual contracts and e(emplif1 its eDe%t on propert1 ri-&ts.
3or t&e fa%t is t&at petitioner+s memers &ave not even een assessed t&e I)'. 2etitioner+s %ase is not
made %on%rete 1 a series of &1pot&eti%al <uestions as5ed *&i%& are no diDerent from t&ose dealt *it&
in advisor1 opinions.
'&e di=%ult1 %onfrontin- petitioner is t&us apparent. He alle-es aritrariness. ) mere
alle-ation, as &ere, does not su=%e. '&ere must e a fa%tual foundation of su%&
un%onstitutional taint. Considerin- t&at petitioner &ere *ould %ondemn su%& a
provision as void on its fa%e, &e &as not made out a %ase. '&is is merel1 to ad&ere to
t&e aut&oritative do%trine t&at *&ere t&e due pro%ess and e<ual prote%tion %lauses are
invo5ed, %onsiderin- t&at t&e1 are not E(ed rules ut rat&er road standards, t&ere is a
need for proof of su%& persuasive %&ara%ter as *ould lead to su%& a %on%lusion. )sent
su%& a s&o*in-, t&e presumption of validit1 must prevail.
9Sison, Mr. v. )n%&eta, "30 SCR) at !!":
)d8udi%ation of t&ese road %laims must a*ait t&e development of a %on%rete %ase. It ma1 e t&at
postponement of ad8udi%ation *ould result in a multipli%it1 of suits. '&is need not e t&e %ase,
&o*ever. 4nfor%ement of t&e la* ma1 -ive rise to su%& a %ase. ) test %ase, provided it is an a%tual %ase
and not an astra%t or &1pot&eti%al one, ma1 t&us e presented.
Nor is &ards&ip to ta(pa1ers alone an ade<uate 8ustiE%ation for ad8udi%atin- astra%t issues.
At&er*ise, ad8udi%ation *ould e no diDerent from t&e -ivin- of advisor1 opinion t&at does not reall1
settle le-al issues.
$e are told t&at it is our dut1 under )rt. IIII, a", b2 to de%ide *&enever a %laim is made t&at @t&ere &as
een a -rave ause of dis%retion amountin- to la%5 or e(%ess of 8urisdi%tion on t&e part of an1 ran%&
or instrumentalit1 of t&e -overnment.@ '&is dut1 %an onl1 arise if an a%tual %ase or %ontrovers1 is
efore us. ;nder )rt . IIII, a5 our 8urisdi%tion is deEned in terms of @%ases@ and all t&at )rt. IIII, a", b2
%an plausil1 mean is t&at in t&e e(er%ise of t&at 9urisdiction *e &ave t&e 9udicial poer to determine
<uestions of -rave ause of dis%retion 1 an1 ran%& or instrumentalit1 of t&e -overnment.
2ut in anot&er *a1, *&at is -ranted in )rt. IIII, a", b2 is @8udi%ial po*er,@ *&i%& is @t&e po*er of a %ourt
to &ear and de%ide %ases pendin- et*een parties *&o &ave t&e ri-&t to sue and e sued in t&e %ourts
of la* and e<uit1@ 9Bam v. 2&ipps, 22 2&il. .5!, 55# 9"#"2::, as distin-uis&ed from le-islative and
e(e%utive po*er. '&is po*er %annot e dire%tl1 appropriated until it is apportioned amon- several
%ourts eit&er 1 t&e Constitution, as in t&e %ase of )rt. IIII, a5, or 1 statute, as in t&e %ase of t&e
Mudi%iar1 )%t of "#.8 9R.). No. 2#!: and t&e Mudi%iar1 Reor-aniLation )%t of "#80 9/.2. /l-. "2#:. '&e
po*er t&us apportioned %onstitutes t&e %ourt+s @8urisdi%tion,@ deEned as @t&e po*er %onferred 1 la*
upon a %ourt or 8ud-e to ta5e %o-niLan%e of a %ase, to t&e e(%lusion of all ot&ers.@ 9;nited States v.
)r%eo, ! 2&il. 2# 9"#0!:: $it&out an a%tual %ase %omin- *it&in its 8urisdi%tion, t&is Court %annot in<uire
into an1 alle-ation of -rave ause of dis%retion 1 t&e ot&er departments of t&e -overnment.
IIII. ,lle"ed violation of policy toards cooperatives. An t&e ot&er &and, t&e Cooperative ;nion of t&e
2&ilippines 9C;2:, after rieT1 surve1in- t&e %ourse of le-islation, ar-ues t&at it *as to adopt a deEnite
poli%1 of -rantin- ta( e(emption to %ooperatives t&at t&e present Constitution emodies provisions on
%ooperatives. 'o su8e%t %ooperatives to t&e I)' *ould t&erefore e to infrin-e a %onstitutional poli%1.
2etitioner %laims t&at in "#03, 2.G. No. "05 *as promul-ated e(emptin- %ooperatives from t&e
pa1ment of in%ome ta(es and sales ta(es ut in "#8., e%ause of t&e %risis *&i%& mena%ed t&e
national e%onom1, t&is e(emption *as *it&dra*n 1 2.G. No. "#55> t&at in "#8!, 2.G. No. 2008 a-ain
-ranted %ooperatives e(emption from in%ome and sales ta(es until Ge%emer 3", "##", ut, in t&e
same 1ear, 4.A. No. #3 revo5ed t&e e(emption> and t&at Enall1 in "#80 t&e framers of t&e Constitution
@repudiated t&e previous a%tions of t&e -overnment adverse to t&e interests of t&e %ooperatives, that
is, the repeated revocation of the ta! e!emption to cooperatives and instead up&eld t&e poli%1 of
stren-t&enin- t&e %ooperatives by ay of the "rant of ta! e!emptions,@ 1 providin- t&e follo*in- in
)rt. XII6
a". '&e -oals of t&e national e%onom1 are a more e<uitale distriution of
opportunities, in%ome, and *ealt&> a sustained in%rease in t&e amount of -oods and
servi%es produ%ed 1 t&e nation for t&e eneEt of t&e people> and an e(pandin-
produ%tivit1 as t&e 5e1 to raisin- t&e <ualit1 of life for all, espe%iall1 t&e
underprivile-ed.
'&e State s&all promote industrialiLation and full emplo1ment ased on sound
a-ri%ultural development and a-rarian reform, t&rou-& industries t&at ma5e full and
e=%ient use of &uman and natural resour%es, and *&i%& are %ompetitive in ot&
domesti% and forei-n mar5ets. Ho*ever, t&e State s&all prote%t 3ilipino enterprises
a-ainst unfair forei-n %ompetition and trade pra%ti%es.
In t&e pursuit of t&ese -oals, all se%tors of t&e e%onom1 and all re-ions of t&e %ountr1
s&all e -iven optimum opportunit1 to develop. 2rivate enterprises, in%ludin-
%orporations, %ooperatives, and similar %olle%tive or-aniLations, s&all e en%oura-ed to
roaden t&e ase of t&eir o*ners&ip.
a"5. '&e Con-ress s&all %reate an a-en%1 to promote t&e viailit1 and -ro*t& of
%ooperatives as instruments for so%ial 8usti%e and e%onomi% development.
2etitioner+s %ontention &as no merit. In t&e Erst pla%e, it is not true t&at 2.G. No. "#55 sin-led out
%ooperatives 1 *it&dra*in- t&eir e(emption from in%ome and sales ta(es under 2.G. No. "05, a5.
$&at 2.G. No. "#55, a" did *as to *it&dra* the e!emptions and preferential treatments theretofore
"ranted to private business enterprises in "eneral, in vie* of t&e e%onomi% %risis *&i%& t&en eset t&e
nation. It is true t&at after 2.G. No. 2008, a2 &ad restored t&e ta( e(emptions of %ooperatives in "#8!,
t&e e(emption *as a-ain repealed 1 4.A. No. #3, a", ut t&en a-ain %ooperatives *ere not t&e onl1
ones *&ose e(emptions *ere *it&dra*n. 7he ithdraal of ta! incentives applied to all, includin"
"overnment and private entities. In t&e se%ond pla%e, t&e Constitution does not reall1 re<uire t&at
%ooperatives e -ranted ta( e(emptions in order to promote t&eir -ro*t& and viailit1. Hen%e, t&ere is
no asis for petitioner+s assertion t&at t&e -overnment+s poli%1 to*ard %ooperatives &ad een one of
va%illation, as far as t&e -rant of ta( privile-es *as %on%erned, and t&at it *as to put an end to t&is
inde%ision t&at t&e %onstitutional provisions %ited *ere adopted. 2er&aps as a matter of poli%1
%ooperatives s&ould e -ranted ta( e(emptions, ut t&at is left to t&e dis%retion of Con-ress. If
Con-ress does not -rant e(emption and t&ere is no dis%rimination to %ooperatives, no violation of an1
%onstitutional poli%1 %an e %&ar-ed.
Indeed, petitioner+s theory amounts to sayin" that under the Constitution cooperatives are e!empt
from ta!ation. Su%& t&eor1 is %ontrar1 to t&e Constitution under *&i%& onl1 t&e follo*in- are e(empt
from ta(ation6 %&aritale institutions, %&ur%&es and parsona-es, 1 reason of )rt. II, a28 93:, and non,
sto%5, non,proEt edu%ational institutions 1 reason of )rt. XII, a. 93:.
C;2+s furt&er -round for see5in- t&e invalidation of R.). No. 00"! is t&at it denies %ooperatives t&e
e<ual prote%tion of t&e la* e%ause ele%tri% %ooperatives are e(empted from t&e I)'. '&e %lassiE%ation
et*een ele%tri% and ot&er %ooperatives 9farmers %ooperatives, produ%ers %ooperatives, mar5etin-
%ooperatives, et%.: apparentl1 rests on a %on-ressional determination t&at t&ere is -reater need to
provide %&eaper ele%tri% po*er to as man1 people as possile, espe%iall1 t&ose livin- in t&e rural areas,
t&an t&ere is to provide t&em *it& ot&er ne%essities in life. $e %annot sa1 t&at su%& %lassiE%ation is
unreasonale.
$e &ave %arefull1 read t&e various ar-uments raised a-ainst t&e %onstitutional validit1 of R.). No.
00"!. $e &ave in fa%t ta5en t&e e(traordinar1 step of en8oinin- its enfor%ement pendin- resolution of
t&ese %ases. $e &ave no* %ome to t&e %on%lusion t&at t&e la* suDers from none of t&e inErmities
attriuted to it 1 petitioners and t&at its ena%tment 1 t&e ot&er ran%&es of t&e -overnment does
not %onstitute a -rave ause of dis%retion. )n1 <uestion as to its ne%essit1, desirailit1 or e(pedien%1
must e addressed to Con-ress as t&e od1 *&i%& is ele%torall1 responsile, rememerin- t&at, as
Musti%e Holmes &as said, @le-islators are t&e ultimate -uardians of t&e lierties and *elfare of t&e
people in <uite as -reat a de-ree as are t&e %ourts.@ 9Missouri, Ransas ? 'e(as R1. Co. v. Ma1, "#. ;.S.
2!0, 200, .8 B. 4d. #0", #03 9"#0.::. It is not ri-&t, as petitioner in G.R. No. ""55.3 does in ar-uin-
t&at *e s&ould enfor%e t&e puli% a%%ountailit1 of le-islators, t&at t&ose *&o too5 part in passin- t&e
la* in <uestion 1 votin- for it in Con-ress s&ould later t&rust to t&e %ourts t&e urden of revie*in-
measures in t&e Tus& of ena%tment. '&is Court does not sit as a t&ird ran%& of t&e le-islature, mu%&
less e(er%ise a veto po*er over le-islation.
$H4R43AR4, t&e motions for re%onsideration are denied *it& Enalit1 and t&e temporar1 restrainin-
order previousl1 issued is &ere1 lifted.
SA ARG4R4G.
G.R. No. L-#:S7 Apri4 S$, #97
A!(RI%AN /I/L( '&%I(T., plaintiD,appellant,
vs.
%IT. &) !ANILA, defendant,appellee.
City 1iscal *u"enio ,n"eles and 5uan 4abon" for appellant.
,ssistant City 1iscal ,rsenio 4aAaa for appellee.
)(LI,, J.E
2laintiD,appellant is a forei-n, non,sto%5, non,proEt, reli-ious, missionar1 %orporation dul1 re-istered
and doin- usiness in t&e 2&ilippines t&rou-& its 2&ilippine a-en%1 estalis&ed in Manila in Novemer,
"8#8, *it& its prin%ipal o=%e at !3! Isaa% 2eral in said Cit1. '&e defendant appellee is a muni%ipal
%orporation *it& po*ers t&at are to e e(er%ised in %onformit1 *it& t&e provisions of Repuli% )%t No.
.0#, 5no*n as t&e Revised C&arter of t&e Cit1 of Manila.
In t&e %ourse of its ministr1, plaintiD+s 2&ilippine a-en%1 &as een distriutin- and sellin- iles andFor
-ospel portions t&ereof 9e(%ept durin- t&e Mapanese o%%upation: t&rou-&out t&e 2&ilippines and
translatin- t&e same into several 2&ilippine diale%ts. An Ma1 2# "#53, t&e a%tin- Cit1 'reasurer of t&e
Cit1 of Manila informed plaintiD t&at it *as %ondu%tin- t&e usiness of -eneral mer%&andise sin%e
Novemer, "#.5, *it&out providin- itself *it& t&e ne%essar1 Ma1or+s permit and muni%ipal li%ense, in
violation of Ardinan%e No. 3000, as amended, and Ardinan%es Nos. 252#, 3028 and 33!., and re<uired
plaintiD to se%ure, *it&in t&ree da1s, t&e %orrespondin- permit and li%ense fees, to-et&er *it&
%ompromise %overin- t&e period from t&e .t& <uarter of "#.5 to t&e 2nd <uarter of "#53, in t&e total
sum of 25,82"..5 9)nne( ):.
2laintiD protested a-ainst t&is re<uirement, ut t&e Cit1 'reasurer demanded t&at plaintiD deposit and
pa1 under protest t&e sum of 25,8#"..5, if suit *as to e ta5en in %ourt re-ardin- t&e same 9)nne( /:.
'o avoid t&e %losin- of its usiness as *ell as furt&er Enes and penalties in t&e premises on A%toer 2.,
"#53, plaintiD paid to t&e defendant under protest t&e said permit and li%ense fees in t&e
aforementioned amount, -ivin- at t&e same time noti%e to t&e Cit1 'reasurer t&at suit *ould e ta5en
in %ourt to <uestion t&e le-alit1 of t&e ordinan%es under *&i%&, t&e said fees *ere ein- %olle%ted
9)nne( C:, *&i%& *as done on t&e same date 1 Elin- t&e %omplaint t&at -ave rise to t&is a%tion. In its
%omplaint plaintiD pra1s t&at 8ud-ment e rendered de%larin- t&e said Muni%ipal Ardinan%e No. 3000,
as amended, and Ardinan%es Nos. 252#, 3028 and 33!. ille-al and un%onstitutional, and t&at t&e
defendant e ordered to refund to t&e plaintiD t&e sum of 25,8#"..5 paid under protest, to-et&er *it&
le-al interest t&ereon, and t&e %osts, plaintiD furt&er pra1in- for su%& ot&er relief and remed1 as t&e
%ourt ma1 deem 8ust e<uitale.
Gefendant ans*ered t&e %omplaint, maintainin- in turn t&at said ordinan%es *ere ena%ted 1 t&e
Muni%ipal /oard of t&e Cit1 of Manila 1 virtue of t&e po*er -ranted to it 1 se%tion 2..., suse%tion
9m,2: of t&e Revised )dministrative Code, superseded on Mune "8, "#.#, 1 se%tion "8, suse%tion 9":
of Repuli% )%t No. .0#, 5no*n as t&e Revised C&arter of t&e Cit1 of Manila, and pra1in- t&at t&e
%omplaint e dismissed, *it& %osts a-ainst plaintiD. '&is ans*er *as replied 1 t&e plaintiD reiteratin-
t&e un%onstitutionalit1 of t&e often,repeated ordinan%es.
/efore trial t&e parties sumitted t&e follo*in- stipulation of fa%ts6
CAM4 NA$ t&e parties in t&e aove,entitled %ase, t&ru t&eir undersi-ned attorne1s and
respe%tfull1 sumit t&e follo*in- stipulation of fa%ts6
". '&at t&e plaintiD sold for t&e use of t&e pur%&asers at its prin%ipal o=%e at !3! Isaa% 2eral,
Manila, /iles, Ne* 'estaments, ile portions and ile %on%ordan%e in 4n-lis& and ot&er
forei-n lan-ua-es imported 1 it from t&e ;nited States as *ell as /iles, Ne* 'estaments and
ile portions in t&e lo%al diale%ts imported andFor pur%&ased lo%all1> t&at from t&e fourt&
<uarter of "#.5 to t&e Erst <uarter of "#53 in%lusive t&e sales made 1 t&e plaintiD *ere as
follo*s6
Buarter ,mount of +ales
.t& <uarter "#.5 2",2...2"
"st <uarter "#.! 2,20!.85
2nd <uarter "#.! ",#50.38
3rd <uarter "#.! 2,235.##
.t& <uarter "#.! 3,25!.0.
"st <uarter "#.0 "3,2.".00
2nd <uarter "#.0 "5,00..55
3rd <uarter "#.0 ".,!5.."3
.t& <uarter "#.0 "2,5#0.#.
"st <uarter "#.8 "",".3.#0
2nd <uarter "#.8 ".,0"5.2!
3rd <uarter "#.8 38,333.83
.t& <uarter "#.8 "!,"0#.#0
"st <uarter "#.# 23,#05."0
2nd <uarter "#.# "0,802.08
3rd <uarter "#.# "!,!.0.0#
.t& <uarter "#.# "5,#!".38
"st <uarter "#50 "8,5!2..!
2nd <uarter "#50 2",8"!.32
3rd <uarter "#50 25,00..55
.t& <uarter "#50 .5,280.#2
"st <uarter "#5" 30,8.".2"
2nd <uarter "#5" 2#,"03.#8
3rd <uarter "#5" 20,"8"."0
.t& <uarter "#5" 22,#!8.#"
"st <uarter "#52 23,002.!5
2nd <uarter "#52 "0,!2!.#!
3rd <uarter "#52 "0,#2".0"
.t& <uarter "#52 2.,"80.02
"st <uarter "#53 2#,5"!.2"
2. '&at t&e parties &ere1 reserve t&e ri-&t to present eviden%e of ot&er fa%ts not &erein
stipulated.
$H4R43AR4, it is respe%tfull1 pra1ed t&at t&is %ase e set for &earin- so t&at t&e parties ma1
present furt&er eviden%e on t&eir e&alf. 9Re%ord on )ppeal, pp. "5,"!:.
$&en t&e %ase *as set for &earin-, plaintiD proved, amon- ot&er t&in-s, t&at it &as een in e(isten%e
in t&e 2&ilippines sin%e "8##, and t&at its parent so%iet1 is in Ne* Nor5, ;nited States of )meri%a> t&at
its, %onti-uous real properties lo%ated at Isaa% 2eral are e(empt from real estate ta(es> and t&at it *as
never re<uired to pa1 an1 muni%ipal li%ense fee or ta( efore t&e *ar, nor does t&e )meri%an /ile
So%iet1 in t&e ;nited States pa1 an1 li%ense fee or sales ta( for t&e sale of ile t&erein. 2laintiD
furt&er tried to estalis& t&at it never made an1 proEt from t&e sale of its iles, *&i%& are disposed of
for as lo* as one t&ird of t&e %ost, and t&at in order to maintain its operatin- %ost it otains sustantial
remittan%es from its Ne* Nor5 o=%e and voluntar1 %ontriutions and -ifts from %ertain %&ur%&es, ot&
in t&e ;nited States and in t&e 2&ilippines, *&i%& are interested in its missionar1 *or5. Re-ardin-
plaintiD+s %ontention of la%5 of proEt in t&e sale of iles, defendant retorts t&at t&e admissions of
plaintiD,appellant+s lone *itness *&o testiEed on %ross,e(amination t&at iles earin- t&e pri%e of 00
%ents ea%& from plaintiD,appellant+s Ne* Nor5 o=%e are sold &ere 1 plaintiD,appellant at 2".30 ea%&>
t&ose earin- t&e pri%e of c..50 ea%& are sold &ere at 2"0 ea%&> t&ose earin- t&e pri%e of c0 ea%& are
sold &ere at 2"5 ea%&> and t&ose earin- t&e pri%e of c"" ea%& are sold &ere at 222 ea%&, %learl1 s&o*
t&at plaintiD+s %ontention t&at it never ma5es an1 proEt from t&e sale of its ile, is evidentl1
untenale.
)fter &earin- t&e Court rendered 8ud-ment, t&e last part of *&i%& is as follo*s6
)s ma1 e seen from t&e repealed se%tion 9m,2: of t&e Revised )dministrative Code and t&e
repealin- portions 9o: of se%tion "8 of Repuli% )%t No. .0#, alt&ou-& t&e1 seemin-l1 diDer in
t&e *a1 t&e le-islative intent is e(pressed, 1et t&eir meanin- is pra%ti%all1 t&e same for t&e
purpose of ta(in- t&e mer%&andise mentioned in said le-al provisions, and t&at t&e ta(es to e
levied 1 said ordinan%es is in t&e nature of per%enta-e -raduated ta(es 9Se%. 3 of Ardinan%e
No. 3000, as amended, and Se%. ", Group 2, of Ardinan%e No. 252#, as amended 1 Ardinan%e
No. 33!.:.
IN II4$ A3 'H4 3AR4GAING CANSIG4R)'IANS, t&is Court is of t&e opinion and so &olds t&at
t&is %ase s&ould e dismissed, as it is &ere1 dismissed, for la%5 of merits, *it& %osts a-ainst
t&e plaintiD.
Not satisEed *it& t&is verdi%t plaintiD too5 up t&e matter to t&e Court of )ppeals *&i%& %ertiEed t&e
%ase to ;s for t&e reason t&at t&e errors assi-ned to t&e lo*er Court involved onl1 <uestions of la*.
)ppellant %ontends t&at t&e lo*er Court erred6
". In &oldin- t&at Ardinan%es Nos. 252# and 3000, as respe%tivel1 amended, are not
un%onstitutional>
2. In &oldin- t&at suse%tion m,2 of Se%tion 2... of t&e Revised )dministrative Code under
*&i%& Ardinan%es Nos. 25#2 and 3000 *ere promul-ated, *as not repealed 1 Se%tion "8 of
Repuli% )%t No. .0#>
3. In not &oldin- t&at an ordinan%e providin- for ta(es ased on -ross sales or re%eipts, in
order to e valid under t&e ne* C&arter of t&e Cit1 of Manila, must Erst e approved 1 t&e
2resident of t&e 2&ilippines> and
.. In &oldin- t&at, as t&e sales made 1 t&e plaintiD,appellant &ave assumed %ommer%ial
proportions, it %annot es%ape from t&e operation of said muni%ipal ordinan%es under t&e %loa5
of reli-ious privile-e.
7he issues. C )s ma1 e seen from t&e pro%eedin- statement of t&e %ase, t&e issues involved in t&e
present %ontrovers1 ma1 e redu%ed to t&e follo*in-6 9": *&et&er or not t&e ordinan%es of t&e Cit1 of
Manila, Nos. 3000, as amended, and 252#, 3028 and 33!., are %onstitutional and valid> and 92:
*&et&er t&e provisions of said ordinan%es are appli%ale or not to t&e %ase at ar.
Se%tion ", suse%tion 90: of )rti%le III of t&e Constitution of t&e Repuli% of t&e 2&ilippines, provides
t&at6
90: No la* s&all e made respe%tin- an estalis&ment of reli-ion, or pro&iitin- t&e free
e(er%ise t&ereof, and t&e free e(er%ise and en8o1ment of reli-ious profession and *ors&ip,
*it&out dis%rimination or preferen%e, s&all forever e allo*ed. No reli-ion test s&all e re<uired
for t&e e(er%ise of %ivil or politi%al ri-&ts.
2redi%ated on t&is %onstitutional mandate, plaintiD,appellant %ontends t&at Ardinan%es Nos. 252# and
3000, as respe%tivel1 amended, are un%onstitutional and ille-al in so far as its so%iet1 is %on%erned,
e%ause t&e1 provide for reli-ious %ensors&ip and restrain t&e free e(er%ise and en8o1ment of its
reli-ious profession, to *it6 t&e distriution and sale of iles and ot&er reli-ious literature to t&e
people of t&e 2&ilippines.
/efore enterin- into a dis%ussion of t&e %onstitutional aspe%t of t&e %ase, $e s&all Erst %onsider t&e
provisions of t&e <uestioned ordinan%es in relation to t&eir appli%ation to t&e sale of iles, et%. 1
appellant. '&e re%ords, s&o* t&at 1 letter of Ma1 2#, "#53 9)nne( ):, t&e Cit1 'reasurer re<uired
plaintiD to se%ure a Ma1or+s permit in %onne%tion *it& t&e so%iet1+s alle-ed usiness of distriutin- and
sellin- iles, et%. and to pa1 permit dues in t&e sum of 235 for t&e period %overed in t&is liti-ation,
plus t&e sum of 235 for %ompromise on a%%ount of plaintiD+s failure to se%ure t&e permit re<uired 1
Ardinan%e No. 3000 of t&e Cit1 of Manila, as amended. '&is Ardinan%e is of -eneral appli%ation and not
parti%ularl1 dire%ted a-ainst institutions li5e t&e plaintiD, and it does not %ontain an1 provisions
*&atever pres%riin- reli-ious %ensors&ip nor restrainin- t&e free e(er%ise and en8o1ment of an1
reli-ious profession. Se%tion " of Ardinan%e No. 3000 reads as follo*s6
S4C. ". 24RMI'S N4C4SS)RN. C It s&all e unla*ful for an1 person or entit1 to %ondu%t or
en-a-e in an1 of t&e usinesses, trades, or o%%upations enumerated in +ection I of this
(rdinance or other businesses, trades, or occupations for hich a permit is re.uired for the
proper supervision and enforcement of e!istin" las and ordinances "overnin" the sanitation,
security, and elfare of the public and the health of the employees en"a"ed in the business
speci$ed in said section I hereof, $I'HA;' 3IRS' H)IING A/')IN4G ) 24RMI' 'H4R43AR
3RAM 'H4 M)NAR )NG 'H4 N4C4SS)RN BIC4NS4 3RAM 'H4 CI'N 'R4)S;R4R.
'&e usiness, trade or o%%upation of t&e plaintiD involved in t&is %ase is not parti%ularl1 mentioned in
Se%tion 3 of t&e Ardinan%e, and t&e re%ord does not s&o* t&at a permit is re<uired t&erefor under
e(istin- la*s and ordinan%es for t&e proper supervision and enfor%ement of t&eir provisions -overnin-
t&e sanitation, se%urit1 and *elfare of t&e puli% and t&e &ealt& of t&e emplo1ees en-a-ed in t&e
usiness of t&e plaintiD. Ho*ever, se%tions 3 of Ardinan%e 3000 %ontains item No. 0#, *&i%& reads as
follo*s6
0#. )ll ot&er usinesses, trades or o%%upations not
mentioned in t&is Ardinan%e, e(%ept t&ose upon *&i%& t&e
Cit1 is not empo*ered to li%ense or to ta( 25.00
'&erefore, t&e ne%essit1 of t&e permit is made to depend upon t&e po*er of t&e Cit1 to li%ense or ta(
said usiness, trade or o%%upation.
)s to t&e li%ense fees t&at t&e 'reasurer of t&e Cit1 of Manila re<uired t&e so%iet1 to pa1 from t&e .t&
<uarter of "#.5 to t&e "st <uarter of "#53 in t&e sum of 25,82"..5, in%ludin- t&e sum of 250 as
%ompromise, Ardinan%e No. 252#, as amended 1 Ardinan%es Nos. 200#, 282" and 3028 pres%ries
t&e follo*in-6
S4C. ". 344S. C Su8e%t to t&e provisions of se%tion 508 of t&e Revised Ardinan%es of t&e Cit1
of Manila, as amended, t&ere s&all e paid to t&e Cit1 'reasurer for en-a-in- in an1 of t&e
usinesses or o%%upations elo* enumerated, <uarterl1, li%ense fees ased on -ross sales or
re%eipts realiLed durin- t&e pre%edin- <uarter in a%%ordan%e *it& t&e rates &erein pres%ried6
2RAIIG4G, HA$4I4R, '&at a person en-a-ed in an1 usinesses or o%%upation for t&e Erst
time s&all pa1 t&e initial li%ense fee ased on t&e proale -ross sales or re%eipts for t&e Erst
<uarter e-innin- from t&e date of t&e openin- of t&e usiness as indi%ated &erein for t&e
%orrespondin- usiness or o%%upation.
( ( ( ( ( ( ( ( (
GRA;2 2. C Retail dealers in ne* 9not 1et used: mer%&andise, *&i%& dealers are not 1et
su8e%t to t&e pa1ment of an1 muni%ipal ta(, su%& as 9": retail dealers in "eneral merchandise>
92: retail dealers e(%lusivel1 en-a-ed in t&e sale of . . . oo5s, in%ludin- stationer1.
( ( ( ( ( ( ( ( (
)s ma1 e seen, t&e li%ense fees re<uired to e paid <uarterl1 in Se%tion " of said Ardinan%e No. 252#,
as amended, are not imposed dire%tl1 upon an1 reli-ious institution ut upon t&ose en-a-ed in an1 of
t&e usiness or o%%upations t&erein enumerated, su%& as retail @dealers in -eneral mer%&andise@
*&i%&, it is alle-ed, %over t&e usiness or o%%upation of sellin- iles, oo5s, et%.
C&apter !0 of t&e Revised )dministrative Code *&i%& in%ludes se%tion 2..., suse%tion 9m,2: of said
le-al od1, as amended 1 )%t No. 3!5#, approved on 6ecember N, CFKF, empo*ers t&e Muni%ipal
/oard of t&e Cit1 of Manila6
9M,2: 'o ta( and E( t&e li%ense fee on 9a: dealers in ne* automoiles or a%%essories or ot&,
and 9: retail dealers in ne* 9not 1et used: mer%&andise, *&i%& dealers are not 1et su8e%t to
t&e pa1ment of an1 muni%ipal ta(.
3or t&e purpose of ta(ation, t&ese retail dealers s&all e %lassiEed as 9": retail dealers in
-eneral mer%&andise, and 92: retail dealers e(%lusivel1 en-a-ed in t&e sale of 9a: te(tiles . . .
9e: oo5s, in%ludin- stationer1, paper and o=%e supplies, . . .6 2RAIIG4G, HA$4I4R, 7hat the
combined total ta! of any debtor or manufacturer, or both, enumerated under these
subsections (m3C# and (m3K#, hether dealin" in one or all of the articles mentioned herein,
+>,LL 4(7 B* %4 *OC*++ (1 1%-* >246&*6 '*+(+ '*& ,442M.
and appellee+s %ounsel maintains t&at Cit1 Ardinan%es Nos. 252# and 3000, as amended, *ere ena%ted
in virtue of t&e po*er t&at said )%t No. 3!!# %onferred upon t&e Cit1 of Manila. )ppellant, &o*ever,
%ontends t&at said ordinan%es are lon-er in for%e and eDe%t as t&e la* under *&i%& t&e1 *ere
promul-ated &as een e(pressl1 repealed 1 Se%tion "02 of Repuli% )%t No. .0# passed on 5une CN,
CFPF, 5no*n as t&e Revised Manila C&arter.
2assin- upon t&is point t&e lo*er Court %ate-ori%all1 stated t&at Repuli% )%t No. .0# e(pressl1
repealed t&e provisions of C&apter !0 of t&e Revised )dministrative Code ut in t&e opinion of t&e trial
Mud-e, alt&ou-& Se%tion 2... 9m,2: of t&e former Manila C&arter and se%tion "8 9o: of t&e ne*
seemin-l1 diDer in t&e *a1 t&e le-islative intent *as e(pressed, 1et t&eir meanin- is pra%ti%all1 t&e
same for t&e purpose of ta(in- t&e mer%&andise mentioned in ot& le-al provisions and, %onse<uentl1,
Ardinan%es Nos. 252# and 3000, as amended, are to e %onsidered as still in full for%e and eDe%t
uninterruptedl1 up to t&e present.
Aften t&e le-islature, instead of simpl1 amendin- t&e pre,e(istin- statute, *ill repeal t&e old
statute in its entiret1 and 1 t&e same ena%tment re,ena%t all or %ertain portions of t&e
pree(istin- la*. Af %ourse, t&e prolem %reated 1 t&is sort of le-islative a%tion involves mainl1
t&e eDe%t of t&e repeal upon ri-&ts and liailities *&i%& a%%rued under t&e ori-inal statute. )re
t&ose ri-&ts and liailities destro1ed or preservedU '&e aut&orities are divided as to t&e eDe%t
of simultaneous repeals and re,ena%tments. Some ad&ere to t&e vie* t&at t&e ri-&ts and
liailities a%%rued under t&e repealed a%t are destro1ed, sin%e t&e statutes from *&i%& t&e1
spran- are a%tuall1 terminated, even t&ou-& for onl1 a ver1 s&ort period of time. (thers, and
they seem to be in the ma9ority, refuse to accept this vie of the situation, and conse.uently
maintain that all ri"hts an liabilities hich have accrued under the ori"inal statute are
preserved and may be enforced, since the re3enactment neutralizes the repeal, therefore,
continuin" the la in force ithout interruption. 9Cra*ford,Statutor1 Constru%tion, Se%. 322:.
)ppellant+s %ounsel states t&at se%tion "8 9o: of Repuli% )%t No, .0# introdu%es a ne* and *ider
%on%ept of ta(ation and is diDerent from t&e provisions of Se%tion 2...9m,2: t&at t&e former %annot e
%onsidered as a sustantial re,ena%tment of t&e provisions of t&e latter. $e &ave <uoted aove t&e
provisions of se%tion 2...9m,2: of t&e Revised )dministrative Code and $e s&all no* %op1 &ereunder
t&e provisions of Se%tion "8, sudivision 9o: of Repuli% )%t No. .0#, *&i%& reads as follo*s6
9o: 'o ta( and E( t&e li%ense fee on dealers in -eneral mer%&andise, in%ludin- importers and
indentors, e(%ept t&ose dealers *&o ma1 e e(pressl1 su8e%t to t&e pa1ment of some ot&er
muni%ipal ta( under t&e provisions of t&is se%tion.
Gealers in -eneral mer%&andise s&all e %lassiEed as 9a: *&olesale dealers and 9b: retail
dealers. 3or purposes of t&e ta( on retail dealers, -eneral mer%&andise s&all e %lassiEed into
four main %lasses6 namel1 9": lu(ur1 arti%les, 92: semi,lu(ur1 arti%les, 93: essential
%ommodities, and 9.: mis%ellaneous arti%les. ) separate li%ense s&all e pres%ried for ea%&
%lass ut *&ere %ommodities of diDerent %lasses are sold in t&e same estalis&ment, it s&all
not e %ompulsor1 for t&e o*ner to se%ure more t&an one li%ense if &e pa1s t&e &i-&er or
&i-&est rate of ta( pres%ried 1 ordinan%e. $&olesale dealers s&all pa1 t&e li%ense ta( as
su%&, as ma1 e provided 1 ordinan%e.
3or purposes of t&is se%tion, t&e term @General mer%&andise@ s&all in%lude poultr1 and
livesto%5, a-ri%ultural produ%ts, Es& and ot&er allied produ%ts.
'&e onl1 essential diDeren%e t&at $e End et*een t&ese t*o provisions t&at ma1 &ave an1 earin- on
t&e %ase at ar, is t&at, *&ile suse%tion 9m,2: pres%ries t&at t&e %omined total ta( of an1 dealer or
manufa%turer, or ot&, enumerated under suse%tions 9m,": and 9m,2:, *&et&er dealin- in one or all of
t&e arti%les mentioned t&erein,shall not be in e!cess of 'LJJ per annum, t&e %orrespondin- se%tion "8,
suse%tion 9o: of Repuli% )%t No. .0#, does not %ontain an1 limitation as to t&e amount of ta( or
li%ense fee t&at t&e retail dealer &as to pa1 per annum. Hen%e, and in a%%ordan%e *it& t&e *ei-&t of
t&e aut&orities aove referred to t&at maintain t&at @all ri-&ts and liailities *&i%& &ave a%%rued under
t&e ori-inal statute are preserved and ma1 e enfor%ed, sin%e t&e reena%tment neutraliLes t&e repeal,
t&erefore %ontinuin- t&e la* in for%e *it&out interruption@, $e &old t&at t&e <uestioned ordinan%es of
t&e Cit1 of Manila are still in for%e and eDe%t.
2laintiD, &o*ever, ar-ues t&at t&e <uestioned ordinan%es, to e valid, must Erst e approved 1 t&e
2resident of t&e 2&ilippines as per se%tion "8, suse%tion 9ii: of Repuli% )%t No. .0#, *&i%& reads as
follo*s6
9ii: 'o ta(, li%ense and re-ulate an1 usiness, trade or o%%upation ein- %ondu%ted *it&in t&e
Cit1 of Manila,not otherise enumerated in the precedin" subsections, includin" percenta"e
ta!es based on "ross sales or receipts, sub9ect to the approval of the '&*+%6*47, e!cept
amusement ta!es.
ut t&is re<uirement of t&e 2resident+s approval *as not %ontained in se%tion 2... of t&e former
C&arter of t&e Cit1 of Manila under *&i%& Ardinan%e No. 252# *as promul-ated. )n1*a1, as stated 1
appellee+s %ounsel, t&e usiness of @retail dealers in -eneral mer%&andise@ is e(pressl1 enumerated in
suse%tion 9o:, se%tion "8 of Repuli% )%t No. .0#> &en%e, an ordinan%e pres%riin- a muni%ipal ta( on
said usiness does not &ave to e approved 1 t&e 2resident to e eDe%tive, as it is not amon- t&ose
referred to in said suse%tion 9ii:. Moreover, t&e <uestioned ordinan%es are still in for%e, &avin- een
promul-ated 1 t&e Muni%ipal /oard of t&e Cit1 of Manila under t&e aut&orit1 -ranted to it 1 la*.
'&e <uestion t&at no* remains to e determined is *&et&er said ordinan%es are inappli%ale, invalid or
un%onstitutional if applied to t&e alle-ed usiness of distriution and sale of iles to t&e people of t&e
2&ilippines 1 a reli-ious %orporation li5e t&e )meri%an /ile So%iet1, plaintiD &erein.
$it& re-ard to Ardinan%e No. 252#, as amended 1 Ardinan%es Nos. 200#, 282" and 3028, appellant
%ontends t&at it is un%onstitutional and ille-al e%ause it restrains t&e free e(er%ise and en8o1ment of
t&e reli-ious profession and *ors&ip of appellant.
)rti%le III, se%tion ", %lause 90: of t&e Constitution of t&e 2&ilippines afore<uoted, -uarantees t&e
freedom of reli-ious profession and *ors&ip. @Reli-ion &as een spo5en of as a profession of fait& to an
a%tive po*er t&at inds and elevates man to its Creator@ 9)-lipa1 vs. RuiL, !. 2&il., 20":.It &as
referen%e to one+s vie*s of &is relations to His Creator and to t&e oli-ations t&e1 impose of reveren%e
to His ein- and %&ara%ter, and oedien%e to His $ill 9Gavis vs. /eason, "33 ;.S., 3.2:. '&e
%onstitutional -uarant1 of t&e free e(er%ise and en8o1ment of reli-ious profession and *ors&ip %arries
*it& it t&e ri-&t to disseminate reli-ious information. )n1 restraints of su%& ri-&t %an onl1 e 8ustiEed
li5e ot&er restraints of freedom of e(pression on t&e -rounds t&at t&ere is a %lear and present dan-er
of an1 sustantive evil *&i%& t&e State &as t&e ri-&t to prevent@. 9'aPada and 3ernando on t&e
Constitution of t&e 2&ilippines, Iol. ", .t& ed., p. 2#0:. In t&e %ase at ar t&e li%ense fee &erein involved
is imposed upon appellant for its distriution and sale of iles and ot&er reli-ious literature6
In t&e %ase of Murdock vs. 'ennsylvania, it *as &eld t&at an ordinan%e re<uirin- t&at a li%ense
e otained efore a person %ould %anvass or soli%it orders for -oods, paintin-s, pi%tures,
*ares or mer%&andise %annot e made to appl1 to memers of Me&ova&+s $itnesses *&o *ent
aout from door to door distriutin- literature and soli%itin- people to @pur%&ase@ %ertain
reli-ious oo5s and pamp&lets, all pulis&ed 1 t&e $at%& 'o*er /ile ? 'ra%t So%iet1. '&e
@pri%e@ of t&e oo5s *as t*ent1,Eve %ents ea%&, t&e @pri%e@ of t&e pamp&lets Eve %ents ea%&. It
*as s&o*n t&at in ma5in- t&e soli%itations t&ere *as a re<uest for additional @%ontriution@ of
t*ent1,Eve %ents ea%& for t&e oo5s and Eve %ents ea%& for t&e pamp&lets. Besser sum *ere
a%%epted, &o*ever, and oo5s *ere even donated in %ase interested persons *ere *it&out
funds.
An t&e aove fa%ts t&e Supreme Court &eld t&at it %ould not e said t&at petitioners *ere
en-a-ed in %ommer%ial rat&er t&an a reli-ious venture. '&eir a%tivities %ould not e des%ried
as emra%ed in t&e o%%upation of sellin- oo5s and pamp&lets. '&en t&e Court %ontinued6
@$e do not mean to sa1 t&at reli-ious -roups and t&e press are free from all Enan%ial urdens
of -overnment. See /ros9ean vs. ,merican 'ress Co., 2#0 ;.S., 233, 250, 80 B. ed. !!0, !!8,
5! S. Ct. .... $e &ave &ere somet&in- <uite diDerent, for e(ample, from a ta( on t&e in%ome
of one *&o en-a-es in reli-ious a%tivities or a ta( on propert1 used or emplo1ed in %onne%tion
*it& a%tivities. It is one t&in- to impose a ta( on t&e in%ome or propert1 of a prea%&er. It is
<uite anot&er to e(a%t a ta( from &im for t&e privile-e of deliverin- a sermon. '&e ta( imposed
1 t&e Cit1 of Meannette is a Tat li%ense ta(, pa1ment of *&i%& is a %ondition of t&e e(er%ise of
t&ese %onstitutional privile-es. '&e po*er to ta( t&e e(er%ise of a privile-e is t&e po*er to
%ontrol or suppress its en8o1ment. . . . '&ose *&o %an ta( t&e e(er%ise of t&is reli-ious pra%ti%e
%an ma5e its e(er%ise so %ostl1 as to deprive it of t&e resour%es ne%essar1 for its maintenan%e.
'&ose *&o %an ta( t&e privile-e of en-a-in- in t&is form of missionar1 evan-elism %an %lose all
its doors to all t&ose *&o do not &ave a full purse. Spreadin- reli-ious eliefs in t&is an%ient
and &onorale manner *ould t&us e denied t&e need1. . . .
It is %ontended &o*ever t&at t&e fa%t t&at t&e li%ense ta( %an suppress or %ontrol t&is a%tivit1 is
unimportant if it does not do so. /ut t&at is to disre-ard t&e nature of t&is ta(. It is a li%ense ta(
C a Tat ta( imposed on t&e e(er%ise of a privile-e -ranted 1 t&e /ill of Ri-&ts . . . '&e po*er
to impose a li%ense ta( on t&e e(er%ise of t&ese freedom is indeed as potent as t&e po*er of
%ensors&ip *&i%& t&is Court &as repeatedl1 stru%5 do*n. . . . It is not a nominal fee imposed as
a re-ulator1 measure to defra1 t&e e(penses of poli%in- t&e a%tivities in <uestion. It is in no
*a1 apportioned. It is Tat li%ense ta( levied and %olle%ted as a %ondition to t&e pursuit of
a%tivities *&ose en8o1ment is -uaranteed 1 t&e %onstitutional lierties of press and reli-ion
and inevital1 tends to suppress t&eir e(er%ise. '&at is almost uniforml1 re%o-niLed as t&e
in&erent vi%e and evil of t&is Tat li%ense ta(.@
Nor %ould dissemination of reli-ious information e %onditioned upon t&e approval of an o=%ial
or mana-er even if t&e to*n *ere o*ned 1 a %orporation as &eld in t&e %ase of Marsh vs.
+tate of ,labama 932! ;.S. 50":, or 1 t&e ;nited States itself as &eld in t&e %ase of 'u%5er vs.
'e(as 932! ;.S. 5"0:. In t&e former %ase t&e Supreme Court e(pressed t&e opinion t&at t&e
ri-&t to en8o1 freedom of t&e press and reli-ion o%%upies a preferred position as a-ainst t&e
%onstitutional ri-&t of propert1 o*ners.
@$&en *e alan%e t&e %onstitutional ri-&ts of o*ners of propert1 a-ainst t&ose of t&e people
to en8o1 freedom of press and reli-ion, as *e must &ere, *e remain mindful of t&e fa%t t&at t&e
latter o%%up1 a preferred position. . . . In our vie* t&e %ir%umstan%e t&at t&e propert1 ri-&ts to
t&e premises *&ere t&e deprivation of propert1 &ere involved, too5 pla%e, *ere &eld 1 ot&ers
t&an t&e puli%, is not su=%ient to 8ustif1 t&e State+s permittin- a %orporation to -overn a
%ommunit1 of %itiLens so as to restri%t t&eir fundamental lierties and t&e enfor%ement of su%&
restraint 1 t&e appli%ation of a State statute.@ 9'aPada and 3ernando on t&e Constitution of
t&e 2&ilippines, Iol. ", .t& ed., p. 30.,30!:.
Se%tion 20 of Common*ealt& )%t No. .!!, ot&er*ise 5no*n as t&e National Internal Revenue Code,
provides6
S4C. 20. 4X4M2'IANS 3RAM ')X AN CAR2AR)'IANS. C '&e follo*in- or-aniLations s&all not
e ta(ed under t&is 'itle in respe%t to in%ome re%eived 1 t&em as su%& C
9e: Corporations or asso%iations or-aniLed and operated e(%lusivel1 for reli"ious,
%&aritale, . . . or edu%ational purposes, . . .6 2rovided, &o*ever, '&at t&e in%ome of *&atever
5ind and %&ara%ter from an1 of its properties, real or personal, or from an1 a%tivit1 %ondu%ted
for proEt, re-ardless of t&e disposition made of su%& in%ome, s&all e liale to t&e ta( imposed
under t&is Code>
)ppellant+s %ounsel %laims t&at t&e Colle%tor of Internal Revenue &as e(empted t&e plaintiD from t&is
ta( and sa1s t&at su%& e(emption %learl1 indi%ates t&at t&e a%t of distriutin- and sellin- iles, et%. is
purel1 reli-ious and does not fall under t&e aove le-al provisions.
It ma1 e true t&at in t&e %ase at ar t&e pri%e as5ed for t&e iles and ot&er reli-ious pamp&lets *as
in some instan%es a little it &i-&er t&an t&e a%tual %ost of t&e same ut t&is %annot mean t&at
appellant *as en-a-ed in t&e usiness or o%%upation of sellin- said @mer%&andise@ for proEt. 3or t&is
reason $e elieve t&at t&e provisions of Cit1 of Manila Ardinan%e No. 252#, as amended, %annot e
applied to appellant, for in doin- so it *ould impair its free e(er%ise and en8o1ment of its reli-ious
profession and *ors&ip as *ell as its ri-&ts of dissemination of reli-ious eliefs.
$it& respe%t to Ardinan%e No. 3000, as amended, *&i%& re<uires t&e otention t&e Ma1or+s permit
efore an1 person %an en-a-e in an1 of t&e usinesses, trades or o%%upations enumerated t&erein, $e
do not End t&at it imposes an1 %&ar-e upon t&e en8o1ment of a ri-&t -ranted 1 t&e Constitution, nor
ta( t&e e(er%ise of reli-ious pra%ti%es. In t&e %ase of Coleman vs. City of /ri)n, "8# S.4. .20, t&is point
*as elu%idated as follo*s6
)n ordinan%e 1 t&e Cit1 of Gri=n, de%larin- t&at t&e pra%ti%e of distriutin- eit&er 1 &and or
ot&er*ise, %ir%ulars, &andoo5s, advertisin-, or literature of an1 5ind, *&et&er said arti%les are
ein- delivered free, or *&et&er same are ein- sold *it&in t&e %it1 limits of t&e Cit1 of Gri=n,
*it&out Erst otainin- *ritten permission from t&e %it1 mana-er of t&e Cit1 of Gri=n, s&all e
deemed a nuisan%e and punis&ale as an oDense a-ainst t&e Cit1 of Gri=n, does not deprive
defendant of his constitutional ri"ht of the free e!ercise and en9oyment of reli"ious profession
and orship, even thou"h it prohibits him from introducin" and carryin" out a scheme or
purpose hich he sees $t to claim as a part of his reli"ious system.
It seems %lear, t&erefore, t&at Ardinan%e No. 3000 %annot e %onsidered un%onstitutional, even if
applied to plaintiD So%iet1. /ut as Ardinan%e No. 252# of t&e Cit1 of Manila, as amended, is not
appli%ale to plaintiD,appellant and defendant,appellee is po*erless to li%ense or ta( t&e usiness of
plaintiD So%iet1 involved &erein for, as stated efore, it *ould impair plaintiD+s ri-&t to t&e free e(er%ise
and en8o1ment of its reli-ious profession and *ors&ip, as *ell as its ri-&ts of dissemination of reli-ious
eliefs, $e End t&at Ardinan%e No. 3000, as amended is also inappli%ale to said usiness, trade or
o%%upation of t&e plaintiD.
$&erefore, and on t&e stren-t& of t&e fore-oin- %onsiderations, $e &ere1 reverse t&e de%ision
appealed from, senten%in- defendant return to plaintiD t&e sum of 25,8#"..5 undul1 %olle%ted from it.
$it&out pronoun%ement as to %osts. It is so ordered.
,VIII. Non-iApairAent o2 %ontra3ts
G.R. No. SS9# !a" 9, ###
!ANILA (L(%TRI% %&!PAN., petitioner,
vs.
PR&VIN%( &) LAG*NA and /(NIT& R. /ALA>&, in 6is 3apa3it" as Provin3ia4 Treasurer o2
LaBuna,respondents.

VIT*G, J.:
An various dates, %ertain muni%ipalities of t&e 2rovin%e of Ba-una, in%ludin-, /iPan, Sta. Rosa, San
2edro, Buisiana, Calauan and Cau1ao, 1 virtue of e(istin- la*s t&en in eDe%t, issued resolutions
t&rou-& t&eir respe%tive muni%ipal %oun%ils -rantin- fran%&ise in favor of petitioner Manila 4le%tri%
Compan1 9@M4R)BCA@: for t&e suppl1 of ele%tri% li-&t, &eat and po*er *it&in t&eir %on%erned areas. An
"# Manuar1 "#83, M4R)BCA *as li5e*ise -ranted a fran%&ise 1 t&e National 4le%triE%ation
)dministration to operate an ele%tri% li-&t and po*er servi%e in t&e Muni%ipalit1 of Calama, Ba-una.
An "2 Septemer "##", Repuli% )%t No. 0"!0, ot&er*ise 5no*n as t&e @Bo%al Government Code of
"##",@ *as ena%ted to ta5e eDe%t on 0" Manuar1 "##2 en8oinin- lo%al -overnment units to %reate t&eir
o*n sour%es of revenue and to lev1 ta(es, fees and %&ar-es, su8e%t to t&e limitations e(pressed
t&erein, %onsistent *it& t&e asi% poli%1 of lo%al autonom1. 2ursuant to t&e provisions of t&e Code,
respondent provin%e ena%ted Ba-una 2rovin%ial Ardinan%e No. 0",#2, eDe%tive 0" Manuar1 "##3,
providin-, in part, as follo*s6
Se%. 2.0#. 3ran%&ise 'a(. C '&ere is &ere1 imposed a ta( on usinesses en8o1in- a
fran%&ise, at a rate of Eft1 per%ent 9507: of one per%ent 9"7: of t&e -ross annual
re%eipts, *&i%& s&all in%lude ot& %as& sales and sales on a%%ount realiLed durin- t&e
pre%edin- %alendar 1ear *it&in t&is provin%e, in%ludin- t&e territorial limits on an1 %it1
lo%ated in t&e provin%e.
An t&e asis of t&e aove ordinan%e, respondent 2rovin%ial 'reasurer sent a demand letter to M4R)BCA
for t&e %orrespondin- ta( pa1ment. 2etitioner M4R)BCA paid t&e ta(, *&i%& t&en amounted to
2"#,520.!28..2, under protest. ) formal %laim for refund *as t&ereafter sent 1 M4R)BCA to t&e
2rovin%ial 'reasurer of Ba-una %laimin- t&at t&e fran%&ise ta( it &ad paid and %ontinued to pa1 to t&e
National Government pursuant to 2.G. 55" alread1 in%luded t&e fran%&ise ta( imposed 1 t&e 2rovin%ial
'a( Ardinan%e. M4R)BCA, %ontended t&at t&e imposition of a fran%&ise ta( under Se%tion 2.0# of
Ba-una 2rovin%ial Ardinan%e No. 0",#2, insofar as it %on%erned M4R)BCA, %ontravened t&e provisions
of Se%tion " of 2.G. 55" *&i%& read6
)n1 provision of la* or lo%al ordinan%e to t&e %ontrar1 not*it&standin-, t&e fran%&ise
ta( pa1ale 1 all -rantees of fran%&ises to -enerate, distriute and sell ele%tri%
%urrent for li-&t, &eat and po*er s&all e t*o per %ent 927: of t&eir -ross re%eipts
re%eived from t&e sale of ele%tri% %urrent and from transa%tions in%ident to t&e
-eneration, distriution and sale of ele%tri% %urrent.
Su%& fran%&ise ta( s&all e pa1ale to t&e Commissioner of Internal Revenue or &is
dul1 aut&oriLed representative on or efore t&e t*entiet& da1 of t&e mont& follo*in-
t&e end of ea%& %alendar <uarter or mont&, as ma1 e provided in t&e respe%tive
fran%&ise or pertinent muni%ipal re-ulation and s&all, an1 provision of t&e Bo%al 'a(
Code or an1 ot&er la* to t&e %ontrar1 not*it&standin-, e in lieu of all ta(es and
assessments of *&atever nature imposed 1 an1 national or lo%al aut&orit1 on
earnin-s, re%eipts, in%ome and privile-e of -eneration, distriution and sale of ele%tri%
%urrent.
An 28 )u-ust "##5, t&e %laim for refund of petitioner *as denied in a letter si-ned 1 Governor Mose G.
Bina relied on a more re%ent la*, i.e. Repuli% )%t No. 0"!0 or t&e Bo%al Government Code of "##",
t&an t&e old de%ree invo5ed 1 petitioner.
An ". 3eruar1 "##!, petitioner M4R)BCA Eled *it& t&e Re-ional 'rial Court of Sta. CruL, Ba-una, a
%omplaint for refund, *it& a pra1er for t&e issuan%e of a *rit of preliminar1 in8un%tion andFor temporar1
restrainin- order, a-ainst t&e 2rovin%e of Ba-una and also /enito R. /alaLo in &is %apa%it1 as t&e
2rovin%ial 'reasurer of Ba-una. )side from t&e amount of 2"#,520,!28..2 for *&i%& petitioner
M4R)BCA &ad priorl1 made a formal re<uest for refund, petitioner t&ereafter li5e*ise made additional
pa1ments under protest on various dates totalin- 220,!!#,5!!.#".
'&e trial %ourt, in its assailed de%ision of 30 Septemer "##0, dismissed t&e %omplaint and %on%luded6
$H4R43AR4, IN 'H4 BIGH' A3 )BB 'H4 3AR4GAING CANSIG4R)'IANS, M;GGM4N' is
&ere1 rendered in favor of t&e defendants and a-ainst t&e plaintiD, 16
". Arderin- t&e dismissal of t&e Complaint> and
2. Ge%larin- Ba-una 2rovin%ial 'a( Ardinan%e No. 0",#2 as valid, indin-, reasonale
and enfor%eale.
2
In t&e instant petition, M4R)BCA assails t&e aove rulin- and rin-s up t&e follo*in- issues> viz6
". $&et&er t&e imposition of a fran%&ise ta( under Se%tion 2.0# of Ba-una 2rovin%ial
Ardinan%e No. 0",#2, insofar as petitioner is %on%erned, is violative of t&e non,
impairment %lause of t&e Constitution and Se%tion " of 2residential Ge%ree No. 55".
2. $&et&er Repuli% )%t No. 0"!0, ot&er*ise 5no*n Bo%al Government Code of "##",
&as repealed, amended or modiEed 2residential Ge%ree No. 55".
3. $&et&er t&e do%trine of administrative remedies is appli%ale in t&is %ase.
S
'&e petition la%5s merit.
2refatoril1, it mi-&t e *ell to re%all t&at lo%al -overnments do not &ave t&e in&erent po*er to
ta(
4
e(%ept to t&e e(tent t&at su%& po*er mi-&t e dele-ated to t&em eit&er 1 t&e asi% la* or 1
statute. 2resentl1, under )rti%le X of t&e "#80 Constitution, a -eneral dele-ation of t&at po*er &as
een -iven in favor of lo%al -overnment units. '&us6
Se%. 3. '&e Con-ress s&all ena%t a lo%al -overnment %ode *&i%& s&all provide for a
more responsive and a%%ountale lo%al -overnment stru%ture instituted t&rou-& a
s1stem of de%entraliLation *it& eDe%tive me%&anisms of re%all, initiative, and
referendum, allo%ate amon- t&e diDerent lo%al -overnment units t&eir po*ers,
responsiilities, and resour%es, and provide for t&e <ualiE%ations, ele%tion,
appointment and removal, term, salaries, po*ers and fun%tions, and duties of lo%al
o=%ials, and all ot&er matters relatin- to t&e or-aniLation and operation of t&e lo%al
units.
((( ((( (((
Se%. 5. 4a%& lo%al -overnment unit s&all &ave t&e po*er to %reate its o*n sour%es of
revenues and to lev1 ta(es, fees, and %&ar-es su8e%t to su%& -uidelines and
limitations as t&e Con-ress ma1 provide, %onsistent *it& t&e asi% poli%1 of lo%al
autonom1. Su%& ta(es, fees, and %&ar-es s&all a%%rue e(%lusivel1 to t&e lo%al
-overnments.
'&e "#80 Constitution &as a %ounterpart provision in t&e "#03 Constitution *&i%& did %ome out
*it& a similar dele-ation of revenue ma5in- po*ers to lo%al -overnments.
9
;nder re-ime of t&e "#35 Constitution no similar dele-ation of ta( po*ers *as provided, and lo%al
-overnment units instead derived t&eir ta( po*ers under a limited statutor1 aut&orit1. $&ereas, t&en,
t&e dele-ation of ta( po*ers -ranted at t&at time 1 statute to lo%al -overnments *as %onEned and
deEned 9outside of *&i%& t&e po*er *as deemed *it&&eld:, t&e present %onstitutional rule 9startin-
*it& t&e "#03 Constitution:, &o*ever, *ould roadl1 %onfer su%& ta( po*ers su8e%t onl1 to spe%iE%
e(%eptions t&at t&e la* mi-&t pres%rie.
;nder t&e no* prevailin- Constitution, *&ere t&ere is neit&er a -rant nor a pro&iition 1 statute, t&e
ta( po*er must e deemed to e(ist alt&ou-& Con-ress ma1 provide statutor1 limitations and
-uidelines. '&e asi% rationale for t&e %urrent rule is to safe-uard t&e viailit1 and self,su=%ien%1 of
lo%al -overnment units 1 dire%tl1 -rantin- t&em -eneral and road ta( po*ers. Nevert&eless, t&e
fundamental la* did not intend t&e dele-ation to e asolute and un%onditional> t&e %onstitutional
o8e%tive oviousl1 is to ensure t&at, *&ile t&e lo%al -overnment units are ein- stren-t&ened and
made more autonomous,
:
t&e le-islature must still see to it t&at 9a: t&e ta(pa1er *ill not e over,
urdened or saddled *it& multiple and unreasonale impositions> 9: ea%& lo%al -overnment unit *ill
&ave its fair s&are of availale resour%es> 9%: t&e resour%es of t&e national -overnment *ill not e
undul1 distured> and 9d: lo%al ta(ation *ill e fair, uniform, and 8ust.
'&e Bo%al Government Code of "##" &as in%orporated and adopted, 1 and lar-e, t&e provisions of t&e
no* repealed Bo%al 'a( Code, *&i%& &ad een in eDe%t sin%e 0" Mul1 "#03, promul-ated into la* 1
2residential Ge%ree
No. 23"
7
pursuant to t&e t&en provisions of Se%tion 2, )rti%le XI, of t&e "#03 Constitution. '&e "##"
Code e(pli%itl1 aut&oriLes provin%ial -overnments, not*it&standin- @any e!emption "ranted by any
la or other special la, . . . (to# impose a ta! on businesses en9oyin" a franchise.@ Se%tion "30 t&ereof
provides6
Se%. "30. 1ranchise 7a! C 4otithstandin" any e!emption "ranted by any la or other
special la, the province may impose a ta! on businesses en9oyin" a franchise, at a
rate not e(%eedin- Eft1 per%ent 9507: of one per%ent 9"7: of t&e -ross annual re%eipts
for t&e pre%edin- %alendar 1ear ased on t&e in%omin- re%eipt, or realiLed, *it&in its
territorial 8urisdi%tion. In t&e %ase of a ne*l1 started usiness, t&e ta( s&all not e(%eed
one,t*entiet& 9"F20: of one per%ent 9"7: of t&e %apital investment. In t&e su%%eedin-
%alendar 1ear, re-ardless of *&en t&e usiness started to operate, t&e ta( s&all e
ased on t&e -ross re%eipts for t&e pre%edin- %alendar 1ear, or an1 fra%tion t&ereof, as
provided &erein. 9;nders%orin- supplied for emp&asis:
Indi%ative of t&e le-islative intent to %arr1 out t&e Constitutional mandate of vestin- road ta( po*ers
to lo%al -overnment units, t&e Bo%al Government Code &as eDe%tivel1 *it&dra*n under Se%tion "#3
t&ereof, ta( e(emptions or in%entives t&eretofore en8o1ed 1 %ertain entities. '&is la* states6
Se%. "#3. Withdraal of 7a! *!emption 'rivile"es C 2nless otherise provided in this
Code, ta! e!emptions or incentives "ranted to, or presently en9oyed by all persons,
hether natural or 9uridical, in%ludin- -overnment,o*ned or %ontrolled %orporations,
e(%ept lo%al *ater distri%ts, %ooperatives dul1 re-istered under R.). No. !#38, non,
sto%5 and non,proEt &ospitals and edu%ational institutions, are hereby ithdran upon
the e<ectivity of this Code. 9;nders%orin- supplied for emp&asis:
'&e Code, in addition, %ontains a -eneral repealin- %lause in its Se%tion 53.> t&us6
Se%. 53.. Repealin- Clause. C . . .
9f: ,ll "eneral and special las, a%ts, %it1 %&arters, de%rees, e(e%utive orders,
pro%lamations and administrative re-ulations, or part or parts t&ereof *&i%& are
in%onsistent *it& an1 of t&e provisions of t&is Code are &ere1 repealed or modiEed
a%%ordin-l1. 9;nders%orin- supplied for emp&asis:
<
'o e(emplif1, in Mactan Cebu %nternational ,irport ,uthority vs. Marcos,
#
t&e Court up&eld t&e
*it&dra*al of t&e real estate ta( e(emption previousl1 en8o1ed 1 Ma%tan Ceu International )irport
)ut&orit1. '&e Court ratio%inated6
. . . '&ese poli%1 %onsiderations are %onsistent *it& t&e State poli%1 to ensure
autonom1 to lo%al -overnments and t&e o8e%tive of t&e BGC t&at t&e1 en8o1 -enuine
and meanin-ful lo%al autonom1 to enale t&em to attain t&eir fullest development as
self,reliant %ommunities and ma5e t&em eDe%tive partners in t&e attainment of
national -oals. '&e po*er to ta( is t&e most eDe%tive instrument to raise needed
revenues to Enan%e and support m1riad a%tivities if lo%al -overnment units for t&e
deliver1 of asi% servi%es essential to t&e promotion of t&e -eneral *elfare and t&e
en&an%ement of pea%e, pro-ress, and prosperit1 of t&e people. It ma1 also e relevant
to re%all t&at t&e ori-inal reasons for t&e *it&dra*al of ta( e(emption privile-es
-ranted to -overnment,o*ned and %ontrolled %orporations and all ot&er units of
-overnment *ere t&at su%& privile-e resulted in serious ta( ase erosion and
distortions in t&e ta( treatment of similarit1 situated enterprises, and t&ere *as a need
for t&ese entities to s&are in t&e re<uirements of development, Es%al or ot&er*ise, 1
pa1in- t&e ta(es and ot&er %&ar-es due from t&em.
$
2etitioner in its %omplaint efore t&e Re-ional 'rial Court %ited t&e rulin- of t&is Court in 'rovince of
Misamis (riental vs. Ca"ayan *lectric 'oer and Li"ht Company, %nc.>

t&us6
In an earlier %ase, t&e p&rase @s&all e in lieu of all ta(es and at an1 time levied,
estalis&ed 1, or %olle%ted 1 an1 aut&orit1@ found in t&e fran%&ise of t&e Iisa1an
4le%tri% Compan1 *as &eld to e(empt t&e %ompan1 from pa1ment of t&e 57 ta( on
%orporate fran%&ise provided in Se%tion 25# of t&e Internal Revenue Code 9Iisa1an
4le%tri% Co. vs. Gavid, .# A.G. JNo. .K "385:
Similarl1, *e ruled t&at t&e provision6 @s&all e in lieu of all ta(es of ever1 name and
nature@ in t&e fran%&ise of t&e Manila Railroad 9Suse%tion "2, Se%tion ", )%t No. "5"0:
e(empts t&e Manila Railroad from pa1ment of internal revenue ta( for its importations
of %oal and oil under )%t No. 2.32 and t&e )mendator1 )%ts of t&e 2&ilippine
Be-islature 9Manila Railroad vs. RaDert1, .0 2&il. 22.:.
'&e same p&rase found in t&e fran%&ise of t&e 2&ilippine Rail*a1 Co. 9Se%. "3, )%t No.
".#0: 8ustiEed t&e e(emption of t&e 2&ilippine Rail*a1 Compan1 from pa1ment of t&e
ta( on its %orporate fran%&ise under Se%tion 25# of t&e Internal Revenue Code, as
amended 1 R.). No. 3# 92&ilippine Rail*a1 Co vs. Colle%tor of Internal Revenue, #"
2&il. 35:.
'&ose ma-i% *ords, @s&all e in lieu of all ta(es@ also e(%used t&e Cotaato Bi-&t and
I%e 2lant Compan1 from t&e pa1ment of t&e ta( imposed 1 Ardinan%e No. 0 of t&e Cit1
of Cotaato 9Cotaato Bi-&t and 2o*er Co. vs. Cit1 of Cotaato, 32 SCR) 23":.
So *as t&e e(emption up&eld in favor of t&e Car%ar 4le%tri% and I%e 2lant Compan1
*&en it *as re<uired to pa1 t&e %orporate fran%&ise ta( under Se%tion 25# of t&e
Internal Revenue Code, as amended 1 R.). No. 3# 9Car%ar 4le%tri% ? I%e 2lant vs.
Colle%tor of Internal Revenue, 53 A.G. JNo. .K. "0!8:. '&is Court pointed out t&at su%&
e(emption is part of t&e indu%ement for t&e a%%eptan%e of t&e fran%&ise and t&e
rendition of puli% servi%e 1 t&e -rantee.
2
In t&e re%ent %ase of t&e City /overnment of +an 'ablo, etc., et al. vs. >on. Bienvenido -.
&eyes, et al.,
S
t&e Court &as &eld t&at t&e p&rase in lieu of all ta(es @&ave to -ive *a1 to t&e
peremptor1 lan-ua-e of t&e Bo%al Government Code spe%iE%all1 providin- for t&e *it&dra*al of su%&
e(emptions, privile-es,@ and t&at @upon t&e eDe%tivit1 of t&e Bo%al Government Code all e(emptions
e(%ept onl1 as provided t&erein %an no lon-er e invo5ed 1 M4R)BCA to dis%laim liailit1 for t&e lo%al
ta(.@ In Ene, t&e Court &as vie*ed its previous rulin-s as la1in- stress more on t&e le-islative intent of
t&e amendator1 la* C *&et&er t&e ta( e(emption privile-e is to e *it&dra*n or not C rat&er t&an on
*&et&er t&e la* %an *it&dra*, *it&out violatin- t&e Constitution, t&e ta( e(emption or not.
$&ile t&e Court &as, not too infre<uentl1, referred to ta( e(emptions %ontained in spe%ial fran%&ises as
ein- in t&e nature of %ontra%ts and a part of t&e indu%ement for %arr1in- on t&e fran%&ise, t&ese
e(emptions, nevert&eless, are far from ein- stri%tl1 %ontra%tual in nature. Contra%tual ta( e(emptions,
in t&e real sense of t&e term and *&ere t&e non,impairment %lause of t&e Constitution %an ri-&tl1 e
invo5ed, are t&ose a-reed to 1 t&e ta(in- aut&orit1 in %ontra%ts, su%& as t&ose %ontained in
-overnment onds or deentures, la*full1 entered into 1 t&em under enalin- la*s in *&i%& t&e
-overnment, a%tin- in its private %apa%it1, s&eds its %loa5 of aut&orit1 and *aives its -overnmental
immunit1. 'rul1, ta( e(emptions of t&is 5ind ma1 not e revo5ed *it&out impairin- t&e oli-ations of
%ontra%ts.
4
'&ese %ontra%tual ta( e(emptions, &o*ever, are not to e %onfused *it& ta( e(emptions
-ranted under fran%&ises. ) fran%&ise parta5es t&e nature of a -rant *&i%& is e1ond t&e purvie* of
t&e non,impairment %lause of t&e Constitution.
9
Indeed, )rti%le XII, Se%tion "", of t&e "#80
Constitution, li5e its pre%ursor provisions in t&e "#35 and t&e "#03 Constitutions, is e(pli%it t&at no
fran%&ise for t&e operation of a puli% utilit1 s&all e -ranted e(%ept under t&e %ondition t&at su%&
privile-e s&all e su8e%t to amendment, alteration or repeal 1 Con-ress as and *&en t&e %ommon
-ood so re<uires.
$H4R43AR4, t&e instant petition is &ere1 GISMISS4G. No %osts.CEphiC.nQt
SA ARG4R4G.