Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No.

L-7859 December 22, 1955

WALTER LUTZ, as Judicial Administrator of the Intestate Estate of the deceased Antonio Jayme Ledesma, plaintiff-appellant, vs. J. ANTONIO ARANETA, as the Collector of Internal Revenue, defendant-appellee. Ernesto J. Gonzaga for appellant. Office of the Solicitor General Ambrosio Padilla, First Assistant Solicitor General Guillermo E. Torres and Solicitor Felicisimo R. Rosete for appellee. SYLLABUS 1. CONSTITUTIONAL LAW; TAXATION; POWER OF STATE TO LEVY TAX IN AND SUPPORT OF SUGAR INDUSTRY. As the protection and promotion of the sugar industry is a matter of public concern the Legislature may determine within reasonable bounds what is necessary for its protection and expedient for its promotion. Here, the legislative must be allowed full play, subject only to the test of reasonableness; and it is not contended that the means provided in section 6 of Commonwealth Act No. 567 bear no relation to the objective pursued or are oppressive in character. If objective an methods are alike constitutionally valid, no reason is seen why the state may not levy taxes to raise funds for their prosecution and attainment. Taxation may be made the implement. Taxation may be made the implement of the state's police power (Great Atl. & Pac. Tea Co. vs. Grosjean, 301 U.S. 412, 81 L. Ed. 1193; U.S. vs. Butler, 297 U.S. 1, 80 L. Ed. 477; M'Culloch vs. Maryland, 4 Wheat, 316, 4 L. Ed. 579). 2. ID.; ID.; POWER OF STATE TO SELECT SUBJECT OF TAXATION. It is inherent in the power to tax that a state be free to select the subjects of taxation, and it has been repeatedly held that "inequalities which result from a singling out of one particular class for taxation or exemption infringe no constitutional limitation (Carmicheal vs. Southern Coal & Coke Co., 301 U.S. 495, 81 L. Ed. 1245, citing numerous authorities, at 1251). REYES, J.B L., J.: This case was initiated in the Court of First Instance of Negros Occidental to test the legality of the taxes imposed by Commonwealth Act No. 567, otherwise known as the Sugar Adjustment Act. Promulgated in 1940, the law in question opens (section 1) with a declaration of emergency, due to the threat to our industry by the imminent imposition of export taxes upon sugar as provided in the Tydings-McDuffe Act, and the "eventual loss of its preferential position in the United States market"; wherefore, the national policy was expressed "to obtain a readjustment of the benefits derived from the sugar industry by the component elements thereof" and "to stabilize the sugar industry so as to prepare it for the eventuality of the loss of its preferential position in the United States market and the imposition of the export taxes." In section 2, Commonwealth Act 567 provides for an increase of the existing tax on the manufacture of sugar, on a graduated basis, on each picul of sugar manufactured; while section 3 levies on owners or persons in control of lands devoted to the cultivation of sugar cane and ceded to others for a consideration, on lease or otherwise a tax equivalent to the difference between the money value of the rental or consideration collected and the amount representing 12 per centum of the assessed value of such land. According to section 6 of the law SEC. 6. All collections made under this Act shall accrue to a special fund in the Philippine Treasury, to be known as the 'Sugar Adjustment and Stabilization Fund,' and shall be paid out only for any or all of the following purposes or to attain any or all of the following objectives, as may be provided by law. First, to place the sugar industry in a position to maintain itself, despite the gradual loss of the preferntial position of the Philippine sugar in the United States market, and ultimately to insure its continued existence notwithstanding the loss of that market and the consequent necessity of meeting competition in the free markets of the world; Second, to readjust the benefits derived from the sugar industry by all of the component elements thereof the mill, the landowner, the planter of the sugar cane, and the laborers in the factory and in the field so that all might continue profitably to engage therein;lawphi1.net Third, to limit the production of sugar to areas more economically suited to the production thereof; and

Fourth, to afford labor employed in the industry a living wage and to improve their living and working conditions: Provided, That the President of the Philippines may, until the adjourment of the next regular session of the National Assembly, make the necessary disbursements from the fund herein created (1) for the establishment and operation of sugar experiment station or stations and the undertaking of researchers (a) to increase the recoveries of the centrifugal sugar factories with the view of reducing manufacturing costs, (b) to produce and propagate higher yielding varieties of sugar cane more adaptable to different district conditions in the Philippines, (c) to lower the costs of raising sugar cane, (d) to improve the buying quality of denatured alcohol from molasses for motor fuel, (e) to determine the possibility of utilizing the other by-products of the industry, (f) to determine what crop or crops are suitable for rotation and for the utilization of excess cane lands, and (g) on other problems the solution of which would help rehabilitate and stabilize the industry, and (2) for the improvement of living and working conditions in sugar mills and sugar plantations, authorizing him to organize the necessary agency or agencies to take charge of the expenditure and allocation of said funds to carry out the purpose hereinbefore enumerated, and, likewise, authorizing the disbursement from the fund herein created of the necessary amount or amounts needed for salaries, wages, travelling expenses, equipment, and other sundry expenses of said agency or agencies. Plaintiff, Walter Lutz, in his capacity as Judicial Administrator of the Intestate Estate of Antonio Jayme Ledesma, seeks to recover from the Collector of Internal Revenue the sum of P14,666.40 paid by the estate as taxes, under section 3 of the Act, for the crop years 1948-1949 and 1949-1950; alleging that such tax is unconstitutional and void, being levied for the aid and support of the sugar industry exclusively, which in plaintiff's opinion is not a public purpose for which a tax may be constitutioally levied. The action having been dismissed by the Court of First Instance, the plaintifs appealed the case directly to this Court (Judiciary Act, section 17). The basic defect in the plaintiff's position is his assumption that the tax provided for in Commonwealth Act No. 567 is a pure exercise of the taxing power. Analysis of the Act, and particularly of section 6 (heretofore quoted in full), will show that the tax is levied with a regulatory purpose, to provide means for the rehabilitation and stabilization of the threatened sugar industry. In other words, the act is primarily an exercise of the police power. This Court can take judicial notice of the fact that sugar production is one of the great industries of our nation, sugar occupying a leading position among its export products; that it gives employment to thousands of laborers in fields and factories; that it is a great source of the state's wealth, is one of the important sources of foreign exchange needed by our government, and is thus pivotal in the plans of a regime committed to a policy of currency stability. Its promotion, protection and advancement, therefore redounds greatly to the general welfare. Hence it was competent for the legislature to find that the general welfare demanded that the sugar industry should be stabilized in turn; and in the wide field of its police power, the lawmaking body could provide that the distribution of benefits therefrom be readjusted among its components to enable it to resist the added strain of the increase in taxes that it had to sustain (Sligh vs. Kirkwood, 237 U. S. 52, 59 L. Ed. 835; Johnson vs. State ex rel. Marey, 99 Fla. 1311, 128 So. 853; Maxcy Inc. vs. Mayo, 103 Fla. 552, 139 So. 121). As stated in Johnson vs. State ex rel. Marey, with reference to the citrus industry in Florida The protection of a large industry constituting one of the great sources of the state's wealth and therefore directly or indirectly affecting the welfare of so great a portion of the population of the State is affected to such an extent by public interests as to be within the police power of the sovereign. (128 Sp. 857). Once it is conceded, as it must, that the protection and promotion of the sugar industry is a matter of public concern, it follows that the Legislature may determine within reasonable bounds what is necessary for its protection and expedient for its promotion. Here, the legislative discretion must be allowed fully play, subject only to the test of reasonableness; and it is not contended that the means provided in section 6 of the law (above quoted) bear no relation to the objective pursued or are oppressive in character. If objective and methods are alike constitutionally valid, no reason is seen why the state may not levy taxes to raise funds for their prosecution and attainment. Taxation may be made the implement of the state's police power (Great Atl. & Pac. Tea Co. vs. Grosjean, 301 U. S. 412, 81 L. Ed. 1193; U. S. vs. Butler, 297 U. S. 1, 80 L. Ed. 477; M'Culloch vs. Maryland, 4 Wheat. 316, 4 L. Ed. 579). That the tax to be levied should burden the sugar producers themselves can hardly be a ground of complaint; indeed, it appears rational that the tax be obtained precisely from those who are to be benefited from the expenditure of the funds derived from it. At any rate, it is inherent in the power to tax that a state be free to select the subjects of taxation, and it has been repeatedly held that "inequalities which result from a singling out of one particular class for taxation, or exemption infringe no constitutional limitation" (Carmichael vs. Southern Coal & Coke Co., 301 U. S. 495, 81 L. Ed. 1245, citing numerous authorities, at p. 1251). From the point of view we have taken it appears of no moment that the funds raised under the Sugar Stabilization Act, now in question, should be exclusively spent in aid of the sugar industry, since it is that very enterprise that is being protected. It may be that other industries are also in need of similar protection; that the legislature is not required by the Constitution to adhere to a policy of "all or none." As ruled in Minnesota ex rel. Pearson vs. Probate Court, 309 U. S. 270, 84 L. Ed. 744, "if the law presumably hits the evil where it is most felt, it is not to be overthrown because there are other instances to which it might have been applied;" and that "the legislative authority, exerted within its proper field, need not embrace all the evils within its reach" (N. L. R. B. vs. Jones & Laughlin Steel Corp. 301 U. S. 1, 81 L. Ed. 893). Even from the standpoint that the Act is a pure tax measure, it cannot be said that the devotion of tax money to experimental stations to seek increase of efficiency in sugar production, utilization of by-products and solution of allied problems, as well as to the improvements of living and working conditions in sugar mills or plantations, without

any part of such money being channeled directly to private persons, constitutes expenditure of tax money for private purposes, (compare Everson vs. Board of Education, 91 L. Ed. 472, 168 ALR 1392, 1400). The decision appealed from is affirmed, with costs against appellant. So ordered. Paras, C. J., Bengzon, Padilla, Reyes, A., Jugo, Bautista Angelo, Labrador, and Concepcion, JJ., concur.

EN BANC G.R. No. L-31156 February 27, 1976 PEPSI-COLA BOTTLING COMPANY OF THE PHILIPPINES, INC., plaintiff-appellant, vs. MUNICIPALITY OF TANAUAN, LEYTE, THE MUNICIPAL MAYOR, ET AL., defendant appellees. SYNOPSIS Pepsi-Cola Bottling Company of the Philippines, Inc., filed a complaint with preliminary injunction before the Court of First Instance of Leyte to declare Section 2 of R.A. No. 2264, (known as the Local Autonomy Act) unconstitutional as an undue delegation of the taxing authority and declare null and void Municipal Ordinance No. 23, which levies and collects from soft drinks producers and manufactures a tax of 1/16 of a centavo for every bottle of soft drinks corked, and Municipal Ordinance No. 27 which levies and collects on soft drinks produced or manufactured within the territorial jurisdiction a tax of one centavo on each gallon of volume capacity. The trial court dismissed the complaint and upheld the constitutionality of Sec. 2 of R.A. No. 2264 and declared Municipal Ordinances Nos. 27 valid and constitutional. Appealed to the Court of Appeals, the case was certified to the Supreme Court as involving pure question of law. The Supreme Court upheld the validity of the delegation to Municipal Corporation or authority to tax and likewise the validity of Municipal Ordinance No. 27, which repealed Municipal Ordinance No. 23. SYLLABUS 1. TAXATION; NATURE; NON-DELEGATION OF POWER, EXCEPTION. The power of taxation is an essential and inherent attribute of sovereignty, belonging as a matter of right to every independent government, without being expressly conferred by the people. It is a power that is purely legislative and which the central legislative body cannot delegate either to the executive or judicial department of government without infringing upon the theory of separation of powers. The exception, however, lies in the case of municipal corporations, to which, said theory does not apply. Legislative powers may be delegated to local governments in respect of matters of local concern. This is sanctioned by immemorial. By necessary implication, the legislative power to create political corporations for purpose of local self-government carries with it the power to confer on such local government agencies the power to tax. 2. ID.; ID.; ID.; SCOPE OF LOCAL GOVERNMENT'S POWER TO TAX. The taxing authority conferred on local governments under Section 2, Republic Act No. 2264, is broad enough as to extend to almost "everything, excepting those which are mentioned therein." As long as the tax levied under the authority of a city or municipal ordinance is not within the exceptions and limitations in the law, the same comes within the ambit of the general rule, pursuant to the rules of expresio unius est exclusio alterius, and exceptio firmat regulum in casibus non excepti. Municipalities are empowered to impose not only municipal license taxes upon persons engaged in any business or occupation but also to levy for public purposes, just and uniform taxes. 3. ID.; ID.; ID.; LIMITATION. Municipalities and municipal districts are prohibited to impose "any percentage tax on sales or other in any form based thereon nor impose taxes on articles subject to specific tax, except gasoline, under the provisions of the National Internal Revenue Code." For purposes of this particular limitation, a municipal ordinance which prescribes a set of radio between the amount of the tax and the volume of sales of the taxpayer imposes a sales tax and is null and void for being outside the power of the municipality to enact. 4. ID.; ID.; ID.; DELEGATION OF POWER TO TAX UNDER NEW CONSTITUTION. Under the New Constitution, local governments are granted autonomous authority to create their own sources of revenue and to levy taxes. Section 5, Article XI Provides: "Each local government unit shall have the power to create its sources of revenue and to levy taxes, subject to such limitations as may be provided by law." Withal, it cannot be said that Section 2 of Republic Act No. 2264 emanated from beyond the sphere of the legislative power to enact and vest in local governments the power of local taxation. 5. ID.; ID.; ID.; VALIDITY THEREOF. The plenary nature of the delegated power of local governments under Section 2, of R.A. No. 2264 would not suffice to invalidate the law as confiscatory and oppressive. In delegating the authority, the State is not limited to the measure of that which is exercised by itself. When it is said that the taxing power may be delegated to municipalities and the like, it is meant that there may be delegated such measure of power to impose and collect taxes the legislature may deem expedient. Thus, municipalities may be permitted to tax subjects which for reasons of public policy the State has not deemed wise to tax for more general purposes. 6. ID.; REQUISITES FOR LAWFUL EXERCISE OF TAXING POWER. Constitutional injunction against deprivation of property without due process of law may not be passed over under the guise of the taxing power, except when the taking of the property is in the lawful exercise of the taxing power, as when, (1) the tax is for a public purpose; (2) the rule on uniformity of taxation observed; (3) either the person or property taxed is within the jurisdiction of the government levying the tax; and (4) in the assessment and collection of certain kinds of taxes, notice and opportunity for hearing are provided.

7. ID.; ID.; INSTANCES WHERE DUE PROCESS IS VIOLATED. Due process is usually violated where the tax imposed is for a private as distinguished from the public purposes; a tax a imposed on property outside the State, i.e., extra-territorial taxation; and arbitrary or oppressive methods are used in assessing and collecting taxes. But, a tax does not violate the due process clause, as applied to a particular taxpayer, although the purpose of the tax will result in an injury rather than a benefit to such taxpayer. Due process does not require that the property subject to the tax or the amount of tax to be raised should be determined by judicial inquiry, and a notice and hearing as to the amount of tax and the manner in which it shall be apportioned are generally not necessary to due process of law. 8. ID.; DOUBLE TAXATION; GENERALLY NOT FORBIDDEN. The delegated authority under Section 2 of the Local Autonomy Act cannot be declared unconstitutional on the theory of double taxation. It must be observed that the delegating authority specifies the limitations and enumerates the taxes over local taxation may not be exercised. The reason is that the State has exclusively reversed the same for its own prerogative. Moreover, double taxation, in general, is not forbidden by the fundamental law, since the injunction against double taxation found in the Constitution of the United States and some states of the Union has not been adopted as part thereof. 9. ID.; ID.; ID.; EXCEPTION. Double taxation becomes obnoxious only where the taxpayer is taxed twice for the benefit of the same governmental entity or by the same jurisdiction for the same purpose, but not in a case where one tax is imposed by the State and the other by the city or municipality. 10. ID.; ID.; ID.; INSTANT CASE. Where, as in the case at bar, the municipality of Tanauan enacted Ordinance No. 27 imposing a tax of one centavo on each gallon of volume capacity while in the previous Ordinance No. 23, it was 1/16 of a centavo for every bottle corked, it is clear that the intention of the municipal council was to substitute Ordinance No. 27 to that of Ordinance No. 23, repealing the latter. 11. ID.; TAX LEVIED ON PRODUCE, NOT PERCENTAGE TAX. The imposition of "a tax of one centavo (P0.01) on each gallon (128 fluid ounces, U.S.) of volume capacity" on all soft drinks produced or manufactured under Ordinance No. 27 does not partake of a nature of a percentage tax on sales, or other taxes in any form based thereon. The tax is levied on the produce (whether sold or not) and not on the sales. The volume capacity of the taxpayer's production of soft drinks is considered solely for purposes of determining the tax rate on the products, but there is no set ratio between the volume of sales and the amount of tax. 12. ID.; ID.; ID.; MUNICIPALITY ALLOWED TO INCREASE TAX AS LONG AS AMOUNT IS REASONABLE. The tax of one centavo (P0.01) on each gallon (128 fluid ounces, U.S.) of volume capacity of all soft drinks, produced or manufactured or an equivalent of 1-1/2 centavos per case, cannot be considered unjust and unfair. An increase in the tax alone would not support the claim that the tax is oppressive, unjust and confiscatory. Municipal corporations are allowed much discretion in determining the rates of impossible taxes. This is in line with the constitutional policy of according the widest possible autonomy to local government in matters of taxation, an aspect that is given expression in the Local Tax Code (PD No. 231, July 1, 1973). 13. ID.; SPECIFIC TAXES; ARTICLES SUBJECT TO SPECIFIC TAX. Specific taxes are those imposed on specified articles, such as distilled spirits, wines, fermented liquors, products of tobacco other than cigars and cigarettes, matches, firecrackers, manufactured oils and other fuels, coal bunker fuel oil cinematographic films, playing cards, saccharine, opium and other habit forming drugs. FERNANDO, J., concurring: 1. CONSTITUTIONAL LAW; TAXATION; POWER OF MUNICIPAL CORPORATION TO TAX UNDER THE NEW CONSTITUTION. The present Constitution is quite explicit as to the power of taxation vested in local and municipal corporations. It is therein specifically provided: "Each local government unit shall have the power to create its own sources to revenue and to levy taxes, subject to such limitations as may be provided by law." 2. ID.; ID.; LIMITATION ON POWER TO TAX UNDER THE 1935 CONSTITUTION. The only limitation on the authority to tax under the 1935 Constitution was that while the President of the Philippines was vested with the power of control over all executive departments, bureaus, or offices, he could only "exercise general supervision over all local governments as may be provided by law." As far as legislative power over local government was concerned, no restriction whatsoever was placed in the Congress of the Philippines. It would appear therefore that the extent of the taxing power was solely for the legislative body to decide. 3. ID.; ID.; MUNICIPAL CORPORATION'S POWER TO TAX MUST BE CLEARLY SHOWN. Although the scope of municipal taxing power had been enlarged by subsequent legislations, the Court, in Golden Ribbon Lumber Co. vs. City of Butuan, L-18534, December 24, 1964, reaffirmed the traditional concept, thus: "The rule is well-settled that municipal corporations, unlike sovereign states, are clothed with no power of taxation; that its charter or a statute must clearly show an intent to confer that power of the municipal corporation cannot assume and exercise it, and that any such power granted must be construed strictly, any doubt or ambiguity arising from the terms of the grant to be resolved against the municipality." 4. ID.; ID.; DOUBLE TAXATION. The objection to the taxation as double may be laid down on one side. The 14th Amendment (the due process clause) no more forbids double taxation than it does doubling the amount of a tax, short of confiscation or proceedings unconstitutional on other grounds. Sabido, Sabido & Associates for appellant.

Provincial Fiscal Zoila M. Redona & Assistant Provincial Fiscal Bonifacio R Matol and Assistant Solicitor General Conrado T. Limcaoco & Solicitor Enrique M. Reyes for appellees.

MARTIN, J.: This is an appeal from the decision of the Court of First Instance of Leyte in its Civil Case No. 3294, which was certified to Us by the Court of Appeals on October 6, 1969, as involving only pure questions of law, challenging the power of taxation delegated to municipalities under the Local Autonomy Act (Republic Act No. 2264, as amended, June 19, 1959). On February 14, 1963, the plaintiff-appellant, Pepsi-Cola Bottling Company of the Philippines, Inc., commenced a complaint with preliminary injunction before the Court of First Instance of Leyte for that court to declare Section 2 of Republic Act No. 2264. 1 otherwise known as the Local Autonomy Act, unconstitutional as an undue delegation of taxing authority as well as to declare Ordinances Nos. 23 and 27, series of 1962, of the municipality of Tanauan, Leyte, null and void. On July 23, 1963, the parties entered into a Stipulation of Facts, the material portions of which state that, first, both Ordinances Nos. 23 and 27 embrace or cover the same subject matter and the production tax rates imposed therein are practically the same, and second, that on January 17, 1963, the acting Municipal Treasurer of Tanauan, Leyte, as per his letter addressed to the Manager of the Pepsi-Cola Bottling Plant in said municipality, sought to enforce compliance by the latter of the provisions of said Ordinance No. 27, series of 1962. Municipal Ordinance No. 23, of Tanauan, Leyte, which was approved on September 25, 1962, levies and collects "from soft drinks producers and manufacturers a tai of one-sixteenth (1/16) of a centavo for every bottle of soft drink corked." 2 For the purpose of computing the taxes due, the person, firm, company or corporation producing soft drinks shall submit to the Municipal Treasurer a monthly report, of the total number of bottles produced and corked during the month. 3 On the other hand, Municipal Ordinance No. 27, which was approved on October 28, 1962, levies and collects "on soft drinks produced or manufactured within the territorial jurisdiction of this municipality a tax of ONE CENTAVO (P0.01) on each gallon (128 fluid ounces, U.S.) of volume capacity." 4 For the purpose of computing the taxes due, the person, fun company, partnership, corporation or plant producing soft drinks shall submit to the Municipal Treasurer a monthly report of the total number of gallons produced or manufactured during the month. 5 The tax imposed in both Ordinances Nos. 23 and 27 is denominated as "municipal production tax.' On October 7, 1963, the Court of First Instance of Leyte rendered judgment "dismissing the complaint and upholding the constitutionality of [Section 2, Republic Act No. 2264] declaring Ordinance Nos. 23 and 27 legal and constitutional; ordering the plaintiff to pay the taxes due under the oft the said Ordinances; and to pay the costs." From this judgment, the plaintiff Pepsi-Cola Bottling Company appealed to the Court of Appeals, which, in turn, elevated the case to Us pursuant to Section 31 of the Judiciary Act of 1948, as amended. There are three capital questions raised in this appeal: 1. Is Section 2, Republic Act No. 2264 an undue delegation of power, confiscatory and oppressive? 2. Do Ordinances Nos. 23 and 27 constitute double taxation and impose percentage or specific taxes? 3. Are Ordinances Nos. 23 and 27 unjust and unfair? 1. The power of taxation is an essential and inherent attribute of sovereignty, belonging as a matter of right to every independent government, without being expressly conferred by the people. 6 It is a power that is purely legislative and which the central legislative body cannot delegate either to the executive or judicial department of the government without infringing upon the theory of separation of powers. The exception, however, lies in the case of municipal corporations, to which, said theory does not apply. Legislative powers may be delegated to local governments in respect of matters of local concern. 7 This is sanctioned by immemorial practice. 8 By necessary implication, the legislative power to create political corporations for purposes of local self-government carries with it the power to confer on such local governmental agencies the power to tax. 9 Under the New Constitution, local governments are granted the autonomous authority to create their own sources of revenue and to levy taxes. Section 5, Article XI provides: "Each local government unit shall have the power to create its sources of revenue and to levy taxes, subject to such limitations as may be provided by law." Withal, it cannot be said that Section 2 of Republic Act No. 2264 emanated from beyond the sphere of the legislative power to enact and vest in local governments the power of local taxation.

The plenary nature of the taxing power thus delegated, contrary to plaintiff-appellant's pretense, would not suffice to invalidate the said law as confiscatory and oppressive. In delegating the authority, the State is not limited 6 the exact measure of that which is exercised by itself. When it is said that the taxing power may be delegated to municipalities and the like, it is meant that there may be delegated such measure of power to impose and collect taxes as the legislature may deem expedient. Thus, municipalities may be permitted to tax subjects which for reasons of public policy the State has not deemed wise to tax for more general purposes. 10 This is not to say though that the constitutional injunction against deprivation of property without due process of law may be passed over under the guise of the taxing power, except when the taking of the property is in the lawful exercise of the taxing power, as when (1) the tax is for a public purpose; (2) the rule on uniformity of taxation is observed; (3) either the person or property taxed is within the jurisdiction of the government levying the tax; and (4) in the assessment and collection of certain kinds of taxes notice and opportunity for hearing are provided. 11 Due process is usually violated where the tax imposed is for a private as distinguished from a public purpose; a tax is imposed on property outside the State, i.e., extraterritorial taxation; and arbitrary or oppressive methods are used in assessing and collecting taxes. But, a tax does not violate the due process clause, as applied to a particular taxpayer, although the purpose of the tax will result in an injury rather than a benefit to such taxpayer. Due process does not require that the property subject to the tax or the amount of tax to be raised should be determined by judicial inquiry, and a notice and hearing as to the amount of the tax and the manner in which it shall be apportioned are generally not necessary to due process of law. 12 There is no validity to the assertion that the delegated authority can be declared unconstitutional on the theory of double taxation. It must be observed that the delegating authority specifies the limitations and enumerates the taxes over which local taxation may not be exercised. 13 The reason is that the State has exclusively reserved the same for its own prerogative. Moreover, double taxation, in general, is not forbidden by our fundamental law, since We have not adopted as part thereof the injunction against double taxation found in the Constitution of the United States and some states of the Union. 14 Double taxation becomes obnoxious only where the taxpayer is taxed twice for the benefit of the same governmental entity 15 or by the same jurisdiction for the same purpose, 16 but not in a case where one tax is imposed by the State and the other by the city or municipality. 17 2. The plaintiff-appellant submits that Ordinance No. 23 and 27 constitute double taxation, because these two ordinances cover the same subject matter and impose practically the same tax rate. The thesis proceeds from its assumption that both ordinances are valid and legally enforceable. This is not so. As earlier quoted, Ordinance No. 23, which was approved on September 25, 1962, levies or collects from soft drinks producers or manufacturers a tax of one-sixteen (1/16) of a centavo for .every bottle corked, irrespective of the volume contents of the bottle used. When it was discovered that the producer or manufacturer could increase the volume contents of the bottle and still pay the same tax rate, the Municipality of Tanauan enacted Ordinance No. 27, approved on October 28, 1962, imposing a tax of one centavo (P0.01) on each gallon (128 fluid ounces, U.S.) of volume capacity. The difference between the two ordinances clearly lies in the tax rate of the soft drinks produced: in Ordinance No. 23, it was 1/16 of a centavo for every bottle corked; in Ordinance No. 27, it is one centavo (P0.01) on each gallon (128 fluid ounces, U.S.) of volume capacity. The intention of the Municipal Council of Tanauan in enacting Ordinance No. 27 is thus clear: it was intended as a plain substitute for the prior Ordinance No. 23, and operates as a repeal of the latter, even without words to that effect. 18 Plaintiff-appellant in its brief admitted that defendants-appellees are only seeking to enforce Ordinance No. 27, series of 1962. Even the stipulation of facts confirms the fact that the Acting Municipal Treasurer of Tanauan, Leyte sought t6 compel compliance by the plaintiff-appellant of the provisions of said Ordinance No. 27, series of 1962. The aforementioned admission shows that only Ordinance No. 27, series of 1962 is being enforced by defendants-appellees. Even the Provincial Fiscal, counsel for defendants-appellees admits in his brief "that Section 7 of Ordinance No. 27, series of 1962 clearly repeals Ordinance No. 23 as the provisions of the latter are inconsistent with the provisions of the former." That brings Us to the question of whether the remaining Ordinance No. 27 imposes a percentage or a specific tax. Undoubtedly, the taxing authority conferred on local governments under Section 2, Republic Act No. 2264, is broad enough as to extend to almost "everything, accepting those which are mentioned therein." As long as the text levied under the authority of a city or municipal ordinance is not within the exceptions and limitations in the law, the same comes within the ambit of the general rule, pursuant to the rules of exclucion attehus and exceptio firmat regulum in cabisus non excepti 19 The limitation applies, particularly, to the prohibition against municipalities and municipal districts to impose "any percentage tax or other taxes in any form based thereon nor impose taxes on articles subject to specific tax except gasoline, under the provisions of the National Internal Revenue Code." For purposes of this particular limitation, a municipal ordinance which prescribes a set ratio between the amount of the tax and the volume of sale of the taxpayer imposes a sales tax and is null and void for being outside the power of the municipality to enact. 20 But, the imposition of "a tax of one centavo (P0.01) on each gallon (128 fluid ounces, U.S.) of volume capacity" on all soft drinks produced or manufactured under Ordinance No. 27 does not partake of the nature of a percentage tax on sales, or other taxes in any form based thereon. The tax is levied on the produce (whether sold or not) and not on the sales. The volume capacity of the taxpayer's production of soft drinks is considered solely for purposes of determining the tax rate on the products, but there is not set ratio between the volume of sales and the amount of the tax. 21 Nor can the tax levied be treated as a specific tax. Specific taxes are those imposed on specified articles, such as distilled spirits, wines, fermented liquors, products of tobacco other than cigars and cigarettes, matches firecrackers, manufactured oils and other fuels, coal, bunker fuel oil, diesel fuel oil, cinematographic films, playing cards, saccharine, opium and other habit-forming drugs. 22 Soft drink is not one of those specified. 3. The tax of one (P0.01) on each gallon (128 fluid ounces, U.S.) of volume capacity on all softdrinks, produced or manufactured, or an equivalent of 1- centavos per case, 23 cannot be considered unjust and unfair. 24 an increase in the tax alone would not support the claim that the tax is oppressive, unjust and confiscatory. Municipal corporations are allowed much discretion in determining the reates of imposable taxes. 25 This is in line with the constutional policy of according the widest possible autonomy to local governments in matters of local taxation, an aspect that is

given expression in the Local Tax Code (PD No. 231, July 1, 1973). 26 Unless the amount is so excessive as to be prohibitive, courts will go slow in writing off an ordinance as unreasonable. 27 Reluctance should not deter compliance with an ordinance such as Ordinance No. 27 if the purpose of the law to further strengthen local autonomy were to be realized. 28 Finally, the municipal license tax of P1,000.00 per corking machine with five but not more than ten crowners or P2,000.00 with ten but not more than twenty crowners imposed on manufacturers, producers, importers and dealers of soft drinks and/or mineral waters under Ordinance No. 54, series of 1964, as amended by Ordinance No. 41, series of 1968, of defendant Municipality, 29 appears not to affect the resolution of the validity of Ordinance No. 27. Municipalities are empowered to impose, not only municipal license taxes upon persons engaged in any business or occupation but also to levy for public purposes, just and uniform taxes. The ordinance in question (Ordinance No. 27) comes within the second power of a municipality. ACCORDINGLY, the constitutionality of Section 2 of Republic Act No. 2264, otherwise known as the Local Autonomy Act, as amended, is hereby upheld and Municipal Ordinance No. 27 of the Municipality of Tanauan, Leyte, series of 1962, re-pealing Municipal Ordinance No. 23, same series, is hereby declared of valid and legal effect. Costs against petitioner-appellant. SO ORDERED. Castro, C.J., Teehankee, Barredo, Makasiar, Antonio, Esguerra, Muoz Palma, Aquino and Concepcion, Jr., JJ., concur.

Separate Opinions

FERNANDO, J., concurring: The opinion of the Court penned by Justice Martin is impressed with a scholarly and comprehensive character. Insofar as it shows adherence to tried and tested concepts of the law of municipal taxation, I am only in agreement. If I limit myself to concurrence in the result, it is primarily because with the article on Local Autonomy found in the present Constitution, I feel a sense of reluctance in restating doctrines that arose from a different basic premise as to the scope of such power in accordance with the 1935 Charter. Nonetheless it is well-nigh unavoidable that I do so as I am unable to share fully what for me are the nuances and implications that could arise from the approach taken by my brethren. Likewise as to the constitutional aspect of the thorny question of double taxation, I would limit myself to what has been set forth in City of Baguio v. De Leon. 1 1. The present Constitution is quite explicit as to the power of taxation vested in local and municipal corporations. It is therein specifically provided: "Each local government unit shall have the power to create its own sources of revenue and to levy taxes subject to such limitations as may be provided by law. 2 That was not the case under the 1935 Charter. The only limitation then on the authority, plenary in character of the national government, was that while the President of the Philippines was vested with the power of control over all executive departments, bureaus, or offices, he could only . It exercise general supervision over all local governments as may be provided by law ... 3 As far as legislative power over local government was concerned, no restriction whatsoever was placed on the Congress of the Philippines. It would appear therefore that the extent of the taxing power was solely for the legislative body to decide. It is true that in 1939, there was a statute that enlarged the scope of the municipal taxing power. 4 Thereafter, in 1959 such competence was further expanded in the Local Autonomy Act. 5 Nevertheless, as late as December of 1964, five years after its enactment of the Local Autonomy Act, this Court, through Justice Dizon, in Golden Ribbon Lumber Co. v. City of Butuan, 6 reaffirmed the traditional concept in these words: "The rule is well-settled that municipal corporations, unlike sovereign states, after clothed with no power of taxation; that its charter or a statute must clearly show an intent to confer that power or the municipal corporation cannot assume and exercise it, and that any such power granted must be construed strictly, any doubt or ambiguity arising from the terms of the grant to be resolved against the municipality." 7 Taxation, according to Justice Parades in the earlier case of Tan v. Municipality of Pagbilao, 8 "is an attribute of sovereignty which municipal corporations do not enjoy." 9 That case left no doubt either as to weakness of a claim "based merely by inferences, implications and deductions, [as they have no place in the interpretation of the power to tax of a municipal corporation." 10 As the conclusion reached by the Court finds support in such grant of the municipal taxing power, I concur in the result. 2. As to any possible infirmity based on an alleged double taxation, I would prefer to rely on the doctrine announced by this Court in City of Baguio v. De Leon. 11 Thus: "As to why double taxation is not violative of due process, Justice Holmes made clear in this language: 'The objection to the taxation as double may be laid down on one side. ... The 14th Amendment [the due process clause) no more forbids double taxation than it does doubling the amount of a tax, short of (confiscation or proceedings unconstitutional on other grouse With that decision rendered at a time when American sovereignty in the Philippines was recognized, it possesses more than just a persuasive effect. To some, it delivered the coup justice to the bogey of double taxation as a constitutional bar to the exercise of the taxing power. It would seem though that in the United States, as with us, its ghost, as noted by an eminent critic, still stalks the juridical stage. 'In a 1947 decision, however, we quoted with approval this excerpt

from a leading American decision: 'Where, as here, Congress has clearly expressed its intention, the statute must be sustained even though double taxation results. 12 So I would view the issues in this suit and accordingly concur in the result.

Separate Opinions FERNANDO, J., concurring: The opinion of the Court penned by Justice Martin is impressed with a scholarly and comprehensive character. Insofar as it shows adherence to tried and tested concepts of the law of municipal taxation, I am only in agreement. If I limit myself to concurrence in the result, it is primarily because with the article on Local Autonomy found in the present Constitution, I feel a sense of reluctance in restating doctrines that arose from a different basic premise as to the scope of such power in accordance with the 1935 Charter. Nonetheless it is well-nigh unavoidable that I do so as I am unable to share fully what for me are the nuances and implications that could arise from the approach taken by my brethren. Likewise as to the constitutional aspect of the thorny question of double taxation, I would limit myself to what has been set forth in City of Baguio v. De Leon. 1 1. The present Constitution is quite explicit as to the power of taxation vested in local and municipal corporations. It is therein specifically provided: "Each local government unit shall have the power to create its own sources of revenue and to levy taxes subject to such limitations as may be provided by law. 2 That was not the case under the 1935 Charter. The only limitation then on the authority, plenary in character of the national government, was that while the President of the Philippines was vested with the power of control over all executive departments, bureaus, or offices, he could only . It exercise general supervision over all local governments as may be provided by law ... 3 As far as legislative power over local government was concerned, no restriction whatsoever was placed on the Congress of the Philippines. It would appear therefore that the extent of the taxing power was solely for the legislative body to decide. It is true that in 1939, there was a statute that enlarged the scope of the municipal taxing power. 4 Thereafter, in 1959 such competence was further expanded in the Local Autonomy Act. 5 Nevertheless, as late as December of 1964, five years after its enactment of the Local Autonomy Act, this Court, through Justice Dizon, in Golden Ribbon Lumber Co. v. City of Butuan, 6 reaffirmed the traditional concept in these words: "The rule is well-settled that municipal corporations, unlike sovereign states, after clothed with no power of taxation; that its charter or a statute must clearly show an intent to confer that power or the municipal corporation cannot assume and exercise it, and that any such power granted must be construed strictly, any doubt or ambiguity arising from the terms of the grant to be resolved against the municipality." 7 Taxation, according to Justice Parades in the earlier case of Tan v. Municipality of Pagbilao, 8 "is an attribute of sovereignty which municipal corporations do not enjoy." 9 That case left no doubt either as to weakness of a claim "based merely by inferences, implications and deductions, [as they have no place in the interpretation of the power to tax of a municipal corporation." 10 As the conclusion reached by the Court finds support in such grant of the municipal taxing power, I concur in the result. 2. As to any possible infirmity based on an alleged double taxation, I would prefer to rely on the doctrine announced by this Court in City of Baguio v. De Leon. 11 Thus: "As to why double taxation is not violative of due process, Justice Holmes made clear in this language: 'The objection to the taxation as double may be laid down on one side. ... The 14th Amendment [the due process clause) no more forbids double taxation than it does doubling the amount of a tax, short of (confiscation or proceedings unconstitutional on other grouse With that decision rendered at a time when American sovereignty in the Philippines was recognized, it possesses more than just a persuasive effect. To some, it delivered the coup justice to the bogey of double taxation as a constitutional bar to the exercise of the taxing power. It would seem though that in the United States, as with us, its ghost, as noted by an eminent critic, still stalks the juridical stage. 'In a 1947 decision, however, we quoted with approval this excerpt from a leading American decision: 'Where, as here, Congress has clearly expressed its intention, the statute must be sustained even though double taxation results. 12 So I would view the issues in this suit and accordingly concur in the result. Footnotes 1 "Sec. 2. Taxation. Any provision of law to the contrary notwithstanding, all chartered cities, municipalities and municipal districts shall have authority to impose municipal license taxes or fees upon persons engaged in any occupation or business, or exercising private in chartered cities, municipalities and municipal districts by requiring them to secure licenses at rates fixed by the municipal board or city council of the city, the municipal council of the municipality, or the municipal district council of the municipal district to collect fees and charges for service rendered by the city, municipality or municipal district; to regulate and impose reasonable for services rendered in connection with any business, profession occupation being conducted within the city, municipality or municipal district and otherwise to levy for public purposes, just and uniform taxes, licenses or fees: Provided, That municipalities and municipal districts shall, in no case, impose any percentage tax on sales or other taxes in any form based thereon nor impose taxes on articles subject to specific tax, except gasoline, under the provisions of the National Internal Revenue Code:

Provided, however, That no city, municipality or municipal district may levy or impose any of the following: (a) Residence tax; (b) Documentary stamp tax; (c) Taxes on the business of any newspaper engaged in the printing and publication of any newspaper, magazine, review or bulletin appearing at regular interval and having fixed prices for subscription and sale, and which is not published primarily for the purpose of publishing advertisements; (d) Taxes on persons operating waterworks, irrigation and other public utilities except electric light, heat and power; (e) Taxes on forest products and forest concessions; (f) Taxes on estates, inheritance, gifts, legacies and other acquisitions mortis causa (g) Taxes on income of any kind whatsoever; (h) Taxes or fees for the registration of motor vehicles and for the issuance of all kinds of licenses or permits for the driving thereof; (i) Customs duties registration, wharfage on wharves owned by the national government, tonnage and all other kinds of customs fees, charges and dues; (j) Taxes of any kind on banks, insurance companies, and persons paying franchise tax: (k) Taxes on premiums paid by owners of property who obtain insurance directly with foreign insurance companies; and (i) Taxes, fees or levies, of any kind, which in effect impose a burden on exports of Philippine finished, manufactured or processed products and products of Philippine cottage industries. 2 Section 2. 3 Section 3. 4 Section 2. 5 Section 3. 6 Cooley, The Law of Taxation, Vol. 1, Fourth Edition, 149-150. 7 Pepsi-Cola Bottling Co. of the Phil., Inc. vs. City of Butuan, L-22814, August 28, 1968, 24 SCRA 793-96. 8 Rubi v. Prov. Brd. of Mindoro, 39 Phil. 702 (1919). 9 Cooley, ante at 190. 10 Idem at 198-200. 11 Malcolm, Philippine Constitutional Law, 513-14. 12 Cooley ante at 334. 13 See footnote 1. 14 Pepsi-Cola Bottling Co. of the Phil. Inc. vs. City of Butuan, 1, 2S 1 4, August 28, 1968, 24 SCRA 793-96. See Sec. 22, Art. VI, 1935 Constitution and Sec. 17 (1), Art. VIII, 1973 Constitution. 15 Commissioner of Internal Revenue v. Lednicky L- 18169, July 31, 1964, 11 SCRA 609.

16 SMB, Inc. v. City of Cebu, L-20312, February 26, 1972, 43 SCRA 280. 17 Punzalan v. Mun. Bd of City of Manila, 50 O.G. 2485; manufacturers Life Ins. Co. v. Meer, 89 Phil. 351 (1951). 18 McQuillin. Municipal Corporations, 3rd. Ed., Vol. 6, at 206.-210. 19 Villanueva v. City of Iloilo, L-26521, December 28, 1968, 26 SCRA 585-86; Nin Bay Mining Co. v. Mun. of Roxas, Palawan, L-20125, July 20, 1965, 14 SCRA 663-64. 20 Arabay, Inc. v. CFI of Zamboanga del Norte, et al., L-27684, September 10, 1975. 21 SMB, Inc. v. City of Cebu, ante, Footnote 16. 22 Shell Co. of P.I. Ltd. v. Vao, 94 Phil. 394-95 (1954); Sections 123-148, NIRC; RA No. 953, Narcotic Drugs Law, June 20, 1953. 23 Brief, defendants-appellees, at 14. A regular bottle of Pepsi-Cola soft drinks contains 8 oz., or 192 oz. per case of 24 bottles; a family-size contains 26 oz., or 312 oz. per case of 12 bottles. 24 See Pepsi-Cola Bottling Co. of the Phil., Inc. v. City of Butuan, ante, Footnote 14, where the tax rate is P.10 per case of 24 bottles; City of Bacolod v. Gruet, L-18290, January 31, 1963, 7 SCRA 168-69, where the tax is P.03 on every case of bottled Coca-Coal. 25 Northern Philippines Tobacco Corp. v. Mun. of Agoo, La Union, L-26447, January 30, 1971, 31 SCRA 308. 26 William Lines, Inc. v. City of Ozamis, L-350048, April 23, 1974, 56 SCRA 593, Second Division, per Fernando, J. 27 Victorias Milling Co. v. Mun. of Victorias, L-21183, September 27, 1968, 25 SCRa 205. 28 Procter & Gamble Trading Co. v. Mun. of Medina, Misamis Oriental, L-29125, January 31, 1973, 43 SCRA 133-34. 29 Subject of plaintiff-appellant's Motion for Admission and consideration of Essential Newly Dissevered Evidence, dated April 30, 1969. FERNANDO, J. 1 L-24756, October 31, 1968, 25 SCRA 938. 2 Article XI, Section 5 of the present Constitution. 3 Article VII, Section 10 of the 1935 Constitution. 4 Commonwealth Act 472 entitled: "An Act Revising the General Authority of Municipal Councils and Municipal District Councils to Levy Taxes, Subject to Certain Limitations." 5 Republic Act No. 2264. 6 L-18534, December 24,1964,12 SCRA 611. 7 Ibid, 619. Cf. Cuunjieng v. Potspone, 42 Phil. 818 (1922); De Linan v. Municipal Council of Daet, 44 Phil. 792 (1923); Arquiza Luta v. Municipality of Zamboanga, 50 Phil. 748 (1927; Hercules Lumber Co. v. Zamboanga, 55 Phil. 653 (1931); Yeo Loby v. Zamboanga, 55 Phil. 656 (1931); People v. Carreon, 65 Phil. 588 (1939); Yap Tak Wing v. Municipal Board, 68 Phil. 511 (1939); Eastern Theatrical Co. v. Alfonso 83 Phil. 852 (1949); De la Rosa v. City of Baguio, 91 Phil. 720 (I!)52); Medina v. City of Baguio, 91 Phil. 854 (1952); Standard-Vacuum Oil Co. v. Antigua, 96 Phil. 909 (1955); Municipal Government of Pagsanjan v. Reyes, 98 Phil. 654 (1956), We Wa Yu v. City of Lipa, Phil. 975 (1956); Municipality of Cotabato v. Santos, 105 Phil. 963 (1959). 8 L-14264, April 30, 1963, 7 SCRA 887. 9 Ibid, 892. 10 Ibid.

11 L-24756, October 31, 1968, 25 SCRA 938. 12 Ibid, 943-944.

EN BANC

G.R. No. L-28271 July 25, 1975 SMITH, BELL AND CO. (PHIL.), INC., petitioner, vs. COMMISSIONER OF INTERNAL REVENUE, respondent. Hildawa and Gomez for petitioner. Office of the Solicitor General Antonio P. Barredo, Assistant Solicitor General Antonio A. Torres, Solicitor Lolita O. Gal-lang and Special Attorney Gamaliel H. Mantolino for respondent. SYNOPSIS Petitioner imported 119 cases of "Chatteau Gay" wine which it declared as "still wine" under section 134(b) of the Tax Code and paid thereon the specific tax of P1.00 per liter of volume capacity. To determine the correct amount of specific tax due on petitioner's importation, the Commissioner ordered it tested and analyzed in the Bureau of Internal Revenue Laboratory Center. The analyst concluded that the wine should be classified as "sparkling wine" subject to a higher specific tax of P12.00 per liter of volume capacity. Accordingly, the Commissioner ordered the issuance of the corresponding deficiency assessment against petitioner. The Court of Tax Appeals affirmed the assessment made by the Commissioner. Petitioner claimed that the assessment is unconstitutional since Section 134(a) of the Tax Code on which the assessment was based lays down an insufficient and hazy standard by which the policy and purpose of the law may be ascertained and gives the Commissioner a blanket authority to decide what is or is not a sparkling wine; so that there was an unconstitutional abdication of legislative power and a failure of due process. On the other hand, the Commissioner argued that Section 134 of the Tax Code is clear as to the categories of the articles subject to specific taxes and the corresponding amounts of tax to be paid. The Supreme Court held that Section 134 of the Tax Code clearly and indubitably discloses the legislative will, leaving to the officers charged with its implementation and execution thereof no more than an administrative function to determine what kind of wine or imitation wine falls in one class or another, and that the internal revenue officers are guided by sound established practices and technology of the wine industry. Appealed decision affirmed at petitioner's costs. SYLLABUS 1. TAXATION; ASSESSMENT AND COLLECTION; COMMISSIONER OF INTERNAL REVENUE MERELY EXERCISES ADMINISTRATIVE FUNCTION IN MATTERS OF ASSESSMENT AND COLLECTION OF SPECIFIC TAXES ON WINES UNDER SECTION 134 OF THE TAX CODE. There can be no uncertainty that the purpose of Section 134 of the Tax Code is to impose specific on tax wines and imitation wines. The first clause of said section states so in plain language. The sub-enumeration that follows unmistakably prescribes the amount of the tax specifically to be paid for each type of wine or imitation wine so classified and described. The section clearly and indubitably discloses the legislative will, leaving to the officers charged with implementation and execution thereof no more than the administrative function of determining whether a particular kind of wine or imitation wine falls in one class or another. In the performance of this function the internal revenue officers are demonstratively guided by the sound, established practices and technology of wine industry. 2. ID.; ID.; ONE WHO ENGAGES IN WINE TRADING BUSINESS IS DUTY BOUND TO KNOW THE KINDS OF WINES HE DEALS IN. One who has chosen to engage in the wine trading business is duty bound to know the kinds of wine he deals in, particularly insofar as such knowledge may be relevant to the proper appreciation of tax liabilities, and cannot take comfort in his pretended ignorance of what a sparkling wine is CASTRO, J.: This is a petition for review of the decision of the court of Tax Appeals in case 1733 which affirms the deficiency assessment made by the Commissioner of Internal Revenue against the petitioner Smith, Bell & Co. in the amount of P11,713.90. We affirm the decision of the Court of Tax Appeals. From August 1963 to August 1965 the petitioner imported 119 cases of "Chatteau Gay" wine which it declared as "still wine" under Section 134(b)of the Tax Code and paid thereon the specific tax of P1.00 per liter of volume capacity. To determine the correct amount of the specific tax due on the petitioner's importation, the Commissioner of Internal Revenue (hereinafter referred to as the Commissioner) ordered it tested and analyzed in the Bureau of Internal Revenue Laboratory Center. The analyst who conducted the laboratory test reported that Chatteau Gay "is a delicate table wine, with an alcohol content of 9.5% by volume (volume 745 cc @ 290C), characterized with explosion

upon opening and effervescence due to CO2 (residual)," and concluded that it should be classified as "sparkling wine." The analyst's conclusion is supported by Herstein and Jacobs who, in their book entitled "Chemistry & Technology of Wines and Liquors," wrote: (f) Sparkling wines are bottled before the fermentation has ceased so that they contain carbon dioxide gas in solution at greater than atmospheric pressure. When they are served, the carbon dioxide is liberated with effervescence. These gas and alcoholic contents vary according to the market for which they are intended. They may be dry or sweet, light or strong. Champagne, sparkling Burgundy, and Asti-Spumante are examples of sparkling wines. On the basis of the analyst's report and recommendation, the Commissioner, on October 11, 1965, assessed the petitioner a deficiency specific tax on the 119 cases of imported Chatteau Gay in the sum of P11,713.90 under Section 134(a) of the Tax Code which imposes a specific tax of P12.00 per liter of volume capacity on sparkling wines. The petitioner does not dispute the mathematical correctness of the Commissioner's assessment, but contends that the assessment is unconstitutional because Section 134(a) of the Tax Code under which it was issued lays down an insufficient and hazy standard by which the policy and purpose of the law may be ascertained and as well gives the Commissioner blanket authority to decide what is or is not the meaning of "sparkling wines." The argument is thus advanced that there is here an abdication of legislative power violative of the established doctrine, delegata potestas non potest delegate, and the due process clause of the Constitution. The Commissioner disagrees on the ground that Chapter I, Title IV of the Tax Code in no uncertain terms specifies the articles subject to specific taxes, among which are wines, and Section 134 does no more than classify wines in several categories and prescribe the corresponding amounts of tax to be paid. The Commissioner's position was sustained by the Court of Tax Appeals in its decision dated October 5, 1967. The contention that in regard to Section 134(a) of the Tax Code there is an unconstitutional surrender of legislative powers and a failure of due process, need not give us more than a momentary pause. Section 134 of the Tax Code provides: 1 Specific tax on wines. On wines and imitation wines there shall be collected, per liter of volume capacity, the following taxes: (a) Sparkling wines, regardless of proof, twelve pesos. (b) Still wines containing fourteen per centum of alcohol or less, except those produced from casuy and duhat, one peso. (c) Still wines containing more than fourteen per centum of alcohol, two pesos. Imitation wines containing more than twenty-five per centum of alcohol shall be taxed as distilled spirits. There can be no uncertainty that the purpose of the abovequoted provision is to impose a specific tax on wines and imitation wines. The first clause of Section 134 states so in plain language. The sole object of the sub-enumeration that follows is in turn unmistakably to prescribe the amount of the tax specifically to be paid for each type of wine and/or imitation wine so classified and described. The section therefore clearly and indubitably discloses the legislative will, leaving to the officers charged with implementation and execution thereof no more than the administrative function of determining whether a particular kind of wine or imitation wine falls in one class or another. In the performance of this function, the internal revenue officers are demonstrably guided by the sound established practices and technology of the wine industry, an industry as aged and widely dispersed as one can care to know. In the case at bar, the Commissioner had the petitioner's wine examined and analyzed. The petitioner, on the other hand, does not appear to have made a similar effort. On the bases of the test thus made and the authoritative and published work on the subject of wines, the Commissioner ordered the corresponding deficiency assessment to be issued. Having chosen to engage in the wine trading business, the petitioner is duty bound to know the kinds of wine it deals in, particularly insofar as such knowledge may be relevant to the proper appreciation of its tax liabilities, and cannot take comfort in its pretended ignorance of what sparkling wine is. ACCORDINGLY, the decision of the Court of Tax Appeals is affirmed, at petitioner's cost. Makalintal, C.J., Fernando, Barredo, Makasiar, Antonio, Esguerra, Muoz Palma, Aquino, Concepcion, Jr., and Martin, JJ, concur. Teehankee, J., is on leave.

Footnotes

1 As amended by Republic Acts 56, 219, 589, 724, 955, 1090, 1335 and 2258.

EN BANC G.R. No. L-46720 June 28, 1940

WELLS FARGO BANK & UNION TRUST COMPANY, petitioner-appellant, vs. THE COLLECTOR OF INTERNAL REVENUE, respondent-appellee. De Witt, Perkins and Ponce Enrile for appellant. Office of the Solicitor-General Ozaeta and Assistant Solicitor-General Concepcion for appellee. Ross, Lawrence, Selph and Carrascoso, James Madison Ross and Federico Agrava as amici curi. SYLLABUS 1. DECLARATORY JUDGMENT; SHARES OF STOCK OF NONRESIDENT; RIGHT OF PHILIPPINE GOVERNMENT TO IMPOSE INHERITANCE TAX. In the instant case, the actual situs of the shares of stock is in the Philippines, the corporation being domiciled therein. And besides, the certificates of stock have remained in this country up to the time when the deceased died in California, and they were in possession of one S. McK, secretary of the Benguet Consolidated Mining Company, to whom they have been delivered and indorsed in blank. This indorsement gave S. McK. the right to vote the certificates at the general meetings of the stockholders, to collect dividends thereon, and dispose of the shares in the manner she may deem fit, without prejudice to her liability to the owner for violation of instructions. For all practical purposes, then, S. McK. had the legal title to the certificates of stock held in trust for the true owner thereof. In other words, the owner residing in California has extended here her activities with respect to her intangibles so as to avail herself of the protection and benefit of the Philippine laws. Accordingly, the jurisdiction of the Philippine Government to tax must be upheld. MORAN, J.: An appeal from a declaratory judgment rendered by the Court of First Instance of Manila. Birdie Lillian Eye, wife of Clyde Milton Eye, died on September 16, 1932, at Los Angeles, California, the place of her alleged last residence and domicile. Among the properties she left her one-half conjugal share in 70,000 shares of stock in the Benguet Consolidated Mining Company, an anonymous partnership (sociedad anonima), organized and existing under the laws of the Philippines, with is principal office in the City of Manila. She left a will which was duly admitted to probate in California where her estate was administered and settled. Petitioner-appellant, Wells Fargo Bank & Union Trust Company, was duly appointed trustee of the created by the said will. The Federal and State of California's inheritance taxes due on said shares have been duly paid. Respondent Collector of Internal Revenue sought to subject anew the aforesaid shares of stock to the Philippine inheritance tax, to which petitioner-appellant objected. Wherefore, a petition for a declaratory judgment was filed in the lower court, with the statement that, "if it should be held by a final declaratory judgment that the transfer of the aforesaid shares of stock is legally subject to the Philippine inheritance tax, the petitioner will pay such tax, interest and penalties (saving error in computation) without protest and will not file to recover the same; and the petitioner believes and t herefore alleges that it should be held that such transfer is not subject to said tax, the respondent will not proceed to assess and collect the same." The Court of First Instance of Manila rendered judgment, holding that the transmission by will of the said 35,000 shares of stock is subject to Philippine inheritance tax. Hence, this appeal by the petitioner. Petitioner concedes (1) that the Philippine inheritance tax is not a tax property, but upon transmission by inheritance (Lorenzo vs. Posadas, 35 Off. Gaz., 2393, 2395), and (2) that as to real and tangible personal property of a nonresident decedent, located in the Philippines, the Philippine inheritance tax may be imposed upon their transmission by death, for the self-evident reason that, being a property situated in this country, its transfer is, in some way, defendant, for its effectiveness, upon Philippine laws. It is contended, however, that, as to intangibles, like the shares of stock in question, their situs is in the domicile of the owner thereof, and, therefore, their transmission by death necessarily takes place under his domiciliary laws. Section 1536 of the Administrative Code, as amended, provides that every transmission by virtue of inheritance of any share issued by any corporation of sociedad anonima organized or constituted in the Philippines, is subject to the tax therein provided. This provision has already been applied to shares of stock in a domestic corporation which were owned by a British subject residing and domiciled in Great Britain. (Knowles vs. Yatco, G. R. No. 42967. See also Gibbs vs. Government of P. I., G. R. No. 35694.) Petitioner, however, invokes the rule laid down by the United States Supreme Court in four cases (Farmers Loan & Trust Company vs. Minnesota, 280 U.S. 204; 74 Law. ed., 371; Baldwin vs. Missouri, 281 U.S., 586; 74 Law. ed., 1056, Beidler vs. South Carolina Tax Commission 282 U. S., 1; 75 Law. ed., 131; First National Bank of Boston vs. Maine, 284 U. S., 312; 52 S. Ct., 174, 76 Law. ed., 313; 77 A. L. R., 1401), to the effect that an inheritance tax can be imposed with respect to intangibles only by the State where the decedent was domiciled at the time of his death, and that, under the due-process clause, the State in which a corporation has been incorporated has no power to impose such tax if the shares of stock in such corporation are owned by a non-resident decedent. It is to be observed, however, that in a later case (Burnet vs. Brooks, 288 U. S., 378; 77 Law. ed., 844), the United States Supreme Court upheld the authority of the Federal Government to impose an inheritance tax on the transmission, by death of a non-resident, of stock in a domestic (America) corporation, irrespective of the situs of the corresponding certificates of stock. But it is contended that the doctrine in the foregoing case is not applicable, because the due-process clause is directed at the State and not at the Federal Government, and that the federal or national power of the United States is to be determined in relation to other countries and their subjects by applying the principles of jurisdiction recognized in international relations. Be that as it may, the truth is

that the due-process clause is "directed at the protection of the individual and he is entitled to its immunity as much against the state as against the national government." (Curry vs. McCanless, 307 U. S., 357, 370; 83 Law. ed., 1339, 1349.) Indeed, the rule laid down in the four cases relied upon by the appellant was predicated on a proper regard for the relation of the states of the American Union, which requires that property should be taxed in only one state and that jurisdiction to tax is restricted accordingly. In other words, the application to the states of the due-process rule springs from a proper distribution of their powers and spheres of activity as ordained by the United States Constitution, and such distribution is enforced and protected by not allowing one state to reach out and tax property in another. And these considerations do not apply to the Philippines. Our status rests upon a wholly distinct basis and no analogy, however remote, cam be suggested in the relation of one state of the Union with another or with the United States. The status of the Philippines has been aptly defined as one which, though a part of the United States in the international sense, is, nevertheless, foreign thereto in a domestic sense. (Downes vs. Bidwell, 182 U. S., 244, 341.) At any rate, we see nothing of consequence in drawing any distinct between the operation and effect of the dueprocess clause as it applies to the individual states and to the national government of the United States. The question here involved is essentially not one of due-process, but of the power of the Philippine Government to tax. If that power be conceded, the guaranty of due process cannot certainly be invoked to frustrate it, unless the law involved is challenged, which is not, on considerations repugnant to such guaranty of due process of that of the equal protection of the laws, as, when the law is alleged to be arbitrary, oppressive or discriminatory. Originally, the settled law in the United States is that intangibles have only one situs for the purpose of inheritance tax, and that such situs is in the domicile of the decedent at the time of his death. But this rule has, of late, been relaxed. The maxim mobilia sequuntur personam, upon which the rule rests, has been described as a mere "fiction of law having its origin in consideration of general convenience and public policy, and cannot be applied to limit or control the right of the state to tax property within its jurisdiction" (State Board of Assessors vs. Comptoir National D'Escompte, 191 U. S., 388, 403, 404), and must "yield to established fact of legal ownership, actual presence and control elsewhere, and cannot be applied if to do so result in inescapable and patent injustice." (Safe Deposit & Trust Co. vs. Virginia, 280 U. S., 83, 91-92) There is thus a marked shift from artificial postulates of law, formulated for reasons of convenience, to the actualities of each case. An examination of the adjudged cases will disclose that the relaxation of the original rule rests on either of two fundamental considerations: (1) upon the recognition of the inherent power of each government to tax persons, properties and rights within its jurisdiction and enjoying, thus, the protection of its laws; and (2) upon the principle that as o intangibles, a single location in space is hardly possible, considering the multiple, distinct relationships which may be entered into with respect thereto. It is on the basis of the first consideration that the case of Burnet vs. Brooks, supra, was decided by the Federal Supreme Court, sustaining the power of the Government to impose an inheritance tax upon transmission, by death of a non-resident, of shares of stock in a domestic (America) corporation, regardless of the situs of their corresponding certificates; and on the basis of the second consideration, the case of Cury vs. McCanless, supra. In Burnet vs. Brooks, the court, in disposing of the argument that the imposition of the federal estate tax is precluded by the due-process clause of the Fifth Amendment, held: The point, being solely one of jurisdiction to tax, involves none of the other consideration raised by confiscatory or arbitrary legislation inconsistent with the fundamental conceptions of justice which are embodied in the due-process clause for the protection of life, liberty, and property of all persons citizens and friendly aliens alike. Russian Volunteer Fleet vs. United States, 282 U. S., 481, 489; 75 Law ed., 473, 476; 41 S. Ct., 229; Nicholas vs. Coolidge, 274 U. S., 531; 542, 71 Law ed., 1184, 1192; 47 S. Ct., 710; 52 A. L. R., 1081; Heiner vs. Donnon, 285 U.S., 312, 326; 76 Law ed., 772, 779; 52 S. Ct., 358. If in the instant case the Federal Government had jurisdiction to impose the tax, there is manifestly no ground for assailing it. Knowlton vs. Moore, 178 U.S., 41, 109; 44 Law. ed., 969, 996; 20 S. Ct., 747; MaGray vs. United States, 195 U.S., 27, 61; 49 Law. ed., 78; 97; 24 S. Ct., 769; 1 Ann. Cas., 561; Flint vs. Stone Tracy Co., 220 U.S., 107, 153, 154; 55 Law. ed., 389, 414, 415; 31 S. Ct., 342; Ann. Cas., 1912B, 1312; Brushaber vs. Union p. R. Co., 240 U.S., 1, 24; 60 Law. ed., 493, 504; 36 S. Ct., 236; L. R. A., 1917 D; 414, Ann. Cas, 1917B, 713; United States vs. Doremus, 249 U. S., 86, 93; 63 Law. ed., 439, 496; 39 S. Ct., 214. (Emphasis ours.) And, in sustaining the power of the Federal Government to tax properties within its borders, wherever its owner may have been domiciled at the time of his death, the court ruled: . . . There does not appear, a priori, to be anything contrary to the principles of international law, or hurtful to the polity of nations, in a State's taxing property physically situated within its borders, wherever its owner may have been domiciled at the time of his death. . . . As jurisdiction may exist in more than one government, that is, jurisdiction based on distinct grounds the citizenship of the owner, his domicile, the source of income, the situs of the property efforts have been made to preclude multiple taxation through the negotiation of appropriate international conventions. These endeavors, however, have proceeded upon express or implied recognition, and not in denial, of the sovereign taxing power as exerted by governments in the exercise of jurisdiction upon any one of these grounds. . . . (See pages 396-397; 399.) In Curry vs. McCanless, supra, the court, in deciding the question of whether the States of Alabama and Tennessee may each constitutionally impose death taxes upon the transfer of an interest in intangibles held in trust by an

Alabama trustee but passing under the will of a beneficiary decedent domiciles in Tennessee, sustained the power of each State to impose the tax. In arriving at this conclusion, the court made the following observations: In cases where the owner of intangibles confines his activity to the place of his domicile it has been found convenient to substitute a rule for a reason, cf. New York ex rel., Cohn vs. Graves, 300 U.S., 308, 313; 81 Law. ed., 666, 670; 57 S. Ct., 466; 108 A. L. R., 721; First Bank Stock Corp. vs. Minnesota, 301 U. S., 234, 241; 81 Law. ed., 1061, 1065; 57 S. Ct., 677; 113 A. L. R., 228, by saying that his intangibles are taxed at their situs and not elsewhere, or perhaps less artificially, by invoking the maxim mobilia sequuntur personam. Blodgett vs. Silberman, 277 U.S., 1; 72 Law. ed., 749; S. Ct., 410, supra; Baldwin vs. Missouri, 281 U. S., 568; 74 Law. ed., 1056; 50 S. Ct., 436; 72 A. L. R., 1303, supra, which means only that it is the identify owner at his domicile which gives jurisdiction to tax. But when the taxpayer extends his activities with respect to his intangibles, so as to avail himself of the protection and benefit of the laws of another state, in such a way as to bring his person or properly within the reach of the tax gatherer there, the reason for a single place of taxation no longer obtains, and the rule even workable substitute for the reasons may exist in any particular case to support the constitutional power of each state concerned to tax. Whether we regard the right of a state to tax as founded on power over the object taxed, as declared by Chief Justice Marshall in McCulloch vs. Maryland, 4 Wheat., 316; 4 Law. ed., 579, supra, through dominion over tangibles or over persons whose relationships are source of intangibles rights, or on the benefit and protection conferred by the taxing sovereignty, or both, it is undeniable that the state of domicile is not deprived, by the taxpayer's activities elsewhere, of its constitutional jurisdiction to tax, and consequently that there are many circumstances in which more than one state may have jurisdiction to impose a tax and measure it by some or all of the taxpayer's intangibles. Shares or corporate stock be taxed at the domicile of the shareholder and also at that of the corporation which the taxing state has created and controls; and income may be taxed both by the state where it is earned and by the state of the recipient's domicile. protection, benefit, and power over the subject matter are not confined to either state. . . .(p. 1347-1349.) . . . We find it impossible to say that taxation of intangibles can be reduced in every case to the mere mechanical operation of locating at a single place, and there taxing, every legal interest growing out of all the complex legal relationships which may be entered into between persons. This is the case because in point of actuality those interests may be too diverse in their relationships to various taxing jurisdictions to admit of unitary treatment without discarding modes of taxation long accepted and applied before the Fourteen Amendment was adopted, and still recognized by this Court as valid. (P. 1351.) We need not belabor the doctrines of the foregoing cases. We believe, and so hold, that the issue here involved is controlled by those doctrines. In the instant case, the actual situs of the shares of stock is in the Philippines, the corporation being domiciled therein. And besides, the certificates of stock have remained in this country up to the time when the deceased died in California, and they were in possession of one Syrena McKee, secretary of the Benguet Consolidated Mining Company, to whom they have been delivered and indorsed in blank. This indorsement gave Syrena McKee the right to vote the certificates at the general meetings of the stockholders, to collect dividends, and dispose of the shares in the manner she may deem fit, without prejudice to her liability to the owner for violation of instructions. For all practical purposes, then, Syrena McKee had the legal title to the certificates of stock held in trust for the true owner thereof. In other words, the owner residing in California has extended here her activities with respect to her intangibles so as to avail herself of the protection and benefit of the Philippine laws. Accordingly, the jurisdiction of the Philippine Government to tax must be upheld. Judgment is affirmed, with costs against petitioner-appellant. Avancea, C.J., Imperial, Diaz and Concepcion, JJ., concur.

EN BANC [G.R. Nos. L-65773-74. April 30, 1987.] COMMISSIONER OF INTERNAL REVENUE, petitioner, vs. BRITISH OVERSEAS AIRWAYS CORPORATION and COURT OF TAX APPEALS, respondents. Quasha, Asperilla, Ancheta, Pea, Valmonte & Marcos for respondent British Airways. DECISION MELENCIO-HERRERA, J p: Petitioner Commissioner of Internal Revenue (CIR) seeks a review on Certiorari of the joint Decision of the Court of Tax Appeals (CTA) in CTA Cases Nos. 2373 and 2561, dated 26 January 1983, which set aside petitioner's assessment of deficiency income taxes against respondent British Overseas Airways Corporation (BOAC) for the fiscal years 1959 to 1967, 1968-69 to 1970-71, respectively, as well as its Resolution of 18 November, 1983 denying reconsideration. cdphil BOAC is a 100% British Government-owned corporation organized and existing under the laws of the United Kingdom. It is engaged in the international airline business and is a membersignatory of the Interline Air Transport Association (IATA). As such, it operates air transportation service and sells transportation tickets over the routes of the other airline members. During the periods covered by the disputed assessments, it is admitted that BOAC had no landing rights for traffic purposes in the Philippines, and was not granted a Certificate of public convenience and necessity to operate in the Philippines by the Civil Aeronautics Board (CAB), except for a nine-month period, partly in 1961 and partly in 1962, when it was granted a temporary landing permit by the CAB. Consequently, it did not carry passengers and/or cargo to or from the Philippines, although during the period covered by the assessments, it maintained a general sales agent in the Philippines Warner Barnes and Company, Ltd., and later Qantas Airways which was responsible for selling BOAC tickets covering passengers and cargoes. 1 G.R. No. 65773 (CTA Case No. 2373, the First Case) On 7 May 1968, petitioner Commissioner of Internal Revenue (CIR, for brevity) assessed BOAC the aggregate amount of P2,498,358.56 for deficiency income taxes covering the years 1959 to 1963. This was protested by BOAC. Subsequent investigation resulted in the issuance of a new assessment, dated 16 January 1970 for the years 1959 to 1967 in the amount of P858,307.79. BOAC paid this new assessment under protest. On 7 October 1970, BOAC filed a claim for refund of the amount of P858,307.79, which claim was denied by the CIR on 16 February 1972. But before said denial, BOAC had already filed a petition for review with the Tax Court on 27 January 1972, assailing the assessment and praying for the refund of the amount paid. G.R. No. 65774 (CTA Case No. 2561, the Second Case) On 17 November 1971, BOAC was assessed deficiency income taxes, interests, and penalty for the fiscal years 1968/1969 to 1970-1971 in the aggregate amount of P549,327.43, and the additional amounts of P1,000.00 and P1,800.00 as compromise penalties for violation of Section 46 (requiring the filing of corporation returns) penalized under Section 74 of the National Internal Revenue Code (NIRC). On 25 November 1971, BOAC requested that the assessment be countermanded and set aside. In a letter, dated 16 February 1972, however, the CIR not only denied the BOAC request for refund in the First Case but also re-issued in the Second Case the deficiency income tax assessment for P534,132.08 for the years 1969 to 1970-71 plus P1,000.00 as compromise penalty under Section 74 of the Tax Code. BOAC's request for reconsideration was denied by the CIR on 24 August 1973. This prompted BOAC to file the Second Case before the Tax Court praying that it be absolved of liability for deficiency income tax for the years 1969 to 1971. This case was subsequently tried jointly with the First Case. On 26 January 1983, the Tax Court rendered the assailed joint Decision reversing the CIR. The Tax Court held that the proceeds of sales of BOAC passage tickets in the Philippines by Warner Barnes and Company, Ltd., and later by Qantas Airways, during the period in question, do not constitute BOAC income from Philippine sources "since no service of carriage of passengers or freight was performed by BOAC within the Philippines" and, therefore, said income is not subject to Philippine income tax. The CTA position was that income from transportation is income from services so that the place where services are rendered determines the source. Thus, in the dispositive portion of its Decision, the Tax Court ordered petitioner to credit BOAC with

the sum of P858,307.79, and to cancel the deficiency income tax assessments against BOAC in the amount of P534,132.08 for the fiscal years 1968-69 to 1970-71. Hence, this Petition for Review on Certiorari of the Decision of the Tax Court. The Solicitor General, in representation of the CIR, has aptly defined the issues, thus: "1. Whether or not the revenue derived by private respondent British Overseas Airways Corporation (BOAC) from sales of tickets in the Philippines for air transportation, while having no landing rights here, constitute income of BOAC from Philippine sources, and, accordingly, taxable. "2. Whether or not during the fiscal years in question BOAC is a resident foreign corporation doing business in the Philippines or has an office or place of business in the Philippines. "3. In the alternative that private respondent may not be considered a resident foreign corporation but a non-resident foreign corporation, then it is liable to Philippine income tax at the rate of thirty-five per cent (35%) of its gross income received from all sources within the Philippines." Under Section 20 of the 1977 Tax Code: "(h) the term 'resident foreign corporation' applies to a foreign corporation engaged in trade or business within the Philippines or having an office or place of business therein. "(i) The term 'non-resident foreign corporation' applies to a foreign corporation not engaged in trade or business within the Philippines and not having any office or place of business therein." LLpr It is our considered opinion that BOAC is a resident foreign corporation. There is no specific criterion as to what constitutes "doing" or "engaging in" or "transacting" business. Each case must be judged in the light of its peculiar environmental circumstances. The term implies a continuity of commercial dealings and arrangements, and contemplates, to that extent, the performance of acts or works or the exercise of some of the functions normally incident to, and in progressive prosecution of commercial gain or for the purpose and object of the business organization. 2 "In order that a foreign corporation may be regarded as doing business within a State, there must be continuity of conduct and intention to establish a continuous business, such as the appointment of a local agent, and not one of a temporary character.' 3 BOAC, during the periods covered by the subject-assessments, maintained a general sales agent in the Philippines. That general sales agent, from 1959 to 1971, "was engaged in (1) selling and issuing tickets; (2) breaking down the whole trip into series of trips each trip in the series corresponding to a different airline company; (3) receiving the fare from the whole trip; and (4) consequently allocating to the various airline companies on the basis of their participation in the services rendered through the mode of interline settlement as prescribed by Article VI of the Resolution No. 850 of the IATA Agreement." 4 Those activities were in exercise of the functions which are normally incident to, and are in progressive pursuit of, the purpose and object of its organization as an international air carrier. In fact, the regular sale of tickets, its main activity, is the very lifeblood of the airline business, the generation of sales being the paramount objective. There should be no doubt then that BOAC was "engaged in" business in the Philippines through a local agent during the period covered by the assessments. Accordingly, it is a resident foreign corporation subject to tax upon its total net income received in the preceding taxable year from all sources within the Philippines. 5 "Sec. 24. Rates of tax on corporations. . . . "(b) Tax on foreign corporations. . . . "(2) Resident corporations. A corporation organized, authorized, or existing under the laws of any foreign country, except a foreign life insurance company, engaged in trade or business within the Philippines, shall be taxable as provided in subsection (a) of this section upon the total net income received in the preceding taxable year from all sources within the Philippines. (Emphasis ours) Next, we address ourselves to the issue of whether or not the revenue from sales of tickets by BOAC in the Philippines constitutes income from Philippine sources and, accordingly, taxable under our income tax laws. The Tax Code defines "gross income" thus: "'Gross income' includes gains, profits, and income derived from salaries, wages or compensation for personal service of whatever kind and in whatever form paid, or from profession, vocations, trades, business, commerce, sales, or dealings in property, whether real or

personal, growing out of the ownership or use of or interest in such property; also from interests, rents, dividends, securities, or the transactions of any business carried on for gain or profit or gains, profits, and income derived from any source whatever" (Sec. 29[3]; Emphasis supplied) The definition is broad and comprehensive to include proceeds from sales of transport documents. "The words 'income from any source whatever' disclose a legislative policy to include all income not expressly exempted within the class of taxable income under our laws." Income means "cash received or its equivalent"; it is the amount of money coming to a person within a specific time . . .; it means something distinct from principal or capital. For, while capital is a fund, income is a flow. As used in our income tax law, "income" refers to the flow of wealth. 6 The records show that the Philippine gross income of BOAC for the fiscal years 1968-69 to 1970-71 amounted to P10,428,368.00. 7 Did such "flow of wealth" come from "sources within the Philippines"? The source of an income is the property, activity or service that produced the income. 8 For the source of income to be considered as coming from the Philippines, it is sufficient that the income is derived from activity within the Philippines. In BOAC's case, the sale of tickets in the Philippines is the activity that produces the income. The tickets exchanged hands here and payments for fares were also made here in Philippine currency. The situs of the source of payments is the Philippines. The flow of wealth proceeded from, and occurred within, Philippine territory, enjoying the protection accorded by the Philippine government. In consideration of such protection, the flow of wealth should share the burden of supporting the government. A transportation ticket is not a mere piece of paper. When issued by a common carrier, it constitutes the contract between the ticket-holder and the carrier. It gives rise to the obligation of the purchaser of the ticket to pay the fare and the corresponding obligation of the carrier to transport the passenger upon the terms and conditions set forth thereon. The ordinary ticket issued to members of the travelling public in general embraces within its terms all the elements to constitute it a valid contract, binding upon the parties entering into the relationship. 9 True, Section 37(a) of the Tax Code, which enumerates items of gross income from sources within the Philippines, namely: (1) interest, (2) dividends, (3) service, (4) rentals and royalties, (5) sale of real property, and (6) sale of personal property, does not mention income from the sale of tickets for international transportation. However, that does not render it less an income from sources within the Philippines. Section 37, by its language, does not intend the enumeration to be exclusive. It merely directs that the types of income listed therein be treated as income from sources within the Philippines. A cursory reading of the section will show that it does not state that it is an all-inclusive enumeration, and that no other kind of income may be so considered. 10 BOAC, however, would impress upon this Court that income derived from transportation is income for services, with the result that the place where the services are rendered determines the source; and since BOAC's service of transportation is performed outside the Philippines, the income derived is from sources without the Philippines and, therefore, not taxable under our income tax laws. The Tax Court upholds that stand in the joint Decision under review. The absence of flight operations to and from the Philippines is not determinative of the source of income or the situs of income taxation. Admittedly, BOAC was an off-line international airline at the time pertinent to this case. The test of taxability is the "source"; and the source of an income is that activity . . . which produced the income. 11 Unquestionably, the passage documentations in these cases were sold in the Philippines and the revenue therefrom was derived from a business activity regularly pursued within the Philippines. And even if the BOAC tickets sold covered the "transport of passengers and cargo to and from foreign cities", 12 it cannot alter the fact that income from the sale of tickets was derived from the Philippines. The word "source" conveys one essential idea, that of origin, and the origin of the income herein is the Philippines. 13 It should be pointed out, however, that the assessments upheld herein apply only to the fiscal years covered by the questioned deficiency income tax assessments in these cases, or, from 1959 to 1967, 1968-69 to 1970-71. For, pursuant to Presidential Decree No. 69, promulgated on 24 November, 1972, international carriers are now taxed as follows: ". . . Provided, however, That international carriers shall pay a tax of 2-1/2 per cent on their gross Philippine billings." (Sec. 24[b] [2], Tax Code).

Presidential Decree No. 1355, promulgated on 21 April, 1978, provided a statutory definition of the term "gross Philippine billings," thus: ". . . 'Gross Philippine billings' includes gross revenue realized from uplifts anywhere in the world by any international carrier doing business in the Philippines of passage documents sold therein, whether for passenger, excess baggage or mail, provided the cargo or mail originates from the Philippines. . . ." The foregoing provision ensures that international airlines are taxed on their income from Philippine sources. The 2-1/2% tax on gross Philippine billings is an income tax. If it had been intended as an excise or percentage tax it would have been place under Title V of the Tax Code covering Taxes on Business. Lastly, we find as untenable the BOAC argument that the dismissal for lack of merit by this Court of the appeal in JAL vs. Commissioner of Internal Revenue (G.R. No. L-30041) on February 3, 1969, is res judicata to the present case. The ruling by the Tax Court in that case was to the effect that the mere sale of tickets, unaccompanied by the physical act of carriage of transportation, does not render the taxpayer therein subject to the common carrier's tax. As elucidated by the Tax Court, however, the common carrier's tax is an excise tax, being a tax on the activity of transporting, conveying or removing passengers and cargo from one place to another. It purports to tax the business of transportation. 14 Being an excise tax, the same can be levied by the State only when the acts, privileges or businesses are done or performed within the jurisdiction of the Philippines. The subject matter of the case under consideration is income tax, a direct tax on the income of persons and other entities "of whatever kind and in whatever form derived from any source." Since the two cases treat of a different subject matter, the decision in one cannot be res judicata to the other. WHEREFORE, the appealed joint Decision of the Court of Tax Appeals is hereby SET ASIDE. Private respondent, the British Overseas Airways Corporation (BOAC), is hereby ordered to pay the amount of P534,132.08 as deficiency income tax for the fiscal years 1968-69 to 1970-71 plus 5% surcharge, and 1% monthly interest from April 16, 1972 for a period not to exceed three (3) years in accordance with the Tax Code. The BOAC claim for refund in the amount of P858,307.79 is hereby denied. Without costs. SO ORDERED. Paras, Gancayco, Padilla, Bidin, Sarmiento, Yap and Cortes, JJ ., concur. Fernan, J ., took no part, his brother-in-law being a member of the law firm representing private respondents. Separate Opinions TEEHANKEE, C .J ., concurring: I concur with the Court's majority judgment upholding the assessments of deficiency income taxes against respondent BOAC for the fiscal years 1959-1967, 1968-1969 to 1970-1971 and therefore setting aside the appealed joint decision of respondent Court of Tax Appeals. I just wish to point out that the conflict between the majority opinion penned by Mme. Justice Melencio-Herrera and the dissenting opinion penned by Mr. Justice Feliciano as to the proper characterization of the taxable income derived by respondent BOAC from the sales in the Philippines of tickets for BOAC flights as sold and issued by its general sales agent in the Philippines has become moot after November 24, 1972. Both opinions state that by amendment through P.D. No. 69, promulgated on November 24, 1972, of section 24(b) (2) of the Tax Code providing for the rate of income tax on foreign corporations, international carriers such as respondent BOAC, have since then been taxed at a reduced rate of 2-1/2% on their gross Philippine billings. There is, therefore, no longer any source of substantial conflict between the two opinions as to the present 2-1/2% tax on their gross Philippine billings charged against such international carriers as herein respondent foreign corporation. cdrep FELICIANO, J ., dissenting: With great respect and reluctance, I record my dissent from the opinion of Mme. Justice A.A. Melencio-Herrera speaking for the majority. In my opinion, the joint decision of the Court of Tax Appeals in CTA Cases Nos. 2373 and 2561, dated 26 January 1983, is correct and should be affirmed. The fundamental issue raised in this petition for review is whether the British Overseas Airways Corporation (BOAC), a foreign airline company which does not maintain any flight operations to and from the Philippines, is liable for Philippine income taxation in respect of "sales of air

tickets" in the Philippines through a general sales agent, relating to the carriage of passengers and cargo between two points both outside the Philippines. cdtai 1. The Solicitor General has defined as one of the issues in this case the question of: "2. Whether or not during the fiscal years in question 1 BOAC, [was] a resident foreign corporation doing business in the Philippines or [had] an office or place of business in the Philippines." It is important to note at the outset that the answer to the above-quoted issue is not determinative of the liability of the BOAC to Philippine income taxation in respect of the income here involved. The liability of BOAC to Philippine income taxation in respect of such income depends, not on BOAC's status as a "resident foreign corporation" or alternatively, as a "nonresident foreign corporation," but rather on whether or not such income is derived from "sources within the Philippines." A "resident foreign corporation" or a foreign corporation engaged in trade or business in the Philippines or having an office or place of business in the Philippines is subject to Philippine income taxation only in respect of income derived from sources within the Philippines. Section 24 (b) (2) of the National Internal Revenue Code ("Tax Code"), as amended by Republic Act No. 2343, approved 20 June 1959, as it existed up to 3 August 1969, read as follows: "(2) Resident corporations. A foreign corporation engaged in trade or business within the Philippines (except foreign life insurance companies) shall be taxable as provided in subsection (a) of this section." Section 24 (a) of the Tax Code in turn provides: "Rate of tax on corporations. (a) Tax on domestic corporations. . . . and a like tax shall be levied, collected, and paid annually upon the total net income received in the preceeding taxable year from all sources within the Philippines by every corporation organized, authorized, or existing under the laws of any foreign country: . . . ." (Emphasis supplied) Republic Act No. 6110, which took effect on 4 August 1969, made this even clearer when it amended once more Section 24 (b) (2) of the Tax Code so as to read as follows: "(2) Resident Corporations. A corporation, organized, authorized or existing under the laws of any foreign country, except foreign life insurance company, engaged in trade or business within the Philippines, shall be taxable as provided in subsection (a) of this section upon the total net income received in the preceding taxable year from all sources within the Philippines." (Emphasis supplied) Exactly the same rule is provided by Section 24 (b) (1) of the Tax Code upon non-resident foreign corporations. Section 24 (b) (1) as amended by Republic Act No. 3825 approved 22 June 1963, read as follows: "(b) Tax on foreign corporations. (1) Non-resident corporations. There shall be levied, collected and paid for each taxable year, in lieu of the tax imposed by the preceding paragraph upon the amount received by every foreign corporation not engaged in trade or business within the Philippines, from all sources within the Philippines, as interests, dividends, rents, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinative annual or periodical gains, profits and incomes a tax equal to thirty per centum of such amount: provided, however, that premiums shall not include reinsurance premiums." 2 Clearly, whether the foreign corporate taxpayer is doing business in the Philippines and therefore a resident foreign corporation, or not doing business in the Philippines and therefore a nonresident foreign corporation, it is liable to income tax only to the extent that it derives income from sources within the Philippines. The circumstance that a foreign corporation is resident in the Philippines yields no inference that all or any part of its income is Philippine source income. Similarly, the non-resident status of a foreign corporation does not imply that it has no Philippine source income. Conversely, the receipt of Philippine source income creates no presumption that the recipient foreign corporation is a resident of the Philippines. The critical issue, for present purposes, is therefore whether or not BOAC is deriving income from sources within the Philippines. 2. For purposes of income taxation, it is well to bear in mind that the "source of income" relates not to the physical sourcing of a flow of money or the physical situs of payment but rather to the "property, activity or service which produced the income." In Howden and Co., Ltd. vs. Collector of Internal Revenue, 3 the Court dealt with the issue of the applicable source rule

relating to reinsurance premiums paid by a local insurance company to a foreign reinsurance company in respect of risks located in the Philippines. The Court said: "The source of an income is the property, activity or service that produced the income. The reinsurance premiums remitted to appellants by virtue of the reinsurance contracts, accordingly, had for their source the undertaking to indemnify Commonwealth Insurance Co. against liability. Said undertaking is the activity that produced the reinsurance premiums, and the same took place in the Philippines. [T]he reinsured, the liabilities insured and the risks originally underwritten by Commonwealth Insurance Co., upon which the reinsurance premiums and indemnity were based, were all situated in the Philippines. " 4 The Court may be seen to be saying that it is the underlying prestation which is properly regarded as the activity giving rise to the income that is sought to be taxed. In the Howden case, that underlying prestation was the indemnification of the local insurance company. Such indemnification could take place only in the Philippines where the risks were located and where payment from the foreign reinsurer (in case the casualty insured against occurs) would be received in Philippine pesos under the reinsurance contract. The Court held accordingly that the reinsurance premiums paid by the local insurance companies constituted Philippine source income of the foreign reinsurers. The concept of "source of income" for purposes of income taxation originated in the United States income tax system. The phrase "sources within the United States" was first introduced into the U.S. tax system in 1916, and was subsequently embodied in the 1939 U.S. Tax Code. As is commonly known, our Tax Code (Commonwealth Act 466, as amended) was patterned after the 1939 U.S. Tax Code. It therefore seems useful to refer to a standard U.S. text on federal income taxation: "The Supreme Court has said, in a definition much quoted but often debated, that income may be derived from three possible sources only: (1) capital and/or (2) labor and/or (3) the sale of capital assets. While the three elements of this attempt at definition need not be accepted as allinclusive, they serve as useful guides in any inquiry into whether a particular item is from 'sources within the United States' and suggest an investigation into the nature and location of the activities or property which produce the income. If the income is from labor (services) the place where the labor is done should be decisive; if it is done in this country, the income should be from 'sources within the United States.' If the income is from capital, the place where the capital is employed should be decisive; if it is employed in this country, the income should be from 'sources within the United States.' If the income is from the sale of capital assets, the place where the sale is made should be likewise decisive. Much confusion will be avoided by regarding the term 'source' in this fundamental light. It is not a place; it is an activity or property. As such, it has a situs or location; and if that situs or location is within the United States the resulting income is taxable to nonresident aliens and foreign corporations. The intention of Congress in the 1916 and subsequent statutes was to discard the 1909 and 1913 basis of taxing nonresident aliens and foreign corporations and to make the test of taxability the 'source,' or situs of the activities or property which produce the income. . . Thus, if income is to be taxed, the recipient thereof must be resident within the jurisdiction, or the property or activities out of which the income issues or is derived must be situated within the jurisdiction so that the source of the income may be said to have a situs in this country. The underlying theory is that the consideration for taxation is protection of life and property and that the income rightly to be levied upon to defray the burdens of the United States Government is that income which is created by activities and property protected by this Government or obtained by persons enjoying that protection." 5 3. We turn now to the question of what is the source of income rule applicable in the instant case. There are two possibly relevant source of income rules that must be confronted: (a) the source rule applicable in respect of contracts of service; and (b) the source rule applicable in respect of sales of personal property. Where a contract for the rendition of service is involved, the applicable source rule may be simply stated as follows: the income is sourced in the place where the service contracted for is rendered. Section 37 (a) (3) of our Tax Code reads as follows: "Section 37. Income from sources within the Philippines. (a) Gross income from sources within the Philippines. The following items of gross income shall be treated as gross income from sources within the Philippines:

xxx xxx xxx (3) Services. Compensation for labor or personal services performed in the Philippines; . . ." (Emphasis supplied) Section 37 (c) (3) of the Tax Code, on the other hand, deals with income from sources without the Philippines in the following manner: "(c) Gross income from sources without the Philippines. The following items of gross income shall be treated as income from sources without the Philippines: (3) Compensation for labor or personal services performed without the Philippines; . . . " (Emphasis supplied) It should not be supposed that Section 37 (a) (3) and (c) (3) of the Tax Code apply only in respect of services rendered by individual natural persons; they also apply to services rendered by or through the medium of a juridical person. 6 Further, a contract of carriage or of transportation is assimilated in our Tax Code and Revenue Regulations to a contract for services. Thus, Section 37 (e) of the Tax Code provides as follows: "(e) Income from sources partly within and partly without the Philippines. Items of gross income, expenses, losses and deductions, other than those specified in subsections (a) and (c) of this section shall be allocated or apportioned to sources within or without the Philippines, under the rules and regulations prescribed by the Secretary of Finance. . . . Gains, profits, and income from (1) transportation or other services rendered partly within and partly without the Philippines, or (2) from the sale of personal property produced (in whole or in part) by the taxpayer within and sold without the Philippines, or produced (in whole or in part) by the taxpayer without and sold within the Philippines, shall be treated as derived partly from sources within and partly from sources without the Philippines. . . ." (Emphasis supplied) It should be noted that the above underscored portion of Section 37 (e) was derived from the 1939 U.S. Tax Code which "was based upon a recognition that transportation was a service and that the source of the income derived therefrom was to be treated as being the place where the service of transportation was rendered." 7 Section 37 (e) of the Tax Code quoted above carries a strong, well-nigh irresistible, implication that income derived from transportation or other services rendered entirely outside the Philippines must be treated as derived entirely from sources without the Philippines. This implication is reinforced by a consideration of certain provisions of Revenue Regulations No. 2 entitled "Income Tax Regulations," as amended, first promulgated by the Department of Finance on 10 February 1940. Section 155 of Revenue Regulations No. 2 (implementing Section 37 of the Tax Code) provides in part as follows: "Section 155. Compensation for labor or personal services. Gross income from sources within the Philippines includes compensation for labor or personal services within the Philippines regardless of the residence of the payor, of the place in which the contract for services was made, or of the place of payment " (Emphasis supplied) Section 163 of Revenue Regulations No. 2 (still relating to Section 37 of the Tax Code) deals with a particular species of foreign transportation companies i.e., foreign steamship companies deriving income from sources partly within and partly without the Philippines: "Section 163. Foreign steamship companies. The returns of foreign steamship companies whose vessels touch ports of the Philippines should include as gross income, the total receipts of all outgoing business whether freight or passengers. With the gross income thus ascertained, the ratio existing between it and the gross income from all ports, both within and without the Philippines of all vessels, whether touching ports of the Philippines or not, should be determined as the basis upon which allowable deductions may be computed, ." (Emphasis supplied) Another type of utility or service enterprise is dealt with in Section 164 of Revenue Regulations No. 2 (again implementing Section 37 of the Tax Code) which provides as follows: "Section 164. Telegraph and cable services. A foreign corporation carrying on the business of transmission of telegraph or cable messages between points in the Philippines and points outside the Philippines derives income partly from sources within and partly from sources without the Philippines. xxx xxx xxx (Emphasis supplied) Once more, a very strong inference arises under Sections 163 and 164 of Revenue Regulations No. 2 that steamship and telegraph and cable services rendered between points both outside the

Philippines give rise to income wholly from sources outside the Philippines, and therefore not subject to Philippine income taxation. We turn to the "source of income" rules relating to the sale of personal property, upon the one hand, and to the purchase and sale of personal property, upon the other hand. We consider first sales of personal property. Income from the sale of personal property by the producer or manufacturer of such personal property will be regarded as sourced entirely within or entirely without the Philippines or as sourced partly within and partly without the Philippines, depending upon two factors: (a) the place where the sale of such personal property occurs; and (b) the place where such personal property was produced or manufactured. If the personal property involved was both produced or manufactured and sold outside the Philippines, the income derived therefrom will be regarded as sourced entirely outside the Philippines. If, however, the sale took place within the Philippines, although the personal property had been produced outside the Philippines, or if the sale of the property takes place outside the Philippines and the personal property was produced in the Philippines, then, the income derived from the sale will be deemed partly as income sourced within and partly as income sourced without the Philippines. In other words, the income (and the related expenses, losses and deductions) will be allocated between sources within and sources without the Philippines. Thus, Section 37 (e) of the Tax Code, although already quoted above, may be usefully quoted again: "(e) Income from sources partly within and partly without the Philippines. . . . Gains, profits and income from (1) transportation or other services rendered partly within and partly without the Philippines; or (2) from the sale of personal property produced (in whole or in part) by the taxpayer within and sold without the Philippines, or produced (in whole or in part) by the taxpayer without and sold within the Philippines, shall be treated as derived partly from sources within and partly from sources without the Philippines. . . ." (Emphasis supplied) In contrast, income derived from the purchase and sale of personal property i.e., trading is, under the Tax Code, regarded as sourced wholly in the place where the personal property is sold. Section 37 (e) of the Tax Code provides in part as follows: "(e) Income from sources partly within and partly without the Philippines . . . Gains, profits and income derived from the purchase of personal property within and its sale without the Philippines or from the purchase of personal property without and its sale within the Philippines, shall be treated as derived entirely from sources within the country in which sold." (Emphasis supplied) Section 159 of Revenue Regulations No. 2 puts the applicable rule succinctly: "Section 159. Sale of personal property. Income derived from the purchase and sale of personal property shall be treated as derived entirely from the country in which sold. The word 'sold' includes 'exchange.' The 'country' in which 'sold' ordinarily means the place where the property is marketed. This Section does not apply to income from the sale of personal property produced (in whole or in part) by the taxpayer within and sold without the Philippines or produced (in whole or in part) by the taxpayer without and sold within the Philippines. (See Section 162 of these regulations). (Emphasis supplied) 4. It will be seen that the basic problem is one of characterization of the transactions entered into by BOAC in the Philippines. Those transactions may be characterized either as sales of personal property (i.e., "sales of airline tickets") or as entering into a lease of services or a contract of service or carriage. The applicable "source of income" rules differ depending upon which characterization is given to the BOAC transactions. The appropriate characterization, in my opinion, of the BOAC transactions is that of entering into contracts of service, i.e., carriage of passengers or cargo between points located outside the Philippines. The phrase "sale of airline tickets," while widely used in popular parlance, does not appear to be correct as a matter of tax law. The airline ticket in and of itself has no monetary value, even as scrap paper. The value of the ticket lies wholly in the right acquired by the "purchaser" the passenger to demand a prestation from BOAC, which prestation consists of the carriage of the "purchaser" or passenger from one point to another outside the Philippines. The ticket is really the evidence of the contract of carriage entered into between BOAC and the passenger. The money paid by the passenger changes hands in the Philippines. But the passenger does not receive in the Philippines the consideration therefor the service undertaken to be delivered by BOAC. The "purchase price of the airline ticket" is quite different from the purchase price of a

physical good or commodity such as a pair of shoes or a refrigerator or an automobile; it is really the compensation paid for the undertaking of BOAC to transport the passenger or cargo outside the Philippines. The characterization of the BOAC transactions either as sales of personal property or as purchases and sales of personal property, appear entirely inappropriate from another viewpoint. Consider first purchases and sales: is BOAC properly regarded as engaged in trading in the purchase and sale of personal property? Certainly, BOAC was not purchasing tickets outside the Philippines and selling them in the Philippines. Consider next sales: can BOAC be regarded as "selling" personal property produced or manufactured by it? In a popular or journalistic sense, BOAC might be described as "selling" "a product" its services. However, for the technical purposes of the law on income taxation, BOAC is in fact entering into contracts of service or carriage. The very existence of "source" rules" specifically and precisely applicable to the rendition of services must preclude the application here of "source rules" applying generally to sales, and purchases and sales, of personal property which can be invoked only by the grace of popular language. On a slightly more abstract level, BOAC's income is more appropriately characterized as derived from a "service", rather than from an "activity" (a broader term than service and including the activity of selling) or from the use of "property." Finally, it is well to recall that what is here involved is income taxation, and not a sales tax or an excise or privilege tax. 5. The taxation of international carriers is today effected under Section 24 (b) (2) of the Tax Code, as amended by Presidential Decree No. 69, promulgated on 24 November 1972 and by Presidential Decree No. 1355, promulgated on 21 April 1978, in the following manner: "(2) Resident corporations. A corporation organized, authorized, or existing under the laws of any foreign country, engaged in trade or business within the Philippines, shall be taxable as provided in subsection (a) of this section upon the total net income received in the preceding taxable year from all sources within the Philippines: Provided, however, That international carriers shall pay a tax of two and one-half per cent on their gross Philippine billings. 'Gross Philippine billings' includes gross revenue realized from uplifts anywhere in the world by any international carrier doing business in the Philippines of passage documents sold therein, whether for passenger, excess baggage or mail, provided the cargo or mail originates from the Philippines. The gross revenue realized from the said cargo or mail shall include the gross freight charge up to final destination. Gross revenues from chartered flights originating from the Philippines shall likewise form part of 'gross Philippine billings' regardless of the place of sale or payment of the passage documents. For purposes of determining the taxability of revenues from chartered flights, the term 'originating from the Philippines' shall include flight of passengers who stay in the Philippines for more than forty-eight (48) hours prior to embarkation." (Emphasis supplied) Under the above-quoted proviso, international carriers issuing for compensation passage documentation in the Philippines for uplifts from any point in the world to any other point in the world, are not charged any Philippine income tax on their Philippine billings (i.e., billings in respect of passenger or cargo originating from the Philippines). Under this new approach, international carriers who service ports or points in the Philippines are treated in exactly the same way as international carriers not servicing any port or point in the Philippines. Thus, the source of income rule applicable, as above discussed, to transportation or other services rendered partly within and partly without the Philippines, or wholly without the Philippines, has been set aside. In place of Philippine income taxation, the Tax Code now imposes this 21/2 per cent tax computed on the basis of billings in respect of passengers and cargo originating from the Philippines regardless of where embarkation and debarkation would be taking place. This 2-1/2 per cent tax is effectively a tax on gross receipts or an excise or privilege tax and not a tax on income. Thereby, the Government has done away with the difficulties attending the allocation of income and related expenses, losses and deductions. Because taxes are the very lifeblood of government, the resulting potential "loss" or "gain" in the amount of taxes collectible by the state is sometimes, with varying degrees of consciousness, considered in choosing from among competing possible characterizations under or interpretations of tax statutes. It is hence perhaps useful to point out that the determination of the appropriate characterization here that of contracts of air carriage rather than sales of airline tickets entails no down-the-road loss of income tax revenues to the Government. In lieu thereof, the Government takes in revenues

generated by the 2-1/2 per cent tax on the gross Philippine billings or receipts of international carriers. I would vote to affirm the decision of the Court of Tax Appeals. Narvasa, Gutierrez, Jr. and Cruz JJ ., dissent. Footnotes 1. Partial Stipulation of Facts, Annex "E" and Annex "4", pp. 74-77 and 87-90, Rollo. 2. The Mentholatum Co., Inc., et al. vs. Anacleto Mangaliman, et al., 72 Phil. 524 (1941); Section 1, R.A. No. 5455. 3. Pacific Micronesian Line, Inc. vs. Del Rosario and Peligon, 96 Phil. 23, 30, citing Thompson on Corporations, Vol. 8, 3rd ed., pp. 844-847 and Fisher's Philippine Law of Stock Corporation, p. 415. 4. P. 11, BOAC Memorandum; p. 261, Rollo. 5. Section 24(b), (2), Tax Code, as amended by R.A. 6110, approved on 4 August 1969. 6. Madrigal and Paternol vs. Rafferty and Concepcion, 38 Phil. 414 (1918). 7. Memorandum for Petitioner, p. 22; p. 299, Rollo. 8. Mertens, Jr., Jacob, Law on Federal Income Taxation, Vol. 8, Section 45.27; cited in Howden & Co., Ltd. vs. Collector of Internal Revenue, 13 SCRA 601 (1965). 9. 14 Am Jur 2d 813. 10. British Trader's Insurance Co., Ltd. vs. Commissioner of Internal Revenue, 13 SCRA 719 (1965). 11. Howden & Co., Ltd. vs. Collector of Internal Revenue, 13 SCRA 601 (1965). 12. Partial Stipulation of Facts, paragraph 5, p. 89, Rollo. 13. Manila Gas Corporation vs. Collector of Internal Revenue, 62 Phil. 895 (1935). 14. Commissioner of Internal Revenue vs. U.S. Lines, Co., 5 SCRA 175 (1962). FELICIANO, J., dissenting: 1. I.e., 1959-1969 and 1971. 2. Emphasis, Republic Act No. 6110 continued the above-quoted sub-paragraph, except that it raised the tax rate from 30% to 35%. 3. 13 SCRA 601 (1965). 4. 13 SCRA, at 604; emphasis supplied. 5. 8 Mertens, Law of Federal Income Taxation, Section 45.27 (1957); underscoring supplied; footnotes omitted. 6. Commissioner v. Hawaiian Philippine Co., 100 F. 2d 988, 991 (9th Cir. 1939, where the Court also observed that the sugar milling services rendered by the respondent were not any less in the nature of "personal" services merely because "they were performed, in part, through the use of machinery, or because of the magnitude of the taxpayers operations." Id. 7. 8 Mertens, Id., Section 45.43, which goes on to state that: "It was the intention of Congress under the 1921 law to place the taxation of transportation companies upon a sounder and more scientific basis (rather than the species of franchise tax previously imposed upon nonresidents in general), and so the principle was adopted of considering income derived from transportation to be income for services, with the result that the place where the services were rendered determined the source. The result was income from sources partly within and partly without the United States." (Id.) (Emphasis supplied)

EN BANC G.R. No. L-22074 April 30, 1965

THE PHILIPPINE GUARANTY CO., INC., petitioner, vs. THE COMMISSIONER OF INTERNAL REVENUE and THE COURT OF TAX APPEALS, respondents. Josue H. Gustilo and Ramirez and Ortigas for petitioner. Office of the Solicitor General and Attorney V.G. Saldajena for respondents. SYLLABUS 1. TAXATION; INCOME TAX; REINSURANCE PREMIUMS CEDED TO FOREIGN REINSURERS SUBJECT TO WITHHOLDING TAX. Reinsurance premiums on local risks ceded by domestic insurers to foreign reinsurers not doing business in the Philippines are subject to withholding tax. 2. ID.; ID.; REINSURANCE PREMIUMS CEDED TO FOREIGN REINSURERS CONSIDERED INCOME FROM PHILIPPINE SOURCES. Where the reinsurance contracts show that the activities that constituted the undertaking to reinsure a domestic insurer against losses arising from the original insurances in the Philippines were performed in the Philippines, the reinsurance premiums are considered as coming from sources within the Philippines and are subject to Philippine Income Tax. 3. ID.; ID.; ID.; PLACE OF ACTIVITY CREATING INCOME CONTROLLING. Section 24 of the Tax Code does not require a foreign corporation to engage in business in the Philippines in subjecting its income to tax. It suffices that the activity creating the income is performed or done in the Philippines. What is controlling, therefore, is not the place of business but the place of activity that created an income. 4. ID.; ID.; SECTION 37 OF TAX CODE NOT ALL INCLUSIVE ENUMERATION. Section 37 of the Tax Code is not an all-inclusive enumeration, for it merely directs that the kinds of income mentioned therein should be treated as income from sources within the Philippines but it does not require that other kinds of income should not be considered likewise. 5. ID.; ID.; NO ESTOPPEL ON GOVERNMENT FOR MISTAKE OF ITS AGENTS. The defense of reliance in good faith on rulings of the Commissioner of Internal Revenue requiring no withholding of the tax due on reinsurance premiums may free the taxpayer from the payment of surcharges or penalties imposed for failure to pay the corresponding withholding tax, but it certainly would not exculpate it from liability to pay such withholding tax. The Government is not estopped from collecting taxes by the mistakes or errors of its agents. 6. ID.; ID.; WITHHOLDING TAX ON REINSURANCE PREMIUMS COMPUTED ON TOTAL AMOUNT CEDED. The withholding tax on reinsurance premiums should be computed on the total amount ceded instead of on the amount actually remitted to foreign reinsurers. Sections 53 and 54 of the Tax Code allow no deduction from the income therein enumerated in determining the amount to be withheld. Accordingly, in computing the withholding tax due on the reinsurance premiums no deduction shall be recognized. BENGZON, J.P., J.: The Philippine Guaranty Co., Inc., a domestic insurance company, entered into reinsurance contracts, on various dates, with foreign insurance companies not doing business in the Philippines namely: Imperio Compaia de Seguros, La Union y El Fenix Espaol, Overseas Assurance Corp., Ltd., Socieded Anonima de Reaseguros Alianza, Tokio Marino & Fire Insurance Co., Ltd., Union Assurance Society Ltd., Swiss Reinsurance Company and Tariff Reinsurance Limited. Philippine Guaranty Co., Inc., thereby agreed to cede to the foreign reinsurers a portion of the premiums on insurance it has originally underwritten in the Philippines, in consideration for the assumption by the latter of liability on an equivalent portion of the risks insured. Said reinsurrance contracts were signed by Philippine Guaranty Co., Inc. in Manila and by the foreign reinsurers outside the Philippines, except the contract with Swiss Reinsurance Company, which was signed by both parties in Switzerland. The reinsurance contracts made the commencement of the reinsurers' liability simultaneous with that of Philippine Guaranty Co., Inc. under the original insurance. Philippine Guaranty Co., Inc. was required to keep a register in Manila where the risks ceded to the foreign reinsurers where entered, and entry therein was binding upon the reinsurers. A proportionate amount of taxes on insurance premiums not recovered from the original assured were to be paid for by the foreign reinsurers. The foreign reinsurers further agreed, in consideration for managing or administering their affairs in the Philippines, to compensate the Philippine Guaranty Co., Inc., in an amount equal to 5% of the reinsurance premiums. Conflicts and/or differences between the parties under the reinsurance contracts were to be arbitrated in Manila. Philippine Guaranty Co., Inc. and Swiss Reinsurance Company stipulated that their contract shall be construed by the laws of the Philippines. Pursuant to the aforesaid reinsurance contracts, Philippine Guaranty Co., Inc. ceded to the foreign reinsurers the following premiums:

1953 . . . . . . . . . . . . . . . . . . . . . 1954 . . . . . . . . . . . . . . . . . . . . .

P842,466.71 721,471.85

Said premiums were excluded by Philippine Guaranty Co., Inc. from its gross income when it file its income tax returns for 1953 and 1954. Furthermore, it did not withhold or pay tax on them. Consequently, per letter dated April 13, 1959, the Commissioner of Internal Revenue assessed against Philippine Guaranty Co., Inc. withholding tax on the ceded reinsurance premiums, thus: 1953 Gross premium per investigation . . . . . . . . . . Withholding tax due thereon at 24% . . . . . . . . 25% surcharge . . . . . . . . . . . . . . . . . . . . . . . . . . Compromise for non-filing of withholding income tax return . . . . . . . . . . . . . . . . . . . . . . . . . TOTAL AMOUNT DUE & COLLECTIBLE . . . . 1954 Gross premium per investigation . . . . . . . . . . Withholding tax due thereon at 24% . . . . . . . . 25% surcharge . . . . . . . . . . . . . . . . . . . . . . . . . . Compromise for non-filing of withholding income tax return . . . . . . . . . . . . . . . . . . . . . . . . . TOTAL AMOUNT DUE & COLLECTIBLE . . . . P780.880.68 P184,411.00 P184,411.00 100.00 P768,580.00 P184,459.00 46,114.00 100.00

P230,673.00 ==========

P234,364.00 ==========

Philippine Guaranty Co., Inc., protested the assessment on the ground that reinsurance premiums ceded to foreign reinsurers not doing business in the Philippines are not subject to withholding tax. Its protest was denied and it appealed to the Court of Tax Appeals. On July 6, 1963, the Court of Tax Appeals rendered judgment with this dispositive portion: IN VIEW OF THE FOREGOING CONSIDERATIONS, petitioner Philippine Guaranty Co., Inc. is hereby ordered to pay to the Commissioner of Internal Revenue the respective sums of P202,192.00 and P173,153.00 or the total sum of P375,345.00 as withholding income taxes for the years 1953 and 1954, plus the statutory delinquency penalties thereon. With costs against petitioner. Philippine Guaranty Co, Inc. has appealed, questioning the legality of the Commissioner of Internal Revenue's assessment for withholding tax on the reinsurance premiums ceded in 1953 and 1954 to the foreign reinsurers. Petitioner maintain that the reinsurance premiums in question did not constitute income from sources within the Philippines because the foreign reinsurers did not engage in business in the Philippines, nor did they have office here. The reinsurance contracts, however, show that the transactions or activities that constituted the undertaking to reinsure Philippine Guaranty Co., Inc. against loses arising from the original insurances in the Philippines were performed in the Philippines. The liability of the foreign reinsurers commenced simultaneously with the liability of Philippine Guaranty Co., Inc. under the original insurances. Philippine Guaranty Co., Inc. kept in Manila a register of the risks ceded to the foreign reinsurers. Entries made in such register bound the foreign resinsurers, localizing in the Philippines the actual cession of the risks and premiums and assumption of the reinsurance undertaking by the foreign reinsurers. Taxes on premiums imposed by Section 259 of the Tax Code for the privilege of doing insurance business in the Philippines were payable by the foreign reinsurers when the same were not recoverable from the original assured. The foreign reinsurers paid Philippine Guaranty Co., Inc. an amount equivalent to 5% of the ceded premiums, in consideration for administration and management by the latter of the affairs of the former in the Philippines in regard to their reinsurance activities here. Disputes and differences between the parties were subject to arbitration in the City of Manila. All the reinsurance contracts, except that with Swiss Reinsurance Company, were signed by Philippine Guaranty Co., Inc. in the Philippines and later signed by the foreign reinsurers abroad. Although the contract between Philippine Guaranty Co., Inc. and Swiss Reinsurance Company was signed by both parties in Switzerland, the same specifically provided that its provision shall be construed according to the laws of the Philippines, thereby manifesting a clear intention of the parties to subject themselves to Philippine law.

Section 24 of the Tax Code subjects foreign corporations to tax on their income from sources within the Philippines. The word "sources" has been interpreted as the activity, property or service giving rise to the income. 1 The reinsurance premiums were income created from the undertaking of the foreign reinsurance companies to reinsure Philippine Guaranty Co., Inc., against liability for loss under original insurances. Such undertaking, as explained above, took place in the Philippines. These insurance premiums, therefore, came from sources within the Philippines and, hence, are subject to corporate income tax. The foreign insurers' place of business should not be confused with their place of activity. Business should not be continuity and progression of transactions 2 while activity may consist of only a single transaction. An activity may occur outside the place of business. Section 24 of the Tax Code does not require a foreign corporation to engage in business in the Philippines in subjecting its income to tax. It suffices that the activity creating the income is performed or done in the Philippines. What is controlling, therefore, is not the place of business but the place of activity that created an income. Petitioner further contends that the reinsurance premiums are not income from sources within the Philippines because they are not specifically mentioned in Section 37 of the Tax Code. Section 37 is not an all-inclusive enumeration, for it merely directs that the kinds of income mentioned therein should be treated as income from sources within the Philippines but it does not require that other kinds of income should not be considered likewise.

1wph1.t

The power to tax is an attribute of sovereignty. It is a power emanating from necessity. It is a necessary burden to preserve the State's sovereignty and a means to give the citizenry an army to resist an aggression, a navy to defend its shores from invasion, a corps of civil servants to serve, public improvement designed for the enjoyment of the citizenry and those which come within the State's territory, and facilities and protection which a government is supposed to provide. Considering that the reinsurance premiums in question were afforded protection by the government and the recipient foreign reinsurers exercised rights and privileges guaranteed by our laws, such reinsurance premiums and reinsurers should share the burden of maintaining the state. Petitioner would wish to stress that its reliance in good faith on the rulings of the Commissioner of Internal Revenue requiring no withholding of the tax due on the reinsurance premiums in question relieved it of the duty to pay the corresponding withholding tax thereon. This defense of petitioner may free if from the payment of surcharges or penalties imposed for failure to pay the corresponding withholding tax, but it certainly would not exculpate if from liability to pay such withholding tax The Government is not estopped from collecting taxes by the mistakes or errors of its agents.3 In respect to the question of whether or not reinsurance premiums ceded to foreign reinsurers not doing business in the Philippines are subject to withholding tax under Section 53 and 54 of the Tax Code, suffice it to state that this question has already been answered in the affirmative in Alexander Howden & Co., Ltd. vs. Collector of Internal Revenue, L-19393, April 14, 1965. Finally, petitioner contends that the withholding tax should be computed from the amount actually remitted to the foreign reinsurers instead of from the total amount ceded. And since it did not remit any amount to its foreign insurers in 1953 and 1954, no withholding tax was due. The pertinent section of the Tax Code States: Sec. 54. Payment of corporation income tax at source. In the case of foreign corporations subject to taxation under this Title not engaged in trade or business within the Philippines and not having any office or place of business therein, there shall be deducted and withheld at the source in the same manner and upon the same items as is provided in Section fifty-three a tax equal to twenty-four per centum thereof, and such tax shall be returned and paid in the same manner and subject to the same conditions as provided in that section. The applicable portion of Section 53 provides: (b) Nonresident aliens. All persons, corporations and general copartnerships (compaias colectivas), in what ever capacity acting, including lessees or mortgagors of real or personal property, trustees acting in any trust capacity, executors, administrators, receivers, conservators, fiduciaries, employers, and all officers and employees of the Government of the Philippines having the control, receipt, custody, disposal, or payment of interest, dividends, rents, salaries, wages, premiums, annuities, compensation, remunerations, emoluments, or other fixed or determinable annual or periodical gains, profits, and income of any nonresident alien individual, not engaged in trade or business within the Philippines and not having any office or place of business therein, shall (except in the case provided for in subsection [a] of this section) deduct and withhold from such annual or periodical gains, profits, and income a tax equal to twelve per centum thereof: Provided That no deductions or withholding shall be required in the case of dividends paid by a foreign corporation unless (1) such corporation is engaged in trade or business within the Philippines or has an office or place of business therein, and (2) more than eighty-five per centum of the gross income of such corporation for the three-year period ending with the close of its taxable year preceding the declaration of such dividends (or for such part of such period as the corporation has been in existence)was derived from sources within the Philippines as determined under the provisions of section thirty-seven: Provided, further, That the Collector of Internal Revenue may authorize such tax to be deducted and withheld from the interest upon any securities the owners of which are not known to the withholding agent.

The above-quoted provisions allow no deduction from the income therein enumerated in determining the amount to be withheld. According, in computing the withholding tax due on the reinsurance premium in question, no deduction shall be recognized. WHEREFORE, in affirming the decision appealed from, the Philippine Guaranty Co., Inc. is hereby ordered to pay to the Commissioner of Internal Revenue the sums of P202,192.00 and P173,153.00, or a total amount of P375,345.00, as withholding tax for the years 1953 and 1954, respectively. If the amount of P375,345.00 is not paid within 30 days from the date this judgement becomes final, there shall be collected a surcharged of 5% on the amount unpaid, plus interest at the rate of 1% a month from the date of delinquency to the date of payment, provided that the maximum amount that may be collected as interest shall not exceed the amount corresponding to a period of three (3) years. With costs againsts petitioner. Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon and Regala, JJ., concur. Makalintal and Zaldivar, JJ., took no part. Footnotes
1

Mertens, Jr., Jacob, Law On Federal Income Taxation, Vol. 8, Section 45.27. Imperial v. Collector of Internal Revenue, L-7924, September 30, 1955.

Hilado v. Collector of Internal Revenue, 53 O.G. 2471; Koppel (Philippines), Inc. v. Collector of Internal Revenues, L-10550, September 19, 1961; Compaia General de Tabacos de Filipinas v. City of Manila, L16619, June 29, 1963.

SECOND DIVISION G.R. No. L-30745 January 18, 1978 PHILIPPINE MATCH CO., LTD., plaintiff-appellant, vs. THE CITY OF CEBU and JESUS E. ZABATE, Acting City Treasurer, defendants-appellees. Pelaez, Pelaez & Pelaez for appellant. Nazario Pacquiao, Metudio P. Belarmino & Ceferino Jomuad for appellees. SYNOPSIS Appellant assailed the legality of the sales tax which the city treasurer of Cebu collected on out-of-town deliveries of matches, to wit: (1) sales of matches booked and paid for in Cebu City but shipped directly to customers outside of the city; (2) transfers of matches to salesman assigned to different agencies outside of the city; and (3) shipments of matches to provincial customers pursuant to salesmen's instructions. Appellant paid under protest the sales tax on those three categories of out-of-town deliveries. The trial court sustained the tax imposed on the first transaction, and invalidated the tax in the other two. It characterized the tax on the other two transactions as a "storage tax", not a sales tax, since the sales were consummated outside of the city, and hence, beyond the city's taxing power. The city did not appeal from the decision. But the appellant appealed from that portion of the decision sustaining the tax on sales of matches to customers outside of the city, which sales were bocked and paid for in Cebu City and also from the dismissal of its claim for damages against the city treasurer. In affirming the appealed decisions, the Supreme Court held that the municipal board of Cebu City is empowered "to provide for the levy and collection of taxes for general and special purposes in accordance with law." The prohibition against the imposition of percentage taxes refers to municipalities and municipal districts but not to chartered cities. The fact that the matches were delivered to customers outside the of the city did not place the sales beyond the city's taxing power. The sales formed part of the merchandising business being carried on by the appellant in the city. As the city treasurer acted within the scope of his authority and n consonance with his bona fide interpretation of the tax ordinance, though not sustained completely by the court, his action did not render him liable for damages. SYLLABUS 1. TAXATION; TAXING POWER OF CITIES AND MUNICIPALITIES, DEFEND BY LOCAL AUTONOMY ACT. The taxing power validly delegated to cities and municipalities is defined in the local Autonomy Act, Republic Act No. 2264 which took effect on June 19, 1959. 2. ID.; CONSTITUTIONAL PROVISIONS. Article XI of the Constitution provides that "each local government unit shall have the power to create its own sources of revenue and to levy taxes, subject to such limitations as may be provided by law". This was implemented by Presidential Decree No. 231, the Local Tax Code, which took effect on July 1, 1973. 3. ID.; SCOPE OF TAXING POWER OF LOCAL GOVERNMENT. The taxing power of cities, municipalities and municipal districts may be used (1) upon any person engaged in any occupation or business, or exercising any privilege therein; (2) for services rendered by those political subdivisions or rendered in connection with any business, profession or occupation being conducted therein, and (3) to levy, for public purposes just and uniform taxes. licenses or fees. 4. ID.; MUNICIPAL BOARDS OF CEBU CITY; EMPOWERED TO PROVIDE FOR THE LEVY AND COLLECTION OF TAXES. The municipal board of Cebu City is empowered "to provide for the levy and collection of taxes for general and special purposes in accordance with law." 5. ID.; MUNICIPAL CORPORATIONS; TAX ON SALES OF GOODS IN THE CITY. Under a city ordinance which imposes tax on sales of goods in the city, the city can validly tax sales of matches to customers outside of the city as long as the orders were booked and paid for, and the matches were delivered to the carrier, in the city. The matches can be regarded as sold in the city, as contemplated in the ordinance, because delivery to the carrier is delivery to the buyer. As the sales were finalized in the city and the matches sold were stored in the city, the fact that the matches were delivered to customers, whose places of business were outside of the city, would not place those sales beyond the city's taxing power. Those sales formed part of the merchandising business being carried on by the taxpayer in the city. In essence, they are the same as sales of matches fully consummated in the city. 6. DAMAGES, AWARD OF; ARTICLE 27, NEW CIVIL CODE, CONSTRUED. Article 27 presupposes that the refusal or omission of a public official is attributed to malice or inexcusable negligence. 7. PUBLIC OFFICERS; LIABILITY, GENERAL RULE. As a rule, a public officer, whether judicial, quasijudicial or executive, is not personally liable to one injured in consequence of an act performed within the scope of his

official authority, and in the line of his official duty. Where an officer is invested with discretion and is empowered to exercise his judgment in matters brought before him, he is sometimes called a quasi-judicial officer, and when so acting he is usually given immunity from liability to persons who may be injured as the result of an erroneous or mistaken decision, however erroneous his judgment may be, provided the acts complained of are done within the scope of the officer's authority, and without willfulness, malice of corruption. 8. ID.; CITY TREASURER WHO ACTED WITHIN THE SCOPE OF AUTHORITY, NOT LIABLE. Where the city treasurer honestly believed that he was justified under section 9 of the tax ordinance in collecting the sales tax on out-of-town deliveries, considering that the company's branch office was located in the city and that all out-of-town purchase orders for matches were filled up by the branch office and the sales were duly reported to it and the city treasurer acted within the scope of his authority and in consonance with his bona fide interpretation of the tax ordinance, the fact that his action was not completely sustained by the courts would not render him liable for damages. 9. ID.; ERRONEOUS INTERPRETATION OF ORDINANCE, NOT GROUND FOR DAMAGES. An erroneous interpretation of an ordinance does not constitute nor does it amount to bad faith that would entitle and aggrieved party to an award for damages. AQUINO, J.: This case is about the legality of the tax collected by the City of Cebu on sales of matches stored by the Philippine Match Co., Ltd. in Cebu City but delivered to customers outside of the City. Ordinance No. 279 of Cebu City (approved by the mayor on March 10, 1960 and also approved by the provincial board) is "an ordinance imposing a quarterly tax on gross sales or receipts of merchants, dealers, importers and manufacturers of any commodity doing business" in Cebu City. It imposes a sales tax of one percent (1%) on the gross sales, receipts or value of commodities sold, bartered, exchanged or manufactured in the city in excess of P2,000 a quarter. Section 9 of the ordinance provides that, for purposes of the tax, "all deliveries of goods or commodities stored in the City of Cebu, or if not stored are sold" in that city, "shall be considered as sales" in the city and shall be taxable. Thus, it would seem that under the tax ordinance sales of matches consummated outside of the city are taxable as long as the matches sold are taken from the company's stock stored in Cebu City. The Philippine Match Co., Ltd., whose principal office is in Manila, is engaged in the manufacture of matches. Its factory is located at Punta, Sta. Ana, Manila. It ships cases or cartons of matches from Manila to its branch office in Cebu City for storage, sale and distribution within the territories and districts under its Cebu branch or the whole Visayas-Mindanao region. Cebu City itself is just one of the eleven districts under the company's Cebu City branch office. The company does not question the tax on the matches of matches consummated in Cebu City, meaning matches sold and delivered within the city. It assails the legality of the tax which the city treasurer collected on out-of- town deliveries of matches, to wit: (1) sales of matches booked and paid for in Cebu City but shipped directly to customers outside of the city; (2) transfers of matches to newsmen assigned to different agencies outside of the city and (3) shipments of matches to provincial customers pursuant to salesmen's instructions. The company paid under protest to the city t the sum of P12,844.61 as one percent sales tax on those three classes of out-of-town deliveries of matches for the second quarter of 1961 to the second quarter of 1963. In paying the tax the company accomplished the verified forms furnished by the city treasurers office. It submitted a statement indicating the four kinds of transactions enumerated above, the total sales, and a summary of the deliveries to the different agencies, as well as the invoice numbers, names of customers, the value of the sales, the transfers of matches to salesmen outside of Cebu City, and the computation of taxes. Sales of matches booked and paid for in Cebu City but shipped directly to customers outside of the city refer to orders for matches made in the city by the company's customers, by means of personal or phone calls, for which sales invoices are issued, and then the matches are shipped from the bodega in the city, where the matches had been stored, to the place of business or residences of the customers outside of the city, duly covered by bills of lading The matches are used and consumed outside of the city. Transfers of matches to salesmen assigned to different agencies outside of the city embrace equipments of matches from the branch office in the city to the salesmen (provided with panel cars) assigned within the province of Cebu and in the different districts in the Visayas and Mindanao under the jurisdiction or supervision of the Cebu City branch office. The shipments are covered by bills of lading. No sales invoices whatever are issued. The matches received by the salesmen constitute their direct cash accountability to the company. The salesmen sell the matches within their respective territories. They issue cash sales invoices and remit the proceeds of the sales to the company's Cebu branch office. The value of the unsold matches constitutes their stock liability. The matches are used and consumed outside of the city.

Shipments of matches to provincial customers pursuant to newsmens instructions embrace orders, by letter or telegram sent to the branch office by the company's salesmen assigned outside of the city. The matches are shipped from the company's bodega in the city to the customers residing outside of the city. The salesmen issue the sales invoices. The proceeds of the sale, for which the salesmen are accountable are remitted to the branch office. As in the first and seconds of transactions above-mentioned, the matches are consumed and used outside of the city. The company in its letter of April 15, 1961 to the city treasurer sought the refund of the sales tax paid for out-of-town deliveries of matches. It invoked Shell Company of the Philippines, Ltd. vs. Municipality of Sipocot, Camarines Sur, 105 Phil. 1263. In that case sales of oil and petroleum products effected outside the territorial limits of Sipocot, were held not to be subject to the tax imposed by an ordinance of that municipality. The city treasurer denied the request. His stand is that under section 9 of the ordinance all out-of-town deliveries of latches stored in the city are subject to the sales tax imposed by the ordinance. On August 12, 1963 the company filed the complaint herein, praying that the ordinance be d void insofar as it taxed the deliveries of matches outside of Cebu City, that the city be ordered to refund to the company the said sum of P12,844.61 as excess sales tax paid, and that the city treasurer be ordered to pay damages. After hearing, the trial court sustained the tax on the sales of matches booked and paid for in Cebu City although the matches were shipped directly to customers outside of the city. The lower court held that the said sales were consummated in Cebu City because delivery to the carrier in the city is deemed to be a delivery to the customers outside of the city. But the trial court invalidated the tax on transfers of matches to salesmen assigned to different agencies outside of the city and on shipments of matches to provincial customers pursuant to the instructions of the newsmen It ordered the defendants to refund to the plaintiff the sum of P8,923.55 as taxes paid out the said out-of-town deliveries with legal rate of interest from the respective dates of payment. The trial court characterized the tax on the other two transactions as a "storage tax" and not a sales tax. It assumed that the sales were consummated outside of the city and, hence, beyond the city's taxing power. The city did not appeal from that decision. The company appealed from that portion of the decision upholding the tax on sales of matches to customers outside of the city but which sales were booked and paid for in Cebu City, and also from the dismissal of its claim for damages against the city treasurer. The issue is whether the City of Cebu can tax sales of matches which were perfected and paid for in Cebu City but the matches were delivered to customers outside of the City. We hold that the appeal is devoid of merit bemuse the city can validly tax the sales of matches to customers outside of the city as long as the orders were booked and paid for in the company's branch office in the city. Those matches can be regarded as sold in the city, as contemplated in the ordinance, because the matches were delivered to the carrier in Cebu City. Generally, delivery to the carrier is delivery to the buyer (Art. 1523, Civil Code; Behn, Meyer & Co. vs. Yangco, 38 Phil. 602). A different interpretation would defeat the tax ordinance in question or encourage tax evasion through the simple expedient of arranging for the delivery of the matches at the out. skirts of the city through the purchase were effected and paid for in the company's branch office in the city. The municipal board of Cebu City is empowered "to provide for the levy and collection of taxes for general and purposes in accordance with law" (Sec. 17[a], Commonwealth Act No. 58; Sec. 31[l], Rep. Act No. 3857, Revised Charter of Cebu city). The taxing power validly delegated to cities and municipalities is defined in the Local Autonomy Act, Republic Act No. 2264 (Pepsi-Cola Bottling Co. of the Philippines, Inc. vs. Municipality of Tanauan, Leyte, L-31156, February 27, 1976, 69 SCRA 460), which took effect on June 19, 1959 and which provides: SEC. 2. Taxation. Any provision of law to the contrary notwithstanding, all chartered cities, municipalities and municipal districts shall have authority to impose municipal license taxes or fees upon persons engaged in any occupation or business, or exercising privileges in chartered cities,. municipalities or municipal districts by requiring them to secure licenses at rates fixed by the municipal board or city council of the city, the municipal council of the municipality, or the municipal district council of the municipal district; to collect fees and charges for services rendered by the city, municipality or municipal district; to regulate and impose reasonable fees for services rendered in connection with any business, profession or occupation being conducted within the city, municipality or municipal district and otherwise to levy for public purposes, just and uniform taxes, licenses or fees; Provided, That municipalities and municipal districts shall, in no case, impose any percentage tax on sales or other taxes in any form based thereon nor impose taxes on articles subject to specific tax, except gasoline, under the provisions of the National International Revenue Code;

Provided, however, That no city, municipality or municipal districts may levy or impose any of the following: (here follows an enumeration of internal revenue taxes) xxx xxx xxx * Note that the prohibition against the imposition of percentage taxes (formerly provided for in section 1 of Commonwealth Act No. 472) refers to municipalities and municipal districts but not to chartered cities. (See Local Tax Code, P.D. No. 231. Marinduque Iron Mines Agents, Inc. vs. Municipal Council of Hinabangan Samar, 120 Phil. 413; Ormoc Sugar Co., Inc. vs. Treasurer of Ormoc City, L-23794, February 17, 1968, 22 SCRA 603). Note further that the taxing power of cities, municipalities and municipal districts may be used (1) "upon any person engaged in any occupation or business, or exercising any privilege" therein; (2) for services rendered by those political subdivisions or rendered in connection with any business, profession or occupation being conducted therein, and (3) to levy, for public purposes, just and uniform taxes, licenses or fees (C. N. Hodges vs. Municipal Board of the City of Iloilo, 117 Phil. 164, 167. See sec. 31[251, Revised Charter of Cebu City). Applying that jurisdictional test to the instant case, it is at once obvious that sales of matches to customers outside oil Cebu City, which sales were booked and paid for in the company's branch office in the city, are subject to the city's taxing power. The instant case is easily distinguishable from the Shell Company case where the price of the oil sold was paid outside of the municipality of Sipocot, the entity imposing the tax. On the other hand, the ruling in Municipality of Jose Panganiban, Province of Camarines Norte vs. Shell Company of the Philippines, Ltd., L-18349, July 30, 1966, 17 SCRA 778 that the place of delivery determines the taxable situs of the property to be taxed cannot properly be invoked in this case. Republic Act No. 1435, the law which enabled the Municipality of Jose Panganiban to levy the sales tax involved in that case, specifies that the tax may be levied upon oils "distributed within the limits of the city or municipality", meaning the place where the oils were delivered. That feature of the Jose Panganiban case distinguished it from this case. The sales in the instant case were in the city and the matches sold were stored in the city. The fact that the matches were delivered to customers, whose places of business were outside of the city, would not place those sales beyond the city's taxing power. Those sales formed part of the merchandising business being assigned on by the company in the city. In essence, they are the same as sales of matches fully consummated in the city. Furthermore, because the sellers place of business is in Cebu City, it cannot be sensibly argued that such sales should be considered as transactions subject to the taxing power of the political subdivisions where the customers resided and accepted delivery of the matches sold. The company in its second assignment of error contends that the trial court erred in not ordering defendant acting city treasurer to pay exemplary damages of P20,000 and attorney's fees. The claim for damages is predicated on articles 19, 20, 21, 27 and 2229 of the Civil Code. It is argued that the city treasurer refused and neglected without just cause to perform his duty and to act with justice and good faith. The company faults the city treasurer for not following the opinion of the city fiscals, as legal adviser of the city, that all out-of-town deliveries of matches are not subject to sales tax because such transactions were effected outside of the city's territorial limits. In reply, it is argued for defendant city treasurer that in enforcing the tax ordinance in question he was simply complying with his duty as collector of taxes (Sec. 50, Revised Charter of Cebu City). Moreover, he had no choice but to enforce the ordinance because according to section 357 of the Revised Manual of Instruction to Treasurer's "a tax ordinance win be enforced in accordance with its provisions" until d illegal or void by a competent court, or otherwise revoked by the council or board from which it originated. Furthermore, the Secretary of Finance had reminded the city treasurer that a tax ordinance approved by the provincial board is operative and must be enforced without prejudice to the right of any affected taxpayer to assail its legality in the judicial forum. The fiscals opinion on the legality of an ordinance is merely advisory and has no binding effect. Article 27 of the Civil Code provides that "any person suffering material or moral lose because a public servant or employee refuses or neglects, without just cause, to perform his official duty may file an action for damages and other relief against the latter, without prejudice to any disciplinary administrative action that may be taken." Article 27 presupposes that the refuse or omission of a public official is attributable to malice or inexcusable negligence. In this case, it cannot be said that the city treasurer acted wilfully or was grossly t in not refunding to the plaintiff the taxes which it paid under protest on out-of-town sales of matches. The record clearly reveals that the city treasurer honestly believed that he was justified under section 9 of the tax ordinance in collecting the sales tax on out-of-town deliveries, considering that the company's branch office was located in Cebu City and that all out-of-town purchase order for matches were filled up by the branch office and the sales were duly reported to it.

The city treasurer acted within the scope of his authority and in consonance with his bona fide interpretation of the tax ordinance. The fact that his action was not completely sustained by the courts would not him liable for We have upheld his act of taxing sales of matches booked and paid for in the city. "As a rule, a public officer, whether judicial ,quasi-judicial or executive, is not y liable to one injured in consequence of an act performed within the scope of his official authority, and in the line of his official duty." "Where an officer is invested with discretion and is empowered to exercise his judgment in matters brought before him. he is sometimes called a quasi-judicial officer, and when so acting he is usually given immunity from liability to persons who may be injured as the result or an erroneous or mistaken decision, however erroneous his judgment may be. provided the acts complained of are done within the scope of the officer's authority and without malice, or corruption." (63 Am Jur 2nd 798, 799 cited in Philippine Racing Club, Inc. vs. Bonifacio, 109 Phil. 233, 240-241). It has been held that an erroneous interpretation of an ordinance does not constitute nor does it amount to bad faith that would entitle an aggrieved party to an award for damages (Cabungcal vs. Cordovan 120 Phil. 667, 572-3). That salutary in addition to moral temperate, liquidated or compensatory damages (Art. 2229, Civil Code). Attorney's fees are being claimed herein as actual damages. We find that it would not be just and equitable to award attorney's fees in this case against the City of Cebu and its (See Art. 2208, Civil Code). WHEREFORE, the trial court's judgment is affirmed. No costs. SO ORDERED. Fernando (Chairman), Antonio and Concepcion, Jr., JJ., concur. Santos, J., is on leave.

Separate Opinions

BARREDO, J., concurring: Anent appellant's claim for damages, it should be happy the trial court did not the city fully, which in my opinion, could have been possible.

Separate Opinions BARREDO, J., concurring: Anent appellant's claim for damages, it should be happy the trial court did not the city fully, which in my opinion, could have been possible. Footnotes * Sec. 5, Article XI of the Constitution provides that "each sale government unit shall have the power to create its own sources of revenue and to levy taxes, subject to such limitations as may be provided by law". That Constitutional provision was implemented by Presidential Decree No. 231, the Local Tax Code, which took effect on July 1, 1973.

EN BANC G.R. No. L-10405 December 29, 1960

WENCESLAO PASCUAL, in his official capacity as Provincial Governor of Rizal, petitioner-appellant, vs. THE SECRETARY OF PUBLIC WORKS AND COMMUNICATIONS, ET AL., respondents-appellees. Asst. Fiscal Noli M. Cortes and Jose P. Santos for appellant. Office of the Asst. Solicitor General Jose G. Bautista and Solicitor A. A. Torres for appellee. SYLLABUS 1. CONSTITUTIONAL LAW; LEGISLATIVE POWERS; APPROPRIATION OF PUBLIC REVENUES ONLY FOR PUBLIC PURPOSES; WHAT DETERMINES VALIDITY OF A PUBLIC EXPENDITURE. "It is a general rule that the legislature is without power to appropriate public revenues for anything but a public purpose. . . . It is the essential character of the direct object of the expenditure which must determine its validity as justifying a tax and not the magnitude of the interests to be affected nor the degree to which the general advantage of the community, and thus the public welfare, may be ultimately benefited by their promotion. Incidental advantage to the public or to the state, which results from the promotion of private interests, and the prosperity of private enterprises or business, does not justify their aid by the use of public money." (23 R. L. C. pp. 398-450). 2. ID.; ID.; ID.; UNDERLYING REASON FOR THE RULE. Generally, under the express or implied provisions of the constitution, public funds may be used only for a public purpose. The right of the legislature to appropriate public funds is correlative with its right to tax, and, under constitutional provisions against taxation except for public purposes and prohibiting the collection of a tax for one purpose and the devotion thereof to another purpose, no appropriate of state funds can be made for other than a public purpose. (81 C.J.S. p. 1147). 3. ID.; ID.; ID.; TEST OF CONSTITUTIONALITY. The test of the constitutionality of a statute requiring the use of public funds is whether the statute is designed to promote the public interests, as opposed to the furtherance of the advantage of individuals, although such advantage to individuals might incidentally serve the public. (81 C.J.S. p. 1147). 4. ID.; ID.; ID.; ID.; POWERS OF CONGRESS AT THE TIME OF PASSAGE OF A STATUTE SHOULD BE CONSIDERED. The validity of a statute depends upon the powers of Congress at the time of its passage or approval, not upon events occurring, or acts performed, subsequently thereto, unless the latter consist of an amendment of the organic law, removing, with retrospective operation, the constitutional limitation infringed by said statute. 5. ID.; ID.; ID.; APPROPRIATION FOR A PRIVATE PURPOSE NULL AND VOID; SUBSEQUENT DONATION TO GOVERNMENT NOT CURATIVE OF DEFECT. Where the land on which projected feeder roads are to be constructed belongs to a private person, an appropriation made by Congress for that purpose is null and void, and a donation to the Government, made over five (5) months after the approval and effectivity of the Act for the purpose of giving a "semblance of legality" to the appropriation, does not cure the basic defect. Consequently, a judicial nullification of said donation need not precede the declaration of unconstitutionality of said appropriation. 6. ID.; ID.; ID.; ID.; RIGHT OF TAXPAYERS TO CONTEST CONSTITUTIONALITY OF A LEGISLATION. The relation between the people of the Philippines and its taxpayers, on the one hand, and the Republic of the Philippines, on the other, is not identical to that obtaining between the people and taxpayers of the U.S. and its Federal Government. It is closer, from a domestic viewpoint, to that existing between the people and taxpayers of each state and the government thereof, except that the authority of the Republic of the Philippines over the people of the Philippines is more fully direct than that of the states of the Union, insofar as the simple and unitary type of our national government is not subject to limitations analogous to those imposed by the Federal Constitution upon the states of the Union, and those imposed upon the Federal Government in the interest of the states of the Union. For this reason, the rule recognizing the right of taxpayers to assailed the constitutionality of a legislation appropriating local or state public funds - which has been upheld by the Federal Supreme Court (Crampton vs. Zabriskie, 101 U.S. 601) - has greater application in the Philippines than that adopted with respect to acts of Congress of the United States appropriating federal funds. 7. CONTRACTS; DEFENSE OF ILLEGALITY; EXCEPTIONS TO ARTICLE 1421 OF THE CIVIL CODE. Article 1421 of the Civil Code is subject to exceptions. For instance, the creditors of a party to an illegal contract may, under the conditions set forth in Article 1177 of said Code, exercise the rights and actions of the latter, except only those which are inherent in his person, including his right to the annulment of said contract, even though such creditors are not affected by the same, except indirectly, in the manner indicated in said legal provision. CONCEPCION, J.: Appeal, by petitioner Wenceslao Pascual, from a decision of the Court of First Instance of Rizal, dismissing the above entitled case and dissolving the writ of preliminary injunction therein issued, without costs.

On August 31, 1954, petitioner Wenceslao Pascual, as Provincial Governor of Rizal, instituted this action for declaratory relief, with injunction, upon the ground that Republic Act No. 920, entitled "An Act Appropriating Funds for Public Works", approved on June 20, 1953, contained, in section 1-C (a) thereof, an item (43[h]) of P85,000.00 "for the construction, reconstruction, repair, extension and improvement" of Pasig feeder road terminals (Gen. Roxas Gen. Araneta Gen. Lucban Gen. Capinpin Gen. Segundo Gen. Delgado Gen. Malvar Gen. Lim)"; that, at the time of the passage and approval of said Act, the aforementioned feeder roads were "nothing but projected and planned subdivision roads, not yet constructed, . . . within the Antonio Subdivision . . . situated at . . . Pasig, Rizal" (according to the tracings attached to the petition as Annexes A and B, near Shaw Boulevard, not far away from the intersection between the latter and Highway 54), which projected feeder roads "do not connect any government property or any important premises to the main highway"; that the aforementioned Antonio Subdivision (as well as the lands on which said feeder roads were to be construed) were private properties of respondent Jose C. Zulueta, who, at the time of the passage and approval of said Act, was a member of the Senate of the Philippines; that on May, 1953, respondent Zulueta, addressed a letter to the Municipal Council of Pasig, Rizal, offering to donate said projected feeder roads to the municipality of Pasig, Rizal; that, on June 13, 1953, the offer was accepted by the council, subject to the condition "that the donor would submit a plan of the said roads and agree to change the names of two of them"; that no deed of donation in favor of the municipality of Pasig was, however, executed; that on July 10, 1953, respondent Zulueta wrote another letter to said council, calling attention to the approval of Republic Act. No. 920, and the sum of P85,000.00 appropriated therein for the construction of the projected feeder roads in question; that the municipal council of Pasig endorsed said letter of respondent Zulueta to the District Engineer of Rizal, who, up to the present "has not made any endorsement thereon" that inasmuch as the projected feeder roads in question were private property at the time of the passage and approval of Republic Act No. 920, the appropriation of P85,000.00 therein made, for the construction, reconstruction, repair, extension and improvement of said projected feeder roads, was illegal and, therefore, void ab initio"; that said appropriation of P85,000.00 was made by Congress because its members were made to believe that the projected feeder roads in question were "public roads and not private streets of a private subdivision"'; that, "in order to give a semblance of legality, when there is absolutely none, to the aforementioned appropriation", respondents Zulueta executed on December 12, 1953, while he was a member of the Senate of the Philippines, an alleged deed of donation copy of which is annexed to the petition of the four (4) parcels of land constituting said projected feeder roads, in favor of the Government of the Republic of the Philippines; that said alleged deed of donation was, on the same date, accepted by the then Executive Secretary; that being subject to an onerous condition, said donation partook of the nature of a contract; that, such, said donation violated the provision of our fundamental law prohibiting members of Congress from being directly or indirectly financially interested in any contract with the Government, and, hence, is unconstitutional, as well as null and void ab initio, for the construction of the projected feeder roads in question with public funds would greatly enhance or increase the value of the aforementioned subdivision of respondent Zulueta, "aside from relieving him from the burden of constructing his subdivision streets or roads at his own expense"; that the construction of said projected feeder roads was then being undertaken by the Bureau of Public Highways; and that, unless restrained by the court, the respondents would continue to execute, comply with, follow and implement the aforementioned illegal provision of law, "to the irreparable damage, detriment and prejudice not only to the petitioner but to the Filipino nation." Petitioner prayed, therefore, that the contested item of Republic Act No. 920 be declared null and void; that the alleged deed of donation of the feeder roads in question be "declared unconstitutional and, therefor, illegal"; that a writ of injunction be issued enjoining the Secretary of Public Works and Communications, the Director of the Bureau of Public Works and Highways and Jose C. Zulueta from ordering or allowing the continuance of the abovementioned feeder roads project, and from making and securing any new and further releases on the aforementioned item of Republic Act No. 920, and the disbursing officers of the Department of Public Works and Highways from making any further payments out of said funds provided for in Republic Act No. 920; and that pending final hearing on the merits, a writ of preliminary injunction be issued enjoining the aforementioned parties respondent from making and securing any new and further releases on the aforesaid item of Republic Act No. 920 and from making any further payments out of said illegally appropriated funds. Respondents moved to dismiss the petition upon the ground that petitioner had "no legal capacity to sue", and that the petition did "not state a cause of action". In support to this motion, respondent Zulueta alleged that the Provincial Fiscal of Rizal, not its provincial governor, should represent the Province of Rizal, pursuant to section 1683 of the Revised Administrative Code; that said respondent is " not aware of any law which makes illegal the appropriation of public funds for the improvements of . . . private property"; and that, the constitutional provision invoked by petitioner is inapplicable to the donation in question, the same being a pure act of liberality, not a contract. The other respondents, in turn, maintained that petitioner could not assail the appropriation in question because "there is no actual bona fide case . . . in which the validity of Republic Act No. 920 is necessarily involved" and petitioner "has not shown that he has a personal and substantial interest" in said Act "and that its enforcement has caused or will cause him a direct injury." Acting upon said motions to dismiss, the lower court rendered the aforementioned decision, dated October 29, 1953, holding that, since public interest is involved in this case, the Provincial Governor of Rizal and the provincial fiscal thereof who represents him therein, "have the requisite personalities" to question the constitutionality of the disputed item of Republic Act No. 920; that "the legislature is without power appropriate public revenues for anything but a public purpose", that the instructions and improvement of the feeder roads in question, if such roads where private property, would not be a public purpose; that, being subject to the following condition: The within donation is hereby made upon the condition that the Government of the Republic of the Philippines will use the parcels of land hereby donated for street purposes only and for no other purposes whatsoever; it being expressly understood that should the Government of the Republic of the Philippines violate the condition hereby imposed upon it, the title to the land hereby donated shall, upon such violation, ipso facto revert to the DONOR, JOSE C. ZULUETA. (Emphasis supplied.)

which is onerous, the donation in question is a contract; that said donation or contract is "absolutely forbidden by the Constitution" and consequently "illegal", for Article 1409 of the Civil Code of the Philippines, declares in existence and void from the very beginning contracts "whose cause, objector purpose is contrary to law, morals . . . or public policy"; that the legality of said donation may not be contested, however, by petitioner herein, because his "interest are not directly affected" thereby; and that, accordingly, the appropriation in question "should be upheld" and the case dismissed. At the outset, it should be noted that we are concerned with a decision granting the aforementioned motions to dismiss, which as much, are deemed to have admitted hypothetically the allegations of fact made in the petition of appellant herein. According to said petition, respondent Zulueta is the owner of several parcels of residential land situated in Pasig, Rizal, and known as the Antonio Subdivision, certain portions of which had been reserved for the projected feeder roads aforementioned, which, admittedly, were private property of said respondent when Republic Act No. 920, appropriating P85,000.00 for the "construction, reconstruction, repair, extension and improvement" of said roads, was passed by Congress, as well as when it was approved by the President on June 20, 1953. The petition further alleges that the construction of said roads, to be undertaken with the aforementioned appropriation of P85,000.00, would have the effect of relieving respondent Zulueta of the burden of constructing his subdivision streets or roads at his own expenses, 1and would "greatly enhance or increase the value of the subdivision" of said respondent. The lower court held that under these circumstances, the appropriation in question was "clearly for a private, not a public purpose." Respondents do not deny the accuracy of this conclusion, which is self-evident. 2However, respondent Zulueta contended, in his motion to dismiss that: A law passed by Congress and approved by the President can never be illegal because Congress is the source of all laws . . . Aside from the fact that movant is not aware of any law which makes illegal the appropriation of public funds for the improvement of what we, in the meantime, may assume as private property . . . (Record on Appeal, p. 33.) The first proposition must be rejected most emphatically, it being inconsistent with the nature of the Government established under the Constitution of the Republic of the Philippines and the system of checks and balances underlying our political structure. Moreover, it is refuted by the decisions of this Court invalidating legislative enactments deemed violative of the Constitution or organic laws. 3 As regards the legal feasibility of appropriating public funds for a public purpose, the principle according to Ruling Case Law, is this: It is a general rule that the legislature is without power to appropriate public revenue for anything but a public purpose. . . . It is the essential character of the direct object of the expenditure which must determine its validity as justifying a tax, and not the magnitude of the interest to be affected nor the degree to which the general advantage of the community, and thus the public welfare, may be ultimately benefited by their promotion. Incidental to the public or to the state, which results from the promotion of private interest and the prosperity of private enterprises or business, does not justify their aid by the use public money. (25 R.L.C. pp. 398-400; Emphasis supplied.) The rule is set forth in Corpus Juris Secundum in the following language: In accordance with the rule that the taxing power must be exercised for public purposes only, discussed supra sec. 14, money raised by taxation can be expended only for public purposes and not for the advantage of private individuals. (85 C.J.S. pp. 645-646; emphasis supplied.) Explaining the reason underlying said rule, Corpus Juris Secundum states: Generally, under the express or implied provisions of the constitution, public funds may be used only for public purpose. The right of the legislature to appropriate funds is correlative with its right to tax, and, under constitutional provisions against taxation except for public purposes and prohibiting the collection of a tax for one purpose and the devotion thereof to another purpose, no appropriation of state funds can be made for other than for a public purpose.

The test of the constitutionality of a statute requiring the use of public funds is whether the statute is designed to promote the public interest, as opposed to the furtherance of the advantage of individuals, although each advantage to individuals might incidentally serve the public. (81 C.J.S. pp. 1147; emphasis supplied.) Needless to say, this Court is fully in accord with the foregoing views which, apart from being patently sound, are a necessary corollary to our democratic system of government, which, as such, exists primarily for the promotion of the general welfare. Besides, reflecting as they do, the established jurisprudence in the United States, after whose constitutional system ours has been patterned, said views and jurisprudence are, likewise, part and parcel of our own constitutional law.
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This notwithstanding, the lower court felt constrained to uphold the appropriation in question, upon the ground that petitioner may not contest the legality of the donation above referred to because the same does not affect him directly. This conclusion is, presumably, based upon the following premises, namely: (1) that, if valid, said donation cured the constitutional infirmity of the aforementioned appropriation; (2) that the latter may not be annulled without a previous declaration of unconstitutionality of the said donation; and (3) that the rule set forth in Article 1421 of the Civil Code is absolute, and admits of no exception. We do not agree with these premises. The validity of a statute depends upon the powers of Congress at the time of its passage or approval, not upon events occurring, or acts performed, subsequently thereto, unless the latter consists of an amendment of the organic law, removing, with retrospective operation, the constitutional limitation infringed by said statute. Referring to the P85,000.00 appropriation for the projected feeder roads in question, the legality thereof depended upon whether said roads were public or private property when the bill, which, latter on, became Republic Act 920, was passed by Congress, or, when said bill was approved by the President and the disbursement of said sum became effective, or on June 20, 1953 (see section 13 of said Act). Inasmuch as the land on which the projected feeder roads were to be constructed belonged then to respondent Zulueta, the result is that said appropriation sought a private purpose, and hence, was null and void. 4 The donation to the Government, over five (5) months after the approval and effectivity of said Act, made, according to the petition, for the purpose of giving a "semblance of legality", or legalizing, the appropriation in question, did not cure its aforementioned basic defect. Consequently, a judicial nullification of said donation need not precede the declaration of unconstitutionality of said appropriation. Again, Article 1421 of our Civil Code, like many other statutory enactments, is subject to exceptions. For instance, the creditors of a party to an illegal contract may, under the conditions set forth in Article 1177 of said Code, exercise the rights and actions of the latter, except only those which are inherent in his person, including therefore, his right to the annulment of said contract, even though such creditors are not affected by the same, except indirectly, in the manner indicated in said legal provision. Again, it is well-stated that the validity of a statute may be contested only by one who will sustain a direct injury in consequence of its enforcement. Yet, there are many decisions nullifying, at the instance of taxpayers, laws providing for the disbursement of public funds, 5upon the theory that "the expenditure of public funds by an officer of the State for the purpose of administering an unconstitutional act constitutes a misapplication of such funds," which may be enjoined at the request of a taxpayer. 6Although there are some decisions to the contrary, 7the prevailing view in the United States is stated in the American Jurisprudence as follows: In the determination of the degree of interest essential to give the requisite standing to attack the constitutionality of a statute, the general rule is that not only persons individually affected, but also taxpayers, have sufficient interest in preventing the illegal expenditure of moneys raised by taxation and may therefore question the constitutionality of statutes requiring expenditure of public moneys. (11 Am. Jur. 761; emphasis supplied.) However, this view was not favored by the Supreme Court of the U.S. in Frothingham vs. Mellon (262 U.S. 447), insofar as federal laws are concerned, upon the ground that the relationship of a taxpayer of the U.S. to its Federal Government is different from that of a taxpayer of a municipal corporation to its government. Indeed, under the composite system of government existing in the U.S., the states of the Union are integral part of the Federation from an international viewpoint, but, each state enjoys internally a substantial measure of sovereignty, subject to the limitations imposed by the Federal Constitution. In fact, the same was made by representatives of each state of the Union, not of the people of the U.S., except insofar as the former represented the people of the respective States, and the people of each State has, independently of that of the others, ratified said Constitution. In other words, the Federal Constitution and the Federal statutes have become binding upon the people of the U.S. in consequence of an act of, and, in this sense, through the respective states of the Union of which they are citizens. The peculiar nature of the relation between said people and the Federal Government of the U.S. is reflected in the election of its President, who is chosen directly, not by the people of the U.S., but by electors chosen by each State, in such manner as the legislature thereof may direct (Article II, section 2, of the Federal Constitution).
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The relation between the people of the Philippines and its taxpayers, on the other hand, and the Republic of the Philippines, on the other, is not identical to that obtaining between the people and taxpayers of the U.S. and its Federal Government. It is closer, from a domestic viewpoint, to that existing between the people and taxpayers of each state and the government thereof, except that the authority of the Republic of the Philippines over the people of the Philippines is more fully direct than that of the states of the Union, insofar as the simple and unitary type of our national government is not subject to limitations analogous to those imposed by the Federal Constitution upon the states of the Union, and those imposed upon the Federal Government in the interest of the Union. For this reason, the rule recognizing the right of taxpayers to assail the constitutionality of a legislation appropriating local or state public funds which has been upheld by the Federal Supreme Court (Crampton vs. Zabriskie, 101 U.S. 601) has greater application in the Philippines than that adopted with respect to acts of Congress of the United States appropriating federal funds. Indeed, in the Province of Tayabas vs. Perez (56 Phil., 257), involving the expropriation of a land by the Province of Tayabas, two (2) taxpayers thereof were allowed to intervene for the purpose of contesting the price being paid to the owner thereof, as unduly exorbitant. It is true that in Custodio vs. President of the Senate (42 Off. Gaz., 1243), a taxpayer and employee of the Government was not permitted to question the constitutionality of an appropriation for backpay of members of Congress. However, in Rodriguez vs. Treasurer of the Philippines and Barredo vs. Commission on Elections (84 Phil., 368; 45 Off. Gaz., 4411), we entertained the action of taxpayers impugning the validity of certain appropriations of public funds, and invalidated the same. Moreover, the reason that impelled this Court to take such position in said two (2) cases the importance of the issues therein raised is present in the case at bar. Again, like the petitioners in the Rodriguez and Barredo cases, petitioner herein is not merely a taxpayer.

The Province of Rizal, which he represents officially as its Provincial Governor, is our most populated political subdivision, 8and, the taxpayers therein bear a substantial portion of the burden of taxation, in the Philippines. Hence, it is our considered opinion that the circumstances surrounding this case sufficiently justify petitioners action in contesting the appropriation and donation in question; that this action should not have been dismissed by the lower court; and that the writ of preliminary injunction should have been maintained. Wherefore, the decision appealed from is hereby reversed, and the records are remanded to the lower court for further proceedings not inconsistent with this decision, with the costs of this instance against respondent Jose C. Zulueta. It is so ordered. Paras, C.J., Bengzon, Padilla, Bautista Angelo, Labrador, Reyes, J.B.L., Barrera, Gutierrez David, Paredes, and Dizon, JJ., concur.

Footnotes 1 For, pursuant to section 19(h) of the existing rules and regulation of the Urban Planning Commission, the owner of a subdivision is under obligation "to improve, repair and maintain all streets, highways and other ways in his subdivision until their dedication to public use is accepted by the government." 2 Ex parte Bagwell, 79 P. 2d. 395; Road District No. 4 Shelby County vs. Allred. 68 S.W 2d 164; State ex rel. Thomson vs. Giessel, 53-N.W. 2d. 726, Attorney General vs. City of Eau Claire, 37 Wis. 400; State ex rel. Smith vs. Annuity Pension Board, 241 Wis. 625, 6 N.W. 2d. 676; State vs. Smith, 293 N.W. 161; State vs. Dammann 280 N.W. 698; Sjostrum vs. State Highway Commission 228 P. 2d. 238; Hutton vs. Webb, 126 N.C. 897, 36 S.E. 341; Michigan Sugar Co. vs. Auditor General, 124 Mich. 674, 83 N.W. 625; Oxnard Beet Sugar Co. vs. State, 105 N.W. 716. 3 Casanovas vs. Hord. 8 Phil., McGirr vs. Hamilton, 30 Phil., 563; Compania General de Tabacos vs. Board of Public Utility, 34 Phil., 136; Central Capiz vs. Ramirez, 40 Phil., 883; Concepcion vs. Paredes, 42 Phil., 599; U.S. vs. Ang Tang Ho, 43 Phil., 6; McDaniel vs. Apacible, 44 Phil., 248; People vs. Pomar, 46 Phil., 440; Agcaoili vs. Suguitan, 48 Phil., 676; Government of P.I. vs. Springer, 50 Phil., 259; Manila Electric Co. vs. Pasay Transp. Co., 57 Phil., 600; People vs. Linsangan, 62 Phil., 464; People and Hongkong & Shanghai Banking Corp. vs. Jose O. Vera, 65 Phil., 56; People vs. Carlos, 78 Phil., 535; 44 Off. Gaz. 428; In re Cunanan, 94 Phil., 534; 50 Off. Gaz., 1602; City of Baguio vs. Nawasa, 106 Phil., 144; City of Cebu vs. Nawasa, 107 Phil., 1112; Rutter vs. Esteban, 93 Phil., 68; Off. Gaz., [5]1807. 4 In the language of the Supreme Court of Nebraska, "An unconstitutional statute is a legal still birth, which neither moves, nor breathes, nor holds out any sign of life. It is a form without one vital spark. It is wholly dead from the time of conception, and, no right, either legal or equitable, arises from such inanimate thing." (Oxnard Beet Sugar Co. vs. State, 102 N.W. 80.). 5 See, among others, Livermore, vs. Waite, 102 Cal. 113, 25 L.R.A. 312,36 P. 424; Crawford vs. Gilchrist, 64 Fla. 41, 59 So. 963; Lucas vs. American Hawaiian Engineering and Constr. Co., 16 Haw. 80; Castle vs. Capena, 5 Haw. 27; Littler vs. Jayne, 124 Ill. 123, 16 N.E. 374; Burke vs. Snively, 208 I11. 328, 70 N.E. 372; Ellingham vs. Dye, 178 Ind. 336, 99 N.E. 1; Christmas vs. Warfield, 105 Md. 536; Sears vs. Steel, 55 Or. 544, 107 Pac. 3; State ex rel. Taylor vs. Pennover, 26 Or. 205, 37 Pac. 906; Carman vs. Woodruf, 10 Or. 123; MacKinley vs. Watson, 145 Pac. 266; Sears vs. James, 47 Or. 50, 82 Pac. 14; Mott vs. Pennsylvania R. Co., 30 Pa. 9, 72 Am. Dec. 664; Bradly vs. Power County, 37 Am. Dec. 563; Frost vs. Thomas, 26 Colo. 227, 77 Am. St. Rep. 259, 56 Pac. 899; Martin vs. Ingham, 38 Kan. 641, 17 Pac. 162; Martin vs. Lacy, 39 Kan. 703, 18 Pac. 951; Smith vs. Maguerich, 44 Ga. 163; Giddings vs. Blacker, 93 Mich. 1, 16 L.R.A. 402, 52 N.W. 944; Rippe vs. Becker, 56 Minn. 100, 57 N.W. 331; Auditor vs. Treasurer, 4 S.C. 311; McCullough vs. Brown, 31 S.C. 220, 19 S.E. 458; State ex rel. Lamb vs. Cummingham, 83 Wis. 90, 53 N.W. 35; State ex rel. Rosenhian vs. Frear, 138 Wis. 173, 119 N.W. 894. 6 Rubs vs. Thompson, 56 N.E. 2d. 761; Reid vs. Smith, 375 Ill. 147, 30N. E. 2d. 908; Fergus vs. Russel, 270 Ill. 304, 110 N.E. 130; Burke vs. Snively, 208 Ill. 328; Jones vs. Connell, 266 Ill. 443, 107 N.E. 731; Dudick vs. Baumann, 349 [PEPSI] Ill. 46, 181 N.E. 690. 7 Thompson vs. Canal Fund Comps., 2 Abb. Pr. 248; Shieffelin vs. Komfort, 212 N.Y. 520, 106 N.E. 675; Hutchison vs. Skinmer, 21 Misc. 729, 49N. Y. Supp. 360; Long vs. Johnson, 70 Misc. 308; 127 N.Y. Supp. 756; Whiteback vs. Hooker, 73 Misc. 573, 133 N.Y. Supp. 534; State ex rel. Cranmer vs. Thorson, 9 S.D. 149, 68 N.W. 202; Davenport vs. Elrod, 20 S.D. 567, 107 N.W. 833; Indiana Jones vs. Reed, 3 Wash. 57, 27 Pac. 1067; Birmingham vs. Cheetham, 19 Wash. 657, 54 Pac. 37; Tacoma vs. Bridges, 25 Wash. 221, 65 Pac. 186; Hilger vs. State, 63 Wash. 457, 116 Pac. 19. 8 It has 1,463,530 inhabitants.

EN BANC [G.R. No. L-9141. September 25, 1956.] Testate Estate of OLIMPIO FERNANDEZ, deceased. REPUBLIC OF THE PHILIPPINES, claimant-appellee, vs. ANGELINA OASAN VDA DE FERNANDEZ, PRISCILLA O. FERNANDEZ, and ESTELA O. FERNANDEZ, oppositors-appellants. Ramon C. Aquino for appellants. Solicitor General Ambrosio Padilla and Solicitor Felicisimo R. Rosete for appellee. SYLLABUS 1. CONSTITUTIONAL LAW; WAR PROFIT TAX LAW; RETROACTIVITY, VALIDITY OF. Appellant's contention that the law is invalid or unconstitutional because it acts retroactively, thus violating the due process of law clause, is not supported by reason or authority. Property taxes and benefits assessments on real estate, retroactively applied, are not open to the objection that they infringe upon the due process of law clause of the Constitution; that taxes on income are not subject to the constitutional objection because of their retroactivity. The universal practice has been to increase taxes on income already earned; yet notwithstanding this retroactive operation, income taxes have not been successfully assailed as invalid. The uniform ruling of the courts in the United State has been to reject the contention that the retroactive application of revenue acts is a denial of the due process guaranteed by the Fifth Amendment. In order to declare a tax as transgressing the constitutional limitation, it must be so harsh and oppressive in its retroactive application. Far from being unjust or harsh and oppressive our war profit tax is both wise and just. 2. ID.; ID.; NOT HARSH AND OPPRESSIVE. The law may not be considered harsh and oppressive because the force of its impact fell on those who had amassed wealth or increased their wealth during the war, but did not touch the less fortunate. The policy followed is the same as that which underlie the Income Tax Law, imposing the burden upon those who have relieving those who have not. No one can dare challenge the law as harsh and oppressive. 3. WAR PROFIT TAX LAW; ON ESTATE OF DECEASED IS A PROPERTY TAX AND INCOME TAX. The tax, insofar as applicable to the estate of a deceased, is both a property tax and a tax on income. It is a property tax in relation to the properties the deceased had at the outbreak of the war and it is an income tax in relation to the properties which the deceased acquired during the war. 4. ID.; APPLICABLE TO ESTATE OF DECEASED WHO DIED BEFORE ITS ENACTMENT. The contention that a deceased or his estate should not be responsible because he was no longer living when the law was enacted is absolutely without merit. Where the deceased died immediately before the liberation and actual cessation of hostilities and he profited by the war, there is no reason why the incident of his death should relieve his estate from the tax. 5. ID.; HUSBAND AND WIFE; PROPERTIES ACQUIRED DURING THE MARRIAGE PRESUMED CONJUGAL. The property which the deceased was possessed in December, 1941, is presumed to be conjugal and so are the properties which were acquired by him during the war, because at the time he was married. In the case at bar, there is no claim or evidence to support the claim that any of the properties were paraphernal properties of the wife so the presumption stands that they were conjugal properties of the husband and the wife. Under those circumstances they cannot be considered as properties belonging to two individuals, each of which shall be subject to the tax independently of the other. DECISION LABRADOR, J p: Appeal from a decision of the Court of Tax Appeals sustaining the validity of a tax amounting to P7,614.60 against the estate of Olimpio Fernandez under the War Profits Tax Law (Republic Act No. 55). Olimpio Fernandez and his wife Angelina Oasan had a net worth of P8,600 on December 8, 1941. During the Japanese occupation the spouses acquired several real properties, and at the time of his death on February 11, 1945 he had a net worth of P31,489. The Collector of Internal Revenue assessed a war profits tax on the estate of the deceased at P7,614.60, which his administratrix refused to pay. The case was brought to the Court of Tax Appeals which sustained the validity and legality of the assessment. The administratrix has appealed this decision to this Court.

The most important questions raised by the appellant are: (a) the unconstitutionality of the war profits tax law for the reason that it is retroactive; (b) the inapplicability of said law to the estate of the deceased Olimpio Fernandez, because the law taxes individuals; and (c) the separate taxation of the estate of the deceased Olimpio Fernandez from that of his wife's, because Olimpio Fernandez died before the law was passed. Appellant's contention that the law is invalid or unconstitutional because it acts retroactively, thus violating the due process of law clause, is not supported by reason or authority. The tax, insofar as applicable to the estate of the deceased Olimpio Fernandez, is both a property tax and a tax on income. It is a property tax in relation to the properties that Fernandez had in December, 1941; and it is an income tax in relation to the properties which he purchased during the Japanese occupation. In both cases, however, the war profits tax may not be considered as unconstitutional. The doctrine of unconstitutionality raised by appellant is based on the prohibition against ex post facto laws. But this prohibition applies only to criminal or penal matters, and not to laws which concern civil matters or proceedings generally, or which affect or regulate civil or private rights (Ex parte Garland, 18 Law Ed., 366; 16 C. J. S., 889-891). "At an early day it was settled by authoritative decisions, in opposition to what might seem the more natural and obvious meaning of the term ex post facto, that in their scope and purpose these provisions were confined to laws respecting criminal punishments, and had no relation whatever to retrospective legislation of any other description. And it has, therefore, been repeatedly held, that retrospective laws, when not of a criminal nature, do not come in conflict with the national Constitution, unless obnoxious to its provisions on other grounds than their respective character." (1 Cooley, Constitutional Limitations, 544-545.) We have applied the above principle in the cases of Mekin vs. Wolf, 2 Phil. 74 and Ongsiako vs. Gamboa, 47 Off. Gaz., No. 11, 5613, 5616. It has also been held that property taxes and benefit assessments on real estate, retroactively applied, are not open to the objection that they infringe upon the due process of law clause of the Constitution (Wagner vs. Baltimore, 239 U. S. 207, 60 L. Ed. 230); that taxes on income are not subject to the constitutional objection because of their retroactivity. The universal practice has been to increase taxes on incomes already earned; yet notwithstanding this retroactive operation, income taxes have not been successfully assailed as invalid. The uniform ruling of the courts in the United States has been to reject the contention that the retroactive application of revenue acts is a denial of the due process guaranteed by the Fifth Amendment (Welch vs. Henry, 305 U. S. 134, 83 L. Ed. 87). It has also been held that in order to declare a tax as transgressing the constitutional limitation, it must be so harsh and oppressive in its retroactive application (Idem.). But we hold that far from being unjust or harsh and oppressive our war profits tax is both wise and just. The last Pacific war and the Japanese occupation of the Islands have wrought divergent effects upon the different sectors of the population. The quiet and the timid, who were afraid to go out of their homes or who refused to have any dealings with the enemy, stopped from exercising their callings or professions, losing their incomes; and they supported themselves with properties they already owned, selling these from time to time to raise funds with which to purchase their daily needs. These were reduced to penury and want. But the bold and the daring, as well as those who were callous to the criticism of being collaborators, engaged in trading in all forms or sorts of commodities, from foodstuffs to war materials, earning fabulous incomes and acquiring properties with their earnings. Those who were able to retain their properties found themselves possessed of increased wealth because inflation set in, the currency dropped in value and properties soared in prices. It would have been unrealistic for the legislature to have ignored all these facts and circumstances. After the war it could not, with justice to all concerned, apportion the expenses of government equally on all the people irrespective of the vicissitudes of war, equally on those who had their properties decimated as on those who had become fabulously rich after the war. Those who were fortunate to increase their wealth during the troubulous period of the war were made to contribute a portion of their newly-acquired wealth for the maintenance of the government and defray its expenses. Those who in turn were reduced to penury or whose incomes suffered reductions could not be compelled to share in the expenses to the same extent as those who grew rich. This in effect is what the legislature did when it enacted the War Profits

Tax Law. The law may not be considered harsh and oppressive because the force of its impact fell on those who had amassed wealth or increased their wealth during the war, but did not touch the less fortunate. The policy followed is the same as that which underlies the Income Tax Law, imposing the burden upon those who have and relieving those who have not. No one can dare challenge the law as harsh and oppressive. We declare it to be just and sound and overrule the objection thereto on the ground of unconstitutionality. The contention that the deceased Olimpio Fernandez or his estate should not be responsible because he died in 1945 and was no longer living when the law was enacted at a later date, in 1946, is absolutely without merit. Fernandez died immediately before the liberation and the actual cessation of hostilities. He profited by the war; there is no reason why the incident of his death should relieve his estate from the tax. On this matter we agree with the Court of Tax Appeals that the provisions of section 18 of the Internal Revenue Code have been incorporated in Republic Act No. 55 by virtue of Section 9 thereof, which provides: SEC. 9. Administrative remedies. All administrative, special and general provisions of law, including the laws in relation to the assessment, remission, collection and refund of national internal revenue taxes, not inconsistent with the provisions of the Act, are hereby extended and made applicable to all the provisions of this law, and to the tax herein imposed." Under section 84 of the National Internal Revenue Code, the term "person" means an individual, a trust, estate, corporation, or a duly registered general co-partnership. If the individual is already dead, property or estate left by him should be subject to the tax in the same manner as if he were alive. The last contention is also without merit. The property which Olimpio Fernandez was possessed of in December, 1941 is presumed to be conjugal property and so are the properties which were acquired by him during the war, because at that time he was married. There is no claim or evidence to support the claim that any of the properties were paraphernal properties of the wife; so the presumption stands that they were conjugal properties of the husband and wife. Under these circumstances they cannot be considered as properties belonging to two individuals, each of which shall be subject to the tax independently of the other. For the foregoing considerations, the judgment appealed from is hereby affirmed, with costs against the appellants. Paras, C.J., Padilla, Montemayor, Bautista Angelo, Concepcion, Reyes, J.B.L., Endencia, and Felix, JJ., concur.

EN BANC G.R. No. L-29646 November 10, 1978 MAYOR ANTONIO J. VILLEGAS, petitioner, vs. HIU CHIONG TSAI PAO HO and JUDGE FRANCISCO ARCA, respondents. Angel C. Cruz, Gregorio A. Ejercito, Felix C. Chaves & Jose Laureta for petitioner. Sotero H. Laurel for respondents.

FERNANDEZ, J.: This is a petition for certiorari to review tile decision dated September 17, 1968 of respondent Judge Francisco Arca of the Court of First Instance of Manila, Branch I, in Civil Case No. 72797, the dispositive portion of winch reads. Wherefore, judgment is hereby rendered in favor of the petitioner and against the respondents, declaring Ordinance No. 6 37 of the City of Manila null and void. The preliminary injunction is made permanent. No pronouncement as to cost. SO ORDERED. Manila, Philippines, September 17, 1968. (SGD.) FRANCISCO ARCA Judge 1 The controverted Ordinance No. 6537 was passed by the Municipal Board of Manila on February 22, 1968 and signed by the herein petitioner Mayor Antonio J. Villegas of Manila on March 27, 1968. 2 City Ordinance No. 6537 is entitled: AN ORDINANCE MAKING IT UNLAWFUL FOR ANY PERSON NOT A CITIZEN OF THE PHILIPPINES TO BE EMPLOYED IN ANY PLACE OF EMPLOYMENT OR TO BE ENGAGED IN ANY KIND OF TRADE, BUSINESS OR OCCUPATION WITHIN THE CITY OF MANILA WITHOUT FIRST SECURING AN EMPLOYMENT PERMIT FROM THE MAYOR OF MANILA; AND FOR OTHER PURPOSES. 3 Section 1 of said Ordinance No. 6537 4 prohibits aliens from being employed or to engage or participate in any position or occupation or business enumerated therein, whether permanent, temporary or casual, without first securing an employment permit from the Mayor of Manila and paying the permit fee of P50.00 except persons employed in the diplomatic or consular missions of foreign countries, or in the technical assistance programs of both the Philippine Government and any foreign government, and those working in their respective households, and members of religious orders or congregations, sect or denomination, who are not paid monetarily or in kind. Violations of this ordinance is punishable by an imprisonment of not less than three (3) months to six (6) months or fine of not less than P100.00 but not more than P200.00 or both such fine and imprisonment, upon conviction. 5 On May 4, 1968, private respondent Hiu Chiong Tsai Pao Ho who was employed in Manila, filed a petition with the Court of First Instance of Manila, Branch I, denominated as Civil Case No. 72797, praying for the issuance of the writ of preliminary injunction and restraining order to stop the enforcement of Ordinance No. 6537 as well as for a judgment declaring said Ordinance No. 6537 null and void. 6 In this petition, Hiu Chiong Tsai Pao Ho assigned the following as his grounds for wanting the ordinance declared null and void: 1) As a revenue measure imposed on aliens employed in the City of Manila, Ordinance No. 6537 is discriminatory and violative of the rule of the uniformity in taxation; 2) As a police power measure, it makes no distinction between useful and non-useful occupations, imposing a fixed P50.00 employment permit, which is out of proportion to the cost of registration and that it fails to prescribe any standard to guide and/or limit the action of the Mayor, thus, violating the fundamental principle on illegal delegation of legislative powers:

3) It is arbitrary, oppressive and unreasonable, being applied only to aliens who are thus, deprived of their rights to life, liberty and property and therefore, violates the due process and equal protection clauses of the Constitution. 7 On May 24, 1968, respondent Judge issued the writ of preliminary injunction and on September 17, 1968 rendered judgment declaring Ordinance No. 6537 null and void and making permanent the writ of preliminary injunction. 8 Contesting the aforecited decision of respondent Judge, then Mayor Antonio J. Villegas filed the present petition on March 27, 1969. Petitioner assigned the following as errors allegedly committed by respondent Judge in the latter's decision of September 17,1968: 9 I THE RESPONDENT JUDGE COMMITTED A SERIOUS AND PATENT ERROR OF LAW IN RULING THAT ORDINANCE NO. 6537 VIOLATED THE CARDINAL RULE OF UNIFORMITY OF TAXATION. II RESPONDENT JUDGE LIKEWISE COMMITTED A GRAVE AND PATENT ERROR OF LAW IN RULING THAT ORDINANCE NO. 6537 VIOLATED THE PRINCIPLE AGAINST UNDUE DESIGNATION OF LEGISLATIVE POWER. III RESPONDENT JUDGE FURTHER COMMITTED A SERIOUS AND PATENT ERROR OF LAW IN RULING THAT ORDINANCE NO. 6537 VIOLATED THE DUE PROCESS AND EQUAL PROTECTION CLAUSES OF THE CONSTITUTION. Petitioner Mayor Villegas argues that Ordinance No. 6537 cannot be declared null and void on the ground that it violated the rule on uniformity of taxation because the rule on uniformity of taxation applies only to purely tax or revenue measures and that Ordinance No. 6537 is not a tax or revenue measure but is an exercise of the police power of the state, it being principally a regulatory measure in nature. The contention that Ordinance No. 6537 is not a purely tax or revenue measure because its principal purpose is regulatory in nature has no merit. While it is true that the first part which requires that the alien shall secure an employment permit from the Mayor involves the exercise of discretion and judgment in the processing and approval or disapproval of applications for employment permits and therefore is regulatory in character the second part which requires the payment of P50.00 as employee's fee is not regulatory but a revenue measure. There is no logic or justification in exacting P50.00 from aliens who have been cleared for employment. It is obvious that the purpose of the ordinance is to raise money under the guise of regulation. The P50.00 fee is unreasonable not only because it is excessive but because it fails to consider valid substantial differences in situation among individual aliens who are required to pay it. Although the equal protection clause of the Constitution does not forbid classification, it is imperative that the classification should be based on real and substantial differences having a reasonable relation to the subject of the particular legislation. The same amount of P50.00 is being collected from every employed alien whether he is casual or permanent, part time or full time or whether he is a lowly employee or a highly paid executive Ordinance No. 6537 does not lay down any criterion or standard to guide the Mayor in the exercise of his discretion. It has been held that where an ordinance of a municipality fails to state any policy or to set up any standard to guide or limit the mayor's action, expresses no purpose to be attained by requiring a permit, enumerates no conditions for its grant or refusal, and entirely lacks standard, thus conferring upon the Mayor arbitrary and unrestricted power to grant or deny the issuance of building permits, such ordinance is invalid, being an undefined and unlimited delegation of power to allow or prevent an activity per se lawful. 10 In Chinese Flour Importers Association vs. Price Stabilization Board, 11 where a law granted a government agency power to determine the allocation of wheat flour among importers, the Supreme Court ruled against the interpretation of uncontrolled power as it vested in the administrative officer an arbitrary discretion to be exercised without a policy, rule, or standard from which it can be measured or controlled. It was also held in Primicias vs. Fugoso 12 that the authority and discretion to grant and refuse permits of all classes conferred upon the Mayor of Manila by the Revised Charter of Manila is not uncontrolled discretion but legal discretion to be exercised within the limits of the law. Ordinance No. 6537 is void because it does not contain or suggest any standard or criterion to guide the mayor in the exercise of the power which has been granted to him by the ordinance. The ordinance in question violates the due process of law and equal protection rule of the Constitution.

Requiring a person before he can be employed to get a permit from the City Mayor of Manila who may withhold or refuse it at will is tantamount to denying him the basic right of the people in the Philippines to engage in a means of livelihood. While it is true that the Philippines as a State is not obliged to admit aliens within its territory, once an alien is admitted, he cannot be deprived of life without due process of law. This guarantee includes the means of livelihood. The shelter of protection under the due process and equal protection clause is given to all persons, both aliens and citizens. 13 The trial court did not commit the errors assigned. WHEREFORE, the decision appealed from is hereby affirmed, without pronouncement as to costs. SO ORDERED. Barredo, Makasiar, Muoz Palma, Santos and Guerrero, JJ., concur. Castro, C.J., Antonio and Aquino, Fernando, JJ., concur in the result. Concepcion, Jr., J., took no part.

Separate Opinions

TEEHANKEE, J., concurring: I concur in the decision penned by Mr. Justice Fernandez which affirms the lower court's judgment declaring Ordinance No. 6537 of the City of Manila null and void for the reason that the employment of aliens within the country is a matter of national policy and regulation, which properly pertain to the national government officials and agencies concerned and not to local governments, such as the City of Manila, which after all are mere creations of the national government. The national policy on the matter has been determined in the statutes enacted by the legislature, viz, the various Philippine nationalization laws which on the whole recognize the right of aliens to obtain gainful employment in the country with the exception of certain specific fields and areas. Such national policies may not be interfered with, thwarted or in any manner negated by any local government or its officials since they are not separate from and independent of the national government. As stated by the Court in the early case of Phil. Coop. Livestock Ass'n. vs. Earnshaw, 59 Phil. 129: "The City of Manila is a subordinate body to the Insular (National Government ...). When the Insular (National) Government adopts a policy, a municipality is without legal authority to nullify and set at naught the action of the superior authority." Indeed, "not only must all municipal powers be exercised within the limits of the organic laws, but they must be consistent with the general law and public policy of the particular state ..." (I McQuillin, Municipal Corporations, 2nd sec. 367, P. 1011). With more reason are such national policies binding on local governments when they involve our foreign relations with other countries and their nationals who have been lawfully admitted here, since in such matters the views and decisions of the Chief of State and of the legislature must prevail over those of subordinate and local governments and officials who have no authority whatever to take official acts to the contrary.

Separate Opinions TEEHANKEE, J., concurring: I concur in the decision penned by Mr. Justice Fernandez which affirms the lower court's judgment declaring Ordinance No. 6537 of the City of Manila null and void for the reason that the employment of aliens within the country is a matter of national policy and regulation, which properly pertain to the national government officials and agencies concerned and not to local governments, such as the City of Manila, which after all are mere creations of the national government. The national policy on the matter has been determined in the statutes enacted by the legislature, viz, the various Philippine nationalization laws which on the whole recognize the right of aliens to obtain gainful employment in the

country with the exception of certain specific fields and areas. Such national policies may not be interfered with, thwarted or in any manner negated by any local government or its officials since they are not separate from and independent of the national government. As stated by the Court in the early case of Phil. Coop. Livestock Ass'n. vs. Earnshaw, 59 Phil. 129: "The City of Manila is a subordinate body to the Insular (National Government ...). When the Insular (National) Government adopts a policy, a municipality is without legal authority to nullify and set at naught the action of the superior authority." Indeed, "not only must all municipal powers be exercised within the limits of the organic laws, but they must be consistent with the general law and public policy of the particular state ..." (I McQuillin, Municipal Corporations, 2nd sec. 367, P. 1011). With more reason are such national policies binding on local governments when they involve our foreign relations with other countries and their nationals who have been lawfully admitted here, since in such matters the views and decisions of the Chief of State and of the legislature must prevail over those of subordinate and local governments and officials who have no authority whatever to take official acts to the contrary. Footnotes 1 Annex "F", Petition, Rollo, p. 64. 2 Petition, Rollo, p. 28. 3 Annex "A", of Petition, Rollo, p. 37-38. 4 Section 1. It shall he unlawful for any person not a citizen of the Philippines to be employed in any kind of position or occupation or allowed directly or indirectly to participate in the functions, administration or management in any office, corporation, store, restaurant, factory, business firm, or any other place of employment either as consultant, adviser, clerk, employee, technician, teacher, actor, actress, acrobat, singer or other theatrical performer, laborer, cook, etc., whether temporary, casual, permanent or otherwise and irrespective of the source or origin of his compensation or number of hours spent in said office, store, restaurant, factory, corporation or any other place of employment, or to engage in any kind of business and trade within the City of Manila, without first securing an employment permit from the Mayor of Manila, and paying the necessary fee therefor to the City the City Treasurer: PROVIDED, HOWEVER, That persons employed in diplomatic and consular missions of foreign countries and in technical assistance programs agreed upon by the Philippine Government and any foreign government, and those working in their respective households, and members of different congregations or religious orders of any religion, sect or denomination, who are not paid either monetarily or in kind shag be exempted from the provisions of this Ordinance. 5 Section 4. Any violation of this Ordinance shall upon conviction, be punished by imprisonment of not less than three (3) months but not more than six (6) months or by a fine of not less than one hundred pesos (P100.00) but not more than two hundred pesos (P200.00), or by both such fine and imprisonment, in the discretion of the Court: PROVIDED, HOWEVER, That in case of juridical persons, the President, the Vice-President or the person in charge shall be liable. 6 Annex "B", Petition, Rollo, p. 39. 7 Ibid 8 Annex "F", Petition, Rollo, pp. 75-83. 9 Petition, Rollo, p. 31. 10 People vs. Fajardo, 104 Phil. 443, 446. 11 89 Phil. 439, 459-460. 12 80 Phil. 86. 13 Kwong Sing vs. City of Manila, 41 Phil, 103.

EN BANC G.R. No. L-45987 May 5, 1939

THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. CAYAT, defendant-appellant. Sinai Hamada y Cario for appellant. Office of the Solicitor-General Tuason for appellee. FIRST DIVISION [G.R. No. 45987. May 5, 1939.] THE PEOPLE OF THE PHILIPPINES, plaintiff-appellee, vs. CAYAT, defendant-appellant. Sinai Hamada y Cario for appellant. Solicitor-General Tuason for appellee. SYLLABUS 1. CONSTITUTIONAL LAW; GUARANTY OF EQUAL PROTECTION OF THE LAWS; LEGISLATION BASED ON REASONABLE CLASSIFICATION. It is an established principle of constitutional law that the guaranty of the equal protection of the laws is not violated by a legislation based on reasonable classification. And the classification, to be reasonable, (1) must rest on substantial distinctions; (2) must be germane to the purposes of the law; (3) must not be limited to existing conditions only; and (4) must apply equally to all members of the same class. 2. ID.; ID.; ID.; NON-CHRISTIAN TRIBES. Act No. 1639 satisfies these requirements. The classification rests on real or substantial, not merely imaginary or whimsical, distinctions. It is not based upon "accident of birth or parentage!' but upon the degree of civilization and culture. The term "non-Christian tribes" refers, ,not to religious belief, but, in a way, to the geographical area, and, more directly, to natives of the Philippines of a low grade of civilization, usually living in tribal relationship apart from settled communities. 3. ID.; ID.; ID; ID. This distinction is unquestionably reasonable, for the Act was intended to meet the peculiar conditions existing in the non-Christian tribes. The exceptional cases of certain members thereof who at present have reached a position of cultural equality with their Christian brothers, cannot affect the reasonableness of the classification thus established. 4. ID.; ID.; ID.; ID. That the classification i~ germane to the purposes of law cannot be doubted. The prohibition "to buy, receive, have in his possession, or drink any ardent spirits, ale, beer, wine, or intoxicating liquors of any kind, other than the so-called native wines and liquors which the members of such tribes have been accustomed themselves to make prior to the passage of this Act," is unquestionably designed to insure peace and order in and among the non-Christian tribes. It has been the and experience of the past, as the observations of the lower court disclose, that the free use of highly intoxicating liquors the non-Christian tribes have often resulted in lawlessness and crimes, thereby hampering the efforts of the government to raise their standard of life and civilization. 5. ID.; ID.; ID.; ID. The law is not limited in its application to conditions existing at the time of its enactment. It is intended to apply for all times as long as those conditions exist. The act was not predicated upon the assumption that the non-Christians are "impermeable to any civilizing influence." On the contrary, the Legislature understood that the civilization of a people is a slow process and that hand in hand with it must go measures of protection and security. 6. ID.; ID.; ID.; ID. That the Act applies equally to all members of the class is evident from a perusal thereof. That it may be unfair in its operation against a certain number of non-Christians by reason of their degree of culture, is not an argument against the equality of its application. 7. ID.; ID.; ID.; ID.; DUE PROCESS OF LAW. To constitute due process of law, notice and hearing are not always necessary. This rule is especially true where much must be left to the discretion of the administrative officials in applying a law to particular cases. Due process of law means simply: (1) that there shall be a law prescribed in harmony with the general powers of the legislative department of the government; (2) that it shall be reasonable in its operation; (3) that it shall be enforced according to the regular methods of procedure prescribed; and (4) that it shall be applicable alike to 811 citizens of the state or to all of a class. 8. ID.; ID.; ID.; ID.; POLICE POWER OF THE STATE. Neither is the Act an improper exercise of the police power of the state. It has been said that the police power is the most insistent and least limitable of all the powers of the government. It has been aptly described as a power coextensive with self-protection and constitutes the law of overruling necessity. Any measure intended to promote the health, peace, morals, education and good order of the

people or to increase the industries of the state, develop its resources and add to its wealth and prosperity, is a legitimate exercise of the police power, and unless shown to be whimsical or capricious as to unduly interfere with the rights of an individual, the same must be upheld. 9. ID.; ID.; ID.; ID.; ID. Act No. 1639 is designed to promote peace and order in the non-Christian tribes so as to remove all obstacles to their moral and intellectual growth and, eventually, to hasten their equalization and unification with the rest of their Christian brothers. Its ultimate purpose can be no other than to unify the Filipino people with a view to a greater Philippines. The law, then, does not seek to mark the non-Christian tribes as "an inferior or less capable race." On the contrary, all measures thus far adopted in the promotion of the public policy towards them rest upon a recognition of their inherent right to equality in the enjoyment of those privileges now enjoyed by their Christian brothers. But as there can be no true equality before the law, if there is, in fact, no equality in education, the government has endeavored, by appropriate measures, to raise their culture and civilization and secure for them the benefits of their progress, with the ultimate end in view of placing them with their Christian brothers on the basis of true equality. 10. ID; ID.; ID.; ID; ID.; PRINCIPLE OF "SALUS POPULI SUPREMA EST LEX". In the constitutional scheme of our government, this court can go no farther than to inquire whether the Legislature had the power to enact the law. If the power exists, and we bold it does exist, the wisdom of the policy adopted, and the adequacy under existing conditions of the measures enacted to forward it, are matters which this court has no authority to pass upon. And, if in the application of the law, the educated non-Christians shall incidentally suffer, the justification still exists in the allcomprehending principle of salus populi suprema est lex. 11. ID.; ID.; ID.; ID.; ID.; ID.; PUBLIC AND PRIVATE INTERESTS. When the public safety or the public morals require the discontinuance of a certain practice by a certain class of persons, the hand of the Legislature cannot be stayed from providing for its discontinuance by any incidental inconvenience which some members of the class may suffer. The private interests of such members must yield to the paramount interests of the nation (Of, Boston Beer Co. V8. Mass., 97 U. S., 26; 24 Law. ed., 989). MORAN, J.: Prosecuted for violation of Act No. 1639 (secs. 2 and 3), the accused, Cayat, a native of Baguio, Benguet, Mountain Province, was sentenced by the justice of the peace court of Baguio to pay a fine of five pesos (P5) or suffer subsidiary imprisonment in case of insolvency. On appeal of the Court of First Instance, the following information was filed against him: That on or about the 25th day of January, 1937, in the City of Baguio, Commonwealth of the Philippines, and within the jurisdiction of this court, the above-named accused, Cayat, being a member of the non-Christian tribes, did then and there willfully, unlawfully, and illegally receive, acquire, and have in his possession and under his control or custody, one bottle of A-1-1 gin, an intoxicating liquor, other than the so-called native wines and liquors which the members of such tribes have been accustomed themselves to make prior to the passage of Act No. 1639. Accused interposed a demurrer which was overruled. At the trial, he admitted all the facts alleged in the information, but pleaded not guilty to the charge for the reasons adduced in his demurrer and submitted the case on the pleadings. The trial court found him guilty of the crime charged and sentenced him to pay a fine of fifty pesos (P50) or supper subsidiary imprisonment in case of insolvency. The case is now before this court on appeal. Sections 2 and 3 of Act No. 1639 read: SEC. 2. It shall be unlawful for any native of the Philippine Islands who is a member of a non-Christian tribe within the meaning of the Act Numbered Thirteen hundred and ninety-seven, to buy, receive, have in his possession, or drink any ardent spirits, ale, beer, wine, or intoxicating liquors of any kind, other than the socalled native wines and liquors which the members of such tribes have been accustomed themselves to make prior to the passage of this Act, except as provided in section one hereof; and it shall be the duty of any police officer or other duly authorized agent of the Insular or any provincial, municipal or township government to seize and forthwith destroy any such liquors found unlawfully in the possession of any member of a non-Christian tribe. SEC. 3. Any person violating the provisions of section one or section two of this Act shall, upon conviction thereof, be punishable for each offense by a fine of not exceeding two hundred pesos or by imprisonment for a term not exceeding six months, in the discretion of the court. The accused challenges the constitutionality of the Act on the following grounds: (1) That it is discriminatory and denies the equal protection of the laws; (2) That it is violative of the due process clause of the Constitution: and. (3) That it is improper exercise of the police power of the state. Counsel for the appellant holds out his brief as the "brief for the non-Christian tribes." It is said that as these less civilized elements of the Filipino population are "jealous of their rights in a democracy," any attempt to treat them with

discrimination or "mark them as inferior or less capable rate or less entitled" will meet with their instant challenge. As the constitutionality of the Act here involved is questioned for purposes thus mentioned, it becomes imperative to examine and resolve the issues raised in the light of the policy of the government towards the non-Christian tribes adopted and consistently followed from the Spanish times to the present, more often with sacrifice and tribulation but always with conscience and humanity. As early as 1551, the Spanish Government had assumed an unvarying solicitous attitude toward these inhabitants, and in the different laws of the Indies, their concentration in so-called "reducciones" (communities) have been persistently attempted with the end in view of according them the "spiritual and temporal benefits" of civilized life. Throughout the Spanish regime, it had been regarded by the Spanish Government as a sacred "duty to conscience and humanity" to civilize these less fortunate people living "in the obscurity of ignorance" and to accord them the "the moral and material advantages" of community life and the "protection and vigilance afforded them by the same laws." (Decree of the Governor-General of the Philippines, Jan. 14, 1887.) This policy had not been deflected from during the American period. President McKinley in his instructions to the Philippine Commission of April 7, 1900, said: In dealing with the uncivilized tribes of the Islands, the Commission should adopt the same course followed by Congress in permitting the tribes of our North American Indians to maintain their tribal organization and government, and under which many of those tribes are now living in peace and contentment, surrounded by civilization to which they are unable or unwilling to conform. Such tribal government should, however, be subjected to wise and firm regulation; and, without undue or petty interference, constant and active effort should be exercised to prevent barbarous practices and introduce civilized customs. Since then and up to the present, the government has been constantly vexed with the problem of determining "those practicable means of bringing about their advancement in civilization and material prosperity." (See, Act No. 253.) "Placed in an alternative of either letting them alone or guiding them in the path of civilization," the present government "has chosen to adopt the latter measure as one more in accord with humanity and with the national conscience." (Memorandum of Secretary of the Interior, quoted in Rubi vs. Provincial Board of Mindoro, 39 Phil., 660, 714.) To this end, their homes and firesides have been brought in contact with civilized communities through a network of highways and communications; the benefits of public education have to them been extended; and more lately, even the right of suffrage. And to complement this policy of attraction and assimilation, the Legislature has passed Act No. 1639 undoubtedly to secure for them the blessings of peace and harmony; to facilitate, and not to mar, their rapid and steady march to civilization and culture. It is, therefore, in this light that the Act must be understood and applied. It is an established principle of constitutional law that the guaranty of the equal protection of the laws is not equal protection of the laws is not violated by a legislation based on reasonable classification. And the classification, to be reasonable, (1) must rest on substantial distinctions; (2) must be germane to the purposes of the law; (3) must not be limited to existing conditions only; and (4) must apply equally to all members of the same class. (Borgnis vs. Falk Co., 133 N.W., 209; Lindsley vs. Natural Carbonic Gas Co., 220 U.S. 61; 55 Law. ed., Rubi vs. Provincial Board of Mindoro, 39 Phil., 660; People and Hongkong & Shanghai Banking Corporation vs. Vera and Cu Unjieng, 37 Off. Gaz ., 187.) Act No. 1639 satisfies these requirements. The classification rests on real and substantial, not merely imaginary or whimsical, distinctions. It is not based upon "accident of birth or parentage," as counsel to the appellant asserts, but upon the degree of civilization and culture. "The term 'non-Christian tribes' refers, not to religious belief, but, in a way, to the geographical area, and, more directly, to natives of the Philippine Islands of a low grade of civilization, usually living in tribal relationship apart from settled communities." (Rubi vs. Provincial Board of Mindoro, supra.) This distinction is unquestionably reasonable, for the Act was intended to meet the peculiar conditions existing in the nonChristian tribes. The exceptional cases of certain members thereof who at present have reached a position of cultural equality with their Christian brothers, cannot affect the reasonableness of the classification thus established. That it is germane to the purposes of law cannot be doubted. The prohibition "to buy, receive, have in his possession, or drink any ardent spirits, ale, beer, wine, or intoxicating liquors of any kind, other than the so-called native wines and liquors which the members of such tribes have been accustomed themselves to make prior to the passage of this Act.," is unquestionably designed to insure peace and order in and among the non-Christian tribes. It has been the sad experience of the past, as the observations of the lower court disclose, that the free use of highly intoxicating liquors by the non-Christian tribes have often resulted in lawlessness and crimes, thereby hampering the efforts of the government to raise their standard of life and civilization. The law is not limited in its application to conditions existing at the time of its enactment. It is intended to apply for all times as long as those conditions exist. The Act was not predicated, as counsel for appellant asserts, upon the assumption that the non-Christians are "impermeable to any civilizing influence." On the contrary, the Legislature understood that the civilization of a people is a slow process and that hand in hand with it must go measures of protection and security. Finally, that the Act applies equally to all members of the class is evident from a perusal thereof. That it may be unfair in its operation against a certain number non-Christians by reason of their degree of culture, is not an argument against the equality of its application. Appellants contends that that provision of the law empowering any police officer or other duly authorized agent of the government to seize and forthwith destroy any prohibited liquors found unlawfully in the possession of any member of the non-Christian tribes is violative of the due process of law provided in the Constitution. But this provision is not involved in the case at bar. Besides, to constitute due process of law, notice and hearing are not always necessary.

This rule is especially true where much must be left to the discretion of the administrative officials in applying a law to particular cases. (McGehee, Due Process of Law p. 371, cited with approval in Rubi vs. Provincial Board of Mindoro, supra.) Due process of law means simply: (1) that there shall be a law prescribed in harmony with the general powers of the legislative department of the government; (2) that it shall be reasonable in its operation; (3) that it shall be enforced according to the regular methods of procedure prescribed; and (4) that it shall be applicable alike to all citizens of the state or to all of the class. (U.S. vs. Ling Su Fan, 10 Phil., 104, affirmed on appeal by the United States Supreme Court, 218 U.S., 302: 54 Law. ed., 1049.) Thus, a person's property may be seized by the government in payment of taxes without judicial hearing; or property used in violation of law may be confiscated (U.S. vs. Surla, 20 Phil., 163, 167), or when the property constitutes corpus delicti, as in the instant case (Moreno vs. Ago Chi, 12 Phil., 439, 442). Neither is the Act an improper exercise of the police power of the state. It has been said that the police power is the most insistent and least limitable of all powers of the government. It has been aptly described as a power coextensive with self-protection and constitutes the law of overruling necessity. Any measure intended to promote the health, peace, morals, education and good order of the people or to increase the industries of the state, develop its resources and add to its wealth and prosperity (Barbier vs. Connolly, 113 U.S., 27), is a legitimate exercise of the police power, unless shown to be whimsical or capricious as to unduly interfere with the rights of an individual, the same must be upheld. Act No. 1639, as above stated, is designed to promote peace and order in the non-Christian tribes so as to remove all obstacles to their moral and intellectual growth and, eventually, to hasten their equalization and unification with the rest of their Christian brothers. Its ultimate purpose can be no other than to unify the Filipino people with a view to a greater Philippines. The law, then, does not seek to mark the non-Christian tribes as "an inferior or less capable race." On the contrary, all measures thus far adopted in the promotion of the public policy towards them rest upon a recognition of their inherent right to equality in tht enjoyment of those privileges now enjoyed by their Christian brothers. But as there can be no true equality before the law, if there is, in fact, no equality in education, the government has endeavored, by appropriate measures, to raise their culture and civilization and secure for them the benefits of their progress, with the ultimate end in view of placing them with their Christian brothers on the basis of true equality. It is indeed gratifying that the non-Christian tribes "far from retrograding, are definitely asserting themselves in a competitive world," as appellant's attorney impressively avers, and that they are "a virile, up-and -coming people eager to take their place in the world's social scheme." As a matter of fact, there are now lawyers, doctors and other professionals educated in the best institutions here and in America. Their active participation in the multifarious welfare activities of community life or in the delicate duties of government is certainly a source of pride and gratification to people of the Philippines. But whether conditions have so changed as to warrant a partial or complete abrogation of the law, is a matter which rests exclusively within the prerogative of the National Assembly to determine. In the constitutional scheme of our government, this court can go no farther than to inquire whether the Legislature had the power to enact the law. If the power exists, and we hold it does exist, the wisdom of the policy adopted, and the adequacy under existing conditions of the measures enacted to forward it, are matters which this court has no authority to pass upon. And, if in the application of the law, the educated non-Christians shall incidentally suffer, the justification still exists in the allcomprehending principle of salus populi suprema est lex. When the public safety or the public morals require the discontinuance of a certain practice by certain class of persons, the hand of the Legislature cannot be stayed from providing for its discontinuance by any incidental inconvenience which some members of the class may suffer. The private interests of such members must yield to the paramount interests of the nation (Cf. Boston Beer Co. vs. Mass., 97 U.S., 25; 24 law. ed., 989). Judgment is affirmed, with costs against appellant. Avancea, C.J., Villa-Real, Imperial, Diaz, Laurel, and Conception, JJ., concur

EN BANC G.R. No. L-23794 February 17, 1968

ORMOC SUGAR COMPANY, INC., plaintiff-appellant, vs. THE TREASURER OF ORMOC CITY, THE MUNICIPAL BOARD OF ORMOC CITY, HON. ESTEBAN C. CONEJOS as Mayor of Ormoc City and ORMOC CITY, defendants-appellees. Ponce Enrile, Siguion Reyna, Montecillo & Belo and Teehankee, Carreon & Taada for plaintiff-appellant. Ramon O. de Veyra for defendants-appellees. SYLLABUS 1. MUNICIPAL CORPORATIONS; POWER TO IMPOSE EXPORT OR IMPORT TAX; REP. ACT 2264, SEC. 2; EFFECT ON SEC. 2287 OF REVISED ADMINISTRATIVE CODE. Section 2 of Rep. Act 2264 which became effective on June 19, 1959, gave chartered cities, municipalities and municipal districts authority to levy for public purposes just and uniform taxes, licenses or fees. This provision of law has repealed Sec. 2287 of the Revised Administrative Code (Nin Bay Mining Co. vs. Municipality of Roxas, L-20125, July 20, 1965), which withheld from municipalities the power to impose an import or export tax upon such goods in the guise of an unreasonable charge for wharfage. 2. CONSTITUTIONAL LAW; EQUAL PROTECTION OF LAW; REASONABLE CLASSIFICATION; REQUISITES. The equal protection clause applies only to persons or things identically situated and does not bar a reasonable classification of the subject of legislation. A classification is reasonable where (1) it is based on substantial distinctions which make real differences; (2) these are germane to the purpose of the law; (3) the classification applies not only to present conditions but also to future conditions which are substantially identical to those of the present; (4) the classification applies only to those who belong to the same class. 3. ID.; ID.; ID.; TAX ORDINANCE SHOULD NOT BE SINGULAR AND EXCLUSIVE. When the taxing ordinance was enacted, Ormoc Sugar Co,, Inc. was the only sugar central in the City. A reasonable classification should be in terms applicable to future conditions as well. The taxing ordinance should not be singular and exclusive as to exclude any subsequently established sugar central. 4. TAXATION; TAX, REFUND OF; NO INTEREST CAN BE CLAIMED; REASONS. Appellant is not entitled to interest on the refund because the taxes were not arbitrarily collected. There is sufficient basis to preclude arbitrariness. The constitutionality of the statute is presumed until declared otherwise. BENGZON, J.P., J.: On January 29, 1964, the Municipal Board of Ormoc City passed 1 Ordinance No. 4, Series of 1964, imposing "on any and all productions of centrifugal sugar milled at the Ormoc Sugar Company, Inc., in Ormoc City a municipal tax equivalent to one per centum (1%) per export sale to the United States of America and other foreign countries." 2 Payments for said tax were made, under protest, by Ormoc Sugar Company, Inc. on March 20, 1964 for P7,087.50 and on April 20, 1964 for P5,000, or a total of P12,087.50. On June 1, 1964, Ormoc Sugar Company, Inc. filed before the Court of First Instance of Leyte, with service of a copy upon the Solicitor General, a complaint 3 against the City of Ormoc as well as its Treasurer, Municipal Board and Mayor, alleging that the afore-stated ordinance is unconstitutional for being violative of the equal protection clause (Sec. 1[1], Art. III, Constitution) and the rule of uniformity of taxation (Sec. 22[1]), Art. VI, Constitution), aside from being an export tax forbidden under Section 2287 of the Revised Administrative Code. It further alleged that the tax is neither a production nor a license tax which Ormoc City under Section 15-kk of its charter and under Section 2 of Republic Act 2264, otherwise known as the Local Autonomy Act, is authorized to impose; and that the tax amounts to a customs duty, fee or charge in violation of paragraph 1 of Section 2 of Republic Act 2264 because the tax is on both the sale and export of sugar. Answering, the defendants asserted that the tax ordinance was within defendant city's power to enact under the Local Autonomy Act and that the same did not violate the afore-cited constitutional limitations. After pre-trial and submission of the case on memoranda, the Court of First Instance, on August 6, 1964, rendered a decision that upheld the constitutionality of the ordinance and declared the taxing power of defendant chartered city broadened by the Local Autonomy Act to include all other forms of taxes, licenses or fees not excluded in its charter. Appeal therefrom was directly taken to Us by plaintiff Ormoc Sugar Company, Inc. Appellant alleges the same statutory and constitutional violations in the aforesaid taxing ordinance mentioned earlier. Section 1 of the ordinance states: "There shall be paid to the City Treasurer on any and all productions of centrifugal sugar milled at the Ormoc Sugar Company, Incorporated, in Ormoc City, a municipal tax equivalent to one per centum (1%) per export sale to the United States of America and other foreign countries." Though referred to as a tax on the export of centrifugal sugar produced at Ormoc Sugar Company, Inc. For production of sugar alone is not taxable; the only time the tax applies is when the sugar produced is exported.

Appellant questions the authority of the defendant Municipal Board to levy such an export tax, in view of Section 2287 of the Revised Administrative Code which denies from municipal councils the power to impose an export tax. Section 2287 in part states: "It shall not be in the power of the municipal council to impose a tax in any form whatever, upon goods and merchandise carried into the municipality, or out of the same, and any attempt to impose an import or export tax upon such goods in the guise of an unreasonable charge for wharfage use of bridges or otherwise, shall be void." Subsequently, however, Section 2 of Republic Act 2264 effective June 19, 1959, gave chartered cities, municipalities and municipal districts authority to levy for public purposes just and uniform taxes, licenses or fees. Anent the inconsistency between Section 2287 of the Revised Administrative Code and Section 2 of Republic Act 2264, this Court, in Nin Bay Mining Co. v. Municipality of Roxas 4 held the former to have been repealed by the latter. And expressing Our awareness of the transcendental effects that municipal export or import taxes or licenses will have on the national economy, due to Section 2 of Republic Act 2264, We stated that there was no other alternative until Congress acts to provide remedial measures to forestall any unfavorable results. The point remains to be determined, however, whether constitutional limits on the power of taxation, specifically the equal protection clause and rule of uniformity of taxation, were infringed. The Constitution in the bill of rights provides: ". . . nor shall any person be denied the equal protection of the laws." (Sec. 1 [1], Art. III) In Felwa vs. Salas, 5 We ruled that the equal protection clause applies only to persons or things identically situated and does not bar a reasonable classification of the subject of legislation, and a classification is reasonable where (1) it is based on substantial distinctions which make real differences; (2) these are germane to the purpose of the law; (3) the classification applies not only to present conditions but also to future conditions which are substantially identical to those of the present; (4) the classification applies only to those who belong to the same class. A perusal of the requisites instantly shows that the questioned ordinance does not meet them, for it taxes only centrifugal sugar produced and exported by the Ormoc Sugar Company, Inc. and none other. At the time of the taxing ordinance's enactment, Ormoc Sugar Company, Inc., it is true, was the only sugar central in the city of Ormoc. Still, the classification, to be reasonable, should be in terms applicable to future conditions as well. The taxing ordinance should not be singular and exclusive as to exclude any subsequently established sugar central, of the same class as plaintiff, for the coverage of the tax. As it is now, even if later a similar company is set up, it cannot be subject to the tax because the ordinance expressly points only to Ormoc City Sugar Company, Inc. as the entity to be levied upon. Appellant, however, is not entitled to interest; on the refund because the taxes were not arbitrarily collected (Collector of Internal Revenue v. Binalbagan). 6 At the time of collection, the ordinance provided a sufficient basis to preclude arbitrariness, the same being then presumed constitutional until declared otherwise. WHEREFORE, the decision appealed from is hereby reversed, the challenged ordinance is declared unconstitutional and the defendants-appellees are hereby ordered to refund the P12,087.50 plaintiff-appellant paid under protest. No costs. So ordered. Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar, Sanchez, Castro, Angeles and Fernando, JJ., concur. Footnotes
1
1wph1.t

Resolution No. 30, Series of 1964. Section 1, emphasis supplied.

An action for declaratory judgment was also filed on May 23, 1964 (Civil Case No. 665-0) but this and the present case were tried jointly.
4

L-20125, July 20, 1965. L-26511, Oct. 29, 1966. L-12752, Jan. 30, 1965.

EN BANC G.R. No. L-4376 May 22, 1953

ASSOCIATION OF CUSTOMS BROKERS, INC. and G. MANLAPIT, INC., petitioners-appellants, vs. THE MUNICIPALITY BOARD, THE CITY TREASURER, THE CITY ASSESSOR and THE CITY MAYOR, all of the City of Manila, respondents-appellees. Teotimo A. Roja for appellants. City Fiscal Eugenio Angeles and Assistant Fiscal Eulogio S. Serrano for appellees. SYLLABUS 1. TAXATION; TAXES ON MOTOR VEHICLES; NO FEES OTHER THAN PROPERTY TAX AND THOSE PROVIDED IN ACT No. 3992 MAY BE EXACTED ON MOTOR VEHICLES. Under section 70-b of Act No. 3992 as amended, no fees may be exacted or demanded for the operation of any motor vehicle other than those therein provided, the only exception being that which refers to property tax which may be imposed by a municipal corporation. This provision is all-inclusive in the sense that it applies to all motor vehicles. In this sense, this provision should be construed as limiting the broad grant of power conferred upon the City of Manila by its Charter to impose taxes. When Section 18 of said Charter provides that the City of Manila can impose a tax on motor vehicles operating within its limits, it can only refer to property tax, as a different interpretation would make it repugnant to the Motor Vehicle Law. 2. ID.; CONSTITUTIONAL LAW; ORDINANCE No. 3379 OF MANILA, INVALID; PROPERTY TAX, DISTINGUISHED FROM EXCISE TAX OR LICENSE FEE. While Ordinance No. 3379 of the City of Manila refers to property tax and it is fixed ad volorem yet we can not reject the idea that it is merely levied on motor vehicles operating within the said city with the main purpose of raising funds to be expended exclusively for the repair, maintenance and improvement of the streets and bridges in said city. This is precisely what the Motor Vehicle Law (Act No. 3992) intends to prevent, for the reason that, under said Act, municipal corporations already participate in the distribution of the proceeds that are raised for the same purpose of repairing, maintaining and improving bridges and public highways (Motor Vehicle Law, sec. 73). This prohibition is intended to prevent duplication in the imposition of fees for the same purpose. It is for this reason that it is believed that the ordinance in question merely imposes a license fee although under the cloak of an ad valorem tax to circumvent the prohibition adverted to. 3. ID.; ID.; ID.; UNIFORMITY OF TAXATION. The said ordinance infringes also the rule of uniformity of taxation ordained by our Constitution. It exacts the tax upon all motor vehicles operating within the City of Manila. It does not distinguish between a motor vehicle for hire and one which is purely for private use. Neither does it distinguish between a motor vehicle registered in the City of Manila and one registered in another place but occasionally comes to Manila and uses its streets and public highways. There is no pretense that the ordinance equally applies to motor vehicles which come to Manila for a temporary stay or for short errands, and it cannot be denied that they contribute in no small degree to the deterioration of the streets and public highways. As they are benefited by their use they should also be made to share the corresponding burden. This is an inequality which is found in the ordinance in question end which renders it offensive to the Constitution. BAUTISTA ANGELO, J.: This is a petition for declaratory relief to test the validity of Ordinance No. 3379 passed by the Municipal Board of the City of Manila on March 24, 1950. The Association of Customs Brokers, Inc., which is composed of all brokers and public service operators of motor vehicles in the City of Manila, and G. Manlapit, Inc., a member of said association, also a public service operator of the trucks in said City, challenge the validity of said ordinance on the ground that (1) while it levies a so-called property tax it is in reality a license tax which is beyond the power of the Municipal Board of the City of Manila; (2) said ordinance offends against the rule of uniformity of taxation; and (3) it constitutes double taxation. The respondents, represented by the city fiscal, contend on their part that the challenged ordinance imposes a property tax which is within the power of the City of Manila to impose under its Revised Charter [Section 18 (p) of Republic Act No. 409], and that the tax in question does not violate the rule of uniformity of taxation, nor does it constitute double taxation. The issues having been joined, the Court of First Instance of Manila sustained the validity of the ordinance and dismissed the petition. Hence this appeal. The disputed ordinance was passed by the Municipal Board of the City of Manila under the authority conferred by section 18 (p) of Republic Act No. 409. Said section confers upon the municipal board the power "to tax motor and other vehicles operating within the City of Manila the provisions of any existing law to the contrary notwithstanding." It is contended that this power is broad enough to confer upon the City of Manila the power to enact an ordinance imposing the property tax on motor vehicles operating within the city limits.

In the deciding the issue before us it is necessary to bear in mind the pertinent provisions of the Motor Vehicles Law, as amended, (Act No. 3992) which has a bearing on the power of the municipal corporation to impose tax on motor vehicles operating in any highway in the Philippines. The pertinent provisions are contained in section 70 (b) which provide in part: No further fees than those fixed in this Act shall be exacted or demanded by any public highway, bridge or ferry, or for the exercise of the profession of chauffeur, or for the operation of any motor vehicle by the owner thereof: Provided, however, That nothing in this Act shall be construed to exempt any motor vehicle from the payment of any lawful and equitable insular, local or municipal property tax imposed thereupon. . . . Note that under the above section no fees may be exacted or demanded for the operation of any motor vehicle other than those therein provided, the only exception being that which refers to the property tax which may be imposed by a municipal corporation. This provision is all-inclusive in that sense that it applies to all motor vehicles. In this sense, this provision should be construed as limiting the broad grant of power conferred upon the City of Manila by its Charter to impose taxes. When section 18 of said Charter provides that the City of Manila can impose a tax on motor vehicles operating within its limit, it can only refers to property tax as a different interpretation would make it repugnant to the Motor Vehicle Law. Coming now to the ordinance in question, we find that its title refers to it as "An Ordinance Levying a Property Tax on All Motor Vehicles Operating Within the City of Manila", and that in its section 1 it provides that the tax should be 1 per cent ad valorem per annum. It also provides that the proceeds of the tax "shall accrue to the Streets and Bridges Funds of the City and shall be expended exclusively for the repair, maintenance and improvement of its streets and bridges." Considering the wording used in the ordinance in the light in the purpose for which the tax is created, can we consider the tax thus imposed as property tax, as claimed by respondents? While as a rule an ad valorem tax is a property tax, and this rule is supported by some authorities, the rule should not be taken in its absolute sense if the nature and purpose of the tax as gathered from the context show that it is in effect an excise or a license tax. Thus, it has been held that "If a tax is in its nature an excise, it does not become a property tax because it is proportioned in amount to the value of the property used in connection with the occupation, privilege or act which is taxed. Every excise necessarily must finally fall upon and be paid by property and so may be indirectly a tax upon property; but if it is really imposed upon the performance of an act, enjoyment of a privilege, or the engaging in an occupation, it will be considered an excise." (26 R. C. L., 35-36.) It has also been held that The character of the tax as a property tax or a license or occupation tax must be determined by its incidents, and from the natural and legal effect of the language employed in the act or ordinance, and not by the name by which it is described, or by the mode adopted in fixing its amount. If it is clearly a property tax, it will be so regarded, even though nominally and in form it is a license or occupation tax; and, on the other hand, if the tax is levied upon persons on account of their business, it will be construed as a license or occupation tax, even though it is graduated according to the property used in such business, or on the gross receipts of the business. (37 C.J., 172) The ordinance in question falls under the foregoing rules. While it refers to property tax and it is fixed ad valorem yet we cannot reject the idea that it is merely levied on motor vehicles operating within the City of Manila with the main purpose of raising funds to be expended exclusively for the repair, maintenance and improvement of the streets and bridges in said city. This is precisely what the Motor Vehicle Law (Act No. 3992) intends to prevent, for the reason that, under said Act, municipal corporation already participate in the distribution of the proceeds that are raised for the same purpose of repairing, maintaining and improving bridges and public highway (section 73 of the Motor Vehicle Law). This prohibition is intended to prevent duplication in the imposition of fees for the same purpose. It is for this reason that we believe that the ordinance in question merely imposes a license fee although under the cloak of an ad valorem tax to circumvent the prohibition above adverted to. It is also our opinion that the ordinance infringes the rule of the uniformity of taxation ordained by our Constitution. Note that the ordinance exacts the tax upon all motor vehicles operating within the City of Manila. It does not distinguish between a motor vehicle for hire and one which is purely for private use. Neither does it distinguish between a motor vehicle registered in the City of Manila and one registered in another place but occasionally comes to Manila and uses its streets and public highways. The distinction is important if we note that the ordinance intends to burden with the tax only those registered in the City of Manila as may be inferred from the word "operating" used therein. The word "operating" denotes a connotation which is akin to a registration, for under the Motor Vehicle Law no motor vehicle can be operated without previous payment of the registration fees. There is no pretense that the ordinance equally applies to motor vehicles who come to Manila for a temporary stay or for short errands, and it cannot be denied that they contribute in no small degree to the deterioration of the streets and public highway. The fact that they are benefited by their use they should also be made to share the corresponding burden. And yet such is not the case. This is an inequality which we find in the ordinance, and which renders it offensive to the Constitution. Wherefore, reversing the decision appealed from, we hereby declare the ordinance null and void. Paras, C.J., Bengzon and Tuason, JJ., concur. Montemayor, Reyes, Jugo and Labrador, JJ., concur in the result.

Separate Opinions

FERIA, J., concurring: I concur on the ground that it is a license tax.

SECOND DIVISION G.R. No. L-60126 September 25, 1985 CAGAYAN ELECTRIC POWER & LIGHT CO., INC., petitioner, vs. COMMISSIONER OF INTERNAL REVENUE and COURT OF APPEALS, respondents. Quasha, De Guzman Makalintal & Barot for petitioner. AQUINO, J.: This is about the liability of petitioner Cagayan Electric Power & Light Co., Inc. for income tax amounting to P75,149.73 for the more than seven-month period of the year 1969 in addition to franchise tax. The petitioner is the holder of a legislative franchise, Republic Act No. 3247, under which its payment of 3% tax on its gross earnings from the sale of electric current is "in lieu of all taxes and assessments of whatever authority upon privileges, earnings, income, franchise, and poles, wires, transformers, and insulators of the grantee, from which taxes and assessments the grantee is hereby expressly exempted" (Sec. 3). On June 27, 1968, Republic Act No. 5431 amended section 24 of the Tax Code by making liable for income tax all corporate taxpayers not specifically exempt under paragraph (c) (1) of said section and section 27 of the Tax Code notwithstanding the "provisions of existing special or general laws to the contrary". Thus, franchise companies were subjected to income tax in addition to franchise tax. However, in petitioner's case, its franchise was amended by Republic Act No. 6020, effective August 4, 1969, by authorizing the petitioner to furnish electricity to the municipalities of Villanueva and Jasaan, Misamis Oriental in addition to Cagayan de Oro City and the municipalities of Tagoloan and Opol. The amendment reenacted the tax exemption in its original charter or neutralized the modification made by Republic Act No. 5431 more than a year before. By reason of the amendment to section 24 of the Tax Code, the Commissioner of Internal Revenue in a demand letter dated February 15, 1973 required the petitioner to pay deficiency income taxes for 1968-to 1971. The petitioner contested the assessments. The Commissioner cancelled the assessments for 1970 and 1971 but insisted on those for 1968 and 1969. The petitioner filed a petition for review with the Tax Court, which on February 26, 1982 held the petitioner liable only for the income tax for the period from January 1 to August 3, 1969 or before the passage of Republic Act No. 6020 which reiterated its tax exemption. The petitioner appealed to this Court. It contends that the Tax Court erred (1) in not holding that the franchise tax paid by the petitioner is a commutative tax which already includes the income tax; (2) in holding that Republic Act No. 5431 as amended, altered or repealed petitioner's franchise; (3) in holding that petitioner's franchise is a contract which can be impaired by an implied repeal and (4) in not holding that section 24(d) of the Tax Code should be construed strictly against the Government. We hold that Congress could impair petitioner's legislative franchise by making it liable for income tax from which heretofore it was exempted by virtue of the exemption provided for in section 3 of its franchise. The Constitution provides that a franchise is subject to amendment, alteration or repeal by the Congress when the public interest so requires (Sec. 8, Art. XIV, 1935 Constitution; Sec. 5, Art. XIV, 1973 Constitution), Section 1 of petitioner's franchise, Republic Act No. 3247, provides that it is subject to the provisions of the Constitution and to the terms and conditions established in Act No. 3636 whose section 12 provides that the franchise is subject to amendment, alteration or repeal by Congress. Republic Act No. 5431, in amending section 24 of the Tax Code by subjecting to income tax all corporate taxpayers not expressly exempted therein and in section 27 of the Code, had the effect of withdrawing petitioner's exemption from income tax. The Tax Court acted correctly in holding that the exemption was restored by the subsequent enactment on August 4, 1969 of Republic Act No. 6020 which reenacted the said tax exemption. Hence, the petitioner is liable only for the income tax for the period from January 1 to August 3, 1969 when its tax exemption was modified by Republic Act No. 5431. It is relevant to note that franchise companies, like the Philippine Long Distance Telephone Company, have been paying income tax in addition to the franchise tax. However, it cannot be denied that the said 1969 assessment appears to be highly controversial. The Commissioner at the outset was not certain as to petitioner's income tax liability. It had reason not to pay income tax because of the tax exemption in its franchise.

For this reason, it should be liable only for tax proper and should not be held liable for the surcharge and interest. (Advertising Associates, Inc. vs. Commissioner of Internal Revenue and Court of Tax Appeals, G. R. No. 59758, December 26, 1984,133 SCRA 765; Imus Electric Co., Inc. vs. Commissioner of Internal Revenue, 125 Phil. 1024; C.M. Hoskins & Co., Inc. vs. Commissioner of Internal Revenue, L-28383, June 22, 1976, 71 SCRA 511.) WHEREFORE, the judgment of the Tax Court is affirmed with the modification that the petitioner is liable only for the tax proper and that it should not pay the delinquency penalties. No costs. SO ORDERED. Concepcion, Jr., Abad Santos, Escolin, Cuevas and Alampay, JJ., concur.

EN BANC

G.R. No. 115455 August 25, 1994 ARTURO M. TOLENTINO, petitioner, vs. THE SECRETARY OF FINANCE and THE COMMISSIONER OF INTERNAL REVENUE, respondents. G.R. No. 115525 August 25, 1994 JUAN T. DAVID, petitioner, vs. TEOFISTO T. GUINGONA, JR., as Executive Secretary; ROBERTO DE OCAMPO, as Secretary of Finance; LIWAYWAY VINZONS-CHATO, as Commissioner of Internal Revenue; and their AUTHORIZED AGENTS OR REPRESENTATIVES, respondents. G.R. No. 115543 August 25, 1994 RAUL S. ROCO and the INTEGRATED BAR OF THE PHILIPPINES, petitioners, vs. THE SECRETARY OF THE DEPARTMENT OF FINANCE; THE COMMISSIONERS OF THE BUREAU OF INTERNAL REVENUE AND BUREAU OF CUSTOMS, respondents. G.R. No. 115544 August 25, 1994 PHILIPPINE PRESS INSTITUTE, INC.; EGP PUBLISHING CO., INC.; PUBLISHING CORPORATION; PHILIPPINE JOURNALISTS, INC.; JOSE L. PAVIA; and OFELIA L. DIMALANTA, petitioners, vs. HON. LIWAYWAY V. CHATO, in her capacity as Commissioner of Internal Revenue; HON. TEOFISTO T. GUINGONA, JR., in his capacity as Executive Secretary; and HON. ROBERTO B. DE OCAMPO, in his capacity as Secretary of Finance, respondents. G.R. No. 115754 August 25, 1994 CHAMBER OF REAL ESTATE AND BUILDERS ASSOCIATIONS, INC., (CREBA), petitioner, vs. THE COMMISSIONER OF INTERNAL REVENUE, respondent. G.R. No. 115781 August 25, 1994 KILOSBAYAN, INC., JOVITO R. SALONGA, CIRILO A. RIGOS, ERME CAMBA, EMILIO C. CAPULONG, JR., JOSE T. APOLO, EPHRAIM TENDERO, FERNANDO SANTIAGO, JOSE ABCEDE, CHRISTINE TAN, FELIPE L. GOZON, RAFAEL G. FERNANDO, RAOUL V. VICTORINO, JOSE CUNANAN, QUINTIN S. DOROMAL, MOVEMENT OF ATTORNEYS FOR BROTHERHOOD, INTEGRITY AND NATIONALISM, INC. ("MABINI"), FREEDOM FROM DEBT COALITION, INC., PHILIPPINE BIBLE SOCIETY, INC., and WIGBERTO TAADA, petitioners, vs. THE EXECUTIVE SECRETARY, THE SECRETARY OF FINANCE, THE COMMISSIONER OF INTERNAL REVENUE and THE COMMISSIONER OF CUSTOMS, respondents. G.R. No. 115852 August 25, 1994 PHILIPPINE AIRLINES, INC., petitioner, vs. THE SECRETARY OF FINANCE, and COMMISSIONER OF INTERNAL REVENUE, respondents. G.R. No. 115873 August 25, 1994 COOPERATIVE UNION OF THE PHILIPPINES, petitioners, vs. HON. LIWAYWAY V. CHATO, in her capacity as the Commissioner of Internal Revenue, HON. TEOFISTO T. GUINGONA, JR., in his capacity as Executive Secretary, and HON. ROBERTO B. DE OCAMPO, in his capacity as Secretary of Finance, respondents. G.R. No. 115931 August 25, 1994 PHILIPPINE EDUCATIONAL PUBLISHERS ASSOCIATION, INC., and ASSOCIATION OF PHILIPPINE

BOOK-SELLERS, petitioners, vs. HON. ROBERTO B. DE OCAMPO, as the Secretary of Finance; HON. LIWAYWAY V. CHATO, as the Commissioner of Internal Revenue and HON. GUILLERMO PARAYNO, JR., in his capacity as the Commissioner of Customs, respondents. Arturo M. Tolentino for and in his behalf. Donna Celeste D. Feliciano and Juan T. David for petitioners in G.R. No. 115525. Roco, Bunag, Kapunan, Migallos and Jardeleza for petitioner R.S. Roco. Villaranza and Cruz for petitioners in G.R. No. 115544. Carlos A. Raneses and Manuel M. Serrano for petitioner in G.R. No. 115754. Salonga, Hernandez & Allado for Freedon From Debts Coalition, Inc. & Phil. Bible Society. Estelito P. Mendoza for petitioner in G.R. No. 115852. Panganiban, Benitez, Parlade, Africa & Barinaga Law Offices for petitioners in G.R. No. 115873. R.B. Rodriguez & Associates for petitioners in G.R. No. 115931. Reve A.V. Saguisag for MABINI.

MENDOZA, J.: The value-added tax (VAT) is levied on the sale, barter or exchange of goods and properties as well as on the sale or exchange of services. It is equivalent to 10% of the gross selling price or gross value in money of goods or properties sold, bartered or exchanged or of the gross receipts from the sale or exchange of services. Republic Act No. 7716 seeks to widen the tax base of the existing VAT system and enhance its administration by amending the National Internal Revenue Code. These are various suits for certiorari and prohibition, challenging the constitutionality of Republic Act No. 7716 on various grounds summarized in the resolution of July 6, 1994 of this Court, as follows: I. Procedural Issues: A. Does Republic Act No. 7716 violate Art. VI, 24 of the Constitution? B. Does it violate Art. VI, 26(2) of the Constitution? C. What is the extent of the power of the Bicameral Conference Committee? II. Substantive Issues: A. Does the law violate the following provisions in the Bill of Rights (Art. III)? 1. 1 2. 4 3. 5 4. 10 B. Does the law violate the following other provisions of the Constitution? 1. Art. VI, 28(1) 2. Art. VI, 28(3) These questions will be dealt in the order they are stated above. As will presently be explained not all of

these questions are judicially cognizable, because not all provisions of the Constitution are self executing and, therefore, judicially enforceable. The other departments of the government are equally charged with the enforcement of the Constitution, especially the provisions relating to them. I. PROCEDURAL ISSUES The contention of petitioners is that in enacting Republic Act No. 7716, or the Expanded Value-Added Tax Law, Congress violated the Constitution because, although H. No. 11197 had originated in the House of Representatives, it was not passed by the Senate but was simply consolidated with the Senate version (S. No. 1630) in the Conference Committee to produce the bill which the President signed into law. The following provisions of the Constitution are cited in support of the proposition that because Republic Act No. 7716 was passed in this manner, it did not originate in the House of Representatives and it has not thereby become a law: Art. VI, 24: All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments. Id., 26(2): No bill passed by either House shall become a law unless it has passed three readings on separate days, and printed copies thereof in its final form have been distributed to its Members three days before its passage, except when the President certifies to the necessity of its immediate enactment to meet a public calamity or emergency. Upon the last reading of a bill, no amendment thereto shall be allowed, and the vote thereon shall be taken immediately thereafter, and the yeas and nays entered in the Journal. It appears that on various dates between July 22, 1992 and August 31, 1993, several bills 1 were introduced in the House of Representatives seeking to amend certain provisions of the National Internal Revenue Code relative to the value-added tax or VAT. These bills were referred to the House Ways and Means Committee which recommended for approval a substitute measure, H. No. 11197, entitled AN ACT RESTRUCTURING THE VALUE-ADDED TAX (VAT) SYSTEM TO WIDEN ITS TAX BASE AND ENHANCE ITS ADMINISTRATION, AMENDING FOR THESE PURPOSES SECTIONS 99, 100, 102, 103, 104, 105, 106, 107, 108 AND 110 OF TITLE IV, 112, 115 AND 116 OF TITLE V, AND 236, 237 AND 238 OF TITLE IX, AND REPEALING SECTIONS 113 AND 114 OF TITLE V, ALL OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED The bill (H. No. 11197) was considered on second reading starting November 6, 1993 and, on November 17, 1993, it was approved by the House of Representatives after third and final reading. It was sent to the Senate on November 23, 1993 and later referred by that body to its Committee on Ways and Means. On February 7, 1994, the Senate Committee submitted its report recommending approval of S. No. 1630, entitled AN ACT RESTRUCTURING THE VALUE-ADDED TAX (VAT) SYSTEM TO WIDEN ITS TAX BASE AND ENHANCE ITS ADMINISTRATION, AMENDING FOR THESE PURPOSES SECTIONS 99, 100, 102, 103, 104, 105, 107, 108, AND 110 OF TITLE IV, 112 OF TITLE V, AND 236, 237, AND 238 OF TITLE IX, AND REPEALING SECTIONS 113, 114 and 116 OF TITLE V, ALL OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, AND FOR OTHER PURPOSES It was stated that the bill was being submitted "in substitution of Senate Bill No. 1129, taking into consideration P.S. Res. No. 734 and H.B. No. 11197." On February 8, 1994, the Senate began consideration of the bill (S. No. 1630). It finished debates on the bill and approved it on second reading on March 24, 1994. On the same day, it approved the bill on third reading by the affirmative votes of 13 of its members, with one abstention. H. No. 11197 and its Senate version (S. No. 1630) were then referred to a conference committee which, after meeting four times (April 13, 19, 21 and 25, 1994), recommended that "House Bill No. 11197, in consolidation with Senate Bill No. 1630, be approved in accordance with the attached copy of the bill as reconciled and approved by the conferees." The Conference Committee bill, entitled "AN ACT RESTRUCTURING THE VALUE-ADDED TAX (VAT) SYSTEM, WIDENING ITS TAX BASE AND ENHANCING ITS ADMINISTRATION AND FOR THESE PURPOSES AMENDING AND REPEALING THE RELEVANT PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, AND FOR OTHER PURPOSES," was thereafter approved by the House of Representatives on April 27, 1994 and by the Senate on May 2, 1994. The

enrolled bill was then presented to the President of the Philippines who, on May 5, 1994, signed it. It became Republic Act No. 7716. On May 12, 1994, Republic Act No. 7716 was published in two newspapers of general circulation and, on May 28, 1994, it took effect, although its implementation was suspended until June 30, 1994 to allow time for the registration of business entities. It would have been enforced on July 1, 1994 but its enforcement was stopped because the Court, by the vote of 11 to 4 of its members, granted a temporary restraining order on June 30, 1994. First. Petitioners' contention is that Republic Act No. 7716 did not "originate exclusively" in the House of Representatives as required by Art. VI, 24 of the Constitution, because it is in fact the result of the consolidation of two distinct bills, H. No. 11197 and S. No. 1630. In this connection, petitioners point out that although Art. VI, SS 24 was adopted from the American Federal Constitution, 2 it is notable in two respects: the verb "shall originate" is qualified in the Philippine Constitution by the word "exclusively" and the phrase "as on other bills" in the American version is omitted. This means, according to them, that to be considered as having originated in the House, Republic Act No. 7716 must retain the essence of H. No. 11197. This argument will not bear analysis. To begin with, it is not the law but the revenue bill which is required by the Constitution to "originate exclusively" in the House of Representatives. It is important to emphasize this, because a bill originating in the House may undergo such extensive changes in the Senate that the result may be a rewriting of the whole. The possibility of a third version by the conference committee will be discussed later. At this point, what is important to note is that, as a result of the Senate action, a distinct bill may be produced. To insist that a revenue statute and not only the bill which initiated the legislative process culminating in the enactment of the law must substantially be the same as the House bill would be to deny the Senate's power not only to "concur with amendments" but also to "propose amendments." It would be to violate the coequality of legislative power of the two houses of Congress and in fact make the House superior to the Senate. The contention that the constitutional design is to limit the Senate's power in respect of revenue bills in order to compensate for the grant to the Senate of the treaty-ratifying power 3 and thereby equalize its powers and those of the House overlooks the fact that the powers being compared are different. We are dealing here with the legislative power which under the Constitution is vested not in any particular chamber but in the Congress of the Philippines, consisting of "a Senate and a House of Representatives." 4 The exercise of the treaty-ratifying power is not the exercise of legislative power. It is the exercise of a check on the executive power. There is, therefore, no justification for comparing the legislative powers of the House and of the Senate on the basis of the possession of such nonlegislative power by the Senate. The possession of a similar power by the U.S. Senate 5 has never been thought of as giving it more legislative powers than the House of Representatives. In the United States, the validity of a provision ( 37) imposing an ad valorem tax based on the weight of vessels, which the U.S. Senate had inserted in the Tariff Act of 1909, was upheld against the claim that the provision was a revenue bill which originated in the Senate in contravention of Art. I, 7 of the U.S. Constitution. 6 Nor is the power to amend limited to adding a provision or two in a revenue bill emanating from the House. The U.S. Senate has gone so far as changing the whole of bills following the enacting clause and substituting its own versions. In 1883, for example, it struck out everything after the enacting clause of a tariff bill and wrote in its place its own measure, and the House subsequently accepted the amendment. The U.S. Senate likewise added 847 amendments to what later became the Payne-Aldrich Tariff Act of 1909; it dictated the schedules of the Tariff Act of 1921; it rewrote an extensive tax revision bill in the same year and recast most of the tariff bill of 1922. 7 Given, then, the power of the Senate to propose amendments, the Senate can propose its own version even with respect to bills which are required by the Constitution to originate in the House. It is insisted, however, that S. No. 1630 was passed not in substitution of H. No. 11197 but of another Senate bill (S. No. 1129) earlier filed and that what the Senate did was merely to "take [H. No. 11197] into consideration" in enacting S. No. 1630. There is really no difference between the Senate preserving H. No. 11197 up to the enacting clause and then writing its own version following the enacting clause (which, it would seem, petitioners admit is an amendment by substitution), and, on the other hand, separately presenting a bill of its own on the same subject matter. In either case the result are two bills on the same subject. Indeed, what the Constitution simply means is that the initiative for filing revenue, tariff, or tax bills, bills authorizing an increase of the public debt, private bills and bills of local application must come from the House of Representatives on the theory that, elected as they are from the districts, the members of the House can be expected to be more sensitive to the local needs and problems. On the other hand, the senators, who are elected at large, are expected to approach the same problems from the national perspective. Both views are thereby made to bear on the enactment of such laws. Nor does the Constitution prohibit the filing in the Senate of a substitute bill in anticipation of its receipt of the bill from the House, so long as action by the Senate as a body is withheld pending receipt of the House bill. The Court cannot, therefore, understand the alarm expressed over the fact that on March 1, 1993, eight months before the House passed H. No. 11197, S. No. 1129 had been filed in the Senate. After all it does not appear that the Senate ever considered it. It was only after the Senate had received H. No. 11197 on November 23, 1993 that the process of legislation in respect of it began with the referral to the Senate Committee on Ways and Means of H. No. 11197 and the submission by the Committee on

February 7, 1994 of S. No. 1630. For that matter, if the question were simply the priority in the time of filing of bills, the fact is that it was in the House that a bill (H. No. 253) to amend the VAT law was first filed on July 22, 1992. Several other bills had been filed in the House before S. No. 1129 was filed in the Senate, and H. No. 11197 was only a substitute of those earlier bills. Second. Enough has been said to show that it was within the power of the Senate to propose S. No. 1630. We now pass to the next argument of petitioners that S. No. 1630 did not pass three readings on separate days as required by the Constitution 8 because the second and third readings were done on the same day, March 24, 1994. But this was because on February 24, 1994 9 and again on March 22, 1994, 10 the President had certified S. No. 1630 as urgent. The presidential certification dispensed with the requirement not only of printing but also that of reading the bill on separate days. The phrase "except when the President certifies to the necessity of its immediate enactment, etc." in Art. VI, 26(2) qualifies the two stated conditions before a bill can become a law: (i) the bill has passed three readings on separate days and (ii) it has been printed in its final form and distributed three days before it is finally approved. In other words, the "unless" clause must be read in relation to the "except" clause, because the two are really coordinate clauses of the same sentence. To construe the "except" clause as simply dispensing with the second requirement in the "unless" clause (i.e., printing and distribution three days before final approval) would not only violate the rules of grammar. It would also negate the very premise of the "except" clause: the necessity of securing the immediate enactment of a bill which is certified in order to meet a public calamity or emergency. For if it is only the printing that is dispensed with by presidential certification, the time saved would be so negligible as to be of any use in insuring immediate enactment. It may well be doubted whether doing away with the necessity of printing and distributing copies of the bill three days before the third reading would insure speedy enactment of a law in the face of an emergency requiring the calling of a special election for President and Vice-President. Under the Constitution such a law is required to be made within seven days of the convening of Congress in emergency session. 11 That upon the certification of a bill by the President the requirement of three readings on separate days and of printing and distribution can be dispensed with is supported by the weight of legislative practice. For example, the bill defining the certiorari jurisdiction of this Court which, in consolidation with the Senate version, became Republic Act No. 5440, was passed on second and third readings in the House of Representatives on the same day (May 14, 1968) after the bill had been certified by the President as urgent. 12 There is, therefore, no merit in the contention that presidential certification dispenses only with the requirement for the printing of the bill and its distribution three days before its passage but not with the requirement of three readings on separate days, also. It is nonetheless urged that the certification of the bill in this case was invalid because there was no emergency, the condition stated in the certification of a "growing budget deficit" not being an unusual condition in this country. It is noteworthy that no member of the Senate saw fit to controvert the reality of the factual basis of the certification. To the contrary, by passing S. No. 1630 on second and third readings on March 24, 1994, the Senate accepted the President's certification. Should such certification be now reviewed by this Court, especially when no evidence has been shown that, because S. No. 1630 was taken up on second and third readings on the same day, the members of the Senate were deprived of the time needed for the study of a vital piece of legislation? The sufficiency of the factual basis of the suspension of the writ of habeas corpus or declaration of martial law under Art. VII, 18, or the existence of a national emergency justifying the delegation of extraordinary powers to the President under Art. VI, 23(2), is subject to judicial review because basic rights of individuals may be at hazard. But the factual basis of presidential certification of bills, which involves doing away with procedural requirements designed to insure that bills are duly considered by members of Congress, certainly should elicit a different standard of review. Petitioners also invite attention to the fact that the President certified S. No. 1630 and not H. No. 11197. That is because S. No. 1630 was what the Senate was considering. When the matter was before the House, the President likewise certified H. No. 9210 the pending in the House. Third. Finally it is contended that the bill which became Republic Act No. 7716 is the bill which the Conference Committee prepared by consolidating H. No. 11197 and S. No. 1630. It is claimed that the Conference Committee report included provisions not found in either the House bill or the Senate bill and that these provisions were "surreptitiously" inserted by the Conference Committee. Much is made of the fact that in the last two days of its session on April 21 and 25, 1994 the Committee met behind closed doors. We are not told, however, whether the provisions were not the result of the give and take that often mark the proceedings of conference committees. Nor is there anything unusual or extraordinary about the fact that the Conference Committee met in executive sessions. Often the only way to reach agreement on conflicting provisions is to meet behind closed doors, with only the conferees present. Otherwise, no compromise is likely to be made. The Court

is not about to take the suggestion of a cabal or sinister motive attributed to the conferees on the basis solely of their "secret meetings" on April 21 and 25, 1994, nor read anything into the incomplete remarks of the members, marked in the transcript of stenographic notes by ellipses. The incomplete sentences are probably due to the stenographer's own limitations or to the incoherence that sometimes characterize conversations. William Safire noted some such lapses in recorded talks even by recent past Presidents of the United States. In any event, in the United States conference committees had been customarily held in executive sessions with only the conferees and their staffs in attendance. 13 Only in November 1975 was a new rule adopted requiring open sessions. Even then a majority of either chamber's conferees may vote in public to close the meetings. 14 As to the possibility of an entirely new bill emerging out of a Conference Committee, it has been explained: Under congressional rules of procedure, conference committees are not expected to make any material change in the measure at issue, either by deleting provisions to which both houses have already agreed or by inserting new provisions. But this is a difficult provision to enforce. Note the problem when one house amends a proposal originating in either house by striking out everything following the enacting clause and substituting provisions which make it an entirely new bill. The versions are now altogether different, permitting a conference committee to draft essentially a new bill. . . . 15 The result is a third version, which is considered an "amendment in the nature of a substitute," the only requirement for which being that the third version be germane to the subject of the House and Senate bills. 16 Indeed, this Court recently held that it is within the power of a conference committee to include in its report an entirely new provision that is not found either in the House bill or in the Senate bill. 17 If the committee can propose an amendment consisting of one or two provisions, there is no reason why it cannot propose several provisions, collectively considered as an "amendment in the nature of a substitute," so long as such amendment is germane to the subject of the bills before the committee. After all, its report was not final but needed the approval of both houses of Congress to become valid as an act of the legislative department. The charge that in this case the Conference Committee acted as a third legislative chamber is thus without any basis. 18 Nonetheless, it is argued that under the respective Rules of the Senate and the House of Representatives a conference committee can only act on the differing provisions of a Senate bill and a House bill, and that contrary to these Rules the Conference Committee inserted provisions not found in the bills submitted to it. The following provisions are cited in support of this contention: Rules of the Senate Rule XII: 26. In the event that the Senate does not agree with the House of Representatives on the provision of any bill or joint resolution, the differences shall be settled by a conference committee of both Houses which shall meet within ten days after their composition. The President shall designate the members of the conference committee in accordance with subparagraph (c), Section 3 of Rule III. Each Conference Committee Report shall contain a detailed and sufficiently explicit statement of the changes in or amendments to the subject measure, and shall be signed by the conferees. The consideration of such report shall not be in order unless the report has been filed with the Secretary of the Senate and copies thereof have been distributed to the Members. (Emphasis added) Rules of the House of Representatives Rule XIV: 85. Conference Committee Reports. In the event that the House does not agree with the Senate on the amendments to any bill or joint resolution, the differences may

be settled by conference committees of both Chambers. The consideration of conference committee reports shall always be in order, except when the journal is being read, while the roll is being called or the House is dividing on any question. Each of the pages of such reports shall be signed by the conferees. Each report shall contain a detailed, sufficiently explicit statement of the changes in or amendments to the subject measure. The consideration of such report shall not be in order unless copies thereof are distributed to the Members: Provided, That in the last fifteen days of each session period it shall be deemed sufficient that three copies of the report, signed as above provided, are deposited in the office of the Secretary General. (Emphasis added) To be sure, nothing in the Rules limits a conference committee to a consideration of conflicting provisions. But Rule XLIV, 112 of the Rules of the Senate is cited to the effect that "If there is no Rule applicable to a specific case the precedents of the Legislative Department of the Philippines shall be resorted to, and as a supplement of these, the Rules contained in Jefferson's Manual." The following is then quoted from the Jefferson's Manual: The managers of a conference must confine themselves to the differences committed to them. . . and may not include subjects not within disagreements, even though germane to a question in issue. Note that, according to Rule XLIX, 112, in case there is no specific rule applicable, resort must be to the legislative practice. The Jefferson's Manual is resorted to only as supplement. It is common place in Congress that conference committee reports include new matters which, though germane, have not been committed to the committee. This practice was admitted by Senator Raul S. Roco, petitioner in G.R. No. 115543, during the oral argument in these cases. Whatever, then, may be provided in the Jefferson's Manual must be considered to have been modified by the legislative practice. If a change is desired in the practice it must be sought in Congress since this question is not covered by any constitutional provision but is only an internal rule of each house. Thus, Art. VI, 16(3) of the Constitution provides that "Each House may determine the rules of its proceedings. . . ." This observation applies to the other contention that the Rules of the two chambers were likewise disregarded in the preparation of the Conference Committee Report because the Report did not contain a "detailed and sufficiently explicit statement of changes in, or amendments to, the subject measure." The Report used brackets and capital letters to indicate the changes. This is a standard practice in billdrafting. We cannot say that in using these marks and symbols the Committee violated the Rules of the Senate and the House. Moreover, this Court is not the proper forum for the enforcement of these internal Rules. To the contrary, as we have already ruled, "parliamentary rules are merely procedural and with their observance the courts have no concern." 19 Our concern is with the procedural requirements of the Constitution for the enactment of laws. As far as these requirements are concerned, we are satisfied that they have been faithfully observed in these cases. Nor is there any reason for requiring that the Committee's Report in these cases must have undergone three readings in each of the two houses. If that be the case, there would be no end to negotiation since each house may seek modifications of the compromise bill. The nature of the bill, therefore, requires that it be acted upon by each house on a "take it or leave it" basis, with the only alternative that if it is not approved by both houses, another conference committee must be appointed. But then again the result would still be a compromise measure that may not be wholly satisfying to both houses. Art. VI, 26(2) must, therefore, be construed as referring only to bills introduced for the first time in either house of Congress, not to the conference committee report. For if the purpose of requiring three readings is to give members of Congress time to study bills, it cannot be gainsaid that H. No. 11197 was passed in the House after three readings; that in the Senate it was considered on first reading and then referred to a committee of that body; that although the Senate committee did not report out the House bill, it submitted a version (S. No. 1630) which it had prepared by "taking into consideration" the House bill; that for its part the Conference Committee consolidated the two bills and prepared a compromise version; that the Conference Committee Report was thereafter approved by the House and the Senate, presumably after appropriate study by their members. We cannot say that, as a matter of fact, the members of Congress were not fully informed of the provisions of the bill. The allegation that the Conference Committee usurped the legislative power of Congress is, in our view, without warrant in fact and in law. Fourth. Whatever doubts there may be as to the formal validity of Republic Act No. 7716 must be resolved in its favor. Our cases 20 manifest firm adherence to the rule that an enrolled copy of a bill is conclusive not only of its provisions but also of its due enactment. Not even claims that a proposed constitutional amendment was invalid because the requisite votes for its approval had not been obtained 21 or that certain provisions of a statute had been "smuggled" in the printing of the bill 22 have moved or persuaded us to look behind the proceedings of a coequal branch of the government. There is no reason

now to depart from this rule. No claim is here made that the "enrolled bill" rule is absolute. In fact in one case 23 we "went behind" an enrolled bill and consulted the Journal to determine whether certain provisions of a statute had been approved by the Senate in view of the fact that the President of the Senate himself, who had signed the enrolled bill, admitted a mistake and withdrew his signature, so that in effect there was no longer an enrolled bill to consider. But where allegations that the constitutional procedures for the passage of bills have not been observed have no more basis than another allegation that the Conference Committee "surreptitiously" inserted provisions into a bill which it had prepared, we should decline the invitation to go behind the enrolled copy of the bill. To disregard the "enrolled bill" rule in such cases would be to disregard the respect due the other two departments of our government. Fifth. An additional attack on the formal validity of Republic Act No. 7716 is made by the Philippine Airlines, Inc., petitioner in G.R. No. 11582, namely, that it violates Art. VI, 26(1) which provides that "Every bill passed by Congress shall embrace only one subject which shall be expressed in the title thereof." It is contended that neither H. No. 11197 nor S. No. 1630 provided for removal of exemption of PAL transactions from the payment of the VAT and that this was made only in the Conference Committee bill which became Republic Act No. 7716 without reflecting this fact in its title. The title of Republic Act No. 7716 is: AN ACT RESTRUCTURING THE VALUE- ADDED TAX (VAT) SYSTEM, WIDENING ITS TAX BASE AND ENHANCING ITS ADMINISTRATION, AND FOR THESE PURPOSES AMENDING AND REPEALING THE RELEVANT PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, AND FOR OTHER PURPOSES. Among the provisions of the NIRC amended is 103, which originally read: 103. Exempt transactions. The following shall be exempt from the value-added tax: .... (q) Transactions which are exempt under special laws or international agreements to which the Philippines is a signatory. Among the transactions exempted from the VAT were those of PAL because it was exempted under its franchise (P.D. No. 1590) from the payment of all "other taxes . . . now or in the near future," in consideration of the payment by it either of the corporate income tax or a franchise tax of 2%. As a result of its amendment by Republic Act No. 7716, 103 of the NIRC now provides: 103. Exempt transactions. The following shall be exempt from the value-added tax: .... (q) Transactions which are exempt under special laws, except those granted under Presidential Decree Nos. 66, 529, 972, 1491, 1590. . . . The effect of the amendment is to remove the exemption granted to PAL, as far as the VAT is concerned. The question is whether this amendment of 103 of the NIRC is fairly embraced in the title of Republic Act No. 7716, although no mention is made therein of P.D. No. 1590 as among those which the statute amends. We think it is, since the title states that the purpose of the statute is to expand the VAT system, and one way of doing this is to widen its base by withdrawing some of the exemptions granted before. To insist that P.D. No. 1590 be mentioned in the title of the law, in addition to 103 of the NIRC, in which it is specifically referred to, would be to insist that the title of a bill should be a complete index of its content. The constitutional requirement that every bill passed by Congress shall embrace only one subject which shall be expressed in its title is intended to prevent surprise upon the members of Congress and to inform the people of pending legislation so that, if they wish to, they can be heard regarding it. If, in the case at bar, petitioner did not know before that its exemption had been withdrawn, it is not because of any defect in the title but perhaps for the same reason other statutes, although published, pass unnoticed until some event somehow calls attention to their existence. Indeed, the title of Republic Act No. 7716 is not any more general than the title of PAL's own franchise under P.D. No. 1590, and yet no mention is made of its tax exemption. The title of P.D. No. 1590 is: AN ACT GRANTING A NEW FRANCHISE TO PHILIPPINE AIRLINES, INC. TO ESTABLISH, OPERATE, AND MAINTAIN AIR-TRANSPORT SERVICES IN THE

PHILIPPINES AND BETWEEN THE PHILIPPINES AND OTHER COUNTRIES. The trend in our cases is to construe the constitutional requirement in such a manner that courts do not unduly interfere with the enactment of necessary legislation and to consider it sufficient if the title expresses the general subject of the statute and all its provisions are germane to the general subject thus expressed. 24 It is further contended that amendment of petitioner's franchise may only be made by special law, in view of 24 of P.D. No. 1590 which provides: This franchise, as amended, or any section or provision hereof may only be modified, amended, or repealed expressly by a special law or decree that shall specifically modify, amend, or repeal this franchise or any section or provision thereof. This provision is evidently intended to prevent the amendment of the franchise by mere implication resulting from the enactment of a later inconsistent statute, in consideration of the fact that a franchise is a contract which can be altered only by consent of the parties. Thus in Manila Railroad Co. v. Rafferty, 25 it was held that an Act of the U.S. Congress, which provided for the payment of tax on certain goods and articles imported into the Philippines, did not amend the franchise of plaintiff, which exempted it from all taxes except those mentioned in its franchise. It was held that a special law cannot be amended by a general law. In contrast, in the case at bar, Republic Act No. 7716 expressly amends PAL's franchise (P.D. No. 1590) by specifically excepting from the grant of exemptions from the VAT PAL's exemption under P.D. No. 1590. This is within the power of Congress to do under Art. XII, 11 of the Constitution, which provides that the grant of a franchise for the operation of a public utility is subject to amendment, alteration or repeal by Congress when the common good so requires. II. SUBSTANTIVE ISSUES A. Claims of Press Freedom, Freedom of Thought and Religious Freedom The Philippine Press Institute (PPI), petitioner in G.R. No. 115544, is a nonprofit organization of newspaper publishers established for the improvement of journalism in the Philippines. On the other hand, petitioner in G.R. No. 115781, the Philippine Bible Society (PBS), is a nonprofit organization engaged in the printing and distribution of bibles and other religious articles. Both petitioners claim violations of their rights under 4 and 5 of the Bill of Rights as a result of the enactment of the VAT Law. The PPI questions the law insofar as it has withdrawn the exemption previously granted to the press under 103 (f) of the NIRC. Although the exemption was subsequently restored by administrative regulation with respect to the circulation income of newspapers, the PPI presses its claim because of the possibility that the exemption may still be removed by mere revocation of the regulation of the Secretary of Finance. On the other hand, the PBS goes so far as to question the Secretary's power to grant exemption for two reasons: (1) The Secretary of Finance has no power to grant tax exemption because this is vested in Congress and requires for its exercise the vote of a majority of all its members 26 and (2) the Secretary's duty is to execute the law. 103 of the NIRC contains a list of transactions exempted from VAT. Among the transactions previously granted exemption were: (f) Printing, publication, importation or sale of books and any newspaper, magazine, review, or bulletin which appears at regular intervals with fixed prices for subscription and sale and which is devoted principally to the publication of advertisements. Republic Act No. 7716 amended 103 by deleting (f) with the result that print media became subject to the VAT with respect to all aspects of their operations. Later, however, based on a memorandum of the Secretary of Justice, respondent Secretary of Finance issued Revenue Regulations No. 11-94, dated June 27, 1994, exempting the "circulation income of print media pursuant to 4 Article III of the 1987 Philippine Constitution guaranteeing against abridgment of freedom of the press, among others." The exemption of "circulation income" has left income from advertisements still subject to the VAT. It is unnecessary to pass upon the contention that the exemption granted is beyond the authority of the Secretary of Finance to give, in view of PPI's contention that even with the exemption of the circulation revenue of print media there is still an unconstitutional abridgment of press freedom because of the imposition of the VAT on the gross receipts of newspapers from advertisements and on their acquisition of paper, ink and services for publication. Even on the assumption that no exemption has effectively been granted to print media transactions, we find no violation of press freedom in these cases. To be sure, we are not dealing here with a statute that on its face operates in the area of press freedom.

The PPI's claim is simply that, as applied to newspapers, the law abridges press freedom. Even with due recognition of its high estate and its importance in a democratic society, however, the press is not immune from general regulation by the State. It has been held: The publisher of a newspaper has no immunity from the application of general laws. He has no special privilege to invade the rights and liberties of others. He must answer for libel. He may be punished for contempt of court. . . . Like others, he must pay equitable and nondiscriminatory taxes on his business. . . . 27 The PPI does not dispute this point, either. What it contends is that by withdrawing the exemption previously granted to print media transactions involving printing, publication, importation or sale of newspapers, Republic Act No. 7716 has singled out the press for discriminatory treatment and that within the class of mass media the law discriminates against print media by giving broadcast media favored treatment. We have carefully examined this argument, but we are unable to find a differential treatment of the press by the law, much less any censorial motivation for its enactment. If the press is now required to pay a value-added tax on its transactions, it is not because it is being singled out, much less targeted, for special treatment but only because of the removal of the exemption previously granted to it by law. The withdrawal of exemption is all that is involved in these cases. Other transactions, likewise previously granted exemption, have been delisted as part of the scheme to expand the base and the scope of the VAT system. The law would perhaps be open to the charge of discriminatory treatment if the only privilege withdrawn had been that granted to the press. But that is not the case. The situation in the case at bar is indeed a far cry from those cited by the PPI in support of its claim that Republic Act No. 7716 subjects the press to discriminatory taxation. In the cases cited, the discriminatory purpose was clear either from the background of the law or from its operation. For example, in Grosjean v. American Press Co., 28 the law imposed a license tax equivalent to 2% of the gross receipts derived from advertisements only on newspapers which had a circulation of more than 20,000 copies per week. Because the tax was not based on the volume of advertisement alone but was measured by the extent of its circulation as well, the law applied only to the thirteen large newspapers in Louisiana, leaving untaxed four papers with circulation of only slightly less than 20,000 copies a week and 120 weekly newspapers which were in serious competition with the thirteen newspapers in question. It was well known that the thirteen newspapers had been critical of Senator Huey Long, and the Long-dominated legislature of Louisiana respondent by taxing what Long described as the "lying newspapers" by imposing on them "a tax on lying." The effect of the tax was to curtail both their revenue and their circulation. As the U.S. Supreme Court noted, the tax was "a deliberate and calculated device in the guise of a tax to limit the circulation of information to which the public is entitled in virtue of the constitutional guaranties." 29 The case is a classic illustration of the warning that the power to tax is the power to destroy. In the other case 30 invoked by the PPI, the press was also found to have been singled out because everything was exempt from the "use tax" on ink and paper, except the press. Minnesota imposed a tax on the sales of goods in that state. To protect the sales tax, it enacted a complementary tax on the privilege of "using, storing or consuming in that state tangible personal property" by eliminating the residents' incentive to get goods from outside states where the sales tax might be lower. The Minnesota Star Tribune was exempted from both taxes from 1967 to 1971. In 1971, however, the state legislature amended the tax scheme by imposing the "use tax" on the cost of paper and ink used for publication. The law was held to have singled out the press because (1) there was no reason for imposing the "use tax" since the press was exempt from the sales tax and (2) the "use tax" was laid on an "intermediate transaction rather than the ultimate retail sale." Minnesota had a heavy burden of justifying the differential treatment and it failed to do so. In addition, the U.S. Supreme Court found the law to be discriminatory because the legislature, by again amending the law so as to exempt the first $100,000 of paper and ink used, further narrowed the coverage of the tax so that "only a handful of publishers pay any tax at all and even fewer pay any significant amount of tax." 31 The discriminatory purpose was thus very clear. More recently, in Arkansas Writers' Project, Inc. v. Ragland, 32 it was held that a law which taxed general interest magazines but not newspapers and religious, professional, trade and sports journals was discriminatory because while the tax did not single out the press as a whole, it targeted a small group within the press. What is more, by differentiating on the basis of contents (i.e., between general interest and special interests such as religion or sports) the law became "entirely incompatible with the First Amendment's guarantee of freedom of the press." These cases come down to this: that unless justified, the differential treatment of the press creates risks of suppression of expression. In contrast, in the cases at bar, the statute applies to a wide range of goods and services. The argument that, by imposing the VAT only on print media whose gross sales exceeds P480,000 but not more than P750,000, the law discriminates 33 is without merit since it has not been shown that as a result the class subject to tax has been unreasonably narrowed. The fact is that this limitation does not apply to the press along but to all sales. Nor is impermissible motive shown by the fact that print media and broadcast media are treated differently. The press is taxed on its transactions involving printing and publication, which are different from the transactions of broadcast media. There is thus a reasonable basis for the classification. The cases canvassed, it must be stressed, eschew any suggestion that "owners of newspapers are

immune from any forms of ordinary taxation." The license tax in the Grosjean case was declared invalid because it was "one single in kind, with a long history of hostile misuse against the freedom of the press." 34 On the other hand, Minneapolis Star acknowledged that "The First Amendment does not prohibit all regulation of the press [and that] the States and the Federal Government can subject newspapers to generally applicable economic regulations without creating constitutional problems." 35 What has been said above also disposes of the allegations of the PBS that the removal of the exemption of printing, publication or importation of books and religious articles, as well as their printing and publication, likewise violates freedom of thought and of conscience. For as the U.S. Supreme Court unanimously held in Jimmy Swaggart Ministries v. Board of Equalization, 36 the Free Exercise of Religion Clause does not prohibit imposing a generally applicable sales and use tax on the sale of religious materials by a religious organization. This brings us to the question whether the registration provision of the law, 37 although of general applicability, nonetheless is invalid when applied to the press because it lays a prior restraint on its essential freedom. The case of American Bible Society v. City of Manila 38 is cited by both the PBS and the PPI in support of their contention that the law imposes censorship. There, this Court held that an ordinance of the City of Manila, which imposed a license fee on those engaged in the business of general merchandise, could not be applied to the appellant's sale of bibles and other religious literature. This Court relied on Murdock v. Pennsylvania, 39 in which it was held that, as a license fee is fixed in amount and unrelated to the receipts of the taxpayer, the license fee, when applied to a religious sect, was actually being imposed as a condition for the exercise of the sect's right under the Constitution. For that reason, it was held, the license fee "restrains in advance those constitutional liberties of press and religion and inevitably tends to suppress their exercise." 40 But, in this case, the fee in 107, although a fixed amount (P1,000), is not imposed for the exercise of a privilege but only for the purpose of defraying part of the cost of registration. The registration requirement is a central feature of the VAT system. It is designed to provide a record of tax credits because any person who is subject to the payment of the VAT pays an input tax, even as he collects an output tax on sales made or services rendered. The registration fee is thus a mere administrative fee, one not imposed on the exercise of a privilege, much less a constitutional right. For the foregoing reasons, we find the attack on Republic Act No. 7716 on the ground that it offends the free speech, press and freedom of religion guarantees of the Constitution to be without merit. For the same reasons, we find the claim of the Philippine Educational Publishers Association (PEPA) in G.R. No. 115931 that the increase in the price of books and other educational materials as a result of the VAT would violate the constitutional mandate to the government to give priority to education, science and technology (Art. II, 17) to be untenable.

B. Claims of Regressivity, Denial of Due Process, Equal Protection, and Impairment of Contracts There is basis for passing upon claims that on its face the statute violates the guarantees of freedom of speech, press and religion. The possible "chilling effect" which it may have on the essential freedom of the mind and conscience and the need to assure that the channels of communication are open and operating importunately demand the exercise of this Court's power of review. There is, however, no justification for passing upon the claims that the law also violates the rule that taxation must be progressive and that it denies petitioners' right to due process and that equal protection of the laws. The reason for this different treatment has been cogently stated by an eminent authority on constitutional law thus: "[W]hen freedom of the mind is imperiled by law, it is freedom that commands a momentum of respect; when property is imperiled it is the lawmakers' judgment that commands respect. This dual standard may not precisely reverse the presumption of constitutionality in civil liberties cases, but obviously it does set up a hierarchy of values within the due process clause." 41 Indeed, the absence of threat of immediate harm makes the need for judicial intervention less evident and underscores the essential nature of petitioners' attack on the law on the grounds of regressivity, denial of due process and equal protection and impairment of contracts as a mere academic discussion of the merits of the law. For the fact is that there have even been no notices of assessments issued to petitioners and no determinations at the administrative levels of their claims so as to illuminate the actual operation of the law and enable us to reach sound judgment regarding so fundamental questions as those raised in these suits. Thus, the broad argument against the VAT is that it is regressive and that it violates the requirement that "The rule of taxation shall be uniform and equitable [and] Congress shall evolve a progressive system of taxation." 42 Petitioners in G.R. No. 115781 quote from a paper, entitled "VAT Policy Issues: Structure, Regressivity, Inflation and Exports" by Alan A. Tait of the International Monetary Fund, that "VAT payment by low-income households will be a higher proportion of their incomes (and expenditures) than payments by higher-income households. That is, the VAT will be regressive." Petitioners contend that as a result of

the uniform 10% VAT, the tax on consumption goods of those who are in the higher-income bracket, which before were taxed at a rate higher than 10%, has been reduced, while basic commodities, which before were taxed at rates ranging from 3% to 5%, are now taxed at a higher rate. Just as vigorously as it is asserted that the law is regressive, the opposite claim is pressed by respondents that in fact it distributes the tax burden to as many goods and services as possible particularly to those which are within the reach of higher-income groups, even as the law exempts basic goods and services. It is thus equitable. The goods and properties subject to the VAT are those used or consumed by higher-income groups. These include real properties held primarily for sale to customers or held for lease in the ordinary course of business, the right or privilege to use industrial, commercial or scientific equipment, hotels, restaurants and similar places, tourist buses, and the like. On the other hand, small business establishments, with annual gross sales of less than P500,000, are exempted. This, according to respondents, removes from the coverage of the law some 30,000 business establishments. On the other hand, an occasional paper 43 of the Center for Research and Communication cities a NEDA study that the VAT has minimal impact on inflation and income distribution and that while additional expenditure for the lowest income class is only P301 or 1.49% a year, that for a family earning P500,000 a year or more is P8,340 or 2.2%. Lacking empirical data on which to base any conclusion regarding these arguments, any discussion whether the VAT is regressive in the sense that it will hit the "poor" and middle-income group in society harder than it will the "rich," as the Cooperative Union of the Philippines (CUP) claims in G.R. No. 115873, is largely an academic exercise. On the other hand, the CUP's contention that Congress' withdrawal of exemption of producers cooperatives, marketing cooperatives, and service cooperatives, while maintaining that granted to electric cooperatives, not only goes against the constitutional policy to promote cooperatives as instruments of social justice (Art. XII, 15) but also denies such cooperatives the equal protection of the law is actually a policy argument. The legislature is not required to adhere to a policy of "all or none" in choosing the subject of taxation. 44 Nor is the contention of the Chamber of Real Estate and Builders Association (CREBA), petitioner in G.R. 115754, that the VAT will reduce the mark up of its members by as much as 85% to 90% any more concrete. It is a mere allegation. On the other hand, the claim of the Philippine Press Institute, petitioner in G.R. No. 115544, that the VAT will drive some of its members out of circulation because their profits from advertisements will not be enough to pay for their tax liability, while purporting to be based on the financial statements of the newspapers in question, still falls short of the establishment of facts by evidence so necessary for adjudicating the question whether the tax is oppressive and confiscatory. Indeed, regressivity is not a negative standard for courts to enforce. What Congress is required by the Constitution to do is to "evolve a progressive system of taxation." This is a directive to Congress, just like the directive to it to give priority to the enactment of laws for the enhancement of human dignity and the reduction of social, economic and political inequalities (Art. XIII, 1), or for the promotion of the right to "quality education" (Art. XIV, 1). These provisions are put in the Constitution as moral incentives to legislation, not as judicially enforceable rights. At all events, our 1988 decision in Kapatiran 45 should have laid to rest the questions now raised against the VAT. There similar arguments made against the original VAT Law (Executive Order No. 273) were held to be hypothetical, with no more basis than newspaper articles which this Court found to be "hearsay and [without] evidentiary value." As Republic Act No. 7716 merely expands the base of the VAT system and its coverage as provided in the original VAT Law, further debate on the desirability and wisdom of the law should have shifted to Congress. Only slightly less abstract but nonetheless hypothetical is the contention of CREBA that the imposition of the VAT on the sales and leases of real estate by virtue of contracts entered into prior to the effectivity of the law would violate the constitutional provision that "No law impairing the obligation of contracts shall be passed." It is enough to say that the parties to a contract cannot, through the exercise of prophetic discernment, fetter the exercise of the taxing power of the State. For not only are existing laws read into contracts in order to fix obligations as between parties, but the reservation of essential attributes of sovereign power is also read into contracts as a basic postulate of the legal order. The policy of protecting contracts against impairment presupposes the maintenance of a government which retains adequate authority to secure the peace and good order of society. 46 In truth, the Contract Clause has never been thought as a limitation on the exercise of the State's power of taxation save only where a tax exemption has been granted for a valid consideration. 47 Such is not the case of PAL in G.R. No. 115852, and we do not understand it to make this claim. Rather, its position, as discussed above, is that the removal of its tax exemption cannot be made by a general, but only by a specific, law. The substantive issues raised in some of the cases are presented in abstract, hypothetical form because of the lack of a concrete record. We accept that this Court does not only adjudicate private cases; that public actions by "non-Hohfeldian" 48 or ideological plaintiffs are now cognizable provided they meet the standing requirement of the Constitution; that under Art. VIII, 1, 2 the Court has a "special function" of vindicating constitutional rights. Nonetheless the feeling cannot be escaped that we do not have before us in these cases a fully developed factual record that alone can impart to our adjudication the impact of actuality 49 to insure that decision-making is informed and well grounded. Needless to say, we do not

have power to render advisory opinions or even jurisdiction over petitions for declaratory judgment. In effect we are being asked to do what the Conference Committee is precisely accused of having done in these cases to sit as a third legislative chamber to review legislation. We are told, however, that the power of judicial review is not so much power as it is duty imposed on this Court by the Constitution and that we would be remiss in the performance of that duty if we decline to look behind the barriers set by the principle of separation of powers. Art. VIII, 1, 2 is cited in support of this view: Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government. To view the judicial power of review as a duty is nothing new. Chief Justice Marshall said so in 1803, to justify the assertion of this power in Marbury v. Madison: It is emphatically the province and duty of the judicial department to say what the law is. Those who apply the rule to particular cases must of necessity expound and interpret that rule. If two laws conflict with each other, the courts must decide on the operation of each. 50 Justice Laurel echoed this justification in 1936 in Angara v. Electoral Commission: And when the judiciary mediates to allocate constitutional boundaries, it does not assert any superiority over the other departments; it does not in reality nullify or invalidate an act of the legislature, but only asserts the solemn and sacred obligation assigned to it by the Constitution to determine conflicting claims of authority under the Constitution and to establish for the parties in an actual controversy the rights which that instrument secures and guarantees to them. 51 This conception of the judicial power has been affirmed in several cases 52 of this Court following Angara. It does not add anything, therefore, to invoke this "duty" to justify this Court's intervention in what is essentially a case that at best is not ripe for adjudication. That duty must still be performed in the context of a concrete case or controversy, as Art. VIII, 5(2) clearly defines our jurisdiction in terms of "cases," and nothing but "cases." That the other departments of the government may have committed a grave abuse of discretion is not an independent ground for exercising our power. Disregard of the essential limits imposed by the case and controversy requirement can in the long run only result in undermining our authority as a court of law. For, as judges, what we are called upon to render is judgment according to law, not according to what may appear to be the opinion of the day. _______________________________ In the preceeding pages we have endeavored to discuss, within limits, the validity of Republic Act No. 7716 in its formal and substantive aspects as this has been raised in the various cases before us. To sum up, we hold: (1) That the procedural requirements of the Constitution have been complied with by Congress in the enactment of the statute; (2) That judicial inquiry whether the formal requirements for the enactment of statutes beyond those prescribed by the Constitution have been observed is precluded by the principle of separation of powers; (3) That the law does not abridge freedom of speech, expression or the press, nor interfere with the free exercise of religion, nor deny to any of the parties the right to an education; and (4) That, in view of the absence of a factual foundation of record, claims that the law is regressive, oppressive and confiscatory and that it violates vested rights protected under the Contract Clause are prematurely raised and do not justify the grant of prospective relief by writ of prohibition. WHEREFORE, the petitions in these cases are DISMISSED. Bidin, Quiason, and Kapunan, JJ., concur.

Separate Opinions

NARVASA, C.J.: I fully concur with the conclusions set forth in the scholarly opinion of my learned colleague, Mr. Justice Vicente V. Mendoza. I write this separate opinion to express my own views relative to the procedural issues raised by the various petitions and death with by some other Members of the Court in their separate opinions. By their very nature, it would seem, discussions of constitutional issues prove fertile ground for a not uncommon phenomenon: debate marked by passionate partisanship amounting sometimes to impatience with adverse views, an eagerness on the part of the proponents on each side to assume the role of, or be perceived as, staunch defenders of constitutional principles, manifesting itself in flights of rhetoric, even hyperbole. The peril in this, obviously, is a diminution of objectivity that quality which, on the part of those charged with the duty and authority of interpreting the fundamental law, is of the essence of their great function. For the Court, more perhaps than for any other person or group, it is necessary to maintain that desirable objectivity. It must make certain that on this as on any other occasion, the judicial function is meticulously performed, the facts ascertained as comprehensively and as accurately as possible, all the issues particularly identified, all the arguments clearly understood; else, it may itself be accused, by its own members or by others, of a lack of adherence to, or a careless observance of, its own procedures, the signatures of its individual members on its enrolled verdicts notwithstanding. In the matter now before the Court, and whatever reservations some people may entertain about their intellectual limitations or moral scruples, I cannot bring myself to accept the thesis which necessarily implies that the members of our august Congress, in enacting the expanded VAT law, exposed their ignorance, or indifference to the observance, of the rules of procedure set down by the Constitution or by their respective chambers, or what is worse, deliberately ignored those rules for some yet undiscovered purpose nefarious in nature, or at least some purpose other than the public weal; or that a few of their fellows, acting as a bicameral conference committee, by devious schemes and cunning maneuvers, and in conspiracy with officials of the Executive Department and others, succeeded in "pulling the wool over the eyes" of all their other colleagues and foisting on them a bill containing provisions that neither chamber of our bicameral legislature conceived or contemplated. This is the thesis that the petitioners would have this Court approve. It is a thesis I consider bereft of any factual or logical foundation. Other than the bare declarations of some of the petitioners, or arguments from the use and import of the language employed in the relevant documents and records, there is no evidence before the Court adequate to support a finding that the legislators concerned, whether of the upper or lower chamber, acted otherwise than in good faith, in the honest discharge of their functions, in the sincere belief that the established procedures were being regularly observed or, at least, that there occurred no serious or fatal deviation therefrom. There is no evidence on which reasonably to rest a conclusion that any executive or other official took part in or unduly influenced the proceedings before the bicameral conference committee, or that the members of the latter were motivated by a desire to surreptitiously introduce improper revisions in the bills which they were required to reconcile, or that after agreement had been reached on the mode and manner of reconciliation of the "disagreeing provisions," had resorted to stratragems or employed under-handed ploys to ensure their approval and adoption by either House. Neither is there any proof that in voting on the Bicameral Conference Committee (BCC) version of the reconciled bills, the members of the Senate and the House did so in ignorance of, or without understanding, the contents thereof or the bills therein reconciled. Also unacceptable is the theory that since the Constitution requires appropriation and revenue bills to originate exclusively in the House of Representatives, it is improper if not unconstitutional for the Senate to formulate, or even think about formulating, its own draft of this type of measure in anticipation of receipt of one transmitted by the lower Chamber. This is specially cogent as regards much-publicized suggestions for legislation (like the expanded VAT Law) emanating from one or more legislators, or from the Executive Department, or the private sector, etc. which understandably could be expected to forthwith generate much Congressional cogitation. Exclusive origination, I submit, should have no reference to time of conception. As a practical matter, origination should refer to the affirmative act which effectively puts the bicameral legislative procedure in motion, i.e., the transmission by one chamber to the other of a bill for its adoption. This is the purposeful act which sets the legislative machinery in operation to effectively lead to the enactment of a statute. Until this transmission takes place, the formulation and discussions, or the reading for three or more times of proposed measures in either chamber, would be meaningless in the context of the activity leading towards concrete legislation. Unless transmitted to the other chamber, a bill prepared by either house cannot possibly become law. In other words, the first affirmative, efficacious step, the operative act as it were, leading to actual enactment of a statute, is the transmission of a bill from one house to the other for

action by the latter. This is the origination that is spoken of in the Constitution in its Article VI, Section 24, in reference to appropriation, revenue, or tariff bills, etc. It may be that in the Senate, revenue or tax measures are discussed, even drafted, and this before a similar activity takes place in the House. This is of no moment, so long as those measures or bill remain in the Senate and are not sent over the House. There is no origination of revenue or tax measures by the Senate in this case. However, once the House completes the drawing up of a similar tax measure in accordance with the prescribed procedure, ven if this is done subsequent to the Senates own measure indeed, even if this be inspired by information that measure of the Senate and after third reading transmits its bill to the Senate, there is origination by (or in) the House within the contemplation of the Constitution. So it is entirely possible, as intimated, that in expectation of the receipt of a revenue or tax bill from the House of Representatives, the Senate commences deliberations on its own concept of such a legislative measure. This, possibly to save time, so that when the House bill raches it, its thoughts and views on the matter are already formed and even reduced to writing in the form of a draft statute. This should not be thought ilegal, as interdicted by the Constitution. What the Constitution prohibits is for the Senate to begin the legislative process first, by sending its own revenue bill to the House of Representatives for its consideration and action. This is the initiation that is prohibited to the Senate. But petitioners claims that this last was what in fact happened, that the went through the legislative mill and was finally approved as R.A. No. 7716, was the Senate version, SB 1630. This is disputed by the respondents. They claim it was House Bill 11197 that, after being transmitted to the Senate, was referred after first reading to its Committee on Ways and Means; was reported out by said Committee; underwent second and third readings, was sent to the bicameral conference committee and then, after appropriate proceedings therein culminating in extensive amendments thereof, was finally approved by both Houses and became the Expanded VAT Law. On whose side does the truth lie? If it is not possible to make that determination from the pleadings and records before this Court, shall it require evidence to be presented? No, on both law and principle. The Court will reject a case where the legal issues raised, whatever they may be, depend for their resolution on still unsettled questions of fact. Petitioners may not, by raising what are Court to assume the role of a trier of facts. It is on the contrary their obligation, before raising those questions to this Court, to see to it that all issues of fact are settled in accordance with the procedures laid down by law for proof of facts. Failing this, petitioners would have only themselves to blame for a peremptory dismissal. Now, what is really proven about what happened to HB 11197 after it was transmitted to the Senate? It seems to be admitted on all sides that after going through first reading, HB 11197 was referred to the Committee on Ways and Means chaired by Senator Ernesto Herrera. It is however surmised that after this initial step, HB 11197 was never afterwards deliberated on in the Senate, that it was there given nothing more than a "passing glance," and that it never went through a proper second and third reading. There is no competent proof to substantiate this claim. What is certain is that on February 7, 1994, the Senate Committee on Ways and Means submitted its Report (No. 349) stating that HB 11197 was considered, and recommending that SB 1630 be approved "in substitution of S.B. No. 1129, taking into consideration P.S. Res. No. 734 1 and H.B. No. 11197." This Report made known to the Senate, and clearly indicates, that H.B. No. 11197 was indeed deliberated on by the Committee; in truth, as Senator Herrera pointed out, the BCC later "agreed to adopt (a broader coverage of the VAT) which is closely adhering to the Senate version ** ** with some new provisions or amendments." The plain implication is that the Senate Committee had indeed discussed HB 11197 in comparison with the inconsistent parts of SB 1129 and afterwards proposed amendments to the former in the form of a new bill (No. 1630) more closely akin to the Senate bill (No. 1129). And it is as reasonable to suppose as not that later, during the second and third readings on March 24, 1994, the Senators, assembled as a body, had before them copies of HB 11197 and SB 1129, as well as of the Committee's new "SB 1630" that had been recommended for their approval, or at the very least were otherwise perfectly aware that they were considering the particular provisions of these bills. That there was such a deliberation in the Senate on HB 11197 in light of inconsistent portions of SB 1630, may further be necessarily inferred from the request, made by the Senate on the same day, March 24, 1994, for the convocation of a bicameral conference committee to reconcile "the disagreeing provisions of said bill (SB 1630) and House Bill No. 11197," a request that could not have been made had not the Senators more or less closely examined the provisions of HB 11197 and compared them with those of the counterpart Senate measures. Were the proceedings before the bicameral conference committee fatally flawed? The affirmative is suggested because the committee allegedly overlooked or ignored the fact that SB 1630 could not validly originate in the Senate, and that HB 11197 and SB 1630 never properly passed both chambers. The untenability of these contentions has already been demonstrated. Now, demonstration of the indefensibility of other arguments purporting to establish the impropriety of the BCC proceedings will be attempted. There is the argument, for instance, that the conference committee never used HB 11197 even as "frame

of reference" because it does not appear that the suggestion therefor (made by House Penal Chairman Exequiel Javier at the bicameral conference committee's meeting on April 19, 1994, with the concurrence of Senator Maceda) was ever resolved, the minutes being regrettably vague as to what occurred after that suggestion was made. It is, however, as reasonable to assume that it was, as it was not, given the vagueness of the minutes already alluded to. In fact, a reading of the BCC Report persuasively demonstrates that HB 11197 was not only utilized as a "frame of reference" but actually discussed and deliberated on. Said BCC Report pertinently states: 2 CONFERENCE COMMITTEE REPORT The Conference Committee on the disagreeing provisions of House Bill No. 11197, entitled: AN ACT RESTRUCTURING THE VALUE ADDED TAX (VAT) SYSTEM TO WIDEN ITS TAX BASE AND ENHANCE ITS ADMINISTRATION, AMENDING FOR THESE PURPOSES SECTIONS 99, 100, 102, 1013, 104, 105, 106, 107, 108 AND 110 OF TITLE IV, 112, 115 AND 116 OF TITLE V, AND 236, 237, AND 238 OF TITLE IX, AND REPEALING SECTIONS 113SD AND 114 OF TITLE V, ALL OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED and Senate Bill No. 1630 entitled: AN ACT RESTRUCTURING THE VALUE ADDED TAX (VAT) SYSTEM TO WIDEN ITS TAX BASE AND ENHANCE ITS ADMINISTRATION, AMENDING FOR THESE PURPOSES SECTIONS 99, 100, 102, 103, 104, 1 106, 107, 108 AND 110 OF TITLE IV, 112, 115, 117 AND 121 OF TITLE V, ACND 236, 237, AND 238 OF TITLE IX, AND REPEALING SECTIONS 1113, 114, 116, 119 AND 120 OF TITLE V, ALL OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED AND FOR OTHER PURPOSES having met, after full and free conference, has agreed to recommend and do hereby recommend to their respective Houses that House Bill No. 11197, in consolidation with Senate Bill No. 1630, be approved in accordance with the attached copy of the bill as reconciled and approved by the conferees. Approved. The Report, it will be noted, explicitly adverts to House Bill No. 11197, it being in fact mentioned ahead of Senate Bill No. 1630; graphically shows the very close identity of the subjects of both bills (indicated in their respective titles); and clearly says that the committee met in "full and free conference" on the "disagreeing provisions" of both bills (obviously in an effort to reconcile them); and that reconciliation of said "disagreeing provisions" had been effected, the BCC having agreed that "House Bill No. 11197, in consolidation with Senate Bill No. 1630, be approved in accordance with the attached copy of the bill as reconciled and approved by the conferees." It may be concluded, in other words, that, conformably to the procedure provided in the Constitution with which all the Members of the bicameral conference committee cannot but be presumed to be familiar, and no proof to the contrary having been adduced on the point, it was the original bill (HB 11197) which said body had considered and deliberated on in detail, reconciled or harmonized with SB 1630, and used as basis for drawing up the amended version eventually reported out and submitted to both houses of Congress. It is further contended that the BCC was created and convoked prematurely, that SB 1630 should first have been sent to the House of Representatives for concurrence It is maintained, in other words, that the latter chamber should have refused the Senate request for a bicameral conference committee to reconcile the "disagreeing provisions" of both bills, and should have required that SB 1630 be first transmitted to it. This, seemingly, is nit-picking given the urgency of the proposed legislation as certified by the President (to both houses, in fact). Time was of the essence, according to the President's best judgment as regards which absolutely no one in either chamber of Congress took exception, general acceptance being on the contrary otherwise manifested and that judgment the Court will not now question. In light of that urgency, what was so vital or indispensable about such a transmittal that its absence would invalidate all else that had been done towards enactment of the law, completely escapes me, specially considering that the House had immediately acceded without demur to the request for convocation of the conference committee. What has just been said should dispose of the argument that the statement in the enrolled bill, that "This Act which is a consolidation of House Bill No. 11197 and Senate Bill No. 11630 was finally passed by the House of Representatives and the Senate on April 27, 1994 and May 2, 1994," necessarily signifies that there were two (2) bills separately introduced, retaining their independent existence until they reached the

bicameral conference committee where they were consolidated, and therefore, the VAT law did not originate exclusively in the House having originated in part in the Senate as SB 1630, which bill was not embodied in but merely merged with HB 11197, retaining its separate identity until it was joined by the BCC with the house measure. The more logical, and fairer, course is to construe the expression, "consolidation of House Bill No. 11197 and Senate Bill No. 11630" in the context of accompanying and contemporaneous statements, i.e.: (a) the declaration in the BCC Report, supra, that the committee met to reconcile the disagreeing provisions of the two bills, "and after full and free conference" on the matter, agreed and so recommended that "House Bill No. 11197, in consolidation with Senate Bill No. 1630, be approved in accordance with the attached copy of the bill as reconciled and approved by the conferees;" and (b) the averment of Senator Herrera, in the Report of the Ways and Means Committee, supra, that the committee had actually "considered" (discussed) HB No. 11197 and taken it "into consideration" in recommending that its own version of the measure (SB 1630) be the one approved. That the Senate might have drawn up its own version of the expanded VAT bill, contemporaneously with or even before the House did, is of no moment. It bears repeating in this connection that no VAT bill ever originated in the Senate; neither its SB 1129 or SB 1630 or any of its drafts was ever officially transmitted to the House as an initiating bill which, as already pointed out, is what the Constitution forbids; it was HB 11197 that was first sent to the Senate, underwent first reading, was referred to Committee on Ways and Means and there discussed in relation to and in comparison with the counterpart Senate version or versions the mere formulation of which was, as also already discussed, not prohibited to it and afterwards considered by the Senate itself, also in connection with SB 1630, on second and third readings. HB 11197 was in the truest sense, the originating bill. An issue has also arisen respecting the so-called "enrolled bill doctrine" which, it is said, whatever sacrosanct status it might originally have enjoyed, is now in bad odor with modern scholars on account of its imputed rigidity and unrealism; it being also submitted that the ruling in Mabanag v. Lopez Vito (78 Phil. 1) and the cases reaffirming it, is no longer good law, it being based on a provision of the Code of Civil Procedure 3 long since stricken from the statute books. I would myself consider the "enrolled bill" theory as laying down a presumption of so strong a character as to be well nigh absolute or conclusive, fully in accord with the familiar and fundamental philosophy of separation of powers. The result, as far as I am concerned, is to make discussion of the enrolled bill principle purely academic; for as already pointed out, there is no proof worthy of the name of any facts to justify its reexamination and, possibly, disregard. The other question is, what is the nature of the power given to a bicameral conference committee of reconciling differences between, or "disagreeing provisions" in, a bill originating from the House in relation to amendments proposed by the Senate whether as regards some or all of its provisions? Is the mode of reconciliation, subject to fixed procedure and guidelines? What exactly can the committee do, or not do? Can it only clarify or revise provisions found in either Senate or House bill? Is it forbidden to propose additional or new provisions, even on matters necessarily or reasonably connected with or germane to items in the bills being reconciled? In answer, it is postulated that the reconciliation function is quite limited. In these cases, the conference committee should have confined itself to reconciliation of differences or inconsistencies only by (a) restoring provisions of HB11197 aliminated by SB 1630, or (b) sustaining wholly or partly the Senate amendments, or (c) as a compromise, agreeing that neither provisions nor amendments be carried into the final form of HB 11197 for submission to both chambers of the legislature. The trouble is, it is theorized, the committee incorporated activities or transactions which were not within the contemplation of both bills; it made additions and deletions which did not enjoy the enlightenment of initial committee studies; it exercised what is known as an "ex post veto power" granted to it by no law, rule or regulation, a power that in truth is denied to it by the rules of both the Senate and the House. In substantiation, the Senate rule is cited, similar to that of the House, providing that "differences shall be settled by a conference committee" whose report shall contain "detailed and sufficiently explicit statement of the changes in or amendments to the subject measure, ** (to be) signed by the conferees;" as well as the "Jefferson's Manual," adopted by the Senate as supplement to its own rules, directing that the managers of the conference must confine themselves to differences submitted to them; they may not include subjects not within the disagreements even though germane to a question in issue." It is significant that the limiting proviso in the relevant rules has been construed and applied as directory, not mandatory. During the oral argument, counsel for petitioners admitted that the practice for decades has been for bicameral conference committees to include such provisions in the reconciled bill as they believed to be germane or necessary and acceptable to both chambers, even if not within any of the "disagreeing provisions," and the reconciled bills, containing such provisions had invariably been approved and adopted by both houses of Congress. It is a practice, they say, that should be stopped. But it is a practice that establishes in no uncertain manner the prevailing concept in both houses of Congress of the permissible and acceptable modes of reconciliation that their conference committees may adopt, one whose undesirability is not all that patent if not, indeed, incapable of unquestionable demonstration. The fact is that conference committees only take up bills which have already been freely and fully discussed in both chambers of the legislature, but as to which there is need of reconciliation in view of "disagreeing provisions" between them; and both chambers entrust the function of reconciling the bills to their delegates at a conference committee with full awareness, and tacit consent, that conformably with

established practice unquestioningly observed over many years, new provisions may be included even if not within the "disagreeing provisions" but of which, together with other changes, they will be given detailed and sufficiently explicit information prior to voting on the conference committee version. In any event, a fairly recent decision written for the Court by Senior Associate Justice Isagani A. Cruz, promulgated on November 11, 1993 (G.R. No. 105371, The Philippine Judges Association, etc., et al. v. Hon. Pete Prado, etc., et al.), should leave no doubt of the continuing vitality of the enrolled bill doctrine and give an insight into the nature of the reconciling function of bicameral conference committees. In that case, a bilateral conference committee was constituted and met to reconcile Senate Bill No. 720 and House Bill No. 4200. It adopted a "reconciled" measure that was submitted to and approved by both chambers of Congress and ultimately signed into law by the President, as R.A. No. 7354. A provision in this statute (removing the franking privilege from the courts, among others) was assailed as being an invalid amendment because it was not included in the original version of either the senate or the house bill and hence had generated no disagreement between them which had to be reconciled. The Court held: While it is true that a conference committee is the mechanism for compromising differences between the Senate and the House, it is not limited in its jurisdiction to this question. Its broader function is described thus: A conference committee may deal generally with the subject matter or it may be limited to resolving the precise differences between the two houses. Even where the conference committee is not by rule limited in its jurisdiction, legislative custom severely limits the freedom with which new subject matter can be inserted into the conference bill. But occasionally a conference committee produces unexpected results, results beyond its mandate. These excursions occur even where the rules impose strict limitations on conference committee jurisdiction. This is symptomatic of the authoritarian power of conference committee (Davies, Legislative Law and Process: In A Nutshell, 1987 Ed., p. 81). It is a matter of record that the Conference Committee Report on the bill in question was returned to and duly approved by both the Senate and the House of Representatives. Thereafter, the bill was enrolled with its certification by Senate President Neptali A. Gonzales and Speaker Ramon V. Mitra of the House of Representatives as having been duly passed by both Houses of Congress. It was then presented to and approved by President Corazon C. Aquino on April 3, 1992. Under the doctrine of separation of powers, the Court may not inquire beyond the certification of the approval of a bill from the presiding officers of Congress. Casco Philippine Chemical Co. v. Gimenez (7 SCRA 347) laid down the rule that the enrolled bill is conclusive upon the Judiciary (except in matters that have to be entered in the journals like the yeas and nays on the final reading of the bill) (Mabanag v. Lopez Vito, 78 Phil. 1). The journals are themselves also binding on the Supreme Court, as we held in the old (but still valid) case of U.S. v. Pons (34 Phil. 729), where we explained the reason thus: To inquire into the veracity of the journals of the Philippine legislature when they are, as we have said, clear and explicit, would be to violate both the letter and spirit of the organic laws by which the Philippine Government was brought into existence, to invade a coordinate and independent department of the Government, and to interfere with the legitimate powers and functions of the Legislature. Applying these principles, we shall decline to look into the petitioners' charges that an amendment was made upon the last reading of the bill that eventually R.A. No. 7354 and that copies thereof in its final form were not distributed among the members of each House. Both the enrolled bill and the legislative journals certify that the measure was duly enacted i.e., in accordance with Article VI, Sec. 26 (2) of the Constitution. We are bound by such official assurances from a coordinate department of the government, to which we owe, at the very least, a becoming courtesy. Withal, an analysis of the changes made by the conference committee in HB 11197 and SB 1630 by way of reconciling their "disagreeing provisions," assailed by petitioners as unauthorized or incongrouous reveals that many of the changes related to actual "disagreeing provisions," and that those that might perhaps be considered as entirely new are nevertheless necessarily or logically connected with or germane to particular matters in the bills being reconciled. For instance, the change made by the bicameral conference committee (BCC) concerning amendments to Section 99 of the National Internal Revenue Code (NIRC) the addition of "lessors of goods or properties and importers of goods" is really a reconciliation of disagreeing provisions, for while HB

11197 mentions as among those subject to tax, "one who sells, barters, or exchanges goods or properties and any person who leases personal properties," SB 1630 does not. The change also merely clarifies the provision by providing that the contemplated taxpayers includes "importers." The revision as regards the amendment to Section 100, NIRC, is also simple reconciliation, being nothing more than the adoption by the BCC of the provision in HB 11197 governing the sale of gold to Bangko Sentral, in contrast to SB 1630 containing no such provision. Similarly, only simple reconciliation was involved as regards approval by the BCC of a provision declaring as not exempt, the sale of real properties primarily held for sale to customers or held for lease in the ordinary course of trade or business, which provision is found in HB 11197 but not in SB 1630; as regards the adoption by the BCC of a provision on life insurance business, contained in SB 1630 but not found in HB 11197; as regards adoption by the BCC of the provision in SB 1630 for deferment of tax on certain goods and services for no longer than 3 years, as to which there was no counterpart provision in SB 11197; and as regards the fixing of a period for the adoption of implementing rules, a period being prescribed in SB 1630 and none in HB 11197. In respect of other revisions, it would seem that questions logically arose in the course of the discussion of specific "disagreeing provisions" to which answers were given which, because believed acceptable to both houses of Congress, were placed in the BCC draft. For example, during consideration of radio and television time (Sec. 100, NIRC) dealt with in both House and Senate bills, the question apparently came up, the relevance of which is apparent on its face, relative to satellite transmission and cable television time. Hence, a provision in the BCC bill on the matter. Again, while deliberating on the definition of goods or properties in relation to the provision subjecting sales thereof to tax, a question apparently arose, logically relevant, about real properties intended to be sold by a person in economic difficulties, or because he wishes to buy a car, i.e., not as part of a business, the BCC evidently resolved to clarify the matter by excluding from the tax, "real properties held primarily for sale to customers or held for lease in the ordinary course of business." And in the course of consideration of the term, sale or exchange of services (Sec 102, NIRC), the inquiry most probably was posed as to whether the term should be understood as including other services: e.g., services of lessors of property whether real or personal, of warehousemen, of keepers of resthouses, pension houses, inns, resorts, or of common carriers, etc., and presumably the BCC resolved to clarify the matter by including the services just mentioned. Surely, changes of this nature are obviously to be expected in proceedings before bicameral conference committees and may even be considered grist for their mill, given the history of such BCCs and their general practice here and abroad In any case, all the changes and revisions, and deletions, made by the conference committee were all subsequently considered by and approved by both the Senate and the House, meeting and voting separately. It is an unacceptable theorization, to repeat, that when the BCC report and its proposed bill were submitted to the Senate and the House, the members thereof did not bother to read, or what is worse, having read did not understand, what was before them, or did not realize that there were new provisions in the reconciled version unrelated to any "disagreeing provisions," or that said new provisions or revisions were effectively concealed from them Moreover, it certainly was entirely within the power and prerogative of either legislative chamber to reject the BCC bill and require the organization of a new bicameral conference committee. That this option was not exercised by either house only proves that the BCC measure was found to be acceptable as in fact it was approved and adopted by both chambers. I vote to DISMISS the petitions for lack of merit.

PADILLA, J.: I The original VAT law and the expanded VAT law In Kapatiran v. Tan, 1 where the ponente was the writer of this Separate Opinion, a unanimous Supreme Court en banc upheld the validity of the original VAT law (Executive Order No. 273, approved on 25 July 1987). It will, in my view, be pointless at this time to re-open arguments advanced in said case as to why said VAT law was invalid, and it will be equally redundant to re-state the principles laid down by the Court in the same case affirming the validity of the VAT law as a tax measure. And yet, the same arguments are, in effect, marshalled against the merits and substance of the expanded VAT law (Rep. Act. No. 7716, approved on 5 May 1994). The same Supreme Court decision should therefore dispose, in the main, of such arguments, for the expanded VAT law is predicated basically on the same principles as the original VAT law, except that now the tax base of the VAT imposition has been expanded or broadened. It only needs to be stated what actually should be obvious that a tax measure, like the expanded VAT law (Republic Act. No. 7716), is enacted by Congress and approved by the President in the exercise of the State's power to tax, which is an attribute of sovereignty. And while the power to tax, if exercised without limit, is a power to destroy, and should, therefore, not be allowed in such form, it has to be equally recognized that the power to tax is an essential right of government. Without taxes, basic services to the people can come to a halt; economic progress will be stunted, and, in the long run, the people will suffer

the pains of stagnation and retrogression. Consequently, upon careful deliberation, I have no difficulty in reaching the conclusion that the expanded VAT law comes within the legitimate power of the state to tax. And as I had occasion to previously state: Constitutional Law, to begin with, is concerned with power not political convenience, wisdom, exigency, or even necessity. Neither the Executive nor the legislative (Commission on Appointments) can create power where the Constitution confers none.
2

Likewise, in the first VAT case, I said: In any event, if petitioners seriously believe that the adoption and continued application of the VAT are prejudicial to the general welfare or the interests of the majority of the people, they should seek, recourse and relief from the political branches of the government. The Court, following the time-honored doctrine of separation of powers, cannot substitute its judgment for that of the President (and Congress) as to the wisdom, justice and advisability of the adoption of the VAT. 3 This Court should not, as a rule, concern itself with questions of policy, much less, economic policy. That is better left to the two (2) political branches of government. That the expanded VAT law is unwise, unpopular and even anti-poor, among other things said against it, are arguments and considerations within the realm of policy-debate, which only Congress and the Executive have the authority to decisively confront, alleviate, remedy and resolve. II The procedure followed in the approval of Rep. Act No. 7716 Petitioners however posit that the present case raises a far-reaching constitutional question which the Court is duty-bound to decide under its expanded jurisdiction in the 1987 Constitution. 4 Petitioners more specifically question and impugn the manner by which the expanded VAT law (Rep. Act. No. 7716) was approved by Congress. They contend that it was approved in violation of the Constitution from which fact it follows, as a consequence, that the law is null and void. Main reliance of the petitioners in their assault in Section 24, Art. VI of the Constitution which provides: Sec. 24. All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bill of local application, and private bills shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments. While it should be admitted at the outset that there was no rigorous and strict adherence to the literal command of the above provision, it may however be said, after careful reflection, that there was substantial compliance with the provision. There is no question that House Bill No. 11197 expanding the VAT law originated from the House of Representatives. It is undeniably a House measure. On the other hand, Senate Bill No. 1129, also expanding the VAT law, originated from the Senate. It is undeniably a Senate measure which, in point of time, actually antedated House Bill No. 11197. But it is of record that when House Bill No. 11197 was, after approval by the House, sent to the Senate, it was referred to, and considered by the Senate Committee on Ways and Means (after first reading) together with Senate Bill No. 1129, and the Committee came out with Senate Bill No. 1630 in substitution of Senate Bill No. 1129 but after expressly taking into consideration House Bill No. 11197. Since the Senate is, under the above-quoted constitutional provision, empowered to concur with a revenue measure exclusively originating from the House, or to propose amendments thereto, to the extent of proposing amendments by SUBSTITUTION to the House measure, the approval by the Senate of Senate Bill No. 1630, after it had considered House Bill No. 11197, may be taken, in my view, as an AMENDMENT BY SUBSTITUTION by the Senate not only of Senate Bill No. 1129 but of House Bill No. 11197 as well which, it must be remembered, originated exclusively from the House. But then, in recognition of the fact that House Bill No. 11197 which originated exclusively from the House and Senate Bill No. 1630 contained conflicting provisions, both bills (House Bill No. 11197 and Senate Bill No. 1630) were referred to the Bicameral Conference Committee for joint consideration with a view to reconciling their conflicting provisions. The Conference Committee came out eventually with a Conference Committee Bill which was submitted to both chambers of Congress (the Senate and the House). The Conference Committee reported out a bill consolidating provisions in House Bill No. 11197 and Senate Bill No. 1630. What transpired in both chambers after the Conference Committee Report was submitted to them is not clear from the records in

this case. What is clear however is that both chambers voted separately on the bill reported out by the Conference Committee and both chambers approved the bill of the Conference Committee. To me then, what should really be important is that both chambers of Congress approved the bill reported out by the Conference Committee. In my considered view, the act of both chambers of Congress in approving the Conference Committee bill, should put an end to any inquiry by this Court as to how the bill came about. What is more, such separate approvals CURED whatever constitutional infirmities may have arisen in the procedures leading to such approvals. For, if such infirmities were serious enough to impugn the very validity of the measure itself, there would have been an objection or objections from members of both chambers to the approval. The Court has been shown no such objection on record in both chambers. Petitioners contend that there were violations of Sec. 26 paragraph 2, Article VI of the Constitution which provides: Sec. 26. . . . (2) No bill passed by either House shall become a law unless it has passed three readings on separate days, and printed copies thereof in its final form have been distributed to its Members three days before its passage, except when the President certifies to the necessity of its immediate enactment to meet a public calamity or emergency. Upon the last reading of a bill, no amendment thereto shall be allowed, and the vote thereon shall be taken immediately thereafter, and the yeas and nays entered in the Journal. in that, when Senate Bill No. 1630 (the Senate counterpart of House Bill No. 11197) was approved by the Senate, after it had been reported out by the Senate Committee on Ways and Means, the bill went through second and third readings on the same day (not separate days) and printed copies thereof in its final form were not distributed to the members of the Senate at least three (3) days before its passage by the Senate. But we are told by the respondents that the reason for this "short cut" was that the President had certified to the necessity of the bill's immediate enactment to meet an emergency a certification that, by leave of the same constitutional provision, dispensed with the second and third readings on separate days and the printed form at least three (3) days before its passage. We have here then a situation where the President did certify to the necessity of Senate Bill No. 1630's immediate enactment to meet an emergency and the Senate responded accordingly. While I would be the last to say that this Court cannot review the exercise of such power by the President in appropriate cases ripe for judicial review, I am not prepared however to say that the President gravely abused his discretion in the exercise of such power as to require that this Court overturn his action. We have been shown no fact or circumstance which would impugn the judgment of the President, concurred in by the Senate, that there was an emergency that required the immediate enactment of Senate Bill No. 1630. On the other hand, a becoming respect for a co-equal and coordinate department of government points that weight and credibility be given to such Presidential judgment. The authority or power of the Conference Committee to make insertions in and deletions from the bills referred to it, namely, House Bill No. 11197 and Senate Bill No. 1630 is likewise assailed by petitioners. Again, what appears important here is that both chambers approved and ratified the bill as reported out by the Conference Committee (with the reported insertions and deletions). This is perhaps attributable to the known legislative practice of allowing a Conference Committee to make insertions in and deletions from bills referred to it for consideration, as long as they are germane to the subject matter of the bills under consideration. Besides, when the Conference Committee made the insertions and deletions complained of by petitioners, was it not actually performing the task assigned to it of reconciling conflicting provisions in House Bill No. 11197 and Senate Bill No. 1630? This Court impliedly if not expressly recognized the fact of such legislative practice in Philippine Judges Association, etc. vs. Hon. Peter Prado, etc., 5 In said case, we stated thus: The petitioners also invoke Sec. 74 of the Rules of the House of Representatives, requiring that amendment to any bill when the House and the Senate shall have differences thereon may be settled by a conference committee of both chambers. They stress that Sec. 35 was never a subject of any disagreement between both Houses and so the second paragraph could not have been validly added as an amendment. These arguments are unacceptable. While it is true that a conference committee is the mechanism for compromising differences between the Senate and the House, it is not limited in its jurisdiction to this question. Its broader function is described thus: A conference committee may deal generally with the subject matter or it may be limited to resolving the precise differences between the

two houses. Even where the conference committee is not by rule limited in its jurisdiction, legislative custom severely limits the freedom with which new subject matter can be inserted into the conference bill. But occasionally a conference committee produces unexpected results, results beyond its mandate. These excursions occurs even where the rules impose strict limitations on conference committee jurisdiction. This is symptomatic of the authoritarian power of conference committee (Davies, Legislative Law and Process: In A Nutshell, 1986 Ed., p. 81). It is a matter of record that the Conference Committee Report on the bill in question was returned to and duly approved by both the Senate and the House of Representatives. Thereafter, the bill was enrolled with its certification by Senate President Neptali A. Gonzales and Speaker Ramon V. Mitra of the House of Representatives as having been duly passed by both Houses of Congress. It was then presented to and approved by President Corazon C. Aquino on April 3, 1992. It would seem that if corrective measures are in order to clip the powers of the Conference Committee, the remedy should come from either or both chambers of Congress, not from this Court, under the timehonored doctrine of separation of powers. Finally, as certified by the Secretary of the Senate and the Secretary General of the House of Representatives This Act (Rep. Act No. 7716) is a consolidation of House Bill No. 11197 and Senate Bill No. 1630 (w)as finally passed by the House of Representatives and the Senate on April 27, 1994 and May 2, 1994 respectively. Under the long-accepted doctrine of the "enrolled bill," the Court in deference to a co-equal and coordinate branch of government is held to a recognition of Rep. Act No. 7716 as a law validly enacted by Congress and, thereafter, approved by the President on 5 May 1994. Again, we quote from out recent decision in Philippine Judges Association, supra: Under the doctrine of separation of powers, the Court may not inquire beyond the certification of the approval of a bill from the presiding officers of Congress. Casco Philippine Chemical Co. v. Gimenez laid down the rule that the enrolled bill is conclusive upon the Judiciary (except in matters that have to be entered in the journals like the yeas and nays on the finally reading of the bill). The journals are themselves also binding on the Supreme Court, as we held in the old (but still valid) case of U.S. vs. Pons, 8 where we explained the reason thus: To inquire into the veracity of the journals of the Philippine legislature when they are, as we have said, clear and explicit, would be to violate both the letter and spirit of the organic laws by which the Philippine Government was brought into existence, to invade a coordinate and independent department of the Government, and to interfere with the legitimate powers and functions of the Legislature. Applying these principles, we shall decline to look into the petitioners' charges that an amendment was made upon the last reading of the bill that eventually became R.A. No. 7354 and that copies thereof in its final form were not distributed among the members of each House. Both the enrolled bill and the legislative journals certify that the measure was duly enacted i.e., in accordance with Article VI, Sec. 26(2) of the Constitution. We are bound by such official assurances from a coordinate department of the government, to which we owe, at the very least, a becoming courtesy. III Press Freedom and Religious Freedom and Rep. Act No. 7716 The validity of the passage of Rep. Act No. 7716 notwithstanding, certain provisions of the law have to be examined separately and carefully. Rep. Act. No. 7716 in imposing a value-added tax on circulation income of newspapers and similar publications and on income derived from publishing advertisements in newspapers 9, to my mind, violates Sec. 4, Art. III of the Constitution. Indeed, even the Executive Department has tried to cure this defect by the issuance of the BIR Regulation No. 11-94 precluding implementation of the tax in this area. It should be clear, however, that the BIR regulation cannot amend the law (Rep. Act No. 7716). Only legislation (as distinguished from administration regulation) can amend an existing law. Freedom of the press was virtually unknown in the Philippines before 1900. In fact, a prime cause of the

revolution against Spain at the turn of the 19th century was the repression of the freedom of speech and expression and of the press. No less than our national hero, Dr. Jose P. Rizal, in "Filipinas Despues de Cien Anos" (The Philippines a Century Hence) describing the reforms sine quibus non which the Filipinos were insisting upon, stated: "The minister . . . who wants his reforms to be reforms, must begin by declaring the press in the Philippines free . . . ". 10 Press freedom in the Philippines has met repressions, most notable of which was the closure of almost all forms of existing mass media upon the imposition of martial law on 21 September 1972. Section 4, Art. III of the Constitution maybe traced to the United States Federal Constitution. The guarantee of freedom of expression was planted in the Philippines by President McKinley in the Magna Carta of Philippine Liberty, Instructions to the Second Philippine Commission on 7 April 1900. The present constitutional provision which reads: Sec. 4 No law shall be passed abridging the freedom of speech, of expression, or of the press, or the right of the people peaceably to assemble and petition the government for redress of grievances. is essentially the same as that guaranteed in the U.S. Federal Constitution, for which reason, American case law giving judicial expression as to its meaning is highly persuasive in the Philippines. The plain words of the provision reveal the clear intention that no prior restraint can be imposed on the exercise of free speech and expression if they are to remain effective and meaningful. The U.S. Supreme Court in the leading case of Grosjean v. American Press Co. Inc. 11 declared a statute imposing a gross receipts license tax of 2% on circulation and advertising income of newspaper publishers as constituting a prior restraint which is contrary to the guarantee of freedom of the press. In Bantam Books, Inc. v. Sullivan 12, the U.S. Supreme Court stated: "Any system of prior restraint of expression comes to this Court bearing a heavy presumption against its constitutionality." In this jurisdiction, prior restraint on the exercise of free expression can be justified only on the ground that there is a clear and present danger of a substantive evil which the State has the right to prevent 13. In the present case, the tax imposed on circulation and advertising income of newspaper publishers is in the nature of a prior restraint on circulation and free expression and, absent a clear showing that the requisite for prior restraint is present, the constitutional flaw in the law is at once apparent and should not be allowed to proliferate. Similarly, the imposition of the VAT on the sale and distribution of religious articles must be struck down for being contrary to Sec. 5, Art. III of the Constitution which provides: Sec. 5. No law shall be made respecting an establishment of religion, or prohibiting the free exercise thereof. The free exercise and enjoyment of religious profession and worship, without discrimination or preference, shall forever be allowed. No religious test shall be required for the exercise of civil or political rights. That such a tax on the sale and distribution of religious articles is unconstitutional, has been long settled in American Bible Society, supra. Insofar, therefore, as Rep. Act No. 7716 imposes a value-added tax on the exercise of the abovediscussed two (2) basic constitutional rights, Rep. Act No. 7716 should be declared unconstitutional and of no legal force and effect. IV Petitions of CREBA and PAL and Rep. Act No. 7716 The Chamber of Real Estate and Builder's Association, Inc. (CREBA) filed its own petition (GR No. 11574) arguing that the provisions of Rep. Act No. 7716 imposing a 10% value-added tax on the gross selling price or gross value in money of every sale, barter or exchange of goods or properties (Section 2) and a 10% value-added tax on gross receipts derived from the sale or exchange of services, including the use or lease of properties (Section 3), violate the equal protection, due process and non-impairment provisions of the Constitution as well as the rule that taxation should be uniform, equitable and progressive. The issue of whether or not the value-added tax is uniform, equitable and progressive has been settled in

Kapatiran. CREBA which specifically assails the 10% value-added tax on the gross selling price of real properties, fails to distinguish between a sale of real properties primarily held for sale to customers or held for lease in the ordinary course of trade or business and isolated sales by individual real property owners (Sec. 103[s]). That those engaged in the business of real estate development realize great profits is of common knowledge and need not be discussed at length here. The qualification in the law that the 10% VAT covers only sales of real property primarily held for sale to customers, i.e. for trade or business thus takes into consideration a taxpayer's capacity to pay. There is no showing that the consequent distinction in real estate sales is arbitrary and in violation of the equal protection clause of the Constitution. The inherent power to tax of the State, which is vested in the legislature, includes the power to determine whom or what to tax, as well as how much to tax. In the absence of a clear showing that the tax violates the due process and equal protection clauses of the Constitution, this Court, in keeping with the doctrine of separation of powers, has to defer to the discretion and judgment of Congress on this point. Philippine Airlines (PAL) in a separate petition (G.R. No. 115852) claims that its franchise under PD No. 1590 which makes it liable for a franchise tax of only 2% of gross revenues "in lieu of all the other fees and charges of any kind, nature or description, imposed, levied, established, assessed or collected by any municipal, city, provincial, or national authority or government agency, now or in the future," cannot be amended by Rep. Act No. 7716 as to make it (PAL) liable for a 10% value-added tax on revenues, because Sec. 24 of PD No. 1590 provides that PAL's franchise can only be amended, modified or repealed by a special law specifically for that purpose. The validity of PAL's above argument can be tested by ascertaining the true intention of Congress in enacting Rep. Act No. 7716. Sec. 4 thereof dealing with Exempt Transactions states: Sec. 103. Exempt Transactions. The following shall be exempt from the value-added tax: xxx xxx xxx (q) Transactions which are exempt under special laws, except those granted under Presidential Decrees No. 66, 529, 972, 1491, 1590, . . . " (Emphasis supplied) The repealing clause of Rep. Act No. 7716 further reads: Sec. 20. Repealing clauses. The provisions of any special law relative to the rate of franchise taxes are hereby expressly repealed. xxx xxx xxx All other laws, orders, issuances, rules and regulations or parts thereof inconsistent with this Act are hereby repealed, amended or modified accordingly (Emphasis supplied) There can be no dispute, in my mind, that the clear intent of Congress was to modify PAL's franchise with respect to the taxes it has to pay. To this extent, Rep. Act No. 7716 can be considered as a special law amending PAL's franchise and its tax liability thereunder. That Rep. Act. No. 7716 imposes the valueadded taxes on other subjects does not make it a general law which cannot amend PD No. 1590. To sum up: it is my considered view that Rep. Act No. 7716 (the expanded value-added tax) is a valid law, viewed from both substantive and procedural standards, except only insofar as it violates Secs. 4 and 5, Art. III of the Constitution (the guarantees of freedom of expression and the free exercise of religion). To that extent, it is, in its present form, unconstitutional. I, therefore, vote to DISMISS the petitions, subject to the above qualification.

VITUG, J.: Lest we be lost by a quagmire of trifles, the real threshold and prejudicial issue, to my mind, is whether or not this Court is ready to assume and to take upon itself with an overriding authority the awesome responsibility of overseeing the entire bureaucracy. Far from it, ours is merely to construe and to apply the law regardless of its wisdom and salutariness, and to strike it down only when it clearly disregards constitutional proscriptions. It is what the fundamental law mandates, and it is what the Court must do. I cannot yet concede to the novel theory, so challengingly provocative as it might be, that under the 1987 Constitution the Court may now at good liberty intrude, in the guise of the people's imprimatur, into every

affair of the government. What significance can still then remain, I ask, of the time honored and widely acclaimed principle of separation of powers, if at every turn the Court allows itself to pass upon, at will, the disposition of a co-equal, independent and coordinate branch in our system of government. I dread to think of the so varied uncertainties that such an undue interference can lead to. The respect for long standing doctrines in our jurisprudence, nourished through time, is one of maturity not timidity, of stability rather than quiescence. It has never occurred to me, and neither do I believe it has been intended, that judicial tyranny is envisioned, let alone institutionalized, by our people in the 1987 Constitution. The test of tyranny is not solely on how it is wielded but on how, in the first place, it can be capable of being exercised. It is time that any such perception of judicial omnipotence is corrected. Against all that has been said, I see, in actuality in these cases at bench, neither a constitutional infringement of substance, judging from precedents already laid down by this Court in previous cases, nor a justiciability even now of the issues raised, more than an attempt to sadly highlight the perceived shortcomings in the procedural enactment of laws, a matter which is internal to Congress and an area that is best left to its own basic concern. The fact of the matter is that the legislative enactment, in its final form, has received the ultimate approval of both houses of Congress. The finest rhetoric, indeed fashionable in the early part of this closing century, would still be a poor substitute for tangibility. I join, nonetheless, some of my colleagues in respectfully inviting the kind attention of the honorable members of our Congress in the suggested circumspect observance of their own rules. A final remark. I should like to make it clear that this opinion does not necessarily foreclose the right, peculiar to any taxpayer adversely affected, to pursue at the proper time, in appropriate proceedings, and in proper fora, the specific remedies prescribed therefor by the National Internal Revenue Code, Republic Act 1125, and other laws, as well as rules of procedure, such as may be pertinent. Some petitions filed with this Court are, in essence, although styled differently, in the nature of declaratory relief over which this Court is bereft of original jurisdiction. All considered, I, therefore, join my colleagues who are voting for the dismissal of the petitions.

CRUZ, J.: It is a curious and almost incredible fact that at the hearing of these cases on July 7, 1994, the lawyers who argued for the petitioners two of them former presidents of the Senate and the third also a member of that body all asked this Court to look into the internal operations of their Chamber and correct the irregularities they claimed had been committed there as well as in the House of Representatives and in the bicameral conference committee. While a member of the legislative would normally resist such intervention and invoke the doctrine of separation of powers to protect Congress from what he would call judicial intrusion, these counsel practically implored the Court to examine the questioned proceedings and to this end go beyond the journals of each House, scrutinize the minutes of the committee, and investigate all other matters relating to the passage of the bill (or bills) that eventually became R.A. No. 7716. In effect, the petitioners would have us disregard the time-honored inhibitions laid down by the Court upon itself in the landmark case of U.S. v. Pons (34 Phil. 725), where it refused to consider extraneous evidence to disprove the recitals in the journals of the Philippine Legislature that it had adjourned sine die at midnight of February 28, 1914. Although it was generally known then that the special session had actually exceeded the deadline fixed by the Governor-General in his proclamation, the Court chose to be guided solely by the legislative journals, holding significantly as follows: . . . From their very nature and object, the records of the legislature are as important as those of the judiciary, and to inquire into the veracity of the journals of the Philippine Legislature, when they are, as we have said, clear and explicit, would be to violate both the letter and the spirit of the organic laws by which the Philippine Government was brought into existence, to invade a coordinate and independent department of the Government, and to interfere with the legitimate powers and functions of the Legislature. But counsel in his argument says that the public knows that the Assembly's clock was stopped on February 28, 1914, at midnight and left so until the determination of the discussion of all pending matters. Or, in other words, the hands of the clock were stayed in order to enable the Assembly to effect an adjournment apparently within the fixed time by the Governor's proclamation for the expiration of the special session, in direct violation of the Act of Congress of July 1, 1902. If the clock was, in fact, stopped, as here suggested, "the resultant evil might be slight as compared with that of altering the probative force and character of legislative records, and making the proof of legislative action depend upon uncertain oral evidence, liable to loss by death or absence, and so imperfect on account of the treachery of memory. . . . The journals say that the Legislature adjourned at 12 midnight on February 28,

1914. This settles the question, and the court did not err in declining to go beyond the journals. As one who has always respected the rationale of the separation of powers, I realize only too well the serious implications of the relaxation of the doctrine except only for the weightiest of reasons. The lowering of the barriers now dividing the three major branches of the government could lead to individious incursions by one department into the exclusive domains of the other departments to the detriment of the proper discharge of the functions assigned to each of them by the Constitution. Still, while acknowledging the value of tradition and the reasons for judicial non-interference announced in Pons, I am not disinclined to take a second look at the ruling from a more pragmatic viewpoint and to tear down, if we must, the iron curtain it has hung, perhaps improvidently, around the proceedings of the legislature. I am persuaded even now that where a specific procedure is fixed by the Constitution itself, it should not suffice for Congress to simply say that the rules have been observed and flatly consider the matter closed. It does not have to be as final as that. I would imagine that the judiciary, and particularly this Court, should be able to verify that statement and determine for itself, through the exercise of its own powers, if the Constitution has, indeed, been obeyed. In fact, the Court had already said that the question of whether certain procedural rules have been followed is justiciable rather than political because what is involved is the legality and not the wisdom of the act in question. So we ruled in Sanidad v. Commission on Elections (73 SCRA 333) on the amendment of the Constitution; in Daza v. Singson (180 SCRA 496) on the composition of the Commission on Appointments; and in the earlier case of Taada v. Cuenco (100 SCRA 1101) on the organization of the Senate Electoral Tribunal, among several other cases. By the same token, the ascertainment of whether a bill underwent the obligatory three readings in both Houses of Congress should not be considered an invasion of the territory of the legislature as this would not involve an inquiry into its discretion in approving the measure but only the manner in which the measure was enacted. These views may upset the conservatives among us who are most comfortable when they allow themselves to be petrified by precedents instead of venturing into uncharted waters. To be sure, there is much to be said of the wisdom of the past expressed by vanished judges talking to the future. Via trita est tuttisima. Except when there is a need to revise them because of an altered situation or an emergent idea, precedents should tell us that, indeed, the trodden path is the safest path. It could be that the altered situation has arrived to welcome the emergent idea. The jurisdiction of this Court has been expanded by the Constitution, to possibly include the review the petitioners would have us make of the congressional proceedings being questioned. Perhaps it is also time to declare that the activities of Congress can no longer be smoke-screened in the inviolate recitals of its journals to prevent examination of its sacrosanct records in the name of the separation of powers. But then again, perhaps all this is not yet necessary at this time and all these observations are but wishful musings for a more activist judiciary. For I find that this is not even necessary, at least for me, to leave the trodden path in the search for new adventures in the byways of the law. The answer we seek, as I see it, is not far afield. It seems to me that it can be found through a study of the enrolled bill alone and that we do not have to go beyond that measure to ascertain if R.A. No. 7716 has been validly enacted. It is settled in this jurisdiction that in case of conflict between the enrolled bill and the legislative journals, it is the former that should prevail except only as to matters that the Constitution requires to be entered in the journals. (Mabanag v. Lopez Vito, 78 Phil. 1). These are the yeas and nays on the final reading of a bill or on any question at the request of at least one-fifth of the member of the House (Constitution, Art. VI, Sec. 16[4]), the objections of the President to a vetoed bill or item (Ibid, Sec. 27 [1]), and the names of the members voting for or against the overriding of his veto (Id. Section 27 [1]), The original of a bill is not specifically required by the Constitution to be entered in the journals. Hence, on this particular manner, it is the recitals in the enrolled bill and not in the journals that must control. Article VI, Section 24, of the Constitution provides: Sec. 24. All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments. The enrolled bill submitted to and later approved by the President of the Philippines as R.A. No. 7716 was signed by the President of the Senate and the Speaker of the House of Representatives. It carried the following certification over the signatures of the Secretary of the Senate and the Acting Secretary of the House of Representatives: This Act which is a consolidation of House Bill No. 11197 and Senate Bill No. 11630

was finally passed by the House of Representative and the Senate on April 27, 1994, and May 2, 1994. Let us turn to Webster for the meaning of certain words, To "originate" is "to bring into being; to create something (original); to invent; to begin; start." The word "exclusively" means "excluding all others" and is derived from the word "exclusive," meaning "not shared or divided; sole; single." Applying these meanings, I would read Section 24 as saying that the bills mentioned therein must be brought into being, or created, or invented, or begun or started, only or singly or by no other body than the house of Representatives. According to the certification, R.A. No. 7716 "is a consolidation of House Bill No. 11197 and Senate Bill No. 1630." Again giving the words used their natural and ordinary sense conformably to an accepted canon of construction, I would read the word "consolidation" as a "combination or merger" and derived from the word "consolidated," meaning "to combine into one; merge; unite." The two bills were separately introduced in their respective Chambers. Both retained their independent existence until they reached the bicameral conference committee where they were consolidated. It was this consolidated measure that was finally passed by Congress and submitted to the President of the Philippines for his approval. House Bill No. 11197 originated in the House of Representatives but this was not the bill that eventually became R.A. No. 7716. The measure that was signed into law by President Ramos was the consolidation of that bill and another bill, viz., Senate Bill No. 1630, which was introduced in the Senate. The resultant enrolled bill thus did not originate exclusively in the House of Representatives. The enrolled bill itself says that part of it (and it does not matter to what extent) originated in the Senate. It would have been different if the only participation of the Senate was in the amendment of the measure that was originally proposed in the House of Representatives. But this was not the case. The participation of the Senate was not in proposing or concurring with amendments that would have been incorporated in House Bill No. 11197. Its participation was in originating its own Senate Bill No. 1630, which was not embodied in but merged with House Bill No. 11197. Senate Bill No. 1630 was not even an amendment by substitution, assuming this was permissible. To "substitute" means "to take the place of; to put or use in place of another." Senate Bill No. 1630 did not, upon its approval replace (and thus eliminate) House Bill No. 11197. Both bills retained their separate identities until they were joined or united into what became the enrolled bill and ultimately R.A. No. 7716. The certification in the enrolled bill says it all. It is clear that R.A. No. 7716 did not originate exclusively in the House of Representatives. To go back to my earlier observations, this conclusion does not require the reversal of U.S. vs. Pons and an inquiry by this Court into the proceedings of the legislature beyond the recitals of its journals. All we need to do is consider the certification in the enrolled bill and, without entering the precincts of Congress, declare that by this own admission it has, indeed, not complied with the Constitution. While this Court respects the prerogatives of the other departments, it will not hesitate to rise to its higher duty to require from them, if they go astray, full and strict compliance with the fundamental law. Our fidelity to it must be total. There is no loftier principle in our democracy than the supremacy of the Constitution, to which all must submit. I vote to invalidate R.A. No. 7716 for violation of Article VI, Sec. 24, of the Constitution.

REGALADO, J.: It would seem like an inconceivable irony that Republic Act No. 7716 which, so respondents claim, was conceived by the collective wisdom of a bicameral Congress and crafted with sedulous care by two branches of government should now be embroiled in challenges to its validity for having been enacted in disregard of mandatory prescriptions of the Constitution itself. Indeed, such impugnment by petitioners goes beyond merely the procedural flaws in the parturition of the law. Creating and regulating as it does definite rights to property, but with its own passage having been violative of explicit provisions of the organic law, even without going into the intrinsic merits of the provisions of Republic Act No. 7716 its substantive invalidity is pro facto necessarily entailed. How it was legislated into its present statutory existence is not in serious dispute and need not detain us except for a recital of some salient and relevant facts. The House of Representatives passed House Bill No. 11197 1 on third reading on November 17, 1993 and, the following day, It transmitted the same to the Senate for concurrence. On its part, the Senate approved Senate Bill No. 1630 on second and third

readings on March 24, 1994. It is important to note in this regard that on March 22, 1994, said S.B. No. 1630 had been certified by President Fidel V. Ramos for immediate enactment to meet a public emergency, that is, a growing budgetary deficit. There was no such certification for H.B. No. 11197 although it was the initiating revenue bill. It is, therefore, not only a curious fact but, more importantly, an invalid procedure since that Presidential certification was erroneously made for and confined to S.B. No. 1630 which was indisputably a tax bill and, under the Constitution, could not validly originate in the Senate. Whatever is claimed in favor of S.B. No. 1630 under the blessings of that certification, such as its alleged exemption from the three separate readings requirement, is accordingly negated and rendered inutile by the inefficacious nature of said certification as it could lawfully have been issued only for a revenue measure originating exclusively from the lower House. To hold otherwise would be to validate a Presidential certification of a bill initiated in the Senate despite the Constitutional prohibition against its originating therefrom. Equally of serious significance is the fact that S.B. No. 1630 was reported out in Committee Report No. 349 submitted to the Senate on February 7, 1994 and approved by that body "in substitution of S.B. No. 1129," while merely "taking into consideration P.S. No. 734 and H.B. No. 11197." 2 S.B. No. 1630, therefore, was never filed in substitution of either P.S. No. 734 or, more emphatically, of H.B. No. 11197 as these two legislative issuances were merely taken account of, at the most, as referential bases or materials. This is not a play on misdirection for, in the first instance, the respondents assure us that H.B. No. 11197 was actually the sole source of and started the whole legislative process which culminated in Republic Act No. 7716. The participation of the Senate in enacting S.B. No. 1630 was, it is claimed, justified as it was merely in pursuance of its power to concur in or propose amendments to H.B. No. 11197. Citing the 83-year old case of Flint vs. Stone Tracy Co., 3 it is blithely announced that such power to amend includes an amendment by substitution, that is, even the extent of substituting the entire H.B. No. 11197 by an altogether completely new measure of Senate provenance. Ergo, so the justification goes, the Senate acted perfectly in accordance with its amending power under Section 24, Article VI of the Constitution since it merely proposed amendments through a bill allegedly prepared in advance. This is a mode of argumentation which, by reason of factual inaccuracy and logical implausibility, both astounds and confounds. For, it is of official record that S.B. No. 1630 was filed, certified and enacted in substitution of S.B. No. 1129 which in itself was likewise in derogation of the Constitutional prohibition against such initiation of a tax bill in the Senate. In any event, S.B. No. 1630 was neither intended as a bill to be adopted by the Senate nor to be referred to the bicameral conference committee as a substitute for H.B. No. 11197. These indelible facts appearing in official documents cannot be erased by any amount of strained convolutions or incredible pretensions that S.B. No. 1630 was supposedly enacted in anticipation of H.B. No. 11197. On that score alone, the invocation by the Solicitor General of the hoary concept of amendment by substitution falls flat on its face. Worse, his concomitant citation of Flint to recover from that prone position only succeeded in turning the same postulation over, this time supinely flat on its back. As elsewhere noted by some colleagues, which I will just refer to briefly to avoid duplication, respondents initially sought sanctuary in that doctrine supposedly laid down in Flint, thus: "It has, in fact, been held that the substitution of an entirely new measure for the one originally proposed can be supported as a valid amendment." 4 (Emphasis supplied.) During the interpellation by the writer at the oral argument held in these cases, the attention of the Solicitor General was called to the fact that the amendment in Flint consisted only of a single item, that its, the substitution of a corporate tax for an inheritance tax proposed in a general revenue bill; and that the text of the decision therein nowhere contained the supposed doctrines he quoted and ascribed to the court, as those were merely summations of arguments of counsel therein. It is indeed a source of disappointment for us, but an admission of desperation on his part, that, instead of making a clarification or a defense of his contention, the Solicitor General merely reproduced all over again 5 the same quotations as they appeared in his original consolidated comment, without venturing any explanation or justification. The aforestated dissemblance, thus unmasked, has further undesirable implications on the contentions advanced by respondents in their defense. For, even indulging respondents ex gratia argumenti in their pretension that S.B. No. 1630 substituted or replaced H.B. No. 11197, aside from muddling the issue of the true origination of the disputed law, this would further enmesh respondents in a hopeless contradiction. In a publication authorized by the Senate and from which the Solicitor General has liberally quoted, it is reported as an accepted rule therein that "(a)n amendment by substitution when approved takes the place of the principal bill. C.R. March 19, 1963, p. 943." 6 Stated elsewise, the principal bill is supplanted and goes out of actuality. Applied to the present situation, and following respondents' submission that H.B. No. 11197 had been substituted or replaced in its entirety, then in law it had no further existence for purposes of the subsequent stages of legislation except, possibly, for referential data. Now, the enrolled bill thereafter submitted to the President of the Philippines, signed by the President of the Senate and the Speaker of the House of Representatives, carried this solemn certification over the signatures of the respective secretaries of both chambers: "This Act which is a consolidation of House Bill No. 11197 and Senate Bill No. 1630 was finally passed by the House of Representatives and the Senate

on April 27, 1994, and May 2, 1994." (Emphasis mine.) In reliance thereon, the Chief Executive signed the same into law as Republic Act No. 7716. The confusion to which the writer has already confessed is now compounded by that official text of the aforequoted certification which speaks, and this cannot be a mere lapsus calami, of two independent and existing bills (one of them being H.B. No. 11197) which were consolidated to produce the enrolled bill. In parliamentary usage, to consolidate two bills, is to unite them into one 7 and which, in the case at bar, necessarily assumes that H.B. No. 11197 never became legally inexistent. But did not the Solicitor General, under the theory of amendment by substitution of the entire H.B. No. 11197 by S.B. No. 1630, thereby premise the same upon the replacement, hence the total elimination from the legislative process, of H.B. 11197? It results, therefore, that to prove compliance with the requirement for the exclusive origination of H.B. No. 11197, two alternative but inconsistent theories had to be espoused and defended by respondents' counsel. To justify the introduction and passage of S.B. No. 1630 in the Senate, it was supposedly enacted only as an amendment by substitution, hence on that theory H.B. No. 11197 had to be considered as displaced and terminated from its role or existence. Yet, likewise for the same purpose but this time on the theory of origination by consolidation, H.B. No. 11197 had to be resuscitated so it could be united or merged with S.B. No. 1630. This latter alternative theory, unfortunately, also exacerbates the constitutional defect for then it is an admission of a dual origination of the two tax bills, each respectively initiated in and coming from the lower and upper chambers of Congress. Parenthetically, it was also this writer who pointedly brought this baffling situation to the attention of the Solicitor General during the aforesaid oral argument, to the extent of reading aloud the certification in full. We had hoped thereby to be clarified on these vital issue in respondents' projected memorandum, but we have not been favored with an explanation unraveling this delimma. Verily, by passing sub silentio on these intriguing submissions, respondents have wreaked havoc on both logic and law just to gloss over their non-compliance with the Constitutional mandate for exclusive origination of a revenue bill. The procedure required therefor, we emphatically add, can be satisfied only by complete and strict compliance since this is laid down by the Constitution itself and not by a mere statute. This writer consequently agrees with the clearly tenable proposition of petitioners that when the Senate passed and approved S.B. No. 1630, had it certified by the Chief Executive, and thereafter caused its consideration by the bicameral conference committee in total substitution of H.B. No. 11197, it clearly and deliberately violated the requirements of the Constitution not only in the origination of the bill but in the very enactment of Republic Act No. 7716. Contrarily, the shifting sands of inconsistency in the arguments adduced for respondents betray such lack of intellectual rectitude as to give the impression of being mere rhetorics in defense of the indefensible. We are told, however, that by our discoursing on the foregoing issues we are introducing into nonjusticiable areas long declared verboten by such time-honored doctrines as those on political questions, the enrolled bill theory and the respect due to two co-equal and coordinate branches of Government, all derived from the separation of powers inherent in republicanism. We appreciate the lectures, but we are not exactly unaware of the teachings in U.S. vs. Pons, 8 Mabanag, vs. Lopez Vito, 9 Casco Philippine Chemical Co., Inc. vs. Gimenez, etc., et al., 10 Morals vs. Subido, etc., 11 and Philippine Judges Association, etc., et al. vs. Prado, etc., et al., 12 on the one hand, and Taada, et al. vs. Cuenco, et al., 13 Sanidad, et al., vs. Commission on Elections, et al., 14 and Daza vs. Singson, et al., 15 on the other, to know which would be applicable to the present controversy and which should be rejected. But, first, a positional exordium. The writer of this opinion would be among the first to acknowledge and enjoin not only courtesy to, but respect for, the official acts of the Executive and Legislative departments, but only so long as the same are in accordance with or are defensible under the fundamental charter and the statutory law. He would readily be numbered in the ranks of those who would preach a reasoned sermon on the separation of powers, but with the qualification that the same are not contained in tripartite compartments separated by empermeable membranes. He also ascribes to the general validity of American constitutional doctrines as a matter of historical and legal necessity, but not to the extent of being oblivious to political changes or unmindful of the fallacy of undue generalization arising from myopic disregard of the factual setting of each particular case. These ruminations have likewise been articulated and dissected by my colleagues, hence it is felt that the only issue which must be set aright in this dissenting opinion is the so-called enrolled bill doctrine to which we are urged to cling with reptilian tenacity. It will be preliminarily noted that the official certification appearing right on the face of Republic Act No. 7716 would even render unnecessary any further judicial inquiry into the proceedings which transpired in the two legislative chambers and, on a parody of tricameralism, in the bicameral conference committee. Moreover, we have the excellent dissertations of some of my colleagues on these matters, but respondents insist en contra that the congressional proceedings cannot properly be inquired into by this Court. Such objection confirms a suppressive pattern aimed at sacrificing the rule of law to the fiat of expediency. Respondents thus emplaced on their battlements the pronouncement of this Court in the aforecited case of Philippine Judges Association vs. Prado. 16 Their reliance thereon falls into the same error committed by their seeking refuge in the Flint case, ante. which, as has earlier been demonstrated (aside from the quotational misrepresentation), could not be on par with the factual situation in the present case. Flint, to

repeat, involved a mere amendment on a single legislative item, that is, substituting the proposal therein of an inheritance tax by one on corporate tax. Now, in their submission based on Philippine Judges Association, respondents studiously avoid mention of the fact that the questioned insertion referred likewise to a single item, that is, the repeal of the franking privilege thretofore granted to the judiciary. That both cases cannot be equated with those at bar, considering the multitude of items challenged and the plethora of constitutional violations involved, is too obvious to belabor. Legal advocacy and judicial adjudication must have a becoming sense of qualitative proportion, instead of lapsing into the discredited and maligned practice of yielding blind adherence to precedents. The writer unqualifiedly affirms his respect for valid official acts of the two branches of government and eschews any unnecessary intrusion into their operational management and internal affairs. These, without doubt, are matters traditionally protected by the republican principle of separation of powers. Where, however, there is an overriding necessity for judicial intervention in light of the pervasive magnitude of the problems presented and the gravity of the constitutional violations alleged, but this Court cannot perform its constitutional duty expressed in Section 1, Article VIII of the Constitution unless it makes the inescapable inquiry, then the confluence of such factors should compel an exception to the rule as an ultimate recourse. The cases now before us present both the inevitable challenge and the inescapable exigency for judicial review. For the Court to now shirk its bounden duty would not only project it as a citadel of the timorous and the slothful, but could even undermine its raison d'etre as the highest and ultimate tribunal. Hence, this dissenting opinion has touched on events behind and which transpired prior to the presentation of the enrolled bill for approval into law. The details of that law which resulted from the legislative action followed by both houses of Congress, the substantive validity of whose provisions and the procedural validity of which legislative process are here challenged as unconstitutional, have been graphically presented by petitioners and admirably explained in the respective opinions of my brethren. The writer concurs in the conclusions drawn therefrom and rejects the contention that we have unjustifiably breached the dike of the enrolled bill doctrine. Even in the land of its source, the so-called conclusive presumption of validity originally attributed to that doctrine has long been revisited and qualified, if not altogether rejected. On the competency of judicial inquiry, it has been held that "(u)nder the 'enrolled bill rule' by which an enrolled bill is sole expository of its contents and conclusive evidence of its existence and valid enactment, it is nevertheless competent for courts to inquire as to what prerequisites are fixed by the Constitution of which journals of respective houses of Legislature are required to furnish the evidence." 17 In fact, in Gwynn vs. Hardee, etc., et al., 18 the Supreme Court of Florida declared: (1) While the presumption is that the enrolled bill, as signed by the legislative officers and filed with the secretary of state, is the bill as it passed, yet this presumption is not conclusive, and when it is shown from the legislative journals that a bill though engrossed and enrolled, and signed by the legislative officers, contains provisions that have not passed both houses, such provisions will be held spurious and not a part of the law. As was said by Mr. Justice Cockrell in the case of Wade vs. Atlantic Lumber Co., 51 Fla. 628, text 633, 41 So. 72, 73: This Court is firmly committed to the holding that when the journals speak they control, and against such proof the enrolled bill is not conclusive. More enlightening and apropos to the present controversy is the decision promulgated on May 13, 1980 by the Supreme Court of Kentucky in D & W Auto Supply, et al. vs. Department of Revenue, et al., 19 pertinent exceprts wherefrom are extensively reproduced hereunder: . . . In arriving at our decision we must, perforce, reconsider the validity of a long line of decisions of this court which created and nurtured the so-called "enrolled bill" doctrine. xxx xxx xxx [1] Section 46 of the Kentucky Constitution sets out certain procedures that the legislature must follow before a bill can be considered for final passage. . . . . xxx xxx xxx . . . Under the enrolled bill doctrine as it now exists in Kentucky, a court may not look behind such a bill, enrolled and certified by the appropriate officers, to determine if there are any defects. xxx xxx xxx . . . In Lafferty, passage of the law in question violated this provision, yet the bill was

properly enrolled and approved by the governor. In declining to look behind the law to determine the propriety of its enactment, the court enunciated three reasons for adopting the enrolled bill rule. First, the court was reluctant to scrutinize the processes of the legislature, an equal branch of government. Second, reasons of convenience prevailed, which discouraged requiring the legislature to preserve its records and anticipated considerable complex litigation if the court ruled otherwise. Third, the court acknowledged the poor record-keeping abilities of the General Assembly and expressed a preference for accepting the final bill as enrolled, rather than opening up the records of the legislature. . . . . xxx xxx xxx Nowhere has the rule been adopted without reason, or as a result of judicial whim. There are four historical bases for the doctrine. (1) An enrolled bill was a "record" and, as such, was not subject to attack at common law. (2) Since the legislature is one of the three branches of government, the courts, being coequal, must indulge in every presumption that legislative acts are valid. (3) When the rule was originally formulated, record-keeping of the legislatures was so inadequate that a balancing of equities required that the final act, the enrolled bill, be given efficacy. (4) There were theories of convenience as expressed by the Kentucky court in Lafferty. The rule is not unanimous in the several states, however, and it has not been without its critics. From an examination of cases and treaties, we can summarize the criticisms as follows: (1) Artificial presumptions, especially conclusive ones, are not favored. (2) Such a rule frequently (as in the present case) produces results which do not accord with facts or constitutional provisions. (3) The rule is conducive to fraud, forgery, corruption and other wrongdoings. (4) Modern automatic and electronic record-keeping devices now used by legislatures remove one of the original reasons for the rule. (5) The rule disregards the primary obligation of the courts to seek the truth and to provide a remedy for a wrong committed by any branch of government. In light of these considerations, we are convinced that the time has come to re-examine the enrolled bill doctrine. [2] This court is not unmindful of the admonition of the doctrine of stare decisis. The maxim is "Stare decisis et non quieta movere," which simply suggests that we stand by precedents and not disturb settled points of law. Yet, this rule is not inflexible, nor is it of such a nature as to require perpetuation of error or logic. As we stated in Daniel's Adm'r v. Hoofnel, 287 Ky 834, 155 S.W. 2d 469, 471-72 (1941) (citations omitted): The force of the rule depends upon the nature of the question to be decided and the extent of the disturbance of rights and practices which a change in the interpretation of the law or the course of judicial opinions may create. Cogent considerations are whether there is clear error and urgent reasons "for neither justice nor wisdom requires a court to go from one doubtful rule to another," and whether or not the evils of the principle that has been followed will be more injurious than can possibly result from a change. Certainly, when a theory supporting a rule of law is not grounded on facts, or upon sound logic, or is unjust, or has been discredited by actual experience, it should be discarded, and with it the rule it supports. [3] It is clear to us that the major premise of the Lafferty decision, the poor recordkeeping of the legislature, has disappeared. Modern equipment and technology are the rule in record-keeping by our General Assembly. Tape recorders, electric typewriters, duplicating machines, recording equipment, printing presses, computers, electronic voting machines, and the like remove all doubts and fears as to the ability of the General Assembly to keep accurate and readily accessible records. It is also apparent that the "convenience" rule is not appropriate in today's modern and developing judicial philosophy. The fact that the number and complexity of lawsuits may increase is not persuasive if one is mindful that the overriding purpose of our judicial system is to discover the truth and see that justice is done. The existence of difficulties and complexities should not deter this pursuit and we reject any doctrine or presumption that so provides. Lastly, we address the premises that the equality of the various branches of government requires that we shut our eyes to constitutional failings and other errors of our coparceners in government. We simply do not agree. Section 26 of the Kentucky Constitution provides that any law contrary to the constitution is "void." The proper exercise of judicial authority requires us to recognize any law which is unconstitutional and to declare it void. Without belaboring the point, we believe that under section 228

of the Kentucky Constitution it is our obligation to "support . . . the Constitution of the commonwealth." We are sworn to see that violations of the constitution by any person, corporation, state agency or branch of government are brought to light and corrected. To countenance an artificial rule of law that silences our voices when confronted with violations of our constitution is not acceptable to this court. We believe that a more reasonable rule is the one which Professor Sutherland describes as the "extrinsic evidence" rule . . . Under this approach there is a prima facie presumption that an enrolled bill is valid, but such presumption may be overcome by clear, satisfactory and convincing evidence establishing that constitutional requirements have not been met. We therefore overrule Lafferty v. Huffman and all other cases following the so-called enrolled bill doctrine, to the extent that there is no longer a conclusive presumption that an enrolled bill is valid. . . . (Emphasis mine.) Undeniably, the value-added tax system may have its own merits to commend its continued adoption, and the proposed widening of its base could achieve laudable governmental objectives if properly formulated and conscientiously implemented. We would like to believe, however, that ours is not only an enlightened democracy nurtured by a policy of transparency but one where the edicts of the fundamental law are sacrosanct for all, barring none. While the realization of the lofty ends of this administration should indeed be the devout wish of all, likewise barring none, it can never be justified by methods which, even if unintended, are suggestive of Machiavellism. Accordingly, I vote to grant the instant petitions and to invalidate Republic Act No. 7716 for having been enacted in violation of Section 24, Article VI of the Constitution.

DAVIDE, JR., J.: The legislative history of R.A. No. 7716, as highlighted in the Consolidated Memorandum for the public respondents submitted by the Office of the Solicitor General, demonstrates beyond doubt that it was passed in violation or deliberate disregard of mandatory provisions of the Constitution and of the rules of both chambers of Congress relating to the enactment of bills. I therefore vote to strike down R.A. No. 7716 as unconstitutional and as having been enacted with grave abuse of discretion. The Constitution provides for a bicameral Congress. Therefore, no bill can be enacted into law unless it is approved by both chambers the Senate and the House of Representatives (hereinafter House). Otherwise stated, each chamber may propose and approve a bill, but until it is submitted to the other chamber and passed by the latter, it cannot be submitted to the President for its approval into law. Paragraph 2, Section 26, Article VI of the Constitution provides: No bill passed by either House shall become a law unless it has passed three readings on separate days, and printed copies thereof in its final form have been distributed to its Members three days before its passage, except when the President certifies to the necessity of its immediate enactment to meet a public calamity or emergency. Upon the last reading of a bill, no amendment thereto shall be allowed, and the vote thereon shall be taken immediately thereafter, and the yeas and nays entered in the journal. The "three readings" refers to the three readings in both chambers. There are, however, bills which must originate exclusively in the House. Section 24, Article VI of the Constitution enumerates them: Sec. 24. All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments. Webster's Third New International Dictionary 1 defines originate as follows: vt 1: to cause the beginning of: give rise to: INITIATE . . . 2. to start (a person or thing) on a course or journey . . . vi: to take or have origin: be derived: ARISE, BEGIN, START . . .

Black's Law Dictionary 2 defines the word exclusively in this wise: Apart from all others; only; solely; substantially all or for the greater part. To the exclusion of all others; without admission of others to participation; in a manner to exclude. In City Mayor vs. The Chief of Philippine Constabulary, 3 this Court said: The term "exclusive" in its usual and generally accepted sense, means possessed to the exclusion of others; appertaining to the subject alone, not including, admitting or pertaining to another or others, undivided, sole. (15 Words and Phrases, p. 510, citing Mitchel v. Tulsa Water, Light, Heat and Power Co., 95 P. 961, 21 Okl. 243; and p. 513, citing Commonwealth v. Superintendent of House of Correction, 64 Pa. Super. 613, 615). Indisputably then, only the House can cause the beginning or initiate the passage of any appropriation, revenue, or tarriff bill, any bill increasing the public debt, any bill of local application, or any private bill. The Senate can only "propose or concur with amendments." Under the Rules of the Senate, the first reading is the reading of the title of the bill and its referral to the corresponding committee; the second reading consists of the reading of the bill in the form recommended by the corresponding committee; and the third reading is the reading of the bill in the form it will be after approval on second reading. 4 During the second reading, the following takes place: (1) Second reading of the bill; (2) Sponsorship by the Committee Chairman or any member designated by the corresponding committee; (3) If a debate ensues, turns for and against the bill shall be taken alternately; (4) The sponsor of the bill closes the debate; (5) After the close of the debate, the period of amendments follows; (6) Then, after the period of amendments is closed, the voting on the bill on second reading. 5 After approval on second readings, printed copies thereof in its final form shall be distributed to the Members of the Senate at least three days prior to the third reading, except in cases of certified bills. At the third reading, the final vote shall be taken and the yeas and nays shall be entered in the Journal. 6 Under the Rules of the House, the first reading of a bill consists of a reading of the number, title, and author followed by the referral to the appropriate committees; 7 the second reading consists of the reading in full of the bill with the amendments proposed by the committee, it any; 8 and the third reading is the reading of the bill in the form as approved on second reading and takes place only after printed copies thereof in its final form have been distributed to the Members at least three days before, unless the bill is certified. 9 At the second reading, the following takes place: (1) Reading of the bill; (2) Sponsorship; (3) Debates; (4) Period of Amendments; and (5) Voting on Second Reading. 10 At the third reading, the votes shall be taken immediately and the yeas and nays entered in the Journal. 11 Clearly, whether in the Senate or in the House, every bill must pass the three readings on separate days, except when the bill is certified. Amendments to the bill on third reading are constitutionally prohibited. 12 After its passage by one chamber, the bill should then be transmitted to the other chamber for its concurrence. Section 83, Rule XIV of the Rules of the House expressly provides: Sec. 83. Transmittal to Senate. The Secretary General, without need of express

order, shall transmit to the Senate for its concurrence all the bills and joint or concurrent resolutions approved by the House or the amendments of the House to the bills or resolutions of the Senate, as the case may be. If the measures approved without amendments are bills or resolutions of the Senate, or if amendments of the Senate to bills of the House are accepted, he shall forthwith notify the Senate of the action taken. Simplified, this rule means that: 1. As to a bill originating in the House: (a) Upon its approval by the House, the bill shall be transmitted to the Senate; (b) The Senate may approve it with or without amendments; (c) The Senate returns the bill to the House; (d) The House may accept the Senate amendments; if it does not, the Secretary General shall notify the Senate of that action. As hereinafter be shown, a request for conference shall then be in order. 2. As to bills originating in the Senate; (a) Upon its approval by the Senate, the bill shall be transmitted to the House; (b) The House may approve it with or without amendments; (c) The House then returns it to the Senate, informing it of the action taken; (d) The Senate may accept the House amendements; if it does not, it shall notify the House and make a request for conference. The transmitted bill shall then pass three readings in the other chamber on separate days. Section 84, Rule XIV of the Rules of the House states: Sec. 84. Bills from the Senate. The bills, resolutions and communications of the Senate shall be referred to the corresponding committee in the same manner as bills presented by Members of the House. and Section 51, Rule XXIII of the Rules of the Senate provides: Sec. 51. Prior to their final approval, bills and joint resolutions shall be read at least three times. It is only when the period of disagreement is reached, i.e., amended proposed by one chamber to a bill originating from the other are not accepted by the latter, that a request for conference is made or is in order. The request for conference is specifically covered by Section 26, Rule XII of the Rules of the Senate which reads: Sec. 26. In the event that the Senate does not agree with the House of Representatives on the provision of any bill or joint resolution, the differences shall be settled by a conference committee of both Houses which shall meet within ten days after its composition. and Section 85, Rule XIV of the Rules of the House which reads: Sec. 85. Conference Committee Reports. In the event that the House does not agree with the Senate on the amendments to any bill or joint resolution, the differences may be settled by conference committees of both Chambers. The foregoing provisions of the Constitution and the Rules of both chambers of Congress are mandatory. In his Treatise On the Constitutional Limitations, 13 more particularly on enactment of bill, Cooley states: Where, for an instance, the legislative power is to be exercised by two houses, and by settled and well-understood parliamentary law these two houses are to hold separate

sessions for their deliberations, and the determination of the one upon a proposes law is to be submitted to the separate determination of the other, the constitution, in providing for two houses, has evidently spoken in reference to this settled custom, incorporating it as a rule of constitutional interpretation; so that it would require no prohibitory clause to forbid the two houses from combining in one, and jointly enacting laws by the vote of a majority of all. All those rules which are of the essentials of lawmaking must be observed and followed; and it is only the customary rules of order and routine, such as in every deliberative body are always understood to be under its control, and subject to constant change at its will, that the constitution can be understood to have left as matters of discretion, to be established, modified, or abolished by the bodies for whose government in non-essential matters they exist. In respect of appropriation, revenue, or tariff bills, bills increasing the public debt, bills of local application, or private bills, the return thereof to the House after the Senate shall have "proposed or concurred with amendments" for the former either to accept or reject the amendments would not only be in conformity with the foregoing rules but is also implicit from Section 24 of Article VI. With the foregoing as our guiding light, I shall now show the violations of the Constitution and of the Rules of the Senate and of the House in the passage of R.A. No. 7716. VIOLATIONS OF SECTION 24, ARTICLE VI OF THE CONSTITUTION: First violation. Since R.A. No. 7716 is a revenue measure, it must originate exclusively in the House not in the Senate. As correctly asserted by petitioner Tolentino, on the face of the enrolled copy of R.A. No. 7716, it is a "CONSOLIDATION OF HOUSE BILL NO. 11197 AND SENATE BILL NO. 1630." In short, it is an illicit marriage of a bill which originated in the House and a bill which originated in the Senate. Therefore, R.A. No. 7716 did not originate exclusively in the House. The only bill which could serve as a valid basis for R.A. No. 7716 is House Bill (HB) No. 11197. This bill, which is the substitute bill recommended by the House Committee on Ways and Means in substitution of House Bills Nos. 253, 771, 2450, 7033, 8086, 9030, 9210, 9397, 10012, and 10100, and covered by its Committee Report No. 367, 14 was approved on third reading by the House on 17 November 1993. 15 Interestingly, HB No. 9210, 16 which was filed by Representative Exequiel B. Javier on 19 May 1993, was certified by the President in his letter to Speaker Jose de Venecia, Jr. of 1 June 1993. 17 Yet, HB No. 11197, which substituted HB No. 9210 and the others above-stated, was not. Its certification seemed to have been entirely forgotten. On 18 November 1993, the Secretary-General of the House, pursuant to Section 83, Rule XIV of the Rules of the House, transmitted to the President of the Senate HB No. 11197 and requested the concurrence of the Senate therewith. 18 However, HB No. 11197 had passed only its first reading in that Senate by its referral to its Committee on Ways and Means. That Committee never deliberated on HB No. 11197 as it should have. It acted only on Senate Bill (SB) No. 1129 19 introduced by Senator Ernesto F. Herrera on 1 March 1993. It then prepared and proposed SB No. 1630, and in its Committee Report No. 349 20 which was submitted to the Senate on 7 February 1994, 21 it recommended that SB No. 1630 be approved "in substitution of S.B. No. 1129, taking into consideration P.S. Res. No. 734 and H.B. No. 11197." 22 It must be carefully noted that SB No. 1630 was proposed and submitted for approval by the Senate in SUBSTITUTION of SB No. 1129, and not HB No. 11197. Obviously, the principal measure which the Committee deliberated on and acted upon was SB No. 1129 and not HB No. 11197. The latter, instead of being the only measure to be taken up, deliberated upon, and reported back to the Senate for its consideration on second reading and, eventually, on third reading, was, at the most, merely given by the Committee a passing glance. This specific unequivocal action of the Senate Committee on Ways and Means, i.e., proposing and recommending approval of SB No. 1630 as a substitute for or in substitution of SB No. 1129 demolishes at once the thesis of the Solicitor General that: Assuming that SB 1630 is distinct from HB 11197, amendment by substitution is within the purview of Section 24, Article VI of the Constitution. because, according to him, (a) "Section 68, Rule XXIX of the Rules of the Senate authorizes an amendment by substitution and the only condition required is that "the text thereof is submitted in writing"; and (b) "[I]n Flint vs. Stone Tracy Co. (220 U.S. 107) the United Stated Supreme Court, interpreting the provision in the United States Constitution similar to Section 24, Article VI of the Philippine Constitution, stated that the power of the Senate to amend a revenue bill includes substitution of an entirely new measure for the one originally proposed by the House of Representatives." 23 This thesis is utterly without merit. In the first place, it reads into the Committee Report something which it had not contemplated, that is, to propose SB No. 1630 in substitution of HB No. 11197; or speculates that the Committee may have committed an error in stating that it is SB No. 1129, and not HB No. 11197,

which is to be substituted by SB No. 1630. Either, of course, is unwarranted because the words of the Report, solemnly signed by the Chairman, Vice-Chairman (who dissented), seven members, and three ex-officio members, 24 leave no room for doubt that although SB No. 1129, P.S. Res No. 734, and HB No. 11197 were referred to and considered by the Committee, it had prepared the attached SB No. 1630 which it recommends for approval "in substitution of S.B. No. 11197, taking into consideration P.S. No. 734 and H.B. No. 11197 with Senators Herrera, Angara, Romulo, Sotto, Ople and Shahani as authors." To do as suggested would be to substitute the judgment of the Committee with another that is completely inconsistent with it, or, simply, to capriciously ignore the facts. In the second place, the Office of the Solicitor General intentionally made it appear, to mislead rather than to persuade us, that in Flint vs. Stone Tracy Co. 25 The U.S. Supreme Court ruled, as quoted by it in the Consolidated Memorandum for Respondents, as follows: 26 The Senate has the power to amend a revenue bill. This power to amend is not confined to the elimination of provisions contained in the original act, but embraces as well the addition of such provisions thereto as may render the original act satisfactory to the body which is called upon to support it. It has, in fact, been held that the substitution of an entirely new measure for the one originally proposed can be supported as a valid amendment. xxx xxx xxx It is contended in the first place that this section of the act is unconstitutional, because it is a revenue measure, and originated in the Senate in violation of Section 7 of article 1 of the Constitution, providing that "all bills for raising revenue shall originate in the House of Representatives, but the Senate may propose or concur with the amendments, as on other bills." The first part is not a statement of the Court, but a summary of the arguments of counsel in one of the companion cases (No. 425, entitled, "Gay vs. Baltic Mining Co."). The second part is the second paragraph of the opinion of the Court delivered by Mr. Justice Day. The misrepresentation that the first part is a statement of the Court is highly contemptuous. To show such deliberate misrepresentation, it is well to quote what actually are found in 55 L.Ed. 408, 410, to wit: Messrs. Charles A. Snow and Joseph H. Knight filed a brief for appellees in No. 425: xxx xxx xxx The Senate has the power to amend a revenue bill. This power to amend is not confined to the elimination of provisions contained in the original act, but embraces as well the addition of such provisions thereto as may render the original act satisfactory to the body which is called upon to support it. It has, in fact, been held that the substitution of an entirely new measure for the one originally proposed can be supported as a valid amendment. Brake v. Collison, 122 Fed. 722. Mr. James L. Quackenbush filed a statement for appellees in No. 442. Solicitor General Lehmann (by special leave) argued the cause for the United States on reargument. Mr. Justice Day delivered the opinion of the court: These cases involve the constitutional validity of 38 of the act of Congress approved August 5, 1909, known as "the corporation tax" law. 36 Stat. at L. 11, 112-117, chap. 6, U.S. Comp. Stat. Supp. 1909, pp. 659, 844-849. It is contended in the first place that this section of the act is unconstitutional, because it is a revenue measure, and originated in the Senate in violation of 7 of article 1 of the Constitution, providing the "all bills for raising revenue shall originate in the House of Representatives, but the Senate may propose or concur with the amendments, as on other bills." The history of the act is contained in the government's brief, and is accepted as correct, no objection being made to its accuracy.

This statement shows that the tariff bill of which the section under consideration is a part, originated in the House of Representatives, and was there a general bill for the collection of revenue. As originally introduced, it contained a plan of inheritance taxation. In the Senate the proposed tax was removed from the bill, and the corporation tax, in a measure, substituted therefor. The bill having properly originated in the House, we perceive no reason in the constitutional provision relied upon why it may not be amended in the Senate in the manner which it was in this case. The amendment was germane to the subject-matter of the bill, and not beyond the power of the Senate to propose. (Emphasis supplied) xxx xxx xxx As shown above, the underlined portions were deliberately omitted in the quotation made by the Office of the Solicitor General. In the third place, a Senate amendment by substitution with an entirely new bill of a bill, which under Section 24, Article VI of the Constitution can only originate exclusively in the House, is not authorized by said Section 24. Flint vs. Stone Tracy Co. cannot be invoked in favor of such a view. As pointed out by Mr. Justice Florenz D. Regalado during the oral arguments of these cases and during the initial deliberations thereon by the Court, Flint involves a Senate amendment to a revenue bill which, under the United States Constitution, should originate from the House of Representatives. The amendment consisted of the substitution of a corporation tax in lieu of the plan of inheritance taxation contained in a general bill for the collection of revenue as it came from the House of Representatives where the bill originated. The constitutional provision in question is Section 7, Article I of the United States Constitution which reads: Sec. 7. Bills and Resolutions. All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments, as on other Bills. This provision, contrary to the misleading claim of the Solicitor General, is not similar to Section 24, Article VI of our Constitution, which for easy comparison is hereunder quoted again: All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments. Note that in the former the word exclusively does not appear. And, in the latter, the phrase "as on other Bill," which is found in the former, does not appear. These are very significant in determining the authority of the upper chamber over the bills enumerated in Section 24. Since the origination is not exclusively vested in the House of Representatives of the United States, the Senate's authority to propose or concur with amendments is necessarily broader. That broader authority is further confirmed by the phrase "as on other Bills," i.e., its power to propose or concur with amendments thereon is the same as in ordinary bills. The absence of this phrase in our Constitution was clearly intended to restrict or limit the Philippine Senate's power to propose or concur with amendments. In the light of the exclusivity of origination and the absence of the phrase "as on other Bills," the Philippine Senate cannot amend by substitution with an entirely new bill of its own any bill covered by Section 24 of Article VI which the House of Representatives transmitted to it because such substitution would indirectly violate Section 24. These obvious substantive differences between Section 7, Article I of the U.S. Constitution and Section 24, Article VI of our Constitution are enough reasons why this Court should neither allow itself to be misled by Flint vs. Stone nor be awed by Rainey vs. United States 27 and the opinion of Messrs. Ogg and Ray 28 which the majority cites to support the view that the power of the U.S. Senate to amend a revenue measure is unlimited. Rainey concerns the Tariff Act of 1909 of the United States of America and specifically involved was its Section 37 which was an amendment introduced by the U.S. Senate. It was claimed by the petitioners that the said section is a revenue measure which should originate in the House of Representatives. The U.S. Supreme Court, however, adopted and approved the finding of the court a quo that: the section in question is not void as a bill for raising revenue originating in the Senate, and not in the House of Representatives. It appears that the section was proposed by the Senate as an amendment to a bill for raising revenue which originated in the House. That is sufficient. Messrs. Ogg and Ray, who are professors emeritus of political science, based their statement not even on a case decided by the U.S. Supreme Court but on their perception of what Section 7, Article I of the U.S. Constitution permits. In the tenth edition (1951) of their work, they state: Any bill may make its first appearance in either house, except only that bills for raising revenue are required by the constitution to "originate" in the House of Representatives.

Indeed, through its right to amend revenue bills, even to the extent of substituting new ones, the Senate may, in effect, originate them also. 29 Their "in effect" conclusion is, of course, logically correct because the word exclusively does not appear in said Section 7, Article I of the U.S. Constitution. Neither can I find myself in agreement with the view of the majority that the Constitution does not prohibit the filing in the Senate of a substitute bill in anticipation of its receipt of the bill from the House so long as action by the Senate as a body is withheld pending receipt of the House bill, thereby stating, in effect, that S.B. No. 1129 was such an anticipatory substitute bill, which, nevertheless, does not seem to have been considered by the Senate except only after its receipt of H.B. No. 11179 on 23 November 1993 when the process of legislation in respect of it began with a referral to the Senate Committee on Ways and Means. Firstly, to say that the Constitution does not prohibit it is to render meaningless Section 24 of Article VI or to sanction its blatant disregard through the simple expedient of filing in the Senate of a so-called anticipatory substitute bill. Secondly, it suggests that S.B. No. 1129 was filed as an anticipatory measure to substitute for H.B. No. 11179. This is a speculation which even the author of S.B. No. 1129 may not have indulged in. S.B. No. 1129 was filed in the Senate by Senator Herrera on 1 March 1993. H.B. No. 11197 was approved by the House on third reading only on 17 November 1993. Frankly, I cannot believe that Senator Herrera was able to prophesy that the House would pass any VAT bill, much less to know its provisions. That "it does not seem that the Senate even considered" the latter not until after its receipt of H.B. No. 11179 is another speculation. As stated earlier, S.B. No. 1129 was filed in the Senate on 1 March 1993, while H.B. No. 11197 was transmitted to the Senate only on 18 November 1993. There is no evidence on record to show that both were referred to the Senate Committee on Ways and Means at the same time. Finally, in respect of H.B. No. 11197, its legislative process did not begin with its referral to the Senate's Ways and Means Committee. It began upon its filing, as a Committee Bill of the House of Committee on Ways and Means, in the House. Second violation. Since SB No. 1129 is a revenue measure, it could not even be validly introduced or initiated in the Senate. It follows too, that the Senate cannot validly act thereon. Third violation. Since SB No. 1129 could not have been validly introduced in the Senate and could not have been validly acted on by the Senate, then it cannot be substituted by another revenue measure, SB No. 1630, which the Senate Committee on Ways and Means introduced in substitution of SB No. 1129. The filing or introduction in the Senate of SB No. 1630 also violated Section 24, Article VI of the Constitution. VIOLATIONS OF SECTION 26(2), ARTICLE VI OF THE CONSTITUTION: First violation. The Senate, despite its lack of constitutional authority to consider SB No. 1630 or SB No. 1129 which the former substituted, opened deliberations on second reading of SB No. 1630 on 8 February 1994. On 24 March 1994, the Senate approved it on second reading and on third reading. 30 That approval on the same day violated Section 26(2), Article VI of the Constitution. The justification therefor was that on 24 February 1994 the President certified to "the necessity of the enactment of SB No. 1630 . . . to meet a public emergency." 31 I submit, however, that the Presidential certification is void ab initio not necessarily for the reason adduced by petitioner Kilosbayan, Inc., but because it was addressed to the Senate for a bill which is prohibited from originating therein. The only bill which could be properly certified on permissible constitutional grounds even if it had already been transmitted to the Senate is HB No. 11197. As earlier observed, this was not so certified, although HB No. 9210 (one of those consolidated into HB No. 11197) was certified on 1 June 1993. 32 Also, the certification of SB No. 1630 cannot, by any stretch of the imagination, be extended to HB No. 11197 because SB No. 1630 did not substitute HB No. 11197 but SB No. 1129. Considering that the certification of SB No. 1630 is void, its approval on second and third readings in one day violated Section 26(2), Article VI of the Constitution. Second violation. It further appears that on 24 June 1994, after the approval of SB No. 1630, the Secretary of the Senate, upon directive of the Senate President, formally notified the House Speaker of the Senate's approval thereof and its request for a bicameral conference "in view of the disagreeing provisions of said bill and House Bill No. 11197." 33 It must be stressed again that HB No. 11197 was never submitted for or acted on second and third readings in the Senate, and SB No. 1630 was never sent to the House for its concurrence. Elsewise stated, both were only half-way through the legislative mill. Their submission to a conference committee was not only anomalously premature, but violative of the constitutional rule on three readings. The suggestion that SB No. 1630 was not required to be submitted to the House for otherwise the procedure would be endless, is unacceptable for, firstly, it violates Section 26, Rule XII of the Rules of the

Senate and Section 85, Rule XIV of the Rules of the House, and, secondly, it is never endless. If the chamber of origin refuses to accept the amendments of the other chamber, the request for conference shall be made. VIOLATIONS OF THE RULES OF BOTH CHAMBERS; GRAVE ABUSE OF DISCRETION. The erroneous referral to the conference committee needs further discussion. Since S.B. No. 1630 was not a substitute bill for H.B. No. 11197 but for S.B. No. 1129, it (S.B. No. 1630) remained a bill which originated in the Senate. Even assuming arguendo that it could be validly initiated in the Senate, it should have been first transmitted to the House where it would undergo three readings. On the other hand, since HB No. 11197 was never acted upon by the Senate on second and third readings, no differences or inconsistencies could as yet arise so as to warrant a request for a conference. It should be noted that under Section 83, Rule XIV of the Rules of the House, it is only when the Senate shall have approved with amendments HB no. 11197 and the House declines to accept the amendments after having been notified thereof that the request for a conference may be made by the House, not by the Senate. Conversely, the Senate's request for a conference would only be proper if, following the transmittal of SB No. 1630 to the House, it was approved by the latter with amendments but the Senate rejected the amendments. Indisputably then, when the request for a bicameral conference was made by the Senate, SB No. 1630 was not yet transmitted to the House for consideration on three readings and HB No. 11197 was still in the Senate awaiting consideration on second and third readings. Their referral to the bicameral conference committee was palpably premature and, in so doing, both the Senate and the House acted without authority or with grave abuse of discretion. Nothing, and absolutely nothing, could have been validly acted upon by the bicameral conference committee. GRAVE ABUSE OF DISCRETION COMMITTED BY THE BICAMERAL CONFERENCE COMMITTEE. Serious irregularities amounting to lack of jurisdiction or grave abuse of discretion were committed by the bicameral conference committee. First, it assumed, and took for granted that SB No. 1630 could validly originate in the Senate. This assumption is erroneous. Second, it assumed that HB No. 11197 and SB No. 1630 had properly passed both chambers of Congress and were properly and regularly submitted to it. As earlier discussed, the assumption is unfounded in fact. Third, per the bicameral conference committee's proceedings of 19 April 1994, Representative Exequiel Javier, Chairman of the panel from the House, initially suggested that HB No. 11197 should be the "frame of reference," because it is a revenue measure, to which Senator Ernesto Maceda concurred. However, after an incompletely recorded reaction of Senator Ernesto Herrera, Chairman of the Senate panel, Representative Javier seemed to agree that "all amendments will be coming from the Senate." The issue of what should be the "frame of reference" does not appear to have been resolved. These facts are recorded in this wise, as quoted in the Consolidated Memorandum for Respondents: 34 CHAIRMAN JAVIER. First of all, what would be the basis, no, or framework para huwag naman mawala yung personality namin dito sa bicameral, no, because the bill originates from the House because this is a revenue bill, so we would just want to ask, we make the House Bill as the frame of reference, and then everything will just be inserted? HON. MACEDA. Yes. That's true for every revenue measure. There's no other way. The House Bill has got to be the base. Of course, for the record, we know that this is an administration; this is certified by the President and I was about to put into the records as I am saying now that your problem about the impact on prices on the people was already decided when the President and the administration sent this to us and certified it. They have already gotten over that political implication of this bill and the economic impact on prices. CHAIRMAN HERRERA. Yung concern mo about the bill as the reference in this discussion is something that we can just . . .

CHAIRMAN JAVIER. We will just . . . all the amendments will be coming from the Senate. (BICAMERAL CONFERENCE ON MAJOR DIFFERENCES BETWEEN HB NO. 11197 AND SB NO. 1630 [Cte. on Ways & Means] APRIL 19, 1994, II-6 and II-7; Emphasis supplied) These exchanges would suggest that Representative Javier had wanted HB No. 11197 to be the principal measure on which reconciliation of the differences should be based. However, since the Senate did not act on this Bill on second and third readings because its Committee on Ways and Means did not deliberate on it but instead proposed SB No. 1630 in substitution of SB No. 1129, the suggestion has no factual basis. Then, when finally he agreed that "all amendments will be coming from the Senate," he in fact withdrew the former suggestion and agreed that SB No. 1630, which is the Senate version of the Value Added Tax (VAT) measure, should be the "frame of reference." But then SB No. 1630 was never transmitted to the House for the latter's concurrence. Hence, it cannot serve as the "frame of reference" or as the basis for deliberation. The posture taken by Representative Javier also indicates that SB No. 1630 should be taken as the amendment to HB No. 11197. This, too, is unfounded because SB No. 1630 was not proposed in substitution of HB No. 11197. Since SB No. 1630 did not pass three readings in the House and HB No. 11197 did not pass second and third readings in the Senate, it logically follows that no disagreeing provisions had as yet arisen. The bicameral conference committee erroneously assumed the contrary. Even granting arguendo that both HB No. 11197 and SB No. 1630 had been validly approved by both chambers of Congress and validly referred to the bicameral conference committee, the latter had very limited authority thereon. It was created "in view of the disagreeing provisions of" the two bills. 35 Its duty was limited to the reconciliation of disagreeing provisions or the resolution of differences or inconsistencies. The committee recognized that limited authority in the opening paragraph of its Report 36 when it said: The Conference Committee on the disagreeing provisions of House Bill No. 11197 . . . and Senate Bill No. 1630 . . . . Under such limited authority, it could only either (a) restore, wholly or partly, the specific provisions of HB No. 11197 amended by SB No. 1630, (b) sustain, wholly or partly, the Senate's amendments, or (c) by way of a compromise, to agree that neither provisions in HB No. 11197 amended by the Senate nor the latter's amendments thereto be carried into the final form of the former. But as pointed out by petitioners Senator Raul Roco and Kilosbayan, Inc., the bicameral conference committee not only struck out non-disagreeing provisions of HB No. 11197 and SB No. 1630, i.e., provisions where both bills are in full agreement; it added more activities or transactions to be covered by VAT, which were not within the contemplation of both bills. Since both HB No. 11197 and SB No. 1630 were still half-cooked in the legislative vat, and were not ready for referral to a conference, the bicameral conference committee clearly acted without jurisdiction or with grave abuse of discretion when it consolidated both into one bill which became R.A. No. 7716. APPROVAL BY BOTH CHAMBERS OF CONFERENCE COMMITTEE REPORT AND PROPOSED BILL DID NOT CURE CONSTITUTIONAL INFIRMITIES. I cannot agree with the suggestion that since both the Senate and the House had approved the bicameral conference committee report and the bill proposed by it in substitution of HB No. 11197 and SB No. 1630, whatever infirmities may have been committed by it were cured by ratification. This doctrine of ratification may apply to minor procedural flaws or tolerable breachs of the parameters of the bicameral conference committee's limited powers but never to violations of the Constitution. Congress is not above the Constitution. In the instant case, since SB No. 1630 was introduced in violation of Section 24, Article VI of the Constitution, was passed in the Senate in violation of the "three readings" rule, and was not transmitted to the House for the completion of the constitutional process of legislation, and HB No. 11197 was not likewise passed by the Senate on second and third readings, neither the Senate nor the House could validly approve the bicameral conference committee report and the proposed bill. In view of the foregoing, the conclusion is inevitable that for non-compliance with mandatory provisions of the Constitution and of the Rules of the Senate and of the House on the enactment of laws, R.A. No. 7716 is unconstitutional and, therefore, null and void. A discussion then of the instrinsic validity of some of its provisions would be unnecessary. The majority opinion, however, invokes the enrolled bill doctrine and wants this Court to desist from looking behind the copy of the assailed measure as certified by the Senate President and the Speaker of the House. I respectfully submit that the invocation is misplaced. First, as to the issue of origination, the

certification in this case explicitly states that R.A. No. 7716 is a "consolidation of House Bill No. 11197 and Senate Bill No. 1630." This is conclusive evidence that the measure did not originate exclusively in the House. Second, the enrolled bill doctrine is of American origin, and unquestioned fealty to it may no longer be justified in view of the expanded jurisdiction 37 of this Court under Section 1, Article VIII of our Constitution which now expressly grants authority to this Court to: determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government. Third, even under the regime of the 1935 Constitution which did not contain the above provision, this Court, through Mr. Chief Justice Makalintal, in Astorga vs. Villegas, 38 declared that it cannot be truly said that Mabanag vs. Lopez Vito 39 has laid to rest the question of whether the enrolled bill doctrine or the journal entry rule should be adhered to in this jurisdiction, and stated: As far as Congress itself is concerned, there is nothing sacrosanct in the certification made by the presiding officers. It is merely a mode of authentication. The lawmaking process in Congress ends when the bill is approved by both Houses, and the certification does not add to the validity of the bill or cure any defect already present upon its passage. In other words, it is the approval of Congress and not the signatures of the presiding officers that is essential. Thus the (1935) Constitution says that "[e]very bill passed by the Congress shall, before it becomes law, be presented to the President." In Brown vs. Morris, supra, the Supreme Court of Missouri, interpreting a similar provision in the State Constitution, said that the same "makes it clear that the indispensable step in the passage" and it follows that if a bill, otherwise fully enacted as a law, is not attested by the presiding officer, other proof that it has "passed both houses will satisfy the constitutional requirement." Fourth, even in the United States, the enrolled bill doctrine has been substantially undercut. This is shown in the disquisitions of Mr. Justice Reynato S. Puno in his dissenting opinion, citing Sutherland, Statutory Construction. Last, the pleadings of the parties have established beyond doubt that HB No. 11197 was not acted on second and third readings in the Senate and SB No. 1630, which was approved by the Senate on second and third readings in substitution of SB No. 1129, was never transmitted to the House for its passage. Otherwise stated, they were only passed in their respective chamber of origin but not in the other. In no way can each become a law under paragraph 2, Section 26, Article VI of the Constitution. For the Court to close its eyes to this fact because of the enrolled bill doctrine is to shrink its duty to hold "inviolate what is decreed by the Constitution." 40 I vote then to GRANT these petitions and to declare R.A. No. 7716 as unconstitutional.

ROMERO, J.: Few issues brought before this Court for resolution have roiled the citizenry as much as the instant case brought by nine petitioners which challenges the constitutionality of Republic Act No. 7716 (to be referred to herein as the "Expanded Value Added Tax" or EVAT law to distinguish it from Executive Order No. 273 which is the VAT law proper) that was enacted on May 5, 1994. A visceral issue, it has galvanized the populace into mass action and strident protest even as the EVAT proponents have taken to podia and media in a post facto information campaign. The Court is confronted here with an atypical case. Not only is it a vatful of seething controversy but some unlikely petitioners invoke unorthodox remedies. Three Senator-petitioners would nullify a statute that bore the indispensable stamp of approval of their own Chamber with two of them publicly repudiating what they had earlier endorsed. With two former colleagues, one of them an erstwhile Senate President, making common cause with them, they would stay the implementation by the Executive Department of a law which they themselves have initiated. They address a prayer to a co-equal Department to probe their official acts for any procedural irregularities they have themselves committed lest the effects of these aberrations inflict such damage or irreparable loss as would bring down the wrath of the people on their heads. To the extent that they perceive that a vital cog in the internal machinery of the Legislature has malfunctioned from having operated in blatant violation of the enabling Rules they have themselves laid down, they would now plead that this other Branch of Government step in, invoking the exercise of what is at once a delicate and awesome power. Undoubtedly, the case at bench is as much a test for the Legislature as it is for the Judiciary. A backward glance on the Value Added Tax (VAT) is in order at this point.

The first codification of the country's internal revenue laws was effected with the enactment of Commonwealth Act No. 466, commonly known as the 'National Internal Revenue Code' which was approved on June 15, 1939 and took effect on July 1, 1939, although the provisions on the income tax were made retroactive to January 1, 1939. Since 1939 when the turnover tax was replaced by the manufacturer's sales tax, the Tax Code had provided for a single-stage value-added tax on original sales by manufacturers, producers and importers computed on the "cost deduction method" and later, on the basis of the "tax credit method." The turnover tax was re-introduced in 1985 by Presidential Decree No. 1991 (as amended by Presidential Decree No. 2006).
1

In 1986, a tax reform package was approved by the Aquino Cabinet. It contained twenty-nine measures, one of which proposed the adoption of the VAT, as well as the simplification of the sales tax structure and the abolition of the turnover tax. Up until 1987, the system of taxing goods consisted of (a) an excise tax on certain selected articles (b) fixed and percentage taxes on original and subsequent sales, on importations and on milled articles and (c) mining taxes on mineral products. Services were subjected to percentage taxes based mainly on gross receipts. 2 On July 25, 1987, President Corazon C. Aquino signed into law Executive Order No. 273 which adopted the VAT. From the former single-stage value-added tax, it introduced the multi-stage VAT system where "the value-added tax is imposed on the sale of and distribution process culminating in sale, to the final consumer. Generally described, the taxpayer (the seller) determines his tax liability by computing the tax on the gross selling price or gross receipt ("output tax") and subtracting or crediting the earlier VAT on the purchase or importation of goods or on the sale of service ("input tax") against the tax due on his own sale." 3 On January 1, 1988, implementing rules and regulations for the VAT were promulgated. President Aquino then issued Proclamation No. 219 on February 12, 1988 urging the public and private sectors to join the nationwide consumers' education campaign for VAT. Soon after the implementation of Executive Order No. 273, its constitutionality was assailed before this Court in the case of Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas, Inc., et al. v. Tan. 4 The four petitioners sought to nullify the VAT law "for being unconstitutional in that its enactment is not allegedly within the powers of the President; that the VAT is oppressive, discriminatory, regressive, and violates the due process and equal protection clauses and other provisions of the 1987 Constitution." 5 In dismissing the consolidated petitions, this Court stated: The Court, following the time-honored doctrine of separation of powers cannot substitute its judgment for that of the President as to the wisdom, justice and advisability of the VAT. The Court can only look into and determine whether or not Executive Order No. 273 was enacted and made effective as law, in the manner required by and consistent with, the Constitution, and to make sure that it was not issued in grave abuse of discretion amounting to lack or excess of jurisdiction; and, in this regard, the Court finds no reason to impede its application or continued implementation. 6 Although declared constitutional, the VAT law was sought to be amended from 1992 on by a series of bills filed in both Houses of Congress. In chronological sequence, these were:

HB/SB No. Date Filed in Congress HB No. 253 - July 22, 1992 HB No. 771 - August 10, 1992 HB No. 2450 - September 9, 1992 Senate Res. No. 734 7 - September 10, 1992

HB No. 7033 - February 3, 1993 SB No. 1129 8 - March 1, 1993 HB No. 8086 - March 9, 1993 HB No. 9030 - May 11, 1993 HB No. 9210 9 - May 19, 1993 HB No. 9297 - May 25, 1993 HB No. 10012 - July 28, 1993 HB No. 10100 - August 3, 1993 HB No. 11197 in substitution of HB Nos. 253, 771, 2450, 7033, 8086, 9030, 9210, 9297, 10012 and

10100 10 - November 5, 1993

We now trace the course taken by H.B. No. 11197 and S.B. No. 1129. HB/SB No. HB No. 11197 was approved in the Lower House onsecond reading November 11, 1993 HB No. 11197 was approved in the Lower House on third reading and voted upon with 114 Yeas and 12 Nays - November 17, 1993 HB No. 11197 was transmitted to the Senate - November 18, 1993 Senate Committee on Ways and Means submitted Com. Report No. 349 recommeding for approval SB No. 1630 in substitution of SB No. 1129, taking into consideration PS Res. No. 734 and HB No. 11197 11 - February 7, 1994 Certification by President Fidel V. Ramos of Senate Bill No. 1630 for immediate enactment to meet a public emergency - March 22, 1994 SB No. 1630 was approved by the Senate on second and third readings and subsequently voted upon with 13 yeas, none against and one abstention - March 24, 1994 Transmittal by the Senate to the Lower House of a request for a conference in view of disagreeing provisions of SB No. 1630 and HB NO. 11197 - March 24, 1994 The Bicameral Conference Committee conducted various meetings to reconcile the proposals on the VAT - April 13, 19, 20, 21, 25 The House agreed on the Conference Committee Report - April 27, 1994 The Senate agreed on the Conference Committee Report - May 2, 1994 The President signed Republic Act No. 7716 - The Expanded VAT Law 12 - May 5, 1994 Republic Act No. 7716 was published in two newspapers of general circulation - May 12, 1994 Republic Act No. 7716 became effective - May 28, 1994

Republic Act No. 7716 merely expanded the base of the VAT law even as the tax retained its multi-stage

character. At the oral hearing held on July 7, 1994, this Court delimited petitioners' arguments to the following issues culled from their respective petitions. PROCEDURAL ISSUES Does Republic Act No. 7716 violate Article VI, Section 24, of the Constitution? Does it violate Article VI, Section 26, paragraph 2, of the Constitution? 14 What is the extent of the power of the Bicameral Conference Committee? SUBSTANTIVE ISSUES Does the law violate the following provisions in Article III (Bill of Rights) of the Constitution: 1. Section 1 15 2. Section 4 16 3. Section 5 17 4. Section 10 18 Does the law violate the following other provisions of the Constitution? 1. Article VI, Section 28, paragraph 1 19 2. Article VI, Section 28, paragraph 3 20 As a result of the unedifying experience of the past where the Court had the propensity to steer clear of questions it perceived to be "political" in nature, the present Constitution, in contrast, has explicitly expanded judicial power to include the duty of the courts, especially the Supreme Court, "to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government." 21 I submit that under this explicit mandate, the Court is empowered to rule upon acts of other Government entities for the purpose of determining whether there may have been, in fact, irregularities committed tantamount to violation of the Constitution, which case would clearly constitute a grave abuse of discretion on their part. In the words of the sponsor of the above-quoted Article of the Constitution on the Judiciary, the former Chief Justice Roberto R. Concepcion, "the judiciary is the final arbiter on the question of whether or not a branch of government or any of its officials has acted without jurisdiction or in excess of jurisdiction, or so capriciously as to constitute an abuse of discretion amounting to excess of jurisdiction or lack of jurisdiction. This is not only a judicial power but a duty to pass judgment on matters of this nature. This is the back ground of paragraph 2 of Section 1, which means that the courts cannot hereafter exhibit its wonted reticence by claiming that such matters constitute a political question." 22 In the instant petitions, this Court is called upon, not so much to exercise its traditional power of judicial review as to determine whether or not there has indeed been a grave abuse of discretion on the part of the Legislature amounting to lack or excess of jurisdiction. Where there are grounds to resolve a case without touching on its constitutionality, the Court will do so with utmost alacrity in due deference to the doctrine of separation of powers anchored on the respect that must be accorded to the other branches of government which are coordinate, coequal and, as far as practicable, independent of one another. Once it is palpable that the constitutional issue is unavoidable, then it is time to assume jurisdiction, provided that the following requisites for a judicial inquiry are met: that there must be an actual and appropriate case; a personal and substantial interest of the party raising the constitutional question; the constitutional question must be raised at the earliest possible opportunity and the decision of the constitutional question must be necessary to the determination of the case itself, the same being the lis mota of the case. 23 Having assured ourselves that the above-cited requisites are present in the instant petitions, we proceed
13

to take them up. ARTICLE VI, SECTION 24 Some petitioners assail the constitutionality of Republic Act No. 7716 as being in violation of Article VI, Section 24 of the Constitution which provides: All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills, shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments. In G.R. Nos. 115455 and 115781, petitioners argue: (a) The bill which became Republic Act No. 7716 did not originate exclusively in the House of Representatives. The Senate, after receiving H.B. No. 11197, submitted its own bill, S.B. No. 1630, and proceeded to vote and approve the same after second and third readings. (b) The Senate exceeded its authority to "propose or concur with amendments" when it submitted its own bill, S.B. No. 1630, recommending its approval "in substitution of S.B. No. 1129, taking into consideration P.S. Res. No. 734 and H.B. No. 11197." (c) H.B. No. 11197 was not deliberated upon by the Senate. Neither was it voted upon by the Senate on second and third readings, as what was voted upon was S.B. No. 1630. Article VI, Section 24 is taken word for word from Article VI, Section 18 of the 1935 Constitution which was, in turn, patterned after Article I, Section 7 (1) of the Constitution of the United States, which states: All bills for raising revenue shall originate in the House of Representatives, but the Senate may propose or concur with amendments as on other bills. The historical precedent for requiring revenue bills to originate in Congress is explained in the U.S. case of Morgan v. Murray. 24 The constitutional requirement that all bills for raising revenue shall originate in the House of Representatives stemmed from a remedial outgrowth of the historic conflict between Parliament (i.e., Commons) and the Crown, whose ability to dominate the monarchially appointive and hereditary Lords was patent. See 1 Story, Constitution, S 875 et seq., 5th Ed.; 1 Cooley, Constitutional Limitations, pp. 267, 268, 8th Ed., 1 Sutherland, Statutory Construction, S 806, 3d Ed. There was a measure of like justification for the insertion of the provision of article I, S 7, cl. 1, of the Federal Constitution. At that time (1787) and thereafter until the adoption (in 1913) of the Seventeenth Amendment providing for the direct election of senators, the members of the United States Senate were elected for each state by the joint vote of both houses of the Legislature of the respective states, and hence, were removed from the people . . . The legislative authority under the 1935 Constitution being unicameral, in the form of the National Assembly, it served no purpose to include the subject provision in the draft submitted by the 1934 Constitutional Convention to the Filipino people for ratification. In 1940, however, the Constitution was amended to establish a bicameral Congress of the Philippines composed of a House of Representatives and a Senate. In the wake of the creation of a new legislative machinery, new provisions were enacted regarding the law-making power of Congress. The National Assembly explained how the final formulation of the subject provision came about: The concurrence of both houses would be necessary to the enactment of a law. However, all appropriation, revenue or tariff bills, bills authorizing an increase of the public debt, bills of local application, and private bills, should originate exclusively in the House of Representatives, although the Senate could propose or concur with amendments. In one of the first drafts of the amendments, it was proposed to give both houses equal powers in lawmaking. There was, however, much opposition on the part of several members of the Assembly. In another draft; the following provision, more restrictive than the present provision in the amendment, was proposed and for sometime was seriously considered: All bills appropriating public funds, revenue or tariff bills, bills of local application, and private bills shall originate exclusively in the

Assembly, but the Senate may propose or concur with amendments. In case of disapproval by the Senate of any such bills, the Assembly may repass the same by a two-thirds vote of all its members, and thereupon, the bill so repassed shall be deemed enacted and may be submitted to the President for corresponding action. In the event that the Senate should fail to finally act on any such bills, the Assembly may, after thirty days from the opening of the next regular sessions of the same legislative term, reapprove the same with a vote of twothirds of all the members of the Assembly. And upon such reapproval, the bill shall be deemed enacted and may be submitted to the president for corresponding action. However, the special committee voted finally to report the present amending provision as it is now worded; and in that form it was approved by the National Assembly with the approval of Resolution No. 38 and later of Resolution No. 73. 25 (Emphasis supplied) Thus, the present Constitution is identically worded as its 1935 precursor: "All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills, shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments." (Emphasis supplied) That all revenue bills, such as Republic Act No. 7716, should "originate exclusively in the House of Representatives" logically flows from the more representative and broadly-based character of this Chamber. It is said that the House of Representatives being the more popular branch of the legislature, being closer to the people, and having more frequent contacts with them than the Senate, should have the privilege of taking the initiative in the proposals of revenue and tax project, the disposal of the people's money, and the contracting of public indebtedness. These powers of initiative in the raising and spending of public funds enable the House of Representatives not only to implement but even to determine the fiscal policies of the government. They place on its shoulders much of the responsibility of solving the financial problems of the government, which are so closely related to the economic life of the country, and of deciding on the proper distribution of revenues for such uses as may best advance public interests. 26 The popular nature of the Lower House has been more pronounced with the inclusion of Presidentiallyappointed sectoral representatives, as provided in Article VI, Section 5 (2), of the Constitution, thus: "The party-list representatives shall constitute twenty per centum of the total number of representatives including those under the party list. For three consecutive terms after the ratification of this Constitution, one-half of the seats allocated to party-list representatives shall be filled, as provided by law, by selection or election from the labor, peasant, urban poor, indigenous cultural communities, women, youth, and such other sectors as may be provided by law, except the religious sector." (Emphasis supplied) This novel provision which was implemented in the Batasang Pambansa during the martial law regime 27 was eventually incorporated in the present Constitution in order to give those from the marginalized and often deprived sector, an opportunity to have their voices heard in the halls of the Legislature, thus giving substance and meaning to the concept of "people empowerment." That the Congressmen indeed have access to, and consult their constituencies has been demonstrated often enough by the fact that even after a House bill has been transmitted to the Senate for concurrence, some Congressmen have been known to express their desire to change their earlier official position or reverse themselves after having heard their constituents' adverse reactions to their representations. In trying to determine whether the mandate of the Constitution with regard to the initiation of revenue bills has been preserved inviolate, we have recourse to the tried and tested method of definition of terms. The term "originate" is defined by Webster's New International Dictionary (3rd Edition, 1986) as follows: "v.i., to come into being; begin; to start." On the other hand, the word "exclusively" is defined by the same Webster's Dictionary as "in an exclusive manner; to the exclusion of all others; only; as, it is his, exclusively." Black's Law Dictionary has this definition: "apart from all others; only; solely; substantially all or for the greater part. To the exclusion of all other; without admission of others to participation; in a manner to exclude. Standard Oil Co. of Texas v. State, Tex. Civ. App., 142 S.W. 2d 519, 521, 522, 523." This Court had occasion to define the term "exclusive" as follows: . . . In its usual and generally accepted sense, the term means possessed to the exclusion of others; appertaining to the subject alone; not including, admitting or

pertaining to another or others; undivided, sole. 28 When this writer, during the oral argument of July 7, 1994, asked the petitioner in G.R. No. 115455 whether he considers the word "exclusively" to be synonymous with "solely," he replied in the affirmative.
29

A careful examination of the legislative history traced earlier in this decision shows that the original VAT law, Executive Order No. 273, was sought to be amended by ten House bills which finally culminated in House Bill No. 11197, as well as two Senate bills. It is to be noted that the first House Bill No. 253 was filed on July 22, 1992, and two other House bills followed in quick succession on August 10 and September 9, 1992 before a Senate Resolution, namely, Senate Res. No. 734, was filed on September 10, 1992 and much later, a Senate Bill proper, viz., Senate Bill No. 1129 on March 1, 1993. Undoubtedly, therefore, these bills originated or had their start in the House and before any Senate bill amending the VAT law was filed. In point of time and venue, the conclusion is ineluctable that Republic Act No. 7716, which is indisputably a revenue measure, originated in the House of Representatives in the form of House Bill No. 253, the first EVAT bill. Additionally, the content and substance of the ten amendatory House Bills filed over the roughly one-year period from July 1992 to August 1993 reenforce the position that these revenue bills, pertaining as they do, to Executive Order No. 273, the prevailing VAT law, originated in the Lower House. House Bill Nos. 253, 771, 2450, 7033, 8086, 9030, 9210, 9297, 10012 and 10100 were intended to restructure the VAT system by exempting or imposing the tax on certain items or otherwise introducing reforms in the mechanics of implementation. 30 Of these, House Bill No. 9210 was favored with a Presidential certification on the need for its immediate enactment to meet a public emergency. Easily the most comprehensive, it noted that the revenue performance of the VAT, being far from satisfactory since the collections have always fallen short of projections, "the system is rendered inefficient, inequitable and less comprehensive." Hence, the Bill proposed several amendments designed to widen the tax base of the VAT and enhance its administration. 31 That House Bill No. 11197 being a revenue bill, originated from the Lower House was acknowledged, in fact was virtually taken for granted, by the Chairmen of the Committee on Ways and Means of both the House of Representatives and the Senate. Consequently, at the April 19, 1994 meeting of the Bicameral Conference Committee, the Members agreed to make the House Bill as the "frame of reference" or "base" of the discussions of the Bicameral Conference Committee with the "amendments" or "insertions to emanate from the Senate." 32 As to whether the bills originated exclusively in the Lower House is altogether a different matter. Obviously, bills amendatory of VAT did not originate solely in the House to the exclusion of all others for there were P.S. Res. No. 734 filed in the Senate on September 10, 1992 followed by Senate Bill No. 1129 which was filed on March 1, 1993. About a year later, this was substituted by Senate Bill No. 1630 that eventually became the EVAT law, namely, Republic Act No. 7716. Adverting to the passage of the amendatory VAT bills in the Lower House, it is to be noted that House Bill No. 11197 which substituted all the prior bills introduced in said House complied with the required readings, that is, the first reading consisting of the reading of the title and referral to the appropriate Committee, approval on second reading on November 11, 1993 and on third reading on November 17, 1993 before being finally transmitted to the Senate. In the Senate, its identity was preserved and its provisions were taken into consideration when the Senate Committee on Ways and Means submitted Com. Report No. 349 which recommended for approval "S.B. No. 1630 in substitution of S.B. No. 1129, taking into consideration P.S. Res. No. 734 and H.B. No. 11197." At this stage, the subject bill may be considered to have passed first reading in the Senate with the submission of said Committee Report No. 349 by the Senate Committee on Ways and Means to which it had been referred earlier. What remained, therefore, was no longer House Bill No. 11197 but Senate Bill No. 1630. Thence, the Senate, instead of transmitting the bill to the Lower House for its concurrence and amendments, if any, took a "shortcut," bypassed the Lower House and instead, approved Senate Bill No. 1630 on both second and third readings on the same day, March 24, 1994. The first irregularity, that is, the failure to return Senate Bill No. 1630 to the Lower House for its approval is fatal inasmuch as the other chamber of legislature was not afforded the opportunity to deliberate and make known its views. It is no idle dictum that no less than the Constitution ordains: "The legislative power shall be vested in the Congress of the Philippines which shall consist of a Senate and a House of Representatives . . ." 33 (Emphasis supplied) It is to be pointed out too, that inasmuch as Senate Bill No. 1630 which had "taken into consideration" House Bill No. 11197 was not returned to the Lower House for deliberation, the latter Chamber had no opportunity at all to express its views thereon or to introduce any amendment. The customary practice is, after the Senate has considered the Lower House Bill, it returns the same to the House of origin with its amendments. In the event that there may be any differences between the two, the same shall then be referred to a Conference Committee composed of members from both Chambers which shall then proceed to reconcile said differences.

In the instant case, the Senate transmitted to the Lower House on March 24, 1994, a letter informing the latter that it had "passed S. No. 1630 entitled . . . (and) in view of the disagreeing provisions of said bill and House Bill No. 11197, entitled . . . the Senate requests a conference . . ." This, in spite of the fact that Com. Report No. 349 of the Senate Committee on Ways and Means had already recommended for approval on February 7, 1994 "S.B. No. 1630 . . . taking into consideration H.B. No. 11197." Clearly, the Conference Committee could only have acted upon Senate Bill No. 1630, for House Bill No. 11197 had already been fused into the former. At the oral hearing of July 7, 1994, petitioner in G.R. No. 115455 admitted, in response to this writer's query, that he had attempted to rectify some of the perceived irregularities by presenting a motion in the Senate to recall the bill from the Conference Committee so that it could revert to the period of amendment, but he was outvoted, in fact "slaughtered." 34 In accordance with the Rules of the House of Representatives and the Senate, Republic Act No. 7716 was duly authenticated after it was signed by the President of the Senate and the Speaker of the House of Representatives followed by the certifications of the Secretary of the Senate and the Acting Secretary General of the House of Representatives. 35 With the signature of President Fidel V. Ramos under the words "Approved: 5 May 1994," it was finally promulgated. Its legislative journey ended, Republic Act No. 7716 attained the status of an enrolled bill which is defined as one "which has been duly introduced, finally passed by both houses, signed by the proper officers of each, approved by the governor (or president) and filed by the secretary of state." 36 Stated differently: It is a declaration by the two houses, through their presiding officers, to the president, that a bill, thus attested, has received in due form, the sanction of the legislative branch of the government, and that it is delivered to him in obedience to the constitutional requirement that all bills which pass Congress shall be presented to him. And when a bill, thus attested, receives his approval, and is deposited in the public archives, its authentication as a bill that has passed Congress should be deemed complete and unimpeachable. As the President has no authority to approve a bill not passed by Congress, an enrolled Act in the custody of the Secretary of State, and having the official attestations of the Speaker of the House of Representatives, of the President of the Senate, and of the President of the United States, carries, on its face, a solemn assurance by the legislative and executive departments of the government, charged, respectively, with the duty of enacting and executing the laws, that it was passed by Congress. The respect due to coequal and independent departments requires the judicial department to act upon that assurance, and to accept, as having passed Congress, all bills authenticated in the manner stated; leaving the courts to determine, when the question properly arises, whether the Act, so authenticated, is in conformity with the Constitution. 37 The enrolled bill assumes importance when there is some variance between what actually transpired in the halls of Congress, as reflected in its journals, and as shown in the text of the law as finally enacted. But suppose the journals of either or both Houses fail to disclose that the law was passed in accordance with what was certified to by their respective presiding officers and the President. Or that certain constitutional requirements regarding its passage were not observed, as in the instant case. Which shall prevail: the journal or the enrolled bill? A word on the journal. The journal is the official record of the acts of a legislative body. It should be a true record of the proceedings arranged in chronological order. It should be a record of what is done rather than what is said. The journal should be a clear, concise, unembellished statement of all proposals made and all actions taken complying with all requirements of constitutions, statutes, charters or rules concerning what is to be recorded and how it is to be recorded. 38 Article VI, Section 16 (4) of the Constitution ordains: Each house shall keep a Journal of its proceedings, and from time to time publish the same, excepting such parts as may, in its judgment, affect national security; and the yeas and nays on any question shall, at the request of one-fifth of the Members present, be entered in the Journal. Each House shall also keep a Record of its proceedings." (Emphasis supplied) The rationale behind the above provision and of the "journal entry rule" is as follows: It is apparent that the object of this provision is to make the legislature show what it has

done, leaving nothing whatever to implication. And, when the legislature says what it has done, with regard to the passage of any bill, it negatives the idea that it has done anything else in regard thereto. Silence proves nothing where one is commanded to speak . . . . Our constitution commands certain things to be done in regard to the passage of a bill, and says that no bill shall become a law unless these things are done. It seems a travesty upon our supreme law to say that it guaranties to the people the right to have their laws made in this manner only, and that there is no way of enforcing this right, or for the court to say that this is law when the constitution says it is not law. There is one safe course which is in harmony with the constitution, and that is to adhere to the rule that the legislature must show, as commanded by the constitution, that it has done everything required by the constitution to be done in the serious and important matter of making laws. This is the rule of evidence provided by the constitution. It is not presumptuous in the courts, nor disrespectful to the legislature, to judge the acts of the legislature by its own evidence. 39 Confronted with a discrepancy between the journal proceedings and the law as duly enacted, courts have indulged in different theories. The "enrolled bill" and "journal entry" rules, being rooted deep in the Parliamentary practices of England where there is no written constitution, and then transplanted to the United States, it may be instructive to examine which rule prevails in the latter country through which, by a process of legislative osmosis, we adopted them in turn. There seems to be three distinct and different rules as applicable to the enrolled bill recognized by the various courts of this country. The first of these rules appears to be that the enrolled bill is the ultimate proof and exclusive and conclusive evidence that the bill passed the legislature in accordance with the provisions of the Constitution. Such has been the holding in California, Georgia, Kentucky, Texas, Washington, New Mexico, Mississippi, Indiana, South Dakota, and may be some others. The second of the rules seems to be that the enrolled bill is a verity and resort cannot be had to the journals of the Legislature to show that the constitutional mandates were not complied with by the Legislature, except as to those provisions of the Constitution, compliance with which is expressly required to be shown on the journal. This rule has been adopted in South Carolina, Montana, Oklahoma, Utah, Ohio, New Jersey, United States Supreme Court, and others. The third of the rules seems to be that the enrolled bill raises only a prima facie presumption that the mandatory provisions of the Constitution have been complied with and that resort may be had to the journals to refute that presumption, and if the constitutional provision is one, compliance with which is expressly required by the Constitution to be shown on the journals, then the mere silence of the journals to show a compliance therewith will refute the presumption. This rule has been adopted in Illinois, Florida, Kansas, Louisiana, Tennessee, Arkansas, Idaho, Minnesota, Nebraska, Arizona, Oregon, New Jersey, Colorado, and others. 40 In the 1980 case of D & W Auto Supply v. Department of Revenue, the Supreme Court of Kentucky which had subscribed in the past to the first of the three theories, made the pronouncement that it had shifted its stand and would henceforth adopt the third. It justified its changed stance, thus: We believe that a more reasonable rule is the one which Professor Sutherland describes as the "extrinsic evidence" rule . . . . Under this approach there is a prima facie presumption that an enrolled bill is valid, but such presumption may be overcome by clear satisfactory and convincing evidence establishing that constitutional requirements have not been met. 41 What rule, if any, has been adopted in this jurisdiction? Advocates of the "journal entry rule" cite the 1916 decision in U.S. v. Pons 42 where this Court placed reliance on the legislative journals to determine whether Act No. 2381 was passed on February 28, 1914 which is what appears in the Journal, or on March 1, 1914 which was closer to the truth. The confusion was caused by the adjournment sine die at midnight of February 28, 1914 of the Philippine Commission. A close examination of the decision reveals that the Court did not apply the "journal entry rule" vis-a-vis the "enrolled bill rule" but the former as against what are "behind the legislative journals." Passing over the question of whether the printed Act (No. 2381), published by authority of law, is conclusive evidence as to the date when it was passed, we will inquire whether the courts may go behind the legislative journals for the purpose of determining the date of adjournment when such journals are clear and explicit. 43 It is to be noted from the above that the Court "passed over" the probative value to be accorded to the

enrolled bill. Opting for the journals, the Court proceeded to explain: From their very nature and object, the records of the Legislature are as important as those of the judiciary, and to inquire into the veracity of the journals of the Philippine Legislature, when they are, as we have said clear and explicit, would be to violate both the letter and the spirit of the organic laws by which the Philippine Government was brought into existence, to invade a coordinate and independent department of the Government, and to interfere with the legitimate powers and functions of the Legislature. 44 Following the courts in the United States since the Constitution of the Philippine Government is modeled after that of the Federal Government, the Court did not hesitate to follow the courts in said country, i.e., to consider the journals decisive of the point at issue. Thus: "The journals say that the Legislature adjourned at 12 midnight on February 28, 1914. This settles the question and the court did not err in declining to go behind these journals." 45 The Court made a categorical stand for the "enrolled bill rule" for the first time in the 1947 case of Mabanag v. Lopez Vito 46 where it held that an enrolled bill imports absolute verity and is binding on the courts. This Court held itself bound by an authenticated resolution, despite the fact that the vote of threefourths of the Members of the Congress (as required by the Constitution to approve proposals for constitutional amendments) was not actually obtained on account of the suspension of some members of the House of Representatives and the Senate. In this connection, the Court invoked the "enrolled bill rule" in this wise: "If a political question conclusively binds the judges out of respect to the political departments, a duly certified law or resolution also binds the judges under the 'enrolled bill rule' born of that respect." 47 Mindful that the U.S. Supreme Court is on the side of those who favor the rule and for no other reason than that it conforms to the expressed policy of our law making body (i.e., Sec. 313 of the old Code of Civil Procedure, as amended by Act No. 2210), the Court said that "duly certified copies shall be conclusive proof of the provisions of such Acts and of the due enactment thereof." Without pulling the legal underpinnings from U.S. v. Pons, it justified its position by saying that if the Court at the time looked into the journals, "in all probability, those were the documents offered in evidence" and that "even if both the journals and authenticated copy of the Act had been presented, the disposal of the issue by the Court on the basis of the journals does not imply rejection of the enrolled theory; for as already stated, the due enactment of a law may be proved in either of the two ways specified in Section 313 of Act No. 190 as amended." 48 Three Justices voiced their dissent from the majority decision. Again, the Court made its position plain in the 1963 case of Casco Philippine Chemical Co., Inc. v. Gimenez 49 when a unanimous Court ruled that: "The enrolled bill is conclusive upon the courts as regards the tenor of the measure passed by Congress and approved by the President. If there has been any mistake in the printing of a bill before it was certified by the officers of Congress and approved by the Executive, the remedy is by amendment or curative legislation not by judicial decree." According to Webster's New 20th Century Dictionary, 2nd ed., 1983, the word "tenor" means, among others, "the general drift of something spoken or written; intent, purport, substance." Thus, the Court upheld the respondent Auditor General's interpretation that Republic Act No. 2609 really exempted from the margin fee on foreign exchange transactions "urea formaldehyde" as found in the law and not "urea and formaldehyde" which petitioner insisted were the words contained in the bill and were so intended by Congress. In 1969, the Court similarly placed the weight of its authority behind the conclusiveness of the enrolled bill. In denying the motion for reconsideration, the Court ruled in Morales v. Subido that "the enrolled Act in the office of the legislative secretary of the President of the Philippines shows that Section 10 is exactly as it is in the statute as officially published in slip form by the Bureau of Printing . . . Expressed elsewise, this is a matter worthy of the attention not of an Oliver Wendell Holmes but of a Sherlock Holmes." 50 The alleged omission of a phrase in the final Act was made, not at any stage of the legislative proceedings, but only in the course of the engrossment of the bill, more specifically in the proofreading thereof. But the Court did include a caveat that qualified the absoluteness of the "enrolled bill" rule stating: By what we have essayed above we are not of course to be understood as holding that in all cases the journals must yield to the enrolled bill. To be sure there are certain matters which the Constitution (Art. VI, secs. 10 [4], 20 [1], and 21 [1]) expressly requires must be entered on the journal of each house. To what extent the validity of a legislative act may be affected by a failure to have such matters entered on the journal, is a question which we do not now decide (Cf. e.g., Wilkes Country Comm'rs. v. Coler, 180 U.S. 506 [1900]). All we hold is that with respect to matters not expressly required to be entered on the journal, the enrolled bill prevails in the event of any discrepancy. 51 More recently, in the 1993 case of Philippine Judges Association v. Prado, 52 this Court, in ruling on the

unconstitutionality of Section 35 of Republic Act No. 7354 withdrawing the franking privilege from the entire hierarchy of courts, did not so much adhere to the enrolled bill rule alone as to both "enrolled bill and legislative journals." Through Mr. Justice Isagani A. Cruz, we stated: "Both the enrolled bill and the legislative journals certify that the measure was duly enacted, i.e., in accordance with Article VI, Sec. 26(2) of the Constitution. We are bound by such official assurances from a coordinate department of the government, to which we owe, at the very least, a becoming courtesy." Aware of the shifting sands on which the validity and continuing relevance of the "enrolled bill" theory rests, I have taken pains to trace the history of its applicability in this jurisdiction, as influenced in varying degrees by different Federal rulings. As applied to the instant petition, the issue posed is whether or not the procedural irregularities that attended the passage of House Bill No. 11197 and Senate Bill No. 1630, outside of the reading and printing requirements which were exempted by the Presidential certification, may no longer be impugned, having been "saved" by the conclusiveness on us of the enrolled bill. I see no cogent reason why we cannot continue to place reliance on the enrolled bill, but only with respect to matters pertaining to the procedure followed in the enactment of bills in Congress and their subsequent engrossment, printing errors, omission of words and phrases and similar relatively minor matters relating more to form and factual issues which do not materially alter the essence and substance of the law itself. Certainly, "courts cannot claim greater ability to judge procedural legitimacy, since constitutional rules on legislative procedure are easily mastered. Procedural disputes are over facts whether or not the bill had enough votes, or three readings, or whatever not over the meaning of the constitution. Legislators, as eyewitnesses, are in a better position than a court to rule on the facts. The argument is also made that legislatures would be offended if courts examined legislative procedure. 53 Such a rationale, however, cannot conceivably apply to substantive changes in a bill introduced towards the end of its tortuous trip through Congress, catching both legislators and the public unawares and altering the same beyond recognition even by its sponsors. This issue I wish to address forthwith. EXTENT OF THE POWER OF THE BICAMERAL CONFERENCE COMMITTEE One of the issues raised in these petitions, especially in G.R. Nos. 115781, 115543 and 115754, respectively, is whether or not Congress violated Section 26, par. 2, Article VI (of the 1987 Constitution) when it approved the Bicameral Conference Committee Report which embodied, in violation of Rule XII of the Rules of the Senate, a radically altered tax measure containing provisions not reported out or discussed in either House as well as provisions on which there was no disagreement between the House and the Senate and, worse, provisions contrary to what the House and the Senate had approved after three separate readings. 54 and By adding or deleting provisions, when there was no conflicting provisions between the House and Senate versions, the BICAM acted in excess of its jurisdiction or with such grave abuse of discretion as to amount to loss of jurisdiction. . . . In adding to the bill and thus subjecting to VAT, real properties, media and cooperatives despite the contrary decision of both Houses, the BICAM exceeded its jurisdiction or acted with such abuse of discretion as to amount to loss of jurisdiction. . . . 55 I wish to consider this issue in light of Article VIII, Sec. 1 of the Constitution which provides that "(j)udicial power includes the duty of the courts of justice . . . to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government." We are also guided by the principle that a court may interfere with the internal procedures of its coordinate branch only to uphold the Constitution. 56 A conference committee has been defined: . . . unlike the joint committee is two committees, one appointed by each house. It is normally appointed for a specific bill and its function is to gain accord between the two houses either by the recession of one house from its bill or its amendments or by the further amendment of the existing legislation or by the substitution of an entirely new bill. Obviously the conference committee is always a special committee and normally includes the member who introduced the bill and the chairman of the committee which considered it together with such other representatives of the house as seem expedient. (Horack, Cases and Materials on Legislation [1940] 220. See also Zinn, Conference Procedure in Congress, 38 ABAJ 864 [1952]; Steiner, The Congressional Conference

Committee [U of III. Press, 1951]). 57 From the foregoing definition, it is clear that a bicameral conference committee is a creature, not of the Constitution, but of the legislative body under its power to determine rules of its proceedings under Article VI, Sec. 16 (3) of the Constitution. Thus, it draws its life and vitality from the rules governing its creation. The why, when, how and wherefore of its operations, in other words, the parameters within which it is to function, are to be found in Section 26, Rule XII of the Rules of the Senate and Section 85 of the Rules of the House of Representatives, respectively, which provide: Rule XII, Rules of the Senate Sec. 26. In the event that the Senate does not agree with the House of Representatives on the provision of any bill or joint resolution, the differences shall be settled by a conference committee of both Houses which shall meet within ten days after their composition. The President shall designate the members of the conference committee in accordance with subparagraph (c), Section 8 of Rule III. Each Conference Committee Report shall contain a detailed and sufficiently explicit statement of the changes in or amendments to the subject measure, and shall be signed by the conferees. The consideration of such report shall not be in order unless the report has been filed with the Secretary of the Senate and copies thereof have been distributed to the Members. Rules of the House of Representatives Sec. 85. Conference Committee Reports. In the event that the House does not agree with the Senate on the amendments to any bill or joint resolution, the differences may be settled by conference committee of both Chambers. The consideration of conference committee reports shall always be in order, except when the journal is being read, while the roll is being called or the House is dividing on any question. Each of the pages of such reports shall contain a detailed, sufficiently explicit statement of the changes in or amendments to the subject measure. The consideration of such report shall not be in order unless copies thereof are distributed to the Members: Provided, That in the last fifteen days of each session period it shall be deemed sufficient that three copies of the report, signed as above provided, are deposited in the office of the Secretary General. Under these Rules, a bicameral conference committee comes into being only when there are disagreements and differences between the Senate and the House with regard to certain provisions of a particular legislative act which have to be reconciled. Jefferson's Manual, which, according to Section 112, Rule XLIX of the Senate Rules, supplements it, states that a conference committee is usually called "on the occasion of amendments between the Houses" and "in all cases of difference of opinion between the two House on matters pending between them." 58 It further states: The managers of a conference must confine themselves to the differences committed to them, and may not include subjects not within the disagreements, even though germane to a question in issue. But they may perfect amendments committed to them if they do not in so doing go beyond the differences. . . . Managers may not change the text to which both Houses have agreed. 59 (Emphasis supplied.) Mason's Manual of Legislative Procedures which is also considered as controlling authority for any situation not covered by a specific legislative rule, 60 states that either House may "request a conference with the other on any matter of difference or dispute between them" and that in such a request, "the subject of the conference should always be stated." 61 In the Philippines, as in the United States, the Conference Committee exercises such a wide range of authority that they virtually constitute a third House in the Legislature. As admitted by the Solicitor General, "It was the practice in past Congresses for Conference Committees to insert in bills approved by the two Houses new provisions that were not originally contemplated by them." 62 In Legislative Procedure, Robert Luce gives a graphic description of the milieu and the circumstances

which have conspired to transform an initially innocuous mechanism designed to facilitate action into an all-powerful Frankenstein that brooks no challenge to its authority even from its own members. Their power lies chiefly in the fact that reports of conference committees must be accepted without amendment or else rejected in toto. The impulse is to get done with the matters and so the motion to accept has undue advantage, for some members are sure to prefer swallowing unpalatable provisions rather than prolong controversy. This is the more likely if the report comes in the rush of business toward the end of a session, when to seek further conference might result in the loss of the measure altogether. At any time in the session there is some risk of such a result following the rejection of a conference report, for it may not be possible to secure a second conference, or delay may give opposition to the main proposal chance to develop more strength. xxx xxx xxx Entangled in a network of rule and custom, the Representative who resents and would resist this theft of his rights, finds himself helpless. Rarely can he vote, rarely can he voice his mind, in the matter of any fraction of the bill. Usually he cannot even record himself as protesting against some one feature while accepting the measure as whole. Worst of all, he cannot by argument or suggested change, try to improve what the other branch has done. This means more than the subversion of individual rights. It means to a degree the abandonment of whatever advantage the bicameral system may have. By so much it in effect transfers the lawmaking power to a small group of members who work out in private a decision that almost always prevails. What is worse, these men are not chosen in a way to ensure the wisest choice. It has become the practice to name as conferees the ranking members of the committee, so that the accident of seniority determines. Exceptions are made, but in general it is not a question of who are most competent to serve. Chance governs, sometimes giving way to favor, rarely to merit. xxx xxx xxx Speaking broadly, the system of legislating by conference committee is unscientific and therefore defective. Usually it forfeits the benefit of scrutiny and judgment by all the wisdom available. Uncontrolled, it is inferior to that process by which every amendment is secured independent discussion and vote. . . . 63 (Emphasis supplied) Not surprisingly has it been said: "Conference Committee action is the most undemocratic procedure in the legislative process; it is an appropriate target for legislative critics." 64 In the case at bench, petitioners insist that the Conference Committee to which Senate Bill No. 1630 and House Bill No. 11197 were referred for the purpose of harmonizing their differences, overreached themselves in not confining their "reconciliation" function to those areas of disagreement in the two bills but actually making "surreptitious insertions" and deletions which amounted to a grave abuse of discretion. At this point, it becomes imperative to focus on the errant provisions which found their way into Republic Act No. 7716. Below is a breakdown to facilitate understanding the grounds for petitioners' objections: INSERTIONS MADE BY BICAMERAL CONFERENCE COMMITTEE (BICAM) TO SENATE BILL (SB) NO. 1630 AND HOUSE BILL (HB) NO. 11197 1. Sec. 99 of the National Internal Revenue Code (NIRC) (1) Under the HB, this section includes any person who, in the course of trade or business, sells, barters or exchanges goods OR PROPERTIES and any person who LEASES PERSONAL PROPERTIES. (2) The SB completely changed the said section and defined a number of words and phrases. Also, Section 99-A was added which included one who sells, exchanges, barters PROPERTIES and one who imports PROPERTIES. (3) The BICAM version makes LESSORS of goods OR PROPERTIES and importers of goods LIABLE to VAT (subject of petition in G.R. No. 115754). 2. Section 100 (VAT on Sale of Goods)

The term "goods" or "properties" includes the following, which were not found in either the HB or the SB: In addition to radio and television time; SATTELITE TRANSMISSION AND CABLE TELEVISION TIME. The term "Other similar properties" was deleted, which was present in the HB and the SB. Real properties held primarily for sale to customers or held for lease in the ordinary course or business were included, which was neither in the HB nor the SB (subject of petition in G.R. No. 115754). 3. Section 102 On what are included in the term "sale or exchange of services," as to make them subject to VAT, the BICAM included/inserted the following (not found in either House or Senate Bills): 1. Services of lessors of property, whether personal or real (subject of petition in G.R. No. 115754); 2. Warehousing services; 3. Keepers of resthouses, pension houses, inns, resorts; 4. Common carriers by land, air and sea; 5. Services of franchise grantees of telephone and telegraph; 6. Radio and television broadcasting; 7. All other franchise grantees except those under Section 117 of this Code (subject of petition in G.R. No. 115852); 8. Services of surety, fidelity, indemnity, and bonding companies; 9. Also inserted by the BICAM (on page 8 thereof) is the lease or use of or the right to use of satellite transmission and cable television time. 4. Section 103 (Exempt Transactions) The BICAM deleted subsection (f) in its entirety, despite its inclusion in both the House and Senate Bills. Therefore, under Republic Act No. 7716, the "printing, publication, importation or sale of books and any newspaper, magazine, review, or bulletin which appears at regular intervals with fixed prices for subscription and sale and which is not devoted principally to the publication of advertisements" is subject to VAT (subject of petition in G.R. No. 115931 and G.R. No. 115544). The HB and SB did not touch Subsection (g) but it was amended by the BICAM by changing the word TEN to FIVE. Thus, importation of vessels with tonnage of more than five thousand tons is VAT exempt. Subsection L, which was identical in the HB and the SB that stated that medical, dental, hospital and veterinary services were exempted from the VAT was amended by the BICAM by adding the qualifying phrase: EXCEPT THOSE RENDERED BY PROFESSIONALS, thus subjecting doctors, dentists and veterinarians to the VAT. Subsection U which exempts from VAT "transactions which are exempt under special laws," was amended by the BICAM by adding the phrase: EXCEPT THOSE GRANTED UNDER PD Nos. 66, 529, 972, 1491, AND 1590, AND NON-ELECTRIC COOPERATIVES UNDER RA 6938 (subject of petition in G.R. No. 115873), not found in either the HB or the SB, resulting in the inclusion of all cooperatives to the VAT, except non-electric cooperatives. The sale of real properties was included in the exempt transactions under the House Bill, but the BICAM qualified this with the provision: (S) SALE OF REAL PROPERTIES NOT PRIMARILY HELD FOR SALE TO CUSTOMERS OR HELD FOR LEASE IN THE ORDINARY COURSE OF TRADE OR BUSINESS OR REAL PROPERTY UTILIZED FOR LOW-COST AND SOCIALIZED HOUSING AS DEFINED BY RA NO. 7279 OTHERWISE KNOWN AS THE URBAN DEVELOPMENT AND HOUSING ACT OF 1992 AND OTHER RELATED LAWS.

(subject of petition in G.R. No. 115754) The BICAM also exempted the sale of properties, the receipts of which are not less than P480,000.00 or more than P720,000.00. Under the SB, no amount was given, but in the HB it was stated that receipts from the sale of properties not less than P350,000.00 nor more than P600,000.00 were exempt. It did not include, as VAT exempt, the sale or transfer of securities, as defined in the Revised Securities Act (BP 178) which was contained in both Senate and House Bills. 5. Section 104 Not included in the HB or the SB is the phrase "INCLUDING PACKAGING MATERIALS" which was inserted by the BICAM in Section 104 (A) (1) (B), thus excluding from creditable input tax packaging materials and the phrase "ON WHICH A VALUE-ADDED TAX HAS BEEN ACTUALLY PAID" in Section 104 (A) (2). 6. Section 107 Both House and Senate Bills provide for the payment of P500.00 VAT registration fee but this was increased by BICAM to P1,000.00. 7. Section 112 Regarding a person whose sales or receipts are exempt under Section 103 (w), the BICAM inserted the phrase: "THREE PERCENT UPON THE EFFECTIVITY OF THIS ACT AND FOUR PERCENT (4%) TWO YEARS THEREAFTER," although the SB and the HB provide only "three percent of his gross quarterly sales." 8. Section 115 The BICAM adopted the HB version which subjects common carriers by land, air or water for the transport of passengers to 3% of their gross quarterly sales, which is not found in the SB. 9. Section 117 The BICAM amended this section by subjecting franchises on electric, gas and water utilities to a tax of two percent (2%) on gross receipts derived . . ., although neither the HB nor the SB has a similar provision. 10. Section 17 (d) (a) The BICAM defers for only 2 years the VAT on services of actors and actresses, although the SB defers it for 3 years. (b) The BICAM uses the word "EXCLUDE" in the section on deferment of VAT collection on certain goods and services. The HB does not contain any counterpart provision and SB only allows deferment for no longer than 3 years. 11. Section 18 on the Tax Administration Development Fund is an entirely new provision not contained in the House/Senate Bills. This fund is supposed to ensure effective implementation of Republic Act No. 7716. 12. Section 19 No period within which to promulgate the implementing rules and regulations is found in the HB or the SB but BICAM provided "within 90 days" which found its way in Republic Act No. 7716. Even a cursory perusal of the above outline will convince one that, indeed, the Bicameral Conference Committee (henceforth to be referred to as BICAM) exceeded the power and authority granted in the Rules of its creation. Both Senate and House Rules limit the task of the Conference Committee in almost identical language to the settlement of differences in the provisions or amendments to any bill or joint resolution. If it means anything at all, it is that there are provisions in subject bill, to start with, which differ and, therefore, need reconciliation. Nowhere in the Rules is it authorized to initiate or propose completely new matter. Although under certain rules on legislative procedure, like those in Jefferson's Manual, a conference committee may introduce germane matters in a particular bill, such matters should be circumscribed by the committee's sole authority and function to reconcile differences. Parenthetically, in the Senate and in the House, a matter is "germane" to a particular bill if there is a common tie between said matter and the provisions which tend to promote the object and purpose of the

bill it seeks to amend. If it introduces a new subject matter not within the purview of the bill, then it is not "germane" to the bill. 65 The test is whether or not the change represented an amendment or extension of the basic purpose of the original, or the introduction of an entirely new and different subject matter. 66 In the BICAM, however, the germane subject matter must be within the ambit of the disagreement between the two Houses. If the "germane" subject is not covered by the disagreement but it is reflected in the final version of the bill as reported by the Conference Committee or, if what appears to be a "germane" matter in the sense that it is "relevant or closely allied" 67 with the purpose of the bill, was not the subject of a disagreement between the Senate and the House, it should be deemed an extraneous matter or even a "rider" which should never be considered legally passed for not having undergone the three-day reading requirement. Insertion of new matter on the part of the BICAM is, therefore, an ultra vires act which makes the same void. The determination of what is "germane" and what is not may appear to be a difficult task but the Congress, having been confronted with the problem before, resolved it in accordance with the rules. In that case, the Congress approved a Conference Committee's insertion of new provisions that were not contemplated in any of the provisions in question between the Houses simply because of the provision in Jefferson's Manual that conferees may report matters "which are germane modifications of subjects in disagreement between the Houses and the committee. 68 In other words, the matter was germane to the points of disagreement between the House and the Senate. As regards inserted amendments in the BICAM, therefore, the task of determining what is germane to a bill is simplified, thus: If the amendments are not circumscribed by the subjects of disagreement between the two Houses, then they are not germane to the purpose of the bill. In the instant case before us, the insertions and deletions made do not merely spell an effort at settling conflicting provisions but have materially altered the bill, thus giving rise to the instant petitions on the part of those who were caught unawares by the legislative legerdemain that took place. Going by the definition of the word "amendment" in Black's Law Dictionary, 5th Ed., 1979, which means "to change or modify for the better; to alter by modification, deletion, or addition," said insertions and deletions constitute amendments. Consequently, these violated Article VI, Section 26 (2) which provides inter alia: "Upon the last reading of a bill, no amendment thereto shall be allowed . . ." This proscription is intended to subject all bills and their amendments to intensive deliberation by the legislators and the ample ventilation of issues to afford the public an opportunity to express their opinions or objections issues to afford the public an opportunity to express their opinions or objections thereon. The same rationale underlies the three-reading requirement to the end that no surprises may be sprung on an unsuspecting citizenry. Provisions of the "now you see it, now you don't" variety, meaning those which were either in the House and/or Senate versions but simply disappeared or were "bracketed out" of existence in the BICAM Report, were eventually incorporated in Republic Act No. 7716. Worse, some goods, properties or services which were not covered by the two versions and, therefore, were never intended to be so covered, suddenly found their way into the same Report. No advance notice of such insertions prepared the rest of the legislators, much less the public who could be adversely affected, so that they could be given the opportunity to express their views thereon. Well has the final BICAM report been described, therefore, as an instance of "taxation without representation." That the conferees or delegates in the BICAM representing the two Chambers could not possibly be charged with bad faith or sinister motives or, at the very least, unseemly behavior, is of no moment. The stark fact is that items not previously subjected to the VAT now fell under its coverage without interested sectors or parties having been afforded the opportunity to be heard thereon. This is not to say that the Conference Committee Report should have undergone the three readings required in Article VI, Section 26 (2), for this clearly refers only to bills which, after having been initially filed in either House, negotiated the labyrinthine passage therein until its approval. The composition of the BICAM including as it usually does, the Chairman of the appropriate Committee, the sponsor of the bill and other interested members ensures an informed discussion, at least with respect to the disagreeing provisions. The same does not obtain as regards completely new matter which suddenly spring on the legislative horizon. It has been pointed out that such extraneous matters notwithstanding, all Congressman and Senators were given the opportunity to approve or turn down the Committee Report in toto, thus "curing" whatever defect or irregularity it bore. Earlier in this opinion, I explained that the source of the acknowledged power of this ad hoc committee stems from the precise fact that, the meetings, being scheduled "take it or leave it" basis. It has not been uncommon for legislators who, for one reason or another have been frustrated in their attempt to pass a pet bill in their own chamber, to work for its passage in the BICAM where it may enjoy a more hospitable reception and faster approval. In the instant case, had there been full, open and unfettered discussion on the bills during the Committee sessions, there would not have been as much vociferous objections on this score. Unfortunately, however, the Committee held two of the five sessions behind closed doors, sans stenographers, record-takers and interested observers. To that extent, the proceedings were shrouded in mystery and the public's right to information on matters of public concern as enshrined in Article III, Section 7 69 and the government's policy of transparency in transactions involving public interest in Article II, Section 28 of the

Constitution 70 are undermined. Moreover, that which is void ab initio such as the objectionable provisions in the Conference Committee Report, cannot be "cured" or ratified. For all intents and purposes, these never existed. Quae ab initio non valent, ex post facto convalescere non possunt. Things that are invalid from the beginning are not made valid by a subsequent act. Should this argument be unacceptable, the "enrolled bill" doctrine, in turn, is invoked to support the proposition that the certification by the presiding officers of Congress, together with the signature of the President, bars further judicial inquiry into the validity of the law. I reiterate my submission that the "enrolled bill ruling" may be applicable but only with respect to questions pertaining to the procedural enactment, engrossment, printing, the insertion or deletion of a word or phrase here and there, but would draw a dividing line with respect to substantial substantive changes, such as those introduced by the BICAM herein. We have before us then the spectacle of a body created by the two Houses of Congress for the very limited purpose of settling disagreements in provisions between bills emanating therefrom, exercising the plenary legislative powers of the parent chambers but holding itself exempt from the mandatory constitutional requirements that are the hallmarks of legislation under the aegis of a democratic political system. From the initial filing, through the three readings which entail detailed debates and discussions in Committee and plenary sessions, and on to the transmittal to the other House in a repetition of the entire process to ensure exhaustive deliberations all these have been skipped over. In the proverbial twinkling of an eye, provisions that probably may not have seen the light of day had they but run their full course through the legislative mill, sprang into existence and emerged full-blown laws. Yet our Constitution vests the legislative power in "the Congress of the Philippines which shall consist of a Senate and a House of Representatives . . ." 71 and not in any special, standing or super committee of its own creation, no matter that these have been described, accurately enough, as "the eye, the ear, the hand, and very often the brain of the house." Firstly, that usage or custom has sanctioned this abbreviated, if questionable, procedure does not warrant its being legitimized and perpetuated any longer. Consuetudo, contra rationem introducta, potius usurpatio quam consuetudo appellari debet. A custom against reason is rather an usurpation. In the hierarchy of sources of legislative procedure, constitutional rules, statutory provisions and adopted rules (as for example, the Senate and House Rules), rank highest, certainly much ahead of customs and usages. Secondly, is this Court to assume the role of passive spectator or indulgent third party, timorous about exercising its power or more importantly, performing its duty, of making a judicial determination on the issue of whether there has been grave abuse of discretion by the other branches or instrumentalities of government, where the same is properly invoked? The time is past when the Court was not loathe to raise the bogeyman of the political question to avert a head-on collision with either the Executive or Legislative Departments. Even the separation of powers doctrine was burnished to a bright sheen as often as it was invoked to keep the judiciary within bounds. No longer does this condition obtain. Article VIII, Section 2 of the Constitution partly quoted in this paragraph has broadened the scope of judicial inquiry. This Court can now safely fulfill its mandate of delimiting the powers of co-equal departments like the Congress, its officers or its committees which may have no compunctions about exercising legislative powers in full. Thirdly, dare we close our eyes to the presumptuous assumption by a runaway committee of its progenitor's legislative powers in derogation of the rights of the people, in the process, subverting the democratic principles we all are sworn to uphold, when a proper case is made out for our intervention? The answers to the above queries are self-evident. I call to mind this exhortation: "We are sworn to see that violations of the constitution by any person, corporation, state agency or branch of government are brought to light and corrected. To countenance an artificial rule of law that silences our voices when confronted with violations of our Constitution is not acceptable to this Court." 72 I am not unaware that a rather recent decision of ours brushed aside an argument that a provision in subject law regarding the withdrawal of the franking privilege from the petitioners and this Court itself, not having been included in the original version of Senate Bill No. 720 or of House Bill No. 4200 but only in the Conference Committee Report, was violative of Article VI, Section 26 (2) of the Constitution. Likewise, that said Section 35, never having been a subject of disagreement between both Houses, could not have been validly added as an amendment before the Conference Committee. The majority opinion in said case explained: While it is true that a conference committee is the mechanism for compromising differences between the Senate and the House, it is not limited in its jurisdiction to this question. Its broader function is described

thus: A conference committee may deal generally with the subject matter or it may be limited to resolving the precise differences between the two houses. Even where the conference committee is not by rule limited in its jurisdiction, legislative custom severely limits the freedom with which new subject matter can be inserted into the conference bill. But occasionally a conference committee produces unexpected results, results beyond its mandate. These excursions occur even where the rules impose strict limitations on conference committee jurisdiction. This is symptomatic of the authoritarian power of conference committee (Davies, Legislative Law and Process: In a Nutshell, 1986 Ed., p. 81). 73 (Emphasis supplied) At the risk of being repetitious, I wish to point out that the general rule, as quoted above, is: "Even where the conference committee is not by rule limited in its jurisdiction, legislative custom severely limits the freedom with which new subject matter can be inserted into the conference bill." What follows, that is, "occasionally a conference committee produces unexpected results, results beyond its mandate. . ." is the exception. Then it concludes with a declaration that: "This is symptomatic of the authoritarian power of conference committee." Are we about to reinstall another institution that smacks of authoritarianism which, after our past experience, has become anathema to the Filipino people? The ruling above can hardly be cited in support of the proposition that a provision in a BICAM report which was not the subject of differences between the House and Senate versions of a bill cannot be nullified. It submit that such is not authorized in our Basic Law. Moreover, this decision concerns merely one provision whereas the BICAM Report that culminated in the EVAT law has a wider scope as it, in fact, expanded the base of the original VAT law by imposing the tax on several items which were not so covered prior to the EVAT. One other flaw in most BICAM Reports, not excluding this one under scrutiny, is that, hastily drawn up, it often fails to conform to the Senate and House Rules requiring no less than a "detailed" and "sufficiently explicit statement of the changes in or amendments to the subject measure." The Report of the committee, as may be gleaned from the preceding pages, was no more than the final version of the bill as "passed" by the BICAM. The amendments or subjects of dissension, as well as the reconciliation made by the committee, are not even pointed out, much less explained therein. It may be argued that legislative rules of procedure may properly be suspended, modified, revoked or waived at will by the legislators themselves. 74 This principle, however, does not come into play in interpreting what the record of the proceedings shows was, or was not, done. It is rather designed to test the validity of legislative action where the record shows a final action in violation or disregard of legislative rules. 75 Utilizing the Senate and the House Rules as both guidelines and yardstick, the BICAM here obviously did not adhere to the rule on what the Report should contain. Given all these irregularities that have apparently been engrafted into the BICAM system, and which have been tolerated, if not accorded outright acceptance by everyone involved in or conversant with, the institution, it may be asked: Why not leave well enough alone? That these practices have remained unchallenged in the past does not justify our closing our eyes and turning a deaf ear to them. Writ large is the spectacle of a mechanism ensconced in the very heart of the people's legislative halls, that now stands indicted with the charge of arrogating legislative powers unto itself through the use of dubious "shortcuts." Here, for the people to judge, is the "mother of all shortcuts." In the petitions at bench, we are confronted with the enactment of a tax law which was designed to broaden the tax base. It is rote learning for any law student that as an attribute of sovereignty, the power to tax is "the strongest of all the powers of government." 76 Admittedly, "for all its plenitude, the power to tax is not unconfined. There are restrictions." 77 Were there none, then the oft-quoted 1803 dictum of Chief Justice Marshall that "the power to tax involves the power to destroy" 78 would be a truism. Happily, we can concur with, and the people can find comfort in, the reassuring words of Mr. Justice Holmes: "The power to tax is not the power to destroy while this Court sits." 79 Manakanaka, mayroong dumudulog dito sa Kataastaasang Hukuman na may kamangha-manghang hinaing. Angkop na halimbawa ay ang mga petisyong iniharap ngayon sa amin. Ang ilan sa kanila ay mga Senador na nais mapawalang bisa ang isang batas ukol sa buwis na ipinasa mismo nila. Diumano ito ay hindi tumalima sa mga itinatadhana ng Saligang Batas. Bukod sa rito, tutol sila sa mga bagong talata na isiningit ng "Bicameral Conference Committee" na nagdagdag ng mga bagong bagay bagay at serbisyo na papatawan ng buwis. Ayon sa kanila, ginampanan ng komiteng iyan ang gawain na nauukol sa buong Kongreso. Kung kaya't ang nararapat na mangyari ay ihatol ng Kataastaasang Hukuman na malabis na pagsasamantala sa sariling pagpapasiya ang ginawa ng Kongreso. Bagama't bantulot kaming makialam sa isang kapantay na sangay ng Pamahalaan, hindi naman nararapat na kami ay tumangging gampanan ang tungkulin na iniatas sa amin ng Saligang Batas. Lalu't-

lalo nang ang batas na kinauukulan ay maaaring makapinsala sa nakararami sa sambayanan. Sa ganang akin, itong batas na inihaharap sa amin ngayon, ay totoong labag sa Saligang Batas, samakatuwid ay walang bisa. Nguni't ito ay nauukol lamang sa mga katiwalian na may kinalaman sa paraan ng pagpapasabatas nito. Hindi namin patakaran ang makialam o humadlang sa itinakdang gawain ng Saligang Batas sa Pangulo at sa Kongreso. Ang dalawang sangay na iyan ng Pamahalaan ang higit na maalam ukol sa kung ang anumang panukalang batas ay nararapat, kanais-nais o magagampanan; kung kaya't hindi kami nararapat na maghatol o magpapasiya sa mga bagay na iyan. Ang makapapataw ng angkop na lunas sa larangan na iyan ay ang mismong mga kinatawan ng sambayanan sa Kongreso. Faced with this challenge of protecting the rights of the people by striking down a law that I submit is unconstitutional and in the process, checking the wonted excesses of the Bicameral Conference Committee system, I see in this case a suitable vehicle to discharge the Court's Constitutional mandate and duty of declaring that there has indeed been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the Legislature. Republic Act No. 7716, being unconstitutional and void, I find no necessity to rule on the substantive issues as dealt with in the majority opinion as they have been rendered moot and academic. These issues pertain to the intrinsic merits of the law. It is axiomatic that the wisdom, desirability and advisability of enacting certain laws lie, not within the province of the Judiciary but that of the political departments, the Executive and the Legislative. The relief sought by petitioners from what they perceive to be the harsh and onerous effect of the EVAT on the people is within their reach. For Congress, of which Senatorpetitioners are a part, can furnish the solution by either repealing or amending the subject law. For the foregoing reasons, I VOTE to GRANT the petition.

PUNO, J.: Petitioners plead that we affirm the self-evident proposition that they who make law should not break the law. There are many evils whose elimination can be trusted to time. The evil of lawlessness in lawmaking cannot. It must be slain on sight for it subverts the sovereignty of the people. First, a fast snapshot of the facts. On November 17, 1993, the House of Representatives passed on third reading House Bill (H.B.) No. 11197 entitled "An Act Restructuring the Value Added Tax (VAT) System to Widen its Tax Base and Enhance its Administration, Amending for These Purposes Sections 99, 100, 102 to 108 and 110 Title V and 236, 237 and 238 of Title IX, and Repealing Sections 113 and 114 of Title V, all of the National Internal Revenue Code as Amended." The vote was 114 Yeas and 12 Nays. The next day, November 18, 1993, H.B. No. 11197 was transmitted to the Senate for its concurrence by the Hon. Camilo L. Sabio, Secretary General of the House of Representatives. On February 7, 1994, the Senate Committee on Ways and Means submitted Senate Bill (S.B.) No. 1630, recommending its approval "in substitution of Senate Bill No. 1129 taking into consideration P.S. Res. No. 734 and House Bill No. 11197." On March 24, 1994, S.B. No. 1630 was approved on second and third readings. On the same day, the Senate, thru Secretary Edgardo E. Tumangan, requested the House for a conference "in view of the disagreeing provisions of S.B. No. 1630 and H.B. No. 11197." It designated the following as members of its Committee: Senators Ernesto F. Herrera, Leticia R. Shahani, Alberto S. Romulo, John H. Osmea, Ernesto M. Maceda, Blas F. Ople, Francisco S. Tatad, Rodolfo G. Biazon, and Wigberto S. Taada. On the part of the House, the members of the Committee were: Congressmen Exequiel B. Javier, James L. Chiongbian, Renato V. Diaz, Arnulfo P. Fuentebella, Mariano M. Tajon, Gregorio Andolong, Thelma Almario, and Catalino Figueroa. After five (5) meetings, 1 the Bicameral Conference Committee submitted its Report to the Senate and the House stating: CONFERENCE COMMITTEE REPORT The Conference Committee on the disagreeing provisions of House Bill No. 11197, entitled: AN ACT RESTRUCTURING THE VALUE ADDED TAX (VAT) SYSTEM TO WIDEN ITS TAX BASE AND ENHANCE ITS ADMINISTRATION, AMENDING FOR THESE PURPOSES SECTIONS 99, 100, 102, 103, 104, 105, 106, 107, 108 AND 110 OF TITLE IV, 112, 115 AND 116 OF TITLE V, AND 236, 237, AND 238 OF TITLE IX, AND REPEALING SECTIONS 113 AND 114 OF TITLE V, ALL OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED and Senate Bill No. 1630 entitled: AN ACT RESTRUCTURING THE VALUE ADDED TAX (VAT) SYSTEM TO WIDEN ITS TAX BASE AND ENHANCE ITS ADMINISTRATION, AMENDING FOR THESE

PURPOSES SECTIONS 99, 100, 102, 103, 104, 106, 107, 108 AND 110 OF TITLE IV, 112, 115, 117 AND 121 OF TITLE V, AND 236, 237, AND 238 OF TITLE IX, AND REPEALING SECTIONS 113, 114, 116, 119 AND 120 OF TITLE V, ALL OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED AND FOR OTHER PURPOSES having met, after full and free conference, has agreed to recommend and do hereby recommend to their respective Houses that House Bill No. 11197, in consolidation with Senate Bill No. 1630, be approved in accordance with the attached copy of the bill as reconciled and approved by the conferees. Approved. The Report was approved by the House on April 27, 1994. The Senate approved it on May 2, 1994. On May 5, 1994, the President signed the bill into law as R.A. No. 7716. There is no question that the Bicameral Conference Committee did more than reconcile differences between House Bill No. 11197 and Senate Bill No. 1630. In several instances, it either added new provisions or deleted provisions already approved in House Bill No. 11197 and Senate Bill No. 1630. These insertions/deletions numbering twenty four (24) are specified in detail by petitioner Tolentino as follows: 2 SOME SALIENT POINTS ON THE (AMENDMENTS TO THE VATE LAW [EO 273]) SHOWING ADDITIONS/INSERTIONS MADE BY BICAMERAL CONFERENCE COMMITTEE TO SB 1630 & HB 11197 I On Sec. 99 of the NIRC H.B. 11197 amends this section by including, as liable to VAT, any person who in the course of trade of business, sells, barters, or exchanges goods or PROPERTIES and any person who LEASES PERSONAL PROPERTIES. Senate Bill 1630 deleted Sec. 99 to give way for a new Section 99 DEFINITION OF TERMS where eleven (11) terms were defined. A new Section, Section 99-A was incorporated which included as subject to VAT, one who sells, exchanges, barters PROPERTIES and one who imports PROPERTIES. The BCC version (R.A. 7716) makes LESSORS of goods OR PROPERTIES and importers of goods LIABLE to VAT. II On Section 100 (VAT on sale of goods) A. The H.B., S.B., and the BCC (R.A. 7716) all included sale of PROPERTIES as subject to VAT. The term GOODS or PROPERTIES includes the following:
HB (pls. refer

SB (pls. refer To Sec. 1(4) 1. The same

BCC (RA 7716 (Sec. 2) 1. The same

to Sec. 2)
1

. Right or the

privilege to use patent, copyright, design, or model, plan, secret formula or process, goodwill trademark, tradebrand or other like property or right.

2. Right or the privilege to use in the Philippines of any industrial, commercial, or scientific equipment.

2. The same

2. The same

3. Right or the privilege to use motion picture films, films, tapes and discs.

3. The same

3. The same

4. Radio and Television time

4. The same

4. In addition to radio and television time the following were included: SATELLITE TRANSMISSION and CABLE TELEVISION TIME

5. Other Similar properties

5. The Same

5. 'Other similar properties' was deleted

6. -

6. -

6. Real properties held primarily for sale to customers or held for lease in the ordinary course or business

B. The HB and the BCC Bills has each a provision which includes THE SALE OF GOLD TO BANGKO SENTRAL NG PILIPINAS as falling under the term Export Sales, hence subject to 0% VAT. The Senate Bill does not contain such provision (See Section 102-A thereof). III. On Section 102 This section was amended to include as subject to a 10% VAT the gross receipts derived from THE SALE OR EXCHANGE OF SERVICES, INCLUDING THE USE OR LEASE OF PROPERTIES. The SB, HB, and BCC have the same provisions on this. However, on what are included in the term SALE OR EXCHANGE OF SERVICES, the BCC included/inserted the following (not found in either the House or Senate Bills): 1. Services of lessors of property WHETHER PERSONAL OR REAL; (See BCC Report/Bill p. 7) 2. WAREHOUSING SERVICES (Ibid.,) 3. Keepers of RESTHOUSES, PENSION HOUSES, INNS, RESORTS (Ibid.,) 4. Common carriers by LAND, AIR AND SEA (Ibid.,) 5. SERVICES OF FRANCHISE GRANTEES OF TELEPHONE AND TELEGRAPH; 6. RADIO AND TELEVISION BROADCASTING 7. ALL OTHER FRANCHISE GRANTEES EXCEPT THOSE UNDER SECTION 117 OF THIS CODE 8. SERVICES OF SURETY, FIDELITY, INDEMNITY, AND BONDING COMPANIES. 9. Also inserted by the BCC (on page B thereof) is the LEASE OR USE OF OR THE RIGHT TO USE OF SATTELITE TRANSMISSION AND CABLE TELEVISION TIME IV. On Section 103 (Exempt Transactions) The BCC deleted subsection (f) in its entirety, despite its retention in both the House and Senate Bills, thus under RA 7716, the "printing, publication, importation or sale of books and any newspaper, magazine, review, or bulletin which appears at regular intervals with fixed prices for subscription and sale and which is not devoted principally to the publication of advertisements" is subject to VAT. Subsection (g) was amended by the BCC (both Senate and House Bills did not) by changing the word TEN to FIVE, thus: "Importation of passenger and/or cargo vessel of more than five thousand ton to ocean going, including engine and spare parts of said vessel to be used by the importer himself as operator thereof." In short, importation of vessels with tonnage of more than 5 thousand is VAT exempt. Subsection L, was amended by the BCC by adding the qualifying phrase: EXCEPT THOSE RENDERED BY PROFESSIONALS. Subsection U which exempts from VAT "Transactions which are exempt under special laws", was amended by BCC by adding the phrase: EXCEPT THOSE GRANTED UNDER PD NOS. 66, 529, 972, 1491, and 1590, and NON-ELECTRIC COOPERATIVES under RA 6938. This is the reason why cooperatives are now subject to VAT. While the SALE OF REAL PROPERTIES was included in the exempt transactions under the House Bill, the BCC made a qualification by stating: (S) SALE OF REAL PROPERTIES NOT PRIMARILY HELD FOR SALE TO CUSTOMERS OR HELD FOR LEASE IN THE ORDINARY COURSE OF TRADE OR BUSINESS OR REAL PROPERTY UTILIZED FOR LOW-COST AND SOCIALIZED HOUSING AS DEFINED BY R.A. NO. 7279 OTHERWISE KNOWN AS THE URBAN DEVELOPMENT AND HOUSING ACT OF 1992 AND OTHER RELATED LAWS.

Under the Senate Bill, the sale of real property utilized for low-cost and socialized housing as defined by RA 7279, is one of the exempt transactions. Under the House Bill, also exempt from VAT, is the SALE OF PROPERTIES OTHER THAN THE TRANSACTIONS MENTIONED IN THE FOREGOING PARAGRAPHS WITH A GROSS ANNUAL SALES AND/OR RECEIPTS OF WHICH DOES NOT EXCEED THE AMOUNT PRESCRIBED IN THE REGULATIONS TO BE PROMULGATED BY THE SECRETARY OF FINANCE WHICH SHALL NOT BE LESS THAN P350,000.00 OR HIGHER THAN P600,000.00 . . . Under the Senate Bill, the amount is P240,000.00. The BCC agreed at the amount of not less than P480,000.00 or more than P720,000.00 SUBJECT TO TAX UNDER SEC. 112 OF THIS CODE. The BCC did not include, as VAT exempt, the sale or transfer of securities as defined in the Revised Securities Act (BP 178) which was contained in both Senate and House Bills. V On Section 104 The phrase INCLUDING PACKAGING MATERIALS was included by the BCC on Section 104 (A) (1) (B), and the phrase ON WHICH A VALUE-ADDED TAX HAS BEEN ACTUALLY on Section 104 (A) (2). These phrases are not contained in either House and Senate Bills. VI On Section 107 Both House and Senate Bills provide for the payment of P500.00 VAT registration fee. The BCC provides for P1,000.00 VAT fee. VII On Section 112 While both the Senate and House Bills provide that a person whose sales or receipts and are exempt under Section 103[w] of the Code, and who are not VAT registered shall pay a tax equivalent to THREE (3) PERCENT of his gross quarterly sales or receipts, the BCC inserted the phrase: THREE PERCENT UPON THE EFFECTIVITY OF THIS ACT AND FOUR PERCENT (4%) TWO YEARS THEREAFTER. VIII On Section 115 Sec. 17 of SB 1630 Sec. 12 of House Bill 11197 amends this Section by clarifying that common carriers by land, air or water FOR THE TRANSPORT OF PASSENGERS are subject to Percentage Tax equivalent to 3% of their quarterly gross sales. The BCC adopted this and the House Bill's provision that the GROSS RECEIPTS OF COMMON CARRIERS DERIVED FROM THEIR INCOMING AND OUTGOING FREIGHT SHALL NOT BE SUBJECTED TO THE LOCAL TAXES IMPOSED UNDER RA 7160. The Senate Bill has no similar provision. IX On Section 117 This Section has not been touched by either Senate and House Bills. But the BCC amended it by subjecting franchises on ELECTRIC, GAS and WATER UTILITIES A TAX OF TWO PERCENT (2%) ON GROSS RECEIPTS DERIVED . . . . X On Section 121 The BCC adopted the Senate Bills' amendment to this section by subjecting to 5% premium tax on life insurance business. The House Bill does not contain this provision. XI Others A) The House Bill does not contain any provision on the deferment of VAT collection on Certain Goods and Services as does the Senate Bill (Section 19, SB 1630). But although the Senate Bill authorizes the deferment on certain goods and services for no longer than 3 years, there is no specific provision that authorizes the President to EXCLUDE from VAT any of these. The BCC uses the word EXCLUDE.

B) Moreover, the Senate Bill defers the VAT on services of actors and actresses etc. for 3 years but the BCC defers it for only 2 years. C) Section 18 of the BCC Bill (RA 7716) is an entirely new provision not contained in the House/Senate Bills. D) The period within which to promulgate the implementing rules and regulations is within 60 days under SB 1630; No specific period under the House Bill, within 90 days under RA 7716 (BCC). E) The House Bill provides for a general repealing clause i.e., all inconsistent laws etc. are repealed. Section 16 of the Senate Bill expressly repeals Sections 113, 114, 116, 119 and 120 of the code. The same Senate Bill however contains a general repealing clause in Sec. 21 thereof. RA 7716 (BCC's Bill) expressly repeals Sections 113, 114 and 116 of the NIRC; Article 39 (c) (d) and (e) of EO 226 and provides the repeal of Sec. 119 and 120 of the NIRC upon the expiration of two (2) years unless otherwise excluded by the President. The charge that the Bicameral Conference Committee added new provisions in the bills of the two chambers is hardly disputed by respondents. Instead, respondents justify them. According to respondents: (1) the Bicameral Conference Committee has an ex post veto power or a veto after the fact of approval of the bill by both Houses; (2) the bill prepared by the Bicameral Conference Committee, with its additions and deletions, was anyway approved by both Houses; (3) it was the practice in past Congresses for conference committees to insert in bills approved by the two Houses new provisions that were not originally contemplated by them; and (4) the enrolled bill doctrine precludes inquiry into the regularity of the proceedings that led to the enactment of R.A. 7716. With due respect, I reject these contentions which will cave in on closer examination. First. There is absolutely no legal warrant for the bold submission that a Bicameral Conference Committee possesses the power to add/delete provisions in bills already approved on third reading by both Houses or an ex post veto power. To support this postulate that can enfeeble Congress itself, respondents cite no constitutional provision, no law, not even any rule or regulation. 3 Worse, their stance is categorically repudiated by the rules of both the Senate and the House of Representatives which define with precision the parameters of power of a Bicameral Conference Committee. Thus, Section 209, Rule XII of the Rules of the Senate provides; In the event that the Senate does not agree with the House of Representatives on the provision of any bill or joint resolution, the differences shall be settled by a conference committee of both Houses which shall meet within ten days after their composition. Each Conference Committee Report shall contain a detailed and sufficiently explicit statement of the changes in or amendments to the subject measure, and shall be signed by the conferees. (Emphasis supplied) The counterpart rule of the House of Representatives is cast in near identical language. Section 85 of the Rules of the House of Representatives pertinently provides: In the event that the House does not agree with the Senate on the amendments to any bill or joint resolution, the differences may be settled by a conference committee of both chambers. . . . . Each report shall contain a detailed, sufficiently explicit statement of the changes in or amendments to the subject measure. (Emphasis supplied) The Jefferson's Manual has been adopted 4 as a supplement to our parliamentary rules and practice. Section 456 of Jefferson's Manual similarly confines the powers of a conference committee, viz: 5 The managers of a conference must confine themselves to the differences committed to them . . . and may not include subjects not within the disagreements, even though germane to a question in issue. This rule of antiquity has been honed and honored in practice by the Congress of the United States. Thus, it is chronicled by Floyd Biddick, Parliamentarian Emeritus of the United States Senate, viz: 6 Committees of conference are appointed for the sole purpose of compromising and adjusting the differing and conflicting opinions of the two Houses and the committees of conference alone can grant compromises and modify propositions of either Houses within the limits of the disagreement. Conferees are limited to the consideration of differences between the two Houses. Conferees shall not insert in their report matters not committed to them by either House, nor shall they strike from the bill matters agreed to by both Houses. No matter on which there is nothing in either the Senate or House passed versions of a bill may be included in the conference report and actions to the contrary would subject the report to a point of order. (Emphasis ours)

In fine, there is neither a sound nor a syllable in the Rules of the Senate and the House of Representative to support the thesis of the respondents that a bicameral conference committee is clothed with an ex post veto power. But the thesis that a Bicameral Conference Committee can wield ex post veto power does not only contravene the rules of both the Senate and the House. It wages war against our settled ideals of representative democracy. For the inevitable, catastrophic effect of the thesis is to install a Bicameral Conference Committee as the Third Chamber of our Congress, similarly vested with the power to make laws but with the dissimilarity that its laws are not the subject of a free and full discussion of both Houses of Congress. With such a vagrant power, a Bicameral Conference Committee acting as a Third Chamber will be a constitutional monstrosity. It needs no omniscience to perceive that our Constitution did not provide for a Congress composed of three chambers. On the contrary, section 1, Article VI of the Constitution provides in clear and certain language: "The legislative power shall be vested in the Congress of the Philippines which shall consist of a Senate and a House of Representatives . . ." Note that in vesting legislative power exclusively to the Senate and the House, the Constitution used the word "shall." Its command for a Congress of two houses is mandatory. It is not mandatory sometimes. In vesting legislative power to the Senate, the Constitution means the Senate ". . . composed of twenty-four Senators . . . elected at large by the qualified voters of the Philippines . . . ." 7 Similarly, when the Constitution vested the legislative power to the House, it means the House ". . . composed of not more than two hundred and fifty members . . . who shall be elected from legislative districts . . . and those who . . . shall be elected through a party-list system of registered national, regional, and sectoral parties or organizations." 8 The Constitution thus, did not vest on a Bicameral Conference Committee with an ad hoc membership the power to legislate for it exclusively vested legislative power to the Senate and the House as co-equal bodies. To be sure, the Constitution does not mention the Bicameral Conference Committees of Congress. No constitutional status is accorded to them. They are not even statutory creations. They owe their existence from the internal rules of the two Houses of Congress. Yet, respondents peddle the disconcerting idea that they should be recognized as a Third Chamber of Congress and with ex post veto power at that. The thesis that a Bicameral Conference Committee can exercise law making power with ex post veto power is freighted with mischief. Law making is a power that can be used for good or for ill, hence, our Constitution carefully laid out a plan and a procedure for its exercise. Firstly, it vouchsafed that the power to make laws should be exercised by no other body except the Senate and the House. It ought to be indubitable that what is contemplated is the Senate acting as a full Senate and the House acting as a full House. It is only when the Senate and the House act as whole bodies that they truly represent the people. And it is only when they represent the people that they can legitimately pass laws. Laws that are not enacted by the people's rightful representatives subvert the people's sovereignty. Bicameral Conference Committees, with their ad hoc character and limited membership, cannot pass laws for they do not represent the people. The Constitution does not allow the tyranny of the majority. Yet, the respondents will impose the worst kind of tyranny the tyranny of the minority over the majority. Secondly, the Constitution delineated in deft strokes the steps to be followed in making laws. The overriding purpose of these procedural rules is to assure that only bills that successfully survive the searching scrutiny of the proper committees of Congress and the full and unfettered deliberations of both Houses can become laws. For this reason, a bill has to undergo three (3) mandatory separate readings in each House. In the case at bench, the additions and deletions made by the Bicameral Conference Committee did not enjoy the enlightened studies of appropriate committees. It is meet to note that the complexities of modern day legislations have made our committee system a significant part of the legislative process. Thomas Reed called the committee system as "the eye, the ear, the hand, and very often the brain of the house." President Woodrow Wilson of the United States once referred to the government of the United States as "a government by the Chairman of the Standing Committees of Congress. . . " 9 Neither did these additions and deletions of the Bicameral Conference Committee pass through the coils of collective deliberation of the members of the two Houses acting separately. Due to this shortcircuiting of the constitutional procedure of making laws, confusion shrouds the enactment of R.A. No. 7716. Who inserted the additions and deletions remains a mystery. Why they were inserted is a riddle. To use a Churchillian phrase, lawmaking should not be a riddle wrapped in an enigma. It cannot be, for Article II, section 28 of the Constitution mandates the State to adopt and implement a "policy of full public disclosure of all its transactions involving public interest." The Constitution could not have contemplated a Congress of invisible and unaccountable John and Mary Does. A law whose rationale is a riddle and whose authorship is obscure cannot bind the people. All these notwithstanding, respondents resort to the legal cosmetology that these additions and deletions should govern the people as laws because the Bicameral Conference Committee Report was anyway submitted to and approved by the Senate and the House of Representatives. The submission may have some merit with respect to provisions agreed upon by the Committee in the process of reconciling conflicts between S.B. No. 1630 and H.B. No. 11197. In these instances, the conflicting provisions had been previously screened by the proper committees, deliberated upon by both Houses and approved by them. It is, however, a different matter with respect to additions and deletions which were entirely new and which were made not to reconcile inconsistencies between S.B. No. 1630 and H.B. No. 11197. The members of the Bicameral Conference Committee did not have any authority to add new provisions or delete provisions already approved by both Houses as it was not necessary to discharge their limited task of reconciling differences in bills. At that late stage of law making, the Conference Committee cannot add/delete provisions which can become laws without undergoing the study and deliberation of both chambers given to bills on 1st, 2nd, and 3rd readings. Even the Senate and the House cannot enact a law which will not undergo these mandatory three (3) readings required by the Constitution. If the Senate and the House cannot enact such a law, neither can the lesser Bicameral Conference Committee. Moreover, the so-called choice given to the members of both Houses to either approve or disapprove the said additions and deletions is more of an optical illusion. These additions and deletions are not submitted separately for approval. They are tucked to the entire bill. The vote is on the bill as a package, i.e., together with the insertions and

deletions. And the vote is either "aye" or "nay," without any further debate and deliberation. Quite often, legislators vote "yes" because they approve of the bill as a whole although they may object to its amendments by the Conference Committee. This lack of real choice is well observed by Robert Luce: 10 Their power lies chiefly in the fact that reports of conference committees must be accepted without amendment or else rejected in toto. The impulse is to get done with the matter and so the motion to accept has undue advantage, for some members are sure to prefer swallowing unpalatable provisions rather than prolong controversy. This is the more likely if the report comes in the rush of business toward the end of a session, when to seek further conference might result in the loss of the measure altogether. At any time in the session there is some risk of such a result following the rejection of a conference report, for it may not be possible to secure a second conference, or delay may give opposition to the main proposal chance to develop more strength. In a similar vein, Prof. Jack Davies commented that "conference reports are returned to assembly and Senate on a take-it or leave-it-basis, and the bodies are generally placed in the position that to leave-it is a practical impossibility." 11 Thus, he concludes that "conference committee action is the most undemocratic procedure in the legislative process." 12 The respondents also contend that the additions and deletions made by the Bicameral Conference Committee were in accord with legislative customs and usages. The argument does not persuade for it misappreciates the value of customs and usages in the hierarchy of sources of legislative rules of procedure. To be sure, every legislative assembly has the inherent right to promulgate its own internal rules. In our jurisdiction, Article VI, section 16(3) of the Constitution provides that "Each House may determine the rules of its proceedings . . ." But it is hornbook law that the sources of Rules of Procedure are many and hierarchical in character. Mason laid them down as follows: 13 xxx xxx xxx 1. Rules of Procedure are derived from several sources. The principal sources are as follows: a. Constitutional rules. b. Statutory rules or charter provisions. c. Adopted rules. d. Judicial decisions. e. Adopted parliamentary authority. f. Parliamentary law. g. Customs and usages. 2. The rules from the different sources take precedence in the order listed above except that judicial decisions, since they are interpretations of rules from one of the other sources, take the same precedence as the source interpreted. Thus, for example, an interpretation of a constitutional provision takes precedence over a statute. 3. Whenever there is conflict between rules from these sources the rule from the source listed earlier prevails over the rule from the source listed, later. Thus, where the Constitution requires three readings of bills, this provision controls over any provision of statute, adopted rules, adopted manual, or of parliamentary law, and a rule of parliamentary law controls over a local usage but must give way to any rule from a higher source of authority. (Emphasis ours) As discussed above, the unauthorized additions and deletions made by the Bicameral Conference Committee violated the procedure fixed by the Constitution in the making of laws. It is reasonless for respondents therefore to justify these insertions as sanctioned by customs and usages. Finally, respondents seek sanctuary in the conclusiveness of an enrolled bill to bar any judicial inquiry on whether Congress observed our constitutional procedure in the passage of R.A. No. 7716. The enrolled bill theory is a historical relic that should not continuously rule us from the fossilized past. It should be immediately emphasized that the enrolled bill theory originated in England where there is no written constitution and where Parliament is supreme. 14 In this jurisdiction, we have a written constitution and the legislature is a body of limited powers. Likewise, it must be pointed out that starting from the decade of the 40's, even American courts have veered away from the rigidity and unrealism of the conclusiveness of an enrolled bill. Prof. Sutherland observed: 15 xxx xxx xxx. Where the failure of constitutional compliance in the enactment of statutes is not discoverable from the face of the act itself but may be demonstrated by recourse to the legislative journals, debates,

committee reports or papers of the governor, courts have used several conflicting theories with which to dispose of the issue. They have held: (1) that the enrolled bill is conclusive and like the sheriff's return cannot be attacked; (2) that the enrolled bill is prima facie correct and only in case the legislative journal shows affirmative contradiction of the constitutional requirement will the bill be held invalid, (3) that although the enrolled bill is prima facie correct, evidence from the journals, or other extrinsic sources is admissible to strike the bill down; (4) that the legislative journal is conclusive and the enrolled bill is valid only if it accords with the recital in the journal and the constitutional procedure. Various jurisdictions have adopted these alternative approaches in view of strong dissent and dissatisfaction against the philosophical underpinnings of the conclusiveness of an enrolled bill. Prof. Sutherland further observed: . . . Numerous reasons have been given for this rule. Traditionally, an enrolled bill was "a record" and as such was not subject to attack at common law. Likewise, the rule of conclusiveness was similar to the common law rule of the inviolability of the sheriff's return. Indeed, they had the same origin, that is, the sheriff was an officer of the king and likewise the parliamentary act was a regal act and no official might dispute the king's word. Transposed to our democratic system of government, courts held that as the legislature was an official branch of government the court must indulge every presumption that the legislative act was valid. The doctrine of separation of powers was advanced as a strong reason why the court should treat the acts of a co-ordinate branch of government with the same respect as it treats the action of its own officers; indeed, it was thought that it was entitled to even greater respect, else the court might be in the position of reviewing the work of a supposedly equal branch of government. When these arguments failed, as they frequently did, the doctrine of convenience was advanced, that is, that it was not only an undue burden upon the legislature to preserve its records to meet the attack of persons not affected by the procedure of enactment, but also that it unnecessarily complicated litigation and confused the trial of substantive issues. Although many of these arguments are persuasive and are indeed the basis for the rule in many states today, they are not invulnerable to attack. The rule most relied on the sheriff's return or sworn official rule did not in civil litigation deprive the injured party of an action, for always he could sue the sheriff upon his official bond. Likewise, although collateral attack was not permitted, direct attack permitted raising the issue of fraud, and at a later date attack in equity was also available; and that the evidence of the sheriff was not of unusual weight was demonstrated by the fact that in an action against the sheriff no presumption of its authenticity prevailed. The argument that the enrolled bill is a "record" and therefore unimpeachable is likewise misleading, for the correction of records is a matter of established judicial procedure. Apparently, the justification is either the historical one that the king's word could not be questioned or the separation of powers principle that one branch of the government must treat as valid the acts of another. Persuasive as these arguments are, the tendency today is to avoid reaching results by artificial presumptions and thus it would seem desirable to insist that the enrolled bill stand or fall on the basis of the relevant evidence which may be submitted for or against it. (Emphasis ours) Thus, as far back as the 1940's, Prof. Sutherland confirmed that ". . . the tendency seems to be toward the abandonment of the conclusive presumption rule and the adoption of the third rule leaving only a prima facie presumption of validity which may be attacked by any authoritative source of information." 16 I am not unaware that this Court has subscribed to the conclusiveness of an enrolled bill as enunciated in the 1947 lead case of Mabanag v. Lopez Vito, and reiterated in subsequent cases. 17 With due respect, I submit that these rulings are no longer good law. Part of the ratiocination in Mabanag states: xxx xxx xxx If for no other reason than that it conforms to the expressed policy of our law making body, we choose to follow the rule. Section 313 of the old Code of Civil Procedure, as amended by Act No. 2210, provides: "Official documents" may be proved as follows: . . . (2) the proceedings of the Philippine Commission, or of any legislative body that may be provided for in the Philippine Islands, or of Congress, by the journals of those bodies or of either house thereof, or by published statutes or resolutions, or by copies certified by the clerk or secretary, or printed by their order; Provided, That in the case of Acts of the Philippine Commission or the Philippine Legislature, when there is an existence of a copy signed by the presiding officers and secretaries of said bodies, it shall be conclusive proof of the provisions of such Acts and of the due enactment thereof. Suffice to state that section 313 of the Old Code of Civil Procedure as amended by Act No. 2210 is no longer in our statute books. It has long been repealed by the Rules of Court. Mabanag also relied on jurisprudence and authorities in the United States which are under severe criticisms by modern scholars. Hence, even in the United States the conclusiveness of an enrolled bill has been junked by most of the States. It is also true that as late as last year, in the

case of Philippine Judges Association v. Prado, op. cit., this Court still relied on the conclusiveness of an enrolled bill as it refused to invalidate a provision of law on the ground that it was merely inserted by the bicameral conference committee of both Houses. Prado, however, is distinguishable. In Prado, the alleged insertion of the second paragraph of section 35 of R.A. No. 7354 repealing the franking privilege of the judiciary does not appear to be an uncontested fact. In the case at bench, the numerous additions/deletions made by the Bicameral Conference Committee as detailed by petitioners Tolentino and Salonga are not disputed by the respondents. In Prado, the Court was not also confronted with the argument that it can no longer rely on the conclusiveness of an enrolled bill in light of the new provision in the Constitution defining judicial power. More specifically, section 1 of Article VIII now provides: Sec. 1. The judicial power shall be vested in one Supreme Court and in such lower courts as may be established by law. Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government. (Emphasis supplied) Former Chief Justice Roberto R. Concepcion, the sponsor of this provision in the Constitutional Commission explained the sense and the reach of judicial power as follows: 18 xxx xxx xxx . . . In other words, the judiciary is the final arbiter on the question of whether or not a branch of government or any of its officials has acted without jurisdiction or in excess of jurisdiction, or so capriciously as to constitute an abuse of discretion amounting to excess of jurisdiction. This is not only a judicial power but a duty to pass judgment on matters of this nature. This is the background of paragraph 2 of Section 1, which means that the courts cannot hereafter evade the duty to settle matters of this nature, by claiming that such matters constitute political question. (Emphasis ours) The Constitution cannot be any clearer. What it granted to this Court is not a mere power which it can decline to exercise. Precisely to deter this disinclination, the Constitution imposed it as a duty of this Court to strike down any act of a branch or instrumentality of government or any of its officials done with grave abuse of discretion amounting to lack or excess of jurisdiction. Rightly or wrongly, the Constitution has elongated the checking powers of this Court against the other branches of government despite their more democratic character, the President and the legislators being elected by the people. It is, however, theorized that this provision is nothing new. 19 I beg to disagree for the view misses the significant changes made in our constitutional canvass to cure the legal deficiencies we discovered during martial law. One of the areas radically changed by the framers of the 1987 Constitution is the imbalance of power between and among the three great branches of our government the Executive, the Legislative and the Judiciary. To upgrade the powers of the Judiciary, the Constitutional Commission strengthened some more the independence of courts. Thus, it further protected the security of tenure of the members of the Judiciary by providing "No law shall be passed reorganizing the Judiciary when it undermines the security of tenure of its Members." 20 It also guaranteed fiscal autonomy to the Judiciary. 21 More, it depoliticalized appointments in the judiciary by creating the Judicial and Bar Council which was tasked with screening the list of prospective appointees to the judiciary. 22 The power of confirming appointments to the judiciary was also taken away from Congress. 23 The President was likewise given a specific time to fill up vacancies in the judiciary ninety (90) days from the occurrence of the vacancy in case of the Supreme Court 24 and ninety (90) days from the submission of the list of recommendees by the Judicial and Bar Council in case of vacancies in the lower courts. 25 To further insulate appointments in the judiciary from the virus of politics, the Supreme Court was given the power to "appoint all officials and employees of the Judiciary in accordance with the Civil Service Law." 26 And to make the separation of the judiciary from the other branches of government more watertight, it prohibited members of the judiciary to be " . . . designated to any agency performing quasi judicial or administrative functions." 27 While the Constitution strengthened the sinews of the Supreme Court, it reduced the powers of the two other branches of government, especially the Executive. Notable of the powers of the President clipped by the Constitution is his power to suspend the writ of habeas corpus and to proclaim martial law. The exercise of this power is now subject to revocation by Congress. Likewise, the sufficiency of the factual basis for the exercise of said power may be reviewed by this Court in an appropriate proceeding filed by any citizen. 28 The provision defining judicial power as including the "duty of the courts of justice . . . to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government" constitutes the capstone of the efforts of the Constitutional Commission to upgrade the powers of this Court vis-a-vis the other branches of government. This provision was dictated by our experience under martial law which taught us that a stronger and more independent judiciary is needed to abort abuses in government. As sharply stressed by petitioner Salonga, this provision is distinctly Filipino and its interpretation should not be depreciated by undue reliance on inapplicable foreign jurisprudence. It is thus crystal clear that unlike other Supreme Courts, this Court has been mandated by our new Constitution to be a more active agent in annulling acts of grave abuse of discretion committed by a branch of government or any of its officials. This new role, however, will not compel the Court, appropriately defined by Prof. A. Bickel as the least dangerous branch of government, to assume imperial powers and run roughshod over the principle of separation of power for that is

judicial tyranny by any language. But while respecting the essential of the principle of separation of power, the Court is not to be restricted by its non-essentials. Applied to the case at bench, by voiding R.A. No. 7716 on the ground that its enactment violated the procedure imposed by the Constitution in lawmaking, the Court is not by any means wrecking the wall separating the powers between the legislature and the judiciary. For in so doing, the Court is not engaging in lawmaking which is the essence of legislative power. But the Court's interposition of power should not be defeated by the conclusiveness of the enrolled bill. A resort to this fiction will result in the enactment of laws not properly deliberated upon and passed by Congress. Certainly, the enrolled bill theory was not conceived to cover up violations of the constitutional procedure in law making, a procedure intended to assure the passage of good laws. The conclusiveness of the enrolled bill can, therefore, be disregarded for it is not necessary to preserve the principle of separation of powers. In sum, I submit that in imposing to this Court the duty to annul acts of government committed with grave abuse of discretion, the new Constitution transformed this Court from passivity to activism. This transformation, dictated by our distinct experience as a nation, is not merely evolutionary but revolutionary. Under the 1935 and 1973 Constitutions, this Court approached constitutional violations by initially determining what it cannot do; under the 1987 Constitution, there is a shift in stress this Court is mandated to approach constitutional violations not by finding out what it should not do but what it must do. The Court must discharge this solemn duty by not resuscitating a past that petrifies the present. I vote to declare R.A. No. 7716 unconstitutional.

BELLOSILLO, J.: With a consensus already reached after due deliberations, silence perhaps should be the better part of discretion, except to vote. The different views and opinions expressed are so persuasive and convincing; they are more than enough to sway the pendulum for or against the subject petitions. The penetrating and scholarly dissertations of my brethren should dispense with further arguments which may only confound and confuse even the most learned of men. But there is a crucial point, a constitutional issue which, I submit, has been belittled, treated lightly, if not almost considered insignificant and purposeless. It is elementary, as much as it is fundamental. I am referring to the word "exclusively" appearing in Sec. 24, Art. VI, of our 1987 Constitution. This is regrettable, to say the least, as it involves a constitutional mandate which, wittingly or unwittingly, has been cast aside as trivial and meaningless. A comparison of the particular provision on the enactment of revenue bills in the U.S. Constitution with its counterpart in the Philippine Constitution will help explain my position. Under the U.S. Constitution, "[a]ll bills for raising revenue shall originate in the House of Representatives; but the Senate may propose or concur with amendments as on other bills" (Sec. 7, par. [1], Art. I). In contrast, our 1987 Constitution reads: "All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments" (Sec. 24, Art. VI; Emphasis supplied). As may be gleaned from the pertinent provision of our Constitution, all revenue bills are required to originate "exclusively" in the House of Representatives. On the other hand, the U.S. Constitution does not use the word "exclusively;" it merely says, "[a]ll bills for raising revenue shall originate in the House of Representatives." Since the term "exclusively" has already been adequately defined in the various opinions, as to which there seems to be no dispute, I shall no longer offer my own definition. Verily, the provision in our Constitution requiring that all revenue bills shall originate exclusively from the Lower House is mandatory. The word "exclusively" is an "exclusive word," which is indicative of an intent that the provision is mandatory. 1 Hence, all American authorities expounding on the meaning and application of Sec. 7, par. (1), Art. I, of the U.S. Constitution cannot be used in the interpretation of Sec. 24, Art. VI, of our 1987 Constitution which has a distinct feature of "exclusiveness" all its own. Thus, when our Constitution absolutely requires as it is mandatory that a particular bill should exclusively emanate from the Lower House, there is no alternative to the requirement that the bill to become valid law must originate exclusively from that House. In the interpretation of constitutions, questions frequently arise as to whether particular sections are mandatory or directory. The courts usually hesitate to declare that a constitutional provision is directory merely in view of the tendency of the legislature to disregard provisions which are not said to be mandatory. Accordingly, it is the general rule to regard constitutional provisions as mandatory, and not to leave any discretion to the will of the legislature to obey or disregard them. This presumption as to mandatory quality is usually followed unless it is unmistakably manifest that the provisions are intended to be merely directory. So strong is the inclination in favor of giving obligatory force to the terms of the organic law that it has even been said that neither by the courts nor by any other department of the government may any provision of the Constitution be regarded as merely directory, but that each and everyone of its provisions should be treated as imperative and mandatory, without reference to the rules and distinguishing between the directory and the mandatory statutes. 2

The framers of our 1987 Constitution could not have used the term "exclusively" if they only meant to replicate and adopt in toto the U.S. version. By inserting "exclusively" in Sec. 24, Art. VI, of our Constitution, their message is clear: they wanted it different, strong, stringent. There must be a compelling reason for the inclusion of the word "exclusively," which cannot be an act of retrogression but progression, an improvement on its precursor. Thus, "exclusively" must be given its true meaning, its purpose observed and virtue recognized, for it could not have been conceived to be of minor consequence. That construction is to be sought which gives effect to the whole of the statute its every word. Ut magis valeat quam pereat. Consequently, any reference to American authorities, decisions and opinions, however wisely and delicately put, can only mislead in the interpretation of our own Constitution. To refer to them in defending the constitutionality of R.A. 7716, subject of the present petitions, is to argue on a false premise, i.e., that Sec. 24, Art. VI, of our 1987 Constitution is, or means exactly, the same as Sec. 7, par. (1), Art. I, of the U.S. Constitution, which is not correct. Hence, only a wrong conclusion can be drawn from a wrong premise. For example, it is argued that in the United States, from where our own legislature is patterned, the Senate can practically substitute its own tax measure for that of the Lower House. Thus, according to the Majority, citing an American case, "the validity of Sec. 37 which the Senate had inserted in the Tariff Act of 1909 by imposing an ad valorem tax based on the weight of vessels, was upheld against the claim that the revenue bill originated in the Senate in contravention of Art. I, Sec. 7, of the U.S. Constitution." 3 In an effort to be more convincing, the Majority even quotes the footnote in Introduction to American Government by F.A. Ogg and P.O. Ray which reads Thus in 1883 the upper house struck out everything after the enacting clause of a tariff bill and wrote its own measure, which the House eventually felt obliged to accept. It likewise added 847 amendments to the Payne-Aldrich tariff act of 1909, dictated the schedules of the emergency tariff act of 1921, rewrote an extensive tax revision bill in the same year, and recast most of the permanent tariff bill of 1922 4 which in fact suggests, very clearly, that the subject revenue bill actually originated from the Lower House and was only amended, perhaps considerably, by the Senate after it was passed by the former and transmitted to the latter. In the cases cited, where the statutes passed by the U.S. Congress were upheld, the revenue bills did not actually originate from the Senate but, in fact, from the Lower House. Thus, the Supreme Court of the United States, speaking through Chief Justice White in Rainey v. United States 5 upheld the revenue bill passed by Congress and adopted the ruling of the lower court that . . . the section in question is not void as a bill for raising revenue originating in the Senate and not in the House of Representatives. It appears that the section was proposed by the Senate as an amendment to a bill for raising revenue which originated in the House. That is sufficient. Flint v. Stone Tracy Co., 6 on which the Solicitor General heavily leans in his Consolidated Comment as well as in his Memorandum, does not support the thesis of the Majority since the subject bill therein actually originated from the Lower House and not from the Senate, and the amendment merely covered a certain provision in the House bill. In fine, in the cases cited which were lifted from American authorities, it appears that the revenue bills in question actually originated from the House of Representatives and were amended by the Senate only after they were transmitted to it. Perhaps, if the factual circumstances in those cases were exactly the same as the ones at bench, then the subject revenue or tariff bill may be upheld in this jurisdiction on the principle of substantial compliance, as they were in the United States, except possibly in instances where the House bill undergoes what is now referred to as "amendment by substitution," for that would be in derogation of our Constitution which vests solely in the House of Representatives the power to initiate revenue bills. A Senate amendment by substitution simply means that the bill in question did not in effect originate from the lower chamber but from the upper chamber and not disguises itself as a mere amendment of the House version. It is also theorized that in the U.S., amendment by substitution is recognized. That may be true. But the process may be validly effective only under the U.S. Constitution. The cases before us present a totally different factual backdrop. Several months before the Lower House could even pass HB No. 11197, P.S. Res. No. 734 and SB No. 1129 had already been filed in the Senate. Worse, the Senate subsequently approved SB No. 1630 "in substitution of SB No. 1129, taking into consideration P.S. Res. No. 734 and HB No. 11197," and not HB No. 11197 itself "as amended." Here, the Senate could not have proposed or concurred with amendments because there was nothing to concur with or amend except its own bill. It must be stressed that the process of concurring or amending presupposes that there exists a bill upon which concurrence may be based or amendments introduced. The Senate should have reported out HB No. 11197, as amended, even if in the amendment it took into consideration SB No. 1630. It should not have submitted to the Bicameral Conference Committee SB No. 1630 which, admittedly, did not originate exclusively from the Lower House. But even assuming that in our jurisdiction a revenue bill of the Lower House may be amended by substitution by the Senate although I am not prepared to accept it in view of Sec. 24, Art. VI, of our Constitution still R.A. 7716 could not have been the result of amendment by substitution since the Senate had no House bill to speak of that it could amend when the Senate started deliberating on its own version. Be that as it may, I cannot rest easy on the proposition that a constitutional mandate calling for the exclusive power and prerogative of the House of Representatives may just be discarded and ignored by the Senate. Since the

Constitution is for the observance of all the judiciary as well as the other departments of government and the judges are sworn to support its provisions, the courts are not at liberty to overlook or disregard its commands. And it is not fair and just to impute to them undue interference if they look into the validity of legislative enactments to determine whether the fundamental law has been faithfully observed in the process. It is their duty to give effect to the existing Constitution and to obey all constitutional provisions irrespective of their opinion as to the wisdom of such provisions. The rule is fixed that the duty in a proper case to declare a law unconstitutional cannot be declined and must be performed in accordance with the deliberate judgment of the tribunal before which the validity of the enactment is directly drawn into question. When it is clear that a statute transgresses the authority vested in the legislature by the Constitution, it is the duty of the courts to declare the act unconstitutional because they cannot shirk from it without violating their oaths of office. This duty of the courts to maintain the Constitution as the fundamental law of the state is imperative and unceasing; and, as Chief Justice Marshal said, whenever a statute is in violation of the fundamental law, the courts must so adjudge and thereby give effect to the Constitution. Any other course would lead to the destruction of the Constitution. Since the question as to the constitutionality of a statute is a judicial matter, the courts will not decline the exercise of jurisdiction upon the suggestion that action might be taken by political agencies in disregard of the judgment of the judicial tribunals. 7 It is my submission that the power and authority to originate revenue bills under our Constitution is vested exclusively in the House of Representatives. Its members being more numerous than those of the Senate, elected more frequently, and more directly represent the people, are therefore considered better aware of the economic life of their individual constituencies. It is just proper that revenue bills originate exclusively from them. In this regard, we do not have to devote much time delving into American decisions and opinions and invoke them in the interpretation of our own Constitution which is different from the American version, particularly on the enactment of revenue bills. We have our own Constitution couched in a language our own legislators thought best. Insofar as revenue bills are concerned, our Constitution is not American; it is distinctively Filipino. And no amplitude of legerdemain can detract from our constitutional requirement that all appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills shall originate exclusively in the House of Representatives, although the Senate may propose or concur with amendments. In this milieu, I am left no option but to vote to grant the petitions and strike down R.A. 7716 as unconstitutional.

Separate Opinions

NARVASA, C.J.: I fully concur with the conclusions set forth in the scholarly opinion of my learned colleague, Mr Justice Vicente V. Mendoza. I write this separate opinion to express my own views relative to the procedural issues raised by the various petitions and death with by some other Members of the Court in their separate opinions. By their very nature, it would seem, discussions of constitutional issues prove fertile ground for a not uncommon phenomenon: debate marked by passionate partisanship amounting sometimes to impatience with adverse views, an eagerness on the part of the proponents on each side to assume the role of, or be perceived as, staunch defenders of constitutional principles, manifesting itself in flights of rhetoric, even hyperbole. The peril in this, obviously, is a diminution of objectivity that quality which, on the part of those charged with the duty and authority of interpreting the fundamental law, is of the essence of their great function. For the Court, more perhaps than for any other person or group, it is necessary to maintain that desirable objectivity. It must make certain that on this as on any other occasion, the judicial function is meticulously performed, the facts ascertained as comprehensively and as accurately as possible, all the issues particularly identified, all the arguments clearly understood; else, it may itself be accused, by its own members or by others, of a lack of adherence to, or a careless observance of, its own procedures, the signatures of its individual members on its enrolled verdicts notwithstanding. In the matter now before the Court, and whatever reservations some people may entertain about their intellectual limitations or moral scruples, I cannot bring myself to accept the thesis which necessarily implies that the members of our august Congress, in enacting the expanded VAT law, exposed their ignorance, or indifference to the observance, of the rules of procedure set down by the Constitution or by their respective chambers, or what is worse, deliberately ignored those rules for some yet undiscovered purpose nefarious in nature, or at least some purpose other than the public weal; or that a few of their fellows, acting as a bicameral conference committee, by devious schemes and cunning maneuvers, and in conspiracy with officials of the Executive Department and others, succeeded in "pulling the wool over the eyes" of all their other colleagues and foisting on them a bill containing provisions that neither chamber of our bicameral legislature conceived or contemplated. This is the thesis that the petitioners would have this Court approve. It is a thesis I consider bereft of any factual or logical foundation.

Other than the bare declarations of some of the petitioners, or arguments from the use and import of the language employed in the relevant documents and records, there is no evidence before the Court adequate to support a finding that the legislators concerned, whether of the upper or lower chamber, acted otherwise than in good faith, in the honest discharge of their functions, in the sincere belief that the established procedures were being regularly observed or, at least, that there occurred no serious or fatal deviation therefrom. There is no evidence on which reasonably to rest a conclusion that any executive or other official took part in or unduly influenced the proceedings before the bicameral conference committee, or that the members of the latter were motivated by a desire to surreptitiously introduce improper revisions in the bills which they were required to reconcile, or that after agreement had been reached on the mode and manner of reconciliation of the "disagreeing provisions," had resorted to stratragems or employed under-handed ploys to ensure their approval and adoption by either House. Neither is there any proof that in voting on the Bicameral Conference Committee (BCC) version of the reconciled bills, the members of the Senate and the House did so in ignorance of, or without understanding, the contents thereof or the bills therein reconciled. Also unacceptable is the theory that since the Constitution requires appropriation and revenue bills to originate exclusively in the House of Representatives, it is improper if not unconstitutional for the Senate to formulate, or even think about formulating, its own draft of this type of measure in anticipation of receipt of one transmitted by the lower Chamber. This is specially cogent as regards much-publicized suggestions for legislation (like the expanded VAT Law) emanating from one or more legislators, or from the Executive Department, or the private sector, etc. which understandably could be expected to forthwith generate much Congressional cogitation. Exclusive origination, I submit, should have no reference to time of conception. As a practical matter, origination should refer to the affirmative act which effectively puts the bicameral legislative procedure in motion, i.e., the transmission by one chamber to the other of a bill for its adoption. This is the purposeful act which sets the legislative machinery in operation to effectively lead to the enactment of a statute. Until this transmission takes place, the formulation and discussions, or the reading for three or more times of proposed measures in either chamber, would be meaningless in the context of the activity leading towards concrete legislation. Unless transmitted to the other chamber, a bill prepared by either house cannot possibly become law. In other words, the first affirmative, efficacious step, the operative act as it were, leading to actual enactment of a statute, is the transmission of a bill from one house to the other for action by the latter. This is the origination that is spoken of in the Constitution in its Article VI, Section 24, in reference to appropriation, revenue, or tariff bills, etc. It may be that in the Senate, revenue or tax measures are discussed, even drafted, and this before a similar activity takes place in the House. This is of no moment, so long as those measures or

MISSING PAGE 3

Report (No. 349) stating that HB 11197 was considered, and recommending that SB 1630 be approved "in substitution of S.B. No. 1129, taking into consideration P.S. Res. No. 734 1 and H.B. No. 11197." This Report made known to the Senate, and clearly indicates, that H.B. No. 11197 was indeed deliberated on by the Committee; in truth, as Senator Herrera pointed out, the BCC later "agreed to adopt (a broader coverage of the VAT) which is closely adhering to the Senate version ** ** with some new provisions or amendments." The plain implication is that the Senate Committee had indeed discussed HB 11197 in comparison with the inconsistent parts of SB 1129 and afterwards proposed amendments to the former in the form of a new bill (No. 1630) more closely akin to the Senate bill (No. 1129). And it is as reasonable to suppose as not that later, during the second and third readings on March 24, 1994, the Senators, assembled as a body, had before them copies of HB 11197 and SB 1129, as well as of the Committee's new "SB 1630" that had been recommended for their approval, or at the very least were otherwise perfectly aware that they were considering the particular provisions of these bills. That there was such a deliberation in the Senate on HB 11197 in light of inconsistent portions of SB 1630, may further be necessarily inferred from the request, made by the Senate on the same day, March 24, 1994, for the convocation of a bicameral conference committee to reconcile "the disagreeing provisions of said bill (SB 1630) and House Bill No. 11197," a request that could not have been made had not the Senators more or less closely examined the provisions of HB 11197 and compared them with those of the counterpart Senate measures. Were the proceedings before the bicameral conference committee fatally flawed? The affirmative is suggested because the committee allegedly overlooked or ignored the fact that SB 1630 could not validly originate in the Senate, and that HB 11197 and SB 1630 never properly passed both chambers. The untenability of these contentions has already been demonstrated. Now, demonstration of the indefensibility of other arguments purporting to establish the impropriety of the BCC proceedings will be attempted. There is the argument, for instance, that the conference committee never used HB 11197 even as "frame of reference" because it does not appear that the suggestion therefor (made by House Penal Chairman Exequiel Javier at the bicameral conference committee's meeting on April 19, 1994, with the concurrence of Senator Maceda) was ever resolved, the minutes being regrettably vague as to what occurred after that suggestion was made. It is, however, as reasonable to assume that it was, as it was not, given the vagueness of the minutes already alluded to. In fact, a reading of the BCC Report persuasively demonstrates that HB 11197 was not only utilized as a "frame of reference" but actually discussed and deliberated on.

Said BCC Report pertinently states: 2 CONFERENCE COMMITTEE REPORT The Conference Committee on the disagreeing provisions of House Bill No. 11197, entitled: AN ACT RESTRUCTURING THE VALUE ADDED TAX (VAT) SYSTEM TO WIDEN ITS TAX BASE AND ENHANCE ITS ADMINISTRATION, AMENDING FOR THESE PURPOSES SECTIONS 99, 100, 102, 1013, 104, 105, 106, 107, 108 AND 110 OF TITLE IV, 112, 115 AND 116 OF TITLE V, AND 236, 237, AND 238 OF TITLE IX, AND REPEALING SECTIONS 113SD AND 114 OF TITLE V, ALL OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED and Senate Bill No. 1630 entitled: AN ACT RESTRUCTURING THE VALUE ADDED TAX (VAT) SYSTEM TO WIDEN ITS TAX BASE AND ENHANCE ITS ADMINISTRATION, AMENDING FOR THESE PURPOSES SECTIONS 99, 100, 102, 103, 104, 1 106, 107, 108 AND 110 OF TITLE IV, 112, 115, 117 AND 121 OF TITLE V, ACND 236, 237, AND 238 OF TITLE IX, AND REPEALING SECTIONS 1113, 114, 116, 119 AND 120 OF TITLE V, ALL OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED AND FOR OTHER PURPOSES having met, after full and free conference, has agreed to recommend and do hereby recommend to their respective Houses that House Bill No. 11197, in consolidation with Senate Bill No. 1630, be approved in accordance with the attached copy of the bill as reconciled and approved by the conferees. Approved. The Report, it will be noted, explicitly adverts to House Bill No. 11197, it being in fact mentioned ahead of Senate Bill No. 1630; graphically shows the very close identity of the subjects of both bills (indicated in their respective titles); and clearly says that the committee met in "full and free conference" on the "disagreeing provisions" of both bills (obviously in an effort to reconcile them); and that reconciliation of said "disagreeing provisions" had been effected, the BCC having agreed that "House Bill No. 11197, in consolidation with Senate Bill No. 1630, be approved in accordance with the attached copy of the bill as reconciled and approved by the conferees." It may be concluded, in other words, that, conformably to the procedure provided in the Constitution with which all the Members of the bicameral conference committee cannot but be presumed to be familiar, and no proof to the contrary having been adduced on the point, it was the original bill (HB 11197) which said body had considered and deliberated on in detail, reconciled or harmonized with SB 1630, and used as basis for drawing up the amended version eventually reported out and submitted to both houses of Congress. It is further contended that the BCC was created and convoked prematurely, that SB 1630 should first have been sent to the House of Representatives for concurrence It is maintained, in other words, that the latter chamber should have refused the Senate request for a bicameral conference committee to reconcile the "disagreeing provisions" of both bills, and should have required that SB 1630 be first transmitted to it. This, seemingly, is nit-picking given the urgency of the proposed legislation as certified by the President (to both houses, in fact). Time was of the essence, according to the President's best judgment as regards which absolutely no one in either chamber of Congress took exception, general acceptance being on the contrary otherwise manifested and that judgment the Court will not now question. In light of that urgency, what was so vital or indispensable about such a transmittal that its absence would invalidate all else that had been done towards enactment of the law, completely escapes me, specially considering that the House had immediately acceded without demur to the request for convocation of the conference committee. What has just been said should dispose of the argument that the statement in the enrolled bill, that "This Act which is a consolidation of House Bill No. 11197 and Senate Bill No. 11630 was finally passed by the House of Representatives and the Senate on April 27, 1994 and May 2, 1994," necessarily signifies that there were two (2) bills separately introduced, retaining their independent existence until they reached the bicameral conference committee where they were consolidated, and therefore, the VAT law did not originate exclusively in the House having originated in part in the Senate as SB 1630, which bill was not embodied in but merely merged with HB 11197, retaining its separate identity until it was joined by the BCC with the house measure. The more logical, and fairer, course is to construe the expression, "consolidation of House Bill No. 11197 and Senate Bill No. 11630" in the context of accompanying and contemporaneous statements, i.e.: (a) the declaration in the BCC Report, supra, that the committee met to reconcile the disagreeing provisions of the two bills, "and after full and free conference" on the matter, agreed and so recommended that "House Bill No. 11197, in consolidation with Senate Bill No. 1630, be approved in accordance with the attached copy of the bill as reconciled and approved by the conferees;" and (b) the averment of Senator Herrera, in the Report of the Ways and Means Committee, supra, that the committee had actually "considered" (discussed) HB No. 11197 and taken it "into consideration" in recommending that its own version of the measure (SB 1630) be the one approved. That the Senate might have drawn up its own version of the expanded VAT bill, contemporaneously with or even before the House did, is of no moment. It bears repeating in this connection that no VAT bill ever originated in the Senate; neither its SB 1129 or SB 1630 or any of its drafts was ever officially transmitted to the House as an initiating

bill which, as already pointed out, is what the Constitution forbids; it was HB 11197 that was first sent to the Senate, underwent first reading, was referred to Committee on Ways and Means and there discussed in relation to and in comparison with the counterpart Senate version or versions the mere formulation of which was, as also already discussed, not prohibited to it and afterwards considered by the Senate itself, also in connection with SB 1630, on second and third readings. HB 11197 was in the truest sense, the originating bill. An issue has also arisen respecting the so-called "enrolled bill doctrine" which, it is said, whatever sacrosanct status it might originally have enjoyed, is now in bad odor with modern scholars on account of its imputed rigidity and unrealism; it being also submitted that the ruling in Mabanag v. Lopez Vito (78 Phil. 1) and the cases reaffirming it, is no longer good law, it being based on a provision of the Code of Civil Procedure 3 long since stricken from the statute books. I would myself consider the "enrolled bill" theory as laying down a presumption of so strong a character as to be well nigh absolute or conclusive, fully in accord with the familiar and fundamental philosophy of separation of powers. The result, as far as I am concerned, is to make discussion of the enrolled bill principle purely academic; for as already pointed out, there is no proof worthy of the name of any facts to justify its reexamination and, possibly, disregard. The other question is, what is the nature of the power given to a bicameral conference committee of reconciling differences between, or "disagreeing provisions" in, a bill originating from the House in relation to amendments proposed by the Senate whether as regards some or all of its provisions? Is the mode of reconciliation, subject to fixed procedure and guidelines? What exactly can the committee do, or not do? Can it only clarify or revise provisions found in either Senate or House bill? Is it forbidden to propose additional or new provisions, even on matters necessarily or reasonably connected with or germane to items in the bills being reconciled? In answer, it is postulated that the reconciliation function is quite limited. In these cases, the conference committee should have confined itself to reconciliation of differences or inconsistencies only by (a) restoring provisions of HB11197 aliminated by SB 1630, or (b) sustaining wholly or partly the Senate amendments, or (c) as a compromise, agreeing that neither provisions nor amendments be carried into the final form of HB 11197 for submission to both chambers of the legislature. The trouble is, it is theorized, the committee incorporated activities or transactions which were not within the contemplation of both bills; it made additions and deletions which did not enjoy the enlightenment of initial committee studies; it exercised what is known as an "ex post veto power" granted to it by no law, rule or regulation, a power that in truth is denied to it by the rules of both the Senate and the House. In substantiation, the Senate rule is cited, similar to that of the House, providing that "differences shall be settled by a conference committee" whose report shall contain "detailed and sufficiently explicit statement of the changes in or amendments to the subject measure, ** (to be) signed by the conferees;" as well as the "Jefferson's Manual," adopted by the Senate as supplement to its own rules, directing that the managers of the conference must confine themselves to differences submitted to them; they may not include subjects not within the disagreements even though germane to a question in issue." It is significant that the limiting proviso in the relevant rules has been construed and applied as directory, not mandatory. During the oral argument, counsel for petitioners admitted that the practice for decades has been for bicameral conference committees to include such provisions in the reconciled bill as they believed to be germane or necessary and acceptable to both chambers, even if not within any of the "disagreeing provisions," and the reconciled bills, containing such provisions had invariably been approved and adopted by both houses of Congress. It is a practice, they say, that should be stopped. But it is a practice that establishes in no uncertain manner the prevailing concept in both houses of Congress of the permissible and acceptable modes of reconciliation that their conference committees may adopt, one whose undesirability is not all that patent if not, indeed, incapable of unquestionable demonstration. The fact is that conference committees only take up bills which have already been freely and fully discussed in both chambers of the legislature, but as to which there is need of reconciliation in view of "disagreeing provisions" between them; and both chambers entrust the function of reconciling the bills to their delegates at a conference committee with full awareness, and tacit consent, that conformably with established practice unquestioningly observed over many years, new provisions may be included even if not within the "disagreeing provisions" but of which, together with other changes, they will be given detailed and sufficiently explicit information prior to voting on the conference committee version. In any event, a fairly recent decision written for the Court by Senior Associate Justice Isagani A. Cruz, promulgated on November 11, 1993 (G.R. No. 105371, The Philippine Judges Association, etc., et al. v. Hon. Pete Prado, etc., et al.), should leave no doubt of the continuing vitality of the enrolled bill doctrine and give an insight into the nature of the reconciling function of bicameral conference committees. In that case, a bilateral conference committee was constituted and met to reconcile Senate Bill No. 720 and House Bill No. 4200. It adopted a "reconciled" measure that was submitted to and approved by both chambers of Congress and ultimately signed into law by the President, as R.A. No. 7354. A provision in this statute (removing the franking privilege from the courts, among others) was assailed as being an invalid amendment because it was not included in the original version of either the senate or the house bill and hence had generated no disagreement between them which had to be reconciled. The Court held: While it is true that a conference committee is the mechanism for compromising differences between the Senate and the House, it is not limited in its jurisdiction to this question. Its broader function is described thus: A conference committee may deal generally with the subject matter or it may be limited to resolving the precise differences between the two houses. Even where the conference committee is not by rule limited in its jurisdiction, legislative custom severely limits the freedom with which new subject

matter can be inserted into the conference bill. But occasionally a conference committee produces unexpected results, results beyond its mandate. These excursions occur even where the rules impose strict limitations on conference committee jurisdiction. This is symptomatic of the authoritarian power of conference committee (Davies, Legislative Law and Process: In A Nutshell, 1987 Ed., p. 81). It is a matter of record that the Conference Committee Report on the bill in question was returned to and duly approved by both the Senate and the House of Representatives. Thereafter, the bill was enrolled with its certification by Senate President Neptali A. Gonzales and Speaker Ramon V. Mitra of the House of Representatives as having been duly passed by both Houses of Congress. It was then presented to and approved by President Corazon C. Aquino on April 3, 1992. Under the doctrine of separation of powers, the Court may not inquire beyond the certification of the approval of a bill from the presiding officers of Congress. Casco Philippine Chemical Co. v. Gimenez (7 SCRA 347) laid down the rule that the enrolled bill is conclusive upon the Judiciary (except in matters that have to be entered in the journals like the yeas and nays on the final reading of the bill) (Mabanag v. Lopez Vito, 78 Phil. 1). The journals are themselves also binding on the Supreme Court, as we held in the old (but still valid) case of U.S. v. Pons (34 Phil. 729), where we explained the reason thus: To inquire into the veracity of the journals of the Philippine legislature when they are, as we have said, clear and explicit, would be to violate both the letter and spirit of the organic laws by which the Philippine Government was brought into existence, to invade a coordinate and independent department of the Government, and to interfere with the legitimate powers and functions of the Legislature. Applying these principles, we shall decline to look into the petitioners' charges that an amendment was made upon the last reading of the bill that eventually R.A. No. 7354 and that copies thereof in its final form were not distributed among the members of each House. Both the enrolled bill and the legislative journals certify that the measure was duly enacted i.e., in accordance with Article VI, Sec. 26 (2) of the Constitution. We are bound by such official assurances from a coordinate department of the government, to which we owe, at the very least, a becoming courtesy. Withal, an analysis of the changes made by the conference committee in HB 11197 and SB 1630 by way of reconciling their "disagreeing provisions," assailed by petitioners as unauthorized or incongrouous reveals that many of the changes related to actual "disagreeing provisions," and that those that might perhaps be considered as entirely new are nevertheless necessarily or logically connected with or germane to particular matters in the bills being reconciled. For instance, the change made by the bicameral conference committee (BCC) concerning amendments to Section 99 of the National Internal Revenue Code (NIRC) the addition of "lessors of goods or properties and importers of goods" is really a reconciliation of disagreeing provisions, for while HB 11197 mentions as among those subject to tax, "one who sells, barters, or exchanges goods or properties and any person who leases personal properties," SB 1630 does not. The change also merely clarifies the provision by providing that the contemplated taxpayers includes "importers." The revision as regards the amendment to Section 100, NIRC, is also simple reconciliation, being nothing more than the adoption by the BCC of the provision in HB 11197 governing the sale of gold to Bangko Sentral, in contrast to SB 1630 containing no such provision. Similarly, only simple reconciliation was involved as regards approval by the BCC of a provision declaring as not exempt, the sale of real properties primarily held for sale to customers or held for lease in the ordinary course of trade or business, which provision is found in HB 11197 but not in SB 1630; as regards the adoption by the BCC of a provision on life insurance business, contained in SB 1630 but not found in HB 11197; as regards adoption by the BCC of the provision in SB 1630 for deferment of tax on certain goods and services for no longer than 3 years, as to which there was no counterpart provision in SB 11197; and as regards the fixing of a period for the adoption of implementing rules, a period being prescribed in SB 1630 and none in HB 11197. In respect of other revisions, it would seem that questions logically arose in the course of the discussion of specific "disagreeing provisions" to which answers were given which, because believed acceptable to both houses of Congress, were placed in the BCC draft. For example, during consideration of radio and television time (Sec. 100, NIRC) dealt with in both House and Senate bills, the question apparently came up, the relevance of which is apparent on its face, relative to satellite transmission and cable television time. Hence, a provision in the BCC bill on the matter. Again, while deliberating on the definition of goods or properties in relation to the provision subjecting sales thereof to tax, a question apparently arose, logically relevant, about real properties intended to be sold by a person in economic difficulties, or because he wishes to buy a car, i.e., not as part of a business, the BCC evidently resolved to clarify the matter by excluding from the tax, "real properties held primarily for sale to customers or held for lease in the ordinary course of business." And in the course of consideration of the term, sale or exchange of services (Sec 102, NIRC), the inquiry most probably was posed as to whether the term should be understood as including other services: e.g., services of lessors of property whether real or personal, of warehousemen, of keepers of resthouses, pension houses, inns, resorts, or of common carriers, etc., and presumably the BCC resolved to clarify the matter by including the services just mentioned. Surely, changes of this nature are obviously to be expected in proceedings before bicameral conference committees and may even be considered grist for their mill, given the history of such BCCs and their general practice here and abroad In any case, all the changes and revisions, and deletions, made by the conference committee were all subsequently considered by and approved by both the Senate and the House, meeting and voting separately. It is an unacceptable theorization, to repeat, that when the BCC report and its proposed bill were submitted to the Senate and the House,

the members thereof did not bother to read, or what is worse, having read did not understand, what was before them, or did not realize that there were new provisions in the reconciled version unrelated to any "disagreeing provisions," or that said new provisions or revisions were effectively concealed from them Moreover, it certainly was entirely within the power and prerogative of either legislative chamber to reject the BCC bill and require the organization of a new bicameral conference committee. That this option was not exercised by either house only proves that the BCC measure was found to be acceptable as in fact it was approved and adopted by both chambers. I vote to DISMISS the petitions for lack of merit.

PADILLA, J.: I The original VAT law and the expanded VAT law In Kapatiran v. Tan, 1 where the ponente was the writer of this Separate Opinion, a unanimous Supreme Court en banc upheld the validity of the original VAT law (Executive Order No. 273, approved on 25 July 1987). It will, in my view, be pointless at this time to re-open arguments advanced in said case as to why said VAT law was invalid, and it will be equally redundant to re-state the principles laid down by the Court in the same case affirming the validity of the VAT law as a tax measure. And yet, the same arguments are, in effect, marshalled against the merits and substance of the expanded VAT law (Rep. Act. No. 7716, approved on 5 May 1994). The same Supreme Court decision should therefore dispose, in the main, of such arguments, for the expanded VAT law is predicated basically on the same principles as the original VAT law, except that now the tax base of the VAT imposition has been expanded or broadened. It only needs to be stated - what actually should be obvious - that a tax measure, like the expanded VAT law (Republic Act. No. 7716), is enacted by Congress and approved by the President in the exercise of the State's power to tax, which is an attribute of sovereignty. And while the power to tax, if exercised without limit, is a power to destroy, and should, therefore, not be allowed in such form, it has to be equally recognized that the power to tax is an essential right of government. Without taxes, basic services to the people can come to a halt; economic progress will be stunted, and, in the long run, the people will suffer the pains of stagnation and retrogression. Consequently, upon careful deliberation, I have no difficulty in reaching the conclusion that the expanded VAT law comes within the legitimate power of the state to tax. And as I had occasion to previously state: Constitutional Law, to begin with, is concerned with power not political convenience, wisdom, exigency, or even necessity. Neither the Executive nor the legislative (Commission on Appointments) can create power where the Constitution confers none." 2 Likewise, in the first VAT case, I said: In any event, if petitioners seriously believe that the adoption and continued application of the VAT are prejudicial to the general welfare or the interests of the majority of the people, they should seek, recourse and relief from the political branches of the government. The Court, following the timehonored doctrine of separation of powers, cannot substitute its judgment for that of the President (and Congress) as to the wisdom, justice and advisability of the adoption of the VAT. 3 This Court should not, as a rule, concern itself with questions of policy, much less, economic policy. That is better left to the two (2) political branches of government. That the expanded VAT law is unwise, unpopular and even anti-poor, among other things said against it, are arguments and considerations within the realm of policy-debate, which only Congress and the Executive have the authority to decisively confront, alleviate, remedy and resolve. II The procedure followed in the approval of Rep. Act No. 7716 Petitioners however posit that the present case raises a far-reaching constitutional question which the Court is dutybound to decide under its expanded jurisdiction in the 1987 Constitution. 4 Petitioners more specifically question and impugn the manner by which the expanded VAT law (Rep. Act. No. 7716) was approved by Congress. They contend that it was approved in violation of the Constitution from which fact it follows, as a consequence, that the law is null and void. Main reliance of the petitioners in their assault in Section 24, Art. VI of the Constitution which provides: Sec. 24. All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bill of local application, and private bills shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments.

While it should be admitted at the outset that there was no rigorous and strict adherence to the literal command of the above provision, it may however be said, after careful reflection, that there was substantial compliance with the provision. There is no question that House Bill No. 11197 expanding the VAT law originated from the House of Representatives. It is undeniably a House measure. On the other hand, Senate Bill No. 1129, also expanding the VAT law, originated from the Senate. It is undeniably a Senate measure which, in point of time, actually antedated House Bill No. 11197. But it is of record that when House Bill No. 11197 was, after approval by the House, sent to the Senate, it was referred to, and considered by the Senate Committee on Ways and Means (after first reading) together with Senate Bill No. 1129, and the Committee came out with Senate Bill No. 1630 in substitution of Senate Bill No. 1129 but after expressly taking into consideration House Bill No. 11197. Since the Senate is, under the above-quoted constitutional provision, empowered to concur with a revenue measure exclusively originating from the House, or to propose amendments thereto, to the extent of proposing amendments by SUBSTITUTION to the House measure, the approval by the Senate of Senate Bill No. 1630, after it had considered House Bill No. 11197, may be taken, in my view, as an AMENDMENT BY SUBSTITUTION by the Senate not only of Senate Bill No. 1129 but of House Bill No. 11197 as well which, it must be remembered, originated exclusively from the House. But then, in recognition of the fact that House Bill No. 11197 which originated exclusively from the House and Senate Bill No. 1630 contained conflicting provisions, both bills (House Bill No. 11197 and Senate Bill No. 1630) were referred to the Bicameral Conference Committee for joint consideration with a view to reconciling their conflicting provisions. The Conference Committee came out eventually with a Conference Committee Bill which was submitted to both chambers of Congress (the Senate and the House). The Conference Committee reported out a bill consolidating provisions in House Bill No. 11197 and Senate Bill No. 1630. What transpired in both chambers after the Conference Committee Report was submitted to them is not clear from the records in this case. What is clear however is that both chambers voted separately on the bill reported out by the Conference Committee and both chambers approved the bill of the Conference Committee. To me then, what should really be important is that both chambers of Congress approved the bill reported out by the Conference Committee. In my considered view, the act of both chambers of Congress in approving the Conference Committee bill, should put an end to any inquiry by this Court as to how the bill came about. What is more, such separate approvals CURED whatever constitutional infirmities may have arisen in the procedures leading to such approvals. For, if such infirmities were serious enough to impugn the very validity of the measure itself, there would have been an objection or objections from members of both chambers to the approval. The Court has been shown no such objection on record in both chambers. Petitioners contend that there were violations of Sec. 26 paragraph 2, Article VI of the Constitution which provides: SEC. 26. ... (2) No bill passed by either House shall become a law unless it has passed three readings on separate days, and printed copies thereof in its final form have been distributed to its Members three days before its passage, except when the President certifies to the necessity of its immediate enactment to meet a public calamity or emergency. Upon the last reading of a bill, no amendment thereto shall be allowed, and the vote thereon shall be taken immediately thereafter, and the yeas and nays entered in the Journal. in that, when Senate Bill No. 1630 (the Senate counterpart of House Bill No. 11197) was approved by the Senate, after it had been reported out by the Senate Committee on Ways and Means, the bill went through second and third readings on the same day (not separate days) and printed copies thereof in its final form were not distributed to the members of the Senate at least three (3) days before its passage by the Senate. But we are told by the respondents that the reason for this "short cut" was that the President had certified to the necessity of the bill's immediate enactment to meet an emergency - a certification that, by leave of the same constitutional provision, dispensed with the second and third readings on separate days and the printed form at least three (3) days before its passage. We have here then a situation where the President did certify to the necessity of Senate Bill No. 1630's immediate enactment to meet an emergency and the Senate responded accordingly. While I would be the last to say that this Court cannot review the exercise of such power by the President in appropriate cases ripe for judicial review, I am not prepared however to say that the President gravely abused his discretion in the exercise of such power as to require that this Court overturn his action. We have been shown no fact or circumstance which would impugn the judgment of the President, concurred in by the Senate, that there was an emergency that required the immediate enactment of Senate Bill No. 1630. On the other hand, a becoming respect for a co-equal and coordinate department of government points that weight and credibility be given to such Presidential judgment. The authority or power of the Conference Committee to make insertions in and deletions from the bills referred to it, namely, House Bill No. 11197 and Senate Bill No. 1630 is likewise assailed by petitioners. Again, what appears important here is that both chambers approved and ratified the bill as reported out by the Conference Committee (with the reported insertions and deletions). This is perhaps attributable to the known legislative practice of allowing a

Conference Committee to make insertions in and deletions from bills referred to it for consideration, as long as they are germane to the subject matter of the bills under consideration. Besides, when the Conference Committee made the insertions and deletions complained of by petitioners, was it not actually performing the task assigned to it of reconciling conflicting provisions in House Bill No. 11197 and Senate Bill No. 1630? This Court impliedly if not expressly recognized the fact of such legislative practice in Philippine Judges Association, etc. vs. Hon. Peter Prado, etc., 5 In said case, we stated thus: The petitioners also invoke Sec. 74 of the Rules of the House of Representatives, requiring that amendment to any bill when the House and the Senate shall have differences thereon may be settled by a conference committee of both chambers. They stress that Sec. 35 was never a subject of any disagreement between both Houses and so the second paragraph could not have been validly added as an amendment. These arguments are unacceptable. While it is true that a conference committee is the mechanism for compromising differences between the Senate and the House, it is not limited in its jurisdiction to this question. Its broader function is described thus: A conference committee may deal generally with the subject matter or it may be limited to resolving the precise differences between the two houses. Even where the conference committee is not by rule limited in its jurisdiction, legislative custom severely limits the freedom with which new subject matter can be inserted into the conference bill. But occasionally a conference committee produces unexpected results, results beyond its mandate. These excursions occurs even where the rules impose strict limitations on conference committee jurisdiction. This is symptomatic of the authoritarian power of conference committee (Davies, Legislative Law and Process: In A Nutshell, 1986 Ed., p. 81). It is a matter of record that the Conference Committee Report on the bill in question was returned to and duly approved by both the Senate and the House of Representatives. Thereafter, the bill was enrolled with its certification by Senate President Neptali A. Gonzales and Speaker Ramon V. Mitra of the House of Representatives as having been duly passed by both Houses of Congress. It was then presented to and approved by President Corazon C. Aquino on April 3, 1992. It would seem that if corrective measures are in order to clip the powers of the Conference Committee, the remedy should come from either or both chambers of Congress, not from this Court, under the time-honored doctrine of separation of powers. Finally, as certified by the Secretary of the Senate and the Secretary General of the House of Representatives This Act (Rep. Act No. 7716) is a consolidation of House Bill No. 11197 and Senate Bill No. 1630 (w)as finally passed by the House of Representatives and the Senate on April 27, 1994 and May 2, 1994 respectively. Under the long-accepted doctrine of the "enrolled bill," the Court in deference to a co-equal and coordinate branch of government is held to a recognition of Rep. Act No. 7716 as a law validly enacted by Congress and, thereafter, approved by the President on 5 May 1994. Again, we quote from out recent decision in Philippine Judges Association, supra: Under the doctrine of separation of powers, the Court may not inquire beyond the certification of the approval of a bill from the presiding officers of Congress. Casco Philippine Chemical Co. v. Gimenez laid down the rule that the enrolled bill is conclusive upon the Judiciary (except in matters that have to be entered in the journals like the yeas and nays on the finally reading of the bill). The journals are themselves also binding on the Supreme Court, as we held in the old (but still valid) case of U.S. vs. Pons, 8 where we explained the reason thus: To inquire into the veracity of the journals of the Philippine legislature when they are, as we have said, clear and explicit, would be to violate both the letter and spirit of the organic laws by which the Philippine Government was brought into existence, to invade a coordinate and independent department of the Government, and to interfere with the legitimate powers and functions of the Legislature. Applying these principles, we shall decline to look into the petitioners' charges that an amendment was made upon the last reading of the bill that eventually became R.A. No. 7354 and that copies thereof in its final form were not distributed among the members of each House. Both the enrolled bill and the legislative journals certify that the measure was duly enacted i.e., in accordance with Article VI, Sec. 26(2) of the Constitution. We are bound by such official assurances from a coordinate department of the government, to which we owe, at the very least, a becoming courtesy. III

Press Freedom and Religious Freedom and Rep. Act No. 7716 The validity of the passage of Rep. Act No. 7716 notwithstanding, certain provisions of the law have to be examined separately and carefully. Rep. Act. No. 7716 in imposing a value-added tax on circulation income of newspapers and similar publications and on income derived from publishing advertisements in newspapers 9, to my mind, violates Sec. 4, Art. III of the Constitution. Indeed, even the Executive Department has tried to cure this defect by the issuance of the BIR Regulation No. 11-94 precluding implementation of the tax in this area. It should be clear, however, that the BIR regulation cannot amend the law (Rep. Act No. 7716). Only legislation (as distinguished from administration regulation) can amend an existing law. Freedom of the press was virtually unknown in the Philippines before 1900. In fact, a prime cause of the revolution against Spain at the turn of the 19th century was the repression of the freedom of speech and expression and of the press. No less than our national hero, Dr. Jose P. Rizal, in "Filipinas Despues de Cien Anos" (The Philippines a Century Hence) describing the reforms sine quibus non which the Filipinos were insisting upon, stated: "The minister ... who wants his reforms to be reforms, must begin by declaring the press in the Philippines free ... ". 10 Press freedom in the Philippines has met repressions, most notable of which was the closure of almost all forms of existing mass media upon the imposition of martial law on 21 September 1972. Section 4, Art. III of the Constitution maybe traced to the United States Federal Constitution. The guarantee of freedom of expression was planted in the Philippines by President McKinley in the Magna Carta of Philippine Liberty, Instructions to the Second Philippine Commission on 7 April 1900. The present constitutional provision which reads: Sec. 4 No law shall be passed abridging the freedom of speech, of expression, or of the press, or the right of the people peaceably to assemble and petition the government for redress of grievances. is essentially the same as that guaranteed in the U.S. Federal Constitution, for which reason, American case law giving judicial expression as to its meaning is highly persuasive in the Philippines. The plain words of the provision reveal the clear intention that no prior restraint can be imposed on the exercise of free speech and expression if they are to remain effective and meaningful. The U.S. Supreme Court in the leading case of Grosjean v. American Press Co. Inc @=. 11 declared a statute imposing a gross receipts license tax of 2% on circulation and advertising income of newspaper publishers as constituting a prior restraint which is contrary to the guarantee of freedom of the press. In Bantam Books, Inc. v. Sullivan 12, the U.S. Supreme Court stated: "Any system of prior restraint of expression comes to this Court bearing a heavy presumption against its constitutionality." In this jurisdiction, prior restraint on the exercise of free expression can be justified only on the ground that there is a clear and present danger of a substantive evil which the State has the right to prevent 13. In the present case, the tax imposed on circulation and advertising income of newspaper publishers is in the nature of a prior restraint on circulation and free expression and, absent a clear showing that the requisite for prior restraint is present, the constitutional flaw in the law is at once apparent and should not be allowed to proliferate. Similarly, the imposition of the VAT on the sale and distribution of religious articles must be struck down for being contrary to Sec. 5, Art. III of the Constitution which provides: Sec. 5. No law shall be made respecting an establishment of religion, or prohibiting the free exercise thereof. The free exercise and enjoyment of religious profession and worship, without discrimination or preference, shall forever be allowed. No religious test shall be required for the exercise of civil or political rights. That such a tax on the sale and distribution of religious articles is unconstitutional, has been long settled in American Bible Society, supra. Insofar, therefore, as Rep. Act No. 7716 imposes a value-added tax on the exercise of the above- discussed two (2) basic constitutional rights, Rep. Act No. 7716 should be declared unconstitutional and of no legal force and effect. IV Petitions of CREBA and PAL and Rep. Act No. 7716

The Chamber of Real Estate and Builder's Association, Inc. (CREBA) filed its own petition (GR No. 11574) arguing that the provisions of Rep. Act No. 7716 imposing a 10% value-added tax on the gross selling price or gross value in money of every sale, barter or exchange of goods or properties (Section 2) and a 10% value-added tax on gross receipts derived from the sale or exchange of services, including the use or lease of properties (Section 3), violate the equal protection, due process and non-impairment provisions of the Constitution as well as the rule that taxation should be uniform, equitable and progressive. The issue of whether or not the value-added tax is uniform, equitable and progressive has been settled in Kapatiran. CREBA which specifically assails the 10% value-added tax on the gross selling price of real properties, fails to distinguish between a sale of real properties primarily held for sale to customers or held for lease in the ordinary course of trade or business and isolated sales by individual real property owners (Sec. 103[s]). That those engaged in the business of real estate development realize great profits is of common knowledge and need not be discussed at length here. The qualification in the law that the 10% VAT covers only sales of real property primarily held for sale to customers, i.e. for trade or business thus takes into consideration a taxpayer's capacity to pay. There is no showing that the consequent distinction in real estate sales is arbitrary and in violation of the equal protection clause of the Constitution. The inherent power to tax of the State, which is vested in the legislature, includes the power to determine whom or what to tax, as well as how much to tax. In the abseence o f a clear showing that the tax violates the due process and equal protection clauses of the Constitution, this Court, in keeping with the doctrine of separation of powers, has to defer to the discretion and judgment of Congress on this point. Philippine Airlines (PAL) in a separate petition (G.R. No. 115852) claims that its franchise under PD No. 1590 which makes it liable for a franchise tax of only 2% of gross revenues "in lieu of all the other fees and charges of any kind, nature or description, imposed, levied, established, assessed or collected by any municipal, city, provincial, or national authority or government agency, now or in the future," cannot be amended by Rep. Act No. 7716 as to make it (PAL) liable for a 10% value-added tax on revenues, because Sec. 24 of PD No. 1590 provides that PAL's franchise can only be amended, modified or repealed by a special law specifically for that purpose. The validity of PAL's above argument can be tested by ascertaining the true intention of Congress in enacting Rep. Act No. 7716. Sec. 4 thereof dealing with Exempt Transactions states: Section 103. Exempt Transactions. - The following shall be exempt from the value-added tax: xxx xxx xxx (q) Transactions which are exempt under special laws, except those granted under Presidential Decrees No. 66, 529, 972, 1491, 1590, ... " (Italics supplied) The repealing clause of Rep. Act No. 7716 further reads: Sec. 20. Repealing clauses. - The provisions of any special law relative to the rate of franchise taxes are hereby expressly repealed. xxx xxx xxx All other laws, orders, issuances, rules and regulations or parts thereof inconsistent with this Act are hereby repealed, amended or modified accordingly (italics supplied) There can be no dispute, in my mind, that the clear intent of Congress was to modify PAL's franchise with respect to the taxes it has to pay. To this extent, Rep. Act No. 7716 can be considered as a special law amending PAL's franchise and its tax liability thereunder. That Rep. Act. No. 7716 imposes the value-added taxes on other subjects does not make it a general law which cannot amend PD No. 1590. To sum up: it is my considered view that Rep. Act No. 7716 (the expanded value-added tax) is a valid law, viewed from both substantive and procedural standards, except only insofar as it violates Secs. 4 and 5, Art. III of the Constitution (the guarantees of freedom of expression and the free exercise of religion). To that extent, it is, in its present form, unconstitutional. I, therefore, vote to DISMISS the petitions, subject to the above qualification.

VITUG, J.: Lest we be lost by a quagmire of trifles, the real threshold and prejudicial issue, to my mind, is whether or not this Court is ready to assume and to take upon itself with an overriding authority the owesome responsibility of overseeing the entire bureaucracy. Far from it, ours is merely to construe and to apply the law regardless of its wisdom and salutariness, and to strike it down only when it clearly disregards constitutional proscriptions. It is what the fundamental law mandates, and it is what the Court must do. I cannot yet concede to the novel theory, so challengingly provocative as it might be, that under the 1987 Constitution the Court may now at good liberty intrude,

in the guise of the people's imprimatur, into every affair of the government. What significance can still then remain, I ask, of the time honored and widely acclaimed principle of separation of powers, if at every turn the Court allows itself to pass upon, at will, the disposition of a co-equal, independent and coordinate branch in our system of government. I dread to think of the so varied uncertainties that such an undue interference can lead to. The respect for long standing doctrines in our jurisprudence, a nourished through time, is one of maturity not timidity, of stability rather than quiescence. It has never occurred to me, and neither do I believe it has been intended, that judicial tyranny is envisioned, let alone institutionalized, by our people in the 1987 Constitution. The test of tyranny is not solely on how it is wielded but on how, in the first place, it can be capable of being exercised. It is time that any such perception of judicial omnipotence is corrected. Against all that has been said, I see, in actuality in these cases at bench, neither a constitutional infringement of substance, judging from precedents already laid down by this Court in previous cases, nor a justiciability even now of the issues raised, more than an attempt to sadly highlight the perceived shortcomings in the procedural enactment of laws, a matter which is internal to Congress and an area that is best left to its own basic concern. The fact of the matter is that the legislative enactment, in its final form, has received the ultimate approval of both houses of Congress. The finest rhetoric, indeed fashionable in the early part of this closing century, would still be a poor substitute for tangibility. I join, nonetheless, some of my colleagues in respectfully inviting the kind attention of the honorable members of our Congress in the suggested circumspect observance of their own rules. A final remark. I should like to make it clear that this opinion does not necessarily foreclose the right, peculiar to any taxpayer adversely affected, to pursue at the proper time, in appropriate proceedings, and in proper for a, the specific remedies prescribed therefor by the National Internal Revenue Code, Republic Act 1125, and other laws, as well as rules of procedure, such as may be pertinent. Some petitions filed with this Court are, in essence, although styled differently, in the nature of declaratory relief over which this Court is bereft of original jurisdiction. All considered, I, therefore, join my colleagues who are voting for the dismissal of the petitions.

CRUZ, J.: It is a curious and almost incredible fact that at the hearing of these cases on July 7, 1994, the lawyers who argued for the petitioners - two of them former presidents of the Senate and the third also a member of that body - all asked this Court to look into the internal operations of their Chamber and correct the irregularities they claimed had been committed there as well as in the House of Representatives and in the bicameral conference committee. While a member of the legislative would normally resist such intervention and invoke the doctrine of separation of powers to protect Congress from what he would call judicial intrusion, these counsel practically implored the Court to examine the questioned proceedings and to this end go beyond the journals of each House, scrutinize the minutes of the committee, and investigate all other matters relating to the passage of the bill (or bills) that eventually became R.A. No. 7716. In effect, the petitioners would have us disregard the time-honored inhibitions laid down by the Court upon itself in the landmark case of U.S. v. Pons (34 Phil. 725), where it refused to consider extraneous evidence to disprove the recitals in the journals of the Philippine Legislature that it had adjourned sine die at midnight of February 28, 1914. Although it was generally known then that the special session had actually exceeded the deadline fixed by the Governor-General in his proclamation, the Court chose to be guided solely by the legislative journals, holding significantly as follows: ... From their very nature and object, the records of the legislature are as important as those of the judiciary, and to inquire into the veracity of the journals of the Philippine Legislature, when they are, as we have said, clear and explicit, would be to violate both the letter and the spirit of the organic laws by which the Philippine Government was brought into existence, to invade a coordinate and independent department of the Government, and to interfere with the legitimate powers and functions of the Legislature. But counsel in his argument says that the public knows that the Assembly's clock was stopped on February 28, 1914, at midnight and left so until the determination of the discussion of all pending matters. Or, in other words, the hands of the clock were stayed in order to enable the Assembly to effect an adjournment apparently within the fixed time by the Governor's proclamation for the expiration of the special session, in direct violation of the Act of Congress of July 1, 1902. If the clock was, in fact, stopped, as here suggested, "the resultant evil might be slight as compared with that of altering the probative force and character of legislative records, and making the proof of legislative action depend upon uncertain oral evidence, liable to loss by death or absence, and so imperfect on account of the treachery of memory. ... The journals say that the Legislature adjourned at 12 midnight on February 28, 1914. This settles the question, and the court did not err in declining to go beyond the journals. As one who has always respected the rationale of the separation of powers, I realize only too well the serious implications of the relaxation of the doctrine except only for the weightiest of reasons. The lowering of the barriers now dividing the three major branches of the government could lead to individious incursions by one department into

the exclusive domains of the other departments to the detriment of the proper discharge of the functions assigned to each of them by the Constitution. Still, while acknowledging the value of tradition and the reasons for judicial non-interference announced in Pons, I am not disinclined to take a second look at the ruling from a more pragmatic viewpoint and to tear down, if we must, the iron curtain it has hung, perhaps improvidently, around the proceedings of the legislature. I am persuaded even now that where a specific procedure is fixed by the Constitution itself, it should not suffice for Congress to simply say that the rules have been observed and flatly consider the matter closed. It does not have to be as final as that. I would imagine that the judiciary, and particularly this Court, should be able to verify that statement and determine for itself, through the exercise of its own powers, if the Constitution has, indeed, been obeyed. In fact, the Court had already said that the question of whether certain procedural rules have been followed is justiciable rather than political because what is involved is the legality and not the wisdom of the act in question. So we ruled in Sanidad v. Commission on Elections (73 SCRA 333) on the amendment of the Constitution; in Daza v. Singson (180 SCRA 496) on the composition of the Commission on Appointments; and in the earlier case of Taada v. Cuenco (100 SCRA 1101) on the organization of the Senate Electoral Tribunal, among several other cases. By the same token, the ascertainment of whether a bill underwent the obligatory three readings in both Houses of Congress should not be considered an invasion of the territory of the legislature as this would not involve an inquiry into its discretion in approving the measure but only the manner in which the measure was enacted. These views may upset the conservatives among us who are most comfortable when they allow themselves to be petrified by precedents instead of venturing into uncharted waters. To be sure, there is much to be said of the wisdom of the past expressed by vanished judges talking to the future. Via trita est tuttisima. Except when there is a need to revise them because of an altered situation or an emergent idea, precedents should tell us that, indeed, the trodden path is the safest path. It could be that the altered situation has arrived to welcome the emergent idea. The jurisdiction of this Court has been expanded by the Constitution, to possibly include the review the petitioners would have us make of the congressional proceedings being questioned. Perhaps it is also time to declare that the activities of Congress can no longer be smoke-screened in the inviolate recitals of its journals to prevent examination of its sacrosanct records in the name of the separation of powers. But then again, perhaps all this is not yet necessary at this time and all these observations are but wishful musings for a more activist judiciary. For I find that this is not even necessary, at least for me, to leave the trodden path in the search for new adventures in the byways of the law. The answer we seek, as I see it, is not far afield It seems to me that it can be found through a study of the enrolled bill alone and that we do not have to go beyond that measure to ascertain if R.A. No. 7716 has been validly enacted. It is settled in this jurisdiction that in case of conflict between the enrolled bill and the legislative journals, it is the former that should prevail except only as to matters that the Constitution requires to be entered in the journals. (Mabanag v. Lopez Vito, 78 Phil. 1). These are the yeas and nays on the final reading of a bill or on any question at the request of at least one-fifth of the member of the House (Constitution, Art. VI, Sec. 16[4]), the objections of the President to a vetoed bill or item (Ibid, Sec. 27 [1]), and the names of the members voting for or against the overriding of his veto (Id. Section 27 [1]), The original of a bill is not specifically required by the Constitution to be entered in the journals. Hence, on this particular manner, it is the recitals in the enrolled bill and not in the journals that must control. Article VI, Section 24, of the Constitution provides: Sec. 24. All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments. The enrolled bill submitted to and later approved by the President of the Philippines as R.A. No. 7716 was signed by the President of the Senate and the Speaker of the House of Representatives. It carried the following certification over the signatures of the Secretary of the Senate and the Acting Secretary of the House of Representatives: This Act which is a consolidation of House Bill No. 11197 and Senate Bill No. 11630 was finally passed by the House of Representative and the Senate on April 27, 1994, and May 2, 1994. Let us turn to Webster for the meaning of certain words, To "originate" is "to bring into being; to create something (original); to invent; to begin; start." The word "exclusively" means "excluding all others" and is derived from the word "exclusive," meaning "not shared or divided; sole; single." Applying these meanings, I would read Section 24 as saying that the bills mentioned therein must be brought into being, or created, or invented, or begun or started, only or singly or by no other body than the house of Representatives.

According to the certification, R.A. No. 7716 "is a consolidation of House Bill No. 11197 and Senate Bill No. 1630." Again giving the words used their natural and ordinary sense conformably to an accepted canon of construction, I would read the word "consolidation" as a "combination or merger" and derived from the word "consolidated," meaning "to combine into one; merge; unite." The two bills were separately introduced in their respective Chambers. Both retained their independent existence until they reached the bicameral conference committee where they were consolidated. It was this consolidated measure that was finally passed by Congress and submitted to the President of the Philippines for his approval. House Bill No. 11197 originated in the House of Representatives but this was not the bill that eventually became R.A. No. 7716. The measure that was signed into law by President Ramos was the consolidation of that bill and another bill, viz., Senate Bill No. 1630, which was introduced in the Senate. The resultant enrolled bill thus did not originate exclusively in the House of Representatives. The enrolled bill itself says that part of it (and it does not matter to what extent) originated in the Senate. It would have been different if the only participation of the Senate was in the amendment of the measure that was originally proposed in the House of Representatives. But this was not the case. The participation of the Senate was not in proposing or concurring with amendments that would have been incorporated in House Bill No. 11197. Its participation was in originating its own Senate Bill No. 1630, which was not embodied in but merged with House Bill No. 11197. Senate Bill No. 1630 was not even an amendment by substitution, assuming this was permissible. To "substitute" means "to take the place of; to put or use in place of another." Senate Bill No. 1630 did not, upon its approval replace (and thus eliminate) House Bill No. 11197. Both bills retained their separate identities until they were joined or united into what became the enrolled bill and ultimately R.A. No. 7716. The certification in the enrolled bill says it all. It is clear that R.A. No. 7716 did not originate exclusively in the House of Representatives. To go back to my earlier observations, this conclusion does not require the reversal of U.S. vs. Pons and an inquiry by this Court into the proceedings of the legislature beyond the recitals of its journals. All we need to do is consider the certification in the enrolled bill and, without entering the precincts of Congress, declare that by this own admission it has, indeed, not complied with the Constitution. While this Court respects the prerogatives of the other departments, it will not hesitate to rise to its higher duty to require from them, if they go astray, full and strict compliance with the fundamental law. Our fidelity to it must be total. There is no loftier principle in our democracy than the supremacy of the Constitution, to which all must submit. I vote to invalidate R.A. No. 7716 for violation of Article VI, Sec. 24, of the Constitution.

REGALADO, J.: It would seem like an inconceivable irony that Republic Act No. 7716 which, so respondents claim, was conceived by the collective wisdom of a bicameral Congress and crafted with sedulous care by two branches of government should now be embroiled in challenges to its validity for having been enacted in disregard of mandatory prescriptions of the Constitution itself. Indeed, such impugnment by petitioners goes beyond merely the procedural flaws in the parturition of the law. Creating and regulating as it does definite rights to property, but with its own passage having been violative of explicit provisions of the organic law, even without going into the intrinsic merits of the provisions of Republic Act No. 7716 its substantive invalidity is pro facto necessarily entailed. How it was legislated into its present statutory existence is not in serious dispute and need not detain us except for a recital of some salient and relevant facts. The House of Representatives passed House Bill No. 11197 1 on third reading on November 17, 1993 and, the following day, It transmitted the same to the Senate for concurrence. On its part, the Senate approved Senate Bill No. 1630 on second and third readings on March 24, 1994. It is important to note in this regard that on March 22, 1994, said S.B. No. 1630 had been certified by President Fidel V. Ramos for immediate enactment to meet a public emergency, that is, a growing budgetary deficit. There was no such certification for H.B. No. 11197 although it was the initiating revenue bill. It is, therefore, not only a curious fact but, more importantly, an invalid procedure since that Presidential certification was erroneously made for and confined to S.B. No. 1630 which was indisputably a tax bill and, under the Constitution, could not validly originate in the Senate. Whatever is claimed in favor of S.B. No. 1630 under the blessings of that certification, such as its alleged exemption from the three separate readings requirement, is accordingly negated and rendered inutile by the inefficacious nature of said certification as it could lawfully have been issued only for a revenue measure originating exclusively from the lower House. To hold otherwise would be to validate a Presidential certification of a bill initiated in the Senate despite the Constitutional prohibition against its originating therefrom. Equally of serious significance is the fact that S.B. No. 1630 was reported out in Committee Report No. 349 submitted to the Senate on February 7, 1994 and approved by that body "in substitution of S.B. No. 1129," while merely "taking

into consideration P.S. No. 734 and H.B. No. 11197." 2 S.B. No. 1630, therefore, was never filed in substitution of either P.S. No. 734 or, more emphatically, of H.B. No. 11197 as these two legislative issuances were merely taken account of, at the most, as referential bases or materials. This is not a play on misdirection for, in the first instance, the respondents assure us that H.B. No. 11197 was actually the sole source of and started the whole legislative process which culminated in Republic Act No. 7716. The participation of the Senate in enacting S.B. No. 1630 was, it is claimed, justified as it was merely in pursuance of its power to concur in or propose amendments to H.B. No. 11197. Citing the 83-year old case of Flint vs. Stone Tracy Co., 3 it is blithely announced that such power to amend includes an amendment by substitution, that is, even the extent of substituting the entire H.B. No. 11197 by an altogether completely new measure of Senate provenance. Ergo, so the justification goes, the Senate acted perfectly in accordance with its amending power under Section 24, Article VI of the Constitution since it merely proposed amendments through a bill allegedly prepared in advance. This is a mode of argumentation which, by reason of factual inaccuracy and logical implausibility, both astounds and confounds. For, it is of official record that S.B. No. 1630 was filed, certified and enacted in substitution of S.B. No. 1129 which in itself was likewise in derogation of the Constitutional prohibition against such initiation of a tax bill in the Senate. In any event, S.B. No. 1630 was neither intended as a bill to be adopted by the Senate nor to be referred to the bicameral conference committee as a substitute for H.B. No. 11197. These indelible facts appearing in official documents cannot be erased by any amount of strained convolutions or incredible pretensions that S.B. No. 1630 was supposedly enacted in anticipation of H.B. No. 11197. On that score alone, the invocation by the Solicitor General of the hoary concept of amendment by substitution falls flat on its face. Worse, his concomitant citation of Flint to recover from that prone position only succeeded in turning the same postulation over, this time supinely flat on its back. As elsewhere noted by some colleagues, which I will just refers to briefly to avoid duplication, respondents initially sought sanctuary in that doctrine supposedly laid down in Flint, thus: "It has, in fact, been held that the substitution of an entirely new measure for the one originally proposed can be supported as a valid amendment." 4 (Italics supplied.) During the interpellation by the writer at the oral argument held in these cases, the attention of the Solicitor General was called to the fact that the amendment in Flint consisted only of a single item, that its, the substitution of a corporate tax for an inheritance tax proposed in a general revenue bill; and that the text of the decision therein nowhere contained the supposed doctrines he quoted and ascribed to the court, as those were merely summations of arguments of counsel therein. It is indeed a source of disappointment for us, but an admission of desperation on his part, that, instead of making a clarification or a defense of his contention, the Solicitor General merely reproduced all over again 5 the same quotations as they appeared in his original consolidated comment, without venturing any explanation or justification. The aforestated dissemblance, thus unmasked, has further undesirable implications on the contentions advanced by respondents in their defense. For, even indulging respondents ex gratia argumenti in their pretension that S.B. No. 1630 substituted or replaced H.B. No. 11197, aside from muddling the issue of the true origination of the disputed law, this would further enmesh respondents in a hopeless contradiction. In a publication authorized by the Senate and from which the Solicitor General has liberally quoted, it is reported as an accepted rule therein that "(a)n amendment by substitution when approved takes the place of the principal bill. C.R. March 19, 1963." 6 Stated elsewise, the principal bill is supplanted and goes out of actuality. Applied to the present situation, and following respondents' submission that H.B. No. 11197 had been substituted or replaced in its entirety, then in law it had no further existence for purposes of the subsequent stages of legislation except, possibly, for referential data. Now, the enrolled bill thereafter submitted to the President of the Philippines, signed by the President of the Senate and the Speaker of the House of Representatives, carried this solemn certification over the signatures of the respective secretaries of both chambers: "This Act which is a consolidation of House Bill No. 11197 and Senate Bill No. 1630 was finally passed by the House of Representatives and the Senate on April 27, 1994, and May 2, 1994." (Italics mine.) In reliance thereon, the Chief Executive signed the same into law as Republic Act No. 7716. The confusion to which the writer has already confessed is now compounded by that official text of the aforequoted certification which speaks, and this cannot be a mere lapsus calami, of two independent and existing bills (one of them being H.B. No. 11197) which were consolidated to produce the enrolled bill. In parliamentary usage, to consolidate two bills, is to unite them into one 7 and which, in the case at bar, necessarily assumes that H.B. No. 11197 never became legally inexistent. But did not the Solicitor General, under the theory of amendment by substitution of the entire H.B. No. 11197 by S.B. No. 1630, thereby premise the same upon the replacement, hence the total elimination from the legislative process, of H.B. 11197? It results, therefore, that to prove compliance with the requirement for the exclusive origination of H.B. No. 11197, two alternative but inconsistent theories had to be espoused and defended by respondents' counsel. To justify the introduction and passage of S.B. No. 1630 in the Senate, it was supposedly enacted only as an amendment by substitution, hence on that theory H.B. No. 11197 had to be considered as displaced and terminated from its role or existence. Yet, likewise for the same purpose but this time on the theory of origination by consolidation, H.B. No. 11197 had to be resuscitated so it could be united or merged with S.B. No. 1630. This latter alternative theory, unfortunately, also exacerbates the constitutional defect for then it is an admission of a dual origination of the two tax bills, each respectively initiated in and coming from the lower and upper chambers of Congress. Parenthetically, it was also this writer who pointedly brought this baffling situation to the attention of the Solicitor General during the aforesaid oral argument, to the extent of reading aloud the certification in full. We had hoped thereby to be clarified on these vital issue in respondents' projected memorandum, but we have not been favored with

an explanation unraveling this delimma. Verily, by passing sub silentio on these intriguing submissions, respondents have wreaked havoc on both logic and law just to gloss over their non-compliance with the Constitutional mandate for exclusive origination of a revenue bill. The procedure required therefor, we emphatically add, can be satisfied only by complete and strict compliance since this is laid down by the Constitution itself and not by a mere statute. This writer consequently agrees with the clearly tenable proposition of petitioners that when the Senate passed and approved S.B. No. 1630, had it certified by the Chief Executive, and thereafter caused its consideration by the bicameral conference committee in total substitution of H.B. No. 11197, it clearly and deliberately violated the requirements of the Constitution not only in the origination of the bill but in the very enactment of Republic Act No. 7716. Contrarily, the shifting sands of inconsistency in the arguments adduced for respondents betray such lack of intellectual rectitude as to give the impression of being mere rhetorics in defense of the indefensible. We are told, however, that by our discoursing on the foregoing issues we are introducing into non-justiciable areas long declared verboten by such time-honored doctrines as those on political questions, the enrolled bill theory and the respect due to two co-equal and coordinate branches of Government, all derived from the separation of powers inherent in republicanism. We appreciate the lectures, but we are not exactly unaware of the teachings in U.S. vs. Pons, 8 Mabanag, vs. Lopez Vito, 9 Casco Philippine Chemical Co.,. vs. Gimenez, etc., et al., 10 Morals vs. Subido, etc., 11 and Philippine Judges Association, etc., et al. vs. Prado, etc., et al., 12 on the one hand, and Taada, et al. vs. Cuenco, et al., 13 Sanidad, et al., vs. Commission on Elections, et al., 14 and Daza vs. Singson, et al., 15 on the other, to know which would be applicable to the present controversy and which should be rejected. But, first, a positional exordium. The writer of this opinion would be among the first to acknowledge and enjoin not only courtesy to, but respect for, the official acts of the Executive and Legislative departments, but only so long as the same are in accordance with or are defensible under the fundamental charter and the statutory law. He would readily be numbered in the ranks of those who would preach a reasoned sermon on the separation of powers, but with the qualification that the same are not contained in tripartite compartments separated by empermeable membranes. He also ascribes to the general validity of American constitutional doctrines as a matter of historical and legal necessity, but not to the extent of being oblivious to political changes or unmindful of the fallacy of undue generalization arising from myopic disregard of the factual setting of each particular case. These ruminations have likewise been articulated and dissected by my colleagues, hence it is felt that the only issue which must be set aright in this dissenting opinion is the so-called enrolled bill doctrine to which we are urged to cling with reptilian tenacity. It will be preliminarily noted that the official certification appearing right on the face of Republic Act No. 7716 would even render unnecessary any further judicial inquiry into the proceedings which transpired in the two legislative chambers and, on a parody of tricameralism, in the bicameral conference committee. Moreover, we have the excellent dissertations of some of my colleagues on these matters, but respondents insist en contra that the congressional proceedings cannot properly be inquired into by this Court. Such objection confirms a suppressive pattern aimed at sacrificing the rule of law to the fiat of expediency. Respondents thus emplaced on their battlements the pronouncement of this Court in the aforecited case of Philippine Judges Association vs. Prado. 16 Their reliance thereon falls into the same error committed by their seeking refuge in the Flint case, ante. which, as has earlier been demonstrated (aside from the quotational misrepresentation), could not be on par with the factual situation in the present case. Flint, to repeat, involved a mere amendment on a single legislative item, that is, substituting the proposal therein of an inheritance tax by one on corporate tax. Now, in their submission based on Philippine Judges Association, respondents studiously avoid mention of the fact that the questioned insertion referred likewise to a single item, that is, the repeal of the franking privilege thretofore granted to the judiciary. That both cases cannot be equated with those at bar, considering the multitude of items challenged and the plethora of constitutional violations involved, is too obvious to belabor. Legal advocacy and judicial adjudication must have a becoming sense of qualitative proportion, instead of lapsing into the discredited and maligned practice of yielding blind adherence to precedents. The writer unqualifiedly affirms his respect for valid official acts of the two branches of government and eschews any unnecessary intrusion into their operational management and internal affairs. These, without doubt, are matters traditionally protected by the republican principle of separation of powers. Where, however, there is an overriding necessity for judicial intervention in light of the pervasive magnitude of the problems presented and the gravity of the constitutional violations alleged, but this Court cannot perform its constitutional duty expressed in Section 1, Article VIII of the Constitution unless it makes the inescapable inquiry, then the confluence of such factors should compel an exception to the rule as an ultimate recourse. The cases now before us present both the inevitable challenge and the inescapable exigency for judicial review. For the Court to now shirk its bounden duty would not only project it as a citadel of the timorous and the slothful, but could even undermine its raison d'etre as the highest and ultimate tribunal. Hence, this dissenting opinion has touched on events behind and which transpired prior to the presentation of the enrolled bill for approval into law. The details of that law which resulted from the legislative action followed by both houses of Congress, the substantive validity of whose provisions and the procedural validity of which legislative process are here challenged as unconstitutional, have been graphically presented by petitioners and admirably explained in the respective opinions of my brethren. The writer concurs in the conclusions drawn therefrom and rejects the contention that we have unjustifiably breached the dike of the enrolled bill doctrine. Even in the land of its source, the so-called conclusive presumption of validity originally attributed to that doctrine has long been revisited and qualified, if not altogether rejected. On the competency of judicial inquiry, it has been held that "(u)nder the 'enrolled bill rule' by which an enrolled bill is sole expository of its contents and conclusive evidence of its existence and valid enactment, it is nevertheless competent for courts to inquire as to what prerequisites are fixed by the Constitution of which journals of respective houses of Legislature are required to furnish the evidence." 17

In fact, in Gwynn vs. Hardee, etc., et al., 18 the Supreme Court of Florida declared: (1) While the presumption is that the enrolled bill, as signed by the legislative officers and filed with the secretary of state, is the bill as it passed, yet this presumption is not conclusive, and when it is shown from the legislative journals that a bill though engrossed and enrolled, and signed by the legislative officers, contains provisions that have not passed both houses, such provisions will be held spurious and not a part of the law. As was said by Mr. Justice Cockrell in the case of Wade vs. Atlantic Lumber Co., 51 Fla. 628, text 633, 41 So. 72, 73: This Court is firmly committed to the holding that when the journals speak they control, and against such proof the enrolled bill is not conclusive.' More enlightening and apropos to the present controversy is the decision promulgated on May 13, 1980 by the Supreme Court of Kentucky in D & W Auto Supply, et al. vs. Department of Revenue, et al., 19 pertinent exceprts wherefrom are extensively reproduced hereunder: ... In arriving at our decision we must, perforce, reconsider the validity of a long line of decisions of this court which created and nurtured the so-called 'enrolled bill' doctrine. xxx xxx xxx [1] Section 46 of the Kentucky Constitution sets out certain procedures that the legislature must follow before a bill can be considered for final passage. ... . xxx xxx xxx ... Under the enrolled bill doctrine as it now exists in Kentucky, a court may not look behind such a bill, enrolled and certified by the appropriate officers, to determine if there are any defects. xxx xxx xxx ... In Lafferty, passage of the law in question violated this provision, yet the bill was properly enrolled and approved by the governor. In declining to look behind the law to determine the propriety of its enactment, the court enunciated three reasons for adopting the enrolled bill rule. First, the court was reluctant to scrutinize the processes of the legislature, an equal branch of government. Second, reasons of convenience prevailed, which discouraged requiring the legislature to preserve its records and anticipated considerable complex litigation if the court ruled otherwise. Third, the court acknowledged the poor record-keeping abilities of the General Assembly and expressed a preference for accepting the final bill as enrolled, rather than opening up the records of the legislature. ... . xxx xxx xxx Nowhere has the rule been adopted without reason, or as a result of judicial whim. There are four historical bases for the doctrine. (1) An enrolled bill was a 'record' and, as such, was not subject to attack at common law. (2) Since the legislature is one of the three branches of government, the courts, being coequal, must indulge in every presumption that legislative acts are valid. (3) When the rule was originally formulated, record-keeping of the legislatures was so inadequate that a balancing of equities required that the final act, the enrolled bill, be given efficacy. (4) There were theories of convenience as expressed by the Kentucky court in Lafferty. The rule is not unanimous in the several states, however, and it has not been without its critics. From an examination of cases and treaties, we can summarize the criticisms as follows: (1) Artificial presumptions, especially conclusive ones, are not favored. (2) Such a rule frequently (as in the present case) produces results which do not accord with facts or constitutional provisions. (3) The rule is conducive to fraud, forgery, corruption and other wrongdoings. (4) Modern automatic and electronic record-keeping devices now used by legislatures remove one of the original reasons for the rule. (5) The rule disregards the primary obligation of the courts to seek the truth and to provide a remedy for a wrong committed by any branch of government. In light of these considerations, we are convinced that the time has come to re-examine the enrolled bill doctrine. [2] This court is not unmindful of the admonition of the doctrine of stare decisis. The maxim is "Stare decisis et non quieta movere," which simply suggests that we stand by precedents and not disturb settled points of law. Yet, this rule is not inflexible, nor is it of such a nature as to require perpetuation of error or logic. As we stated in Daniel's Adm'r v. Hoofnel, 287 Ky 834, 155 S.W. 2d 469, 471-72 (1941) (citations omitted): The force of the rule depends upon the nature of the question to be decided and the extent of the disturbance of rights and practices which a change in the interpretation of the law or the course of judicial opinions may create. Cogent considerations are whether there is clear error and urgent reasons 'for neither justice nor wisdom requires a court to go from one doubtful rule to another,' and

whether or not the evils of the principle that has been followed will be more injurious than can possibly result from a change. Certainly, when a theory supporting a rule of law is not grounded on facts, or upon sound logic, or is unjust, or has been discredited by actual experience, it should be discarded, and with it the rule it supports. [3] It is clear to us that the major premise of the Lafferty decision, the poor record- keeping of the legislature, has disappeared. Modern equipment and technology are the rule in record-keeping by our General Assembly. Tape recorders, electric typewriters, duplicating machines, recording equipment, printing presses, computers, electronic voting machines, and the like remove all doubts and fears as to the ability of the General Assembly to keep accurate and readily accessible records. It is also apparent that the 'convenience' rule is not appropriate in today's modern and developing judicial philosophy. The fact that the number and complexity of lawsuits may increase is not persuasive if one is mindful that the overriding purpose of our judicial system is to discover the truth and see that justice is done. The existence of difficulties and complexities should not deter this pursuit and we reject any doctrine or presumption that so provides. Lastly, we address the premises that the equality of the various branches of government requires that we shut our eyes to constitutional failings and other errors of our coparceners in government. We simply do not agree. Section 26 of the Kentucky Constitution provides that any law contrary to the constitution is 'void.' The proper exercise of judicial authority requires us to recognize any law which is unconstitutional and to declare it void. Without belaboring the point, we believe that under section 228 of the Kentucky Constitution it is our obligation to 'support ... the Constitution of the commonwealth.' We are sworn to see that violations of the constitution - by any person, corporation, state agency or branch of government - are brought to light and corrected. To countenance an artificial rule of law that silences our voices when confronted with violations of our constitution is not acceptable to this court. We believe that a more reasonable rule is the one which Professor Sutherland describes as the 'extrinsic evidence' rule ... Under this approach there is a prima facie presumption that an enrolled bill is valid, but such presumption may be overcome by clear, satisfactory and convincing evidence establishing that constitutional requirements have not been met. We therefore overrule Lafferty v. Huffman and all other cases following the so-called enrolled bill doctrine, to the extent that there is no longer a conclusive presumption that an enrolled bill is valid. ... (Italics mine.) Undeniably, the value-added tax system may have its own merits to commend its continued adoption, and the proposed widening of its base could achieve laudable governmental objectives if properly formulated and conscientiously implemented. We would like to believe, however, that ours is not only an enlightened democracy nurtured by a policy of transparency but one where the edicts of the fundamental law are sacrosanct for all, barring none. While the realization of the lofty ends of this administration should indeed be the devout wish of all, likewise barring none, it can never be justified by methods which, even if unintended, are suggestive of Machiavellism. Accordingly, I vote to grant the instant petitions and to invalidate Republic Act No. 7716 for having been enacted in violation of Section 24, Article VI of the Constitution.

DAVIDE, JR., J.: The legislative history of R.A. No. 7716, as highlighted in the Consolidated Memorandum for the public respondents submitted by the Office of the Solicitor General, demonstrates beyond doubt that it was passed in violation or deliberate disregard of mandatory provisions of the Constitution and of the rules of both chambers of Congress relating to the enactment of bills. I therefore vote to strike down R.A. No. 7716 as unconstitutional and as having been enacted with grave abuse of discretion. The Constitution provides for a bicameral Congress. Therefore, no bill can be enacted into law unless it is approved by both chambers -- the Senate and the House of Representatives (hereinafter House). Otherwise stated, each chamber may propose and approve a bill, but until it is submitted to the other chamber and passed by the latter, it cannot be submitted to the President for its approval into law. Paragraph 2, Section 26, Article VI of the Constitution provides: No bill passed by either House shall become a law unless it has passed three readings on separate days, and printed copies thereof in its final form have been distributed to its Members three days before its passage, except when the President certifies to the necessity of its immediate enactment

to meet a public calamity or emergency. Upon the last reading of a bill, no amendment thereto shall be allowed, and the vote thereon shall be taken immediately thereafter, and the yeas and nays entered in the journal. The "three readings" refers to the three readings in both chambers. There are, however, bills which must originate exclusively in the House. Section 24, Article VI of the Constitution enumerates them: SEC. 24. All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments. Webster's Third New International Dictionary 1 defines originate as follows: vt 1: to cause the beginning of: give rise to: INITIATE ... 2. to start (a person or thing) on a course or journey ... vi: to take or have origin: be derived: ARISE, BEGIN, START ... Black's Law Dictionary 2 defines the word exclusively in this wise: Apart from all others; only; solely; substantially all or for the greater part. To the exclusion of all others; without admission of others to participation; in a manner to exclude. In City Mayor vs. The Chief of Philippine Constabulary, @= 3 this Court said: The term 'exclusive' in its usual and generally accepted sense, means possessed to the exclusion of others; appertaining to the subject alone, not including, admitting or pertaining to another or others, undivided, sole. (15 Words and Phrases, p. 510, citing Mitchel v. Tulsa Water, Light, Heat and Power Co., 95 P. 961, 21 Okl. 243; and p. 513, citing Commonwealth v. Superintendent of House of Correction, 64 Pa. Super. 613, 615). Indisputably then, only the House can cause the beginning or initiate the passage of any appropriation, revenue, or tarriff bill, any bill increasing the public debt, any bill of local application, or any private bill. The Senate can only "propose or concur with amendments." Under the Rules of the Senate, the first reading is the reading of the title of the bill and its referral to the corresponding committee; the second reading consists of the reading of the bill in the form recommended by the corresponding committee; and the third reading is the reading of the bill in the form it will be after approval on second reading. 4 During the second reading, the following takes place; (1) Second reading of the bill; (2) Sponsorship by the Committee Chairman or any member designated by the corresponding committee; (3) If a debate ensues, turns for and against the bill shall be taken alternately; (4) The sponsor of the bill closes the debate; (5) After the close of the debate, the period of amendments follows: (6) Then, after the period of amendments is closed, the voting the bill on second reading.
5

After approval on second readings, printed copies thereof in its final form shall be distributed to the Members of the Senate at least three days prior to the third reading, the final vote shall be taken and the yeas and nays shall be entered in the Journal. 6 Under the Rules of the House, the first reading of a bill consists of a reading of the number, title, and author followed by the referral to the appropriate committees; 7 the second reading consists of the reading in full of the bill with the amendments proposed by the committee, it any; 8 and the third reading is the reading of the bill in the form as approved on second reading and takes place only after printed copies thereof in its final form have been distributed to the Members at least three days before, unless the bill is certified. 9 At the second reading, the following takes place: (1) Reading of the bill; (2) Sponsorship; 3) Debates;

(4) Period of Amendments; and (5) Voting on Second Reading. 10 At the third reading, the votes shall be taken immediately and the yeas and nays entered in the Journal. 11 Clearly, whether in the Senate or in the House, every bill must pass the three readings on separate days, except when the bill is certified. Amendments to the bill on third reading are constitutionally prohibited. 12 After its passage by one chamber, the bill should then be transmitted to the other chamber for its concurrence. Section 83, Rule XIV of the Rules of the House expressly provides: SEC. 83. Transmittal to Senate. -- The Secretary General, without need of express order, shall transmit to the Senate for its concurrence all the bills and joint or concurrent resolutions approved by the House or the amendments of the House to the bills or resolutions of the Senate, or if amendments of the Senate to bills of the House are accepted, he shall forthwith notify the Senate of the action taken. Simplified, this rule means that: 1. As to a bill originating in the House: (a) Upon its approval by the House, the bill shall be transmitted to the Senate; (b) The Senate may approve it with or without amendments; (c) The Senate returns the bill to the House; (d) The House may accept the Senate amendments; if it does not, the Secretary General shall notify the Senate of that action. As hereinafter be shown, a request for conference shall then be in order. 2. As to bills originating in the Senate; (a) Upon its approval by the Senate, the bill shall be transmitted to the House; (b) The House may approve it with or without amendments; (c) The House then returns it to the Senate, informing it of the action taken; (d) The Senate may accept the House amendements; if it does not, it shall notify the House and make a request for conference. The transmitted bill shall then pass three readings in the other chamber on separate days. Section 84, Rule XIV of the Rules of the House states: SEC. 84. Bills from the Senate. -- The bills, resolutions and communications of the Senate shall be referred to the corresponding committee in the same manner as bills presented by Members of the House. and Section 51, Rule XXII of the Rules of the Senate provides: SEC. 51. Prior to their final approval, bills and joint resolutions shall be read at least three times." It is only when the period of disagreement is reached, i.e., amendments proposed by one chamber to a bill originating from the other are not accepted by the latter, that a request for conference is made or is in order. The request for conference is specifically covered by Section 26, Rule XI of the Rules of the Senate which reads: It is only when the period of disagreement is reached, i.e., amended proposed by one chamber to a bill originating from the other are not accepted by their latter, that a request for conference is made or is in order. The request for conference is specifically covered by Section 26, Rule XII of the Rules of the Senate which reads: SEC. 26. In the event that the Senate does not agree with the House of Representatives on the provision of any bill or joint resolution, the differences shall be settled by a conference committee of both Houses which shall meet within ten days after its composition. and Section 85, Rule XIV of the Rules of the House which reads:

SEC. 85. Conference Committee Reports. -- In the event that the House does not agree with the Senate on the amendments to any bill or joint resolution, the differences may be settled by conference committees of both Chambers. The foregoing provisions of the Constitution and the Rules of both chambers of Congress are mandatory. In his Treatise On the Constitutional Limitations, 13 more particularly on enactment of bill, Cooley states: Where, for an instance, the legislative power is to be exercised by two houses, and by settled and well-understood parliamentary law these two houses are to hold separate sessions for their deliberations, and the determination of the one upon a proposes law is to be submitted to the separate determination of the other, the constitution, in providing for two houses, has evidently spoken in reference to this settled custom, incorporating it as a rule of constitutional interpretation; so that it would require no prohibitory clause to forbid the two houses from combining in one, and jointly enacting laws by the vote of a majority of all. All those rules which are of the essentials of law-making must be observed and followed; and it is only the customary rules of order and routine, such as in every deliberative body are always understood to be under its control, and subject to constant change at its will, that the constitution can be understood to have left as matters of discretion, to be established, modified, or abolished by the bodies for whose government in nonessential matters they exist. In respect of appropriation, revenue, or tariff bills, bills increasing the public debt, bills of local application, or private bills, the return thereof to the House after the Senate shall have "proposed or concurred with amendments" for the former either to accept or reject the amendments would not only be in conformity with the foregoing rules but is also implicit from Section 24 of Article VI. With the foregoing as our guiding light, I shall now show the violations of the Constitution and of the Rules of the Senate and of the House in the passage of R.A. No. 7716. VIOLATIONS OF SECTION 24, ARTICLE VI OF THE CONSTITUTION: First violation. -- Since R.A. No. 7716 is a revenue measure, it must originate exclusively in the House -- not in the Senate. As correctly asserted by petitioner Tolentino, on the face of the enrolled copy of R.A. No. 7716, it is a "CONSOLIDATION OF HOUSE BILL NO. 11197 AND SENATE BILL NO. 1630." In short, it is an illicit marriage of a bill which originated in the House and a bill which originated in the Senate. Therefore, R.A. No. 7716 did not originate exclusively in the House. The only bill which could serve as a valid basis for R.A. No. 7716 is House Bill (HB) No. 11197. This bill, which is the substitute bill recommended by the House Committee on Ways and Means in substitution of House Bills Nos. 253, 771, 2450, 7033, 8086, 9030, 9210, 9397, 10012, and 10100, and covered by its Committee Report No. 367, 14 was approved on third reading by the House on 17 November 1993. 15 Interestingly, HB No. 9210, 16 which was filed by Representative Exequiel B. Javier on 19 May 1993, was certified by the President in his letter to Speaker Jose de Venecia, Jr. of 1 June 1993. 17 Yet, HB No. 11197, which substituted HB No. 9210 and the others above-stated, was not. Its certification seemed to have been entirely forgotten. On 18 November 1993, the Secretary-General of the House, pursuant to Section 83, Rule XIV of the Rules of the House, transmitted to the President of the Senate HB No. 11197 and requested the concurrence of the Senate therewith. 18 However, HB No. 11197 had passed only its first reading in that Senate by its referral to its Committee on Ways and Means. That Committee never deliberated on HB No. 11197 as it should have. It acted only on Senate Bill (SB) No. 1129 19 introduced by Senator Ernesto F. Herrera on 1 March 1993. It then prepared and proposed SB No. 1630, and in its Committee Report No. 349 20 which was submitted to the Senate on 7 February 1994, 21 it recommended that SB No. 1630 be approved "in substitution of S.B. No. 1129, taking into consideration P.S. Res. No. 734 and H.B. No. 11197." 22 It must be carefully noted that SB No. 1630 was proposed and submitted for approval by the Senate in SUBSTITUTION of SB No. 1129, and not HB No. 11197. Obviously, the principal measure which the Committee deliberated on and acted upon was SB No. 1129 and not HB No. 11197. The latter, instead of being the only measure to be taken up, deliberated upon, and reported back to the Senate for its consideration on second reading and, eventually, on third reading, was, at the most, merely given by the Committee a passing glance. This specific unequivocal action of the Senate Committee on Ways and Means, i.e., proposing and recommending approval of SB No. 1630 as a substitute for or in substitution of SB No. 1129 demolishes at once the thesis of the Solicitor General that: Assuming that SB 1630 is distinct from HB 11197, amendment by substitution is within the purview of Section 24, Article VI of the Constitution. because, according to him, (a) "Section 68, Rule XXIX of the Rules of the Senate authorizes an amendment by substitution and the only condition required is that "the text thereof is submitted in writing'; and (b) '[I]n Flint vs. Stone Tracy Co. (220 U.S. 107) the United Stated Supreme Court, interpreting the provision in the United States

Constitution similar to Section 24, Article VI of the Philippine Constitution, stated that the power of the Senate to amend a revenue bill includes substitution of an entirely new measure for the one originally proposed by the House of Representatives.'" 23 This thesis is utterly without merit. In the first place, it reads into the Committee Report something which it had not contemplated, that is, to propose SB No. 1630 in substitution of HB No. 11197; or speculates that the Committee may have committed an error in stating that it is SB No. 1129, and not HB No. 11197, which is to be substituted by SB No. 1630. Either, of course, is unwarranted because the words of the Report, solemnly signed by the Chairman, ViceChairman (who dissented), seven members, and three ex-officio members, 24 leave no room for doubt that although SB No. 1129, P.S. Res No. 734, and HB No. 11197 were referred to and considered by the Committee, it had prepared the attached SB No. 1630 which it recommends for approval "in substitution of S.B. No. 11197, taking into consideration P.S. No. 734 and H.B. No. 11197 with Senators Herrera, Angara, Romulo, Sotto, Ople and Shahani as authors." To do as suggested would be to substitute the judgment of the Committee with another that is completely inconsistent with it, or, simply, to capriciously ignore the facts. In the second place, the Office of the Solicitor General intentionally made it appear, to mislead rather than to persuade us, that in Flint vs. Stone Tracy Co. 25 The U.S. Supreme Court ruled, as quoted by it in the Consolidated Memorandum for Respondents, as follows: 26 The Senate has the power to amend a revenue bill. This power to amend is not confined to the elimination of provisions contained in the original act, but embraces as well the addition of such provisions thereto as may render the original act satisfactory to the body which is called upon to support it. It has, in fact, been held that the substitution of an entirely new measure for the one originally proposed can be supported as a valid amendment. xxx xxx xxx It is contended in the first place that this section of the act is unconstitutional, because it is a revenue measure, and originated in the Senate in violation of Section 7 of article 1 of the Constitution, providing that 'all bills for raising revenue shall originate in the House of Representatives, but the Senate may propose or concur with the amendments, as on other bills.' The first part is not a statement of the Court, but a summary of the arguments of counsel in one of the companion cases (No. 425, entitled, "Gay vs. Baltic Mining Co."). The second part is the second paragraph of the opinion of the Court delivered by Mr. Justice Day. The misrepresentation that the first part is a statement of the Court is highly contemptuous. To show such deliberate misrepresentation, it is well to quote what actually are found in 55 L.Ed. 408, 410, to wit: Messrs. Charles A. Snow and Joseph H. Knight filed a brief for appellees in No. 425: xxx xxx xxx The Senate has the power to amend a revenue bill. This power to amend is not confined to the elimination of provisions contained in the original act, but embraces as well the addition of such provisions thereto as may render the original act satisfactory to the body which is called upon to support it. It has, in fact, been held that the substitution of an entirely new measure for the one originally proposed can be supported as a valid amendment. Brake v. Collison, 122 Fed. 722. Mr. James L. Quackenbush filed a statement for appellees in No. 442. Solicitor General Lehmann (by special leave) argued the cause for the United States on reargument. Mr. Justice Day delivered the opinion of the court: These cases involve the constitutional validity of 38 of the act of Congress approved August 5, 1909, known as 'the corporation tax' law. 36 Stat. at L. 11, 112-117, chap. 6, U.S. Comp. Stat. Supp. 1909, pp. 659, 844-849. It is contended in the first place that this section of the act is unconstitutional, because it is a revenue measure, and originated in the Senate in violation of 7 of article 1 of the Constitution, providing the 'all bills for raising revenue shall originate in the House of Representatives, but the Senate may propose or concur with the amendments, as on other bills.' The history of the act is contained in the government's brief, and is accepted as correct, no objection being made to its accuracy. This statement shows that the tariff bill of which the section under consideration is a part, originated in the House of Representatives, and was there a general bill for the collection of revenue. As

originally introduced, it contained a plan of inheritance taxation. In the Senate the proposed tax was removed from the bill, and the corporation tax, in a measure, substituted therefor. The bill having properly originated in the House, we perceive no reason in the constitutional provision relied upon why it may not be amended in the Senate in the manner which it was in this case. The amendment was germane to the subject-matter of the bill, and not beyond the power of the Senate to propose. (Italics supplied) xxx xxx xxx As shown above, the underlined portions were deliberately omitted in the quotation made by the Office of the Solicitor General. In the third place, a Senate amendment by substitution with an entirely new bill of a bill, which under Section 24, Article VI of the Constitution can only originate exclusively in the House, is not authorized by said Section 24. Flint vs. Stone Tracy Co. cannot be invoked in favor of such a view. As pointed out by Mr. Justice Florenz D. Regalado during the oral arguments of these cases and during the initial deliberations thereon by the Court, Flint involves a Senate amendment to a revenue bill which, under the United States Constitution, should originate from the House of Representatives. The amendment consisted of the substitution of a corporation tax in lieu of the plan of inheritance taxation contained in a general bill for the collection of revenue as it came from the House of Representatives where the bill originated. The constitutional provision in question is Section 7, Article I of the United States Constitution which reads: Section 7. Bills and Resolutions. -- All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments, as on other Bills. This provision, contrary to the misleading claim of the Solicitor General, is not similar to Section 24, Article VI of our Constitution, which for easy comparison is hereunder quoted again: All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments. Note that in the former the word exclusively does not appear. And, in the latter, the phrase "as on other Bill," which is found in the former, does not appear. These are very significant in determining the authority of the upper chamber over the bills enumerated in Section 24. Since the origination is not exclusively vested in the House of Representatives of the United States, the Senate's authority to propose or concur with amendments is necessarily broader. That broader authority is further confirmed by the phrase "as on other Bills," i.e., its power to propose or concur with amendments thereon is the same as in ordinary bills. The absence of this phrase in our Constitution was clearly intended to restrict or limit the Philippine Senate's power to propose or concur with amendments. In the light of the exclusivity of origination and the absence of the phrase "as on other Bills," the Philippine Senate cannot amend by substitution with an entirely new bill of its own any bill covered by Section 24 of Article VI which the House of Representatives transmitted to it because such substitution would indirectly violate Section 24. These obvious substantive differences between Section 7, Article I of the U.S. Constitution and Section 24, Article VI of our Constitution are enough reasons why this Court should neither allow itself to be misled by Flint vs. Stone nor be awed by Rainey vs. United States 27 and the opinion of Messrs. Ogg and Ray 28 which the majority cites to support the view that the power of the U.S. Senate to amend a revenue measure is unlimited. Rainey concerns the Tariff Act of 1909 of the United States of America and specifically involved was its Section 37 which was an amendment introduced by the U.S. Senate. It was claimed by the petitioners that the said section is a revenue measure which should originate in the House of Representatives. The U.S. Supreme Court, however, adopted and approved the finding of the court a quo that: the section in question is not void as a bill for raising revenue originating in the Senate, and not in the House of Representatives. It appears that the section was proposed by the Senate as an amendment to a bill for raising revenue which originated in the House. That is sufficient. Messrs. Ogg and Ray, who are professors emeritus of political science, based their statement not even on a case decided by the U.S. Supreme Court but on their perception of what Section 7, Article I of the U.S. Constitution permits. In the tenth edition (1951) of their work, they state: Any bill may make its first appearance in either house, except only that bills for raising revenue are required by the constitution to 'originate' in the House of Representatives. Indeed, through its right to amend revenue bills, even to the extent of substituting new ones, the Senate may, in effect, originate them also. 29 Their "in effect" conclusion is, of course, logically correct because the word exclusively does not appear in said Section 7, Article I of the U.S. Constitution. Neither can I find myself in agreement with the view of the majority that the Constitution does not prohibit the filing in the Senate of a substitute bill in anticipation of its receipt of the bill from the House so long as action by the Senate as a body is withheld pending receipt of the House bill, thereby stating, in effect, that S.B. No. 1129 was such an

anticipatory substitute bill, which, nevertheless, does not seem to have been considered by the Senate except only after its receipt of H.B. No. 11179 on 23 November 1993 when the process of legislation in respect of it began with a referral to the Senate Committee on Ways and Means. Firstly, to say that the Constitution does not prohibit it is to render meaningless Section 24 of Article VI or to sanction its blatant disregard through the simple expedient of filing in the Senate of a so-called anticipatory substitute bill. Secondly, it suggests that S.B. No. 1129 was filed as an anticipatory measure to substitute for H.B. No. 11179. This is a speculation which even the author of S.B. No. 1129 may not have indulged in. S.B. No. 1129 was filed in the Senate by Senator Herrera on 1 March 1993. H.B. No. 11197 was approved by the House on third reading only on 17 November 1993. Frankly, I cannot believe that Senator Herrera was able to prophesy that the House would pass any VAT bill, much less to know its provisions. That "it does not seem that the Senate even considered" the latter not until after its receipt of H.B. No. 11179 is another speculation. As stated earlier, S.B. No. 1129 was filed in the Senate on 1 March 1993, while H.B. No. 11197 was transmitted to the Senate only on 18 November 1993. There is no evidence on record to show that both were referred to the Senate Committee on Ways and Means at the same time. Finally, in respect of H.B. No. 11197, its legislative process did not begin with its referral to the Senate's Ways and Means Committee. It began upon its filing, as a Committee Bill of the House of Committee on Ways and Means, in the House. Second violation. -- Since SB No. 1129 is a revenue measure, it could not even be validly introduced or initiated in the Senate. It follows too, that the Senate cannot validly act thereon. Third violation. -- Since SB No. 1129 could not have been validly introduced in the Senate and could not have been validly acted on by the Senate, then it cannot be substituted by another revenue measure, SB No. 1630, which the Senate Committee on Ways and Means introduced in substitution of SB No. 1129. The filing or introduction in the Senate of SB No. 1630 also violated Section 24, Article VI of the Constitution. VIOLATIONS OF SECTION 26(2), ARTICLE VI OF THE CONSTITUTION: First violation. -- The Senate, despite its lack of constitutional authority to consider SB No. 1630 or SB No. 1129 which the former substituted, opened deliberations on second reading of SB No. 1630 on 8 February 1994. On 24 March 1994, the Senate approved it on second reading and on third reading. 30 That approval on the same day violated Section 26(2), Article VI of the Constitution. The justification therefor was that on 24 February 1994 the President certified to "the necessity of the enactment of SB No. 1630 ... to meet a public emergency." 31 I submit, however, that the Presidential certification is void ab initio not necessarily for the reason adduced by petitioner Kilosbayan, Inc., but because it was addressed to the Senate for a bill which is prohibited from originating therein. The only bill which could be properly certified on permissible constitutional grounds even if it had already been transmitted to the Senate is HB No. 11197. As earlier observed, this was not so certified, although HB No. 9210 (one of those consolidated into HB No. 11197) was certified on 1 June 1993. 32 Also, the certification of SB No. 1630 cannot, by any stretch of the imagination, be extended to HB No. 11197 because SB No. 1630 did not substitute HB No. 11197 but SB No. 1129. Considering that the certification of SB No. 1630 is void, its approval on second and third readings in one day violated Section 26(2), Article VI of the Constitution. Second violation. -- It further appears that on 24 June 1994, after the approval of SB No. 1630, the Secretary of the Senate, upon directive of the Senate President, formally notified the House Speaker of the Senate's approval thereof and its request for a bicameral conference "in view of the disagreeing provisions of said bill and House Bill No. 11197." 33 It must be stressed again that HB No. 11197 was never submitted for or acted on second and third readings in the Senate, and SB No. 1630 was never sent to the House for its concurrence. Elsewise stated, both were only half-way through the legislative mill. Their submission to a conference committee was not only anomalously premature, but violate of the constitutional rule on three readings. The suggestion that SB No. 1630 was not required to be submitted to the House for otherwise the procedure would be endless, is unacceptable for, firstly, it violates Section 26, Rule XII of the Rules of the Senate and Section 85, Rule XIV of the Rules of the House, and, secondly, it is never endless. If the chamber of origin refuses to accept the amendments of the other chamber, the request for conference shall be made. VIOLATIONS OF THE RULES OF BOTH CHAMBERS; GRAVE ABUSE OF DISCRETION. The erroneous referral to the conference committee needs further discussion. Since S.B. No. 1630 was not a substitute bill for H.B. No. 11197 but for S.B. No. 1129, it (S.B. No. 1630) remained a bill which originated in the Senate. Even assuming arguendo that it could be validly initiated in the Senate, it should have been first transmitted to the House where it would undergo three readings. On the other hand, since HB No. 11197 was never acted upon by the Senate on second and third readings, no differences or inconsistencies could as yet arise so as to warrant a request for a conference. It should be noted that under Section 83, Rule XIV of the Rules of the House, it is only when the Senate shall have approved with amendments HB no. 11197 and the House declines to accept the amendments after having been notified thereof that the request for a conference may be made by the House, not by

the Senate. Conversely, the Senate's request for a conference would only be proper if, following the transmittal of SB No. 1630 to the House, it was approved by the latter with amendments but the Senate rejected the amendments. Indisputably then, when the request for a bicameral conference was made by the Senate, SB No. 1630 was not yet transmitted to the House for consideration on three readings and HB No. 11197 was still in the Senate awaiting consideration on second and third readings. Their referral to the bicameral conference committee was palpably premature and, in so doing, both the Senate and the House acted without authority or with grave abuse of discretion. Nothing, and absolutely nothing, could have been validly acted upon by the bicameral conference committee. GRAVE ABUSE OF DISCRETION COMMITTED BY THE BICAMERAL CONFERENCE COMMITTEE. Serious irregularities amounting to lack of jurisdiction or grave abuse of discretion were committed by the bicameral conference committee. First, it assumed, and took for granted that SB No. 1630 could validly originate in the Senate. This assumption is erroneous. Second, it assumed that HB No. 11197 and SB No. 1630 had properly passed both chambers of Congress and were properly and regularly submitted to it. As earlier discussed, the assumption is unfounded in fact. Third, per the bicameral conference committee's proceedings of 19 April 1994, Representative Exequiel Javier, Chairman of the panel from the House, initially suggested that HB No. 11197 should be the "frame of reference," because it is a revenue measure, to which Senator Ernesto Maceda concurred. However, after an incompletely recorded reaction of Senator Ernesto Herrera, Chairman of the Senate panel, Representative Javier seemed to agree that "all amendments will be coming from the Senate." The issue of what should be the "frame of reference" does not appear to have been resolved. These facts are recorded in this wise, as quoted in the Consolidated Memorandum for Respondents: 34 CHAIRMAN JAVIER. First of all, what would be the basis, no, or framework para huwag naman mawala yung personality namin dito sa bicameral, no, because the bill originates from the House because this is a revenue bill, so we would just want to ask, we make the House Bill as the frame of reference, and then everything will just be inserted? HON. MACEDA. Yes. That's true for every revenue measure. There's no other way. The House Bill has got to be the base. Of course, for the record, we know that this is an administration; this is certified by the President and I was about to put into the records as I am saying now that your problem about the impact on prices on the people was already decided when the President and the administration sent this to us and certified it. They have already gotten over that political implication of this bill and the economic impact on prices. CHAIRMAN HERRERA. Yung concern mo about the bill as the reference in this discussion is something that we can just ... CHAIRMAN JAVIER. We will just ... all the amendments will be coming from the Senate. (BICAMERAL CONFERENCE ON MAJOR DIFFERENCES BETWEEN HB NO. 11197 AND SB NO. 1630 [Cte. on Ways & Means] APRIL 19, 1994, II-6 and II-7; Italics supplied) These exchanges would suggest that Representative Javier had wanted HB No. 11197 to be the principal measure on which reconciliation of the differences should be based. However, since the Senate did not act on this Bill on second and third readings because its Committee on Ways and Means did not deliberate on it but instead proposed SB No. 1630 in substitution of SB No. 1129, the suggestion has no factual basis. Then, when finally he agreed that "all amendments will be coming from the Senate," he in fact withdrew the former suggestion and agreed that SB No. 1630, which is the Senate version of the Value Added Tax (VAT) measure, should be the "frame of reference." But then SB No. 1630 was never transmitted to the House for the latter's concurrence. Hence, it cannot serve as the "frame of reference" or as the basis for deliberation. The posture taken by Representative Javier also indicates that SB No. 1630 should be taken as the amendment to HB No. 11197. This, too, is unfounded because SB No. 1630 was not proposed in substitution of HB No. 11197. Since SB No. 1630 did not pass three readings in the House and HB No. 11197 did not pass second and third readings in the Senate, it logically follows that no disagreeing provisions had as yet arisen. The bicameral conference committee erroneously assumed the contrary.

Even granting arguendo that both HB No. 11197 and SB No. 1630 had been validly approved by both chambers of Congress and validly referred to the bicameral conference committee, the latter had very limited authority thereon. It was created "in view of the disagreeing provisions of" the two bills. 35 Its duty was limited to the reconciliation of disagreeing provisions or the resolution of differences or inconsistencies. The committee recognized that limited authority in the opening paragraph of its Report 36 when it said: The Conference Committee on the disagreeing provisions of House Bill No. 11197 ... and Senate Bill No. 1630 ... . Under such limited authority, it could only either (a) restore, wholly or partly, the specific provisions of HB No. 11197 amended by SB No. 1630, (b) sustain, wholly or partly, the Senate's amendments, or (c) by way of a compromise, to agree that neither provisions in HB No. 11197 amended by the Senate nor the latter's amendments thereto be carried into the final form of the former. But as pointed out by petitioners Senator Raul Roco and Kilosbayan, Inc., the bicameral conference committee not only struck out non-disagreeing provisions of HB No. 11197 and SB No. 1630, i.e., provisions where both bills are in full agreement; it added more activities or transactions to be covered by VAT, which were not within the contemplation of both bills. Since both HB No. 11197 and SB No. 1630 were still half-cooked in the legislative vat, and were not ready for referral to a conference, the bicameral conference committee clearly acted without jurisdiction or with grave abuse of discretion when it consolidated both into one bill which became R.A. No. 7716. APPROVAL BY BOTH CHAMBERS OF CONFERENCE COMMITTEE REPORT AND PROPOSED BILL DID NOT CURE CONSTITUTIONAL INFIRMITIES. I cannot agree with the suggestion that since both the Senate and the House had approved the bicameral conference committee report and the bill proposed by it in substitution of HB No. 11197 and SB No. 1630, whatever infirmities may have been committed by it were cured by ratification. This doctrine of ratification may apply to minor procedural flaws or tolerable breachs of the parameters of the bicameral conference committee's limited powers but never to violations of the Constitution. Congress is not above the Constitution. In the instant case, since SB No. 1630 was introduced in violation of Section 24, Article VI of the Constitution, was passed in the Senate in violation of the "three readings" rule, and was not transmitted to the House for the completion of the constitutional process of legislation, and HB No. 11197 was not likewise passed by the Senate on second and third readings, neither the Senate nor the House could validly approve the bicameral conference committee report and the proposed bill. In view of the foregoing, the conclusion is inevitable that for non-compliance with mandatory provisions of the Constitution and of the Rules of the Senate and of the House on the enactment of laws, R.A. No. 7716 is unconstitutional and, therefore, null and void. A discussion then of the instrinsic validity of some of its provisions would be unnecessary. The majority opinion, however, invokes the enrolled bill doctrine and wants this Court to desist from looking behind the copy of the assailed measure as certified by the Senate President and the Speaker of the House. I respectfully submit that the invocation is misplaced. First, as to the issue of origination, the certification in this case explicitly states that R.A. No. 7716 is a "consolidation of House Bill No. 11197 and Senate Bill No. 1630." This is conclusive evidence that the measure did not originate exclusively in the House. Second, the enrolled bill doctrine is of American origin, and unquestioned fealty to it may no longer be justified in view of the expanded jurisdiction 37 of this Court under Section 1, Article VIII of our Constitution which now expressly grants authority to this Court to: determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government. Third, even under the regime of the 1935 Constitution which did not contain the above provision, this Court, through Mr. Chief Justice Makalintal, in Astorga vs. Villegas, 38 declared that it cannot be truly said that Mabanag vs. Lopez Vito 39 has laid to rest the question of whether the enrolled bill doctrine or the journal entry rule should be adhered to in this jurisdiction, and stated: As far as Congress itself is concerned, there is nothing sacrosanct in the certification made by the presiding officers. It is merely a mode of authentication. The lawmaking process in Congress ends when the bill is approved by both Houses, and the certification does not add to the validity of the bill or cure any defect already present upon its passage. In other words, it is the approval of Congress and not the signatures of the presiding officers that is essential. Thus the (1935) Constitution says that '[e]very bill passed by the Congress shall, before it becomes a law, be presented to the President.' In Brown vs. Morris, supra, the Supreme Court of Missouri, interpreting a similar provision in the State Constitution, said that the same 'makes it clear that the indispensable step in the passage' and it follows that if a bill, otherwise fully enacted as a law, is not attested by the presiding officer, other proof that it has 'passed both houses will satisfy the constitutional requirement.' Fourth, even in the United States, the enrolled bill doctrine has been substantially undercut. This is shown in the disquisitions of Mr. Justice Reynato S. Puno in his dissenting opinion, citing Sutherland, Statutory Construction.

Last, the pleadings of the parties have established beyond doubt that HB No. 11197 was not acted on second and third readings in the Senate and SB No. 1630, which was approved by the Senate on second and third readings in substitution of SB No. 1129, was never transmitted to the House for its passage. Otherwise stated, they were only passed in their respective chamber of origin but not in the other. In no way can each become a law under paragraph 2, Section 26, Article VI of the Constitution. For the Court to close its eyes to this fact because of the enrolled bill doctrine is to shrink its duty to hold "inviolate what is decreed by the Constitution." 40 I vote then to GRANT these petitions and to declare R.A. No. 7716 as unconstitutional.

ROMERO, J.: Few issues brought before this Court for resolution have roiled the citizenry as much as the instant case brought by nine petitioners which challenges the constitutionality of Republic Act No. 7716 (to be referred to herein as the "Expanded Value Added Tax" or EVAT law to distinguish it from Executive Order No. 273 which is the VAT law proper) that was enacted on May 5, 1994. A visceral issue, it has galvanized the populace into mass action and strident protest even as the EVAT proponents have taken to podia and media in a post facto information campaign. The Court is confronted here with an atypical case. Not only is it a vatful of seething controversy but some unlikely petitioners invoke unorthodox remedies. Three Senator-petitioners would nullify a statute that bore the indispensable stamp of approval of their own Chamber with two of them publicly repudiating what they had earlier endorsed. With two former colleagues, one of them an erstwhile Senate President, making common cause with them, they would stay the implementation by the Executive Department of a law which they themselves have initiated. They address a prayer to a co-equal Department to probe their official acts for any procedural irregularities they have themselves committed lest the effects of these aberrations inflict such damage or irreparable loss as would bring down the wrath of the people on their heads. To the extent that they perceive that a vital cog in the internal machinery of the Legislature has malfunctioned from having operated in blatant violation of the enabling Rules they have themselves laid down, they would now plead that this other Branch of Government step in, invoking the exercise of what is at once a delicate and awesome power. Undoubtedly, the case at bench is as much a test for the Legislature as it is for the Judiciary. A backward glance on the Value Added Tax (VAT) is in order at this point. The first codification of the country's internal revenue laws was effected with the enactment of Commonwealth Act No. 466, commonly known as the 'National Internal Revenue Code' which was approved on June 15, 1939 and took effect on July 1, 1939, although the provisions on the income tax were made retroactive to January 1, 1939. Since 1939 when the turnover tax was replaced by the manufacturer's sales tax, the Tax Code had provided for a single-stage value-added tax on original sales by manufacturers, producers and importers computed on the 'cost deduction method' and later, on the basis of the 'tax credit method.' The turnover tax was re-introduced in 1985 by Presidential Decree No. 1991 (as amended by Presidential Decree No. 2006). 1 In 1986, a tax reform package was approved by the Aquino Cabinet. It contained twenty-nine measures, one of which proposed the adoption of the VAT, as well as the simplification of the sales tax structure and the abolition of the turnover tax. Up until 1987, the system of taxing goods consisted of (a) an excise tax on certain selected articles (b) fixed and percentage taxes on original and subsequent sales, on importations and on milled articles and (c) mining taxes on mineral products. Services were subjected to percentage taxes based mainly on gross receipts. 2 On July 25, 1987, President Corazon C. Aquino signed into law Executive Order No. 273 which adopted the VAT. From the former single-stage value-added tax, it introduced the multi-stage VAT system where "the value-added tax is imposed on the sale of and distribution process culminating in sale, to the final consumer. Generally described, the taxpayer (the seller) determines his tax liability by computing the tax on the gross selling price or gross receipt ("output tax") and subtracting or crediting the earlier VAT on the purchase or importation of goods or on the sale of service ("input tax") against the tax due on his own sale." 3 On January 1, 1988, implementing rules and regulations for the VAT were promulgated. President Aquino then issued Proclamation No. 219 on February 12, 1988 urging the public and private sectors to join the nationwide consumers' education campaign for VAT. Soon after the implementation of Executive Order No. 273, its constitutionality was assailed before this Court in the case of Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas, Inc., et al. v. Tan. 4 The four petitioners sought to nullify the VAT law "for being unconstitutional in that its enactment is not allegedly within the powers of the President; that the VAT is oppressive, discriminatory, regressive, and violates the due process and equal protection clauses and other provisions of the 1987 Constitution." 5 In dismissing the consolidated petitions, this Court stated:

The Court, following the time-honored doctrine of separation of powers cannot substitute its judgment for that of the President as to the wisdom, justice and advisability of the VAT. The Court can only look into and determine whether or not Executive Order No. 273 was enacted and made effective as law, in the manner required by and consistent with, the Constitution, and to make sure that it was not issued in grave abuse of discretion amounting to lack or excess of jurisdiction; and, in this regard, the Court finds no reason to impede its application or continued implementation. 6 Although declared constitutional, the VAT law was sought to be amended from 1992 on by a series of bills filed in both Houses of Congress. In chronological sequence, these were: HB/SB No. - Date Filed in Congress HB No. 253 - July 22, 1992 HB No. 771 - August 10, 1992 HB No. 2450 - September 9, 1992 Senate Res. No. 734 7 - September 10, 1992 HB No. 7033 - February 3, 1993 SB No. 1129 8 - March 1, 1993 HB No. 8086 - March 9, 1993 HB No. 9030 - May 11, 1993 HB No. 9210 9 - May 19, 1993 HB No. 9297 - May 25, 1993 HB No. 10012 - July 28, 1993 HB No. 10100 - August 3, 1993 HB No. 11197 in substitution of HB Nos. 253, 771, 2450, 7033, 8086, 9030, 9210, 9297 10012 and 10100 10 - November 5, 1993 We now trace the course taken by H.B. No. 11197 and S.B. No. 1129.

HB/SB No. HB No. 11197 was approved in the Lower House on second reading - November 11, 1993 HB No. 11197 was approved in the Lower House on third reading and voted upon with 114 Yeas and 12 Nays - November 17, 1993 HB No. 11197 was transmitted to the Senate - November 18, 1993

Senate Committee on Ways and Means submitted Com. Report No. 349 recommeding for approval SB No. 1630 in substitution of SB No. 1129, taking into consideration PS Res. No. 734 and HB No. 11197 11 - February 7, 1994 Certification by President Fidel V. Ramos of Senate Bill No. 1630 for immediate enactment to meet a public emergency - March 22, 1994 SB No. 1630 was approved by the Senate on second and third readings and subsequently voted upon with 13 yeas, none against and one abstention - March 24, 1994 Transmittal by the Senate to the Lower House of a request for a conference in view of disagreeing provisions of SB No. 1630 and HB NO. 11197 - March 24, 1994 The Bicameral Conference Committee conducted various meetings to reconcile the proposals on the VAT - April 13, 19, 20, 21, 25 The House agreed on the Conference Committee Report - April 27, 1994 The Senate agreed on the Conference Committee Report - May 2, 1994 The President signed Republic Act No. 7716 - The Expanded VAT Law 12 - May 5, 1994 Republic Act No. 7716 was published in two newspapers of general circulation - May 12, 1994 Republic Act No. 7716 became effective - May 28, 1994

Republic Act No. 7716 merely expanded the base of the VAT law even as the tax retained its multi-stage character. At the oral hearing held on July 7, 1994, this Court delimited petitioners' arguments to the following issues culled from their respective petitions. PROCEDURAL ISSUES Does Republic Act No. 7716 violate Article VI, Section 24, of the Constitution? Does it violate Article VI, Section 26, paragraph 2, of the Constitution? 14 What is the extent of the power of the Bicameral Conference Committee? SUBSTANTIVE ISSUES Does the law violate the following provisions in Article III (Bill of Rights) of the Constitution: 1. Section 1 15
13

2. Section 4 16 3. Section 5 17 4. Section 10 18 Does the law violate the following other provisions of the Constitution? 1. Article VI, Section 28, paragraph 1 19 2. Article VI, Section 28, paragraph 3 20 As a result of the unedifying experience of the past where the Court had the propensity to steer clear of questions it perceived to be "political" in nature, the present Constitution, in contrast, has explicitly expanded judicial power to include the duty of the courts, especially the Supreme Court, "to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government." 21 I submit that under this explicit mandate, the Court is empowered to rule upon acts of other Government entities for the purpose of determining whether there may have been, in fact, irregularities committed tantamount to violation of the Constitution, which case would clearly constitute a grave abuse of discretion on their part. In the words of the sponsor of the above-quoted Article of the Constitution on the Judiciary, the former Chief Justice Roberto R. Concepcion, "the judiciary is the final arbiter on the question of whether or not a branch of government or any of its officials has acted without jurisdiction or in excess of jurisdiction, or so capriciously as to constitute an abuse of discretion amounting to excess of jurisdiction or lack of jurisdiction. This is not only a judicial power but a duty to pass judgment on matters of this nature. This is the back ground of paragraph 2 of Section 1, which means that the courts cannot hereafter exhibit its wonted reticence by claiming that such matters constitute a political question." 22 In the instant petitions, this Court is called upon, not so much to exercise its traditional power of judicial review as to determine whether or not there has indeed been a grave abuse of discretion on the part of the Legislature amounting to lack or excess of jurisdiction. Where there are grounds to resolve a case without touching on its constitutionality, the Court will do so with utmost alacrity in due deference to the doctrine of separation of powers anchored on the respect that must be accorded to the other branches of government which are coordinate, coequal and, as far as practicable, independent of one another. Once it is palpable that the constitutional issue is unavoidable, then it is time to assume jurisdiction, provided that the following requisites for a judicial inquiry are met: that there must be an actual and appropriate case; a personal and substantial interest of the party raising the constitutional question; the constitutional question must be raised at the earliest possible opportunity and the decision of the constitutional question must be necessary to the determination of the case itself, the same being the lis mota of the case. 23 Having assured ourselves that the above-cited requisites are present in the instant petitions, we proceed to take them up. ARTICLE VI, SECTION 24 Some petitioners assail the constitutionality of Republic Act No. 7716 as being in violation of Article VI, Section 24 of the Constitution which provides: All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills, shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments. In G.R. Nos. 115455 and 115781, petitioners argue: (a) The bill which became Republic Act No. 7716 did not originate exclusively in the House of Representatives. The Senate, after receiving H.B. No. 11197, submitted its own bill, S.B. No. 1630, and proceeded to vote and approve the same after second and third readings. (b) The Senate exceeded its authority to "propose or concur with amendments" when it submitted its own bill, S.B. No. 1630, recommending its approval "in substitution of S.B. No. 1129, taking into consideration P.S. Res. No. 734 and H.B. No. 11197." (c) H.B. No. 11197 was not deliberated upon by the Senate. Neither was it voted upon by the Senate on second and third readings, as what was voted upon was S.B. No. 1630.

Article VI, Section 24 is taken word for word from Article VI, Section 18 of the 1935 Constitution which was, in turn, patterned after Article I, Section 7 (1) of the Constitution of the United States, which states: All bills for raising revenue shall originate in the House of Representatives, but the Senate may propose or concur with amendments as on other bills. The historical precedent for requiring revenue bills to originate in Congress is explained in the U.S. case of Morgan v. Murray. 24 The constitutional requirement that all bills for raising revenue shall originate in the House of Representatives stemmed from a remedial outgrowth of the historic conflict between Parliament (i.e., Commons) and the Crown, whose ability to dominate the monarchially appointive and hereditary Lords was patent. See 1 Story, Constitution, S 875 et seq., 5th Ed.; 1 Cooley, Constitutional Limitations, pp. 267, 268, 8th Ed., 1 Sutherland, Statutory Construction, S 806, 3d Ed. There was a measure of like justification for the insertion of the provision of article I, S 7, cl. 1, of the Federal Constitution. At that time (1787) and thereafter until the adoption (in 1913) of the Seventeenth Amendment providing for the direct election of senators, the members of the United States Senate were elected for each state by the joint vote of both houses of the Legislature of the respective states, and hence, were removed from the people ... The legislative authority under the 1935 Constitution being unicameral, in the form of the National Assembly, it served no purpose to include the subject provision in the draft submitted by the 1934 Constitutional Convention to the Filipino people for ratification. In 1940, however, the Constitution was amended to establish a bicameral Congress of the Philippines composed of a House of Representatives and a Senate. In the wake of the creation of a new legislative machinery, new provisions were enacted regarding the law-making power of Congress. The National Assembly explained how the final formulation of the subject provision came about: The concurrence of both houses would be necessary to the enactment of a law. However, all appropriation, revenue or tariff bills, bills authorizing an increase of the public debt, bills of local application, and private bills, should originate exclusively in the House of Representatives, although the Senate could propose or concur with amendments. In one of the first drafts of the amendments, it was proposed to give both houses equal powers in lawmaking. There was, however, much opposition on the part of several members of the Assembly. In another draft; the following provision, more restrictive than the present provision in the amendment, was proposed and for sometime was seriously considered: 'All bills appropriating public funds, revenue or tariff bills, bills of local application, and private bills shall originate exclusively in the Assembly, but the Senate may propose or concur with amendments. In case of disapproval by the Senate of any such bills, the Assembly may repass the same by a two-thirds vote of all its members, and thereupon, the bill so repassed shall be deemed enacted and may be submitted to the President for corresponding action. In the event that the Senate should fail to finally act on any such bills, the Assembly may, after thirty days from the opening of the next regular sessions of the same legislative term, reapprove the same with a vote of two-thirds of all the members of the Assembly. And upon such reapproval, the bill shall be deemed enacted and may be submitted to the president for corresponding action.' However, the special committee voted finally to report the present amending provision as it is now worded; and in that form it was approved by the National Assembly with the approval of Resolution No. 38 and later of Resolution No. 73. 25 (Italics supplied) Thus, the present Constitution is identically worded as its 1935 precursor: "All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills, shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments." (Italics supplied) That all revenue bills, such as Republic Act No. 7716, should "originate exclusively in the House of Representatives" logically flows from the more representative and broadly-based character of this Chamber. It is said that the House of Representatives being the more popular branch of the legislature, being closer to the people, and having more frequent contacts with them than the Senate, should have the privilege of taking the initiative in the proposals of revenue and tax project, the disposal of the people's money, and the contracting of public indebtedness. These powers of initiative in the raising and spending of public funds enable the House of Representatives not only to implement but even to determine the fiscal policies of the government. They place on its shoulders much of the responsibility of solving the financial problems of the government, which are so closely related to the economic life of the country, and of deciding on the proper distribution of revenues for such uses as may best advance public interests. 26

The popular nature of the Lower House has been more pronounced with the inclusion of Presidentially-appointed sectoral representatives, as provided in Article VI, Section 5 (2), of the Constitution, thus: "The party-list representatives shall constitute twenty per centum of the total number of representatives including those under the party list. For three consecutive terms after the ratification of this Constitution, one-half of the seats allocated to partylist representatives shall be filled, as provided by law, by selection or election from the labor, peasant, urban poor, indigenous cultural communities, women, youth, and such other sectors as may be provided by law, except the religious sector." (Italics supplied) This novel provision which was implemented in the Batasang Pambansa during the martial law regime 27 was eventually incorporated in the present Constitution in order to give those from the marginalized and often deprived sector, an opportunity to have their voices heard in the halls of the Legislature, thus giving substance and meaning to the concept of "people empowerment." That the Congressmen indeed have access to, and consult their constituencies has been demonstrated often enough by the fact that even after a House bill has been transmitted to the Senate for concurrence, some Congressmen have been known to express their desire to change their earlier official position or reverse themselves after having heard their constituents' adverse reactions to their representations. In trying to determine whether the mandate of the Constitution with regard to the initiation of revenue bills has been preserved inviolate, we have recourse to the tried and tested method of definition of terms. The term "originate" is defined by Webster's New International Dictionary (3rd Edition, 1986) as follows: "v.i., to come into being; begin; to start." On the other hand, the word "exclusively" is defined by the same Webster's Dictionary as "in an exclusive manner; to the exclusion of all others; only; as, it is his, exclusively." Black's Law Dictionary has this definition: "apart from all others; only; solely; substantially all or for the greater part. to the exclusion of all other; without admission of others to participation; in a manner to exclude. Standard Oil Co. of Texas v. State, Tex. Civ. App., 142 S.W. 2d 519, 521, 522, 523." This Court had occasion to define the term "exclusive" as follows: ... In its usual and generally accepted sense, the term means possessed to the exclusion of others; appertaining to the subject alone; not including, admitting or pertaining to another or others; undivided, sole. 28 When this writer, during the oral argument of July 7, 1994, asked the petitioner in G.R. No. 115455 whether he considers the word "exclusively" to be synonymous with "solely," he replied in the affirmative. 29 A careful examination of the legislative history traced earlier in this decision shows that the original VAT law, Executive Order No. 273, was sought to be amended by ten House bills which finally culminated in House Bill No. 11197, as well as two Senate bills. It is to be noted that the first House Bill No. 253 was filed on July 22, 1992, and two other House bills followed in quick succession on August 10 and September 9, 1992 before a Senate Resolution, namely, Senate Res. No. 734, was filed on September 10, 1992 and much later, a Senate Bill proper, viz., Senate Bill No. 1129 on March 1, 1993. Undoubtedly, therefore, these bills originated or had their start in the House and before any Senate bill amending the VAT law was filed. In point of time and venue, the conclusion is ineluctable that Republic Act No. 7716, which is indisputably a revenue measure, originated in the House of Representatives in the form of House Bill No. 253, the first EVAT bill. Additionally, the content and substance of the ten amendatory House Bills filed over the roughly one-year period from July 1992 to August 1993 reenforce the position that these revenue bills, pertaining as they do, to Executive Order No. 273, the prevailing VAT law, originated in the Lower House. House Bill Nos. 253, 771, 2450, 7033, 8086, 9030, 9210, 9297, 10012 and 10100 were intended to restructure the VAT system by exempting or imposing the tax on certain items or otherwise introducing reforms in the mechanics of implementation. 30 Of these, House Bill No. 9210 was favored with a Presidential certification on the need for its immediate enactment to meet a public emergency. Easily the most comprehensive, it noted that the revenue performance of the VAT, being far from satisfactory since the collections have always fallen short of projections, "the system is rendered inefficient, inequitable and less comprehensive." Hence, the Bill proposed several amendments designed to widen the tax base of the VAT and enhance its administration. 31 That House Bill No. 11197 being a revenue bill, originated from the Lower House was acknowledged, in fact was virtually taken for granted, by the Chairmen of the Committee on Ways and Means of both the House of Representatives and the Senate. Consequently, at the April 19, 1994 meeting of the Bicameral Conference Committee, the Members agreed to make the House Bill as the "frame of reference" or "base" of the discussions of the Bicameral Conference Committee with the "amendments" or "insertions to emanate from the Senate." 32 As to whether the bills originated exclusively in the Lower House is altogether a different matter. Obviously, bills amendatory of VAT did not originate solely in the House to the exclusion of all others for there were P.S. Res. No. 734 filed in the Senate on September 10, 1992 followed by Senate Bill No. 1129 which was filed on March 1, 1993. About a year later, this was substituted by Senate Bill No. 1630 that eventually became the EVAT law, namely, Republic Act No. 7716.

Adverting to the passage of the amendatory VAT bills in the Lower House, it is to be noted that House Bill No. 11197 which substituted all the prior bills introduced in said House complied with the required readings, that is, the first reading consisting of the reading of the title and referral to the appropriate Committee, approval on second reading on November 11, 1993 and on third reading on November 17, 1993 before being finally transmitted to the Senate. In the Senate, its identity was preserved and its provisions were taken into consideration when the Senate Committee on Ways and Means submitted Com. Report No. 349 which recommended for approval "S.B. No. 1630 in substitution of S.B. No. 1129, taking into consideration P.S. Res. No. 734 and H.B. No. 11197." At this stage, the subject bill may be considered to have passed first reading in the Senate with the submission of said Committee Report No. 349 by the Senate Committee on Ways and Means to which it had been referred earlier. What remained, therefore, was no longer House Bill No. 11197 but Senate Bill No. 1630. Thence, the Senate, instead of transmitting the bill to the Lower House for its concurrence and amendments, if any, took a "shortcut," bypassed the Lower House and instead, approved Senate Bill No. 1630 on both second and third readings on the same day, March 24, 1994. The first irregularity, that is, the failure to return Senate Bill No. 1630 to the Lower House for its approval is fatal inasmuch as the other chamber of legislature was not afforded the opportunity to deliberate and make known its views. It is no idle dictum that no less than the Constitution ordains: "The legislative power shall be vested in the Congress of the Philippines which shall consist of a Senate and a House of Representatives ..." 33 (Italics supplied) It is to be pointed out too, that inasmuch as Senate Bill No. 1630 which had "taken into consideration" House Bill No. 11197 was not returned to the Lower House for deliberation, the latter Chamber had no opportunity at all to express its views thereon or to introduce any amendment. The customary practice is, after the Senate has considered the Lower House Bill, it returns the same to the House of origin with its amendments. In the event that there may be any differences between the two, the same shall then be referred to a Conference Committee composed of members from both Chambers which shall then proceed to reconcile said differences. In the instant case, the Senate transmitted to the Lower House on March 24, 1994, a letter informing the latter that it had "passed S. No. 1630 entitled . . . (and) in view of the disagreeing provisions of said bill and House Bill No. 11197, entitled . . . the Senate requests a conference . . ." This, in spite of the fact that Com. Report No. 349 of the Senate Committee on Ways and Means had already recommended for approval on February 7, 1994 "S.B. No. 1630 . . . taking into consideration H.B. No. 11197." Clearly, the Conference Committee could only have acted upon Senate Bill No. 1630, for House Bill No. 11197 had already been fused into the former. At the oral hearing of July 7, 1994, petitioner in G.R. No. 115455 admitted, in response to this writer's query, that he had attempted to rectify some of the perceived irregularities by presenting a motion in the Senate to recall the bill from the Conference Committee so that it could revert to the period of amendment, but he was outvoted, in fact "slaughtered." 34 In accordance with the Rules of the House of Representatives and the Senate, Republic Act No. 7716 was duly authenticated after it was signed by the President of the Senate and the Speaker of the House of Representatives followed by the certifications of the Secretary of the Senate and the Acting Secretary General of the House of Representatives. 35 With the signature of President Fidel V. Ramos under the words "Approved: 5 May 1994," it was finally promulgated. Its legislative journey ended, Republic Act No. 7716 attained the status of an enrolled bill which is defined as one "which has been duly introduced, finally passed by both houses, signed by the proper officers of each, approved by the governor (or president) and filed by the secretary of state." 36 Stated differently: It is a declaration by the two houses, through their presiding officers, to the president, that a bill, thus attested, has received in due form, the sanction of the legislative branch of the government, and that it is delivered to him in obedience to the constitutional requirement that all bills which pass Congress shall be presented to him. And when a bill, thus attested, receives his approval, and is deposited in the public archives, its authentication as a bill that has passed Congress should be deemed complete and unimpeachable. As the President has no authority to approve a bill not passed by Congress, an enrolled Act in the custody of the Secretary of State, and having the official attestations of the Speaker of the House of Representatives, of the President of the Senate, and of the President of the United States, carries, on its face, a solemn assurance by the legislative and executive departments of the government, charged, respectively, with the duty of enacting and executing the laws, that it was passed by Congress. The respect due to coequal and independent departments requires the judicial department to act upon that assurance, and to accept, as having passed Congress, all bills authenticated in the manner stated; leaving the courts to determine, when the question properly arises, whether the Act, so authenticated, is in conformity with the Constitution. 37 The enrolled bill assumes importance when there is some variance between what actually transpired in the halls of Congress, as reflected in its journals, and as shown in the text of the law as finally enacted. But suppose the journals of either or both Houses fail to disclose that the law was passed in accordance with what was certified to by their respective presiding officers and the President. Or that certain constitutional requirements regarding its passage were not observed, as in the instant case. Which shall prevail: the journal or the enrolled bill? A word on the journal.

The journal is the official record of the acts of a legislative body. It should be a true record of the proceedings arranged in chronological order. It should be a record of what is done rather than what is said. The journal should be a clear, concise, unembellished statement of all proposals made and all actions taken complying with all requirements of constitutions, statutes, charters or rules concerning what is to be recorded and how it is to be recorded. 38 Article VI, Section 16 (4) of the Constitution ordains: Each house shall keep a Journal of its proceedings, and from time to time publish the same, excepting such parts as may, in its judgment, affect national security; and the yeas and nays on any question shall, at the request of one-fifth of the Members present, be entered in the Journal. Each House shall also keep a Record of its proceedings." (Italics supplied) The rationale behind the above provision and of the "journal entry rule" is as follows: It is apparent that the object of this provision is to make the legislature show what it has done, leaving nothing whatever to implication. And, when the legislature says what it has done, with regard to the passage of any bill, it negatives the idea that it has done anything else in regard thereto. Silence proves nothing where one is commanded to speak . . . . Our constitution commands certain things to be done in regard to the passage of a bill, and says that no bill shall become a law unless these things are done. It seems a travesty upon our supreme law to say that it guaranties to the people the right to have their laws made in this manner only, and that there is no way of enforcing this right, or for the court to say that this is law when the constitution says it is not law. There is one safe course which is in harmony with the constitution, and that is to adhere to the rule that the legislature must show, as commanded by the constitution, that it has done everything required by the constitution to be done in the serious and important matter of making laws. This is the rule of evidence provided by the constitution. It is not presumptuous in the courts, nor disrespectful to the legislature, to judge the acts of the legislature by its own evidence. 39 Confronted with a discrepancy between the journal proceedings and the law as duly enacted, courts have indulged in different theories. The "enrolled bill" and "journal entry" rules, being rooted deep in the Parliamentary practices of England where there is no written constitution, and then transplanted to the United States, it may be instructive to examine which rule prevails in the latter country through which, by a process of legislative osmosis, we adopted them in turn. There seems to be three distinct and different rules as applicable to the enrolled bill recognized by the various courts of this country. The first of these rules appears to be that the enrolled bill is the ultimate proof and exclusive and conclusive evidence that the bill passed the legislature in accordance with the provisions of the Constitution. Such has been the holding in California, Georgia, Kentucky, Texas, Washington, New Mexico, Mississippi, Indiana, South Dakota, and may be some others. The second of the rules seems to be that the enrolled bill is a verity and resort cannot be had to the journals of the Legislature to show that the constitutional mandates were not complied with by the Legislature, except as to those provisions of the Constitution, compliance with which is expressly required to be shown on the journal. This rule has been adopted in South Carolina, Montana, Oklahoma, Utah, Ohio, New Jersey, United States Supreme Court, and others. The third of the rules seems to be that the enrolled bill raises only a prima facie presumption that the mandatory provisions of the Constitution have been complied with and that resort may be had to the journals to refute that presumption, and if the constitutional provision is one, compliance with which is expressly required by the Constitution to be shown on the journals, then the mere silence of the journals to show a compliance therewith will refute the presumption. This rule has been adopted in Illinois, Florida, Kansas, Louisiana, Tennessee, Arkansas, Idaho, Minnesota, Nebraska, Arizona, Oregon, New Jersey, Colorado, and others. 40 In the 1980 case of D & W Auto Supply v. Department of Revenue, the Supreme Court of Kentucky which had subscribed in the past to the first of the three theories, made the pronouncement that it had shifted its stand and would henceforth adopt the third. It justified its changed stance, thus: We believe that a more reasonable rule is the one which Professor Sutherland describes as the 'extrinsic evidence' rule . . . . Under this approach there is a prima facie presumption that an enrolled bill is valid, but such presumption may be overcome by clear satisfactory and convincing evidence establishing that constitutional requirements have not been met. 41 What rule, if any, has been adopted in this jurisdiction? Advocates of the "journal entry rule" cite the 1916 decision in U.S. v. Pons 42 where this Court placed reliance on the legislative journals to determine whether Act No. 2381 was passed on February 28, 1914 which is what appears in

the Journal, or on March 1, 1914 which was closer to the truth. The confusion was caused by the adjournment sine die at midnight of February 28, 1914 of the Philippine Commission. A close examination of the decision reveals that the Court did not apply the "journal entry rule" vis-a-vis the "enrolled bill rule" but the former as against what are "behind the legislative journals." Passing over the question of whether the printed Act (No. 2381), published by authority of law, is conclusive evidence as to the date when it was passed, we will inquire whether the courts may go behind the legislative journals for the purpose of determining the date of adjournment when such journals are clear and explicit. 43 It is to be noted from the above that the Court "passed over" the probative value to be accorded to the enrolled bill. Opting for the journals, the Court proceeded to explain: From their very nature and object, the records of the Legislature are as important as those of the judiciary, and to inquire into the veracity of the journals of the Philippine Legislature, when they are, as we have said clear and explicit, would be to violate both the letter and the spirit of the organic laws by which the Philippine Government was brought into existence, to invade a coordinate and independent department of the Government, and to interfere with the legitimate powers and functions of the Legislature. 44 Following the courts in the United States since the Constitution of the Philippine Government is modeled after that of the Federal Government, the Court did not hesitate to follow the courts in said country, i.e., to consider the journals decisive of the point at issue. Thus: "The journals say that the Legislature adjourned at 12 midnight on February 28, 1914. This settles the question and the court did not err in declining to go behind these journals." 45 The Court made a categorical stand for the "enrolled bill rule" for the first time in the 1947 case of Mabanag v. Lopez Vito 46 where it held that an enrolled bill imports absolute verity and is binding on the courts. This Court held itself bound by an authenticated resolution, despite the fact that the vote of three-fourths of the Members of the Congress (as required by the Constitution to approve proposals for constitutional amendments) was not actually obtained on account of the suspension of some members of the House of Representatives and the Senate. In this connection, the Court invoked the "enrolled bill rule" in this wise: "If a political question conclusively binds the judges out of respect to the political departments, a duly certified law or resolution also binds the judges under the 'enrolled bill rule' born of that respect." 47 Mindful that the U.S. Supreme Court is on the side of those who favor the rule and for no other reason than that it conforms to the expressed policy of our law making body (i.e., Sec. 313 of the old Code of Civil Procedure, as amended by Act No. 2210), the Court said that "duly certified copies shall be conclusive proof of the provisions of such Acts and of the due enactment thereof." Without pulling the legal underpinnings from U.S. v. Pons, it justified its position by saying that if the Court at the time looked into the journals, "in all probability, those were the documents offered in evidence" and that "even if both the journals and authenticated copy of the Act had been presented, the disposal of the issue by the Court on the basis of the journals does not imply rejection of the enrolled theory; for as already stated, the due enactment of a law may be proved in either of the two ways specified in Section 313 of Act No. 190 as amended." 48 Three Justices voiced their dissent from the majority decision. Again, the Court made its position plain in the 1963 case of Casco Philippine Chemical Co., Inc. v. Gimenez 49 when a unanimous Court ruled that: "The enrolled bill is conclusive upon the courts as regards the tenor of the measure passed by Congress and approved by the President. If there has been any mistake in the printing of a bill before it was certified by the officers of Congress and approved by the Executive, the remedy is by amendment or curative legislation not by judicial decree." According to Webster's New 20th Century Dictionary, 2nd ed., 1983, the word "tenor" means, among others, "the general drift of something spoken or written; intent, purport, substance." Thus, the Court upheld the respondent Auditor General's interpretation that Republic Act No. 2609 really exempted from the margin fee on foreign exchange transactions "urea formaldehyde" as found in the law and not "urea and formaldehyde" which petitioner insisted were the words contained in the bill and were so intended by Congress. In 1969, the Court similarly placed the weight of its authority behind the conclusiveness of the enrolled bill. In denying the motion for reconsideration, the Court ruled in Morales v. Subido that "the enrolled Act in the office of the legislative secretary of the President of the Philippines shows that Section 10 is exactly as it is in the statute as officially published in slip form by the Bureau of Printing ... Expressed elsewise, this is a matter worthy of the attention not of an Oliver Wendell Holmes but of a Sherlock Holmes." 50 The alleged omission of a phrase in the final Act was made, not at any stage of the legislative proceedings, but only in the course of the engrossment of the bill, more specifically in the proofreading thereof. But the Court did include a caveat that qualified the absoluteness of the "enrolled bill" rule stating: By what we have essayed above we are not of course to be understood as holding that in all cases the journals must yield to the enrolled bill. To be sure there are certain matters which the Constitution (Art. VI, secs. 10 [4], 20 [1], and 21 [1)]) expressly requires must be entered on the journal of each house. To what extent the validity of a legislative act may be affected by a failure to

have such matters entered on the journal, is a question which we do not now decide (Cf. e.g., Wilkes Country Comm'rs. v. Coler, 180 U.S. 506 [1900]). All we hold is that with respect to matters not expressly required to be entered on the journal, the enrolled bill prevails in the event of any discrepancy. 51 More recently, in the 1993 case of Philippine Judges Association v. Prado, 52 this Court, in ruling on the unconstitutionality of Section 35 of Republic Act No. 7354 withdrawing the franking privilege from the entire hierarchy of courts, did not so much adhere to the enrolled bill rule alone as to both "enrolled bill and legislative journals." Through Mr. Justice Isagani A. Cruz, we stated: "Both the enrolled bill and the legislative journals certify that the measure was duly enacted, i.e., in accordance with Article VI, Sec. 26 (2) of the Constitution. We are bound by such official assurances from a coordinate department of the government, to which we owe, at the very least, a becoming courtesy." Aware of the shifting sands on which the validity and continuing relevance of the "enrolled bill" theory rests, I have taken pains to trace the history of its applicability in this jurisdiction, as influenced in varying degrees by different Federal rulings. As applied to the instant petition, the issue posed is whether or not the procedural irregularities that attended the passage of House Bill No. 11197 and Senate Bill No. 1630, outside of the reading and printing requirements which were exempted by the Presidential certification, may no longer be impugned, having been "saved" by the conclusiveness on us of the enrolled bill. I see no cogent reason why we cannot continue to place reliance on the enrolled bill, but only with respect to matters pertaining to the procedure followed in the enactment of bills in Congress and their subsequent engrossment, printing errors, omission of words and phrases and similar relatively minor matters relating more to form and factual issues which do not materially alter the essence and substance of the law itself. Certainly, "courts cannot claim greater ability to judge procedural legitimacy, since constitutional rules on legislative procedure are easily mastered. Procedural disputes are over facts - whether or not the bill had enough votes, or three readings, or whatever - not over the meaning of the constitution. Legislators, as eyewitnesses, are in a better position than a court to rule on the facts. The argument is also made that legislatures would be offended if courts examined legislative procedure. 53 Such a rationale, however, cannot conceivably apply to substantive changes in a bill introduced towards the end of its tortuous trip through Congress, catching both legislators and the public unawares and altering the same beyond recognition even by its sponsors. This issue I wish to address forthwith. EXTENT OF THE POWER OF THE BICAMERAL CONFERENCE COMMITTEE One of the issues raised in these petitions, especially in G.R. Nos. 115781, 115543 and 115754, respectively, is whether or not -Congress violated Section 26, par. 2, Article VI (of the 1987 Constitution) when it approved the Bicameral Conference Committee Report which embodied, in violation of Rule XII of the Rules of the Senate, a radically altered tax measure containing provisions not reported out or discussed in either House as well as provisions on which there was no disagreement between the House and the Senate and, worse, provisions contrary to what the House and the Senate had approved after three separate readings. 54 and By adding or deleting provisions, when there was no conflicting provisions between the House and Senate versions, the BICAM acted in excess of its jurisdiction or with such grave abuse of discretion as to amount to loss of jurisdiction. ... In adding to the bill and thus subjecting to VAT, real properties, media and cooperatives despite the contrary decision of both Houses, the BICAM exceeded its jurisdiction or acted with such abuse of discretion as to amount to loss of jurisdiction. . . . 55 I wish to consider this issue in light of Article VIII, Sec. 1 of the Constitution which provides that "(j)udicial power includes the duty of the courts of justice ... to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government." We are also guided by the principle that a court may interfere with the internal procedures of its coordinate branch only to uphold the Constitution. 56 A conference committee has been defined: ... unlike the joint committee is two committees, one appointed by each house. It is normally appointed for a specific bill and its function is to gain accord between the two houses either by the recession of one house from its bill or its amendments or by the further amendment of the existing legislation or by the substitution of an entirely new bill. Obviously the conference committee is

always a special committee and normally includes the member who introduced the bill and the chairman of the committee which considered it together with such other representatives of the house as seem expedient. (Horack, Cases and Materials on Legislation [1940] 220. See also Zinn, Conference Procedure in Congress, 38 ABAJ 864 [1952]; Steiner, The Congressional Conference Committee [U of III. Press, 1951]). 57 From the foregoing definition, it is clear that a bicameral conference committee is a creature, not of the Constitution, but of the legislative body under its power to determine rules of its proceedings under Article VI, Sec. 16 (3) of the Constitution. Thus, it draws its life and vitality from the rules governing its creation. The why, when, how and wherefore of its operations, in other words, the parameters within which it is to function, are to be found in Section 26, Rule XII of the Rules of the Senate and Section 85 of the Rules of the House of Representatives, respectively, which provide: Rule XII, Rules of the Senate SEC. 26. In the event that the Senate does not agree with the House of Representatives on the provision of any bill or joint resolution, the differences shall be settled by a conference committee of both Houses which shall meet within ten days after their composition. The President shall designate the members of the conference committee in accordance with subparagraph (c), Section 8 of Rule III. Each Conference Committee Report shall contain a detailed and sufficiently explicit statement of the changes in or amendments to the subject measure, and shall be signed by the conferees. The consideration of such report shall not be in order unless the report has been filed with the Secretary of the Senate and copies thereof have been distributed to the Members." Rules of the House of Representatives SEC. 85. Conference Committee Reports. - In the event that the House does not agree with the Senate on the amendments to any bill or joint resolution, the differences may be settled by conference committee of both Chambers. The consideration of conference committee reports shall always be in order, except when the journal is being read, while the roll is being called or the House is dividing on any question. Each of the pages of such reports shall contain a detailed, sufficiently explicit statement of the changes in or amendments to the subject measure. The consideration of such report shall not be in order unless copies thereof are distributed to the Members: Provided, That in the last fifteen days of each session period it shall be deemed sufficient that three copies of the report, signed as above provided, are deposited in the office of the Secretary General. Under these Rules, a bicameral conference committee comes into being only when there are disagreements and differences between the Senate and the House with regard to certain provisions of a particular legislative act which have to be reconciled. Jefferson's Manual, which, according to Section 112, Rule XLIX of the Senate Rules, supplements it, states that a conference committee is usually called "on the occasion of amendments between the Houses" and "in all cases of difference of opinion between the two House on matters pending between them." 58 It further states: The managers of a conference must confine themselves to the differences committed to them, and may not include subjects not within the disagreements, even though germane to a question in issue. But they may perfect amendments committed to them if they do not in so doing go beyond the differences. ... Managers may not change the text to which both Houses have agreed. 59 (Italics supplied.) Mason's Manual of Legislative Procedures which is also considered as controlling authority for any situation not covered by a specific legislative rule, 60 states that either House may "request a conference with the other on any matter of difference or dispute between them" and that in such a request, "the subject of the conference should always be stated." 61 In the Philippines, as in the United States, the Conference Committee exercises such a wide range of authority that they virtually constitute a third House in the Legislature. As admitted by the Solicitor General, "It was the practice in past Congresses for Conference Committees to insert in bills approved by the two Houses new provisions that were not originally contemplated by them." 62 In Legislative Procedure, Robert Luce gives a graphic description of the milieu and the circumstances which have conspired to transform an initially innocuous mechanism designed to facilitate action into an all-powerful Frankenstein that brooks no challenge to its authority even from its own members.

Their power lies chiefly in the fact that reports of conference committees must be accepted without amendment or else rejected in toto. The impulse is to get done with the matters and so the motion to accept has undue advantage, for some members are sure to prefer swallowing unpalatable provisions rather than prolong controversy. This is the more likely if the report comes in the rush of business toward the end of a session, when to seek further conference might result in the loss of the measure altogether. At any time in the session there is some risk of such a result following the rejection of a conference report, for it may not be possible to secure a second conference, or delay may give opposition to the main proposal chance to develop more strength. xxx xxx xxx Entangled in a network of rule and custom, the Representative who resents and would resist this theft of his rights, finds himself helpless. Rarely can he vote, rarely can he voice his mind, in the matter of any fraction of the bill. Usually he cannot even record himself as protesting against some one feature while accepting the measure as whole. Worst of all, he cannot by argument or suggested change, try to improve what the other branch has done. This means more than the subversion of individual rights. It means to a degree the abandonment of whatever advantage the bicameral system may have. By so much it in effect transfers the lawmaking power to a small group of members who work out in private a decision that almost always prevails. What is worse, these men are not chosen in a way to ensure the wisest choice. It has become the practice to name as conferees the ranking members of the committee, so that the accident of seniority determines. Exceptions are made, but in general it is not a question of who are most competent to serve. Chance governs, sometimes giving way to favor, rarely to merit. xxx xxx xxx Speaking broadly, the system of legislating by conference committee is unscientific and therefore defective. Usually it forfeits the benefit of scrutiny and judgment by all the wisdom available. Uncontrolled, it is inferior to that process by which every amendment is secured independent discussion and vote. ... 63 (Italics supplied) Not surprisingly has it been said: "Conference Committee action is the most undemocratic procedure in the legislative process; it is an appropriate target for legislative critics." 64 In the case at bench, petitioners insist that the Conference Committee to which Senate Bill No. 1630 and House Bill No. 11197 were referred for the purpose of harmonizing their differences, overreached themselves in not confining their "reconciliation" function to those areas of disagreement in the two bills but actually making "surreptitious insertions" and deletions which amounted to a grave abuse of discretion. At this point, it becomes imperative to focus on the errant provisions which found their way into Republic Act No. 7716. Below is a breakdown to facilitate understanding the grounds for petitioners' objections: INSERTIONS MADE BY BICAMERAL CONFERENCE COMMITTEE (BICAM) TO SENATE BILL (SB) NO. 1630 AND HOUSE BILL (HB) NO. 11197 1. Sec. 99 of the National Internal Revenue Code (NIRC) (1) Under the HB, this section includes any person who, in the course of trade or business, sells, barters or exchanges goods OR PROPERTIES and any person who LEASES PERSONAL PROPERTIES. (2) The SB completely changed the said section and defined a number of words and phrases. Also, Section 99-A was added which included one who sells, exchanges, barters PROPERTIES and one who imports PROPERTIES. (3) The BICAM version makes LESSORS of goods OR PROPERTIES and importers of goods LIABLE to VAT (subject of petition in G.R. No. 115754). 2. Section 100 (VAT on Sale of Goods) The term "goods" or "properties" includes the following, which were not found in either the HB or the SB: - In addition to radio and television time; SATTELITE TRANSMISSION AND CABLE TELEVISION TIME. - The term "Other similar properties" was deleted, which was present in the HB and the SB. - Real properties held primarily for sale to customers or held for lease in the ordinary course or business were included, which was neither in the HB nor the SB (subject of petition in G.R. No. 115754).

3. Section 102 On what are included in the term "sale or exchange of services," as to make them subject to VAT, the BICAM included/inserted the following (not found in either House or Senate Bills): 1. Services of lessors of property, whether personal or real (subject of petition in G.R. No. 115754); 2. Warehousing services; 3. Keepers of resthouses, pension houses, inns, resorts; 4. Common carriers by land, air and sea; 5. Services of franchise grantees of telephone and telegraph; 6. Radio and television broadcasting; 7. All other franchise grantees except those under Section 117 of this Code (subject of petition in G.R. No. 115852); 8. Services of surety, fidelity, indemnity, and bonding companies; 9. Also inserted by the BICAM (on page 8 thereof) is the lease or use of or the right to use of satellite transmission and cable television time. 4. Section 103 (Exempt Transactions) The BICAM deleted subsection (f) in its entirety, despite its inclusion in both the House and Senate Bills. Therefore, under Republic Act No. 7716, the "printing, publication, importation or sale of books and any newspaper, magazine, review, or bulletin which appears at regular intervals with fixed prices for subscription and sale and which is not devoted principally to the publication of advertisements" is subject to VAT (subject of petition in G.R. No. 115931 and G.R. No. 115544). The HB and SB did not touch Subsection (g) but it was amended by the BICAM by changing the word TEN to FIVE. Thus, importation of vessels with tonnage of more than five thousand tons is VAT exempt. Subsection L, which was identical in the HB and the SB that stated that medical, dental, hospital and veterinary services were exempted from the VAT was amended by the BICAM by adding the qualifying phrase: EXCEPT THOSE RENDERED BY PROFESSIONALS, thus subjecting doctors, dentists and veterinarians to the VAT. Subsection U which exempts from VAT "transactions which are exempt under special laws," was amended by the BICAM by adding the phrase: EXCEPT THOSE GRANTED UNDER PD Nos. 66, 529, 972, 1491, AND 1590, AND NON-ELECTRIC COOPERATIVES UNDER RA 6938 (subject of petition in G.R. No. 115873), not found in either the HB or the SB, resulting in the inclusion of all cooperatives to the VAT, except non-electric cooperatives. The sale of real properties was included in the exempt transactions under the House Bill, but the BICAM qualified this with the provision: (S) SALE OF REAL PROPERTIES NOT PRIMARILY HELD FOR SALE TO CUSTOMERS OR HELD FOR LEASE IN THE ORDINARY COURSE OF TRADE OR BUSINESS OR REAL PROPERTY UTILIZED FOR LOW-COST AND SOCIALIZED HOUSING AS DEFINED BY RA NO. 7279 OTHERWISE KNOWN AS THE URBAN DEVELOPMENT AND HOUSING ACT OF 1992 AND OTHER RELATED LAWS. (subject of petition in G.R. No. 115754) The BICAM also exempted the sale of properties, the receipts of which are not less than P480,000.00 or more than P720,000.00. Under the SB, no amount was given, but in the HB it was stated that receipts from the sale of properties not less than P350,000.00 nor more than P600,000.00 were exempt. It did not include, as VAT exempt, the sale or transfer of securities, as defined in the Revised Securities Act (BP 178) which was contained in both Senate and House Bills. 5. Section 104 Not included in the HB or the SB is the phrase "INCLUDING PACKAGING MATERIALS" which was inserted by the BICAM in Section 104 (A) (1) (B), thus excluding from creditable input tax packaging materials and the phrase "ON WHICH A VALUE-ADDED TAX HAS BEEN ACTUALLY PAID" in Section 104 (A) (2). 6. Section 107

Both House and Senate Bills provide for the payment of P500.00 VAT registration fee but this was increased by BICAM to P1,000.00. 7. Section 112 Regarding a person whose sales or receipts are exempt under Section 103 (w), the BICAM inserted the phrase: "THREE PERCENT UPON THE EFFECTIVITY OF THIS ACT AND FOUR PERCENT (4%) TWO YEARS THEREAFTER," although the SB and the HB provide only "three percent of his gross quarterly sales." 8. Section 115 The BICAM adopted the HB version which subjects common carriers by land, air or water for the transport of passengers to 3% of their gross quarterly sales, which is not found in the SB. 9. Section 117 The BICAM amended this section by subjecting franchises on electric, gas and water utilities to a tax of two percent (2%) on gross receipts derived ..., although neither the HB nor the SB has a similar provision. 10. Section 17 (d) (a) The BICAM defers for only 2 years the VAT on services of actors and actresses, although the SB defers it for 3 years. (b) The BICAM uses the word "EXCLUDE" in the section on deferment of VAT collection on certain goods and services. The HB does not contain any counterpart provision and SB only allows deferment for no longer than 3 years. 11. Section 18 on the Tax Administration Development Fund is an entirely new provision not contained in the House/Senate Bills. This fund is supposed to ensure effective implementation of Republic Act No. 7716. 12. Section 19 No period within which to promulgate the implementing rules and regulations is found in the HB or the SB but BICAM provided "within 90 days" which found its way in Republic Act No. 7716. Even a cursory perusal of the above outline will convince one that, indeed, the Bicameral Conference Committee (henceforth to be referred to as BICAM) exceeded the power and authority granted in the Rules of its creation. Both Senate and House Rules limit the task of the Conference Committee in almost identical language to the settlement of differences in the provisions or amendments to any bill or joint resolution. If it means anything at all, it is that there are provisions in subject bill, to start with, which differ and, therefore, need reconciliation. Nowhere in the Rules is it authorized to initiate or propose completely new matter. Although under certain rules on legislative procedure, like those in Jefferson's Manual, a conference committee may introduce germane matters in a particular bill, such matters should be circumscribed by the committee's sole authority and function to reconcile differences. Parenthetically, in the Senate and in the House, a matter is "germane" to a particular bill if there is a common tie between said matter and the provisions which tend to promote the object and purpose of the bill it seeks to amend. If it introduces a new subject matter not within the purview of the bill, then it is not "germane" to the bill. 65 The test is whether or not the change represented an amendment or extension of the basic purpose of the original, or the introduction of an entirely new and different subject matter. 66 In the BICAM, however, the germane subject matter must be within the ambit of the disagreement between the two Houses. If the "germane" subject is not covered by the disagreement but it is reflected in the final version of the bill as reported by the Conference Committee or, if what appears to be a "germane" matter in the sense that it is "relevant or closely allied" 67 with the purpose of the bill, was not the subject of a disagreement between the Senate and the House, it should be deemed an extraneous matter or even a "rider" which should never be considered legally passed for not having undergone the three-day reading requirement. Insertion of new matter on the part of the BICAM is, therefore, an ultra vires act which makes the same void. The determination of what is "germane" and what is not may appear to be a difficult task but the Congress, having been confronted with the problem before, resolved it in accordance with the rules. In that case, the Congress approved a Conference Committee's insertion of new provisions that were not contemplated in any of the provisions in question between the Houses simply because of the provision in Jefferson's Manual that conferees may report matters "which are germane modifications of subjects in disagreement between the Houses and the committee. 68 In other words, the matter was germane to the points of disagreement between the House and the Senate. As regards inserted amendments in the BICAM, therefore, the task of determining what is germane to a bill is simplified, thus: If the amendments are not circumscribed by the subjects of disagreement between the two Houses, then they are not germane to the purpose of the bill.

In the instant case before us, the insertions and deletions made do not merely spell an effort at settling conflicting provisions but have materially altered the bill, thus giving rise to the instant petitions on the part of those who were caught unawares by the legislative legerdemain that took place. Going by the definition of the word "amendment" in Black's Law Dictionary, 5th Ed., 1979, which means "to change or modify for the better; to alter by modification, deletion, or addition," said insertions and deletions constitute amendments. Consequently, these violated Article VI, Section 26 (2) which provides inter alia: "Upon the last reading of a bill, no amendment thereto shall be allowed . . ." This proscription is intended to subject all bills and their amendments to intensive deliberation by the legislators and the ample ventilation of issues to afford the public an opportunity to express their opinions or objections thereon. The same rationale underlies the three-reading requirement to the end that no surprises may be sprung on an unsuspecting citizenry. Provisions of the "now you see it, now you don't" variety, meaning those which were either in the House and/or Senate versions but simply disappeared or were "bracketed out" of existence in the BICAM Report, were eventually incorporated in Republic Act No. 7716. Worse, some goods, properties or services which were not covered by the two versions and, therefore, were never intended to be so covered, suddenly found their way into the same Report. No advance notice of such insertions prepared the rest of the legislators, much less the public who could be adversely affected, so that they could be given the opportunity to express their views thereon. Well has the final BICAM report been described, therefore, as an instance of "taxation without representation." That the conferees or delegates in the BICAM representing the two Chambers could not possibly be charged with bad faith or sinister motives or, at the very least, unseemly behavior, is of no moment. The stark fact is that items not previously subjected to the VAT now fell under its coverage without interested sectors or parties having been afforded the opportunity to be heard thereon. This is not to say that the Conference Committee Report should have undergone the three readings required in Article VI, Section 26 (2), for this clearly refers only to bills which, after having been initially filed in either House, negotiated the labyrinthine passage therein until its approval. The composition of the BICAM including as it usually does, the Chairman of the appropriate Committee, the sponsor of the bill and other interested members ensures an informed discussion, at least with respect to the disagreeing provisions. The same does not obtain as regards completely new matter which suddenly spring on the legislative horizon. It has been pointed out that such extraneous matters notwithstanding, all Congressman and Senators were given the opportunity to approve or turn down the Committee Report in toto, thus "curing" whatever defect or irregularity it bore. Earlier in this opinion, I explained that the source of the acknowledged power of this ad hoc committee stems from the precise fact that, the meetings, being scheduled "take it or leave it" basis. It has not been uncommon for legislators who, for one reason or another have been frustrated in their attempt to pass a pet bill in their own chamber, to work for its passage in the BICAM where it may enjoy a more hospitable reception and faster approval. In the instant case, had there been full, open and unfettered discussion on the bills during the Committee sessions, there would not have been as much vociferous objections on this score. Unfortunately, however, the Committee held two of the five sessions behind closed doors, sans stenographers, record-takers and interested observers. To that extent, the proceedings were shrouded in mystery and the public's right to information on matters of public concern as enshrined in Article III, Section 7 69 and the government's policy of transparency in transactions involving public interest in Article II, Section 28 of the Constitution 70 are undermined. Moreover, that which is void ab initio such as the objectionable provisions in the Conference Committee Report, cannot be "cured" or ratified. For all intents and purposes, these never existed. Quae ab initio non valent, ex post facto convalescere non possunt. Things that are invalid from the beginning are not made valid by a subsequent act. Should this argument be unacceptable, the "enrolled bill" doctrine, in turn, is invoked to support the proposition that the certification by the presiding officers of Congress, together with the signature of the President, bars further judicial inquiry into the validity of the law. I reiterate my submission that the "enrolled bill ruling" may be applicable but only with respect to questions pertaining to the procedural enactment, engrossment, printing, the insertion or deletion of a word or phrase here and there, but would draw a dividing line with respect to substantial substantive changes, such as those introduced by the BICAM herein. We have before us then the spectacle of a body created by the two Houses of Congress for the very limited purpose of settling disagreements in provisions between bills emanating therefrom, exercising the plenary legislative powers of the parent chambers but holding itself exempt from the mandatory constitutional requirements that are the hallmarks of legislation under the aegis of a democratic political system. From the initial filing, through the three readings which entail detailed debates and discussions in Committee and plenary sessions, and on to the transmittal to the other House in a repetition of the entire process to ensure exhaustive deliberations - all these have been skipped over. In the proverbial twinkling of an eye, provisions that probably may not have seen the light of day had they but run their full course through the legislative mill, sprang into existence and emerged full-blown laws. Yet our Constitution vests the legislative power in "the Congress of the Philippines which shall consist of a Senate and a House of Representatives ..." 71 and not in any special, standing or super committee of its own creation, no matter that these have been described, accurately enough, as "the eye, the ear, the hand, and very often the brain of the house." Firstly, that usage or custom has sanctioned this abbreviated, if questionable, procedure does not warrant its being legitimized and perpetuated any longer. Consuetudo, contra rationem introducta, potius usurpatio quam consuetudo appellari debet. A custom against reason is rather an usurpation. In the hierarchy of sources of legislative procedure, constitutional rules, statutory provisions and adopted rules (as for example, the Senate and House Rules), rank highest, certainly much ahead of customs and usages.

Secondly, is this Court to assume the role of passive spectator or indulgent third party, timorous about exercising its power or more importantly, performing its duty, of making a judicial determination on the issue of whether there has been grave abuse of discretion by the other branches or instrumentalities of government, where the same is properly invoked? The time is past when the Court was not loathe to raise the bogeyman of the political question to avert a head-on collision with either the Executive or Legislative Departments. Even the separation of powers doctrine was burnished to a bright sheen as often as it was invoked to keep the judiciary within bounds. No longer does this condition obtain. Article VIII, Section 2 of the Constitution partly quoted in this paragraph has broadened the scope of judicial inquiry. This Court can now safely fulfill its mandate of delimiting the powers of co-equal departments like the Congress, its officers or its committees which may have no compunctions about exercising legislative powers in full. Thirdly, dare we close our eyes to the presumptuous assumption by a runaway committee of its progenitor's legislative powers in derogation of the rights of the people, in the process, subverting the democratic principles we all are sworn to uphold, when a proper case is made out for our intervention? The answers to the above queries are selfevident. I call to mind this exhortation: "We are sworn to see that violations of the constitution - by any person, corporation, state agency or branch of government - are brought to light and corrected. To countenance an artificial rule of law that silences our voices when confronted with violations of our Constitution is not acceptable to this Court." 72 I am not unaware that a rather recent decision of ours brushed aside an argument that a provision in subject law regarding the withdrawal of the franking privilege from the petitioners and this Court itself, not having been included in the original version of Senate Bill No. 720 or of House Bill No. 4200 but only in the Conference Committee Report, was violative of Article VI, Section 26 (2) of the Constitution. Likewise, that said Section 35, never having been a subject of disagreement between both Houses, could not have been validly added as an amendment before the Conference Committee. The majority opinion in said case explained: While it is true that a conference committee is the mechanism for compromising differences between the Senate and the House, it is not limited in its jurisdiction to this question. Its broader function is described thus: 'A conference committee may deal generally with the subject matter or it may be limited to resolving the precise differences between the two houses. Even where the conference committee is not by rule limited in its jurisdiction, legislative custom severely limits the freedom with which new subject matter can be inserted into the conference bill. But occasionally a conference committee produces unexpected results, results beyond its mandate. These excursions occur even where the rules impose strict limitations on conference committee jurisdiction. This is symptomatic of the authoritarian power of conference committee (Davies, Legislative Law and Process: In a Nutshell, 1986 Ed., p. 81).' 73 (Italics supplied) At the risk of being repetitious, I wish to point out that the general rule, as quoted above, is: "Even where the conference committee is not by rule limited in its jurisdiction, legislative custom severely limits the freedom with which new subject matter can be inserted into the conference bill." What follows, that is, "occasionally a conference committee produces unexpected results, results beyond its mandate. . ." is the exception. Then it concludes with a declaration that: "This is symptomatic of the authoritarian power of conference committee." Are we about to reinstall another institution that smacks of authoritarianism which, after our past experience, has become anathema to the Filipino people? The ruling above can hardly be cited in support of the proposition that a provision in a BICAM report which was not the subject of differences between the House and Senate versions of a bill cannot be nullified. It submit that such is not authorized in our Basic Law. Moreover, this decision concerns merely one provision whereas the BICAM Report that culminated in the EVAT law has a wider scope as it, in fact, expanded the base of the original VAT law by imposing the tax on several items which were not so covered prior to the EVAT. One other flaw in most BICAM Reports, not excluding this one under scrutiny, is that, hastily drawn up, it often fails to conform to the Senate and House Rules requiring no less than a "detailed" and "sufficiently explicit statement of the changes in or amendments to the subject measure." The Report of the committee, as may be gleaned from the preceding pages, was no more than the final version of the bill as "passed" by the BICAM. The amendments or subjects of dissension, as well as the reconciliation made by the committee, are not even pointed out, much less explained therein. It may be argued that legislative rules of procedure may properly be suspended, modified, revoked or waived at will by the legislators themselves. 74 This principle, however, does not come into play in interpreting what the record of the proceedings shows was, or was not, done. It is rather designed to test the validity of legislative action where the record shows a final action in violation or disregard of legislative rules. 75 Utilizing the Senate and the House Rules as both guidelines and yardstick, the BICAM here obviously did not adhere to the rule on what the Report should contain. Given all these irregularities that have apparently been engrafted into the BICAM system, and which have been tolerated, if not accorded outright acceptance by everyone involved in or conversant with, the institution, it may be asked: Why not leave well enough alone?

That these practices have remained unchallenged in the past does not justify our closing our eyes and turning a deaf ear to them. Writ large is the spectacle of a mechanism ensconced in the very heart of the people's legislative halls, that now stands indicted with the charge of arrogating legislative powers unto itself through the use of dubious "shortcuts." Here, for the people to judge, is the "mother of all shortcuts." In the petitions at bench, we are confronted with the enactment of a tax law which was designed to broaden the tax base. It is rote learning for any law student that as an attribute of sovereignty, the power to tax is "the strongest of all the powers of government." 76 Admittedly, "for all its plenitude, the power to tax is not unconfined. There are restrictions." 77 Were there none, then the oft-quoted 1803 dictum of Chief Justice Marshall that "the power to tax involves the power to destroy" 78 would be a truism. Happily, we can concur with, and the people can find comfort in, the reassuring words of Mr. Justice Holmes: "The power to tax is not the power to destroy while this Court sits." 79 Manakanaka, mayroong dumudulog dito sa Kataastaasang Hukuman na may kamangha-manghang hinaing. Angkop na halimbawa ay ang mga petisyong iniharap ngayon sa amin. Ang ilan sa kanila ay mga Senador na nais mapawalang bisa ang isang batas ukol sa buwis na ipinasa mismo nila. Diumano ito ay hindi tumalima sa mga itinatadhana ng Saligang Batas. Bukod sa rito, tutol sila sa mga bagong talata na isiningit ng "Bicameral Conference Committee" na nagdagdag ng mga bagong bagay bagay at serbisyo na papatawan ng buwis. Ayon sa kanila, ginampanan ng komiteng iyan ang gawain na nauukol sa buong Kongreso. Kung kaya't ang nararapat na mangyari ay ihatol ng Kataastaasang Hukuman na malabis na pagsasamantala sa sariling pagpapasiya ang ginawa ng Kongreso. Bagama't bantulot kaming makialam sa isang kapantay na sangay ng Pamahalaan, hindi naman nararapat na kami ay tumangging gampanan ang tungkulin na iniatas sa amin ng Saligang Batas. Lalu't-lalo nang ang batas na kinauukulan ay maaaring makapinsala sa nakararami sa sambayanan. Sa ganang akin, itong batas na inihaharap sa amin ngayon, ay totoong labag sa Saligang Batas, samakatuwid ay walang bisa. Nguni't ito ay nauukol lamang sa mga katiwalian na may kinalaman sa paraan ng pagpapasabatas nito. Hindi namin patakaran ang makialam o humadlang sa itinakdang gawain ng Saligang Batas sa Pangulo at sa Kongreso. Ang dalawang sangay na iyan ng Pamahalaan ang higit na maalam ukol sa kung ang anumang panukalang batas ay nararapat, kanais-nais o magagampanan; kung kaya't hindi kami nararapat na maghatol o magpapasiya sa mga bagay na iyan. Ang makapapataw ng angkop na lunas sa larangan na iyan ay ang mismong mga kinatawan ng sambayanan sa Kongreso. Faced with this challenge of protecting the rights of the people by striking down a law that I submit is unconstitutional and in the process, checking the wonted excesses of the Bicameral Conference Committee system, I see in this case a suitable vehicle to discharge the Court's Constitutional mandate and duty of declaring that there has indeed been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of the Legislature. Republic Act No. 7716, being unconstitutional and void, I find no necessity to rule on the substantive issues as dealt with in the majority opinion as they have been rendered moot and academic. These issues pertain to the intrinsic merits of the law. It is axiomatic that the wisdom, desirability and advisability of enacting certain laws lie, not within the province of the Judiciary but that of the political departments, the Executive and the Legislative. The relief sought by petitioners from what they perceive to be the harsh and onerous effect of the EVAT on the people is within their reach. For Congress, of which Senator-petitioners are a part, can furnish the solution by either repealing or amending the subject law. For the foregoing reasons, I VOTE to GRANT the petition.

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

Committee: Senators Ernesto F. Herrera, Leticia R. Shahani, Alberto S. Romulo, John H. Osmea, Ernesto M. Maceda, Blas F. Ople, Francisco S. Tatad, Rodolfo G. Biazon, and Wigberto S. Taada. On the part of the House, the members of the Committee were: Congressmen Exequiel B. Javier, James L. Chiongbian, Renato V. Diaz, Arnulfo P. Fuentebella, Mariano M. Tajon, Gregorio Andolong, Thelma Almario, and Catalino Figueroa. After five (5) meetings, 1 the Bicameral Conference Committee submitted its Report to the Senate and the House stating: CONFERENCE COMMITTEE REPORT The Conference Committee on the disagreeing provisions of House Bill No. 11197, entitled: AN ACT RESTRUCTURING THE VALUE ADDED TAX (VAT) SYSTEM TO WIDEN ITS TAX BASE AND ENHANCE ITS ADMINISTRATION, AMENDING FOR THESE PURPOSES SECTIONS 99, 100, 102, 103, 104, 105, 106, 107, 108 AND 110 OF TITLE IV, 112, 115 AND 116 OF TITLE V, AND 236, 237, AND 238 OF TITLE IX, AND REPEALING SECTIONS 113 AND 114 OF TITLE V, ALL OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED and Senate Bill No. 1630 entitled: AN ACT RESTRUCTURING THE VALUE ADDED TAX (VAT) SYSTEM TO WIDEN ITS TAX BASE AND ENHANCE ITS ADMINISTRATION, AMENDING FOR THESE PURPOSES SECTIONS 99, 100, 102, 103, 104, 106, 107, 108 AND 110 OF TITLE IV, 112, 115, 117 AND 121 OF TITLE V, AND 236, 237, AND 238 OF TITLE IX, AND REPEALING SECTIONS 113, 114, 116, 119 AND 120 OF TITLE V, ALL OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED AND FOR OTHER PURPOSES having met, after full and free conference, has agreed to recommend and do hereby recommend to their respective Houses that House Bill No. 11197, in consolidation with Senate Bill No. 1630, be approved in accordance with the attached copy of the bill as reconciled and approved by the conferees. Approved. The Report was approved by the House on April 27, 1994. The Senate approved it on May 2, 1994. On May 5, 1994, the President signed the bill into law as R.A. No. 7716. There is no question that the Bicameral Conference Committee did more than reconcile differences between House Bill No. 11197 and Senate Bill No. 1630. In several instances, it either added new provisions or deleted provisions already approved in House Bill No. 11197 and Senate Bill No. 1630. These insertions/deletions numbering twenty four (24) are specified in detail by petitioner Tolentino as follows: 2 SOME SALIENT POINTS ON THE (AMENDMENTS TO THE VATE LAW [EO 273]) SHOWING ADDITIONS/INSERTIONS MADE BY BICAMERAL CONFERENCE COMMITTEE TO SB 1630 & HB 11197 I On Sec. 99 of the NIRC H.B. 11197 amends this section by including, as liable to VAT, any person who in the course of trade of business, sells, barters, or exchanges goods or PROPERTIES and any person who LEASES PERSONAL PROPERTIES. Senate Bill 1630 deleted Sec. 99 to give way for a new Section 99 - DEFINITION OF TERMS where eleven (11) terms were defined. A new Section, Section 99-A was incorporated which included as subject to VAT, one who sells, exchanges, barters PROPERTIES and one who imports PROPERTIES. The BCC version (R.A. 7716) makes LESSORS of goods OR PROPERTIES and importers of goods LIABLE to VAT. II On Section 100 (VAT on sale of goods) A. The H.B., S.B., and the BCC (R.A. 7716) all included sale of PROPERTIES as subject to VAT. The term GOODS or PROPERTIES includes the following:
HB (pls. refer

SB (pls. refer To Sec. 1(4)

BCC (RA 7716 (Sec. 2)

to Sec. 2)

. Right or the

1. The same

1. The same

privilege to use patent, copyright, design, or model, plan, secret formula or process, goodwill trademark, tradebrand or other like property or right.

2. Right or the privilege to use in the Philippines of any industrial, commercial, or scientific equipment.

2. The same

2. The same

3. Right or the privilege to use motion picture films, films, tapes and discs.

3. The same

3. The same

4. Radio and Television time

4. The same

4. In addition to radio and television time the following were included: SATELLITE TRANSMISSION and CABLE TELEVISION TIME

5. Other Similar properties

5. The Same

5. 'Other similar properties' was deleted

6. -

6. -

6. Real properties held primarily for sale to customers or held for lease in the ordinary course or business

B. The HB and the BCC Bills has each a provision which includes THE SALE OF GOLD TO BANGKO SENTRAL NG PILIPINAS as falling under the term Export Sales, hence subject to 0% VAT. The Senate Bill does not contain such provision (See Section 102-A thereof). III. On Section 102 This section was amended to include as subject to a 10% VAT the gross receipts derived from THE SALE OR EXCHANGE OF SERVICES, INCLUDING THE USE OR LEASE OF PROPERTIES. The SB, HB, and BCC have the same provisions on this. However, on what are included in the term SALE OR EXCHANGE OF SERVICES, the BCC included/inserted the following (not found in either the House or Senate Bills): 1. Services of lessors of property WHETHER PERSONAL OR REAL; (See BCC Report/Bill p. 7) 2. WAREHOUSING SERVICES (Ibid.,) 3. Keepers of RESTHOUSES, PENSION HOUSES, INNS, RESORTS (Ibid.,) 4. Common carriers by LAND, AIR AND SEA (Ibid.,) 5. SERVICES OF FRANCHISE GRANTEES OF TELEPHONE AND TELEGRAPH; 6. RADIO AND TELEVISION BROADCASTING 7. ALL OTHER FRANCHISE GRANTEES EXCEPT THOSE UNDER SECTION 117 OF THIS CODE 8. SERVICES OF SURETY, FIDELITY, INDEMNITY, AND BONDING COMPANIES. 9. Also inserted by the BCC (on page B thereof) is the LEASE OR USE OF OR THE RIGHT TO USE OF SATTELITE TRANSMISSION AND CABLE TELEVISION TIME IV. On Section 103 (Exempt Transactions) The BCC deleted subsection (f) in its entirety, despite its retention in both the House and Senate Bills, thus under RA 7716, the 'printing, publication, importation or sale of books and any newspaper, magazine, review, or bulletin which appears at regular intervals with fixed prices for subscription and sale and which is not devoted principally to the publication of advertisements' is subject to VAT. Subsection (g) was amended by the BCC (both Senate and House Bills did not) by changing the word TEN to FIVE, thus: "Importation of passenger and/or cargo vessel of more than five thousand ton to ocean going, including engine and spare parts of said vessel to be used by the importer himself as operator thereof." In short, importation of vessels with tonnage of more than 5 thousand is VAT exempt. Subsection L, was amended by the BCC by adding the qualifying phrase: EXCEPT THOSE RENDERED BY PROFESSIONALS.

Subsection U which exempts from VAT "Transactions which are exempt under special laws", was amended by BCC by adding the phrase: EXCEPT THOSE GRANTED UNDER PD NOS. 66, 529, 972, 1491, and 1590, and NON-ELECTRIC COOPERATIVES under RA 6938. This is the reason why cooperatives are now subject to VAT. While the SALE OF REAL PROPERTIES was included in the exempt transactions under the House Bill, the BCC made a qualification by stating: '(S) SALE OF REAL PROPERTIES NOT PRIMARILY HELD FOR SALE TO CUSTOMERS OR HELD FOR LEASE IN THE ORDINARY COURSE OF TRADE OR BUSINESS OR REAL PROPERTY UTILIZED FOR LOW-COST AND SOCIALIZED HOUSING AS DEFINED BY R.A. NO. 7279 OTHERWISE KNOWN AS THE URBAN DEVELOPMENT AND HOUSING ACT OF 1992 AND OTHER RELATED LAWS. Under the Senate Bill, the sale of real property utilized for low-cost and socialized housing as defined by RA 7279, is one of the exempt transactions. Under the House Bill, also exempt from VAT, is the SALE OF PROPERTIES OTHER THAN THE TRANSACTIONS MENTIONED IN THE FOREGOING PARAGRAPHS WITH A GROSS ANNUAL SALES AND/OR RECEIPTS OF WHICH DOES NOT EXCEED THE AMOUNT PRESCRIBED IN THE REGULATIONS TO BE PROMULGATED BY THE SECRETARY OF FINANCE WHICH SHALL NOT BE LESS THAN P350,000.00 OR HIGHER THAN P600,000.00 ... Under the Senate Bill, the amount is P240,000.00. The BCC agreed at the amount of not less than P480,000.00 or more than P720,000.00 SUBJECT TO TAX UNDER SEC. 112 OF THIS CODE. The BCC did not include, as VAT exempt, the sale or transfer of securities as defined in the Revised Securities Act (BP 178) which was contained in both Senate and House Bills. V On Section 104 The phrase INCLUDING PACKAGING MATERIALS was included by the BCC on Section 104 (A) (1) (B), and the phrase ON WHICH A VALUE-ADDED TAX HAS BEEN ACTUALLY on Section 104 (A) (2). These phrases are not contained in either House and Senate Bills. VI On Section 107 Both House and Senate Bills provide for the payment of P500.00 VAT registration fee. The BCC provides for P1,000.00 VAT fee. VII On Section 112 While both the Senate and House Bills provide that a person whose sales or receipts and are exempt under Section 103[w] of the Code, and who are not VAT registered shall pay a tax equivalent to THREE (3) PERCENT of his gross quarterly sales or receipts, the BCC inserted the phrase: THREE PERCENT UPON THE EFFECTIVITY OF THIS ACT AND FOUR PERCENT (4%) TWO YEARS THEREAFTER. VIII On Section 115 Sec. 17 of SB 1630 Sec. 12 of House Bill 11197 amends this Section by clarifying that common carriers by land, air or water FOR THE TRANSPORT OF PASSENGERS are subject to Percentage Tax equivalent to 3% of their quarterly gross sales. The BCC adopted this and the House Bill's provision that the GROSS RECEIPTS OF COMMON CARRIERS DERIVED FROM THEIR INCOMING AND OUTGOING FREIGHT SHALL NOT BE SUBJECTED TO THE LOCAL TAXES IMPOSED UNDER RA 7160. The Senate Bill has no similar provision. IX On Section 117 This Section has not been touched by either Senate and House Bills. But the BCC amended it by subjecting franchises on ELECTRIC, GAS and WATER UTILITIES A TAX OF TWO PERCENT (2%) ON GROSS RECEIPTS DERIVED ... . X On Section 121

The BCC adopted the Senate Bills' amendment to this section by subjecting to 5% premium tax on life insurance business. The House Bill does not contain this provision. XI Others A) The House Bill does not contain any provision on the deferment of VAT collection on Certain Goods and Services as does the Senate Bill (Section 19, SB 1630). But although the Senate Bill authorizes the deferment on certain goods and services for no longer than 3 years, there is no specific provision that authorizes the President to EXCLUDE from VAT any of these. The BCC uses the word EXCLUDE. B) Moreover, the Senate Bill defers the VAT on services of actors and actresses etc. for 3 years but the BCC defers it for only 2 years. C) Section 18 of the BCC Bill (RA 7716) is an entirely new provision not contained in the House/Senate Bills. D) The period within which to promulgate the implementing rules and regulations is within 60 days under SB 1630; No specific period under the House Bill, within 90 days under RA 7716 (BCC). E) The House Bill provides for a general repealing clause i.e., all inconsistent laws etc. are repealed. Section 16 of the Senate Bill expressly repeals Sections 113, 114, 116, 119 and 120 of the code. The same Senate Bill however contains a general repealing clause in Sec. 21 thereof. RA 7716 (BCC's Bill) expressly repeals Sections 113, 114 and 116 of the NIRC; Article 39 (c) (d) and (e) of EO 226 and provides the repeal of Sec. 119 and 120 of the NIRC upon the expiration of two (2) years unless otherwise excluded by the President." The charge that the Bicameral Conference Committee added new provisions in the bills of the two chambers is hardly disputed by respondents. Instead, respondents justify them. According to respondents: (1) the Bicameral Conference Committee has an ex post veto power or a veto after the fact of approval of the bill by both Houses; (2) the bill prepared by the Bicameral Conference Committee, with its additions and deletions, was anyway approved by both Houses; (3) it was the practice in past Congresses for conference committees to insert in bills approved by the two Houses new provisions that were not originally contemplated by them; and (4) the enrolled bill doctrine precludes inquiry into the regularity of the proceedings that led to the enactment of R.A. 7716. With due respect, I reject these contentions which will cave in on closer examination. First. There is absolutely no legal warrant for the bold submission that a Bicameral Conference Committee possesses the power to add/delete provisions in bills already approved on third reading by both Houses or an ex post veto power. To support this postulate that can enfeeble Congress itself, respondents cite no constitutional provision, no law, not even any rule or regulation. 3 Worse, their stance is categorically repudiated by the rules of both the Senate and the House of Representatives which define with precision the parameters of power of a Bicameral Conference Committee. Thus, Section 209, Rule XII of the Rules of the Senate provides; In the event that the Senate does not agree with the House of Representatives on the provision of any bill or joint resolution, the differences shall be settled by a conference committee of both Houses which shall meet within ten days after their composition. Each Conference Committee Report shall contain a detailed and sufficiently explicit statement of the changes in or amendments to the subject measure, and shall be signed by the conferees. (Italics supplied) The counterpart rule of the House of Representatives is cast in near identical language. Section 85 of the Rules of the House of Representatives pertinently provides: In the event that the House does not agree with the Senate on the amendments to any bill or joint resolution, the differences may be settled by a conference committee of both chambers. ... . Each report shall contain a detailed, sufficiently explicit statement of the changes in or amendments to the subject measure. (Italics supplied) The Jefferson's Manual has been adopted 4 as a supplement to our parliamentary rules and practice. Section 456 of Jefferson's Manual similarly confines the powers of a conference committee, viz: 5 The managers of a conference must confine themselves to the differences committed to them ... and may not include subjects not within the disagreements, even though germane to a question in issue.

This rule of antiquity has been honed and honored in practice by the Congress of the United States. Thus, it is chronicled by Floyd Biddick, Parliamentarian Emeritus of the United States Senate, viz: 6 Committees of conference are appointed for the sole purpose of compromising and adjusting the differing and conflicting opinions of the two Houses and the committees of conference alone can grant compromises and modify propositions of either Houses within the limits of the disagreement. Conferees are limited to the consideration of differences between the two Houses. Conferees shall not insert in their report matters not committed to them by either House, nor shall they strike from the bill matters agreed to by both Houses. No matter on which there is nothing in either the Senate or House passed versions of a bill may be included in the conference report and actions to the contrary would subject the report to a point of order. (Italics ours) In fine, there is neither a sound nor a syllable in the Rules of the Senate and the House of Representative to support the thesis of the respondents that a bicameral conference committee is clothed with an ex post veto power. But the thesis that a Bicameral Conference Committee can wield ex post veto power does not only contravene the rules of both the Senate and the House. It wages war against our settled ideals of representative democracy. For the inevitable, catastrophic effect of the thesis is to install a Bicameral Conference Committee as the Third Chamber of our Congress, similarly vested with the power to make laws but with the dissimilarity that its laws are not the subject of a free and full discussion of both Houses of Congress. With such a vagrant power, a Bicameral Conference Committee acting as a Third Chamber will be a constitutional monstrosity. It needs no omniscience to perceive that our Constitution did not provide for a Congress composed of three chambers. On the contrary, section 1, Article VI of the Constitution provides in clear and certain language: "The legislative power shall be vested in the Congress of the Philippines which shall consist of a Senate and a House of Representatives ..." Note that in vesting legislative power exclusively to the Senate and the House, the Constitution used the word "shall." Its command for a Congress of two houses is mandatory. It is not mandatory sometimes. In vesting legislative power to the Senate, the Constitution means the Senate "... composed of twenty-four Senators ... elected at large by the qualified voters of the Philippines ... ." 7 Similarly, when the Constitution vested the legislative power to the House, it means the House "... composed of not more than two hundred and fifty members ... who shall be elected from legislative districts ... and those who ... shall be elected through a party-list system of registered national, regional, and sectoral parties or organizations." 8 The Constitution thus, did not vest on a Bicameral Conference Committee with an ad hoc membership the power to legislate for it exclusively vested legislative power to the Senate and the House as co-equal bodies. To be sure, the Constitution does not mention the Bicameral Conference Committees of Congress. No constitutional status is accorded to them. They are not even statutory creations. They owe their existence from the internal rules of the two Houses of Congress. Yet, respondents peddle the disconcerting idea that they should be recognized as a Third Chamber of Congress and with ex post veto power at that. The thesis that a Bicameral Conference Committee can exercise law making power with ex post veto power is freighted with mischief. Law making is a power that can be used for good or for ill, hence, our Constitution carefully laid out a plan and a procedure for its exercise. Firstly, it vouchsafed that the power to make laws should be exercised by no other body except the Senate and the House. It ought to be indubitable that what is contemplated is the Senate acting as a full Senate and the House acting as a full House. It is only when the Senate and the House act as whole bodies that they truly represent the people. And it is only when they represent the people that they can legitimately pass laws. Laws that are not enacted by the people's rightful representatives subvert the people's sovereignty. Bicameral Conference Committees, with their ad hoc character and limited membership, cannot pass laws for they do not represent the people. The Constitution does not allow the tyranny of the majority. Yet, the respondents will impose the worst kind of tyranny - the tyranny of the minority over the majority. Secondly, the Constitution delineated in deft strokes the steps to be followed in making laws. The overriding purpose of these procedural rules is to assure that only bills that successfully survive the searching scrutiny of the proper committees of Congress and the full and unfettered deliberations of both Houses can become laws. For this reason, a bill has to undergo three (3) mandatory separate readings in each House. In the case at bench, the additions and deletions made by the Bicameral Conference Committee did not enjoy the enlightened studies of appropriate committees. It is meet to note that the complexities of modern day legislations have made our committee system a significant part of the legislative process. Thomas Reed called the committee system as "the eye, the ear, the hand, and very often the brain of the house." President Woodrow Wilson of the United States once referred to the government of the United States as "a government by the Chairman of the Standing Committees of Congress... " 9 Neither did these additions and deletions of the Bicameral Conference Committee pass through the coils of collective deliberation of the members of the two Houses acting separately. Due to this shortcircuiting of the constitutional procedure of making laws, confusion shrouds the enactment of R.A. No. 7716. Who inserted the additions and deletions remains a mystery. Why they were inserted is a riddle. To use a Churchillian phrase, lawmaking should not be a riddle wrapped in an enigma. It cannot be, for Article II, section 28 of the Constitution mandates the State to adopt and implement a "policy of full public disclosure of all its transactions involving public interest." The Constitution could not have contemplated a Congress of invisible and unaccountable John and Mary Does. A law whose rationale is a riddle and whose authorship is obscure cannot bind the people. All these notwithstanding, respondents resort to the legal cosmetology that these additions and deletions should govern the people as laws because the Bicameral Conference Committee Report was anyway submitted to and approved by the Senate and the House of Representatives. The submission may have some merit with respect to provisions agreed upon by the Committee in the process of reconciling conflicts between S.B. No. 1630 and H.B. No.

11197. In these instances, the conflicting provisions had been previously screened by the proper committees, deliberated upon by both Houses and approved by them. It is, however, a different matter with respect to additions and deletions which were entirely new and which were made not to reconcile inconsistencies between S.B. No. 1630 and H.B. No. 11197. The members of the Bicameral Conference Committee did not have any authority to add new provisions or delete provisions already approved by both Houses as it was not necessary to discharge their limited task of reconciling differences in bills. At that late stage of law making, the Conference Committee cannot add/delete provisions which can become laws without undergoing the study and deliberation of both chambers given to bills on 1st, 2nd, and 3rd readings. Even the Senate and the House cannot enact a law which will not undergo these mandatory three (3) readings required by the Constitution. If the Senate and the House cannot enact such a law, neither can the lesser Bicameral Conference Committee. Moreover, the so-called choice given to the members of both Houses to either approve or disapprove the said additions and deletions is more of an optical illusion. These additions and deletions are not submitted separately for approval. They are tucked to the entire bill. The vote is on the bill as a package, i.e., together with the insertions and deletions. And the vote is either "aye" or "nay," without any further debate and deliberation. Quite often, legislators vote "yes" because they approve of the bill as a whole although they may object to its amendments by the Conference Committee. This lack of real choice is well observed by Robert Luce: 10 Their power lies chiefly in the fact that reports of conference committees must be accepted without amendment or else rejected in toto. The impulse is to get done with the matter and so the motion to accept has undue advantage, for some members are sure to prefer swallowing unpalatable provisions rather than prolong controversy. This is the more likely if the report comes in the rush of business toward the end of a session, when to seek further conference might result in the loss of the measure altogether. At any time in the session there is some risk of such a result following the rejection of a conference report, for it may not be possible to secure a second conference, or delay may give opposition to the main proposal chance to develop more strength. In a similar vein, Prof. Jack Davies commented that "conference reports are returned to assembly and Senate on a take-it or leave-it-basis, and the bodies are generally placed in the position that to leave-it is a practical impossibility." 11 Thus, he concludes that "conference committee action is the most undemocratic procedure in the legislative process." 12 The respondents also contend that the additions and deletions made by the Bicameral Conference Committee were in accord with legislative customs and usages. The argument does not persuade for it misappreciates the value of customs and usages in the hierarchy of sources of legislative rules of procedure. To be sure, every legislative assembly has the inherent right to promulgate its own internal rules. In our jurisdiction, Article VI, section 16(3) of the Constitution provides that "Each House may determine the rules of its proceedings ..." But it is hornbook law that the sources of Rules of Procedure are many and hierarchical in character. Mason laid them down as follows: 13 xxx xxx xxx 1. Rules of Procedure are derived from several sources. The principal sources are as follows: a. Constitutional rules. b. Statutory rules or charter provisions. c. Adopted rules. d. Judicial decisions. e. Adopted parliamentary authority. f. Parliamentary law. g. Customs and usages. 2. The rules from the different sources take precedence in the order listed above except that judicial decisions, since they are interpretations of rules from one of the other sources, take the same precedence as the source interpreted. Thus, for example, an interpretation of a constitutional provision takes precedence over a statute. 3. Whenever there is conflict between rules from these sources the rule from the source listed earlier prevails over the rule from the source listed, later. Thus, where the Constitution requires three readings of bills, this provision controls over any provision of statute, adopted rules, adopted manual, or of parliamentary law, and a rule of parliamentary law controls over a local usage but must give way to any rule from a higher source of authority. (Italics ours)

As discussed above, the unauthorized additions and deletions made by the Bicameral Conference Committee violated the procedure fixed by the Constitution in the making of laws. It is reasonless for respondents therefore to justify these insertions as sanctioned by customs and usages. Finally, respondents seek sanctuary in the conclusiveness of an enrolled bill to bar any judicial inquiry on whether Congress observed our constitutional procedure in the passage of R.A. No. 7716. The enrolled bill theory is a historical relic that should not continuously rule us from the fossilized past. It should be immediately emphasized that the enrolled bill theory originated in England where there is no written constitution and where Parliament is supreme. 14 In this jurisdiction, we have a written constitution and the legislature is a body of limited powers. Likewise, it must be pointed out that starting from the decade of the 40's, even American courts have veered away from the rigidity and unrealism of the conclusiveness of an enrolled bill. Prof. Sutherland observed: 15 xxx xxx xxx. Where the failure of constitutional compliance in the enactment of statutes is not discoverable from the face of the act itself but may be demonstrated by recourse to the legislative journals, debates, committee reports or papers of the governor, courts have used several conflicting theories with which to dispose of the issue. They have held: (1) that the enrolled bill is conclusive and like the sheriff's return cannot be attacked; (2) that the enrolled bill is prima facie correct and only in case the legislative journal shows affirmative contradiction of the constitutional requirement will the bill be held invalid, (3) that although the enrolled bill is prima facie correct, evidence from the journals, or other extrinsic sources is admissible to strike the bill down; (4) that the legislative journal is conclusive and the enrolled bill is valid only if it accords with the recital in the journal and the constitutional procedure. Various jurisdictions have adopted these alternative approaches in view of strong dissent and dissatisfaction against the philosophical underpinnings of the conclusiveness of an enrolled bill. Prof. Sutherland further observed: ... Numerous reasons have been given for this rule. Traditionally, an enrolled bill was 'a record' and as such was not subject to attack at common law. Likewise, the rule of conclusiveness was similar to the common law rule of the inviolability of the sheriff's return. Indeed, they had the same origin, that is, the sheriff was an officer of the king and likewise the parliamentary act was a regal act and no official might dispute the king's word. Transposed to our democratic system of government, courts held that as the legislature was an official branch of government the court must indulge every presumption that the legislative act was valid. The doctrine of separation of powers was advanced as a strong reason why the court should treat the acts of a co-ordinate branch of government with the same respect as it treats the action of its own officers; indeed, it was thought that it was entitled to even greater respect, else the court might be in the position of reviewing the work of a supposedly equal branch of government. When these arguments failed, as they frequently did, the doctrine of convenience was advanced, that is, that it was not only an undue burden upon the legislature to preserve its records to meet the attack of persons not affected by the procedure of enactment, but also that it unnecessarily complicated litigation and confused the trial of substantive issues. Although many of these arguments are persuasive and are indeed the basis for the rule in many states today, they are not invulnerable to attack. The rule most relied on - the sheriff's return or sworn official rule - did not in civil litigation deprive the injured party of an action, for always he could sue the sheriff upon his official bond. Likewise, although collateral attack was not permitted, direct attack permitted raising the issue of fraud, and at a later date attack in equity was also available; and that the evidence of the sheriff was not of unusual weight was demonstrated by the fact that in an action against the sheriff no presumption of its authenticity prevailed. The argument that the enrolled bill is a 'record' and therefore unimpeachable is likewise misleading, for the correction of records is a matter of established judicial procedure. Apparently, the justification is either the historical one that the king's word could not be questioned or the separation of powers principle that one branch of the government must treat as valid the acts of another. Persuasive as these arguments are, the tendency today is to avoid reaching results by artificial presumptions and thus it would seem desirable to insist that the enrolled bill stand or fall on the basis of the relevant evidence which may be submitted for or against it. (Italics ours) Thus, as far back as the 1940's, Prof. Sutherland confirmed that "... the tendency seems to be toward the abandonment of the conclusive presumption rule and the adoption of the third rule leaving only a prima facie presumption of validity which may be attacked by any authoritative source of information." 16 I am not unaware that this Court has subscribed to the conclusiveness of an enrolled bill as enunciated in the 1947 lead case of Mabanag v. Lopez Vito, and reiterated in subsequent cases. 17 With due respect, I submit that these rulings are no longer good law. Part of the ratiocination in Mabanag states: xxx xxx xxx

If for no other reason than that it conforms to the expressed policy of our law making body, we choose to follow the rule. Section 313 of the old Code of Civil Procedure, as amended by Act No. 2210, provides: 'Official documents' may be proved as follows: * * * (2) the proceedings of the Philippine Commission, or of any legislative body that may be provided for in the Philippine Islands, or of Congress, by the journals of those bodies or of either house thereof, or by published statutes or resolutions, or by copies certified by the clerk or secretary, or printed by their order; Provided, That in the case of Acts of the Philippine Commission or the Philippine Legislature, when there is an existence of a copy signed by the presiding officers and secretaries of said bodies, it shall be conclusive proof of the provisions of such Acts and of the due enactment thereof. Suffice to state that section 313 of the Old Code of Civil Procedure as amended by Act No. 2210 is no longer in our statute books. It has long been repealed by the Rules of Court. Mabanag also relied on jurisprudence and authorities in the United States which are under severe criticisms by modern scholars. Hence, even in the United States the conclusiveness of an enrolled bill has been junked by most of the States. It is also true that as late as last year, in the case of Philippine Judges Association v. Prado, op. cit., this Court still relied on the conclusiveness of an enrolled bill as it refused to invalidate a provision of law on the ground that it was merely inserted by the bicameral conference committee of both Houses. Prado, however, is distinguishable. In Prado, the alleged insertion of the second paragraph of section 35 of R.A. No. 7354 repealing the franking privilege of the judiciary does not appear to be an uncontested fact. In the case at bench, the numerous additions/deletions made by the Bicameral Conference Committee as detailed by petitioners Tolentino and Salonga are not disputed by the respondents. In Prado, the Court was not also confronted with the argument that it can no longer rely on the conclusiveness of an enrolled bill in light of the new provision in the Constitution defining judicial power. More specifically, section 1 of Article VIII now provides: Section 1.The judicial power shall be vested in one Supreme Court and in such lower courts as may be established by law. Judicial power includes the duty of the courts of justice to settle actual controversies involving rights which are legally demandable and enforceable, and to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government. (Italics supplied) Former Chief Justice Roberto R. Concepcion, the sponsor of this provision in the Constitutional Commission explained the sense and the reach of judicial power as follows: 18 xxx xxx xxx ... In other words, the judiciary is the final arbiter on the question of whether or not a branch of government or any of its officials has acted without jurisdiction or in excess of jurisdiction, or so capriciously as to constitute an abuse of discretion amounting to excess of jurisdiction. This is not only a judicial power but a duty to pass judgment on matters of this nature. This is the background of paragraph 2 of Section 1, which means that the courts cannot hereafter evade the duty to settle matters of this nature, by claiming that such matters constitute political question. (Italics ours) The Constitution cannot be any clearer. What it granted to this Court is not a mere power which it can decline to exercise. Precisely to deter this disinclination, the Constitution imposed it as a duty of this Court to strike down any act of a branch or instrumentality of government or any of its officials done with grave abuse of discretion amounting to lack or excess of jurisdiction. Rightly or wrongly, the Constitution has elongated the checking powers of this Court against the other branches of government despite their more democratic character, the President and the legislators being elected by the people. It is, however, theorized that this provision is nothing new. 19 I beg to disagree for the view misses the significant changes made in our constitutional canvass to cure the legal deficiencies we discovered during martial law. One of the areas radically changed by the framers of the 1987 Constitution is the imbalance of power between and among the three great branches of our government - the Executive, the Legislative and the Judiciary. To upgrade the powers of the Judiciary, the Constitutional Commission strengthened some more the independence of courts. Thus, it further protected the security of tenure of the members of the Judiciary by providing "No law shall be passed reorganizing the Judiciary when it undermines the security of tenure of its Members." 20 It also guaranteed fiscal autonomy to the Judiciary. 21 More, it depoliticalized appointments in the judiciary by creating the Judicial and Bar Council which was tasked with screening the list of prospective appointees to the judiciary. 22 The power of confirming appointments to the judiciary was also taken away from Congress. 23 The President was likewise given a specific time to fill up vacancies in the judiciary - ninety (90) days from the occurrence of the vacancy in case of the Supreme Court 24 and ninety (90) days from the submission of the list of recommendees by the Judicial and Bar Council in case of vacancies in the lower courts. 25 To further insulate appointments in the judiciary from the virus of politics, the Supreme Court was given the power to "appoint all officials and employees of the Judiciary in accordance with the Civil Service Law." 26 And to make the separation of the judiciary from the other branches of government more watertight, it prohibited members of the judiciary to be " ... designated to any agency performing quasi judicial or administrative functions." 27 While the Constitution strengthened the sinews of the Supreme Court, it reduced the powers of the two other branches of government, especially the Executive. Notable of the powers of the President clipped by the Constitution is his power to suspend the writ of habeas corpus and to proclaim martial law. The exercise of this power is now subject to

revocation by Congress. Likewise, the sufficiency of the factual basis for the exercise of said power may be reviewed by this Court in an appropriate proceeding filed by any citizen. 28 The provision defining judicial power as including the "duty of the courts of justice ... to determine whether or not there has been a grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the Government" constitutes the capstone of the efforts of the Constitutional Commission to upgrade the powers of this Court vis-a-vis the other branches of government. This provision was dictated by our experience under martial law which taught us that a stronger and more independent judiciary is needed to abort abuses in government. As sharply stressed by petitioner Salonga, this provision is distinctly Filipino and its interpretation should not be depreciated by undue reliance on inapplicable foreign jurisprudence. It is thus crystal clear that unlike other Supreme Courts, this Court has been mandated by our new Constitution to be a more active agent in annulling acts of grave abuse of discretion committed by a branch of government or any of its officials. This new role, however, will not compel the Court, appropriately defined by Prof. A. Bickel as the least dangerous branch of government, to assume imperial powers and run roughshod over the principle of separation of power for that is judicial tyranny by any language. But while respecting the essential of the principle of separation of power, the Court is not to be restricted by its non-essentials. Applied to the case at bench, by voiding R.A. No. 7716 on the ground that its enactment violated the procedure imposed by the Constitution in lawmaking, the Court is not by any means wrecking the wall separating the powers between the legislature and the judiciary. For in so doing, the Court is not engaging in lawmaking which is the essence of legislative power. But the Court's interposition of power should not be defeated by the conclusiveness of the enrolled bill. A resort to this fiction will result in the enactment of laws not properly deliberated upon and passed by Congress. Certainly, the enrolled bill theory was not conceived to cover up violations of the constitutional procedure in law making, a procedure intended to assure the passage of good laws. The conclusiveness of the enrolled bill can, therefore, be disregarded for it is not necessary to preserve the principle of separation of powers. In sum, I submit that in imposing to this Court the duty to annul acts of government committed with grave abuse of discretion, the new Constitution transformed this Court from passivity to activism. This transformation, dictated by our distinct experience as a nation, is not merely evolutionary but revolutionary. Under the 1935 and 1973 Constitutions, this Court approached constitutional violations by initially determining what it cannot do; under the 1987 Constitution, there is a shift in stress - this Court is mandated to approach constitutional violations not by finding out what it should not do but what it must do. The Court must discharge this solemn duty by not resuscitating a past that petrifies the present. I vote to declare R.A. No. 7716 unconstitutional.

BELLOSILLO, J.: With a consensus already reached after due deliberations, silence perhaps should be the better part of discretion, except to vote. The different views and opinions expressed are so persuasive and convincing; they are more than enough to sway the pendulum for or against the subject petitions. The penetrating and scholarly dissertations of my brethren should dispense with further arguments which may only confound and confuse even the most learned of men. But there is a crucial point, a constitutional issue which, I submit, has been belittled, treated lightly, if not almost considered insignificant and purposeless. It is elementary, as much as it is fundamental. I am referring to the word "exclusively" appearing in Sec. 24, Art. VI, of our 1987 Constitution. This is regrettable, to say the least, as it involves a constitutional mandate which, wittingly or unwittingly, has been cast aside as trivial and meaningless. A comparison of the particular provision on the enactment of revenue bills in the U.S. Constitution with its counterpart in the Philippine Constitution will help explain my position. Under the U.S. Constitution, "[a]ll bills for raising revenue shall originate in the House of Representatives; but the Senate may propose or concur with amendments as on other bills" (Sec. 7, par. [1], Art. I). In contrast, our 1987 Constitution reads: "All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments" (Sec. 24, Art. VI; Italics supplied). As may be gleaned from the pertinent provision of our Constitution, all revenue bills are required to originate "exclusively" in the House of Representatives. On the other hand, the U.S. Constitution does not use the word "exclusively;" it merely says, "[a]ll bills for raising revenue shall originate in the House of Representatives." Since the term "exclusively" has already been adequately defined in the various opinions, as to which there seems to be no dispute, I shall no longer offer my own definition. Verily, the provision in our Constitution requiring that all revenue bills shall originate exclusively from the Lower House is mandatory. The word "exclusively" is an "exclusive word," which is indicative of an intent that the provision is mandatory. 1 Hence, all American authorities expounding on the meaning and application of Sec. 7, par. (1), Art. I, of the U.S. Constitution cannot be used in the interpretation of Sec. 24, Art. VI, of our 1987 Constitution which has a distinct feature of "exclusiveness" all its own. Thus, when our Constitution absolutely requires - as it is mandatory -

that a particular bill should exclusively emanate from the Lower House, there is no alternative to the requirement that the bill to become valid law must originate exclusively from that House. In the interpretation of constitutions, questions frequently arise as to whether particular sections are mandatory or directory. The courts usually hesitate to declare that a constitutional provision is directory merely in view of the tendency of the legislature to disregard provisions which are not said to be mandatory. Accordingly, it is the general rule to regard constitutional provisions as mandatory, and not to leave any discretion to the will of the legislature to obey or disregard them. This presumption as to mandatory quality is usually followed unless it is unmistakably manifest that the provisions are intended to be merely directory. So strong is the inclination in favor of giving obligatory force to the terms of the organic law that it has even been said that neither by the courts nor by any other department of the government may any provision of the Constitution be regarded as merely directory, but that each and everyone of its provisions should be treated as imperative and mandatory, without reference to the rules and distinguishing between the directory and the mandatory statutes. 2 The framers of our 1987 Constitution could not have used the term "exclusively" if they only meant to replicate and adopt in toto the U.S. version. By inserting "exclusively" in Sec. 24, Art. VI, of our Constitution, their message is clear: they wanted it different, strong, stringent. There must be a compelling reason for the inclusion of the word "exclusively," which cannot be an act of retrogression but progression, an improvement on its precursor. Thus, "exclusively" must be given its true meaning, its purpose observed and virtue recognized, for it could not have been conceived to be of minor consequence. That construction is to be sought which gives effect to the whole of the statute - its every word. Ut magis valeat quam pereat. Consequently, any reference to American authorities, decisions and opinions, however wisely and delicately put, can only mislead in the interpretation of our own Constitution. To refer to them in defending the constitutionality of R.A. 7716, subject of the present petitions, is to argue on a false premise, i.e., that Sec. 24, Art. VI, of our 1987 Constitution is, or means exactly, the same as Sec. 7, par. (1), Art. I, of the U.S. Constitution, which is not correct. Hence, only a wrong conclusion can be drawn from a wrong premise. For example, it is argued that in the United States, from where our own legislature is patterned, the Senate can practically substitute its own tax measure for that of the Lower House. Thus, according to the Majority, citing an American case, "the validity of Sec. 37 which the Senate had inserted in the Tariff Act of 1909 by imposing an ad valorem tax based on the weight of vessels, was upheld against the claim that the revenue bill originated in the Senate in contravention of Art. I, Sec. 7, of the U.S. Constitution." 3 In an effort to be more convincing, the Majority even quotes the footnote in Introduction to American Government by F.A. Ogg and P.O. Ray which reads Thus in 1883 the upper house struck out everything after the enacting clause of a tariff bill and wrote its own measure, which the House eventually felt obliged to accept. It likewise added 847 amendments to the Payne-Aldrich tariff act of 1909, dictated the schedules of the emergency tariff act of 1921, rewrote an extensive tax revision bill in the same year, and recast most of the permanent tariff bill of 1922 4 which in fact suggests, very clearly, that the subject revenue bill actually originated from the Lower House and was only amended, perhaps considerably, by the Senate after it was passed by the former and transmitted to the latter. In the cases cited, where the statutes passed by the U.S. Congress were upheld, the revenue bills did not actually originate from the Senate but, in fact, from the Lower House. Thus, the Supreme Court of the United States, speaking through Chief Justice White in Rainey v. United States 5 upheld the revenue bill passed by Congress and adopted the ruling of the lower court that ... the section in question is not void as a bill for raising revenue originating in the Senate and not in the House of Representatives. It appears that the section was proposed by the Senate as an amendment to a bill for raising revenue which originated in the House. That is sufficient. Flint v. Stone Tracy Co., 6 on which the Solicitor General heavily leans in his Consolidated Comment as well as in his Memorandum, does not support the thesis of the Majority since the subject bill therein actually originated from the Lower House and not from the Senate, and the amendment merely covered a certain provision in the House bill. In fine, in the cases cited which were lifted from American authorities, it appears that the revenue bills in question actually originated from the House of Representatives and were amended by the Senate only after they were transmitted to it. Perhaps, if the factual circumstances in those cases were exactly the same as the ones at bench, then the subject revenue or tariff bill may be upheld in this jurisdiction on the principle of substantial compliance, as they were in the United States, except possibly in instances where the House bill undergoes what is now referred to as "amendment by substitution," for that would be in derogation of our Constitution which vests solely in the House of Representatives the power to initiate revenue bills. A Senate amendment by substitution simply means that the bill in question did not in effect originate from the lower chamber but from the upper chamber and not disguises itself as a mere amendment of the House version. It is also theorized that in the U.S., amendment by substitution is recognized. That may be true. But the process may be validly effective only under the U.S. Constitution. The cases before us present a totally different factual backdrop. Several months before the Lower House could even pass HB No. 11197, P.S. Res. No. 734 and SB No. 1129 had already been filed in the Senate. Worse, the Senate subsequently approved SB No. 1630 "in substitution of SB No. 1129, taking into consideration P.S. Res. No. 734 and HB No. 11197," and not HB No. 11197 itself "as amended."

Here, the Senate could not have proposed or concurred with amendments because there was nothing to concur with or amend except its own bill. It must be stressed that the process of concurring or amending presupposes that there exists a bill upon which concurrence may be based or amendments introduced. The Senate should have reported out HB No. 11197, as amended, even if in the amendment it took into consideration SB No. 1630. It should not have submitted to the Bicameral Conference Committee SB No. 1630 which, admittedly, did not originate exclusively from the Lower House. But even assuming that in our jurisdiction a revenue bill of the Lower House may be amended by substitution by the Senate - although I am not prepared to accept it in view of Sec. 24, Art. VI, of our Constitution - still R.A. 7716 could not have been the result of amendment by substitution since the Senate had no House bill to speak of that it could amend when the Senate started deliberating on its own version. Be that as it may, I cannot rest easy on the proposition that a constitutional mandate calling for the exclusive power and prerogative of the House of Representatives may just be discarded and ignored by the Senate. Since the Constitution is for the observance of all - the judiciary as well as the other departments of government - and the judges are sworn to support its provisions, the courts are not at liberty to overlook or disregard its commands. And it is not fair and just to impute to them undue interference if they look into the validity of legislative enactments to determine whether the fundamental law has been faithfully observed in the process. It is their duty to give effect to the existing Constitution and to obey all constitutional provisions irrespective of their opinion as to the wisdom of such provisions. The rule is fixed that the duty in a proper case to declare a law unconstitutional cannot be declined and must be performed in accordance with the deliberate judgment of the tribunal before which the validity of the enactment is directly drawn into question. When it is clear that a statute transgresses the authority vested in the legislature by the Constitution, it is the duty of the courts to declare the act unconstitutional because they cannot shirk from it without violating their oaths of office. This duty of the courts to maintain the Constitution as the fundamental law of the state is imperative and unceasing; and, as Chief Justice Marshal said, whenever a statute is in violation of the fundamental law, the courts must so adjudge and thereby give effect to the Constitution. Any other course would lead to the destruction of the Constitution. Since the question as to the constitutionality of a statute is a judicial matter, the courts will not decline the exercise of jurisdiction upon the suggestion that action might be taken by political agencies in disregard of the judgment of the judicial tribunals. 7 It is my submission that the power and authority to originate revenue bills under our Constitution is vested exclusively in the House of Representatives. Its members being more numerous than those of the Senate, elected more frequently, and more directly represent the people, are therefore considered better aware of the economic life of their individual constituencies. It is just proper that revenue bills originate exclusively from them. In this regard, we do not have to devote much time delving into American decisions and opinions and invoke them in the interpretation of our own Constitution which is different from the American version, particularly on the enactment of revenue bills. We have our own Constitution couched in a language our own legislators thought best. Insofar as revenue bills are concerned, our Constitution is not American; it is distinctively Filipino. And no amplitude of legerdemain can detract from our constitutional requirement that all appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills shall originate exclusively in the House of Representatives, although the Senate may propose or concur with amendments. In this milieu, I am left no option but to vote to grant the petitions and strike down R.A. 7716 as unconstitutional.

Footnotes 1 H. Nos. 253, 771, 2450, 7033, 8086, 9030, 9210, 9297, 10012 and 10100. (Respondents' Consolidated Memorandum, Annexes 3-12) 2 U.S. CONST., Art. I, 7, cl. 1: "All bills for raising revenue shall originate in the House of Representatives, but the Senate may propose or concur with amendments, as on other bills." 3 Art. VII, 21. 4 Art. VI, 1. 5 U.S. CONST., Art. II, 2, cl. 2. 6 Rainey v. United States, 232 U.S. 309, 58 L. Ed. 117 (1914). 7 F.A. OGG AND P.O. RAY, INTRODUCTION TO AMERICAN GOVERNMENT 309, n. 2 (1945). 8 Although the 1935 Constitution did not expressly require that bills must pass three readings in each House, this was clearly implied from its Art. VI, 21(2) so that the two Houses by their rules prescribed three readings for the passage of bills. Later the requirement was expressly provided in

the 1973 Constitution from which Art. VI, 26(2) was taken. Art. VIII, 19(2) of the 1973 document provided: No bill shall become a law unless it has passed three readings on separate days, and printed copies thereof in its final form have been distributed to the Members three days before its passage, except when the Prime Minister certifies to the necessity of its immediate enactment to meet a public calamity or emergency. Upon the last reading of a bill, no amendment thereto shall be allowed, and the vote thereon shall be taken immediately thereafter, and the yeas and nays entered in the Journal. 9 Respondents' Consolidated Reply, Annex 14. 10 Memorandum of Petitioner Arturo M. Tolentino, Supplement C. 11 Art. VII, 10 provides: "The Congress shall, at ten o'clock in the morning of the third day after the vacancy in the offices of the President and Vice- President occurs, convene in accordance with its rules without need of a call and within seven days enact a law calling for a special election to elect a President and a Vice- President to be held not earlier than forty-five days nor later than sixty days from the time of such call. The bill calling such special election shall be deemed certified under paragraph 2, Section 26, Article VI of this Constitution and shall become law upon its approval on third reading by the Congress. Appropriations for the special election shall be charged against any current appropriations and shall be exempt from the requirements of paragraph 4, Section 25, Article VI of this Constitution. The convening of the Congress cannot be suspended nor the special election postponed. No special election shall be called if the vacancy occurs within eighteen months before the date of the next presidential election." 12 JOURNAL OF THE HOUSE OF REPRESENTATIVES, SIXTH CONGRESS, FOURTH SESSION 398-399 (1968). 13 Zinn, Conference Procedure in Congress, 38 ABAJ 864-865 (1952). 14 CONG. QUARTERLY 65 (1983); M. JEWELL, THE LEGISLATIVE PROCESS IN THE UNITED STATES 169 (1986); LEES AND SHAW, COMMITTEES IN LEGISLATURES 163 (1979). 15 W. KEEFE AND M. OGUL, THE AMERICAN LEGISLATIVE PROCESS 149 (1985). 16 W. OLESZEK, CONGRESSIONAL PROCEDURES AND POLICY PROCESS 214 (1984). 17 Philippine Judges Association v. Prado, G.R. No. 105371, Nov. 11, 1993. 18 The charge is an old one. In the United States, the same charge, including claims that important provisions were being "surreptitiously added" in the committee, was made in the 1940s. But no satisfactory alternative to the conference committee has been devised. And today, given the bicameral nature of the U.S. Congress, the charge is no longer heard. Compare the following from a 1945 comment: "As a devise for oiling the machinery of legislation, committees of conference are, under American conditions, useful, if not indispensable. Nevertheless, they have shortcomings. Without exception, they work behind closed doors, hold no hearings, and give their proceedings no publicity. Doubtless it would be difficult for them to make headway if they did otherwise. Nevertheless, in view of the power which they wield, strong objection can be, and is, raised. For, while the committees are supposed to deal only with actual differences between the houses and to stay well within the bounds set by the extreme positions which the houses have taken, they often work into measures, as reported, provisions of their own devising, even going so far as to rewrite whole sections with the sole purpose of incorporating the views which the majority members happen to hold. . . . In practice, this often results in the adoption of important provisions, more or less surreptitiously added, without consideration by either house in other words, legislation nominally by Congress but actually by conference committee. Any remedy found will probably take the form of reducing the need for using conference committees at all; and the principal suggestion to that end is that bills and resolutions be referred, not, as now, to separate committees of the two houses, but to joint committees, which not only would hold single sets of hearings, but might deliberate and report back bills to the two houses in such agreed form that further significant differences would not be likely to develop. Arrangements of this nature yield excellent results in the legislature of Massachusetts. But there are obstacles to adoption of the plan for Congress, not the least of them being a natural aversion of House members to joint committees in which senators seem likely to dominate; and, as indicated below, the outlook for the reform is problematical." F.A. OGG AND P.O. RAY, supra note 7 at 310-311. 19 Osmea v. Pendatun, 109 Phil. 863, 871 (1960). 20 E.g., Mabanag v. Lopez Vito, 78 Phil. 1 (1947); Casco (Phil.) Inc. v. Gimenez, 7 SCRA 347 (1963); Morales v. Subido, 27 SCRA 131 (1969).

21 Mabanag v. Lopez Vito, supra note 20. 22 Morales v. Subido, supra note 20. 23 Astorga v. Villegas, 56 SCRA 714 (1974). 24 See, e.g., Alalayan v. National Power Corp., 24 SCRA 172 (1968); Cordero v. Cabatuando, 6 SCRA 418 (1962); Sumulong v. COMELEC, 73 Phil. 288 (1941). 25 40 Phil. 224 (1919). 26 Art. VI, 28(4) provides: "No law granting any tax exemption shall be passed without the concurrence of a majority of all the Members of the Congress." 27 Associated Press v. NLRB, 301 U.S. 103, 132, 81 L.Ed. 953, 961 (1937). 28 297 U.S. 233, 80 L.Ed. 660 (1936). 29 297 U.S. at 250, 80 L.Ed. at 669. 30 Minneapolis Star v. Minnesota Commissioner of Revenue, 460 U.S. 575, 75 L.Ed.2d 295 (1983). 31 460 U.S. at 591, 75 L.Ed. 2d at 308-9 (1983). 32 481 U.S. 221, 95 L.Ed. 2d 209 (1987). 33 103(t) of the NIRC exempts from the VAT "Sale or lease of goods or properties or the performance of services other than the transactions mentioned in the preceeding paragraphs, the gross annual sales and/or receipts [of which] do not exceed the amount prescribed in regulations to be promulgated by the President upon the recommendation by the Secretary of Finance which shall not be less than Four hundred eighty thousand pesos (P480,000.00) or more than Seven hundred twenty thousand pesos (P720,000.00) subject to tax under Section 112 of this Code." 34 297 U.S. at 250, 80 L.Ed. at 668. 35 460 U.S. at 581, 75 L.Ed. 2d at 302. 36 493 U.S. 378, 107 L.Ed. 2d 796 (1990). 37 107 of the NIRC provides: "Any person subject to a value-added tax under Sections 100 and 102 of this Code shall register with the appropriate Revenue District Officer and pay an annual registration fee in the amount of One thousand pesos (P1,000.00) for every separate or distinct establishment or place of business and every year thereafter on or before the last day of January. Any person just commencing a business subject to the value-added tax must pay the fee before engaging therein. . . ." 38 101 Phil. 386 (1957). 39 319 U.S. 105, 113, 87 L.Ed. 1292 (1943). 40 319 U.S. at 114, 87 L.Ed. 1292 at 1298. For the same reason, in People v. Korins, 385 N.Y.S. 2d 474 (1976) a decision of the city court of Utica, Oneida County held that to apply an ordinance requiring a business license to be obtained before a person could sell newspapers in the streets would be to impose a prior restraint on press freedom because "a newspaper is not in the same category as pineapple or a soap powder or a pair of shoes" whose sale may be conditioned on the possession of a business license. 41 P.A. FREUND, ON UNDERSTANDING THE SUPREME COURT 11 (1950), quoted in Ermita, Malate Hotel and Motel Operators Ass'n v. City Mayor, 21 SCRA 449, 459 (1967). 42 Art. VI, 28(1). Related to this argument is the claim that Republic Act No. 7716 likewise infringes the Due Process and Equal Protection Clauses of the Bill of Rights, Art. III, 1(1). 43 Neri, "In Support of the Expanded Value-Added Tax," (CRC Economic Policy Papers No. 5, 1994) pp. 3-4. 44 Cf. Lutz v. Araneta, 98 Phil. 148, 153 (1955)

45 Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas Inc. v. Tan, 163 SCRA 371. 46 Cf. Philippine American Life Ins. Co. v. Auditor General, 22 SCRA 135 (1968) 47 See E.M. FERNANDO, THE CONSTITUTION OF THE PHILIPPINES 560-561 (2d Ed., 1977). 48 The term is Professor Jaffe's (JUDICIAL CONTROL OF ADMINISTRATIVE ACTION (1965)) adopted by Justice Harlan in his dissent in Flast v. Cohen, 392 U.S. 83, 119-120, 20 L.Ed.2d 947, 973 (1968) to distinguish between the personal and proprietary interest of traditional plaintiffs and the public interest of a citizen suing in a public action. The term was mentioned by some members of this Court in the Lotto case (Kilosbayan, Inc. v. Guingona, G.R. No. 113375, May 5, 1994). 49 Compare Justice Laurel: "Even then, this power of judicial review is limited to actual cases and controversies to be exercised after full opportunity of argument by the parties, and limited further to the constitutional question raised or the very lis mota presented. Any attempt at abstraction could only lead to dialectics and barren legal questions and to sterile conclusions unrelated to actualities." Angara v. Electoral Commission, 63 Phil. 139, 158 (1936). 50 1 Cranch 137, 2 L.Ed. 60 (1803) (emphasis added). 51 Supra note 49 (emphasis added). 52 People v. Vera, 65 Phil. 56, 94 (1937); Taada v. Cuenco, 103 Phil. 1051, 1061-2 (1957); Macias v. COMELEC, 3 SCRA 1, 7-8 (1961). NARVASA, C.J., concurring: 1 Resolution "Urging the Senate Committee on Ways and Means to Study the Proposal to Exempt Local Movie Producers from the Payment of the Value-Added Tax as an Incentive to the Production of Quality and Wholesome Filipino Movies Whenever they Feature an All-Filipino Cast of Actors and Actresses" 2 Italics supplied 3 Giving "conclusive" character to copies of Acts of the Philippine Commission which have been signed by its presiding officers and secretaries PADILLA, J.: Separate Opinion: 1 G.R. No. 81311, 30 June 1988, 163 SCRA 371. 2 Bautista v. Salonga, G.R. No. 86439, 13 April 1989, 172 SCRA 160. 3 Kapatiran, supra at 385 4 Sec. 1, Art. VIII. 5 G.R. No. 103371, 11 November 1993. 6 7 SCRA 347. 7 Mabanag v. Lopez Vito, 78 Phil. 1. 8 34 Phil. 729. 9 Executive Order No. 273, in Sec. 103(f), had exempted this kind of income from the VAT. Rep. Act. No. 7716 removed the exemption. 10 United States v. Bustos, 37 Phil. 731. 11 297 U.S. 233. 12 372 U.S. 58. 13 American Bible Society v. City of Manila, 101 Phil. 386. REGALADO, J.: Dissenting:

1 In substitution of H.B. Nos. 253, 771, 2450, 7033, 8086, 9030, 9210, 9297, 10012 and 10100 which were filed over the period from July 22, 1992 to August 3, 1993. 2 P.S. Res. No. 734 had earlier been filed in the Senate on September 10, 1992, while S.B. No. 1129 was filed on March 1, 1993. 3 220 U.S. 107, 55 L.Ed. 389 (1911). 4 Consolidated Comment 36-37. 5 Consolidated Memorandum for Respondents, 56-57. 6 Orquiola, H.M., Annotated Rules of the Senate and Procedure, Precedents and Practices of the Senate of the Republic of the Philippines since 1946, 1991 Ed., 108. 7 Black's Law Dictionary, 4th Ed. (1951), 381, citing Fairview vs. Durham, 45 Iowa 56. 8 34 Phil. 729 (1916). 9 78 Phil. 1 (1947). 10 L-17931, February 28, 1963, 7 SCRA 347. 11 L-29658, February 27, 1969, 27 SCRA 131. 12 G.R. No. 105371, November 11, 1993, 227 SCRA 703. 13 103 Phil. 1051 (1957). 14 L-46640, October 12, 1976, 73 SCRA 333. 15 G.R. No. 86344, December 21, 1989, 180 SCRA 496. 16 Consolidated Memorandum for Respondents, 79-82. 17 Brailsford vs. Walker, 31 S.E. 2d 385, 387, 388, 205 S.C. 228. 18 110 So. 343, 346. 19 602 South Western Reporter, 2d Series, 402-425, jointly deciding Carrollton Wholesale Tobaccos, Inc. et al. vs. Department of Revenue, et al., and Bluegrass Provisions Co., Inc., et al. vs. Department of Revenue, et al. DAVIDE JR., J.: Dissenting: 1 1971 ed., 1592. 2 Sixth Edition (1990), 565, citing Standard Oil Co. of Texas vs. State, Tex. Civ. App., 142 S.W. 2d 519, 521, 522, 523. 3 21 SCRA 665, 673 [1967]. 4 Section 52 and 53, Rule XXIII 5 Section 57, Rule XXV. 6 Section 26(2), Article VI, Constitution; paragraph (7), Section 57, Rule XXV. 7 Section 69, Rule XIV. 8 Section 77, Id. 9 Section 82, Rule XIV. 10 Sections 77-81, Id.

11 Section 82, Id., in relation to Section 26(2), Article VI, Constitution. 12 Section 26(2), Article VI, Constitution. 13 Volume I, Eight Edition, Chapter VI, 267. See Miller vs. Mardo, 2 SCRA 539 [1961]; Everlasting Pictures, Inc. vs. Fuentes, 3 SCRA 539 [1961]. 14 Consolidated Memorandum for Respondents, Annexes "2" to "12," inclusive. 15 Consolidated Memorandum for Respondents, 18. 16 Id., Annex "9." 17 Id., Annex "1." 18 Id., 18. 19 Id., Annex "15." Entitled "An Act Restructuring the Value-Added Tax (VAT) System By Expanding Its Tax Base, Amending Sections 103, 113, 114, of the National Internal Revenue Code, as Amended." 20 Id., Annex "17." 21 Id., 20. 22 Emphasis supplied. 23 Consolidated Memorandum for Respondents, 55-56. 24 Consolidated Memorandum for Respondent, Annex "17." Two signed with reservations and four signed subject to amendments. 25 And companion cases, 220 U.S. 107, 55 L.Ed. 389 [1911]. 26 Page 56. 27 232 U.S. 309, 58 L ed. 117 [1914]. 28 Introduction to American Government, 309, n. 2 [1945]. 29 At 317. 30 Consolidated Memorandum for Respondents, 20-21. 31 Id., Annex "14." 32 Id., Annex "1." 33 Consolidated Memorandum for Respondents, Annex "18." 34 Page 22. 35 Consolidated Memorandum for Respondents, Annex "18." 36 Id., Annex "19." 37 ISAGANI A. CRUZ, Philippine Political Law, 1991 ed., 226; Daza vs. Singson, 180 SCRA 496 [1989]; Coseteng vs. Mitra, 187 SCRA 377 [1990]; Gonzales vs. Macaraig, 191 SCRA 452 [1990]; Llamas vs. Orbos, 202 SCRA 844 [1991]; Bengzon vs. Senate Blue Ribbon Committee, 203 SCRA 767 [1991]; Oposa vs. Factoran, 224 SCRA 792 [1993]. 38 56 SCRA 714, 719, 723 [1974]. 39 78 Phil. 1 [1947]. 40 Mutoc vs. COMELEC, 36 SCRA 228 [1970].

ROMERO, J.: Dissenting: 1 Vitug, Jose C., COMPENDIUM OF TAX LAW AND JURISPRUDENCE, Third Revised Edition, 1993 at 201. 2 Ibid. 3 Ibid. 4 L-81311, June 30, 1988, 163 SCRA 371 with Justice Teodoro R. Padilla as ponente. 5 Ibid at 378. 6 Ibid at 385. 7 Senate Resolution No. 734 filed on September 10, 1992 was entitled "Resolution Urging the House Committee on Ways and Means to Study the Proposal to Exempt Local Movie Producers from the Payment of the Value-Added Tax as an Incentive to the Production of Quality and Wholesome Filipino Movies, Whenever They Feature an All-Filipino Cast of Actors and Actresses." 8 SB No. 1129 sought to include under the VAT Law such items as lease of real properties, excluding agricultural lands and residential properties with monthly rentals of less than P10,000.00; hotels; restaurants, eating places, caterers; services by persons in the exercise of their professions; actors, actresses, talents, singers and professional athletes; and lawyers, accountants, doctors and other professionals registered with the Philippine Regulatory Commission. 9 On June 1, 1993, President Fidel V. Ramos certified for immediate enactment House Bill No. 9210 entitled "An Act Amending Title IV and Sections 237 and 238 of the National Internal Revenue Code, as amended, to meet a public emergency." 10 House Bill No. 11197 is entitled "An Act Restructuring the Value-Added Tax (VAT) System to Widen its Tax Base and Enhance Its Administration, Amending for these Purposes Sections 99, 100, 102, 103, 104, 105, 106, 107, 108 and 110 of Title IV, 112, 115 and 116 of Title V, and 236, 237, and 238 of Title IX and Repealing Sections 113 and 114 of Title V, all of the National Internal Revenue Code, as Amended." 11 Senate Bill No. 1630 is entitled "An Act Restructuring The Value-Added Tax (VAT) System to Widen its Tax Base and Enhance its Administration, Amending for these Purposes Sections 99, 100, 102, 103, 104, 105, 107, 108 and 110 of Title IV, 112 of Title V, and 236, 237 and 238 of Title IX, and Repealing Sections 113, 114 and 116 of Title V, all of the National Internal Revenue Code, as Amended, and for other Purposes." 12 Republic Act No. 7716 is entitled "An Act Restructuring The Value-Added Tax (VAT) System, Widening Its Tax Base and Enhancing Its Administration, And For These Purposes Amending And Repealing The Relevant Provisions Of The National Internal Revenue Code, as amended, and for other purposes." 13 Article VI, Section 24: "All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments." 14 Article VI, Section 26, paragraph 2: "No bill passed by either House shall become a law unless it has passed three readings on separate days, and printed copies thereof in its final form have been distributed to its Members three days before its passage, except when the president certifies to the necessity of its immediate enactment to meet a public calamity or emergency. Upon the last reading of a bill, no amendment thereto shall be allowed, and the vote thereon shall be taken immediately thereafter, and the yeas and nays entered in the Journal." 15 Article III, Section 1: "No person shall be deprived of life, liberty, or property without due process of law, nor shall any person be denied the equal protection of the laws." 16 Article III, Section 4: "No law shall be passed abridging the freedom of speech, of expression, or of the press, or the right of the people peaceably to assemble and petition the government for redress of grievances." 17 Article III, Section 5: "No law shall be made respecting an establishment of religion, or prohibiting the free exercise and enjoyment of religious profession and worship, without discrimination or preference, shall forever be allowed. No religious test shall be required for the exercise of civil or political rights."

18 Article III, Section 10: "No law impairing the obligation of contracts shall be passed." 19 Article VI, Section 28, paragraph 1: "The rules of taxation shall be uniform and equitable. The Congress shall evolve a progressive system of taxation." 20 Article VI, Section 28, paragraph 3: "Charitable institutions, churches and parsonages or convents appurtenant thereto, mosques, non-profit cemeteries, and all lands, buildings, and improvements, actually, directly, and exclusively used for religious, charitable, or educational purposes shall be exempt from taxation." 21 Constitution, Article VIII, Section 1. 22 Volume One, CONCOM RECORD, p. 436. 23 Luz Farms v. The Hon. Secretary of the Department of Agrarian Reform, G.R. No. 86889, December 4, 1990, 192 SCRA 51; Dumlao, et al. v. Commission on Elections, G.R. No. 72245, January 22, 1980, 95 SCRA 392; People v. Vera, 65 Phil. 56 (1937). 24 328 P. 2d 644 (1958). 25 Aruego, Jose M., PHILIPPINE POLITICAL LAW, KNOW YOUR CONSTITUTION, University Publishing Co., 1950, pp. 65-66. 26 Sinco, Vicente G., PHILIPPINE POLITICAL LAW, Eleventh Edition, p. 196. 27 Remarks of Commissioner Eulogio Lerum: "At a time when we did not have a lawmaking body after martial law was declared, there were tripartite conferences called by the President for the purpose of acting as a recommendatory body regarding settlement of labor and management disputes. During the said conferences, labor had shown that it can act with maturity. As a result, in 1976, an amendment was introduced in the Constitution providing for sectoral representation. In the Constitution that was approved, the number of sectors was not indicated. However, in the Election Code of 1978, it provided for three sectors; namely, industrial labor, agricultural labor and the youth. The agricultural labor was given four seats; two for Luzon, one for the Visayas and one for Mindanao. The same is true with the industrial labor sector. As far as the youth are concerned, they were also given four seats: two for Luzon, one for Mindanao and one for the Visayas, with the condition that there will be an additional two at large. And so, the youth had six representatives plus four from the agricultural labor sector and four from the industrial labor sector we had 14 seats. In 1981, the Constitution was again amended. In the course of the amendment, the labor representatives in the Batasang Pambansa proposed that sectoral representation be included as a permanent addition to the lawmaking body. Again, in that Constitution which was approved in 1981, the number and the name of the sectors were not indicated. However, in the Election Code that was approved before the 1984 election, there was really a definition of who will constitute the sectors and how they will be appointed. Let me quote from that law that was passed in 1984. Under Section 27 of Batas Pambansa Blg. 881, the scope of the sectors has been defined as follows: The agricultural labor sector covers all persons who personally and physically till the land as their principal occupation. It includes agricultural tenants and lessees, rural workers and farm employees, owner-cultivators, settlers and small fishermen. The industrial labor sector includes all nonagricultural workers and employees. The youth sector embraces persons not more than twenty-five years of age." (Volume Two, CONCOM RECORD, p. 564). 28 City Mayor, et al. v. The Chief, Philippine Constabulary and Col. Nicanor Garcia, L-20346, October 31, 1967, 21 SCRA 673. 29 Transcript of the Stenographic Notes (TSN) on the Hearing Had on Thursday, July 7, 1994, pp. 18-19: JUSTICE FLERIDA RUTH P. ROMERO: Q Mr. Counsel, may I interrupt at this stage? When you say that according to the Constitution such Revenue Bills should originate exclusively from the House. In this instance, did it not originally originate exclusively from the House.?

The word used was not "solely"; if there were Bills later also introduced, let us say in the Senate, but the House Bill came ahead. So, are you using the two (2) words originate "exclusively" and "solely" synonymously? SENATOR TOLENTINO: A The verb "originate" remains the same, Your Honor, but the word "exclusively", as I said, means "solely." . . . 30 H.B. 771 exempting the sale of copra from VAT coverage; H.B. 2450 exempting the lessors or distributors of cinematographic films from paying the VAT; H.B. 7033 amending Sec. 103 of the National Internal Revenue Code, as amended by EO 273; H.B. 8086 exempting packaging materials of export products from the VAT; H.B. 9030 amending Sec. 120 of the NIRC, as renumbered by EO 273; H.B. 9210 amending Title IV and Section 237 and 238 of the NIRC; H.B. 9297 restructuring the VAT system by expanding its tax base, and amending Sections 99, 100 (A), 102 (A), 103, 113, 114, 115 and 116 of the NIRC; H.B. 10012 reducing the rate of VAT imposed on sale and importation of goods, and sale of services; H.B. 10100 amending certain provisions of the NIRC on VAT. 31 Explanatory Note of House Bill No. 9210. 32 Excerpts from the April 19, 1994 meeting of the Bicameral Conference Committee: "CHAIRMAN Javier. First of all, what would be the basis, no, or framework para huwag naman mawala yung personality namin dito sa bicameral, no, because the bill originates from the House because this is a revenue bill, so we would just want to ask, we make the House Bill as the frame of reference, and then everything will just be inserted? "HON. MACEDA. Yes, That's true for every revenue measure. There's no other way. The House Bill has got to be the base. Of course, for the record, we know that this is an administration bill; this is certified by the president and I was about to put into the records as I am saying now that your problem about the impact on prices on the people was already decided when the President and the administration sent this to us and certified it. They have already gotten over that political implication of this bill and the economic impact on prices. "CHAIRMAN HERRERA. Yung concern mo about the bill as the reference in this discussion is something that we can just . . . . "CHAIRMAN JAVIER. We will just . . . all the amendments will be coming from the Senate." 33 Article VI, Section 1. 34 Transcript of the Stenographic Notes (TSN) on the Hearing Had on Thursday, July 7, 1994, pp. 45-46. "Justice Romero: Q: Mr. Counsel, is it not a fact that in the Bicameral Conference Committee, you presented a Motion to return the Bill as it was to the Lower House with also your proposal that this be referred to a Referendum for the entire nation to vote upon, then Senator Wigberto Taada amended your Motion and convinced you to drop that portion about referral to a Referendum and you agreed. So, that Motion of yours to return to the House was the one voted upon by the Bicameral Conference Committee and it lost. What can you say to that? Senator Tolentino: A: No, no, if Your Honor please. My Motion was voted upon by the Senate itself because I presented that said Motion in order to recall the Bill from the Bicameral Conference Committee so that the Senate could go back to the period of amendment and see if we could amend the House Bill itself, but that was defeated. So, it became academic. Thus, what we did we proceeded with the procedure already being followed by the Senate. I thought, as a matter of fact, that was the one way of correcting this procedural error, but I was only one (1), or two (2), or three (3) of us only, then we were defeated in the voting, if Your Honor please. Justice Romero: Q: You mean you were outvoted?

Senator Tolentino: A: Yes, Your Honor; we were actually slaughtered in the voting, so to speak, if Your Honor please." 35 The certification states: "This Act which is a consolidation of House Bill No. 11197 and Senate Bill No. 1630 was finally passed by the House of Representatives and the Senate on April 7, 1994 and May 2, 1994, respectively." 36 BLACK'S LAW DICTIONARY, 5th Ed. (1979). 37 Field v. Clark, 143 U.S. 649, 36 L ed. 294. 38 Mason, Paul, MASON's MANUAL OF LEGISLATIVE PROCEDURE, 1953. 39 Cohn v. Kingsley, 49 P. 985 (1897). 40 Smith v. Thompson, 258 N.W. 190. 41 602 S.W. 2d 420 (1980). 42 34 Phil. 729 (1916). 43 Ibid at 733. 44 Ibid at 733-734. 45 Ibid at 735. 46 78 Phil. 1 (1947). 47 Ibid at 3. 48 Ibid at 18. 49 117 Phil. 363 (1963). 50 136 Phil. 405, 409 (1969). 51 Ibid at 412. 52 G.R. No. 105371, November 11, 1993, 227 SCRA 703. 53 Davies, Jack, LEGISLATIVE LAW AND PROCESS, 2nd ed., 1986. 54 Petition in G.R. No. 115781, p. 18. 55 Petition in G.R. No. 115543, pp. 2-3. 56 Davies, Jack, supra at 90. 57 Sutherland, J.G., STATUTES AND STATUTORY CONSTRUCTION, Vol. I, 4th ed., pp. 293294. 58 Page 261. 59 Page 268. 60 Davies, supra, at 65. 61 Sec. 764, p. 541. 62 Consolidated Memorandum for Respondents, p. 71. 63 Pages 404-405 and 407. 64 Davies, supra, at 81.

65 See: 18 Words and Phrases 482 citing Kennedy v. Truss, Del. Super., 13 A. 2nd 431, 435, 1 Terry 424 (1940). 66 United States Gypsum Co. v. State, Dept. of Revenue, 110 N.W. 2d 698, 71, 363 Mich. 548 (1961). 67 BLACK's DICTIONARY, 6th ed., p. 687 citing State ex. rel. Riley v. District Court of Second Judicial Dist. in and for Silver Bow County, 103 Mont. 576, 64 P. 2d 115, 119 (1937). 68 CONGRESSIONAL RECORD, May 3, 1951, p. 885 cited in Orquiola, Annotated Rules of the Senate, 1991 ed., pp. 40-41. 69 Article III, Section 7. "The right of the people to information on matters of public concern shall be recognized. Access to official records, and to documents, and papers pertaining to official acts, transactions, or decisions, as well as to government research data used as basis for policy development, shall be afforded the citizen, subject to such limitations as may be provided by law." 70 Article II, Section 28. "Subject to reasonable conditions prescribed by law, the State adopts and implements a policy of full public disclosure of all its transactions involving public interest." 71 Article VI, Section 1. 72 D & W Auto Supply v. Department of Revenue, supra. 73 The Philippine Judges Association v. Hon. Pete Prado, G.R. No. 105371, November 11, 1993, 227 SCRA 703, 709. 74 In Osmea, Jr. v. Pendatun (109 Phil. 863 [1960]), the Court held that parliamentary rules are merely procedural and they may be waived or disregarded by the legislative body. Hence, mere failure to conform to parliamentary usage will not invalidate the action taken by a deliberative body when the requisite number of members have agreed to a particular measure. 75 State v. Essling, 128 N.W. 2d 307, 316 (1964). 76 Sarasola v. Trinidad, 40 Phil. 252, 262 (1919). 77 Sison, Jr. v. Ancheta, L-59431, July 25, 1984, 130 SCRA 654, 660. 78 McCullock v. Maryland, 4 Wheaton 316. 79 Quoted in Graves. v. New York, 306 U.S. 466, 490. PUNO, J.: Dissenting: 1 April 13, 19, 20, 21, and 25, 1994. 2 See also Annex "A", Memorandum of Petitioner Kilosbayan in G.R. No. 115781; also the Petition in G.R. No. 115543, pp. 2-3. 3 See p. 66 of the Consolidated Memorandum for Respondents where they refer to certain statements from Canlan, Weightson and Beam but without citing their specific book or article. 4 See Rule 49 of the Rules of the Senate. 5 See p. 22 Memorandum of Petitioners in G.R. No. 115781 citing Jefferson's Manual and Rules of the House of Representatives, by Lewis Deschler, Parliamentarian, U.S. Government Printing Office, 1967, p. 264. 6 Ibid, citing Riddick, Senate Procedure: Precedents and Practices, US Senate, 1981, US Government Printing Office, pp. 383-384. 7 Section 2, Article VI. 8 Section 5(1), Article VI. 9 Sutherland, Statutory Construction, 3rd ed., Vol. I, p. 151.

10 Legislative Procedure, 1922 ed., Riverside Press, p. 404. 11 Legislative Law and Process in a Nut Shell, West Publishing Co., 1986 ed., p. 81. 12 Ibid. 13 Manual of Legislative Procedure for Legislative and other Governmental Bodies, McGraw Hill Co., Inc., 1953 ed., pp. 32-33. 14 82 CJS 136. 15 Statutory Construction, 3rd ed., Vol. I., p. 223. 16 Op. cit., pp. 224-225 citing Barndall Refining v. Welsh, 64 S.D. 647, 269 N.W. 853, 859 [1936]. Jones, Constitutional Provisions Regulating the Mechanics of Enactment in Iowa (1935), 21 Iowa Law Rev. 79, Charlton, Constitutional Regulation of Legislative Procedure (1936), 21 Iowa Law Rev. 538; Note (1936) 21 Iowa Law Rev. 573. 17 See Mabanag v. Lopez Vito, 78 Phil. Rep. 1 [1947]; Casco Phil. Chemical Co. v. Gimenez, L17931, February 28, 1963; Morales v. Subido, No. L-29658, February 27, 1969 27 SCRA 131; Phil. Judges Association v. Prado, G.R. No. 105371, November 11, 1993. 18 Record, Constitutional Commission, Vol. I, p. 436; see also, Bernas, The Constitution of the Republic of the Philippines. A Commentary, 1988 ed., p. 255. 19 Citing Marbury v. Madison, 1 Cranch 137 L. ed [1803]. 20 Article VIII, section 2. 21 Article VIII, section 3. 22 Article VIII, section 8. 23 Article VIII, section 9. 24 Article VIII, section 4(1). 25 Article VIII, section 9. 26 Article VIII, section 6. 27 Article VIII, section 12. 28 Article VII, section 18. BELLOSILLO, J.: Dissenting: 1 See McGee v. Republic, 94 Phil. 821 (1954). 2 See Taada v. Cuenco, 103 Phil. 1051 (1957). 3 See Majority Opinion, p. 15, citing Rainey v. United States, 232 U.S., 309, 58 Law Ed. 617. 4 Id., citing F.A. Ogg and P.O. Ray, Introduction to American Government, 302, n. 2 (1945). 5 See Note 3. 6 22 U.S. 107. 7 11 Am. Jur., pp. 712-13, 713-715.

SECOND DIVISION G.R. No. L-39086 June 15, 1988 ABRA VALLEY COLLEGE, INC., represented by PEDRO V. BORGONIA, petitioner, vs. HON. JUAN P. AQUINO, Judge, Court of First Instance, Abra; ARMIN M. CARIAGA, Provincial Treasurer, Abra; GASPAR V. BOSQUE, Municipal Treasurer, Bangued, Abra; HEIRS OF PATERNO MILLARE, respondents.

PARAS, J.: This is a petition for review on certiorari of the decision * of the defunct Court of First Instance of Abra, Branch I, dated June 14, 1974, rendered in Civil Case No. 656, entitled "Abra Valley Junior College, Inc., represented by Pedro V. Borgonia, plaintiff vs. Armin M. Cariaga as Provincial Treasurer of Abra, Gaspar V. Bosque as Municipal Treasurer of Bangued, Abra and Paterno Millare, defendants," the decretal portion of which reads: IN VIEW OF ALL THE FOREGOING, the Court hereby declares: That the distraint seizure and sale by the Municipal Treasurer of Bangued, Abra, the Provincial Treasurer of said province against the lot and building of the Abra Valley Junior College, Inc., represented by Director Pedro Borgonia located at Bangued, Abra, is valid; That since the school is not exempt from paying taxes, it should therefore pay all back taxes in the amount of P5,140.31 and back taxes and penalties from the promulgation of this decision; That the amount deposited by the plaintaff him the sum of P60,000.00 before the trial, be confiscated to apply for the payment of the back taxes and for the redemption of the property in question, if the amount is less than P6,000.00, the remainder must be returned to the Director of Pedro Borgonia, who represents the plaintiff herein; That the deposit of the Municipal Treasurer in the amount of P6,000.00 also before the trial must be returned to said Municipal Treasurer of Bangued, Abra; And finally the case is hereby ordered dismissed with costs against the plaintiff. SO ORDERED. (Rollo, pp. 22-23) Petitioner, an educational corporation and institution of higher learning duly incorporated with the Securities and Exchange Commission in 1948, filed a complaint (Annex "1" of Answer by the respondents Heirs of Paterno Millare; Rollo, pp. 95-97) on July 10, 1972 in the court a quo to annul and declare void the "Notice of Seizure' and the "Notice of Sale" of its lot and building located at Bangued, Abra, for non-payment of real estate taxes and penalties amounting to P5,140.31. Said "Notice of Seizure" of the college lot and building covered by Original Certificate of Title No. Q-83 duly registered in the name of petitioner, plaintiff below, on July 6, 1972, by respondents Municipal Treasurer and Provincial Treasurer, defendants below, was issued for the satisfaction of the said taxes thereon. The "Notice of Sale" was caused to be served upon the petitioner by the respondent treasurers on July 8, 1972 for the sale at public auction of said college lot and building, which sale was held on the same date. Dr. Paterno Millare, then Municipal Mayor of Bangued, Abra, offered the highest bid of P6,000.00 which was duly accepted. The certificate of sale was correspondingly issued to him. On August 10, 1972, the respondent Paterno Millare (now deceased) filed through counstel a motion to dismiss the complaint. On August 23, 1972, the respondent Provincial Treasurer and Municipal Treasurer, through then Provincial Fiscal Loreto C. Roldan, filed their answer (Annex "2" of Answer by the respondents Heirs of Patemo Millare; Rollo, pp. 98100) to the complaint. This was followed by an amended answer (Annex "3," ibid, Rollo, pp. 101-103) on August 31, 1972. On September 1, 1972 the respondent Paterno Millare filed his answer (Annex "5," ibid; Rollo, pp. 106-108). On October 12, 1972, with the aforesaid sale of the school premises at public auction, the respondent Judge, Hon. Juan P. Aquino of the Court of First Instance of Abra, Branch I, ordered (Annex "6," ibid; Rollo, pp. 109-110) the respondents provincial and municipal treasurers to deliver to the Clerk of Court the proceeds of the auction sale. Hence, on December 14, 1972, petitioner, through Director Borgonia, deposited with the trial court the sum of P6,000.00 evidenced by PNB Check No. 904369. On April 12, 1973, the parties entered into a stipulation of facts adopted and embodied by the trial court in its questioned decision. Said Stipulations reads:

STIPULATION OF FACTS COME NOW the parties, assisted by counsels, and to this Honorable Court respectfully enter into the following agreed stipulation of facts: 1. That the personal circumstances of the parties as stated in paragraph 1 of the complaint is admitted; but the particular person of Mr. Armin M. Cariaga is to be substituted, however, by anyone who is actually holding the position of Provincial Treasurer of the Province of Abra; 2. That the plaintiff Abra Valley Junior College, Inc. is the owner of the lot and buildings thereon located in Bangued, Abra under Original Certificate of Title No. 0-83; 3. That the defendant Gaspar V. Bosque, as Municipal treasurer of Bangued, Abra caused to be served upon the Abra Valley Junior College, Inc. a Notice of Seizure on the property of said school under Original Certificate of Title No. 0-83 for the satisfaction of real property taxes thereon, amounting to P5,140.31; the Notice of Seizure being the one attached to the complaint as Exhibit A; 4. That on June 8, 1972 the above properties of the Abra Valley Junior College, Inc. was sold at public auction for the satisfaction of the unpaid real property taxes thereon and the same was sold to defendant Paterno Millare who offered the highest bid of P6,000.00 and a Certificate of Sale in his favor was issued by the defendant Municipal Treasurer. 5. That all other matters not particularly and specially covered by this stipulation of facts will be the subject of evidence by the parties. WHEREFORE, it is respectfully prayed of the Honorable Court to consider and admit this stipulation of facts on the point agreed upon by the parties. Bangued, Abra, April 12, 1973. Sgd. Agripino Brillantes Typ AGRIPINO BRILLANTES Attorney for Plaintiff Sgd. Loreto Roldan Typ LORETO ROLDAN Provincial Fiscal Counsel for Defendants Provincial Treasurer of Abra and the Municipal Treasurer of Bangued, Abra Sgd. Demetrio V. Pre Typ. DEMETRIO V. PRE Attorney for Defendant Paterno Millare (Rollo, pp. 17-18) Aside from the Stipulation of Facts, the trial court among others, found the following: (a) that the school is recognized by the government and is offering Primary, High School and College Courses, and has a school population of more than one thousand students all in all; (b) that it is located right in the heart of the town of Bangued, a few meters from the plaza and about 120 meters from the Court of First Instance building; (c) that the elementary pupils are housed in a two-storey building across the street; (d) that the high school and college students are housed in the main building; (e) that the Director with his family is in the second floor of the main building; and (f) that the annual gross income of the school reaches more than one hundred thousand pesos. From all the foregoing, the only issue left for the Court to determine and as agreed by the parties, is whether or not the lot and building in question are used exclusively for educational purposes. (Rollo, p. 20) The succeeding Provincial Fiscal, Hon. Jose A. Solomon and his Assistant, Hon. Eustaquio Z. Montero, filed a Memorandum for the Government on March 25, 1974, and a Supplemental Memorandum on May 7, 1974, wherein they opined "that based on the evidence, the laws applicable, court decisions and jurisprudence, the school building and school lot used for educational purposes of the Abra Valley College, Inc., are exempted from the payment of taxes." (Annexes "B," "B-1" of Petition; Rollo, pp. 24-49; 44 and 49). Nonetheless, the trial court disagreed because of the use of the second floor by the Director of petitioner school for residential purposes. He thus ruled for the government and rendered the assailed decision. After having been granted by the trial court ten (10) days from August 6, 1974 within which to perfect its appeal (Per Order dated August 6, 1974; Annex "G" of Petition; Rollo, p. 57) petitioner instead availed of the instant petition for

review on certiorari with prayer for preliminary injunction before this Court, which petition was filed on August 17, 1974 (Rollo, p.2). In the resolution dated August 16, 1974, this Court resolved to give DUE COURSE to the petition (Rollo, p. 58). Respondents were required to answer said petition (Rollo, p. 74). Petitioner raised the following assignments of error: I THE COURT A QUO ERRED IN SUSTAINING AS VALID THE SEIZURE AND SALE OF THE COLLEGE LOT AND BUILDING USED FOR EDUCATIONAL PURPOSES OF THE PETITIONER. II THE COURT A QUO ERRED IN DECLARING THAT THE COLLEGE LOT AND BUILDING OF THE PETITIONER ARE NOT USED EXCLUSIVELY FOR EDUCATIONAL PURPOSES MERELY BECAUSE THE COLLEGE PRESIDENT RESIDES IN ONE ROOM OF THE COLLEGE BUILDING. III THE COURT A QUO ERRED IN DECLARING THAT THE COLLEGE LOT AND BUILDING OF THE PETITIONER ARE NOT EXEMPT FROM PROPERTY TAXES AND IN ORDERING PETITIONER TO PAY P5,140.31 AS REALTY TAXES. IV THE COURT A QUO ERRED IN ORDERING THE CONFISCATION OF THE P6,000.00 DEPOSIT MADE IN THE COURT BY PETITIONER AS PAYMENT OF THE P5,140.31 REALTY TAXES. (See Brief for the Petitioner, pp. 1-2) The main issue in this case is the proper interpretation of the phrase "used exclusively for educational purposes." Petitioner contends that the primary use of the lot and building for educational purposes, and not the incidental use thereof, determines and exemption from property taxes under Section 22 (3), Article VI of the 1935 Constitution. Hence, the seizure and sale of subject college lot and building, which are contrary thereto as well as to the provision of Commonwealth Act No. 470, otherwise known as the Assessment Law, are without legal basis and therefore void. On the other hand, private respondents maintain that the college lot and building in question which were subjected to seizure and sale to answer for the unpaid tax are used: (1) for the educational purposes of the college; (2) as the permanent residence of the President and Director thereof, Mr. Pedro V. Borgonia, and his family including the inlaws and grandchildren; and (3) for commercial purposes because the ground floor of the college building is being used and rented by a commercial establishment, the Northern Marketing Corporation (See photograph attached as Annex "8" (Comment; Rollo, p. 90]). Due to its time frame, the constitutional provision which finds application in the case at bar is Section 22, paragraph 3, Article VI, of the then 1935 Philippine Constitution, which expressly grants exemption from realty taxes for "Cemeteries, churches and parsonages or convents appurtenant thereto, and all lands, buildings, and improvements used exclusively for religious, charitable or educational purposes ... Relative thereto, Section 54, paragraph c, Commonwealth Act No. 470 as amended by Republic Act No. 409, otherwise known as the Assessment Law, provides: The following are exempted from real property tax under the Assessment Law: xxx xxx xxx (c) churches and parsonages or convents appurtenant thereto, and all lands, buildings, and improvements used exclusively for religious, charitable, scientific or educational purposes. xxx xxx xxx In this regard petitioner argues that the primary use of the school lot and building is the basic and controlling guide, norm and standard to determine tax exemption, and not the mere incidental use thereof. As early as 1916 in YMCA of Manila vs. Collector of lnternal Revenue, 33 Phil. 217 [1916], this Court ruled that while it may be true that the YMCA keeps a lodging and a boarding house and maintains a restaurant for its members, still these do not constitute business in the ordinary acceptance of the word, but an institution used exclusively for religious, charitable and educational purposes, and as such, it is entitled to be exempted from taxation.

In the case of Bishop of Nueva Segovia v. Provincial Board of Ilocos Norte, 51 Phil. 352 [1972], this Court included in the exemption a vegetable garden in an adjacent lot and another lot formerly used as a cemetery. It was clarified that the term "used exclusively" considers incidental use also. Thus, the exemption from payment of land tax in favor of the convent includes, not only the land actually occupied by the building but also the adjacent garden devoted to the incidental use of the parish priest. The lot which is not used for commercial purposes but serves solely as a sort of lodging place, also qualifies for exemption because this constitutes incidental use in religious functions. The phrase "exclusively used for educational purposes" was further clarified by this Court in the cases of Herrera vs. Quezon City Board of assessment Appeals, 3 SCRA 186 [1961] and Commissioner of Internal Revenue vs. Bishop of the Missionary District, 14 SCRA 991 [1965], thus Moreover, the exemption in favor of property used exclusively for charitable or educational purposes is 'not limited to property actually indispensable' therefor (Cooley on Taxation, Vol. 2, p. 1430), but extends to facilities which are incidental to and reasonably necessary for the accomplishment of said purposes, such as in the case of hospitals, "a school for training nurses, a nurses' home, property use to provide housing facilities for interns, resident doctors, superintendents, and other members of the hospital staff, and recreational facilities for student nurses, interns, and residents' (84 CJS 6621), such as "Athletic fields" including "a firm used for the inmates of the institution. (Cooley on Taxation, Vol. 2, p. 1430). The test of exemption from taxation is the use of the property for purposes mentioned in the Constitution (Apostolic Prefect v. City Treasurer of Baguio, 71 Phil, 547 [1941]). It must be stressed however, that while this Court allows a more liberal and non-restrictive interpretation of the phrase "exclusively used for educational purposes" as provided for in Article VI, Section 22, paragraph 3 of the 1935 Philippine Constitution, reasonable emphasis has always been made that exemption extends to facilities which are incidental to and reasonably necessary for the accomplishment of the main purposes. Otherwise stated, the use of the school building or lot for commercial purposes is neither contemplated by law, nor by jurisprudence. Thus, while the use of the second floor of the main building in the case at bar for residential purposes of the Director and his family, may find justification under the concept of incidental use, which is complimentary to the main or primary purposeeducational, the lease of the first floor thereof to the Northern Marketing Corporation cannot by any stretch of the imagination be considered incidental to the purpose of education. It will be noted however that the aforementioned lease appears to have been raised for the first time in this Court. That the matter was not taken up in the to court is really apparent in the decision of respondent Judge. No mention thereof was made in the stipulation of facts, not even in the description of the school building by the trial judge, both embodied in the decision nor as one of the issues to resolve in order to determine whether or not said properly may be exempted from payment of real estate taxes (Rollo, pp. 17-23). On the other hand, it is noteworthy that such fact was not disputed even after it was raised in this Court. Indeed, it is axiomatic that facts not raised in the lower court cannot be taken up for the first time on appeal. Nonetheless, as an exception to the rule, this Court has held that although a factual issue is not squarely raised below, still in the interest of substantial justice, this Court is not prevented from considering a pivotal factual matter. "The Supreme Court is clothed with ample authority to review palpable errors not assigned as such if it finds that their consideration is necessary in arriving at a just decision." (Perez vs. Court of Appeals, 127 SCRA 645 [1984]). Under the 1935 Constitution, the trial court correctly arrived at the conclusion that the school building as well as the lot where it is built, should be taxed, not because the second floor of the same is being used by the Director and his family for residential purposes, but because the first floor thereof is being used for commercial purposes. However, since only a portion is used for purposes of commerce, it is only fair that half of the assessed tax be returned to the school involved. PREMISES CONSIDERED, the decision of the Court of First Instance of Abra, Branch I, is hereby AFFIRMED subject to the modification that half of the assessed tax be returned to the petitioner. SO ORDERED. Yap, C.J., Melencio-Herrera, Padilla and Sarmiento, JJ., concur.

Footnotes * Penned by the respondent Judge, Hon. Judge P. Aquino.

EN BANC G.R. No. L-19201 June 16, 1965

REV. FR. CASIMIRO LLADOC, petitioner, vs. The COMMISSIONER OF INTERNAL REVENUE and The COURT of TAX APPEALS, respondents. Hilado and Hilado for petitioner. Office of the Solicitor General for respondents. SYLLABUS 1. TAXATION; CONSTITUTIONAL EXEMPTION FOR RELIGIOUS PURPOSES REFERS ONLY TO PROPERTY TAXES. Section 22 (3), Art. VI of the Constitution of the Philippines, exempts from taxation cemeteries, churches and personages or convents, appurtenants thereto, and all lands, buildings, and improvements used exclusively for religious purposes. The exemption is only from the payment of taxes assessed on such properties enumerated, as property taxes, as contra-distinguished from excise taxes. 2. ID.; ID.; GIFT TAX ON PROPERTY USED FOR RELIGIOUS PURPOSES NOT VIOLATION OF CONSTITUTION. A gift tax is not an assessment on the properties themselves. It did not rest upon general ownership. Rather it is an excise upon the use made of the properties and upon the privilege of receiving them. It is not, therefore a property tax, but an excise tax imposed on the transfer of property by way of gift inter vivos, the imposition of which a property used exclusively for religious purposes, does not constitute an impairment of the Constitution. 3. ID.; ID.; HEAD OF DIOCESE: REAL PARTY IN INTEREST IN GIFT ON CHURCH PROPERTY. The head of the diocese and not the parish priest is the real party in interest in the imposition of a donee's tax on property donated to the church for religious purposes. PAREDES, J.: Sometime in 1957, the M.B. Estate, Inc., of Bacolod City, donated P10,000.00 in cash to Rev. Fr. Crispin Ruiz, then parish priest of Victorias, Negros Occidental, and predecessor of herein petitioner, for the construction of a new Catholic Church in the locality. The total amount was actually spent for the purpose intended. On March 3, 1958, the donor M.B. Estate, Inc., filed the donor's gift tax return. Under date of April 29, 1960, the respondent Commissioner of Internal Revenue issued an assessment for donee's gift tax against the Catholic Parish of Victorias, Negros Occidental, of which petitioner was the priest. The tax amounted to P1,370.00 including surcharges, interests of 1% monthly from May 15, 1958 to June 15, 1960, and the compromise for the late filing of the return. Petitioner lodged a protest to the assessment and requested the withdrawal thereof. The protest and the motion for reconsideration presented to the Commissioner of Internal Revenue were denied. The petitioner appealed to the Court of Tax Appeals on November 2, 1960. In the petition for review, the Rev. Fr. Casimiro Lladoc claimed, among others, that at the time of the donation, he was not the parish priest in Victorias; that there is no legal entity or juridical person known as the "Catholic Parish Priest of Victorias," and, therefore, he should not be liable for the donee's gift tax. It was also asserted that the assessment of the gift tax, even against the Roman Catholic Church, would not be valid, for such would be a clear violation of the provisions of the Constitution. After hearing, the CTA rendered judgment, the pertinent portions of which are quoted below: ... . Parish priests of the Roman Catholic Church under canon laws are similarly situated as its Archbishops and Bishops with respect to the properties of the church within their parish. They are the guardians, superintendents or administrators of these properties, with the right of succession and may sue and be sued. xxx xxx xxx

The petitioner impugns the, fairness of the assessment with the argument that he should not be held liable for gift taxes on donation which he did not receive personally since he was not yet the parish priest of Victorias in the year 1957 when said donation was given. It is intimated that if someone has to pay at all, it should be petitioner's predecessor, the Rev. Fr. Crispin Ruiz, who received the donation in behalf of the Catholic parish of Victorias or the Roman Catholic Church. Following petitioner's line of thinking, we should be equally unfair to hold that the assessment now in question should have been addressed to, and collected from, the Rev. Fr. Crispin Ruiz to be paid from income derived from his present parish where ever it may be. It does not seem right to indirectly burden the present parishioners of Rev. Fr. Ruiz for donee's gift tax on a donation to which they were not benefited. xxx xxx xxx

We saw no legal basis then as we see none now, to include within the Constitutional exemption, taxes which partake of the nature of an excise upon the use made of the properties or upon the exercise of the privilege of receiving the properties. (Phipps vs. Commissioner of Internal Revenue, 91 F [2d] 627; 1938, 302 U.S. 742.) It is a cardinal rule in taxation that exemptions from payment thereof are highly disfavored by law, and the party claiming exemption must justify his claim by a clear, positive, or express grant of such privilege by law. (Collector vs. Manila Jockey Club, G.R. No. L-8755, March 23, 1956; 53 O.G. 3762.) The phrase "exempt from taxation" as employed in Section 22(3), Article VI of the Constitution of the Philippines, should not be interpreted to mean exemption from all kinds of taxes. Statutes exempting charitable and religious property from taxation should be construed fairly though strictly and in such manner as to give effect to the main intent of the lawmakers. (Roman Catholic Church vs. Hastrings 5 Phil. 701.) xxx xxx xxx

WHEREFORE, in view of the foregoing considerations, the decision of the respondent Commissioner of Internal Revenue appealed from, is hereby affirmed except with regard to the imposition of the compromise penalty in the amount of P20.00 (Collector of Internal Revenue v. U.S.T., G.R. No. L-11274, Nov. 28, 1958); ..., and the petitioner, the Rev. Fr. Casimiro Lladoc is hereby ordered to pay to the respondent the amount of P900.00 as donee's gift tax, plus the surcharge of five per centum (5%) as ad valorem penalty under Section 119 (c) of the Tax Code, and one per centum (1%) monthly interest from May 15, 1958 to the date of actual payment. The surcharge of 25% provided in Section 120 for failure to file a return may not be imposed as the failure to file a return was not due to willful neglect.( ... ) No costs. The above judgment is now before us on appeal, petitioner assigning two (2) errors allegedly committed by the Tax Court, all of which converge on the singular issue of whether or not petitioner should be liable for the assessed donee's gift tax on the P10,000.00 donated for the construction of the Victorias Parish Church. Section 22 (3), Art. VI of the Constitution of the Philippines, exempts from taxation cemeteries, churches and parsonages or convents, appurtenant thereto, and all lands, buildings, and improvements used exclusively for religious purposes. The exemption is only from the payment of taxes assessed on such properties enumerated, as property taxes, as contra distinguished from excise taxes. In the present case, what the Collector assessed was a donee's gift tax; the assessment was not on the properties themselves. It did not rest upon general ownership; it was an excise upon the use made of the properties, upon the exercise of the privilege of receiving the properties (Phipps vs. Com. of Int. Rec. 91 F 2d 627). Manifestly, gift tax is not within the exempting provisions of the section just mentioned. A gift tax is not a property tax, but an excise tax imposed on the transfer of property by way of gift inter vivos, the imposition of which on property used exclusively for religious purposes, does not constitute an impairment of the Constitution. As well observed by the learned respondent Court, the phrase "exempt from taxation," as employed in the Constitution (supra) should not be interpreted to mean exemption from all kinds of taxes. And there being no clear, positive or express grant of such privilege by law, in favor of petitioner, the exemption herein must be denied. The next issue which readily presents itself, in view of petitioner's thesis, and Our finding that a tax liability exists, is, who should be called upon to pay the gift tax? Petitioner postulates that he should not be liable, because at the time of the donation he was not the priest of Victorias. We note the merit of the above claim, and in order to put things in their proper light, this Court, in its Resolution of March 15, 1965, ordered the parties to show cause why the Head of the Diocese to which the parish of Victorias pertains, should not be substituted in lieu of petitioner Rev. Fr. Casimiro Lladoc it appearing that the Head of such Diocese is the real party in interest. The Solicitor General, in representation of the Commissioner of Internal Revenue, interposed no objection to such a substitution. Counsel for the petitioner did not also offer objection thereto. On April 30, 1965, in a resolution, We ordered the Head of the Diocese to present whatever legal issues and/or defenses he might wish to raise, to which resolution counsel for petitioner, who also appeared as counsel for the Head of the Diocese, the Roman Catholic Bishop of Bacolod, manifested that it was submitting itself to the jurisdiction and orders of this Court and that it was presenting, by reference, the brief of petitioner Rev. Fr. Casimiro Lladoc as its own and for all purposes. In view here of and considering that as heretofore stated, the assessment at bar had been properly made and the imposition of the tax is not a violation of the constitutional provision exempting churches, parsonages or convents, etc. (Art VI, sec. 22 [3], Constitution), the Head of the Diocese, to which the parish Victorias Pertains, is liable for the payment thereof. The decision appealed from should be, as it is hereby affirmed insofar as tax liability is concerned; it is modified, in the sense that petitioner herein is not personally liable for the said gift tax, and that the Head of the Diocese, herein substitute petitioner, should pay, as he is presently ordered to pay, the said gift tax, without special, pronouncement as to costs. Bengzon, C.J., Bautista Angelo, Concepcion, Reyes, J.B.L., Dizon, Regala, Makalintal, Bengzon, J.P., and Zaldivar, JJ., concur. Barrera, J., took no part.

EN BANC G.R. No. L-15270 September 30, 1961

JOSE V. HERRERA and ESTER OCHANGCO HERRERA, petitioners, vs. THE QUEZON CITY BOARD OF ASSESSMENT APPEALS, respondent. Angel A. Sison for petitioners. Jaime Agloro for respondent. SYLLABUS 1. TAXATION; REAL ESTATE TAXES; CHARITABLE HOSPITALS AND EDUCATIONAL INSTITUTIONS; WHEN BENEVOLENT CHARACTER OF HOSPITAL NOT DETRACTED BY ADMISSION OF PAY PATIENTS. The admission of pay-patients does not detract from the charitable character of a hospital, if all of its funds are devoted "exclusively to the maintenance of the institution as a public charity" (84 C.J.S., 617; see also, 51 Am. Jur., 607; Cooley on Taxation, Vol. 2, p. 1562; 144 A.L.R., 1489-1492). In other words, "where rendering charity is its primary object, and the funds derived from payments made by patients able to pay are devoted to the benevolent purposes of the institution, the mere fact that a profit has been made will not deprive the hospital of its benevolent character" (Prairie Du Chian Sanitarium Co. vs. City of Prairie Du Chian, 242 Wis. 262, 7 NW [2d] 832, 144 A.L.R., 1480). The fact, therefore, that in the case at bar, St. Catherine's Hospital, which is a charitable institution, admits pay-patients, does not bar it from claiming that it is devoted exclusively to benevolent purposes, it being admitted that the income derived from pay-patients is devoted to the improvement of the charity wards, which represent almost two-thirds (2/3) of the bed capacity of the hospital, aside from "out-charity patients" who come only for consultation. 2. ID.; ID.; ID.; EXTENT OF EXEMPTION. The exemption in favor of property used exclusively for charitable or educational purposes is "not limited to property actually indispensable" therefor (Cooley on Taxation, Vol. 2, p. 1430), but extends to facilities which are "incidental to and reasonably necessary for" the accomplishment of said purposes, such as in the case of hospitals, "a school for training nurses, a nurses' home, property used to provide housing facilities for interns, resident doctors, superintendents, and other members of the hospital staff, and recreational facilities for student nurses, interns and residents" (84 C.J.S., 621), such as "athletic fields," including "a farm used for the inmates of the institution" (Cooley on Taxation, Vol. 2, p. 1430). 3. ID.; ID.; ID.; ID.; LANDS BUILDING AND IMPROVEMENTS BEYOND THE TAXING POWER IRRESPECTIVE OF PROFITS. The existence of "St. Catherine's School of Midwifery," with an enrollment of about 200 students, who practice partly in St. Catherine's Hospital and partly in St. Mary's Hospital, which, likewise, belongs to petitioners, does not, and cannot, effect the exemption to which St. Catherine's Hospital is entitled under the Constitution. The fact that the size of the enrollment and the students, aside from the amount they paid for board and lodging, warrant the belief that a substantial profit is derived from the operation of the said school, is immaterial to the issue of whether or not real estate taxes should be paid, because "all lands, buildings and improvements used exclusively for religious, charitable or educational purposes shall be exempt from taxation," pursuant to the Constitution, regardless of whether or not material profit are derived from the operation of the institutions in question. In other words, Congress may, if it deems fit to do so, impose taxes upon such "profits," but said "lands, building and improvements" are beyond its taxing power. 4. ID.; ID.; ID.; ID.; FACTORS THAT DO NOT AFFECT THE CHARITABLE CHARACTER OF A HOSPITAL. The fact that a garage located in the hospital was being used in the operation of the school of midwifery because the students enrolled therein were entitled to transportation, and that the hospital directress, who received no compensation, and her family, resided in the building, were incidental to the operation of the hospital, and, accordingly, did not affect the charitable character of the hospital and the educational nature of the school. CONCEPCION, J.: Appeal, by petitioners Jose V. Herrera and Ester Ochangco Herrera, from a decision of the Court of Tax Appeals affirming that of the Board of Assessment Appeals of Quezon City, which held that certain properties of said petitioners are subject to assessment for purposes of real estate tax. The facts and the issue are set forth in the aforementioned decision of the Court of Tax Appeals, from which we quote: On July 24, 1952, the Director of the Bureau of Hospitals authorized the petitioners to establish and operate the "St. Catherine's Hospital", located at 58 D. Tuazon, Sta. Mesa Heights, Quezon City (Exhibit "F1", p. 7, BIR rec.). On or about January 3, 1953, the petitioners sent a letter to the Quezon City Assessor requesting exemption from payment of real estate tax on the lot, building and other improvements comprising the hospital stating that the same was established for charitable and humanitarian purposes and not for commercial gain (Exhibit "F-2", pp. 8-9, BIR rec.). After an inspection of the premises in question and after a careful study of the case, the exemption from real property taxes was granted effective the years 1953, 1954 and 1955. Subsequently, however, in a letter dated August 10, 1955 (Exhibit "E", p. 65, CTA rec.) the Quezon City Assessor notified the petitioners that the aforesaid properties were re-classified from exempt to "taxable" and thus assessed for real property taxes effective 1956, enclosing therewith copies of Tax Declarations Nos. 19321 to 19322 covering the said properties. The petitioners appealed the assessment to the Quezon City Board of Assessment Appeals, which, in a decision dated March 31, 1956 and received by the former on May 17, 1956, affirmed the decision of the City Assessor. A motion for reconsideration thereof was denied on March 8, 1957. From this decision, the petitioners instituted the instant appeal.
1awphl.nt

The building involved in this case is principally used as a hospital. It is mainly a surgical and orthopedic hospital with emphasis on obstetrical cases, the latter constituting 90% of the total number of cases registered therein. The hospital has thirty-two (32) beds, of which twenty (20) are for charity-patients and twelve (12) for pay-patients. From the evidence presented by petitioners, it is made to appear that there are two kinds of charity patients (a) those who come for consultation only ("out-charity patients"); and (b) those who remain in the hospital for treatment ("lying-in-patients"). The out-charity patients are given free consultation and prescription, although sometimes they are furnished with free medicines which are not costly like aspirin, sulfatiazole, etc. The charity lying-in-patients are given free medical service and medicine although the food served to the pay-patients is very much better than that given to the former. Although no condition is imposed by the hospital on the admission of charity lying-in-patients, they however, usually give donations to the hospital. On the other hand, the pay-patients are required to pay for hospital services ranging from the minimum charge of P5.00 to the maximum of P40.00 for each day of stay in the hospital. The income realized from pay-patients is spent for the improvement of the charity wards. The hospital personnel is composed of three nurses, two graduate midwives, a resident physician receiving a salary of P170.00 a month and the petitioner, Dr. Ester Ochangco Herrera, as directress. As such directress, the latter does not receive any salary. Petitioners also operate within the premises of the hospital the "St. Catherine's School of Midwifery" which was granted government recognition by the Secretary of Education on February 1, 1955 (Exhibit "F3", p. 10, BIR rec.) This school has an enrollment of about two hundred students. The students are charged a matriculation fee of P300.00 for 1- years, plus P50.00 a month for board and lodging, which includes transportation to the St. Mary's Hospital. The students practice in the St. Catherine's Hospital, as well as in the St. Mary's Hospital, which is also owned by the petitioners. A separate set of accounting books is maintained by the school for midwifery distinct from that kept by the hospital. The petitioners alleged that the accounts of the school are not included in Exhibits "A", "A-1", "A-2", "B", "B-1", "B-2", "C", "C-1" and "C-2" which relate to the hospital only. However, the petitioners have refused to submit a separate statement of accounts of the school. A brief tabulation indicating the amount of income of the hospital for the years 1954, 1955 and 1956, and its operational expenses, is as follows:

1954 Income Charity Ward Pay Ward Expenses P 5,280.04 P10,803.26 P16,083.30 (Exhibits "A", "A-1" and "A-2") 1955 Income Charity Ward Pay Ward Expenses P 6,859.32 14,038.92 P20,898.24 (Exhibits "B", "B-1" and "B-2") 1956 Income Charity Ward Pay Ward Expenses P 5,559.89 16,249.04 P21,809.93 (Exhibits "C", "C-1" and "C-2") Aside from the St. Catherine and St. Mary hospitals, the petitioners declared that they also own lands and coconut plantations in Quezon Province, and other real estate in the City of Manila consisting of apartments for rent. The petitioner, Jose V. Herrera, is an architect, actively engaged in the practice of his profession, with office at Tuason Building, Escolta, Manila. He was formerly Chairman, Board of Examiners for Architects and Chairman, Board of Architects connected with the United Nations. He was also connected with the Allied Technologists which constructed the Veterans Hospital in Quezon City. The only issue raised, is whether or not the lot, building and other improvements occupied by the St. Catherine Hospital are exempt from the real property tax. The resolution of this question boils down to the corollary issue as to whether or not the said properties are used exclusively for charitable or educational purposes. (Petitioners' brief, pp. 24-29). Deficit P 341.53 Deficit Deficit P1,303.80

P14,779.50

P17,433.30

P3,464.94

P21,467.40

The Court of Tax Appeals decided the issue in the negative, upon the ground that the St. Catherine's Hospital "has a pay ward for ... pay-patients, who are charged for the use of the private rooms, operating room, laboratory room, delivery room, etc., like other hospitals operated for profit" and that "petitioners and their family occupy a portion of the building for their residence." With respect to petitioners' claim for exemption based upon the operation of the school of midwifery, the Court conceded that "the proposition might be proper if the property used for the school of midwifery were separate and distinct from the hospital." It added, however, that, "in the instant case, the portions of the building used for classrooms of the school of midwifery have not been shown to be exclusively for school purposes"; that said portions "rather ... have a dual use, i.e., for classroom and for hospital use, the latter not being a purpose that renders the property tax exempt;" that part of the building and lot in question "is used as a hospital, part as residence of the petitioners, part as garage, part as dormitory and part as school"; and that "the portion dedicated to educational and charitable purposes can not be identified from those destined to other uses; and the building is itself an indivisible unit of property." It should be noted, however, that, according to the very statement of facts made in the decision appealed from, of the thirty-two (32) beds in the hospital, twenty (20) are for charity-patients; that "the income realized from paypatients is spent for improvement of the charity wards;" and that "petitioners, Dr. Ester Ochangco Herrera, as directress" of said hospital, "does not receive any salary," although its resident physician gets a monthly salary of P170.00. It is well settled, in this connection, that the admission of pay-patients does not detract from the charitable character of a hospital, if all its funds are devoted "exclusively to the maintenance of the institution" as a "public charity" (84 C.J.S., 617; see, also, 51 Am. Jur. 607; Cooley on Taxation, Vol. 2, p. 1562; 144 A.L.R., 1489-1492). "In other words, where rendering charity is its primary object, and the funds derived from payments made by patients able to pay are devoted to the benevolent purposes of the institution, the mere fact that a profit has been made will not deprive the hospital of its benevolent character" (Prairie Du Chien Sanitarium Co. vs. City of Prairie Du Chien, 242 Wis. 262, 7 NW [2d] 832, 144 A.L.R. 1480). Thus, we have held that the U.S.T. Hospital was not established for profit-making purposes, although it had 140 paying beds maintained only to partly finance the expenses of the free wards, containing 203 beds for charity patients (U.S.T. Hospital Employees Association vs. Sto. Tomas University Hospital, L-6988, May 24, 1954), that St. Paul's Hospital of Iloilo, a corporation organized for "charitable educational and religious purposes" can not be considered as engaged in business merely because its pharmacy department charges paying patients the cost of their medicine, plus 10% thereof, to partly offset the cost of medicines supplied free of charge to charity patients (Collector of Internal Revenue vs. St. Paul's Hospital of Iloilo, L-12127, May 25, 1959), and that the amendment of the original articles of incorporation of the University of Visayas to convert it from a non-stock to a stock corporation and the increase of its assets from P9,000 to P50,000, distributed among the members of the original non-stock corporation in terms of shares of stock, as well as the subsequent move of its board of trustees to double the stock dividends of the corporation, in view of a gain of P200,000.00 in property, besides good-will, which was not carried out, does not justify the inference that the corporation has become one for business and profit, none of its profits having inured to the benefit of any stockholder or individual (Collector of Internal Revenue vs. University of Visayas, L-13554, February 28, 1961). Moreover, the exemption in favor of property used exclusively for charitable or educational purposes is "not limited to property actually indispensable" therefor (Cooley on Taxation, Vol. 2, p. 1430), but extends to facilities which are "incidental to and reasonably necessary for" the accomplishment of said purposes, such as, in the case of hospitals, "a school for training nurses, a nurses' home, property use to provide housing facilities for interns, resident doctors, superintendents, and other members of the hospital staff, and recreational facilities for student nurses, interns and residents" (84 C.J.S., 621), such as "athletic fields," including "a farm used for the inmates of the institution" (Cooley on Taxation, Vol. 2, p. 1430). Within the purview of the Constitutional exemption from taxation, the St. Catherine's Hospital is, therefore, a charitable institution, and the fact that it admits pay-patients does not bar it from claiming that it is devoted exclusively to benevolent purposes, it being admitted that the income derived from pay-patients is devoted to the improvement of the charity wards, which represent almost two-thirds (2/3) of the bed capacity of the hospital, aside from "out-charity patients" who come only for consultation. Again, the existence of "St. Catherine's School of Midwifery", with an enrollment of about 200 students, who practice partly in St. Catherine's Hospital and partly in St. Mary's Hospital, which, likewise, belongs to petitioners herein, does not, and cannot, affect the exemption to which St. Catherine's Hospital is entitled under our fundamental law. On the contrary, it furnishes another ground for exemption. Seemingly, the Court of Tax Appeals was impressed by the fact that the size of said enrollment and the matriculation fee charged from the students of midwifery, aside from the amount they paid for board and lodging, including transportation to St. Mary's Hospital, warrants the belief that petitioners derive a substantial profit from the operation of the school aforementioned. Such factor is, however, immaterial to the issue in the case at bar, for "all lands, building and improvements used exclusively for religious, charitable or educational purposes shall be exempt from taxation," pursuant to the Constitution, regardless of whether or not material profits are derived from the operation of the institutions in question. In other words, Congress may, if it deems fit to do so, impose taxes upon such "profits", but said "lands, buildings and improvements" are beyond its taxing power. Similarly, the garage in the building above referred to which was obviously essential to the operation of the school of midwifery, for the students therein enrolled practiced, not only in St. Catherine's Hospital, but, also, in St. Mary's Hospital, and were entitled to transportation thereto for Mrs. Herrera received no compensation as directress of St. Catherine's Hospital were incidental to the operation of the latter and of said school, and, accordingly, did not affect the charitable character of said hospital and the educational nature of said school.

WHEREFORE, the decision of the Court of Tax Appeals, as well as that of the Assessment Board of Appeals of Quezon City, are hereby reversed and set aside, and another one entered declaring that the lot, building and improvements constituting the St. Catherine's Hospital are exempt from taxation under the provisions of the Constitution, without special pronouncement as to costs. It is so ordered. Bengzon, C.J., Padilla, Labrador, Reyes, J.B.L., Paredes and De Leon, JJ., concur.

EN BANC G.R. No. L-9637 April 30, 1957

AMERICAN BIBLE SOCIETY, plaintiff-appellant, vs. CITY OF MANILA, defendant-appellee. City Fiscal Eugenio Angeles and Juan Nabong for appellant. Assistant City Fiscal Arsenio Naawa for appellee. SYLLABUS 1. STATUTES; SIMULTANEOUS REPEAL AND RE-ENACTMENT; EFFECT OF REPEAL UPON RIGHTS AND LIABILITIES WHICH ACCRUED UNDER THE ORIGINAL STATUTE. Where the old statute is repealed in its entirety and by the same enactment re-enacts all or certain portions of the pre-existing law, the majority view holds that the rights and liabilities which have accrued under the original statute are preserved and may be enforced, since the re-enactment neutralizes the repeal, therefore continuing the law in force without interruption. (Crawford, Statutory Construction, Sec. 322). In the case at bar, Ordinances Nos. 2529 and 3000 of the City of Manila were enacted by the Municipal Board of the City of Manila by virtue of the power granted to it by section 2444, Subsection (m-2) of the Revised Administrative Code, superseded on June 13, 1949, by section 13, Subsection (o) of Republic Act No. 409, known as the Revised Charter of the City of Manila. The only essential difference between these two provisions is that while Subsection (m-2) prescribes that the combined total tax of any dealer or manufacturer, or both, enumerated under Subsections (m-1) and (m-2), whether dealing in one or all of the articles mentioned therein, shall not be in excess of P500 per annum, the corresponding Section 18, subsection (o) of Republic Act No. 409, does not contain any limitation as to the amount of tax or license fee that the retail dealer has to pay per annum. Hence, and in accordance with the weight of authorities aforementioned, City ordinances Nos. 2529 and 3000 are still in force and effect. 2. MUNICIPAL TAX; RETAIL DEALERS IN GENERAL MERCHANDISE; ORDINANCE PRESCRIBING TAX NEED NOT BE APPROVED BY THE PRESIDENT TO BE EFFECTIVE. The business of "retail dealers in general merchandise" is expressly enumerated in subsection (o), section 18 of Republic Act No. 409: hence, an ordinance prescribing a municipal tax on said business does not have to be approved by the President to be effective, as it is not among those businesses referred to in subsection (ii) Section 18 of the same Act subject to the approval of the President. 3. CONSTITUTIONAL LAW; RELIGIOUS FREEDOM; DISSEMINATION OF RELIGIOUS INFORMATION, WHEN MAY BE RESTRAINED; PAYMENT OF LICENSE FEE, IMPAIRS FREE EXERCISE OF RELIGION. The constitutional guaranty of the free exercise and enjoyment of religious profession and worship carries with it the right to disseminate religious information. Any restraint of such right can only be justified like other restraints of freedom of expression on the grounds that there is a clear and present danger of any substantive evil which the State has the right to prevent." (Taada and Fernando on the Constitution of the Philippines, Vol. I, 4th ed., p. 297). In the case at bar, plaintiff is engaged in the distribution and sales of bibles and religious articles. The City Treasurer of Manila informed the plaintiff that it was conducting the business of general merchandise without providing itself with the necessary Mayor's permit and municipal license, in violation of Ordinance No. 3000, as amended, and Ordinance No. 2529, as amended, and required plaintiff to secure the corresponding permit and license. Plaintiff protested against this requirement and claimed that it never made any profit from the sale of its bibles. Held: It is true the price asked for the religious articles was in some instances a little bit higher than the actual cost of the same, but this cannot mean that plaintiff was engaged in the business or occupation of selling said "merchandise" for profit. For this reasons, the provisions of City Ordinance No. 2529, as amended, which requires the payment of license fee for conducting the business of general merchandise, cannot be applied to plaintiff society, for in doing so, it would impair its free exercise and enjoyment of its religious profession and worship, as well as its rights of dissemination of religious beliefs. Upon the other hand, City Ordinance No. 3000, as amended, which requires the obtention of the Mayor's permit before any person can engage in any of the businesses, trades or occupations enumerated therein, does not impose any charge upon the enjoyment of a right granted by the Constitution, nor tax the exercise of religious practices. Hence, it cannot be considered unconstitutional, even if applied to plaintiff Society. But as Ordinance No. 2529 is not applicable to plaintiff and the City of Manila is powerless to license or tax the business of plaintiff society involved herein, for the reasons above stated, Ordinance No. 3000 is also inapplicable to said business, trade or occupation of the plaintiff. FELIX, J.: Plaintiff-appellant is a foreign, non-stock, non-profit, religious, missionary corporation duly registered and doing business in the Philippines through its Philippine agency established in Manila in November, 1898, with its principal office at 636 Isaac Peral in said City. The defendant appellee is a municipal corporation with powers that are to be exercised in conformity with the provisions of Republic Act No. 409, known as the Revised Charter of the City of Manila. In the course of its ministry, plaintiff's Philippine agency has been distributing and selling bibles and/or gospel portions thereof (except during the Japanese occupation) throughout the Philippines and translating the same into several Philippine dialects. On May 29 1953, the acting City Treasurer of the City of Manila informed plaintiff that it was conducting the business of general merchandise since November, 1945, without providing itself with the necessary Mayor's permit and municipal license, in violation of Ordinance No. 3000, as amended, and Ordinances

Nos. 2529, 3028 and 3364, and required plaintiff to secure, within three days, the corresponding permit and license fees, together with compromise covering the period from the 4th quarter of 1945 to the 2nd quarter of 1953, in the total sum of P5,821.45 (Annex A). Plaintiff protested against this requirement, but the City Treasurer demanded that plaintiff deposit and pay under protest the sum of P5,891.45, if suit was to be taken in court regarding the same (Annex B). To avoid the closing of its business as well as further fines and penalties in the premises on October 24, 1953, plaintiff paid to the defendant under protest the said permit and license fees in the aforementioned amount, giving at the same time notice to the City Treasurer that suit would be taken in court to question the legality of the ordinances under which, the said fees were being collected (Annex C), which was done on the same date by filing the complaint that gave rise to this action. In its complaint plaintiff prays that judgment be rendered declaring the said Municipal Ordinance No. 3000, as amended, and Ordinances Nos. 2529, 3028 and 3364 illegal and unconstitutional, and that the defendant be ordered to refund to the plaintiff the sum of P5,891.45 paid under protest, together with legal interest thereon, and the costs, plaintiff further praying for such other relief and remedy as the court may deem just equitable. Defendant answered the complaint, maintaining in turn that said ordinances were enacted by the Municipal Board of the City of Manila by virtue of the power granted to it by section 2444, subsection (m-2) of the Revised Administrative Code, superseded on June 18, 1949, by section 18, subsection (1) of Republic Act No. 409, known as the Revised Charter of the City of Manila, and praying that the complaint be dismissed, with costs against plaintiff. This answer was replied by the plaintiff reiterating the unconstitutionality of the often-repeated ordinances. Before trial the parties submitted the following stipulation of facts: COME NOW the parties in the above-entitled case, thru their undersigned attorneys and respectfully submit the following stipulation of facts: 1. That the plaintiff sold for the use of the purchasers at its principal office at 636 Isaac Peral, Manila, Bibles, New Testaments, bible portions and bible concordance in English and other foreign languages imported by it from the United States as well as Bibles, New Testaments and bible portions in the local dialects imported and/or purchased locally; that from the fourth quarter of 1945 to the first quarter of 1953 inclusive the sales made by the plaintiff were as follows: Quarter 4th quarter 1945 1st quarter 1946 2nd quarter 1946 3rd quarter 1946 4th quarter 1946 1st quarter 1947 2nd quarter 1947 3rd quarter 1947 4th quarter 1947 1st quarter 1948 2nd quarter 1948 3rd quarter 1948 4th quarter 1948 1st quarter 1949 2nd quarter 1949 3rd quarter 1949 4th quarter 1949 1st quarter 1950 2nd quarter 1950 3rd quarter 1950 Amount of Sales P1,244.21 2,206.85 1,950.38 2,235.99 3,256.04 13,241.07 15,774.55 14,654.13 12,590.94 11,143.90 14,715.26 38,333.83 16,179.90 23,975.10 17,802.08 16,640.79 15,961.38 18,562.46 21,816.32 25,004.55

4th quarter 1950 1st quarter 1951 2nd quarter 1951 3rd quarter 1951 4th quarter 1951 1st quarter 1952 2nd quarter 1952 3rd quarter 1952 4th quarter 1952 1st quarter 1953

45,287.92 37,841.21 29,103.98 20,181.10 22,968.91 23,002.65 17,626.96 17,921.01 24,180.72 29,516.21

2. That the parties hereby reserve the right to present evidence of other facts not herein stipulated. WHEREFORE, it is respectfully prayed that this case be set for hearing so that the parties may present further evidence on their behalf. (Record on Appeal, pp. 15-16). When the case was set for hearing, plaintiff proved, among other things, that it has been in existence in the Philippines since 1899, and that its parent society is in New York, United States of America; that its, contiguous real properties located at Isaac Peral are exempt from real estate taxes; and that it was never required to pay any municipal license fee or tax before the war, nor does the American Bible Society in the United States pay any license fee or sales tax for the sale of bible therein. Plaintiff further tried to establish that it never made any profit from the sale of its bibles, which are disposed of for as low as one third of the cost, and that in order to maintain its operating cost it obtains substantial remittances from its New York office and voluntary contributions and gifts from certain churches, both in the United States and in the Philippines, which are interested in its missionary work. Regarding plaintiff's contention of lack of profit in the sale of bibles, defendant retorts that the admissions of plaintiff-appellant's lone witness who testified on cross-examination that bibles bearing the price of 70 cents each from plaintiffappellant's New York office are sold here by plaintiff-appellant at P1.30 each; those bearing the price of $4.50 each are sold here at P10 each; those bearing the price of $7 each are sold here at P15 each; and those bearing the price of $11 each are sold here at P22 each, clearly show that plaintiff's contention that it never makes any profit from the sale of its bible, is evidently untenable. After hearing the Court rendered judgment, the last part of which is as follows: As may be seen from the repealed section (m-2) of the Revised Administrative Code and the repealing portions (o) of section 18 of Republic Act No. 409, although they seemingly differ in the way the legislative intent is expressed, yet their meaning is practically the same for the purpose of taxing the merchandise mentioned in said legal provisions, and that the taxes to be levied by said ordinances is in the nature of percentage graduated taxes (Sec. 3 of Ordinance No. 3000, as amended, and Sec. 1, Group 2, of Ordinance No. 2529, as amended by Ordinance No. 3364). IN VIEW OF THE FOREGOING CONSIDERATIONS, this Court is of the opinion and so holds that this case should be dismissed, as it is hereby dismissed, for lack of merits, with costs against the plaintiff. Not satisfied with this verdict plaintiff took up the matter to the Court of Appeals which certified the case to Us for the reason that the errors assigned to the lower Court involved only questions of law. Appellant contends that the lower Court erred: 1. In holding that Ordinances Nos. 2529 and 3000, as respectively amended, are not unconstitutional; 2. In holding that subsection m-2 of Section 2444 of the Revised Administrative Code under which Ordinances Nos. 2592 and 3000 were promulgated, was not repealed by Section 18 of Republic Act No. 409; 3. In not holding that an ordinance providing for taxes based on gross sales or receipts, in order to be valid under the new Charter of the City of Manila, must first be approved by the President of the Philippines; and 4. In holding that, as the sales made by the plaintiff-appellant have assumed commercial proportions, it cannot escape from the operation of said municipal ordinances under the cloak of religious privilege.

The issues. As may be seen from the proceeding statement of the case, the issues involved in the present controversy may be reduced to the following: (1) whether or not the ordinances of the City of Manila, Nos. 3000, as amended, and 2529, 3028 and 3364, are constitutional and valid; and (2) whether the provisions of said ordinances are applicable or not to the case at bar. Section 1, subsection (7) of Article III of the Constitution of the Republic of the Philippines, provides that: (7) No law shall be made respecting an establishment of religion, or prohibiting the free exercise thereof, and the free exercise and enjoyment of religious profession and worship, without discrimination or preference, shall forever be allowed. No religion test shall be required for the exercise of civil or political rights. Predicated on this constitutional mandate, plaintiff-appellant contends that Ordinances Nos. 2529 and 3000, as respectively amended, are unconstitutional and illegal in so far as its society is concerned, because they provide for religious censorship and restrain the free exercise and enjoyment of its religious profession, to wit: the distribution and sale of bibles and other religious literature to the people of the Philippines. Before entering into a discussion of the constitutional aspect of the case, We shall first consider the provisions of the questioned ordinances in relation to their application to the sale of bibles, etc. by appellant. The records, show that by letter of May 29, 1953 (Annex A), the City Treasurer required plaintiff to secure a Mayor's permit in connection with the society's alleged business of distributing and selling bibles, etc. and to pay permit dues in the sum of P35 for the period covered in this litigation, plus the sum of P35 for compromise on account of plaintiff's failure to secure the permit required by Ordinance No. 3000 of the City of Manila, as amended. This Ordinance is of general application and not particularly directed against institutions like the plaintiff, and it does not contain any provisions whatever prescribing religious censorship nor restraining the free exercise and enjoyment of any religious profession. Section 1 of Ordinance No. 3000 reads as follows: SEC. 1. PERMITS NECESSARY. It shall be unlawful for any person or entity to conduct or engage in any of the businesses, trades, or occupations enumerated in Section 3 of this Ordinance or other businesses, trades, or occupations for which a permit is required for the proper supervision and enforcement of existing laws and ordinances governing the sanitation, security, and welfare of the public and the health of the employees engaged in the business specified in said section 3 hereof, WITHOUT FIRST HAVING OBTAINED A PERMIT THEREFOR FROM THE MAYOR AND THE NECESSARY LICENSE FROM THE CITY TREASURER. The business, trade or occupation of the plaintiff involved in this case is not particularly mentioned in Section 3 of the Ordinance, and the record does not show that a permit is required therefor under existing laws and ordinances for the proper supervision and enforcement of their provisions governing the sanitation, security and welfare of the public and the health of the employees engaged in the business of the plaintiff. However, sections 3 of Ordinance 3000 contains item No. 79, which reads as follows: 79. All other businesses, trades or occupations not mentioned in this Ordinance, except those upon which the City is not empowered to license or to tax P5.00 Therefore, the necessity of the permit is made to depend upon the power of the City to license or tax said business, trade or occupation. As to the license fees that the Treasurer of the City of Manila required the society to pay from the 4th quarter of 1945 to the 1st quarter of 1953 in the sum of P5,821.45, including the sum of P50 as compromise, Ordinance No. 2529, as amended by Ordinances Nos. 2779, 2821 and 3028 prescribes the following: SEC. 1. FEES. Subject to the provisions of section 578 of the Revised Ordinances of the City of Manila, as amended, there shall be paid to the City Treasurer for engaging in any of the businesses or occupations below enumerated, quarterly, license fees based on gross sales or receipts realized during the preceding quarter in accordance with the rates herein prescribed: PROVIDED, HOWEVER, That a person engaged in any businesses or occupation for the first time shall pay the initial license fee based on the probable gross sales or receipts for the first quarter beginning from the date of the opening of the business as indicated herein for the corresponding business or occupation. xxx xxx xxx

GROUP 2. Retail dealers in new (not yet used) merchandise, which dealers are not yet subject to the payment of any municipal tax, such as (1) retail dealers in general merchandise; (2) retail dealers exclusively engaged in the sale of . . . books, including stationery. xxx xxx xxx

As may be seen, the license fees required to be paid quarterly in Section 1 of said Ordinance No. 2529, as amended, are not imposed directly upon any religious institution but upon those engaged in any of the business or occupations

therein enumerated, such as retail "dealers in general merchandise" which, it is alleged, cover the business or occupation of selling bibles, books, etc. Chapter 60 of the Revised Administrative Code which includes section 2444, subsection (m-2) of said legal body, as amended by Act No. 3659, approved on December 8, 1929, empowers the Municipal Board of the City of Manila: (M-2) To tax and fix the license fee on (a) dealers in new automobiles or accessories or both, and (b) retail dealers in new (not yet used) merchandise, which dealers are not yet subject to the payment of any municipal tax. For the purpose of taxation, these retail dealers shall be classified as (1) retail dealers in general merchandise, and (2) retail dealers exclusively engaged in the sale of (a) textiles . . . (e) books, including stationery, paper and office supplies, . . .: PROVIDED, HOWEVER, That the combined total tax of any debtor or manufacturer, or both, enumerated under these subsections (m-1) and (m-2), whether dealing in one or all of the articles mentioned herein, SHALL NOT BE IN EXCESS OF FIVE HUNDRED PESOS PER ANNUM. and appellee's counsel maintains that City Ordinances Nos. 2529 and 3000, as amended, were enacted in virtue of the power that said Act No. 3669 conferred upon the City of Manila. Appellant, however, contends that said ordinances are longer in force and effect as the law under which they were promulgated has been expressly repealed by Section 102 of Republic Act No. 409 passed on June 18, 1949, known as the Revised Manila Charter. Passing upon this point the lower Court categorically stated that Republic Act No. 409 expressly repealed the provisions of Chapter 60 of the Revised Administrative Code but in the opinion of the trial Judge, although Section 2444 (m-2) of the former Manila Charter and section 18 (o) of the new seemingly differ in the way the legislative intent was expressed, yet their meaning is practically the same for the purpose of taxing the merchandise mentioned in both legal provisions and, consequently, Ordinances Nos. 2529 and 3000, as amended, are to be considered as still in full force and effect uninterruptedly up to the present. Often the legislature, instead of simply amending the pre-existing statute, will repeal the old statute in its entirety and by the same enactment re-enact all or certain portions of the preexisting law. Of course, the problem created by this sort of legislative action involves mainly the effect of the repeal upon rights and liabilities which accrued under the original statute. Are those rights and liabilities destroyed or preserved? The authorities are divided as to the effect of simultaneous repeals and re-enactments. Some adhere to the view that the rights and liabilities accrued under the repealed act are destroyed, since the statutes from which they sprang are actually terminated, even though for only a very short period of time. Others, and they seem to be in the majority, refuse to accept this view of the situation, and consequently maintain that all rights an liabilities which have accrued under the original statute are preserved and may be enforced, since the re-enactment neutralizes the repeal, therefore, continuing the law in force without interruption. (Crawford-Statutory Construction, Sec. 322). Appellant's counsel states that section 18 (o) of Republic Act No, 409 introduces a new and wider concept of taxation and is different from the provisions of Section 2444(m-2) that the former cannot be considered as a substantial reenactment of the provisions of the latter. We have quoted above the provisions of section 2444(m-2) of the Revised Administrative Code and We shall now copy hereunder the provisions of Section 18, subdivision (o) of Republic Act No. 409, which reads as follows: (o) To tax and fix the license fee on dealers in general merchandise, including importers and indentors, except those dealers who may be expressly subject to the payment of some other municipal tax under the provisions of this section. Dealers in general merchandise shall be classified as (a) wholesale dealers and (b) retail dealers. For purposes of the tax on retail dealers, general merchandise shall be classified into four main classes: namely (1) luxury articles, (2) semi-luxury articles, (3) essential commodities, and (4) miscellaneous articles. A separate license shall be prescribed for each class but where commodities of different classes are sold in the same establishment, it shall not be compulsory for the owner to secure more than one license if he pays the higher or highest rate of tax prescribed by ordinance. Wholesale dealers shall pay the license tax as such, as may be provided by ordinance. For purposes of this section, the term "General merchandise" shall include poultry and livestock, agricultural products, fish and other allied products. The only essential difference that We find between these two provisions that may have any bearing on the case at bar, is that, while subsection (m-2) prescribes that the combined total tax of any dealer or manufacturer, or both, enumerated under subsections (m-1) and (m-2), whether dealing in one or all of the articles mentioned therein, shall not be in excess of P500 per annum, the corresponding section 18, subsection (o) of Republic Act No. 409, does not contain any limitation as to the amount of tax or license fee that the retail dealer has to pay per annum. Hence, and in accordance with the weight of the authorities above referred to that maintain that "all rights and liabilities which have accrued under the original statute are preserved and may be enforced, since the reenactment neutralizes the repeal, therefore continuing the law in force without interruption", We hold that the questioned ordinances of the City of Manila are still in force and effect.

Plaintiff, however, argues that the questioned ordinances, to be valid, must first be approved by the President of the Philippines as per section 18, subsection (ii) of Republic Act No. 409, which reads as follows: (ii) To tax, license and regulate any business, trade or occupation being conducted within the City of Manila, not otherwise enumerated in the preceding subsections, including percentage taxes based on gross sales or receipts, subject to the approval of the PRESIDENT, except amusement taxes. but this requirement of the President's approval was not contained in section 2444 of the former Charter of the City of Manila under which Ordinance No. 2529 was promulgated. Anyway, as stated by appellee's counsel, the business of "retail dealers in general merchandise" is expressly enumerated in subsection (o), section 18 of Republic Act No. 409; hence, an ordinance prescribing a municipal tax on said business does not have to be approved by the President to be effective, as it is not among those referred to in said subsection (ii). Moreover, the questioned ordinances are still in force, having been promulgated by the Municipal Board of the City of Manila under the authority granted to it by law. The question that now remains to be determined is whether said ordinances are inapplicable, invalid or unconstitutional if applied to the alleged business of distribution and sale of bibles to the people of the Philippines by a religious corporation like the American Bible Society, plaintiff herein. With regard to Ordinance No. 2529, as amended by Ordinances Nos. 2779, 2821 and 3028, appellant contends that it is unconstitutional and illegal because it restrains the free exercise and enjoyment of the religious profession and worship of appellant. Article III, section 1, clause (7) of the Constitution of the Philippines aforequoted, guarantees the freedom of religious profession and worship. "Religion has been spoken of as a profession of faith to an active power that binds and elevates man to its Creator" (Aglipay vs. Ruiz, 64 Phil., 201).It has reference to one's views of his relations to His Creator and to the obligations they impose of reverence to His being and character, and obedience to His Will (Davis vs. Beason, 133 U.S., 342). The constitutional guaranty of the free exercise and enjoyment of religious profession and worship carries with it the right to disseminate religious information. Any restraints of such right can only be justified like other restraints of freedom of expression on the grounds that there is a clear and present danger of any substantive evil which the State has the right to prevent". (Taada and Fernando on the Constitution of the Philippines, Vol. 1, 4th ed., p. 297). In the case at bar the license fee herein involved is imposed upon appellant for its distribution and sale of bibles and other religious literature: In the case of Murdock vs. Pennsylvania, it was held that an ordinance requiring that a license be obtained before a person could canvass or solicit orders for goods, paintings, pictures, wares or merchandise cannot be made to apply to members of Jehovah's Witnesses who went about from door to door distributing literature and soliciting people to "purchase" certain religious books and pamphlets, all published by the Watch Tower Bible & Tract Society. The "price" of the books was twenty-five cents each, the "price" of the pamphlets five cents each. It was shown that in making the solicitations there was a request for additional "contribution" of twenty-five cents each for the books and five cents each for the pamphlets. Lesser sum were accepted, however, and books were even donated in case interested persons were without funds. On the above facts the Supreme Court held that it could not be said that petitioners were engaged in commercial rather than a religious venture. Their activities could not be described as embraced in the occupation of selling books and pamphlets. Then the Court continued: "We do not mean to say that religious groups and the press are free from all financial burdens of government. See Grosjean vs. American Press Co., 297 U.S., 233, 250, 80 L. ed. 660, 668, 56 S. Ct. 444. We have here something quite different, for example, from a tax on the income of one who engages in religious activities or a tax on property used or employed in connection with activities. It is one thing to impose a tax on the income or property of a preacher. It is quite another to exact a tax from him for the privilege of delivering a sermon. The tax imposed by the City of Jeannette is a flat license tax, payment of which is a condition of the exercise of these constitutional privileges. The power to tax the exercise of a privilege is the power to control or suppress its enjoyment. . . . Those who can tax the exercise of this religious practice can make its exercise so costly as to deprive it of the resources necessary for its maintenance. Those who can tax the privilege of engaging in this form of missionary evangelism can close all its doors to all those who do not have a full purse. Spreading religious beliefs in this ancient and honorable manner would thus be denied the needy. . . . It is contended however that the fact that the license tax can suppress or control this activity is unimportant if it does not do so. But that is to disregard the nature of this tax. It is a license tax a flat tax imposed on the exercise of a privilege granted by the Bill of Rights . . . The power to impose a license tax on the exercise of these freedom is indeed as potent as the power of censorship which this Court has repeatedly struck down. . . . It is not a nominal fee imposed as a regulatory measure to defray the expenses of policing the activities in question. It is in no way apportioned. It is flat license tax levied and collected as a condition to the pursuit of activities whose enjoyment is guaranteed by the constitutional liberties of press and religion and inevitably tends to suppress their exercise. That is almost uniformly recognized as the inherent vice and evil of this flat license tax." Nor could dissemination of religious information be conditioned upon the approval of an official or manager even if the town were owned by a corporation as held in the case of Marsh vs. State of Alabama (326 U.S. 501), or by the United States itself as held in the case of Tucker vs. Texas (326 U.S. 517). In the former

case the Supreme Court expressed the opinion that the right to enjoy freedom of the press and religion occupies a preferred position as against the constitutional right of property owners. "When we balance the constitutional rights of owners of property against those of the people to enjoy freedom of press and religion, as we must here, we remain mindful of the fact that the latter occupy a preferred position. . . . In our view the circumstance that the property rights to the premises where the deprivation of property here involved, took place, were held by others than the public, is not sufficient to justify the State's permitting a corporation to govern a community of citizens so as to restrict their fundamental liberties and the enforcement of such restraint by the application of a State statute." (Taada and Fernando on the Constitution of the Philippines, Vol. 1, 4th ed., p. 304-306). Section 27 of Commonwealth Act No. 466, otherwise known as the National Internal Revenue Code, provides: SEC. 27. EXEMPTIONS FROM TAX ON CORPORATIONS. The following organizations shall not be taxed under this Title in respect to income received by them as such (e) Corporations or associations organized and operated exclusively for religious, charitable, . . . or educational purposes, . . .: Provided, however, That the income of whatever kind and character from any of its properties, real or personal, or from any activity conducted for profit, regardless of the disposition made of such income, shall be liable to the tax imposed under this Code; Appellant's counsel claims that the Collector of Internal Revenue has exempted the plaintiff from this tax and says that such exemption clearly indicates that the act of distributing and selling bibles, etc. is purely religious and does not fall under the above legal provisions. It may be true that in the case at bar the price asked for the bibles and other religious pamphlets was in some instances a little bit higher than the actual cost of the same but this cannot mean that appellant was engaged in the business or occupation of selling said "merchandise" for profit. For this reason We believe that the provisions of City of Manila Ordinance No. 2529, as amended, cannot be applied to appellant, for in doing so it would impair its free exercise and enjoyment of its religious profession and worship as well as its rights of dissemination of religious beliefs. With respect to Ordinance No. 3000, as amended, which requires the obtention the Mayor's permit before any person can engage in any of the businesses, trades or occupations enumerated therein, We do not find that it imposes any charge upon the enjoyment of a right granted by the Constitution, nor tax the exercise of religious practices. In the case of Coleman vs. City of Griffin, 189 S.E. 427, this point was elucidated as follows: An ordinance by the City of Griffin, declaring that the practice of distributing either by hand or otherwise, circulars, handbooks, advertising, or literature of any kind, whether said articles are being delivered free, or whether same are being sold within the city limits of the City of Griffin, without first obtaining written permission from the city manager of the City of Griffin, shall be deemed a nuisance and punishable as an offense against the City of Griffin, does not deprive defendant of his constitutional right of the free exercise and enjoyment of religious profession and worship, even though it prohibits him from introducing and carrying out a scheme or purpose which he sees fit to claim as a part of his religious system. It seems clear, therefore, that Ordinance No. 3000 cannot be considered unconstitutional, even if applied to plaintiff Society. But as Ordinance No. 2529 of the City of Manila, as amended, is not applicable to plaintiff-appellant and defendant-appellee is powerless to license or tax the business of plaintiff Society involved herein for, as stated before, it would impair plaintiff's right to the free exercise and enjoyment of its religious profession and worship, as well as its rights of dissemination of religious beliefs, We find that Ordinance No. 3000, as amended is also inapplicable to said business, trade or occupation of the plaintiff. Wherefore, and on the strength of the foregoing considerations, We hereby reverse the decision appealed from, sentencing defendant return to plaintiff the sum of P5,891.45 unduly collected from it. Without pronouncement as to costs. It is so ordered. Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador, Concepcion and Endencia, JJ., concur