LEGISLATIVE DEPARTMENT (last part)

i. Allow Utilization of Natural Resources

a. Sec. 2, Art. XII, 1987 Constitution
i. Amend or Revise the Constitution
Secs. 1-2, Art. XVII, 1987 Constitution
a. Legislative Process
a. Requirement as to bills
1. titles of bills
-->Sec. 26, Art. VI, 1987 Constitution
Cruz v. Paras, 123 SCRA 569 (1983)
G.R. No. L-42571-72 July 25, 1983
VICENTE DE LA CRUZ, RENATO ALIPIO, JOSE TORRES III, LEONCIO CORPUZ, TERESITA CALOT,
ROSALIA FERNANDEZ, ELIZABETH VELASCO, NANETTE VILLANUEVA, HONORATO
BUENAVENTURA, RUBEN DE CASTRO, VICENTE ROXAS, RICARDO DAMIAN, DOMDINO
ROMDINA, ANGELINA OBLIGACION, CONRADO GREGORIO, TEODORO REYES, LYDIA
ATRACTIVO, NAPOLEON MENDOZA, PERFECTO GUMATAY, ANDRES SABANGAN, ROSITA
DURAN, SOCORRO BERNARDEZ, and PEDRO GABRIEL, petitioners,
vs.
THE HONORABLE EDGARDO L. PARAS, MATIAS RAMIREZ as the Municipal Mayor, MARIO
MENDOZA as the Municipal Vice-Mayor, and THE MUNICIPAL COUNCIL OF BOCAUE, BULACAN,
respondents.
Federico N. Alday for petitioners.
Dakila F. Castro for respondents.

FERNANDO, C.J.:
The crucial question posed by this certiorari proceeding is whether or not a municipal
1

corporation, Bocaue, Bulacan, represented by respondents, can, prohibit the exercise of a

lawful trade, the operation of night clubs, and the pursuit of a lawful occupation, such clubs
employing hostesses. It is contended that the ordinance assailed as invalid is tainted with nullity,
the municipality being devoid of power to prohibit a lawful business, occupation or calling,
petitioners at the same time alleging that their rights to due process and equal protection of the
laws were violated as the licenses previously given to them was in effect withdrawn without
judicial hearing.

2
3

The assailed ordinance

is worded as follows: "Section 1. Title of Ordinance. This
Ordinance shall be known and may be cited as the [Prohibition and Closure Ordinance] of
Bocaue, Bulacan. Section 2. Definitions of Terms (a) 'Night Club' shall include any place or

establishment selling to the public food or drinks where customers are allowed to dance. (b)
'Cabaret' or 'Dance Hall' shall include any place or establishment where dancing is permitted to
the public and where professional hostesses or hospitality girls and professional dancers are
employed. (c) 'Professional hostesses' or 'hospitality girls' shall include any woman employed by
any of the establishments herein defined to entertain guests and customers at their table or to
dance with them. (d) 'Professional dancer' shall include any woman who dances at any of the
establishments herein defined for a fee or remuneration paid directly or indirectly by the operator
or by the persons she dances with. (e) 'Operator' shall include the owner, manager, administrator
or any person who operates and is responsible for the operation of any night club, cabaret or
dance hall. Section 3. Prohibition in the Issuance and Renewal of Licenses, Permits. Being
the principal cause in the decadence of morality and because of their other adverse effects on this
community as explained above, no operator of night clubs, cabarets or dance halls shall
henceforth be issued permits/licenses to operate within the jurisdiction of the municipality and no
license/permit shall be issued to any professional hostess, hospitality girls and professional
dancer for employment in any of the aforementioned establishments. The prohibition in the
issuance of licenses/permits to said persons and operators of said establishments shall include
prohibition in the renewal thereof. Section 4. Revocation of Permits and Licenses. The
licenses and permits issued to operators of night clubs, cabarets or dance halls which are now in
operation including permits issued to professional hostesses, hospitality girls and professional
dancers are hereby revoked upon the expiration of the thirty-day period given them as provided in
Section 8 hereof and thenceforth, the operation of these establishments within the jurisdiction of
the municipality shall be illegal. Section 5. Penalty in case of violation. Violation of any of the
provisions of this Ordinance shall be punishable by imprisonment not exceeding three (3) months
or a fine not exceeding P200.00 or both at the discretion of the Court. If the offense is committed
by a juridical entity, the person charged with the management and/or operation thereof shall be
liable for the penalty provided herein. Section 6. Separability Clause. If, for any reason, any
section or provision of this Ordinance is held unconstitutional or invalid, no other section or
provision hereof shall be affected thereby. Section 7. Repealing Clause. All ordinance,
resolutions, circulars, memoranda or parts thereof that are inconsistent with the provisions of this
Ordinance are hereby repealed. Section 8. Effectivity. This Ordinance shall take effect
immediately upon its approval; provided, however, that operators of night clubs, cabarets and
dance halls now in operation including professional hostesses, hospitality girls and professional
dancers are given a period of thirty days from the approval hereof within which to wind up their
businesses and comply with the provisions of this Ordinance."

On November 5, 1975, two cases for prohibition with preliminary injunction were filed with
5

the Court of First Instance of Bulacan. The grounds alleged follow:

1. Ordinance No. 84 is null and void as a municipality has no authority to prohibit a lawful
business, occupation or calling.
2. Ordinance No. 84 is violative of the petitioners' right to due process and the equal
protection of the law, as the license previously given to petitioners was in effect withdrawn
without judicial hearing. 3. That under Presidential Decree No. 189, as amended, by
Presidential Decree No. 259, the power to license and regulate tourist-oriented businesses
6

including night clubs, has been transferred to the Department of Tourism." The cases were
assigned to respondent Judge, now Associate Justice Paras of the Intermediate Appellate Court,
who issued a restraining order on November 7, 1975. The answers were thereafter filed. It was
therein alleged: " 1. That the Municipal Council is authorized by law not only to regulate but to
prohibit the establishment, maintenance and operation of night clubs invoking Section 2243 of the

RAC, CA 601, Republic Acts Nos. 938, 978 and 1224. 2. The Ordinance No. 84 is not violative of
petitioners' right to due process and the equal protection of the law, since property rights are
subordinate to public interests. 3. That Presidential Decree No. 189, as amended, did not deprive
7

Municipal Councils of their jurisdiction to regulate or prohibit night clubs." There was the
admission of the following facts as having been established: "l. That petitioners Vicente de la
Cruz, et al. in Civil Case No. 4755-M had been previously issued licenses by the Municipal Mayor
of Bocaue-petitioner Jose Torres III, since 1958; petitioner Vicente de la Cruz, since 1960;
petitioner Renato Alipio, since 1961 and petitioner Leoncio Corpuz, since 1972; 2. That petitioners
had invested large sums of money in their businesses; 3. That the night clubs are well-lighted and
have no partitions, the tables being near each other; 4. That the petitioners owners/operators of
these clubs do not allow the hospitality girls therein to engage in immoral acts and to go out with
customers; 5. That these hospitality girls are made to go through periodic medical check-ups and
not one of them is suffering from any venereal disease and that those who fail to submit to a
medical check-up or those who are found to be infected with venereal disease are not allowed to
work; 6. That the crime rate there is better than in other parts of Bocaue or in other towns of
8

Bulacan."
Then came on January 15, 1976 the decision upholding the constitutionality and
validity of Ordinance No. 84 and dismissing the cases. Hence this petition for certiorari by way of
appeal.

In an exhaustive as well as scholarly opinion, the lower court dismissed the petitions. Its
rationale is set forth in the opening paragraph thus: "Those who lust cannot last. This in
essence is why the Municipality of Bocaue, Province of Bulacan, stigmatized as it has been
by innuendos of sexual titillation and fearful of what the awesome future holds for it, had no
alternative except to order thru its legislative machinery, and even at the risk of partial
economic dislocation, the closure of its night clubs and/or cabarets. This in essence is also
why this Court, obedient to the mandates of good government, and cognizant of the
categorical imperatives of the current legal and social revolution, hereby [upholds] in the
name of police power the validity and constitutionality of Ordinance No. 84, Series of 1975, of
the Municipal Council of Bocaue, Bulacan. The restraining orders heretofore issued in these
two cases are therefore hereby rifted, effective the first day of February, 1976, the purpose of
the grace period being to enable the petitioners herein to apply to the proper appellate
9

tribunals for any contemplated redress." This Court is, however, unable to agree with such a
conclusion and for reasons herein set forth, holds that reliance on the police power is insufficient
to justify the enactment of the assailed ordinance. It must be declared null and void.
3. There is reinforcement to the conclusion reached by virtue of a specific provision of the
25

recently-enacted Local Government Code.

The general welfare clause, a reiteration of the
Administrative Code provision, is set forth in the first paragraph of Section 149 defining the
powers and duties of the sangguniang bayan. It read as follows: "(a) Enact such ordinances and
issue such regulations as may be necessary to carry out and discharge the responsibilities
conferred upon it by law, and such as shall be necessary and proper to provide for the health,
safety, comfort and convenience, maintain peace and order, improve public morals, promote the
prosperity and general welfare of the municipality and the inhabitants thereof, and insure the
26

protection of property therein; ..."

There are in addition provisions that may have a bearing on
the question now before this Court. Thus the sangguniang bayan shall "(rr) Regulate cafes,
restaurants, beer-houses, hotels, motels, inns, pension houses and lodging houses, except travel
agencies, tourist guides, tourist transports, hotels, resorts, de luxe restaurants, and tourist inns of
international standards which shall remain under the licensing and regulatory power of the

Ministry of Tourism which shall exercise such authority without infringing on the taxing or
regulatory powers of the municipality; (ss) Regulate public dancing schools, public dance halls,
and sauna baths or massage parlors; (tt) Regulate the establishment and operation of billiard
27

pools, theatrical performances, circuses and other forms of entertainment; ..."

It is clear that
municipal corporations cannot prohibit the operation of night clubs. They may be regulated, but
not prevented from carrying on their business. It would be, therefore, an exercise in futility if the
decision under review were sustained. All that petitioners would have to do is to apply once more
for licenses to operate night clubs. A refusal to grant licenses, because no such businesses could
legally open, would be subject to judicial correction. That is to comply with the legislative will to
allow the operation and continued existence of night clubs subject to appropriate regulations. In
the meanwhile, to compel petitioners to close their establishments, the necessary result of an
affirmance, would amount to no more than a temporary termination of their business. During such
time, their employees would undergo a period of deprivation. Certainly, if such an undesirable
outcome can be avoided, it should be. The law should not be susceptible to the reproach that it
displays less than sympathetic concern for the plight of those who, under a mistaken appreciation
of a municipal power, were thus left without employment. Such a deplorable consequence is to be
avoided. If it were not thus, then the element of arbitrariness enters the picture. That is to pay
less, very much less, than full deference to the due process clause with its mandate of fairness
and reasonableness.

4. The conclusion reached by this Court is not to be interpreted as a retreat from its resolute
stand sustaining police power legislation to promote public morals. The commitment to such
an Ideal forbids such a backward step. Legislation of that character is deserving of the fullest
sympathy from the judiciary. Accordingly, the judiciary has not been hesitant to lend the
weight of its support to measures that can be characterized as falling within that aspect of
the police power. Reference is made by respondents to Ermita-Malate Hotel and Motel
28

Operators Association, Inc. v. City Mayor of Manila.

There is a misapprehension as to what
was decided by this Court. That was a regulatory measure. Necessarily, there was no valid
objection on due process or equal protection grounds. It did not prohibit motels. It merely
regulated the mode in which it may conduct business in order precisely to put an end to practices
which could encourage vice and immorality. This is an entirely different case. What was involved
is a measure not embraced within the regulatory power but an exercise of an assumed power to
prohibit. Moreover, while it was pointed out in the aforesaid Ermita-Malate Hotel and Motel
Operators Association, Inc. decision that there must be a factual foundation of invalidity, it was
likewise made clear that there is no need to satisfy such a requirement if a statute were void on its
face. That it certainly is if the power to enact such ordinance is at the most dubious and under the
present Local Government Code non-existent.
WHEREFORE, the writ of certiorari is granted and the decision of the lower court dated
January 15, 1976 reversed, set aside, and nullied. Ordinance No. 84, Series of 1975 of the
Municipality of Bocaue is declared void and unconstitutional. The temporary restraining
order issued by this Court is hereby made permanent. No costs.
Teehankee, Aquino, Concepcion Jr., Guerrero, Abad Santos, Plana, Escolin Relova and
Gutierrez, Jr., JJ., concur.
Makasiar, J, reserves his right to file a dissent.
De Castro, Melencio-Herrera and Vasquez, JJ., are on leave.

17

2. The decision now under review refers to Republic Act No. 938 as amended.
It was
originally enacted on June 20, 1953. It is entitled: "AN ACT GRANTING MUNICIPAL OR CITY
BOARDS AND COUNCILS THE POWER TO REGULATE THE ESTABLISHMENT, MAINTENANCE
AND OPERATION OF CERTAIN PLACES OF AMUSEMENT WITHIN THEIR RESPECTIVE
18

TERRITORIAL JURISDICTIONS.'
Its first section insofar as pertinent reads: "The municipal or
city board or council of each chartered city shall have the power to regulate by ordinance the
establishment, maintenance and operation of night clubs, cabarets, dancing schools, pavilions,
cockpits, bars, saloons, bowling alleys, billiard pools, and other similar places of amusement
within its territorial jurisdiction: ... "

19

Then on May 21, 1954, the first section was amended to

20

include not merely "the power to regulate, but likewise "Prohibit ... "
The title, however,
remained the same. It is worded exactly as Republic Act No. 938. It is to be admitted that as thus
amended, if only the above portion of the Act were considered, a municipal council may go as far
as to prohibit the operation of night clubs. If that were all, then the appealed decision is not
devoid of support in law. That is not all, however. The title was not in any way altered. It was not
changed one whit. The exact wording was followed. The power granted remains that of regulation,
not prohibition. There is thus support for the view advanced by petitioners that to construe
Republic Act No. 938 as allowing the prohibition of the operation of night clubs would give rise to
a constitutional question. The Constitution mandates: "Every bill shall embrace only one subject
21

which shall be expressed in the title thereof. "

Since there is no dispute as the title limits the
power to regulating, not prohibiting, it would result in the statute being invalid if, as was done by
the Municipality of Bocaue, the operation of a night club was prohibited. There is a wide gap
between the exercise of a regulatory power "to provide for the health and safety, promote the
prosperity, improve the morals,

22

in the language of the Administrative Code, such competence

23

extending to all "the great public needs,

to quote from Holmes, and to interdict any calling,
occupation, or enterprise. In accordance with the well-settled principle of constitutional
construction that between two possible interpretations by one of which it will be free from
constitutional infirmity and by the other tainted by such grave defect, the former is to be
preferred. A construction that would save rather than one that would affix the seal of doom
certainly commends itself. We have done so before We do so again.

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1. Police power is granted to municipal corporations in general terms as follows: "General

power of council to enact ordinances and make regulations. - The municipal council shall
enact such ordinances and make such regulations, not repugnant to law, as may be
necessary to carry into effect and discharge the powers and duties conferred upon it by law
and such as shall seem necessary and proper to provide for the health and safety, promote
the prosperity, improve the morals, peace, good order, comfort, and convenience of the
municipality and the inhabitants thereof, and for the protection of property therein."

10

It is

11

practically a reproduction of the former Section 39 of Municipal Code. An ordinance enacted by

virtue thereof, according to Justice Moreland, speaking for the Court in the leading case of United
12

States v. Abendan
"is valid, unless it contravenes the fundamental law of the Philippine Islands,
or an Act of the Philippine Legislature, or unless it is against public policy, or is unreasonable,
oppressive, partial, discriminating, or in derogation of common right. Where the power to legislate
upon a given subject, and the mode of its exercise and the details of such legislation are not
prescribed, the ordinance passed pursuant thereto must be a reasonable exercise of the power, or

13

14

it will be pronounced invalid."

In another leading case, United States v. Salaveria,
the
ponente this time being Justice Malcolm, where the present Administrative Code provision was
applied, it was stated by this Court: "The general welfare clause has two branches: One branch
attaches itself to the main trunk of municipal authority, and relates to such ordinances and
regulations as may be necessary to carry into effect and discharge the powers and duties
conferred upon the municipal council by law. With this class we are not here directly concerned.
The second branch of the clause is much more independent of the specific functions of the
council which are enumerated by law. It authorizes such ordinances as shall seem necessary and
proper to provide for the health and safety, promote the prosperity, improve the morals, peace,
good order, comfort, and convenience of the municipality and the inhabitants thereof, and for the
protection of property therein.' It is a general rule that ordinances passed by virtue of the implied
power found in the general welfare clause must be reasonable, consonant with the general
powersand purposes of the corporation, and not inconsistent with the laws or policy of the State."
15

If night clubs were merely then regulated and not prohibited, certainly the assailed ordinance
would pass the test of validity. In the two leading cases above set forth, this Court had stressed
reasonableness, consonant with the general powers and purposes of municipal corporations, as
well as consistency with the laws or policy of the State. It cannot be said that such a sweeping
exercise of a lawmaking power by Bocaue could qualify under the term reasonable. The objective
of fostering public morals, a worthy and desirable end can be attained by a measure that does not
encompass too wide a field. Certainly the ordinance on its face is characterized by overbreadth.
The purpose sought to be achieved could have been attained by reasonable restrictions rather
than by an absolute prohibition. The admonition in Salaveria should be heeded: "The Judiciary
should not lightly set aside legislative action when there is not a clear invasion of personal or
16

property rights under the guise of police regulation."

It is clear that in the guise of a police
regulation, there was in this instance a clear invasion of personal or property rights, personal in
the case of those individuals desirous of patronizing those night clubs and property in terms of
the investments made and salaries to be earned by those therein employed.

Giron v. COMELEC, G.R. No. 188179, 22 January 2013

DECISION
SERENO, CJ.:
Before the Court is a special civil action for certiorari and prohibition assailing the constitutionality of
Section 12 (Substitution of Candidates) and Section 14 (Repealing Clause) of Republic Act No.
(R.A.) 9006, otherwise known as the Fair Election Act. The present Petition also seeks to prohibit the
Commission on Elections (COMELEC) from further implementing the aforesaid sections of the Fa1r
Election Act, on the ground that these provisions would enable elective officials to gain campaign
advantage and allow them to disburse public funds from the time they file their certificates of
candidacy until after the elections.
On the one hand, petitioner Henry R. Giron (Giron) asserts that the insertion of Sections 12 and 14
in the Fair Election Act violates Section 26(1), Article VI of the 1987 Constitution, which specifically
requires: "Every bill passed by the Congress shall embrace only one subject which shall be
expressed in the title thereof." Petitioner avers that these provisions are unrelated to the main
subject of the Fair Election Act: the lifting of the political ad ban. Section 12 refers to the treatment of
the votes cast for substituted candidates after the official ballots have been printed, while Section 14

pertains to the repeal of Section 67 (Candidates holding elective office) of Batas Pambansa Blg.
881, otherwise known as the Omnibus Election Code. Section 67 of this law concerns the ipso facto
resignation of elective officials immediately after they file their respective certificates of candidacy for
an office other than that which they are currently holding in a permanent capacity.
On the other hand, respondent Jose Melo, then chairperson of the COMELEC, opposes the Petition
and argues inter alia that this Court has already resolved the matter in Farias v. Executive
1

Secretary.
Almario E. Francisco, Federico S. Jong Jr., and Ricardo L. Baes Jr. filed their respective petitions-in2

intervention, which essentially reiterated the ratiocinations of Giron.

Issue
Whether or not the inclusion of Sections 12 and 14 in the Fair Election Act violates Section 26(1),
Article VI of the 1987 Constitution, or the "one subject-one title" rule.
Ruling
It is a well-settled rule that courts are to adopt a liberal interpretation in favor of the constitutionality
3

of a legislation, as Congress is deemed to have enacted a valid, sensible, and just law. Because of
this strong presumption, the one who asserts the invalidity of a law has to prove that there is a clear,
5

unmistakable, and unequivocal breach of the Constitution; otherwise, the petition must fail.
After a thorough review of the arguments raised, we find that petitioner and petitioners-inintervention were unable to present a compelling reason that would surpass the strong presumption
of validity and constitutionality in favor of the Fair Election Act. They have not put forward any
gripping justification to reverse our ruling in Farias, in which we have already ruled that the title and
the objectives of R.A. 9006 are comprehensive enough to include subjects other than the lifting of
the ban on the use of media for election propaganda. Below is a reproduction of our exhaustive
6

exposition on the matter in the 10 December 2003 En Banc Decision:

At the core of the controversy is Section 14, the repealing clause of Rep. Act No. 9006, which
provides:
SECTION 14. Repealing Clause. Sections 67 and 85 of the Omnibus Election Code (Batas
Pambansa Blg. 881) and Sections 10 and 11 of Republic Act No. 6646 are hereby repealed. As a
consequence, the first proviso in the third paragraph of Section 11 of Republic Act No. 8436 is
rendered ineffective. All laws, presidential decrees, executive orders, rules and regulations, or any
part thereof inconsistent with the provisions of this Act are hereby repealed or modified or amended
accordingly.
The repealed provision, Section 67 of the Omnibus Election Code, quoted earlier, reads:
SECTION 67. Candidates holding elective office.
Any elective official, whether national or local, running for any office other than the one which he
is holding in a permanent capacity, except for President and Vice-President, shall be considered ipso
facto resigned from his office upon the filing of his certificate of candidacy.
xxxx
The proscription under Section 26(1), Article VI of the Constitution is aimed against the evils of the
so-called omnibus bills and log-rolling legislation as well as surreptitious and/or unconsidered
encroaches. The provision merely calls for all parts of an act relating to its subject finding expression
in its title.
To determine whether there has been compliance with the constitutional requirement that the subject
of an act shall be expressed in its title, the Court laid down the rule that

Constitutional provisions relating to the subject matter and titles of statutes should not be so
narrowly construed as to cripple or impede the power of legislation. The requirement that the subject
of an act shall be expressed in its title should receive a reasonable and not a technical construction.
It is sufficient if the title be comprehensive enough reasonably to include the general object which a
statute seeks to effect, without expressing each and every end and means necessary or convenient
for the accomplishing of that object. Mere details need not be set forth. The title need not be an
abstract or index of the Act.
The title of Rep. Act No. 9006 reads: "An Act to Enhance the Holding of Free, Orderly, Honest,
Peaceful and Credible Elections through Fair Election Practices." Section 2 of the law provides not
only the declaration of principles but also the objectives thereof:
Sec. 2. Declaration of Principles. The State shall, during the election period, supervise or regulate
the enjoyment or utilization of all franchises or permits for the operation of media of communication
or information to guarantee or ensure equal opportunity for public service, including access to media
time and space, and the equitable right to reply, for public information campaigns and for among
candidates and assure free, orderly, honest, peaceful and credible elections.
The State shall ensure that bona fide candidates for any public office shall be free from any form of
harassment and discrimination.
The Court is convinced that the title and the objectives of Rep. Act No. 9006 are comprehensive
enough to include the repeal of Section 67 of the Omnibus Election Code within its contemplation. To
require that the said repeal of Section 67 of the Code be expressed in the title is to insist that the title
be a complete index of its content.
The purported dissimilarity of Section 67 of the Omnibus Election Code, which imposes a limitation
on elective officials who run for an office other than the one they are holding, to the other provisions
of Rep. Act No. 9006, which deal with the lifting of the ban on the use of media for election
propaganda, does not violate the "one subject-one title" rule. This Court has held that an act having
a single general subject, indicated in the title, may contain any number of provisions, no matter how
diverse they may be, so long as they are not inconsistent with or foreign to the general subject, and
may be considered in furtherance of such subject by providing for the method and means of carrying
out the general subject.
xxxx
Moreover, the avowed purpose of the constitutional directive that the subject of a bill should be
embraced in its title is to apprise the legislators of the purposes, the nature and scope of its
provisions, and prevent the enactment into law of matters which have not received the notice, action
and study of the legislators and the public. In this case, it cannot be claimed that the legislators were
not apprised of the repeal of Section 67 of the Omnibus Election Code as the same was amply and
comprehensively deliberated upon by the members of the House. (Emphases supplied and citations
omitted)
The reasoning behind Farias similarly applies to the claim of unconstitutionality with respect to
Section 12 of the Fair Election Act. The questioned provision reads:
SECTION 12. Substitution of Candidates. In case of valid substitutions after the official ballots
have been printed, the votes cast for the substituted candidates shall be considered as stray votes
but shall not invalidate the whole ballot. For this purpose, the official ballots shall provide spaces
where the voters may write the name of the substitute candidates if they are voting for the latter:
Provided, however, That if the substitute candidate is of the same family name, this provision shall
not apply.

To give a contextual background, we observe that Congress consciously looked for a more generic
title in order to express the thrust of the law. Below is an excerpt from the Bicameral Conference
7

Committee deliberations:
CHAIRMAN SYJUCO. x x x x. First of all, we will need to answer when we get back to our own
chamber what it is that there seems to be a rider here that does not seem to be pertinent or relevant
to the...germane to the spirit. And in fact that title and the purpose for this very Act -It is an Act to
enhance the holding of free, orderly, honest, peaceful, and credible elections through fair election
practices.
It is the opinion of many of us in the House that this should be the subject of another legislation
rather than a rider "kuno" on legislation that is...that refers totally to a different subject matter. So
thats one. x x x x
CHAIRMAN SYJUCO. Okay. May we jump a little ahead of ourselves, no. But I think its necessary
to get a little ahead so that we can be enlightened as to how this will fit, these particular things will fit
into the whole pie, no. So, what sort of title then would emanate so as to accommodate a subject
matter which under the present title or the proposed titles or the title from the House or the title from
the Senate would seem to be more appropriately the subject of another legislation?
May I draw on the experience of the Chairman for this, please?
CHAIRMAN ROCO. Yes. We really studied that very carefully and we weighed, and thats why we
recommended as a last thing was fair election practices, and we combed in fact the laws. It becomes
fair election practices. We went through all the different laws pa kung meron pa kaming maii-spot na
unfairness para ipapasok pa, pero wala na eh. The unfairness were in the opportunity lang to run
and then youre disqualified when you run for something else. Ngayon we restrict it only for
President and Vice President. You forfeit...its the reverse really of the present law. x x x x.
CHAIRMAN SYJUCO. Okay. So do you believe, Mr. Chairman, that we can find an appropriate title
for this so that it will not stick out like a sword and seem to be inappropriate as part of the whole
body?
CHAIRMAN ROCO. Will you feel comfortable with fair election practices? Baka okey na because its
really fair na. x x x x.
CHAIRMAN SYJUCO. So if the scope can be widened so as to cover this as well, then it should be
all right.
SEN. LEGARDA-LEVISTE. Yes, Mr. Chairman. I just wanted to clarify. So all were looking for now is
appropriate title to make it broader so that it would cover this provision. Is that correct? CHAIRMAN
SYJUCO. Were looking for an appropriate coverage which will result in the nomenclature.
SEN. LEGARDA-LEVISTE. Because I really do not believe that it is out-of-place. I think that even
with the term FAIR ELECTION PRACTICE it really covers it. Because as expressed by Sen. Roco,
those conditions stated earlier seemed unfair and it is an election practice and therefore, I think Im
very comfortable with the title FAIR ELECTION PRACTICE so that we can get over with these things
so that we dont come back again until we find the title. I mean its one provision which I think is fair
for everybody. It may seem like a limitation but this limitation actually provides for fairness in election
practices as the title implies. x x x x.
CHAIRPERSON MARCOS. Mr. Chairman, may I just make the observation that although it is true
that the bulk of provisions deals with the area of propaganda and political advertising, the complete
title is actually one that indulge full coverage. It says, AN ACT TO ENHANCE THE HOLDING OF
FREE, ORDERLY, HONEST, etcetera ELECTIONS through fair election practices. But as we said we
will put that aside to discuss later on.

Secondly, I think the declaration of principles contained in Section 2, paragraph 2, is perfectly

adequate and that it says that it shall ensure candidates for public office that be free from any form
of harassment and discrimination. Surely, this provision in Section 67 of the old Election
Code of the existing Omnibus Election Code is a form of harassment or discrimination. And so I
think that in the effort at leveling the playing field, we can cover this and it should not be considered
a rider. x x x x.
CHAIRMAN ROCO. Yeah, I think what is on the table is that we are not disputing this but we are
looking for a title that is more generic so that then we have less x x x of an objection on
constitutionality. I think thats the theory. So, there is acceptance of this. Maybe we should not call it
nga limitation on elected officials. Maybe we should say, special provision on elected officials. So,
how is that? Now, also, then we say On the short title of the Act, we say (unfinished) x x x x.
CHAIRMAN ROCO. It's done. So, okay na iyun. The title will be FAIR ELECTION ACT. The rest are
wala nang problema, ana? Wala na. Wala na. (Italics and boldface supplied)
What the above discussion tells us is that Congress did not limit the law to the lifting of the political
ad ban. After combing through various laws, they found other election practices that they considered
inequitable. Some of these practices included the appreciation of the votes cast in case of a late
substitution of candidates and the ipso facto resignation of certain elective officials upon the filing of
their certificates of candidacy. Thus, to "level the playing field," Congress fashioned a law that would
address what they determined were unfair election practices; hence, the birth of the Fair Election
Act.
After a careful analysis of the foregoing, we find that the assailed Section 12 (Substitution of
Candidates) and Section 14 (Repealing Clause) are indeed germane to the subject expressed in the
title of R.A. 9006: An Act to Enhance the Holding of Free, Orderly, Honest, Peaceful and Credible
Elections through Fair Election Practices. The title was worded broadly enough to include the
measures embodied in the assailed sections. Consequently, we dismiss the Petition and the
petitions-in-intervention for failure to establish a clear breach of the Constitution.
On a final note, we observe that petitioner and petitioners-in-intervention raise various arguments
that we deem are matters of policy. Whether or not those ratiocinations are valid, we reiterate that
the power of this Court is limited to the interpretation of the law. Judicial power does not include the
determination of the wisdom, fairness, soundness, or expediency of a statute. Otherwise, the Court
may be accused of engaging in judicial legislation. As it is Congress that is empowered by the
Constitution to determine state policies and to enact laws, we feel that petitioner's reasoning would
be best addressed by the legislature.
WHEREFORE, the Petition is hereby DISMISSED.
SO ORDERED.
1wphi1

1. as to specific laws
a. Appropriation Laws
Secs. 24-25, 29, Art. VI, 1987 Constitution
Sec. 3, Art. VIII, 1987 Constitution
Demetria v. Alba, 148 SCRA 208

Assailed in this petition for prohibition with prayer for a writ of preliminary injunction is the
constitutionality of the first paragraph of Section 44 of Presidential Decree No. 1177, otherwise
known as the "Budget Reform Decree of 1977."
Petitioners, who filed the instant petition as concerned citizens of this country, as members of the
National Assembly/Batasan Pambansa representing their millions of constituents, as parties with
general interest common to all the people of the Philippines, and as taxpayers whose vital interests
1

may be affected by the outcome of the reliefs prayed for" listed the grounds relied upon in this
petition as follows:
A.
SECTION 44 OF THE 'BUDGET REFORM DECREE OF 1977' INFRINGES UPON THE
FUNDAMENTAL LAW BY AUTHORIZING THE ILLEGAL TRANSFER OF PUBLIC MONEYS.
B.
SECTION 44 OF PRESIDENTIAL DECREE NO. 1177 IS REPUGNANT TO THE
CONSTITUTION AS IT FAILS TO SPECIFY THE OBJECTIVES AND PURPOSES FOR WHICH
THE PROPOSED TRANSFER OF FUNDS ARE TO BE MADE.
C.
SECTION 44 OF PRESIDENTIAL DECREE NO. 1177 ALLOWS THE PRESIDENT TO
OVERRIDE THE SAFEGUARDS, FORM AND PROCEDURE PRESCRIBED BY THE
CONSTITUTION IN APPROVING APPROPRIATIONS.
D.
SECTION 44 OF THE SAME DECREE AMOUNTS TO AN UNDUE DELEGATION OF
LEGISLATIVE POWERS TO THE EXECUTIVE.
E.
THE THREATENED AND CONTINUING TRANSFER OF FUNDS BY THE PRESIDENT AND
THE IMPLEMENTATION THEREOF BY THE BUDGET MINISTER AND THE TREASURER OF THE
2

PHILIPPINES ARE WITHOUT OR IN EXCESS OF THEIR AUTHORITY AND JURISDICTION.

Commenting on the petition in compliance with the Court resolution dated September 19, 1985, the
Solicitor General, for the public respondents, questioned the legal standing of petitioners, who were
allegedly merely begging an advisory opinion from the Court, there being no justiciable controversy
fit for resolution or determination. He further contended that the provision under consideration was
enacted pursuant to Section 16[5], Article VIII of the 1973 Constitution; and that at any rate,
prohibition will not lie from one branch of the government to a coordinate branch to enjoin the
performance of duties within the latter's sphere of responsibility.
On February 27, 1986, the Court required the petitioners to file a Reply to the Comment. This, they
did, stating, among others, that as a result of the change in the administration, there is a need to
hold the resolution of the present case in abeyance "until developments arise to enable the parties to
3

concretize their respective stands."

Thereafter, We required public respondents to file a rejoinder. The Solicitor General filed a rejoinder
with a motion to dismiss, setting forth as grounds therefor the abrogation of Section 16[5], Article VIII
of the 1973 Constitution by the Freedom Constitution of March 25, 1986, which has allegedly
rendered the instant petition moot and academic. He likewise cited the "seven pillars" enunciated by
4

Justice Brandeis in Ashwander v. TVA, 297 U.S. 288 (1936) as basis for the petition's dismissal.
In the case of Evelio B. Javier v. The Commission on Elections and Arturo F. Pacificador, G.R. Nos.
68379-81, September 22, 1986, We stated that:
The abolition of the Batasang Pambansa and the disappearance of the office in dispute between the
petitioner and the private respondents both of whom have gone their separate ways could be a
convenient justification for dismissing the case. But there are larger issues involved that must be
resolved now, once and for all, not only to dispel the legal ambiguities here raised. The more

important purpose is to manifest in the clearest possible terms that this Court will not disregard and
in effect condone wrong on the simplistic and tolerant pretext that the case has become moot and
academic.
The Supreme Court is not only the highest arbiter of legal questions but also the conscience of the
government. The citizen comes to us in quest of law but we must also give him justice. The two are
not always the same. There are times when we cannot grant the latter because the issue has been
settled and decision is no longer possible according to the law. But there are also times when
although the dispute has disappeared, as in this case, it nevertheless cries out to be resolved.
Justice demands that we act then, not only for the vindication of the outraged right, though gone, but
also for the guidance of and as a restraint upon the future.
It is in the discharge of our role in society, as above-quoted, as well as to avoid great disservice to
national interest that We take cognizance of this petition and thus deny public respondents' motion to
dismiss. Likewise noteworthy is the fact that the new Constitution, ratified by the Filipino people in
the plebiscite held on February 2, 1987, carries verbatim section 16[5], Article VIII of the 1973
Constitution under Section 24[5], Article VI. And while Congress has not officially reconvened, We
see no cogent reason for further delaying the resolution of the case at bar.
The exception taken to petitioners' legal standing deserves scant consideration. The case of
Pascual v. Secretary of Public Works, et al., 110 Phil. 331, is authority in support of petitioners' locus
standi. Thus:
Again, it is well-settled 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, upon the theory that the
expenditure of public funds by an officer of the state for the purpose of administering an
unconstitutional actconstitutes a misapplication of such funds which may be enjoined at the request
of a taxpayer. Although there are some decisions to the contrary, the 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 expenditures of moneys raised by taxation
and may therefore question the constitutionality of statutes requiring expenditure of public moneys.
[ 11 Am. Jur. 761, Emphasis supplied. ]
Moreover, in Tan v. Macapagal, 43 SCRA 677 and Sanidad v. Comelec, 73 SCRA 333, We said that
as regards taxpayers' suits, this Court enjoys that open discretion to entertain the same or not.
The conflict between paragraph 1 of Section 44 of Presidential Decree No. 1177 and Section 16[5],
Article VIII of the 1973 Constitution is readily perceivable from a mere cursory reading thereof. Said
paragraph 1 of Section 44 provides:
The President shall have the authority to transfer any fund, appropriated for the different
departments, bureaus, offices and agencies of the Executive Department, which are included in the
General Appropriations Act, to any program, project or activity of any department, bureau, or office
included in the General Appropriations Act or approved after its enactment.
On the other hand, the constitutional provision under consideration reads as follows:
Sec. 16[5].
No law shall be passed authorizing any transfer of appropriations, however, the
President, the Prime Minister, the Speaker, the Chief Justice of the Supreme Court, and the heads of
constitutional commis ions may by law be authorized to augment any item in the general
appropriations law for their respective offices from savings in other items of their respective
appropriations.

The prohibition to transfer an appropriation for one item to another was explicit and categorical under
the 1973 Constitution. However, to afford the heads of the different branches of the government and
those of the constitutional commissions considerable flexibility in the use of public funds and
resources, the constitution allowed the enactment of a law authorizing the transfer of funds for the
purpose of augmenting an item from savings in another item in the appropriation of the government
branch or constitutional body concerned. The leeway granted was thus limited. The purpose and
conditions for which funds may be transferred were specified, i.e. transfer may be allowed for the
purpose of augmenting an item and such transfer may be made only if there are savings from
another item in the appropriation of the government branch or constitutional body.
Paragraph 1 of Section 44 of P.D. No. 1177 unduly over extends the privilege granted under said
Section 16[5]. It empowers the President to indiscriminately transfer funds from one department,
bureau, office or agency of the Executive Department to any program, project or activity of any
department, bureau or office included in the General Appropriations Act or approved after its
enactment, without regard as to whether or not the funds to be transferred are actually savings in the
item from which the same are to be taken, or whether or not the transfer is for the purpose of
augmenting the item to which said transfer is to be made. It does not only completely disregard the
standards set in the fundamental law, thereby amounting to an undue delegation of legislative
powers, but likewise goes beyond the tenor thereof. Indeed, such constitutional infirmities render the
provision in question null and void.
"For the love of money is the root of all evil: ..." and money belonging to no one in particular, i.e.
public funds, provide an even greater temptation for misappropriation and embezzlement. This,
evidently, was foremost in the minds of the framers of the constitution in meticulously prescribing the
rules regarding the appropriation and disposition of public funds as embodied in Sections 16 and 18
of Article VIII of the 1973 Constitution. Hence, the conditions on the release of money from the
treasury [Sec. 18(1)]; the restrictions on the use of public funds for public purpose [Sec. 18(2)]; the
prohibition to transfer an appropriation for an item to another [See. 16(5) and the requirement of
specifications [Sec. 16(2)], among others, were all safeguards designed to forestall abuses in the
expenditure of public funds. Paragraph 1 of Section 44 puts all these safeguards to naught. For, as
correctly observed by petitioners, in view of the unlimited authority bestowed upon the President, "...
Pres. Decree No. 1177 opens the floodgates for the enactment of unfunded appropriations, results in
uncontrolled executive expenditures, diffuses accountability for budgetary performance and
entrenches the pork barrel system as the ruling party may well expand [sic] public money not on the
5

basis of development priorities but on political and personal expediency." The contention of public
respondents that paragraph 1 of Section 44 of P.D. 1177 was enacted pursuant to Section 16(5) of Article
VIII of the 1973 Constitution must perforce fall flat on its face.
Another theory advanced by public respondents is that prohibition will not lie from one branch of the
government against a coordinate branch to enjoin the performance of duties within the latter's
sphere of responsibility.
Thomas M. Cooley in his "A Treatise on the Constitutional Limitations," Vol. 1, Eight Edition, Little,
Brown and Company, Boston, explained:
... The legislative and judicial are coordinate departments of the government, of equal dignity; each
is alike supreme in the exercise of its proper functions, and cannot directly or indirectly, while acting
within the limits of its authority, be subjected to the control or supervision of the other, without an
unwarrantable assumption by that other of power which, by the Constitution, is not conferred upon it.
The Constitution apportions the powers of government, but it does not make any one of the three
departments subordinate to another, when exercising the trust committed to it. The courts may

declare legislative enactments unconstitutional and void in some cases, but not because the judicial
power is superior in degree or dignity to the legislative. Being required to declare what the law is in
the cases which come before them, they must enforce the Constitution, as the paramount law,
whenever a legislative enactment comes in conflict with it. But the courts sit, not to review or revise
the legislative action, but to enforce the legislative will, and it is only where they find that the
legislature has failed to keep within its constitutional limits, that they are at liberty to disregard its
action; and in doing so, they only do what every private citizen may do in respect to the mandates of
the courts when the judges assumed to act and to render judgments or decrees without jurisdiction.
"In exercising this high authority, the judges claim no judicial supremacy; they are only the
administrators of the public will. If an act of the legislature is held void, it is not because the judges
have any control over the legislative power, but because the act is forbidden by the Constitution, and
because the will of the people, which is therein declared, is paramount to that of their
representatives expressed in any law." [Lindsay v. Commissioners, & c., 2 Bay, 38, 61; People v.
Rucker, 5 Col. 5; Russ v. Com., 210 Pa. St. 544; 60 Atl. 169, 1 L.R.A. [N.S.] 409, 105 Am. St. Rep.
825] (pp. 332-334).
Indeed, where the legislature or the executive branch is acting within the limits of its authority, the
judiciary cannot and ought not to interfere with the former. But where the legislature or the executive
acts beyond the scope of its constitutional powers, it becomes the duty of the judiciary to declare
what the other branches of the government had assumed to do as void. This is the essence of
judicial power conferred by the Constitution "in one Supreme Court and in such lower courts as may
be established by law" [Art. VIII, Section 1 of the 1935 Constitution; Art. X, Section 1 of the 1973
Constitution and which was adopted as part of the Freedom Constitution, and Art. VIII, Section 1 of
the 1987 Constitution] and which power this Court has exercised in many instances. *
Public respondents are being enjoined from acting under a provision of law which We have earlier
mentioned to be constitutionally infirm. The general principle relied upon cannot therefore accord
them the protection sought as they are not acting within their "sphere of responsibility" but without it.
The nation has not recovered from the shock, and worst, the economic destitution brought about by
the plundering of the Treasury by the deposed dictator and his cohorts. A provision which allows
even the slightest possibility of a repetition of this sad experience cannot remain written in our
statute books.
WHEREFORE, the instant petition is granted. Paragraph 1 of Section 44 of Presidential Decree No.
1177 is hereby declared null and void for being unconstitutional.
SO ORDER RED.
Teehankee, C.J., Yap, Narvasa, Melencio-Herrera, Alampay, Gutierrez, Jr., Cruz, Paras, Feliciano,
Gancayco, Padilla, Bidin, Sarmiento and Cortes, JJ., concur.

Guingona v. Carague, 196 SCRA 221

TEOFISTO T. GUINGONA, JR. and AQUILINO Q. PIMENTEL, JR., petitioners,
vs.
HON. GUILLERMO CARAGUE, in his capacity as Secretary, Budget & Management, HON.
ROZALINA S. CAJUCOM in her capacity as National Treasurer and COMMISSION ON AUDIT,
respondents.
Ramon A. Gonzales for petitioners.
GANCAYCO, J.:

This is a case of first impression whereby petitioners question the constitutionality of the automatic
appropriation for debt service in the 1990 budget.
As alleged in the petition, the facts are as follows:
The 1990 budget consists of P98.4 Billion in automatic appropriation (with P86.8 Billion for debt
service) and P155.3 Billion appropriated under Republic Act No. 6831, otherwise known as the

General Appropriations Act, or a total of P233.5 Billion, while the appropriations for the Department
of Education, Culture and Sports amount to P27,017,813,000.00.

The said automatic appropriation for debt service is authorized by P.D. No. 81, entitled "Amending
Certain Provisions of Republic Act Numbered Four Thousand Eight Hundred Sixty, as Amended (Re:
Foreign Borrowing Act)," by P.D. No. 1177, entitled "Revising the Budget Process in Order to
Institutionalize the Budgetary Innovations of the New Society," and by P.D. No. 1967, entitled "An Act
Strenghthening the Guarantee and Payment Positions of the Republic of the Philippines on Its
Contingent Liabilities Arising out of Relent and Guaranteed Loan by Appropriating Funds For The
Purpose.
There can be no question that petitioners as Senators of the Republic of the Philippines may bring
this suit where a constitutional issue is raised.

Indeed, even a taxpayer has personality to restrain

unlawful expenditure of public funds.

The petitioner seek the declaration of the unconstitutionality of P.D. No. 81, Sections 31 of P.D. 1177,
and P.D. No. 1967. The petition also seeks to restrain the disbursement for debt service under the
1990 budget pursuant to said decrees.
Respondents contend that the petition involves a pure political question which is the repeal or
amendment of said laws addressed to the judgment, wisdom and patriotism of the legislative body
and not this Court.

In Gonzales, the main issue was the unconstitutionality of the presidential veto of certain provision
particularly Section 16 of the General Appropriations Act of 1990, R.A. No. 6831. This Court, in
disposing of the issue, stated
The political question doctrine neither interposes an obstacle to judicial determination of the rival
claims. The jurisdiction to delimit constitutional boundaries has been given to this Court. It cannot
abdicate that obligation mandated by the 1987 Constitution, although said provision by no means
does away with the applicability of the principle in appropriate cases.
Sec. 1. The judicial power shad 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.
With the Senate maintaining that the President's veto is unconstitutional and that charge being
controverted, there is an actual case or justiciable controversy between the Upper House of
Congress and the executive department that may be taken cognizance of by this Court.
The questions raised in the instant petition are
I.
IS THE APPROPRIATION OF P86 BILLION IN THE P233 BILLION 1990 BUDGET
VIOLATIVE OF SECTION 5, ARTICLE XIV OF THE CONSTITUTION?

II.
ARE PD No. 81, PD No. 1177 AND PD No. 1967 STILL OPERATIVE UNDER THE
CONSTITUTION?
III.

ARE THEY VIOLATIVE OF SECTION 29(l), ARTICLE VI OF THE CONSTITUTION?

There is thus a justiciable controversy raised in the petition which this Court may properly take
cognizance of On the first issue, the petitioners aver
According to Sec. 5, Art. XIV of the Constitution:
(5)
The State shall assign the highest budgetary priority to education and ensure that teaching
will attract and retain its rightful share of the best available talents through adequate remuneration
and other means of job satisfaction and fulfillment.
The reason behind the said provision is stated, thus:
In explaining his proposed amendment, Mr. Ople stated that all the great and sincere piety professed
by every President and every Congress of the Philippines since the end of World War II for the
economic welfare of the public schoolteachers always ended up in failure and this failure, he stated,
had caused mass defection of the best and brightest teachers to other careers, including menial jobs
in overseas employment and concerted actions by them to project their grievances, mainly over low
pay and abject working conditions.
He pointed to the high expectations generated by the February Revolution, especially keen among
public schoolteachers, which at present exacerbate these long frustrated hopes.
Mr. Ople stated that despite the sincerity of all administrations that tried vainly to respond to the
needs of the teachers, the central problem that always defeated their pious intentions was really the
one budgetary priority in the sense that any proposed increase for public schoolteachers had to be
multiplied many times by the number of government employees in general and their equitable claims
to any pay standardization such that the pay rate of teachers is hopelessly pegged to the rate of
government workers in general. This, he stated, foredoomed the prospect of a significant pay
increase for teachers.
Mr. Ople pointed out that the recognition by the Constitution of the highest priority for public
schoolteachers, and by implication, for all teachers, would ensure that the President and Congress
would be strongly urged by a constitutional mandate to grant to them such a level of remuneration
and other incentives that would make teaching competitive again and attractive to the best available
talents in the nation.
Finally, Mr. Ople recalled that before World War II, teaching competed most successfully against all
other career choices for the best and the brightest of the younger generation. It is for this reason, he
stated, that his proposed amendment if approved, would ensure that teaching would be restored to
its lost glory as the career of choice for the most talented and most public-spirited of the younger
generation in the sense that it would become the countervailing measure against the continued
decline of teaching and the wholesale desertion of this noble profession presently taking place. He
further stated that this would ensure that the future and the quality of the population would be
asserted as a top priority against many clamorous and importunate but less important claims of the
present. (Journal of the Constitutional Commission, Vol. II, p. 1172)
However, as against this constitutional intention, P86 Billion is appropriated for debt service while
only P27 Billion is appropriated for the Department of Education in the 1990 budget. It plain,
therefore, that the said appropriation for debt services is inconsistent with the Constitution, hence,
viod (Art. 7, New Civil Code).

While it is true that under Section 5(5), Article XIV of the Constitution Congress is mandated to
"assign the highest budgetary priority to education" in order to "insure that teaching will attract and
retain its rightful share of the best available talents through adequate remuneration and other means
of job satisfaction and fulfillment," it does not thereby follow that the hands of Congress are so
hamstrung as to deprive it the power to respond to the imperatives of the national interest and for the
attainment of other state policies or objectives.
As aptly observed by respondents, since 1985, the budget for education has tripled to upgrade and
improve the facility of the public school system. The compensation of teachers has been doubled.

The amount of P29,740,611,000.00 set aside for the Department of Education, Culture and Sports
under the General Appropriations Act (R.A. No. 6831), is the highest budgetary allocation among all
department budgets. This is a clear compliance with the aforesaid constitutional mandate according
highest priority to education.
Having faithfully complied therewith, Congress is certainly not without any power, guided only by its
good judgment, to provide an appropriation, that can reasonably service our enormous debt, the
greater portion of which was inherited from the previous administration. It is not only a matter of
honor and to protect the credit standing of the country. More especially, the very survival of our
economy is at stake. Thus, if in the process Congress appropriated an amount for debt service
bigger than the share allocated to education, the Court finds and so holds that said appropriation
cannot be thereby assailed as unconstitutional.
Now to the second issue. The petitioners made the following observations:
To begin with, Rep. Act 4860 entitled "AN ACT AUTHORIZING THE PRESIDENT OF THE
PHILIPPINES TO OBTAIN SUCH FOREIGN LOANS AND CREDITS, OR TO INCUR SUCH
FOREIGN INDEBTEDNESS, AS MAY BE NECESSARY TO FINANCE APPROVED ECONOMIC
DEVELOPMENT PURPOSES OR PROJECTS, AND TO GUARANTEE, IN BEHALF OF THE
REPUBLIC OF THE PHILIPPINES, FOREIGN LOANS OBTAINED OR BONDS ISSUED BY
CORPORATIONS OWNED OR CONTROLLED BY THE GOVERNMENT OF THE PHILIPPINES
FOR ECONOMIC DEVELOPMENT PURPOSES INCLUDING THOSE INCURRED FOR
PURPOSES OF RELENDING TO THE PRIVATE SECTOR, APPROPRIATING THE NECESSARY
FUNDS THEREFOR, AND FOR OTHER PURPOSES, provides:
Sec. 2. The total amount of loans, credits and indebtedness, excluding interests, which the President
of the Philippines is authorized to incur under this Act shall not exceed one billion United States
dollars or its equivalent in other foreign currencies at the exchange rate prevailing at the time the
loans, credits and indebtedness are incurred: Provided, however, That the total loans, credits and
indebtedness incurred under this Act shall not exceed two hundred fifty million in the fiscal year of
the approval of this Act, and two hundred fifty million every fiscal year thereafter, all in United States
dollars or its equivalent in other currencies.
Sec. 5. It shall be the duty of the President, within thirty days after the opening of every regular
session, to report to the Congress the amount of loans, credits and indebtedness contracted, as well
as the guarantees extended, and the purposes and projects for which the loans, credits and
indebtedness were incurred, and the guarantees extended, as well as such loans which may be
reloaned to Filipino owned or controlled corporations and similar purposes.
Sec. 6. The Congress shall appropriate the necessary amount out of any funds in the National
Treasury not otherwise appropriated, to cover the payment of the principal and interest on such
loans, credits or indebtedness as and when they shall become due.

However, after the declaration of martial law, President Marcos issued PD 81 amending Section 6,
thus:
Sec. 7. Section six of the same Act is hereby further amended to read as follows:
Sec. 6. Any provision of law to the contrary notwithstanding, and in order to enable the Republic of
the Philippines to pay the principal, interest, taxes and other normal banking charges on the loans,
credits or indebtedness, or on the bonds, debentures, securities or other evidences of indebtedness
sold in international markets incurred under the authority of this Act, the proceeds of which are
deemed appropriated for the projects, all the revenue realized from the projects financed by such
loans, credits or indebtedness, or on the bonds, debentures, securities or other evidences of
indebtedness, shall be turned over in full, after deducting actual and necessary expenses for the
operation and maintenance of said projects, to the National Treasury by the government office,
agency or instrumentality, or government-owned or controlled corporation concerned, which is
hereby appropriated for the purpose as and when they shall become due. In case the revenue
realized is insufficient to cover the principal, interest and other charges, such portion of the
budgetary savings as may be necessary to cover the balance or deficiency shall be set aside
exclusively for the purpose by the government office, agency or instrumentality, or governmentowned or controlled corporation concerned: Provided, That, if there still remains a deficiency, such
amount necessary to cover the payment of the principal and interest on such loans, credit or
indebtedness as and when they shall become due is hereby appropriated out of any funds in the
national treasury not otherwise appropriated: . . .
President Marcos also issued PD 1177, which provides:
Sec. 31.
Automatic appropriations. All expenditures for (a) personnel retirement premiums,
government service insurance, and other similar fixed expenditures, (b) principal and interest on
public debt, (c) national government guarantees of obligations which are drawn upon, are
automatically appropriated; Provided, that no obligations shall be incurred or payments made from
funds thus automatically appropriated except as issued in the form of regular budgetary allotments.
and PD 1967, which provides:
Sec. 1. There is hereby appropriated, out of any funds in the National Treasury not otherwise
appropriated, such amounts as may be necessary to effect payments on foreign or domestic loans,
or foreign or domestic loans whereon creditors make a call on the direct and indirect guarantee of
the Republic of the Philippines, obtained by:
a.
The Republic of the Philippines the proceeds of which were relent to government-owned or
controlled corporations and/or government financial institutions;
b.
government-owned or controlled corporations and/or government financial institutions the
proceeds of which were relent to public or private institutions;
c.
government-owned or controlled corporations and/or financial institutions and guaranteed by
the Republic of the Philippines;
d.
other public or private institutions and guaranteed by government-owned or controlled
corporations and/or government financial institutions.
Sec. 2. All repayments made by borrower institutions on the loans for whose account advances were
made by the National Treasury will revert to the General Fund.
Sec. 3. In the event that any borrower institution is unable to settle the advances made out of the
appropriation provided therein, the Treasurer of the Philippines shall make the proper
recommendation to the Minister of Finance on whether such advances shall be treated as equity or
subsidy of the National Government to the institution concerned, which shall be considered in the
budgetary program of the Government.

In the "Budget of Expenditures and Sources of Financing Fiscal Year 1990," which accompanied her
budget message to Congress, the President of the Philippines, Corazon C. Aquino, stated:
Sources Appropriation
The P233.5 billion budget proposed for fiscal year 1990 will require P132.1 billion of new
programmed appropriations out of a total P155.3 billion in new legislative authorization from
Congress. The rest of the budget, totalling P101.4 billion, will be sourced from existing
appropriations: P98.4 billion from Automatic Appropriations and P3.0 billion from Continuing
Appropriations (Fig. 4).
And according to Figure 4, . . ., P86.8 billion out of the P98.4 Billion are programmed for debt
service. In other words, the President had, on her own, determined and set aside the said amount of
P98.4 Billion with the rest of the appropriations of P155.3 Billion to be determined and fixed by
Congress, which is now Rep. Act 6831.

Petitioners argue that the said automatic appropriations under the aforesaid decrees of then
President Marcos became functus oficio when he was ousted in February, 1986; that upon the
expiration of the one-man legislature in the person of President Marcos, the legislative power was
restored to Congress on February 2, 1987 when the Constitution was ratified by the people; that
there is a need for a new legislation by Congress providing for automatic appropriation, but
Congress, up to the present, has not approved any such law; and thus the said P86.8 Billion
automatic appropriation in the 1990 budget is an administrative act that rests on no law, and thus, it
cannot be enforced.
Moreover, petitioners contend that assuming arguendo that P.D. No. 81, P.D. No. 1177 and P.D. No.
1967 did not expire with the ouster of President Marcos, after the adoption of the 1987 Constitution,
the said decrees are inoperative under Section 3, Article XVIII which provides
Sec. 3. All existing laws, decrees, executive orders, proclamations, letters of instructions, and other
executive issuances not inconsistent with this Constitution shall remain operative until amended,
repealed, or revoked." (Emphasis supplied.)
They then point out that since the said decrees are inconsistent with Section 24, Article VI of the
Constitution, i.e.,
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. (Emphasis supplied.)
whereby bills have to be approved by the President,

10

then a law must be passed by Congress to

authorize said automatic appropriation. Further, petitioners state said decrees violate Section 29(l) of
Article VI of the Constitution which provides as follows
Sec. 29(l).
No money shall be paid out of the Treasury except in pursuance of an appropriation
made by law.
They assert that there must be definiteness, certainty and exactness in an appropriation,

11

otherwise it is an undue delegation of legislative power to the President who determines in advance
the amount appropriated for the debt service.

12

The Court is not persuaded.

Section 3, Article XVIII of the Constitution recognizes that "All existing laws, decrees, executive
orders, proclamations, letters of instructions and other executive issuances not inconsistent with the
Constitution shall remain operative until amended, repealed or revoked."

This transitory provision of the Constitution has precisely been adopted by its framers to preserve
the social order so that legislation by the then President Marcos may be recognized. Such laws are
to remain in force and effect unless they are inconsistent with the Constitution or, are otherwise
amended, repealed or revoked.
An examination of the aforecited presidential decrees show the clear intent that the amounts needed
to cover the payment of the principal and interest on all foreign loans, including those guaranteed by
the national government, should be made available when they shall become due precisely without
the necessity of periodic enactments of separate laws appropriating funds therefor, since both the
periods and necessities are incapable of determination in advance.
The automatic appropriation provides the flexibility for the effective execution of debt management
policies. Its political wisdom has been convincingly discussed by the Solicitor General as he argues

. . . First, for example, it enables the Government to take advantage of a favorable turn of market
conditions by redeeming high-interest securities and borrowing at lower rates, or to shift from shortterm to long-term instruments, or to enter into arrangements that could lighten our outstanding debt
burden debt-to-equity, debt to asset, debt-to-debt or other such schemes. Second, the automatic
appropriation obviates the serious difficulties in debt servicing arising from any deviation from what
has been previously programmed. The annual debt service estimates, which are usually made one
year in advance, are based on a mathematical set or matrix or, in layman's parlance, "basket" of
foreign exchange and interest rate assumptions which may significantly differ from actual rates not
even in proportion to changes on the basis of the assumptions. Absent an automatic appropriation
clause, the Philippine Government has to await and depend upon Congressional action, which by
the time this comes, may no longer be responsive to the intended conditions which in the meantime
may have already drastically changed. In the meantime, also, delayed payments and arrearages
may have supervened, only to worsen our debt service-to-total expenditure ratio in the budget due to
penalties and/or demand for immediate payment even before due dates.
Clearly, the claim that payment of the loans and indebtedness is conditioned upon the continuance
of the person of President Marcos and his legislative power goes against the intent and purpose of
the law. The purpose is foreseen to subsist with or without the person of Marcos.

13

The argument of petitioners that the said presidential decrees did not meet the requirement and are
therefore inconsistent with Sections 24 and 27 of Article VI of the Constitution which requires, among
others, that "all appropriations, . . . bills authorizing increase of public debt" must be passed by
Congress and approved by the President is untenable. Certainly, the framers of the Constitution did
not contemplate that existing laws in the statute books including existing presidential decrees
appropriating public money are reduced to mere "bills" that must again go through the legislative
million The only reasonable interpretation of said provisions of the Constitution which refer to "bills"
is that they mean appropriation measures still to be passed by Congress. If the intention of the
framers thereof were otherwise they should have expressed their decision in a more direct or
express manner.
Well-known is the rule that repeal or amendment by implication is frowned upon. Equally
fundamental is the principle that construction of the Constitution and law is generally applied
prospectively and not retrospectively unless it is so clearly stated.

14

On the third issue that there is undue delegation of legislative power, in Edu vs. Ericta,
had this to say

this Court

What cannot be delegated is the authority under the Constitution to make laws and to alter and
repeal them;the test is the completeness of the statute in all its terms and provisions when it leaves
the hands of the legislature. To determine whether or not there is an undue delegation of legislative
power, the inequity must be directed to the scope and definiteness of the measure enacted. The
legislature does not abdicate its function when it describes what job must be done, who is to do it,
and what is the scope of his authority. For a complex economy, that may indeed be the only way in
which legislative process can go forward . . .
To avoid the taint of unlawful delegation there must be a standard, which implies at the very least
that the legislature itself determines matters of principle and lays down fundamental policy . . .
The standard may be either express or implied . . . from the policy and purpose of the act
considered as whole . . .

15

In People vs. Vera,

this Court said "the true distinction is between the delegation of power to

make the law, which necessarily involves discretion as to what the law shall be, and conferring
authority or discretion as to its execution, to be exercised under and in pursuance of the law. The
first cannot be done; to the latter no valid objection can be made."
Ideally, the law must be complete in all its essential terms and conditions when it leaves the
legislature so that there will be nothing left for the delegate to do when it reaches him except enforce
it. If there are gaps in the law that will prevent its enforcement unless they are first filled, the delegate
will then have been given the opportunity to step in the shoes of the legislature and exercise a
discretion essentially legislative in order to repair the omissions. This is invalid delegation.

16

The Court finds that in this case the questioned laws are complete in all their essential terms and
conditions and sufficient standards are indicated therein.
The legislative intention in R.A. No. 4860, as amended, Section 31 of P.D. No. 1177 and P.D. No.
1967 is that the amount needed should be automatically set aside in order to enable the Republic of
the Philippines to pay the principal, interest, taxes and other normal banking charges on the loans,
credits or indebtedness incurred as guaranteed by it when they shall become due without the need
to enact a separate law appropriating funds therefor as the need arises. The purpose of these laws
is to enable the government to make prompt payment and/or advances for all loans to protect and
maintain the credit standing of the country.
Although the subject presidential decrees do not state specific amounts to be paid, necessitated by
the very nature of the problem being addressed, the amounts nevertheless are made certain by the
legislative parameters provided in the decrees. The Executive is not of unlimited discretion as to the
amounts to be disbursed for debt servicing. The mandate is to pay only the principal, interest, taxes
and other normal banking charges on the loans, credits or indebtedness, or on the bonds,
debentures or security or other evidences of indebtedness sold in international markets incurred by
virtue of the law, as and when they shall become due. No uncertainty arises in executive
implementation as the limit will be the exact amounts as shown by the books of the Treasury.
The Government budgetary process has been graphically described to consist of four major phases
as aptly discussed by the Solicitor General:
The Government budgeting process consists of four major phases:
1.
Budget preparation. The first step is essentially tasked upon the Executive Branch and
covers the estimation of government revenues, the determination of budgetary priorities and
activities within the constraints imposed by available revenues and by borrowing limits, and the
translation of desired priorities and activities into expenditure levels.

Budget preparation starts with the budget call issued by the Department of Budget and
Management. Each agency is required to submit agency budget estimates in line with the
requirements consistent with the general ceilings set by the Development Budget Coordinating
Council (DBCC).
With regard to debt servicing, the DBCC staff, based on the macro-economic projections of interest
rates (e.g. LIBOR rate) and estimated sources of domestic and foreign financing, estimates debt
service levels. Upon issuance of budget call, the Bureau of Treasury computes for the interest and
principal payments for the year for all direct national government borrowings and other liabilities
assumed by the same.
2.
Legislative authorization. At this stage, Congress enters the picture and deliberates or
acts on the budget proposals of the President, and Congress in the exercise of its own judgment and
wisdom formulatesan appropriation act precisely following the process established by the
Constitution, which specifies that no money may be paid from the Treasury except in accordance
with an appropriation made by law.
Debt service is not included in the General Appropriation Act, since authorization therefor already
exists under RA No. 4860 and 245, as amended and PD 1967. Precisely in the fight of this
subsisting authorization as embodied in said Republic Acts and PD for debt service, Congress does
not concern itself with details for implementation by the Executive, but largely with annual levels and
approval thereof upon due deliberations as part of the whole obligation program for the year. Upon
such approval, Congress has spoken and cannot be said to have delegated its wisdom to the
Executive, on whose part lies the implementation or execution of the legislative wisdom.
3.
Budget Execution.
Tasked on the Executive, the third phase of the budget process
covers the various operational aspects of budgeting. The establishment of obligation authority
ceilings, the evaluation of work and financial plans for individual activities, the continuing review of
government fiscal position, the regulation of funds releases, the implementation of cash payment
schedules, and other related activities comprise this phase of the budget cycle.
Release from the debt service fired is triggered by a request of the Bureau of the Treasury for
allotments from the Department of Budget and Management, one quarter in advance of payment
schedule, to ensure prompt payments. The Bureau of Treasury, upon receiving official billings from
the creditors, remits payments to creditors through the Central Bank or to the Sinking Fund
established for government security issues (Annex F).
4.
Budget accountability. The fourth phase refers to the evaluation of actual performance and
initially approved work targets, obligations incurred, personnel hired and work accomplished are
compared with the targets set at the time the agency budgets were approved.
There being no undue delegation of legislative power as clearly above shown, petitioners insist
nevertheless that subject presidential decrees constitute undue delegation of legislative power to the
executive on the alleged ground that the appropriations therein are not exact, certain or definite,
invoking in support therefor the Constitution of Nebraska, the constitution under which the case of
State v. Moore, 69 NW 974, cited by petitioners, was decided. Unlike the Constitution of Nebraska,
however, our Constitution does not require a definite, certain, exact or "specific appropriation made
by law." Section 29, Article VI of our 1987 Constitution omits any of these words and simply states:
Section 29(l). No money shall be paid out of the treasury except in pursuance of an appropriation
made by law.
More significantly, there is no provision in our Constitution that provides or prescribes any particular
form of words or religious recitals in which an authorization or appropriation by Congress shall be
made, except that it be "made by law," such as precisely the authorization or appropriation under the

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

17

Thus, in accordance with Section 22, Article VII of the 1987 Constitution, President Corazon C.
Aquino submitted to Congress the Budget of Expenditures and Sources of Financing for the Fiscal
Year 1990. The proposed 1990 expenditure program covering the estimated obligation that will be
incurred by the national government during the fiscal year amounts to P233.5 Billion. Of the
proposed budget, P86.8 is set aside for debt servicing as follows:
1wphi1

National Government Debt

Service Expenditures, 1990
(in million pesos)
Domestic
RA 245, as
amended
Interest
Payments
Principal
Amortization
Total

Foreign
RA 4860
as amended,
PD 1967

Total

P36,861

P18,570

P55,431

16,310

15,077

31,387

P53,171
========

P33,647
========

P86,81
8
========

18

as authorized under P.D. 1967 and R.A. 4860 and 245, as amended.
The Court, therefor, finds that R.A. No. 4860, as amended by P.D. No. 81, Section 31 of P.D. 1177
and P.D. No. 1967 constitute lawful authorizations or appropriations, unless they are repealed or
otherwise amended by Congress. The Executive was thus merely complying with the duty to
implement the same.
There can be no question as to the patriotism and good motive of petitioners in filing this petition.
Unfortunately, the petition must fail on the constitutional and legal issues raised. As to whether or not
the country should honor its international debt, more especially the enormous amount that had been
incurred by the past administration, which appears to be the ultimate objective of the petition, is not
an issue that is presented or proposed to be addressed by the Court. Indeed, it is more of a political
decision for Congress and the Executive to determine in the exercise of their wisdom and sound
discretion.
WHEREFORE, the petition is DISMISSED, without pronouncement as to costs.
SO ORDERED

Tolentino v. Sec. of Finance, 235 SCRA 630

ARTURO M. TOLENTINO, petitioner,
vs.
THE SECRETARY OF FINANCE and THE COMMISSIONER OF INTERNAL REVENUE,
respondents.
G.R. No. 115525
October 30, 1995
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
October 30, 1995
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
October 30, 1995
PHILIPPINE PRESS INSTITUTE, INC.; EGP PUBLISHING CO., INC.; KAMAHALAN PUBLISHING
CORPORATION; PHILIPPINE JOURNALISTS, INC.; JOSE L. PAVIA; and OFELIA L.
DIMALANTA, petitioners,
vs.
HON. LIWAYWAY V. CHATO, in her capacity as Commissioner of Internal Revenue; HON.
TEOFISTO T. GUINGONA, JR., in his capacity as Executive Secretary; and HON. ROBERTO B.
DE OCAMPO, in his capacity as Secretary of Finance, respondents.
G.R. No. 115754
October 30, 1995
CHAMBER OF REAL ESTATE AND BUILDERS ASSOCIATIONS, INC., (CREBA), petitioner,
vs.
THE COMMISSIONER OF INTERNAL REVENUE, respondent.
G.R. No. 115781
October 30, 1995
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., and 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
October 30, 1995
PHILIPPINE AIRLINES, INC., petitioner,
vs.
THE SECRETARY OF FINANCE and COMMISSIONER OF INTERNAL REVENUE, respondents.
G.R. No. 115873
October 30, 1995
COOPERATIVE UNION OF THE PHILIPPINES, petitioner,

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
October 30, 1995
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.
RESOLUTION
MENDOZA, J.:
These are motions seeking reconsideration of our decision dismissing the petitions filed in these
cases for the declaration of unconstitutionality of R.A. No. 7716, otherwise known as the Expanded
Value-Added Tax Law. The motions, of which there are 10 in all, have been filed by the several
petitioners in these cases, with the exception of the Philippine Educational Publishers Association,
Inc. and the Association of Philippine Booksellers, petitioners in G.R. No. 115931.
The Solicitor General, representing the respondents, filed a consolidated comment, to which the
Philippine Airlines, Inc., petitioner in G.R. No. 115852, and the Philippine Press Institute, Inc.,
petitioner in G.R. No. 115544, and Juan T. David, petitioner in G.R. No. 115525, each filed a reply. In
turn the Solicitor General filed on June 1, 1995 a rejoinder to the PPI's reply.
On June 27, 1995 the matter was submitted for resolution.
I.
Power of the Senate to propose amendments to revenue bills. Some of the petitioners
(Tolentino, Kilosbayan, Inc., Philippine Airlines (PAL), Roco, and Chamber of Real Estate and
Builders Association (CREBA)) reiterate previous claims made by them that R.A. No. 7716 did not
"originate exclusively" in the House of Representatives as required by Art. VI, 24 of the
Constitution. Although they admit that H. No. 11197 was filed in the House of Representatives where
it passed three readings and that afterward it was sent to the Senate where after first reading it was
referred to the Senate Ways and Means Committee, they complain that the Senate did not pass it on
second and third readings. Instead what the Senate did was to pass its own version (S. No. 1630)
which it approved on May 24, 1994. Petitioner Tolentino adds that what the Senate committee
should have done was to amend H. No. 11197 by striking out the text of the bill and substituting it
with the text of S. No. 1630. That way, it is said, "the bill remains a House bill and the Senate version
just becomes the text (only the text) of the House bill."
The contention has no merit.
The enactment of S. No. 1630 is not the only instance in which the Senate proposed an amendment
to a House revenue bill by enacting its own version of a revenue bill. On at least two occasions
during the Eighth Congress, the Senate passed its own version of revenue bills, which, in
consolidation with House bills earlier passed, became the enrolled bills. These were:
R.A. No. 7369 (AN ACT TO AMEND THE OMNIBUS INVESTMENTS CODE OF 1987 BY
EXTENDING FROM FIVE (5) YEARS TO TEN YEARS THE PERIOD FOR TAX AND DUTY
EXEMPTION AND TAX CREDIT ON CAPITAL EQUIPMENT) which was approved by the President
on April 10, 1992. This Act is actually a consolidation of H. No. 34254, which was approved by the

House on January 29, 1992, and S. No. 1920, which was approved by the Senate on February 3,
1992.
R.A. No. 7549 (AN ACT GRANTING TAX EXEMPTIONS TO WHOEVER SHALL GIVE REWARD TO
ANY FILIPINO ATHLETE WINNING A MEDAL IN OLYMPIC GAMES) which was approved by the
President on May 22, 1992. This Act is a consolidation of H. No. 22232, which was approved by the
House of Representatives on August 2, 1989, and S. No. 807, which was approved by the Senate on
October 21, 1991.
On the other hand, the Ninth Congress passed revenue laws which were also the result of the
consolidation of House and Senate bills. These are the following, with indications of the dates on
which the laws were approved by the President and dates the separate bills of the two chambers of
Congress were respectively passed:
1.
R.A. NO. 7642
AN ACT INCREASING THE PENALTIES FOR TAX EVASION, AMENDING FOR THIS PURPOSE
THE PERTINENT SECTIONS OF THE NATIONAL INTERNAL REVENUE CODE (December 28,
1992).
House Bill No. 2165, October 5, 1992
Senate Bill No. 32, December 7, 1992
2.
R.A. NO. 7643
AN ACT TO EMPOWER THE COMMISSIONER OF INTERNAL REVENUE TO REQUIRE THE
PAYMENT OF THE VALUE-ADDED TAX EVERY MONTH AND TO ALLOW LOCAL GOVERNMENT
UNITS TO SHARE IN VAT REVENUE, AMENDING FOR THIS PURPOSE CERTAIN SECTIONS OF
THE NATIONAL INTERNAL REVENUE CODE (December 28, 1992)
House Bill No. 1503, September 3, 1992
Senate Bill No. 968, December 7, 1992
3.
R.A. NO. 7646
AN ACT AUTHORIZING THE COMMISSIONER OF INTERNAL REVENUE TO PRESCRIBE THE
PLACE FOR PAYMENT OF INTERNAL REVENUE TAXES BY LARGE TAXPAYERS, AMENDING
FOR THIS PURPOSE CERTAIN PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE,
AS AMENDED (February 24, 1993)
House Bill No. 1470, October 20, 1992
Senate Bill No. 35, November 19, 1992
4.
R.A. NO. 7649
AN ACT REQUIRING THE GOVERNMENT OR ANY OF ITS POLITICAL SUBDIVISIONS,
INSTRUMENTALITIES OR AGENCIES INCLUDING GOVERNMENT-OWNED OR CONTROLLED
CORPORATIONS (GOCCS) TO DEDUCT AND WITHHOLD THE VALUE-ADDED TAX DUE AT THE
RATE OF THREE PERCENT (3%) ON GROSS PAYMENT FOR THE PURCHASE OF GOODS AND
SIX PERCENT (6%) ON GROSS RECEIPTS FOR SERVICES RENDERED BY CONTRACTORS
(April 6, 1993)
House Bill No. 5260, January 26, 1993
Senate Bill No. 1141, March 30, 1993
5.
R.A. NO. 7656
AN ACT REQUIRING GOVERNMENT-OWNED OR CONTROLLED CORPORATIONS TO
DECLARE DIVIDENDS UNDER CERTAIN CONDITIONS TO THE NATIONAL GOVERNMENT, AND
FOR OTHER PURPOSES (November 9, 1993)
House Bill No. 11024, November 3, 1993
Senate Bill No. 1168, November 3, 1993

6.
R.A. NO. 7660
AN ACT RATIONALIZING FURTHER THE STRUCTURE AND ADMINISTRATION OF THE
DOCUMENTARY STAMP TAX, AMENDING FOR THE PURPOSE CERTAIN PROVISIONS OF THE
NATIONAL INTERNAL REVENUE CODE, AS AMENDED, ALLOCATING FUNDS FOR SPECIFIC
PROGRAMS, AND FOR OTHER PURPOSES (December 23, 1993)
House Bill No. 7789, May 31, 1993
Senate Bill No. 1330, November 18, 1993
7.
R.A. NO. 7717
AN ACT IMPOSING A TAX ON THE SALE, BARTER OR EXCHANGE OF SHARES OF STOCK
LISTED AND TRADED THROUGH THE LOCAL STOCK EXCHANGE OR THROUGH INITIAL
PUBLIC OFFERING, AMENDING FOR THE PURPOSE THE NATIONAL INTERNAL REVENUE
CODE, AS AMENDED, BY INSERTING A NEW SECTION AND REPEALING CERTAIN
SUBSECTIONS THEREOF (May 5, 1994)
House Bill No. 9187, November 3, 1993
Senate Bill No. 1127, March 23, 1994
Thus, the enactment of S. No. 1630 is not the only instance in which the Senate, in the exercise of
its power to propose amendments to bills required to originate in the House, passed its own version
of a House revenue measure. It is noteworthy that, in the particular case of S. No. 1630, petitioners
Tolentino and Roco, as members of the Senate, voted to approve it on second and third readings.
On the other hand, amendment by substitution, in the manner urged by petitioner Tolentino,
concerns a mere matter of form. Petitioner has not shown what substantial difference it would make
if, as the Senate actually did in this case, a separate bill like S. No. 1630 is instead enacted as a
substitute measure, "taking into Consideration . . . H.B. 11197."
Indeed, so far as pertinent, the Rules of the Senate only provide:
RULE XXIX
AMENDMENTS
xxx
xxx
xxx
68. Not more than one amendment to the original amendment shall be considered.
No amendment by substitution shall be entertained unless the text thereof is submitted in writing.
Any of said amendments may be withdrawn before a vote is taken thereon.
69. No amendment which seeks the inclusion of a legislative provision foreign to the subject
matter of a bill (rider) shall be entertained.
xxx
xxx
xxx
70-A. A bill or resolution shall not be amended by substituting it with another which covers a
subject distinct from that proposed in the original bill or resolution. (emphasis added).
Nor is there merit in petitioners' contention that, with regard to revenue bills, the Philippine Senate
possesses less power than the U.S. Senate because of textual differences between constitutional
provisions giving them the power to propose or concur with amendments.
Art. I, 7, cl. 1 of the U.S. Constitution reads:
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.
Art. VI, 24 of our 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.

The addition of the word "exclusively" in the Philippine Constitution and the decision to drop the
phrase "as on other Bills" in the American version, according to petitioners, shows the intention of
the framers of our Constitution to restrict the Senate's power to propose amendments to revenue
bills. Petitioner Tolentino contends that the word "exclusively" was inserted to modify "originate" and
"the words 'as in any other bills' (sic) were eliminated so as to show that these bills were not to be
like other bills but must be treated as a special kind."
The history of this provision does not support this contention. The supposed indicia of constitutional
intent are nothing but the relics of an unsuccessful attempt to limit the power of the Senate. It will be
recalled that the 1935 Constitution originally provided for a unicameral National Assembly. When it
was decided in 1939 to change to a bicameral legislature, it became necessary to provide for the
procedure for lawmaking by the Senate and the House of Representatives. The work of proposing
amendments to the Constitution was done by the National Assembly, acting as a constituent
assembly, some of whose members, jealous of preserving the Assembly's lawmaking powers,
sought to curtail the powers of the proposed Senate. Accordingly they proposed the following
provision:
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 twothirds 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
session 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.
The special committee on the revision of laws of the Second National Assembly vetoed the proposal.
It deleted everything after the first sentence. As rewritten, the proposal was approved by the National
Assembly and embodied in Resolution No. 38, as amended by Resolution No. 73. (J. ARUEGO,
KNOW YOUR CONSTITUTION 65-66 (1950)). The proposed amendment was submitted to the
people and ratified by them in the elections held on June 18, 1940.
This is the history of Art. VI, 18 (2) of the 1935 Constitution, from which Art. VI, 24 of the present
Constitution was derived. It explains why the word "exclusively" was added to the American text from
which the framers of the Philippine Constitution borrowed and why the phrase "as on other Bills" was
not copied. Considering the defeat of the proposal, the power of the Senate to propose amendments
must be understood to be full, plenary and complete "as on other Bills." Thus, because revenue bills
are required to originate exclusively in the House of Representatives, the Senate cannot enact
revenue measures of its own without such bills. After a revenue bill is passed and sent over to it by
the House, however, the Senate certainly can pass its own version on the same subject matter. This
follows from the coequality of the two chambers of Congress.
That this is also the understanding of book authors of the scope of the Senate's power to concur is
clear from the following commentaries:
The power of the Senate to propose or concur with amendments is apparently without restriction. It
would seem that by virtue of this power, the Senate can practically re-write a bill required to come
from the House and leave only a trace of the original bill. For example, a general revenue bill passed
by the lower house of the United States Congress contained provisions for the imposition of an
inheritance tax . This was changed by the Senate into a corporation tax. The amending authority of

the Senate was declared by the United States Supreme Court to be sufficiently broad to enable it to
make the alteration. [Flint v. Stone Tracy Company, 220 U.S. 107, 55 L. ed. 389].
(L. TAADA AND F. CARREON, POLITICAL LAW OF THE PHILIPPINES 247 (1961))
The above-mentioned bills are supposed to be initiated by the House of Representatives because it
is more numerous in membership and therefore also more representative of the people. Moreover,
its members are presumed to be more familiar with the needs of the country in regard to the
enactment of the legislation involved.
The Senate is, however, allowed much leeway in the exercise of its power to propose or concur with
amendments to the bills initiated by the House of Representatives. Thus, in one case, a bill
introduced in the U.S. House of Representatives was changed by the Senate to make a proposed
inheritance tax a corporation tax. It is also accepted practice for the Senate to introduce what is
known as an amendment by substitution, which may entirely replace the bill initiated in the House of
Representatives.
(I. CRUZ, PHILIPPINE POLITICAL LAW 144-145 (1993)).
In sum, while Art. VI, 24 provides that all appropriation, revenue or tariff bills, bills authorizing
increase of the public debt, bills of local application, and private bills must "originate exclusively in
the House of Representatives," it also adds, "but the Senate may propose or concur with
amendments." In the exercise of this power, the Senate may propose an entirely new bill as a
substitute measure. As petitioner Tolentino states in a high school text, a committee to which a bill is
referred may do any of the following:
(1)
to endorse the bill without changes; (2) to make changes in the bill omitting or adding
sections or altering its language; (3) to make and endorse an entirely new bill as a substitute, in
which case it will be known as a committee bill; or (4) to make no report at all.
(A. TOLENTINO, THE GOVERNMENT OF THE PHILIPPINES 258 (1950))
To except from this procedure the amendment of bills which are required to originate in the House by
prescribing that the number of the House bill and its other parts up to the enacting clause must be
preserved although the text of the Senate amendment may be incorporated in place of the original
body of the bill is to insist on a mere technicality. At any rate there is no rule prescribing this form. S.
No. 1630, as a substitute measure, is therefore as much an amendment of H. No. 11197 as any
which the Senate could have made.
II.
S. No. 1630 a mere amendment of H. No. 11197. Petitioners' basic error is that they assume
that S. No. 1630 is an independent and distinct bill. Hence their repeated references to its
certification that it was passed by the Senate "in substitution of S.B. No. 1129, taking into
consideration P.S. Res. No. 734 and H.B. No. 11197," implying that there is something substantially
different between the reference to S. No. 1129 and the reference to H. No. 11197. From this premise,
they conclude that R.A. No. 7716 originated both in the House and in the Senate and that it is the
product of two "half-baked bills because neither H. No. 11197 nor S. No. 1630 was passed by both
houses of Congress."
In point of fact, in several instances the provisions of S. No. 1630, clearly appear to be mere
amendments of the corresponding provisions of H. No. 11197. The very tabular comparison of the
provisions of H. No. 11197 and S. No. 1630 attached as Supplement A to the basic petition of
petitioner Tolentino, while showing differences between the two bills, at the same time indicates that
the provisions of the Senate bill were precisely intended to be amendments to the House bill.
Without H. No. 11197, the Senate could not have enacted S. No. 1630. Because the Senate bill was
a mere amendment of the House bill, H. No. 11197 in its original form did not have to pass the
Senate on second and three readings. It was enough that after it was passed on first reading it was

referred to the Senate Committee on Ways and Means. Neither was it required that S. No. 1630 be
passed by the House of Representatives before the two bills could be referred to the Conference
Committee.
There is legislative precedent for what was done in the case of H. No. 11197 and S. No. 1630. When
the House bill and Senate bill, which became R.A. No. 1405 (Act prohibiting the disclosure of bank
deposits), were referred to a conference committee, the question was raised whether the two bills
could be the subject of such conference, considering that the bill from one house had not been
passed by the other and vice versa. As Congressman Duran put the question:
MR. DURAN. Therefore, I raise this question of order as to procedure: If a House bill is passed by
the House but not passed by the Senate, and a Senate bill of a similar nature is passed in the
Senate but never passed in the House, can the two bills be the subject of a conference, and can a
law be enacted from these two bills? I understand that the Senate bill in this particular instance does
not refer to investments in government securities, whereas the bill in the House, which was
introduced by the Speaker, covers two subject matters: not only investigation of deposits in banks
but also investigation of investments in government securities. Now, since the two bills differ in their
subject matter, I believe that no law can be enacted.
Ruling on the point of order raised, the chair (Speaker Jose B. Laurel, Jr.) said:
THE SPEAKER.
The report of the conference committee is in order. It is precisely in cases like
this where a conference should be had. If the House bill had been approved by the Senate, there
would have been no need of a conference; but precisely because the Senate passed another bill on
the same subject matter, the conference committee had to be created, and we are now considering
the report of that committee.
(2 CONG. REC. NO. 13, July 27, 1955, pp. 3841-42 (emphasis added))
III.
The President's certification. The fallacy in thinking that H. No. 11197 and S. No. 1630 are
distinct and unrelated measures also accounts for the petitioners' (Kilosbayan's and PAL's)
contention that because the President separately certified to the need for the immediate enactment
of these measures, his certification was ineffectual and void. The certification had to be made of the
version of the same revenue bill which at the moment was being considered. Otherwise, to follow
petitioners' theory, it would be necessary for the President to certify as many bills as are presented in
a house of Congress even though the bills are merely versions of the bill he has already certified. It
is enough that he certifies the bill which, at the time he makes the certification, is under
consideration. Since on March 22, 1994 the Senate was considering S. No. 1630, it was that bill
which had to be certified. For that matter on June 1, 1993 the President had earlier certified H. No.
9210 for immediate enactment because it was the one which at that time was being considered by
the House. This bill was later substituted, together with other bills, by H. No. 11197.
As to what Presidential certification can accomplish, we have already explained in the main decision
that the phrase "except when the President certifies to the necessity of its immediate enactment,
etc." in Art. VI, 26 (2) qualifies not only the requirement that "printed copies [of a bill] in its final form
[must be] distributed to the members three days before its passage" but also the requirement that
before a bill can become a law it must have passed "three readings on separate days." There is not
only textual support for such construction but historical basis as well.
Art. VI, 21 (2) of the 1935 Constitution originally provided:
(2)
No bill shall be passed by either House unless it shall have been printed and copies thereof
in its final form furnished its Members at least three calendar days prior to its passage, except when
the President shall have certified to the necessity of its immediate enactment. Upon the last reading

of a bill, no amendment thereof shall be allowed and the question upon its passage shall be taken
immediately thereafter, and the yeas and nays entered on the Journal.
When the 1973 Constitution was adopted, it was provided in Art. VIII, 19 (2):
(2)
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.
This provision of the 1973 document, with slight modification, was adopted in Art. VI, 26 (2) of the
present Constitution, thus:
(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.
The exception is based on the prudential consideration that if in all cases three readings on separate
days are required and a bill has to be printed in final form before it can be passed, the need for a law
may be rendered academic by the occurrence of the very emergency or public calamity which it is
meant to address.
Petitioners further contend that a "growing budget deficit" is not an emergency, especially in a
country like the Philippines where budget deficit is a chronic condition. Even if this were the case, an
enormous budget deficit does not make the need for R.A. No. 7716 any less urgent or the situation
calling for its enactment any less an emergency.
Apparently, the members of the Senate (including some of the petitioners in these cases) believed
that there was an urgent need for consideration of S. No. 1630, because they responded to the call
of the President by voting on the bill on second and third readings on the same day. While the
judicial department is not bound by the Senate's acceptance of the President's certification, the
respect due coequal departments of the government in matters committed to them by the
Constitution and the absence of a clear showing of grave abuse of discretion caution a stay of the
judicial hand.
At any rate, we are satisfied that S. No. 1630 received thorough consideration in the Senate where it
was discussed for six days. Only its distribution in advance in its final printed form was actually
dispensed with by holding the voting on second and third readings on the same day (March 24,
1994). Otherwise, sufficient time between the submission of the bill on February 8, 1994 on second
reading and its approval on March 24, 1994 elapsed before it was finally voted on by the Senate on
third reading.
The purpose for which three readings on separate days is required is said to be two-fold: (1) to
inform the members of Congress of what they must vote on and (2) to give them notice that a
measure is progressing through the enacting process, thus enabling them and others interested in
the measure to prepare their positions with reference to it. (1 J. G. SUTHERLAND, STATUTES AND
STATUTORY CONSTRUCTION 10.04, p. 282 (1972)). These purposes were substantially
achieved in the case of R.A. No. 7716.
IV.
Power of Conference Committee. It is contended (principally by Kilosbayan, Inc. and the
Movement of Attorneys for Brotherhood, Integrity and Nationalism, Inc. (MABINI)) that in violation of

the constitutional policy of full public disclosure and the people's right to know (Art. II, 28 and Art. III,
7) the Conference Committee met for two days in executive session with only the conferees
present.
As pointed out in our main decision, even in the United States it was customary to hold such
sessions with only the conferees and their staffs in attendance and it was only in 1975 when a new
rule was adopted requiring open sessions. Unlike its American counterpart, the Philippine Congress
has not adopted a rule prescribing open hearings for conference committees.
It is nevertheless claimed that in the United States, before the adoption of the rule in 1975, at least
staff members were present. These were staff members of the Senators and Congressmen,
however, who may be presumed to be their confidential men, not stenographers as in this case who
on the last two days of the conference were excluded. There is no showing that the conferees
themselves did not take notes of their proceedings so as to give petitioner Kilosbayan basis for
claiming that even in secret diplomatic negotiations involving state interests, conferees keep notes of
their meetings. Above all, the public's right to know was fully served because the Conference
Committee in this case submitted a report showing the changes made on the differing versions of
the House and the Senate.
Petitioners cite the rules of both houses which provide that conference committee reports must
contain "a detailed, sufficiently explicit statement of the changes in or other amendments." These
changes are shown in the bill attached to the Conference Committee Report. The members of both
houses could thus ascertain what changes had been made in the original bills without the need of a
statement detailing the changes.
The same question now presented was raised when the bill which became R.A. No. 1400 (Land
Reform Act of 1955) was reported by the Conference Committee. Congressman Bengzon raised a
point of order. He said:
MR. BENGZON.
My point of order is that it is out of order to consider the report of the
conference committee regarding House Bill No. 2557 by reason of the provision of Section 11, Article
XII, of the Rules of this House which provides specifically that the conference report must be
accompanied by a detailed statement of the effects of the amendment on the bill of the House. This
conference committee report is not accompanied by that detailed statement, Mr. Speaker. Therefore
it is out of order to consider it.
Petitioner Tolentino, then the Majority Floor Leader, answered:
MR. TOLENTINO.
Mr. Speaker, I should just like to say a few words in connection with the point
of order raised by the gentleman from Pangasinan.
There is no question about the provision of the Rule cited by the gentleman from Pangasinan, but
this provision applies to those cases where only portions of the bill have been amended. In this case
before us an entire bill is presented; therefore, it can be easily seen from the reading of the bill what
the provisions are. Besides, this procedure has been an established practice.
After some interruption, he continued:
MR. TOLENTINO.
As I was saying, Mr. Speaker, we have to look into the reason for the
provisions of the Rules, and the reason for the requirement in the provision cited by the gentleman
from Pangasinan is when there are only certain words or phrases inserted in or deleted from the
provisions of the bill included in the conference report, and we cannot understand what those words
and phrases mean and their relation to the bill. In that case, it is necessary to make a detailed
statement on how those words and phrases will affect the bill as a whole; but when the entire bill
itself is copied verbatim in the conference report, that is not necessary. So when the reason for the
Rule does not exist, the Rule does not exist.

(2 CONG. REC. NO. 2, p. 4056. (emphasis added))

Congressman Tolentino was sustained by the chair. The record shows that when the ruling was
appealed, it was upheld by viva voce and when a division of the House was called, it was sustained
by a vote of 48 to 5. (Id.,
p. 4058)
Nor is there any doubt about the power of a conference committee to insert new provisions as long
as these are germane to the subject of the conference. As this Court held in Philippine Judges
Association v. Prado, 227 SCRA 703 (1993), in an opinion written by then Justice Cruz, the
jurisdiction of the conference committee is not limited to resolving differences between the Senate
and the House. It may propose an entirely new provision. What is important is that its report is
subsequently approved by the respective houses of Congress. This Court ruled that it would not
entertain allegations that, because new provisions had been added by the conference committee,
there was thereby a violation of the constitutional injunction that "upon the last reading of a bill, no
amendment thereto shall be allowed."
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.
(Id. at 710. (emphasis added))
It is interesting to note the following description of conference committees in the Philippines in a
1979 study:
Conference committees may be of two types: free or instructed. These committees may be given
instructions by their parent bodies or they may be left without instructions. Normally the conference
committees are without instructions, and this is why they are often critically referred to as "the little
legislatures." Once bills have been sent to them, the conferees have almost unlimited authority to
change the clauses of the bills and in fact sometimes introduce new measures that were not in the
original legislation. No minutes are kept, and members' activities on conference committees are
difficult to determine. One congressman known for his idealism put it this way: "I killed a bill on
export incentives for my interest group [copra] in the conference committee but I could not have
done so anywhere else." The conference committee submits a report to both houses, and usually it
is accepted. If the report is not accepted, then the committee is discharged and new members are
appointed.
(R. Jackson, Committees in the Philippine Congress, in COMMITTEES AND LEGISLATURES: A
COMPARATIVE ANALYSIS 163 (J. D. LEES AND M. SHAW, eds.)).
In citing this study, we pass no judgment on the methods of conference committees. We cite it only
to say that conference committees here are no different from their counterparts in the United States
whose vast powers we noted in Philippine Judges Association v. Prado, supra. At all events, under
Art. VI, 16(3) each house has the power "to determine the rules of its proceedings," including those
of its committees. Any meaningful change in the method and procedures of Congress or its
committees must therefore be sought in that body itself.
V.
The titles of S. No. 1630 and H. No. 11197. PAL maintains that R.A. No. 7716 violates Art. VI,
26 (1) of the Constitution which provides that "Every bill passed by Congress shall embrace only
one subject which shall be expressed in the title thereof." PAL contends that the amendment of its
franchise by the withdrawal of its exemption from the VAT is not expressed in the title of the law.

Pursuant to 13 of P.D. No. 1590, PAL pays a franchise tax of 2% on its gross revenue "in lieu of all
other taxes, duties, royalties, registration, license and 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."
PAL was exempted from the payment of the VAT along with other entities by 103 of the National
Internal Revenue Code, which provides as follows:
103. Exempt transactions. The following shall be exempt from the value-added tax:
xxx
xxx
xxx
(q)
Transactions which are exempt under special laws or international agreements to which the
Philippines is a signatory.
R.A. No. 7716 seeks to withdraw certain exemptions, including that granted to PAL, by amending
103, as follows:
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
Decree Nos. 66, 529, 972, 1491, 1590. . . .
The amendment of 103 is expressed in the title of R.A. No. 7716 which reads:
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.
By stating that R.A. No. 7716 seeks to "[RESTRUCTURE] THE VALUE-ADDED TAX (VAT) SYSTEM
[BY] 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," Congress thereby
clearly expresses its intention to amend any provision of the NIRC which stands in the way of
accomplishing the purpose of the law.
PAL asserts that the amendment of its franchise must be reflected in the title of the law by specific
reference to P.D. No. 1590. It is unnecessary to do this in order to comply with the constitutional
requirement, since it is already stated in the title that the law seeks to amend the pertinent provisions
of the NIRC, among which is 103(q), in order to widen the base of the VAT. Actually, it is the bill
which becomes a law that is required to express in its title the subject of legislation. The titles of H.
No. 11197 and S. No. 1630 in fact specifically referred to 103 of the NIRC as among the provisions
sought to be amended. We are satisfied that sufficient notice had been given of the pendency of
these bills in Congress before they were enacted into what is now R.A.
No. 7716.
In Philippine Judges Association v. Prado, supra, a similar argument as that now made by PAL was
rejected. R.A. No. 7354 is entitled AN ACT CREATING THE PHILIPPINE POSTAL CORPORATION,
DEFINING ITS POWERS, FUNCTIONS AND RESPONSIBILITIES, PROVIDING FOR
REGULATION OF THE INDUSTRY AND FOR OTHER PURPOSES CONNECTED THEREWITH. It
contained a provision repealing all franking privileges. It was contended that the withdrawal of
franking privileges was not expressed in the title of the law. In holding that there was sufficient
description of the subject of the law in its title, including the repeal of franking privileges, this Court
held:
To require every end and means necessary for the accomplishment of the general objectives of the
statute to be expressed in its title would not only be unreasonable but would actually render

legislation impossible. [Cooley, Constitutional Limitations, 8th Ed., p. 297] As has been correctly
explained:
The details of a legislative act need not be specifically stated in its title, but matter germane to the
subject as expressed in the title, and adopted to the accomplishment of the object in view, may
properly be included in the act. Thus, it is proper to create in the same act the machinery by which
the act is to be enforced, to prescribe the penalties for its infraction, and to remove obstacles in the
way of its execution. If such matters are properly connected with the subject as expressed in the
title, it is unnecessary that they should also have special mention in the title. (Southern Pac. Co. v.
Bartine, 170 Fed. 725)
(227 SCRA at 707-708)
VI.
Claims of press freedom and religious liberty. We have held that, as a general proposition,
the press is not exempt from the taxing power of the State and that what the constitutional guarantee
of free press prohibits are laws which single out the press or target a group belonging to the press
for special treatment or which in any way discriminate against the press on the basis of the content
of the publication, and R.A. No. 7716 is none of these.
Now it is contended by the PPI that by removing the exemption of the press from the VAT while
maintaining those granted to others, the law discriminates against the press. At any rate, it is
averred, "even nondiscriminatory taxation of constitutionally guaranteed freedom is unconstitutional."
With respect to the first contention, it would suffice to say that since the law granted the press a
privilege, the law could take back the privilege anytime without offense to the Constitution. The
reason is simple: by granting exemptions, the State does not forever waive the exercise of its
sovereign prerogative.
Indeed, in withdrawing the exemption, the law merely subjects the press to the same tax burden to
which other businesses have long ago been subject. It is thus different from the tax involved in the
cases invoked by the PPI. The license tax in Grosjean v. American Press Co., 297 U.S. 233, 80 L.
Ed. 660 (1936) was found to be discriminatory because it was laid on the gross advertising receipts
only of newspapers whose weekly circulation was over 20,000, with the result that the tax applied
only to 13 out of 124 publishers in Louisiana. These large papers were critical of Senator Huey Long
who controlled the state legislature which enacted the license tax. The censorial motivation for the
law was thus evident.
On the other hand, in Minneapolis Star & Tribune Co. v. Minnesota Comm'r of Revenue, 460 U.S.
575, 75 L. Ed. 2d 295 (1983), the tax was found to be discriminatory because although it could have
been made liable for the sales tax or, in lieu thereof, for the use tax on the privilege of using, storing
or consuming tangible goods, the press was not. Instead, the press was exempted from both taxes.
It was, however, later made to pay a special use tax on the cost of paper and ink which made these
items "the only items subject to the use tax that were component of goods to be sold at retail." The
U.S. Supreme Court held that the differential treatment of the press "suggests that the goal of
regulation is not related to suppression of expression, and such goal is presumptively
unconstitutional." It would therefore appear that even a law that favors the press is constitutionally
suspect. (See the dissent of Rehnquist, J. in that case)
Nor is it true that only two exemptions previously granted by E.O. No. 273 are withdrawn "absolutely
and unqualifiedly" by R.A. No. 7716. Other exemptions from the VAT, such as those previously
granted to PAL, petroleum concessionaires, enterprises registered with the Export Processing Zone
Authority, and many more are likewise totally withdrawn, in addition to exemptions which are partially
withdrawn, in an effort to broaden the base of the tax.

The PPI says that the discriminatory treatment of the press is highlighted by the fact that
transactions, which are profit oriented, continue to enjoy exemption under R.A. No. 7716. An
enumeration of some of these transactions will suffice to show that by and large this is not so and
that the exemptions are granted for a purpose. As the Solicitor General says, such exemptions are
granted, in some cases, to encourage agricultural production and, in other cases, for the personal
benefit of the end-user rather than for profit. The exempt transactions are:
(a)
Goods for consumption or use which are in their original state (agricultural, marine and forest
products, cotton seeds in their original state, fertilizers, seeds, seedlings, fingerlings, fish, prawn
livestock and poultry feeds) and goods or services to enhance agriculture (milling of palay, corn,
sugar cane and raw sugar, livestock, poultry feeds, fertilizer, ingredients used for the manufacture of
feeds).
(b)
Goods used for personal consumption or use (household and personal effects of citizens
returning to the Philippines) or for professional use, like professional instruments and implements, by
persons coming to the Philippines to settle here.
(c)
Goods subject to excise tax such as petroleum products or to be used for manufacture of
petroleum products subject to excise tax and services subject to percentage tax.
(d)
Educational services, medical, dental, hospital and veterinary services, and services
rendered under employer-employee relationship.
(e)
Works of art and similar creations sold by the artist himself.
(f)
Transactions exempted under special laws, or international agreements.
(g)
Export-sales by persons not VAT-registered.
(h)
Goods or services with gross annual sale or receipt not exceeding P500,000.00.
(Respondents' Consolidated Comment on the Motions for Reconsideration, pp. 58-60)
The PPI asserts that it does not really matter that the law does not discriminate against the press
because "even nondiscriminatory taxation on constitutionally guaranteed freedom is
unconstitutional." PPI cites in support of this assertion the following statement in Murdock v.
Pennsylvania, 319 U.S. 105, 87 L. Ed. 1292 (1943):
The fact that the ordinance is "nondiscriminatory" is immaterial. The protection afforded by the First
Amendment is not so restricted. A license tax certainly does not acquire constitutional validity
because it classifies the privileges protected by the First Amendment along with the wares and
merchandise of hucksters and peddlers and treats them all alike. Such equality in treatment does not
save the ordinance. Freedom of press, freedom of speech, freedom of religion are in preferred
position.
The Court was speaking in that case of a license tax, which, unlike an ordinary tax, is mainly for
regulation. Its imposition on the press is unconstitutional because it lays a prior restraint on the
exercise of its right. Hence, although its application to others, such those selling goods, is valid, its
application to the press or to religious groups, such as the Jehovah's Witnesses, in connection with
the latter's sale of religious books and pamphlets, is unconstitutional. As the U.S. Supreme Court put
it, "it is one thing to impose a tax on income or property of a preacher. It is quite another thing to
exact a tax on him for delivering a sermon."
A similar ruling was made by this Court in American Bible Society v. City of Manila, 101 Phil. 386
(1957) which invalidated a city ordinance requiring a business license fee on those engaged in the
sale of general merchandise. It was held that the tax could not be imposed on the sale of bibles by
the American Bible Society without restraining the free exercise of its right to propagate.
The VAT is, however, different. It is not a license tax. It is not a tax on the exercise of a privilege,
much less a constitutional right. It is imposed on the sale, barter, lease or exchange of goods or

properties or the sale or exchange of services and the lease of properties purely for revenue
purposes. To subject the press to its payment is not to burden the exercise of its right any more than
to make the press pay income tax or subject it to general regulation is not to violate its freedom
under the Constitution.
Additionally, the Philippine Bible Society, Inc. claims that although it sells bibles, the proceeds
derived from the sales are used to subsidize the cost of printing copies which are given free to those
who cannot afford to pay so that to tax the sales would be to increase the price, while reducing the
volume of sale. Granting that to be the case, the resulting burden on the exercise of religious
freedom is so incidental as to make it difficult to differentiate it from any other economic imposition
that might make the right to disseminate religious doctrines costly. Otherwise, to follow the
petitioner's argument, to increase the tax on the sale of vestments would be to lay an impermissible
burden on the right of the preacher to make a sermon.
On the other hand the registration fee of P1,000.00 imposed by 107 of the NIRC, as amended by
7 of R.A. No. 7716, although fixed in amount, is really just to pay for the expenses of registration
and enforcement of provisions such as those relating to accounting in 108 of the NIRC. That the
PBS distributes free bibles and therefore is not liable to pay the VAT does not excuse it from the
payment of this fee because it also sells some copies. At any rate whether the PBS is liable for the
VAT must be decided in concrete cases, in the event it is assessed this tax by the Commissioner of
Internal Revenue.
VII.
Alleged violations of the due process, equal protection and contract clauses and the rule on
taxation. CREBA asserts that R.A. No. 7716 (1) impairs the obligations of contracts, (2) classifies
transactions as covered or exempt without reasonable basis and (3) violates the rule that taxes
should be uniform and equitable and that Congress shall "evolve a progressive system of taxation."
With respect to the first contention, it is claimed that the application of the tax to existing contracts of
the sale of real property by installment or on deferred payment basis would result in substantial
increases in the monthly amortizations to be paid because of the 10% VAT. The additional amount, it
is pointed out, is something that the buyer did not anticipate at the time he entered into the contract.
The short answer to this is the one given by this Court in an early case: "Authorities from numerous
sources are cited by the plaintiffs, but none of them show that a lawful tax on a new subject, or an
increased tax on an old one, interferes with a contract or impairs its obligation, within the meaning of
the Constitution. Even though such taxation may affect particular contracts, as it may increase the
debt of one person and lessen the security of another, or may impose additional burdens upon one
class and release the burdens of another, still the tax must be paid unless prohibited by the
Constitution, nor can it be said that it impairs the obligation of any existing contract in its true legal
sense." (La Insular v. Machuca Go-Tauco and Nubla Co-Siong, 39 Phil. 567, 574 (1919)). Indeed not
only existing laws but also "the reservation of the essential attributes of sovereignty, is . . . read into
contracts as a postulate of the legal order." (Philippine-American Life Ins. Co. v. Auditor General, 22
SCRA 135, 147 (1968)) Contracts must be understood as having been made in reference to the
possible exercise of the rightful authority of the government and no obligation of contract can extend
to the defeat of that authority. (Norman v. Baltimore and Ohio R.R., 79 L. Ed. 885 (1935)).
It is next pointed out that while 4 of R.A. No. 7716 exempts such transactions as the sale of
agricultural products, food items, petroleum, and medical and veterinary services, it grants no
exemption on the sale of real property which is equally essential. The sale of real property for
socialized and low-cost housing is exempted from the tax, but CREBA claims that real estate
transactions of "the less poor," i.e., the middle class, who are equally homeless, should likewise be
exempted.

The sale of food items, petroleum, medical and veterinary services, etc., which are essential goods
and services was already exempt under 103, pars. (b) (d) (1) of the NIRC before the enactment of
R.A. No. 7716. Petitioner is in error in claiming that R.A. No. 7716 granted exemption to these
transactions, while subjecting those of petitioner to the payment of the VAT. Moreover, there is a
difference between the "homeless poor" and the "homeless less poor" in the example given by
petitioner, because the second group or middle class can afford to rent houses in the meantime that
they cannot yet buy their own homes. The two social classes are thus differently situated in life. "It is
inherent in the power to tax that the 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.'" (Lutz v. Araneta, 98 Phil. 148, 153 (1955). Accord,
City of Baguio v. De Leon, 134 Phil. 912 (1968); Sison, Jr. v. Ancheta, 130 SCRA 654, 663 (1984);
Kapatiran ng mga Naglilingkod sa Pamahalaan ng Pilipinas, Inc. v. Tan, 163 SCRA 371 (1988)).
Finally, it is contended, for the reasons already noted, that R.A. No. 7716 also violates Art. VI, 28(1)
which provides that "The rule of taxation shall be uniform and equitable. The Congress shall evolve a
progressive system of taxation."
Equality and uniformity of taxation means that all taxable articles or kinds of property of the same
class be taxed at the same rate. The taxing power has the authority to make reasonable and natural
classifications for purposes of taxation. To satisfy this requirement it is enough that the statute or
ordinance applies equally to all persons, forms and corporations placed in similar situation. (City of
Baguio v. De Leon, supra; Sison, Jr. v. Ancheta, supra)
Indeed, the VAT was already provided in E.O. No. 273 long before R.A. No. 7716 was enacted. R.A.
No. 7716 merely expands the base of the tax. The validity of the original VAT Law was questioned in
Kapatiran ng Naglilingkod sa Pamahalaan ng Pilipinas, Inc. v. Tan, 163 SCRA 383 (1988) on
grounds similar to those made in these cases, namely, that the law was "oppressive, discriminatory,
unjust and regressive in violation of Art. VI, 28(1) of the Constitution." (At 382) Rejecting the
challenge to the law, this Court held:
As the Court sees it, EO 273 satisfies all the requirements of a valid tax. It is uniform. . . .
The sales tax adopted in EO 273 is applied similarly on all goods and services sold to the public,
which are not exempt, at the constant rate of 0% or 10%.
The disputed sales tax is also equitable. It is imposed only on sales of goods or services by persons
engaged in business with an aggregate gross annual sales exceeding P200,000.00. Small corner
sari-sari stores are consequently exempt from its application. Likewise exempt from the tax are sales
of farm and marine products, so that the costs of basic food and other necessities, spared as they
are from the incidence of the VAT, are expected to be relatively lower and within the reach of the
general public.
(At 382-383)
The CREBA claims that the VAT is regressive. A similar claim is made by the Cooperative Union of
the Philippines, Inc. (CUP), while petitioner Juan T. David argues that the law contravenes the
mandate of Congress to provide for a progressive system of taxation because the law imposes a flat
rate of 10% and thus places the tax burden on all taxpayers without regard to their ability to pay.
The Constitution does not really prohibit the imposition of indirect taxes which, like the VAT, are
regressive. What it simply provides is that Congress shall "evolve a progressive system of taxation."
The constitutional provision has been interpreted to mean simply that "direct taxes are . . . to be
preferred [and] as much as possible, indirect taxes should be minimized." (E. FERNANDO, THE
CONSTITUTION OF THE PHILIPPINES 221 (Second ed. (1977)). Indeed, the mandate to Congress
is not to prescribe, but to evolve, a progressive tax system. Otherwise, sales taxes, which perhaps

are the oldest form of indirect taxes, would have been prohibited with the proclamation of Art. VIII,
17(1) of the 1973 Constitution from which the present Art. VI, 28(1) was taken. Sales taxes are
also regressive.
Resort to indirect taxes should be minimized but not avoided entirely because it is difficult, if not
impossible, to avoid them by imposing such taxes according to the taxpayers' ability to pay. In the
case of the VAT, the law minimizes the regressive effects of this imposition by providing for zero
rating of certain transactions (R.A. No. 7716, 3, amending 102 (b) of the NIRC), while granting
exemptions to other transactions. (R.A. No. 7716, 4, amending 103 of the NIRC).
Thus, the following transactions involving basic and essential goods and services are exempted from
the VAT:
(a)
Goods for consumption or use which are in their original state (agricultural, marine and forest
products, cotton seeds in their original state, fertilizers, seeds, seedlings, fingerlings, fish, prawn
livestock and poultry feeds) and goods or services to enhance agriculture (milling of palay, corn
sugar cane and raw sugar, livestock, poultry feeds, fertilizer, ingredients used for the manufacture of
feeds).
(b)
Goods used for personal consumption or use (household and personal effects of citizens
returning to the Philippines) and or professional use, like professional instruments and implements,
by persons coming to the Philippines to settle here.
(c)
Goods subject to excise tax such as petroleum products or to be used for manufacture of
petroleum products subject to excise tax and services subject to percentage tax.
(d)
Educational services, medical, dental, hospital and veterinary services, and services
rendered under employer-employee relationship.
(e)
Works of art and similar creations sold by the artist himself.
(f)
Transactions exempted under special laws, or international agreements.
(g)
Export-sales by persons not VAT-registered.
(h)
Goods or services with gross annual sale or receipt not exceeding P500,000.00.
(Respondents' Consolidated Comment on the Motions for Reconsideration, pp. 58-60)
On the other hand, the transactions which are subject to the VAT are those which involve goods and
services which are used or availed of mainly by higher income groups. These include real properties
held primarily for sale to customers or for lease in the ordinary course of trade or business, the right
or privilege to use patent, copyright, and other similar property or right, the right or privilege to use
industrial, commercial or scientific equipment, motion picture films, tapes and discs, radio, television,
satellite transmission and cable television time, hotels, restaurants and similar places, securities,
lending investments, taxicabs, utility cars for rent, tourist buses, and other common carriers, services
of franchise grantees of telephone and telegraph.
The problem with CREBA's petition is that it presents broad claims of constitutional violations by
tendering issues not at retail but at wholesale and in the abstract. There is no fully developed record
which can impart to adjudication the impact of actuality. There is no factual foundation to show in the
concrete the application of the law to actual contracts and exemplify its effect on property rights. For
the fact is that petitioner's members have not even been assessed the VAT. Petitioner's case is not
made concrete by a series of hypothetical questions asked which are no different from those dealt
with in advisory opinions.
The difficulty confronting petitioner is thus apparent. He alleges arbitrariness. A mere allegation, as
here, does not suffice. There must be a factual foundation of such unconstitutional taint. Considering
that petitioner here would condemn such a provision as void on its face, he has not made out a
case. This is merely to adhere to the authoritative doctrine that where the due process and equal

protection clauses are invoked, considering that they are not fixed rules but rather broad standards,
there is a need for proof of such persuasive character as would lead to such a conclusion. Absent
such a showing, the presumption of validity must prevail.
(Sison, Jr. v. Ancheta, 130 SCRA at 661)
Adjudication of these broad claims must await the development of a concrete case. It may be that
postponement of adjudication would result in a multiplicity of suits. This need not be the case,
however. Enforcement of the law may give rise to such a case. A test case, provided it is an actual
case and not an abstract or hypothetical one, may thus be presented.
Nor is hardship to taxpayers alone an adequate justification for adjudicating abstract issues.
Otherwise, adjudication would be no different from the giving of advisory opinion that does not really
settle legal issues.
We are told that it is our duty under Art. VIII, 1, 2 to decide whenever a claim is made that "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." This duty can only arise if an actual case or
controversy is before us. Under Art . VIII, 5 our jurisdiction is defined in terms of "cases" and all that
Art. VIII, 1, 2 can plausibly mean is that in the exercise of that jurisdiction we have the judicial
power to determine questions of grave abuse of discretion by any branch or instrumentality of the
government.
Put in another way, what is granted in Art. VIII, 1, 2 is "judicial power," which is "the power of a
court to hear and decide cases pending between parties who have the right to sue and be sued in
the courts of law and equity" (Lamb v. Phipps, 22 Phil. 456, 559 (1912)), as distinguished from
legislative and executive power. This power cannot be directly appropriated until it is apportioned
among several courts either by the Constitution, as in the case of Art. VIII, 5, or by statute, as in the
case of the Judiciary Act of 1948 (R.A. No. 296) and the Judiciary Reorganization Act of 1980 (B.P.
Blg. 129). The power thus apportioned constitutes the court's "jurisdiction," defined as "the power
conferred by law upon a court or judge to take cognizance of a case, to the exclusion of all others."
(United States v. Arceo, 6 Phil. 29 (1906)) Without an actual case coming within its jurisdiction, this
Court cannot inquire into any allegation of grave abuse of discretion by the other departments of the
government.
VIII.
Alleged violation of policy towards cooperatives. On the other hand, the Cooperative Union
of the Philippines (CUP), after briefly surveying the course of legislation, argues that it was to adopt
a definite policy of granting tax exemption to cooperatives that the present Constitution embodies
provisions on cooperatives. To subject cooperatives to the VAT would therefore be to infringe a
constitutional policy. Petitioner claims that in 1973, P.D. No. 175 was promulgated exempting
cooperatives from the payment of income taxes and sales taxes but in 1984, because of the crisis
which menaced the national economy, this exemption was withdrawn by P.D. No. 1955; that in 1986,
P.D. No. 2008 again granted cooperatives exemption from income and sales taxes until December
31, 1991, but, in the same year, E.O. No. 93 revoked the exemption; and that finally in 1987 the
framers of the Constitution "repudiated the previous actions of the government adverse to the
interests of the cooperatives, that is, the repeated revocation of the tax exemption to cooperatives
and instead upheld the policy of strengthening the cooperatives by way of the grant of tax
exemptions," by providing the following in Art. XII:
1.
The goals of the national economy are a more equitable distribution of opportunities, income,
and wealth; a sustained increase in the amount of goods and services produced by the nation for the
benefit of the people; and an expanding productivity as the key to raising the quality of life for all,
especially the underprivileged.

The State shall promote industrialization and full employment based on sound agricultural
development and agrarian reform, through industries that make full and efficient use of human and
natural resources, and which are competitive in both domestic and foreign markets. However, the
State shall protect Filipino enterprises against unfair foreign competition and trade practices.
In the pursuit of these goals, all sectors of the economy and all regions of the country shall be given
optimum opportunity to develop. Private enterprises, including corporations, cooperatives, and
similar collective organizations, shall be encouraged to broaden the base of their ownership.
15. The Congress shall create an agency to promote the viability and growth of cooperatives as
instruments for social justice and economic development.
Petitioner's contention has no merit. In the first place, it is not true that P.D. No. 1955 singled out
cooperatives by withdrawing their exemption from income and sales taxes under P.D. No. 175, 5.
What P.D. No. 1955, 1 did was to withdraw the exemptions and preferential treatments theretofore
granted to private business enterprises in general, in view of the economic crisis which then beset
the nation. It is true that after P.D. No. 2008, 2 had restored the tax exemptions of cooperatives in
1986, the exemption was again repealed by E.O. No. 93, 1, but then again cooperatives were not
the only ones whose exemptions were withdrawn. The withdrawal of tax incentives applied to all,
including government and private entities. In the second place, the Constitution does not really
require that cooperatives be granted tax exemptions in order to promote their growth and viability.
Hence, there is no basis for petitioner's assertion that the government's policy toward cooperatives
had been one of vacillation, as far as the grant of tax privileges was concerned, and that it was to put
an end to this indecision that the constitutional provisions cited were adopted. Perhaps as a matter
of policy cooperatives should be granted tax exemptions, but that is left to the discretion of
Congress. If Congress does not grant exemption and there is no discrimination to cooperatives, no
violation of any constitutional policy can be charged.
Indeed, petitioner's theory amounts to saying that under the Constitution cooperatives are exempt
from taxation. Such theory is contrary to the Constitution under which only the following are exempt
from taxation: charitable institutions, churches and parsonages, by reason of Art. VI, 28 (3), and
non-stock, non-profit educational institutions by reason of Art. XIV, 4 (3).
CUP's further ground for seeking the invalidation of R.A. No. 7716 is that it denies cooperatives the
equal protection of the law because electric cooperatives are exempted from the VAT. The
classification between electric and other cooperatives (farmers cooperatives, producers
cooperatives, marketing cooperatives, etc.) apparently rests on a congressional determination that
there is greater need to provide cheaper electric power to as many people as possible, especially
those living in the rural areas, than there is to provide them with other necessities in life. We cannot
say that such classification is unreasonable.
We have carefully read the various arguments raised against the constitutional validity of R.A. No.
7716. We have in fact taken the extraordinary step of enjoining its enforcement pending resolution of
these cases. We have now come to the conclusion that the law suffers from none of the infirmities
attributed to it by petitioners and that its enactment by the other branches of the government does
not constitute a grave abuse of discretion. Any question as to its necessity, desirability or expediency
must be addressed to Congress as the body which is electorally responsible, remembering that, as
Justice Holmes has said, "legislators are the ultimate guardians of the liberties and welfare of the
people in quite as great a degree as are the courts." (Missouri, Kansas & Texas Ry. Co. v. May, 194
U.S. 267, 270, 48 L. Ed. 971, 973 (1904)). It is not right, as petitioner in G.R. No. 115543 does in
arguing that we should enforce the public accountability of legislators, that those who took part in
passing the law in question by voting for it in Congress should later thrust to the courts the burden of

reviewing measures in the flush of enactment. This Court does not sit as a third branch of the
legislature, much less exercise a veto power over legislation.
WHEREFORE, the motions for reconsideration are denied with finality and the temporary restraining
order previously issued is hereby lifted.
SO ORDERED.

Pichay v. Executive Secretary, G.R. No. 196425, 24 July 2012

PROSPERO A. PICHAY, JR., Petitioner,
vs.
OFFICE OF THE DEPUTY EXECUTIVE SECRETARY FOR LEGAL AFFAIRS INVESTIGATIVE
AND ADJUDICATORY DIVISION, HON. PAQUITO N. OCHOA, JR., in his capacity as Executive
Secretary, and HON. CESAR V. PURISIMA, in his capacity as Secretary of Finance, and as an
ex-officio member of the Monetary Board, Respondents.
DECISION
PERLAS-BERNABE, J.:
The Case
This is a Petition for Certiorari and Prohibition with a prayer for the issuance of a temporary
restraining order, seeking to declare as unconstitutional Executive Order No. 13, entitled, "Abolishing
the Presidential Anti-Graft Commission and Transferring Its Investigative, Adjudicatory and
Recommendatory Functions to the Office Of The Deputy Executive Secretary For Legal Affairs,
1

Office of the President", and to permanently prohibit respondents from administratively proceeding
against petitioner on the strength of the assailed executive order.
The Facts
On April 16, 2001, then President Gloria Macapagal-Arroyo issued Executive Order No. 12 (E.O. 12)
creating the Presidential Anti-Graft Commission (PAGC) and vesting it with the power to investigate
or hear administrative cases or complaints for possible graft and corruption, among others, against
presidential appointees and to submit its report and recommendations to the President. Pertinent
portions of E.O. 12 provide:
Section 4. Jurisdiction, Powers and Functions.
(a) x x x
xxx
xxx
(b) The Commission, acting as a collegial body, shall have the authority to investigate or hear
administrative cases or complaints against all presidential appointees in the government and any of
its agencies or instrumentalities xxx
xxx
xxx
xxx
xxx
xxx
xxx
Section 8. Submission of Report and Recommendations. After completing its investigation or
hearing, the Commission en banc shall submit its report and recommendations to the President. The
report and recommendations shall state, among others, the factual findings and legal conclusions,
as well as the penalty recommend (sic) to be imposed or such other action that may be taken."
On November 15, 2010, President Benigno Simeon Aquino III issued Executive Order No. 13 (E.O.
13), abolishing the PAGC and transferring its functions to the Office of the Deputy Executive
Secretary for Legal Affairs (ODESLA), more particularly to its newly-established Investigative and
Adjudicatory Division (IAD). The full text of the assailed executive order reads:
EXECUTIVE ORDER NO. 13

ABOLISHING THE PRESIDENTIAL ANTI-GRAFT COMMISSION AND TRANSFERRING ITS

INVESTIGATIVE, ADJUDICATORY AND RECOMMENDATORY FUNCTIONS TO THE OFFICE OF
THE DEPUTY EXECUTIVE SECRETARY FOR LEGAL AFFAIRS, OFFICE OF THE PRESIDENT
WHEREAS, this administration has a continuing mandate and advocacy to fight and eradicate
corruption in the different departments, bureaus, offices and other government agencies and
instrumentalities;
WHEREAS, the government adopted a policy of streamlining the government bureaucracy to
promote economy and efficiency in government;
WHEREAS, Section VII of the 1987 Philippine Constitution provides that the President shall have
control of all the executive departments, bureaus and offices;
WHEREAS, Section 31 Chapter 10, Title III, Book III of Executive Order 292 (Administrative Code of
1987) provides for the continuing authority of the President to reorganize the administrative structure
of the Office of the President;
WHEREAS, Presidential Decree (PD) No. 1416 (Granting Continuing Authority to the President of
the Philippines to Reorganize the National Government), as amended by PD 1722, provides that the
President of the Philippines shall have continuing authority to reorganize the administrative structure
of the National Government and may, at his discretion, create, abolish, group, consolidate, merge or
integrate entities, agencies, instrumentalities and units of the National Government, as well as,
expand, amend, change or otherwise modify their powers, functions and authorities;
WHEREAS, Section 78 of the General Provisions of Republic Act No. 9970 (General Appropriations
Act of 2010) authorizes the President of the Philippines to direct changes in the organizational units
or key positions in any department or agency;
NOW, THEREFORE, I, BENIGNO S. AQUINO III, President of the Philippines, by virtue of the
powers vested in me by law, do hereby order the following:
SECTION 1. Declaration of Policy. It is the policy of the government to fight and eradicate graft and
corruption in the different departments, bureaus, offices and other government agencies and
instrumentalities.
The government adopted a policy of streamlining the government bureaucracy to promote economy
and efficiency in the government.
SECTION 2. Abolition of Presidential Anti-Graft Commission (PAGC). To enable the Office of the
President (OP) to directly investigate graft and corrupt cases of Presidential appointees in the
Executive Department including heads of government-owned and controlled corporations, the
Presidential Anti-Graft Commission (PAGC) is hereby abolished and their vital functions and other
powers and functions inherent or incidental thereto, transferred to the Office of the Deputy Executive
Secretary for Legal Affairs (ODESLA), OP in accordance with the provisions of this Executive Order.
SECTION 3. Restructuring of the Office of the Deputy Executive Secretary for Legal Affairs, OP. In
addition to the Legal and Legislative Divisions of the ODESLA, the Investigative and Adjudicatory
Division shall be created.
The newly created Investigative and Adjudicatory Division shall perform powers, functions and duties
mentioned in Section 2 hereof, of PAGC.
The Deputy Executive Secretary for Legal Affairs (DESLA) will be the recommending authority to the
President, thru the Executive Secretary, for approval, adoption or modification of the report and
recommendations of the Investigative and Adjudicatory Division of ODESLA.
SECTION 4. Personnel Who May Be Affected By the Abolition of PAGC. The personnel who may be
affected by the abolition of the PAGC shall be allowed to avail of the benefits provided under existing

laws if applicable. The Department of Budget and Management (DBM) is hereby ordered to release
the necessary funds for the benefits of the employees.
SECTION 5. Winding Up of the Operation and Disposition of the Functions, Positions, Personnel,
Assets and Liabilities of PAGC. The winding up of the operations of PAGC including the final
disposition or transfer of their functions, positions, personnel, assets and liabilities as may be
necessary, shall be in accordance with the applicable provision(s) of the Rules and Regulations
Implementing EO 72 (Rationalizing the Agencies Under or Attached to the Office of the President)
dated March 15, 2002. The winding up shall be implemented not later than 31 December 2010.
The Office of the Executive Secretary, with the assistance of the Department of Budget and
Management, shall ensure the smooth and efficient implementation of the dispositive actions and
winding-up of the activities of PAGC.
SECTION 6. Repealing Clause. All executive orders, rules, regulations and other issuances or parts
thereof, which are inconsistent with the provisions of this Executive Order, are hereby revoked or
modified accordingly.
SECTION 7. Effectivity. This Executive Order shall take effect immediately after its publication in a
newspaper of general circulation.
On April 6, 2011, respondent Finance Secretary Cesar V. Purisima filed before the IAD-ODESLA a
2

complaint affidavit for grave misconduct against petitioner Prospero A. Pichay, Jr., Chairman of the
Board of Trustees of the Local Water Utilities Administration (LWUA), as well as the incumbent
members of the LWUA Board of Trustees, namely, Renato Velasco, Susana Dumlao Vargas,
Bonifacio Mario M. Pena, Sr. and Daniel Landingin, which arose from the purchase by the LWUA of
Four Hundred Forty-Five Thousand Three Hundred Seventy Seven (445,377) shares of stock of
Express Savings Bank, Inc.
3

On April 14, 2011, petitioner received an Order signed by Executive Secretary Paquito N. Ochoa,
Jr. requiring him and his co-respondents to submit their respective written explanations under oath.
In compliance therewith, petitioner filed a Motion to Dismiss Ex Abundante Ad Cautelam manifesting
that a case involving the same transaction and charge of grave misconduct entitled, "Rustico B.
Tutol, et al. v. Prospero Pichay, et al.", and docketed as OMB-C-A-10-0426-I, is already pending
before the Office of the Ombudsman.
Now alleging that no other plain, speedy and adequate remedy is available to him in the ordinary
course of law, petitioner has resorted to the instant petition for certiorari and prohibition upon the
following grounds:
I. E.O. 13 IS UNCONSTITUTIONAL FOR USURPING THE POWER OF THE LEGISLATURE TO
CREATE A PUBLIC OFFICE.
II. E.O. 13 IS UNCONSTITUTIONAL FOR USURPING THE POWER OF THE LEGISLATURE TO
APPROPRIATE FUNDS.
III. E.O. 13 IS UNCONSTITUTIONAL FOR USURPING THE POWER OF CONGRESS TO
DELEGATE QUASI-JUDICIAL POWERS TO ADMINISTRATIVE AGENCIES.
IV. E.O. 13 IS UNCONSTITUTIONAL FOR ENCROACHING UPON THE POWERS OF THE
OMBUDSMAN.
V. E.O. 13 IS UNCONSTITUTIONAL FOR VIOLATING THE GUARANTEE OF DUE PROCESS.
VI. E.O. 13 IS UNCONSTITUTIONAL FOR VIOLATING THE EQUAL PROTECTION CLAUSE.
Our Ruling
In assailing the constitutionality of E.O. 13, petitioner asseverates that the President is not
authorized under any existing law to create the Investigative and Adjudicatory Division, Office of the

Deputy Executive Secretary for Legal Affairs (IAD-ODESLA) and that by creating a new, additional
and distinct office tasked with quasi-judicial functions, the President has not only usurped the powers
of congress to create a public office, appropriate funds and delegate quasi-judicial functions to
administrative agencies but has also encroached upon the powers of the Ombudsman. Petitioner
avers that the unconstitutionality of E.O. 13 is also evident when weighed against the due process
requirement and equal protection clause under the 1987 Constitution.
The contentions are unavailing.
The President has Continuing Authority to Reorganize the Executive Department under E.O. 292.
Section 31 of Executive Order No. 292 (E.O. 292), otherwise known as the Administrative Code of
1987, vests in the President the continuing authority to reorganize the offices under him in order to
achieve simplicity, economy and efficiency. E.O. 292 sanctions the following actions undertaken for
such purpose:
(1)Restructure the internal organization of the Office of the President Proper, including the
immediate Offices, the Presidential Special Assistants/Advisers System and the Common Staff
Support System, by abolishing, consolidating, or merging units thereof or transferring functions from
one unit to another;
(2)Transfer any function under the Office of the President to any other Department or Agency as well
as transfer functions to the Office of the President from other Departments and Agencies; and
(3)Transfer any agency under the Office of the President to any other Department or Agency as well
as transfer agencies to the Office of the President from other departments or agencies.

In the case of Buklod ng Kawaning EIIB v. Zamora the Court affirmed that the President's authority
to carry out a reorganization in any branch or agency of the executive department is an express
grant by the legislature by virtue of E.O. 292, thus:
But of course, the list of legal basis authorizing the President to reorganize any department or
agency in the executive branch does not have to end here. We must not lose sight of the very
source of the power that which constitutes an express grant of power. Under Section 31, Book III
of Executive Order No. 292 (otherwise known as the Administrative Code of 1987), "the President,
subject to the policy of the Executive Office and in order to achieve simplicity, economy and
efficiency, shall have the continuing authority to reorganize the administrative structure of the Office
of the President." For this purpose, he may transfer the functions of other Departments or Agencies
to the Office of the President. (Emphasis supplied)
6

And in Domingo v. Zamora, the Court gave the rationale behind the President's continuing authority
in this wise:
The law grants the President this power in recognition of the recurring need of every President to
reorganize his office "to achieve simplicity, economy and efficiency." The Office of the President is
the nerve center of the Executive Branch. To remain effective and efficient, the Office of the
President must be capable of being shaped and reshaped by the President in the manner he deems
fit to carry out his directives and policies. After all, the Office of the President is the command post of
the President. (Emphasis supplied)
Clearly, the abolition of the PAGC and the transfer of its functions to a division specially created
within the ODESLA is properly within the prerogative of the President under his continuing
"delegated legislative authority to reorganize" his own office pursuant to E.O. 292.
Generally, this authority to implement organizational changes is limited to transferring either an office
or a function from the Office of the President to another Department or Agency, and the other way
around.

Only Section 31(1) gives the President a virtual freehand in dealing with the internal structure of the
Office of the President Proper by allowing him to take actions as extreme as abolition, consolidation
or merger of units, apart from the less drastic move of transferring functions and offices from one unit
8

to another. Again, in Domingo v. Zamora the Court noted:

However, the President's power to reorganize the Office of the President under Section 31 (2) and
(3) of EO 292 should be distinguished from his power to reorganize the Office of the President
Proper. Under Section 31 (1) of EO 292, the President can reorganize the Office of the President
Proper by abolishing, consolidating or merging units, or by transferring functions from one unit to
another. In contrast, under Section 31 (2) and (3) of EO 292, the President's power to reorganize
offices outside the Office of the President Proper but still within the Office of the
President is limited to merely transferring functions or agencies from the Office of the President to
Departments or Agencies, and vice versa.
The distinction between the allowable organizational actions under Section 31(1) on the one hand
and Section 31 (2) and (3) on the other is crucial not only as it affects employees' tenurial security
but also insofar as it touches upon the validity of the reorganization, that is, whether the executive
actions undertaken fall within the limitations prescribed under E.O. 292. When the PAGC was
created under E.O. 12, it was composed of a Chairman and two (2) Commissioners who held the
9

ranks of Presidential Assistant II and I, respectively, and was placed directly "under the Office of the
President."

10

On the other hand, the ODESLA, to which the functions of the PAGC have now been
11

transferred, is an office within the Office of the President Proper. Since both of these offices belong
to the Office of the President Proper, the reorganization by way of abolishing the PAGC and
transferring its functions to the ODESLA is allowable under Section 31 (1) of E.O. 292.
Petitioner, however, goes on to assert that the President went beyond the authority granted by E.O.
292 for him to reorganize the executive department since his issuance of E.O. 13 did not merely
involve the abolition of an office but the creation of one as well. He argues that nowhere in the legal
definition laid down by the Court in several cases does a reorganization include the act of creating
an office.
The contention is misplaced.
The Reorganization Did not Entail the Creation of a New, Separate and Distinct Office.
The abolition of the PAGC did not require the creation of a new, additional and distinct office as the
duties and functions that pertained to the defunct anti-graft body were simply transferred to the
ODESLA, which is an existing office within the Office of the President Proper. The reorganization
required no more than a mere alteration of the administrative structure of the ODESLA through the
establishment of a third division the Investigative and Adjudicatory Division through which
ODESLA could take on the additional functions it has been tasked to discharge under E.O. 13. In
12

Canonizado v. Aguirre, We ruled that

Reorganization takes place when there is an alteration of the existing structure of government offices
or units therein, including the lines of control, authority and responsibility between them. It involves a
reduction of personnel, consolidation of offices, or abolition thereof by reason of economy or
redundancy of functions.
The Reorganization was Pursued in Good Faith.
A valid reorganization must not only be exercised through legitimate authority but must also be
pursued in good faith. A reorganization is said to be carried out in good faith if it is done for purposes

13

of economy and efficiency. It appears in this case that the streamlining of functions within the
Office of the President Proper was pursued with such purposes in mind.
In its Whereas clauses, E.O. 13 cites as bases for the reorganization the policy dictates of
eradicating corruption in the government and promoting economy and efficiency in the bureaucracy.
Indeed, the economical effects of the reorganization is shown by the fact that while Congress had
14

initially appropriated P22 Million for the PAGC's operation in the 2010 annual budget, no separate
or added funding of such a considerable amount was ever required after the transfer of the PAGC
functions to the IAD-ODESLA.
Apparently, the budgetary requirements that the IAD-ODESLA needed to discharge its functions and
maintain its personnel would be sourced from the following year's appropriation for the President's
15

Offices under the General Appropriations Act of 2011. Petitioner asseverates, however, that since
Congress did not indicate the manner by which the appropriation for the Office of the President was
to be distributed, taking therefrom the operational funds of the IAD-ODESLA would amount to an
illegal appropriation by the President. The contention is without legal basis.
There is no usurpation of the legislative power to appropriate public funds.
In the chief executive dwell the powers to run government. Placed upon him is the power to
16

recommend the budget necessary for the operation of the Government, which implies that he has
the necessary authority to evaluate and determine the structure that each government agency in the
17

executive department would need to operate in the most economical and efficient manner. Hence,
the express recognition under Section 78 of R.A. 9970 or the General Appropriations Act of 2010 of
the Presidents authority to "direct changes in the organizational units or key positions in any
department or agency." The aforecited provision, often and consistently included in the general
appropriations laws, recognizes the extent of the Presidents power to reorganize the executive
offices and agencies under him, which is, "even to the extent of modifying and realigning
18

appropriations for that purpose."

And to further enable the President to run the affairs of the executive department, he is likewise
given constitutional authority to augment any item in the General Appropriations Law using the
19

savings in other items of the appropriation for his office. In fact, he is explicitly allowed by law to
transfer any fund appropriated for the different departments, bureaus, offices and agencies of the
Executive Department which is included in the General Appropriations Act, to any program, project
or activity of any department, bureau or office included in the General Appropriations Act or
20

approved after its enactment.

Thus, while there may be no specific amount earmarked for the IAD-ODESLA from the total amount
appropriated by Congress in the annual budget for the Office of the President, the necessary funds
for the IAD-ODESLA may be properly sourced from the President's own office budget without
committing any illegal appropriation. After all, there is no usurpation of the legislature's power to
appropriate funds when the President simply allocates the existing funds previously appropriated by
Congress for his office.
The IAD-ODESLA is a fact-finding and recommendatory body not vested with quasi-judicial powers.
Petitioner next avers that the IAD-ODESLA was illegally vested with judicial power which is reserved
to the Judicial Department and, by way of exception through an express grant by the legislature, to
administrative agencies. He points out that the name Investigative and Adjudicatory Division is proof
itself that the IAD-ODESLA wields quasi-judicial power.

21

The argument is tenuous. As the OSG aptly explained in its Comment,

while the term
"adjudicatory" appears part of its appellation, the IAD-ODESLA cannot try and resolve cases, its
authority being limited to the conduct of investigations, preparation of reports and submission of
recommendations. E.O. 13 explicitly states that the IAD-ODESLA shall "perform powers, functions
22

and duties xxx, of PAGC."

Under E.O. 12, the PAGC was given the authority to "investigate or hear administrative cases or
complaints against all presidential appointees in the government"

23

and to "submit its report and

24

recommendations to the President." The IAD-ODESLA is a fact-finding and recommendatory body

to the President, not having the power to settle controversies and adjudicate cases. As the Court
ruled in Cario v. Commission on Human Rights,

25

and later reiterated in Biraogo v. The Philippine

26

Truth Commission:
Fact-finding is not adjudication and it cannot be likened to the judicial function of a court of justice, or
even a quasi-judicial agency or office. The function of receiving evidence and ascertaining therefrom
the facts of a controversy is not a judicial function. To be considered as such, the act of receiving
evidence and arriving at factual conclusions in a controversy must be accompanied by the authority
of applying the law to the factual conclusions to the end that the controversy may be decided or
determined authoritatively, finally and definitively, subject to such appeals or modes of review as may
be provided by law.
The President's authority to issue E.O. 13 and constitute the IAD-ODESLA as his fact-finding
investigator cannot be doubted. After all, as Chief Executive, he is granted full control over the
Executive Department to ensure the enforcement of the laws. Section 17, Article VII of the
Constitution provides:
Section 17. The President shall have control of all the executive departments, bureaus and offices.
He shall ensure that the laws be faithfully executed.
The obligation to see to it that laws are faithfully executed necessitates the corresponding power in
the President to conduct investigations into the conduct of officials and employees in the executive
27

department.
The IAD-ODESLA does not encroach upon the powers and duties of the Ombudsman.
Contrary to petitioner's contention, the IAD-ODESLA did not encroach upon the Ombudsman's
primary jurisdiction when it took cognizance of the complaint affidavit filed against him
notwithstanding the earlier filing of criminal and administrative cases involving the same charges and
allegations before the Office of the Ombudsman. The primary jurisdiction of the Ombudsman to
investigate and prosecute cases refers to criminal cases cognizable by the Sandiganbayan and not
to administrative cases. It is only in the exercise of its primary jurisdiction that the Ombudsman may,
at any time, take over the investigation being conducted by another investigatory agency. Section 15
(1) of R.A. No. 6770 or the Ombudsman Act of 1989, empowers the Ombudsman to
(1)Investigate and prosecute on its own or on complaint by any person, any act or omission of any
public officer or employee, office or agency, when such act or omission appears to be illegal, unjust,
improper or inefficient. It has primary jurisdiction over cases cognizable by the Sandiganbayan and,
in the exercise of its primary jurisdiction, it may take over, at any stage, from any investigatory
agency of government, the investigation of such cases. (Emphasis supplied)
Since the case filed before the IAD-ODESLA is an administrative disciplinary case for grave
misconduct, petitioner may not invoke the primary jurisdiction of the Ombudsman to prevent the IAD-

ODESLA from proceeding with its investigation. In any event, the Ombudsman's authority to
investigate both elective and appointive officials in the government, extensive as it may be, is by no
28

means exclusive. It is shared with other similarly authorized government agencies.

While the Ombudsman's function goes into the determination of the existence of probable cause and
the adjudication of the merits of a criminal accusation, the investigative authority of the IADODESLA is limited to that of a fact-finding investigator whose determinations and recommendations
remain so until acted upon by the President. As such, it commits no usurpation of the Ombudsman's
constitutional duties.
Executive Order No. 13 Does Not Violate Petitioner's Right to Due Process and the Equal Protection
of the Laws.
Petitioner goes on to assail E.O. 13 as violative of the equal protection clause pointing to the
arbitrariness of limiting the IAD-ODESLA's investigation only to presidential appointees occupying
upper-level positions in the government. The equal protection of the laws is a guaranty against any
29

form of undue favoritism or hostility from the government. It is embraced under the due process
concept and simply requires that, in the application of the law, "all persons or things similarly situated
30

should be treated alike, both as to rights conferred and responsibilities imposed." The equal
protection clause, however, is not absolute but subject to reasonable classification so that
aggrupations bearing substantial distinctions may be treated differently from each other. This we
31

ruled in Farinas v. Executive Secretary, wherein we further stated that

The equal protection of the law clause is against undue favor and individual or class privilege, as
well as hostile discrimination or the oppression of inequality. It is not intended to prohibit legislation
which is limited either in the object to which it is directed or by territory within which it is to operate. It
does not demand absolute equality among residents; it merely requires that all persons shall be
treated alike, under like circumstances and conditions both as to privileges conferred and liabilities
enforced. The equal protection clause is not infringed by legislation which applies only to those
persons falling within a specified class, if it applies alike to all persons within such class, and
reasonable grounds exist for making a distinction between those who fall within such class and
those who do not. (Emphasis supplied)
Presidential appointees come under the direct disciplining authority of the President. This proceeds
from the well settled principle that, in the absence of a contrary law, the power to remove or to
32

discipline is lodged in the same authority on which the power to appoint is vested. Having the
power to remove and/or discipline presidential appointees, the President has the corollary authority
33

to investigate such public officials and look into their conduct in office. Petitioner is a presidential
appointee occupying the high-level position of Chairman of the LWUA. Necessarily, he comes under
the disciplinary jurisdiction of the President, who is well within his right to order an investigation into
matters that require his informed decision.
There are substantial distinctions that set apart presidential appointees occupying upper-level
positions in government from non-presidential appointees and those that occupy the lower positions
34

in government. In Salumbides v. Office of the Ombudsman, we had ruled extensively on the

substantial distinctions that exist between elective and appointive public officials, thus:
Substantial distinctions clearly exist between elective officials and appointive officials. The former
occupy their office by virtue of the mandate of the electorate. They are elected to an office for a
definite term and may be removed therefrom only upon stringent conditions. On the other hand,

appointive officials hold their office by virtue of their designation thereto by an appointing authority.
Some appointive officials hold their office in a permanent capacity and are entitled to security of
tenure while others serve at the pleasure of the appointing authority.
xxxx
An election is the embodiment of the popular will, perhaps the purest expression of the sovereign
power of the people. It involves the choice or selection of candidates to public office by popular
vote. Considering that elected officials are put in office by their constituents for a definite term, x x x
complete deference is accorded to the will of the electorate that they be served by such officials until
the end of the term for which they were elected. In contrast, there is no such expectation insofar as
appointed officials are concerned. (Emphasis supplied)
Also, contrary to petitioner's assertions, his right to due process was not violated when the IADODESLA took cognizance of the administrative complaint against him since he was given sufficient
opportunity to oppose the formal complaint filed by Secretary Purisima. In administrative
proceedings, the filing of charges and giving reasonable opportunity for the person so charged to
1wphi1

answer the accusations against him constitute the minimum requirements of due process,

35

which

36

simply means having the opportunity to explain ones side. Hence, as long as petitioner was given
the opportunity to explain his side and present evidence, the requirements of due process are
satisfactorily complied with because what the law abhors is an absolute lack of opportunity to be
37

heard. The records show that petitioner was issued an Order requiring him to submit his written
explanation under oath with respect to the charge of grave misconduct filed against him. His own
failure to submit his explanation despite notice defeats his subsequent claim of denial of due
process.
Finally, petitioner doubts that the IAD-ODESLA can lawfully perform its duties as an impartial
tribunal, contending that both the IAD-ODESLA and respondent Secretary Purisima are connected to
the President. The mere suspicion of partiality will not suffice to invalidate the actions of the IADODESLA. Mere allegation is not equivalent to proof. Bias and partiality
38

cannot be presumed. Petitioner must present substantial proof to show that the lAD-ODES LA had
unjustifiably sided against him in the conduct of the investigation. No such evidence has been
presented as to defeat the presumption of regularity m the performance of the fact-finding
investigator's duties. The assertion, therefore, deserves scant consideration.
Every law has in its favor the presumption of constitutionality, and to justify its nullification, there
39

must be a clear and unequivocal breach of the Constitution, not a doubtful and argumentative one.
Petitioner has failed to discharge the burden of proving the illegality of E.O. 13, which IS indubitably
a valid exercise of the President's continuing authority to reorganize the Office of the President.
WHEREFORE, premises considered, the petition IS hereby DISMISSED.
SO ORDERED.

a. Tax Laws
Sec. 28, Art. VI, 1987 Constitution
Sec. 4 (3) & (4), Art. XIV, 1987 Constitution

Tolentino v. Secretary of Finance, G.R. No. 115455, 25 Aug. 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 ValueAdded 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.
1

It appears that on various dates between July 22, 1992 and August 31, 1993, several bills were
introduced in the House of Representatives seeking to amend certain provisions of the National Internal
Revenue Code relative to the value-added tax or VAT. These bills were referred to the House Ways and
Means Committee which recommended for approval a substitute measure, H. No. 11197, entitled
AN ACT RESTRUCTURING THE VALUE-ADDED TAX (VAT) SYSTEM TO WIDEN ITS TAX BASE
AND ENHANCE ITS ADMINISTRATION, AMENDING FOR THESE PURPOSES SECTIONS 99,
100, 102, 103, 104, 105, 106, 107, 108 AND 110 OF TITLE IV, 112, 115 AND 116 OF TITLE V, AND
236, 237 AND 238 OF TITLE IX, AND REPEALING SECTIONS 113 AND 114 OF TITLE V, ALL OF
THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED
The bill (H. No. 11197) was considered on second reading starting November 6, 1993 and, on
November 17, 1993, it was approved by the House of Representatives after third and final reading.
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
2

Constitution,
it is notable in two respects: the verb "shall originate" is qualified in the Philippine
Constitution by the word "exclusively" and the phrase "as on other bills" in the American version is
omitted. This means, according to them, that to be considered as having originated in the House,
Republic Act No. 7716 must retain the essence of H. No. 11197.
This argument will not bear analysis. To begin with, it is not the law but the revenue bill which is
required by the Constitution to "originate exclusively" in the House of Representatives. It is important
to emphasize this, because a bill originating in the House may undergo such extensive changes in
the Senate that the result may be a rewriting of the whole. The possibility of a third version by the
conference committee will be discussed later. At this point, what is important to note is that, as a
result of the Senate action, a distinct bill may be produced. To insist that a revenue statute and
not only the bill which initiated the legislative process culminating in the enactment of the law
must substantially be the same as the House bill would be to deny the Senate's power not only to
"concur with amendments" but also to "propose amendments." It would be to violate the coequality
of legislative power of the two houses of Congress and in fact make the House superior to the
Senate.
The contention that the constitutional design is to limit the Senate's power in respect of revenue bills
3

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

has never been thought of as giving it more

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.
6

I, 7 of the U.S. Constitution. Nor is the power to amend limited to adding a provision or two in a
revenue bill emanating from the House. The U.S. Senate has gone so far as changing the whole of bills

following the enacting clause and substituting its own versions. In 1883, for example, it struck out
everything after the enacting clause of a tariff bill and wrote in its place its own measure, and the House
subsequently accepted the amendment. The U.S. Senate likewise added 847 amendments to what later
became the Payne-Aldrich Tariff Act of 1909; it dictated the schedules of the Tariff Act of 1921; it rewrote
7

an extensive tax revision bill in the same year and recast most of the tariff bill of 1922. Given, then, the
power of the Senate to propose amendments, the Senate can propose its own version even with respect
to bills which are required by the Constitution to originate in the House.

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

because the second and third readings

were done on the same day, March 24, 1994. But this was because on February 24, 1994

and again on

10

March 22, 1994,

the President had certified S. No. 1630 as urgent. The presidential certification
dispensed with the requirement not only of printing but also that of reading the bill on separate days. The
phrase "except when the President certifies to the necessity of its immediate enactment, etc." in Art. VI,
26(2) qualifies the two stated conditions before a bill can become a law: (i) the bill has passed three
readings on separate days and (ii) it has been printed in its final form and distributed three days before it
is finally approved.

In other words, the "unless" clause must be read in relation to the "except" clause, because the two
are really coordinate clauses of the same sentence. To construe the "except" clause as simply
dispensing with the second requirement in the "unless" clause (i.e., printing and distribution three

days before final approval) would not only violate the rules of grammar. It would also negate the very
premise of the "except" clause: the necessity of securing 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
11

days of the convening of Congress in emergency session.

That upon the certification of a bill by the President the requirement of three readings on separate
days and of printing and distribution can be dispensed with is supported by the weight of legislative
practice. For example, the bill defining the certiorari jurisdiction of this Court which, in consolidation
with the Senate version, became Republic Act No. 5440, was passed on second and third readings
in the House of Representatives on the same day (May 14, 1968) after the bill had been certified by
12

the President as urgent.

There is, therefore, no merit in the contention that presidential certification dispenses only with the
requirement for the printing of the bill and its distribution three days before its passage but 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
13

sessions with only the conferees and their staffs in attendance.

Only in November 1975 was a new
rule adopted requiring open sessions. Even then a majority 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
15

bill. . . .
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
16

Senate bills.
Indeed, this Court recently held that it is within the power of a conference committee to include in its
17

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

18

Nonetheless, it is argued that under the respective Rules of the Senate and the House of
Representatives a conference committee can only act on the differing provisions of a Senate bill and
a House bill, and that contrary to these Rules the Conference Committee inserted provisions not
found in the bills submitted to it. The following provisions are cited in support of this contention:
Rules of the Senate
Rule XII:
26. In the event that the Senate does not agree with the House of Representatives on the
provision of any bill or joint resolution, the differences shall be settled by a conference committee of
both Houses which shall meet within ten days after their composition.
The President shall designate the members of the conference committee in accordance with
subparagraph (c), Section 3 of Rule III.
Each Conference Committee Report shall contain a detailed and sufficiently explicit statement of the
changes in or amendments to the subject measure, and shall be signed by the conferees.

The consideration of such report shall not be in order unless the report has been filed with the
Secretary of the Senate and copies thereof have been distributed to the Members.
(Emphasis added)
Rules of the House of Representatives
Rule XIV:
85. Conference Committee Reports. In the event that the House does not agree with the
Senate on the amendments to any bill or joint resolution, the differences may be settled by
conference committees of both Chambers.
The consideration of conference committee reports shall always be in order, except when the journal
is being read, while the roll is being called or the House is dividing on any question. Each of the
pages of such reports shall be signed by the conferees. Each report shall contain a detailed,
sufficiently explicit statement of the changes in or amendments to the subject measure.
The consideration of such report shall not be in order unless copies thereof are distributed to the
Members: Provided, That in the last fifteen days of each session period it shall be deemed sufficient
that three copies of the report, signed as above provided, are deposited in the office of the Secretary
General.
(Emphasis added)
To be sure, nothing in the Rules limits a conference committee to a consideration of conflicting
provisions. But Rule XLIV, 112 of the Rules of the Senate is cited to the effect that "If there is no
Rule applicable to a specific case the precedents of the Legislative Department of the Philippines
shall be resorted to, and as a supplement of these, the Rules contained in Jefferson's Manual." The
following is then quoted from the Jefferson's Manual:
The managers of a conference must confine themselves to the differences committed to them. . .
and may not include subjects not within disagreements, even though germane to a question in issue.
Note that, according to Rule XLIX, 112, in case there is no specific rule applicable, resort must be
to the legislative practice. The Jefferson's Manual is resorted to only as supplement. It is common
place in Congress that conference committee reports include new matters which, though germane,
have not been committed to the committee. This practice was admitted by Senator Raul S. Roco,
petitioner in G.R. No. 115543, during the oral argument in these cases. Whatever, then, may be
provided in the Jefferson's Manual must be considered to have been modified by the legislative
practice. If a change is desired in the practice it must be sought in Congress since this question is
not covered by any constitutional provision but is only an internal rule of each house. Thus, Art. VI,
16(3) of the Constitution provides that "Each House may determine the rules of its proceedings. . . ."
This observation applies to the other contention that the Rules of the two chambers were likewise
disregarded in the preparation of the Conference Committee Report because the Report did not
contain a "detailed and sufficiently explicit statement of changes in, or amendments to, the subject
measure." The Report used brackets and capital letters to indicate the changes. This is a standard
practice in bill-drafting. We cannot say that in using these marks and symbols the Committee
violated the Rules of the Senate and the House. Moreover, this Court is not the proper forum for the
enforcement of these internal Rules. To the contrary, as we have already ruled, "parliamentary rules
19

are merely procedural and with their observance the courts have no concern."
Our concern is with
the procedural requirements of the Constitution for the enactment of laws. As far as these requirements
are concerned, we are satisfied that they have been faithfully observed in these cases.
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
20

resolved in its favor. Our cases

manifest firm adherence to the rule that an enrolled copy of a bill is
conclusive not only of its provisions but also of its due enactment. Not even claims that a proposed
constitutional amendment was invalid because the requisite votes for its approval had not been obtained
21

22

or that certain provisions of a statute had been "smuggled" in the printing of the bill
have moved or
persuaded us to look behind the proceedings of a coequal branch of the government. There is no reason
now to depart from this rule.
23

No claim is here made that the "enrolled bill" rule is absolute. In fact in one case
we "went behind"
an enrolled bill and consulted the Journal to determine whether certain provisions of a statute had been
approved by the Senate in view of the fact that the President of the Senate himself, who had signed the
enrolled bill, admitted a mistake and withdrew his signature, so that in effect there was no longer an
enrolled bill to consider.
But where allegations that the constitutional procedures for the passage of bills have not been
observed have no more basis than another allegation that the Conference Committee
"surreptitiously" inserted provisions into a bill which it had prepared, we should decline the invitation
to go behind the enrolled copy of the bill. To disregard the "enrolled bill" rule in such cases would be
to disregard the respect due the other two departments of our government.
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
24

thus expressed.
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.

25

Rafferty, 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
26

all its members and (2) the Secretary's duty is to execute the law.
103 of the NIRC contains a list of transactions exempted from VAT. Among the transactions
previously granted exemption were:
(f)
Printing, publication, importation or sale of books and any newspaper, magazine, review, or
bulletin which appears at regular intervals with fixed prices for subscription and sale and which is
devoted principally to the publication of advertisements.
Republic Act No. 7716 amended 103 by deleting (f) with the result that print media became
subject to the VAT with respect to all aspects of their operations. Later, however, based on a
memorandum of the Secretary of Justice, respondent Secretary of Finance issued Revenue
Regulations No. 11-94, dated June 27, 1994, exempting the "circulation income of print media
pursuant to 4 Article III of the 1987 Philippine Constitution guaranteeing against abridgment of
freedom of the press, among others." The exemption of "circulation income" has left income from
advertisements still subject to the VAT.
It is unnecessary to pass upon the contention that the exemption granted is beyond the authority of
the Secretary of Finance to 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
27

on his business. . . .
The PPI does not dispute this point, either.
What it contends is that by withdrawing the exemption previously granted to print media transactions
involving printing, publication, importation or sale of newspapers, Republic Act No. 7716 has singled
out the press for discriminatory treatment and that within the class of mass media the law
discriminates against print media by giving broadcast media favored treatment. We have carefully
examined this argument, but we are unable to find a differential treatment of the press by the law,
much less any censorial motivation for its enactment. If the press is now required to pay a valueadded 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
28

example, in Grosjean v. American Press Co.,

the law imposed a license tax equivalent to 2% of the
gross receipts derived from advertisements only on newspapers which had a circulation of more than
20,000 copies per week. Because the tax was not based on the volume of advertisement alone but was
measured by the extent of its circulation as well, the law applied only to the thirteen large newspapers in
Louisiana, leaving untaxed four papers with circulation of only slightly less than 20,000 copies a week and
120 weekly newspapers which were in serious competition with the thirteen newspapers in question. It
was well known that the thirteen newspapers had been critical of Senator Huey Long, and the Longdominated 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."
destroy.

29

The case is a classic illustration of the warning that the power to tax is the power to
30

In the other case

invoked by the PPI, the press was also found to have been singled out because
everything was exempt from the "use tax" on ink and paper, except the press. Minnesota imposed a tax
on the sales of goods in that state. To protect the sales tax, it enacted a complementary tax on the
privilege of "using, storing or consuming in that state tangible personal 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.

32

More recently, in Arkansas Writers' Project, Inc. v. Ragland,

it was held that a law which taxed
general interest magazines but not newspapers and religious, professional, trade and sports journals was
discriminatory because while the tax did not single out the press as a whole, it targeted a small group
within the press. What is more, by differentiating on the basis of contents (i.e., between general interest
and special interests such as religion or sports) the law became "entirely incompatible with the First
Amendment's guarantee of freedom of the press."
These cases come down to this: that unless justified, the differential treatment of the press creates
risks of suppression of expression. In contrast, in the cases at bar, the statute applies to a wide
range of goods and services. The argument that, by imposing the VAT only on print media whose
33

gross sales exceeds P480,000 but not more than P750,000, the law discriminates
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
34

press."
On the other hand, Minneapolis Star acknowledged that "The First Amendment does not
prohibit all regulation of the press [and that] the States and the Federal Government can subject
newspapers to generally 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.
36

Supreme Court unanimously held in Jimmy Swaggart Ministries v. Board of Equalization,

the Free
Exercise of Religion Clause does not prohibit imposing a generally applicable sales and use tax on the
sale of religious materials by a religious organization.
37

This brings us to the question whether the registration provision of the law,
although of general
applicability, nonetheless is invalid when applied to the press because it lays a prior restraint on its
38

essential freedom. The case of American Bible Society v. City of Manila

is cited by both the PBS and
the PPI in support of their contention that the law imposes censorship. There, this Court held that an
ordinance of the City of Manila, which imposed a license fee on those engaged in the business of general
merchandise, could not be applied to the appellant's sale of bibles and other religious literature. This
39

Court relied on Murdock v. Pennsylvania,

in which it was held that, as a license fee is fixed in amount
and unrelated to the receipts of the taxpayer, the license fee, when applied to a religious sect, was
actually being imposed as a condition for the exercise of the sect's right under the Constitution. For that
reason, it was held, the license fee "restrains in advance those constitutional liberties 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
41

due process clause."

Indeed, the absence of threat of immediate harm makes the need for judicial intervention less
evident and underscores the essential nature of petitioners' attack on the law on the grounds of
regressivity, denial of due process and equal protection and 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
42

system of taxation."
Petitioners in G.R. No. 115781 quote from a paper, entitled "VAT Policy Issues:
Structure, Regressivity, Inflation and Exports" by Alan A. Tait of the International Monetary Fund, that "VAT
payment by low-income households will be a higher proportion of their incomes (and expenditures) than
payments by higher-income households. That is, the VAT will be regressive." Petitioners contend that as a
result of the uniform 10% VAT, the tax on consumption goods of those who are in the higher-income
bracket, which before were taxed at a rate higher than 10%, has been reduced, while basic commodities,
which before were taxed at rates ranging from 3% to 5%, are now taxed at a higher rate.
Just as vigorously as it is asserted that the law is regressive, the opposite claim is pressed by
respondents that in fact it distributes the tax burden to as many goods and services as possible
particularly to those which are within the reach of higher-income groups, even as the law exempts

basic goods and services. It is thus equitable. The goods and properties subject to the VAT are those
used or consumed by higher-income groups. These include real properties held primarily for sale to
customers or held for lease in the ordinary course of business, the right or privilege to use industrial,
commercial or scientific equipment, hotels, restaurants and similar places, tourist buses, and the
like. On the other hand, small business establishments, with annual gross sales of less than
P500,000, are exempted. This, according to respondents, removes from the coverage of the law
43

some 30,000 business establishments. On the other hand, an occasional paper

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
44

legislature is not required to adhere to a policy of "all or none" in choosing the subject of taxation.
Nor is the contention of the Chamber of Real Estate and Builders Association (CREBA), petitioner in
G.R. 115754, that the VAT will reduce the mark up of its members by as much as 85% to 90% any
more concrete. It is a mere allegation. On the other hand, the claim of the Philippine Press Institute,
petitioner in G.R. No. 115544, that the VAT will drive some of its members out of circulation because
their profits from advertisements will not be enough to pay for their tax liability, while purporting to be
based on the financial statements of the newspapers in question, still falls short of the establishment
of facts by evidence so necessary for adjudicating the question whether the tax is oppressive and
confiscatory.
Indeed, regressivity is not a negative standard for courts to enforce. What Congress is required by
the Constitution to do is to "evolve a progressive system of taxation." This is a directive to Congress,
just like the directive to it to give priority to the enactment of laws for the enhancement of human
dignity and the reduction of social, economic and political inequalities (Art. XIII, 1), or for the
promotion of the right to "quality education" (Art. XIV, 1). These provisions are put in the
Constitution as moral incentives to legislation, not as judicially enforceable rights.
45

At all events, our 1988 decision in Kapatiran

should have laid to rest the questions now raised
against the VAT. There similar arguments made against the original VAT Law (Executive Order No. 273)
were held to be hypothetical, with no more basis than newspaper articles which this Court found to be
"hearsay and [without] evidentiary value." As Republic Act No. 7716 merely expands the base of the VAT
system and its coverage as provided in the original VAT Law, further debate on the desirability and
wisdom of the law should have shifted to Congress.
Only slightly less abstract but nonetheless hypothetical is the contention of CREBA that the
imposition of the VAT on the sales and leases of real estate by virtue of contracts entered into prior
to the effectivity of the law would violate the constitutional provision that "No law impairing the
obligation of contracts shall be passed." It is enough to say that the parties to a contract cannot,
through the exercise of prophetic discernment, fetter the exercise of the taxing power of the State.
For not only are existing laws read into contracts in order to fix obligations as between parties, but

the reservation of essential attributes of sovereign power is also read into contracts as a basic
postulate of the legal order. The policy of protecting contracts against impairment presupposes the
maintenance of a government which retains adequate authority to secure the peace and good order
46

of society.
In truth, the Contract Clause has never been thought as a limitation on the exercise of the State's
47

power of taxation save only where a tax exemption has been granted for a valid consideration.
Such is not the case of PAL in G.R. No. 115852, and we do not understand it to make this claim. Rather,
its position, as discussed above, is that the removal of its tax exemption cannot be made by a general,
but only by a specific, law.
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
48

cases; that public actions by "non-Hohfeldian"

or ideological plaintiffs are now cognizable provided
they meet the standing requirement of the Constitution; that under Art. VIII, 1, 2 the Court has a
"special function" of vindicating constitutional rights. Nonetheless the feeling cannot be escaped that we
do not have before us in these cases a fully developed factual record that alone can impart to our
49

adjudication the impact of actuality

to insure that decision-making is informed and well grounded.
Needless to say, we do not have power to render advisory opinions or even jurisdiction over petitions for
declaratory judgment. In effect we are being asked to do what the Conference Committee is precisely
accused of having done in these cases to sit as a third legislative chamber to review legislation.

We are told, however, that the power of judicial review is not so much power as it is duty imposed on
this Court by the Constitution and that we would be remiss in the performance of that duty if we
decline to look behind the barriers set by the principle of separation of powers. Art. VIII, 1, 2 is
cited in support of this view:
Judicial power includes the duty of the courts of justice to settle actual controversies involving rights
which are legally demandable and enforceable, and to determine whether or not there has been a
grave abuse of discretion amounting to lack or excess of jurisdiction on the part of any branch or
instrumentality of the Government.
To view the judicial power of review as a duty is nothing new. Chief Justice Marshall said so in 1803,
to justify the assertion of this power in Marbury v. Madison:
It is emphatically the province and duty of the judicial department to say what the law is. Those who
apply the rule to particular cases must of necessity expound and interpret that rule. If two laws
50

conflict with each other, the courts must decide on the operation of each.
Justice Laurel echoed this justification in 1936 in Angara v. Electoral Commission:
And when the judiciary mediates to allocate constitutional boundaries, it does not assert any
superiority over the other departments; it does not in reality nullify or invalidate an act of the
legislature, but only asserts the solemn and sacred obligation assigned to it by the Constitution to
determine conflicting claims of authority under the Constitution and to establish for the parties in an
actual controversy the rights which that instrument secures and guarantees to them.
This conception of the judicial power has been affirmed in several
52

51

cases 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.

John Hay PAC v. Lim, G.R. No. 119775, 24 October 2003

JOHN HAY PEOPLES ALTERNATIVE COALITION, MATEO CARIO

FOUNDATION INC., CENTER FOR ALTERNATIVE SYSTEMS
FOUNDATION INC., REGINA VICTORIA A. BENAFIN REPRESENTED
AND JOINED BY HER MOTHER MRS. ELISA BENAFIN, IZABEL M.
LUYK REPRESENTED AND JOINED BY HER MOTHER MRS.
REBECCA MOLINA LUYK, KATHERINE PE REPRESENTED AND
JOINED BY HER MOTHER ROSEMARIE G. PE, SOLEDAD S. CAMILO,
ALICIA C. PACALSO ALIAS KEVAB, BETTY I. STRASSER, RUBY C.
GIRON, URSULA C. PEREZ ALIAS BA-YAY, EDILBERTO T.
CLARAVALL, CARMEN CAROMINA, LILIA G. YARANON, DIANE
MONDOC, petitioners, vs. VICTOR LIM, PRESIDENT, BASES
CONVERSION DEVELOPMENT AUTHORITY; JOHN HAY PORO POINT
DEVELOPMENT CORPORATION, CITY OF BAGUIO, TUNTEX (B.V.I.)
CO.
LTD.,
ASIAWORLD
INTERNATIONALE
GROUP,
INC.,

DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES,

respondents.
DECISION
CARPIO MORALES, J.:

By the present petition for prohibition, mandamus and declaratory relief with prayer for a
temporary restraining order (TRO) and/or writ of preliminary injunction, petitioners
assail, in the main, the constitutionality of Presidential Proclamation No. 420, Series of
1994, CREATING AND DESIGNATING A PORTION OF THE AREA COVERED BY THE
FORMER CAMP JOHN [HAY] AS THE JOHN HAY SPECIAL ECONOMIC ZONE
PURSUANT TO REPUBLIC ACT NO. 7227.
Republic Act No. 7227, AN ACT ACCELERATING THE CONVERSION OF MILITARY
RESERVATIONS INTO OTHER PRODUCTIVE USES, CREATING THE BASES
CONVERSION AND DEVELOPMENT AUTHORITY FOR THIS PURPOSE,
PROVIDING FUNDS THEREFOR AND FOR OTHER PURPOSES, otherwise known as
the Bases Conversion and Development Act of 1992, which was enacted on March 13,
1992, set out the policy of the government to accelerate the sound and balanced
conversion into alternative productive uses of the former military bases under the 1947
Philippines-United States of America Military Bases Agreement, namely, the Clark and
Subic military reservations as well as their extensions including the John Hay Station
(Camp John Hay or the camp) in the City of Baguio. [1]
As noted in its title, R.A. No. 7227 created public respondent Bases Conversion and
Development Authority[2] (BCDA), vesting it with powers pertaining to the multifarious
aspects of carrying out the ultimate objective of utilizing the base areas in accordance
with the declared government policy.
R.A. No. 7227 likewise created the Subic Special Economic [and Free Port] Zone (Subic
SEZ) the metes and bounds of which were to be delineated in a proclamation to be
issued by the President of the Philippines.[3]
R.A. No. 7227 granted the Subic SEZ incentives ranging from tax and duty-free
importations, exemption of businesses therein from local and national taxes, to other
hallmarks of a liberalized financial and business climate. [4]
And R.A. No. 7227 expressly gave authority to the President to create through
executive proclamation, subject to the concurrence of the local government units
directly affected, other Special Economic Zones (SEZ) in the areas covered respectively
by the Clark military reservation, the Wallace Air Station in San Fernando, La Union,
and Camp John Hay.[5]
On August 16, 1993, BCDA entered into a Memorandum of Agreement and Escrow
Agreement with private respondents Tuntex (B.V.I.) Co., Ltd (TUNTEX) and Asiaworld
Internationale Group, Inc. (ASIAWORLD), private corporations registered under the
laws of the British Virgin Islands, preparatory to the formation of a joint venture for the
development of Poro Point in La Union and Camp John Hay as premier tourist

destinations and recreation centers. Four months later or on December 16, 1993,
BCDA, TUNTEX and ASIAWORD executed a Joint Venture Agreement [6] whereby they
bound themselves to put up a joint venture company known as the Baguio International
Development and Management Corporation which would lease areas within Camp John
Hay and Poro Point for the purpose of turning such places into principal tourist and
recreation spots, as originally envisioned by the parties under their Memorandum of
Agreement.
The Baguio City government meanwhile passed a number of resolutions in response to
the actions taken by BCDA as owner and administrator of Camp John Hay.
By Resolution[7] of September 29, 1993, the Sangguniang Panlungsod of Baguio City
(the sanggunian) officially asked BCDA to exclude all the barangays partly or totally
located within Camp John Hay from the reach or coverage of any plan or program for its
development.
By a subsequent Resolution[8] dated January 19, 1994, the sanggunian sought from
BCDA an abdication, waiver or quitclaim of its ownership over the home lots being
occupied by residents of nine (9) barangays surrounding the military reservation.
Still by another resolution passed on February 21, 1994, the sanggunian adopted and
submitted to BCDA a 15-point concept for the development of Camp John Hay. [9] The
sanggunians vision expressed, among other things, a kind of development that affords
protection to the environment, the making of a family-oriented type of tourist destination,
priority in employment opportunities for Baguio residents and free access to the base
area, guaranteed participation of the city government in the management and operation
of the camp, exclusion of the previously named nine barangays from the area for
development, and liability for local taxes of businesses to be established within the
camp.[10]
BCDA, TUNTEX and ASIAWORLD agreed to some, but rejected or modified the other
proposals of the sanggunian.[11] They stressed the need to declare Camp John Hay a
SEZ as a condition precedent to its full development in accordance with the mandate of
R.A. No. 7227.[12]
On May 11, 1994, the sanggunian passed a resolution requesting the Mayor to order
the determination of realty taxes which may otherwise be collected from real properties
of Camp John Hay.[13] The resolution was intended to intelligently guide the sanggunian
in determining its position on whether Camp John Hay be declared a SEZ, it (the
sanggunian) being of the view that such declaration would exempt the camps property
and the economic activity therein from local or national taxation.
More than a month later, however, the sanggunian passed Resolution No. 255, (Series
of 1994),[14] seeking and supporting, subject to its concurrence, the issuance by then
President Ramos of a presidential proclamation declaring an area of 288.1 hectares of
the camp as a SEZ in accordance with the provisions of R.A. No. 7227. Together with

this resolution was submitted a draft of the proposed proclamation for consideration by
the President.[15]
On July 5, 1994 then President Ramos issued Proclamation No. 420, [16] the title of
which was earlier indicated, which established a SEZ on a portion of Camp John Hay
and which reads as follows:
xxx
Pursuant to the powers vested in me by the law and the resolution of concurrence by
the City Council of Baguio, I, FIDEL V. RAMOS, President of the Philippines, do hereby
create and designate a portion of the area covered by the former John Hay reservation
as embraced, covered, and defined by the 1947 Military Bases Agreement between the
Philippines and the United States of America, as amended, as the John Hay Special
Economic Zone, and accordingly order:
SECTION 1. Coverage of John Hay Special Economic Zone. The John Hay Special
Economic Zone shall cover the area consisting of Two Hundred Eighty Eight and
one/tenth (288.1) hectares, more or less, of the total of Six Hundred Seventy-Seven
(677) hectares of the John Hay Reservation, more or less, which have been surveyed
and verified by the Department of Environment and Natural Resources (DENR) as
defined by the following technical description:
A parcel of land, situated in the City of Baguio, Province of Benguet, Island of Luzon,
and particularly described in survey plans Psd-131102-002639 and Ccs-131102-000030
as approved on 16 August 1993 and 26 August 1993, respectively, by the Department of
Environment and Natural Resources, in detail containing :
Lot 1, Lot 2, Lot 3, Lot 4, Lot 5, Lot 6, Lot 7, Lot 13, Lot 14, Lot 15, and Lot 20 of Ccs131102-000030
-andLot 3, Lot 4, Lot 5, Lot 6, Lot 7, Lot 8, Lot 9, Lot 10, Lot 11, Lot 14, Lot 15, Lot 16, Lot
17, and Lot 18 of Psd-131102-002639 being portions of TCT No. T-3812, LRC Rec. No.
87.
With a combined area of TWO HUNDRED EIGHTY EIGHT AND ONE/TENTH
HECTARES (288.1 hectares); Provided that the area consisting of approximately Six
and two/tenth (6.2) hectares, more or less, presently occupied by the VOA and the
residence of the Ambassador of the United States, shall be considered as part of the
SEZ only upon turnover of the properties to the government of the Republic of the
Philippines.
Sec. 2. Governing Body of the John Hay Special Economic Zone. Pursuant to Section
15 of Republic Act No. 7227, the Bases Conversion and Development Authority is
hereby established as the governing body of the John Hay Special Economic Zone and,
as such, authorized to determine the utilization and disposition of the lands comprising
it, subject to private rights, if any, and in consultation and coordination with the City
Government of Baguio after consultation with its inhabitants, and to promulgate the

necessary policies, rules, and regulations to govern and regulate the zone thru the John
Hay Poro Point Development Corporation, which is its implementing arm for its
economic development and optimum utilization.
Sec. 3. Investment Climate in John Hay Special Economic Zone. Pursuant to Section
5(m) and Section 15 of Republic Act No. 7227, the John Hay Poro Point Development
Corporation shall implement all necessary policies, rules, and regulations governing the
zone, including investment incentives, in consultation with pertinent government
departments. Among others, the zone shall have all the applicable incentives of the
Special Economic Zone under Section 12 of Republic Act No. 7227 and those
applicable incentives granted in the Export Processing Zones, the Omnibus Investment
Code of 1987, the Foreign Investment Act of 1991, and new investment laws that may
hereinafter be enacted.
Sec. 4. Role of Departments, Bureaus, Offices, Agencies and Instrumentalities. All
Heads of departments, bureaus, offices, agencies, and instrumentalities of the
government are hereby directed to give full support to Bases Conversion and
Development Authority and/or its implementing subsidiary or joint venture to facilitate
the necessary approvals to expedite the implementation of various projects of the
conversion program.
Sec. 5. Local Authority. Except as herein provided, the affected local government units
shall retain their basic autonomy and identity.
Sec. 6. Repealing Clause. All orders, rules, and regulations, or parts thereof, which are
inconsistent with the provisions of this Proclamation, are hereby repealed, amended, or
modified accordingly.
Sec. 7. Effectivity. This proclamation shall take effect immediately.
Done in the City of Manila, this 5 th day of July, in the year of Our Lord, nineteen hundred
and ninety-four.
The issuance of Proclamation No. 420 spawned the present petition [17] for prohibition,
mandamus and declaratory relief which was filed on April 25, 1995 challenging, in the
main, its constitutionality or validity as well as the legality of the Memorandum of
Agreement and Joint Venture Agreement between public respondent BCDA and private
respondents TUNTEX and ASIAWORLD.
Petitioners allege as grounds for the allowance of the petition the following:
I. PRESIDENTIAL PROCLAMATION NO. 420, SERIES OF 1990 (sic) IN SO FAR AS IT
GRANTS TAX EXEMPTIONS IS INVALID AND ILLEGAL AS IT IS AN UNCONSTITUTIONAL
EXERCISE BY THE PRESIDENT OF A POWER GRANTED ONLY TO THE LEGISLATURE.
II. PRESIDENTIAL PROCLAMATION NO. 420, IN SO FAR AS IT LIMITS THE POWERS AND
INTERFERES WITH THE AUTONOMY OF THE CITY OF BAGUIO IS INVALID, ILLEGAL AND
UNCONSTITUTIONAL.
III. PRESIDENTIAL PROCLAMATION NO. 420, SERIES OF 1994 IS UNCONSTITUTIONAL IN
THAT IT VIOLATES THE RULE THAT ALL TAXES SHOULD BE UNIFORM AND EQUITABLE.

IV. THE MEMORANDUM OF AGREEMENT ENTERED INTO BY AND BETWEEN PRIVATE

AND PUBLIC RESPONDENTS BASES CONVERSION DEVELOPMENT AUTHORITY HAVING
BEEN ENTERED INTO ONLY BY DIRECT NEGOTIATION IS ILLEGAL.
V. THE TERMS AND CONDITIONS OF THE MEMORANDUM OF AGREEMENT ENTERED
INTO BY AND BETWEEN PRIVATE AND PUBLIC RESPONDENT BASES CONVERSION
DEVELOPMENT AUTHORITY IS (sic) ILLEGAL.
VI. THE CONCEPTUAL DEVELOPMENT PLAN OF RESPONDENTS NOT HAVING
UNDERGONE ENVIRONMENTAL IMPACT ASSESSMENT IS BEING ILLEGALLY
CONSIDERED WITHOUT A VALID ENVIRONMENTAL IMPACT ASSESSMENT.

A temporary restraining order and/or writ of preliminary injunction was prayed for to
enjoin BCDA, John Hay Poro Point Development Corporation and the city government
from implementing Proclamation No. 420, and TUNTEX and ASIAWORLD from
proceeding with their plan respecting Camp John Hays development pursuant to their
Joint Venture Agreement with BCDA.[18]
Public respondents, by their separate Comments, allege as moot and academic the
issues raised by the petition, the questioned Memorandum of Agreement and Joint
Venture Agreement having already been deemed abandoned by the inaction of the
parties thereto prior to the filing of the petition as in fact, by letter of November 21, 1995,
BCDA formally notified TUNTEX and ASIAWORLD of the revocation of their said
agreements.[19]
In maintaining the validity of Proclamation No. 420, respondents contend that by
extending to the John Hay SEZ economic incentives similar to those enjoyed by the
Subic SEZ which was established under R.A. No. 7227, the proclamation is merely
implementing the legislative intent of said law to turn the US military bases into hubs of
business activity or investment. They underscore the point that the governments policy
of bases conversion can not be achieved without extending the same tax exemptions
granted by R.A. No. 7227 to Subic SEZ to other SEZs.
Denying that Proclamation No. 420 is in derogation of the local autonomy of Baguio City
or that it is violative of the constitutional guarantee of equal protection, respondents
assail petitioners lack of standing to bring the present suit even as taxpayers and in the
absence of any actual case or controversy to warrant this Courts exercise of its power
of judicial review over the proclamation.
Finally, respondents seek the outright dismissal of the petition for having been filed in
disregard of the hierarchy of courts and of the doctrine of exhaustion of administrative
remedies.
Replying,[20] petitioners aver that the doctrine of exhaustion of administrative remedies
finds no application herein since they are invoking the exclusive authority of this Court
under Section 21 of R.A. No. 7227 to enjoin or restrain implementation of projects for
conversion of the base areas; that the established exceptions to the aforesaid doctrine
obtain in the present petition; and that they possess the standing to bring the petition
which is a taxpayers suit.

Public respondents have filed their Rejoinder [21] and the parties have filed their
respective memoranda.
Before dwelling on the core issues, this Court shall first address the preliminary
procedural questions confronting the petition.
The judicial policy is and has always been that this Court will not entertain direct resort
to it except when the redress sought cannot be obtained in the proper courts, or when
exceptional and compelling circumstances warrant availment of a remedy within and
calling for the exercise of this Courts primary jurisdiction. [22] Neither will it entertain an
action for declaratory relief, which is partly the nature of this petition, over which it has
no original jurisdiction.
Nonetheless, as it is only this Court which has the power under Section 21 [23] of R.A.
No. 7227 to enjoin implementation of projects for the development of the former US
military reservations, the issuance of which injunction petitioners pray for, petitioners
direct filing of the present petition with it is allowed. Over and above this procedural
objection to the present suit, this Court retains full discretionary power to take
cognizance of a petition filed directly to it if compelling reasons, or the nature and
importance of the issues raised, warrant. [24] Besides, remanding the case to the lower
courts now would just unduly prolong adjudication of the issues.
The transformation of a portion of the area covered by Camp John Hay into a SEZ is not
simply a re-classification of an area, a mere ascription of a status to a place. It involves
turning the former US military reservation into a focal point for investments by both local
and foreign entities. It is to be made a site of vigorous business activity, ultimately
serving as a spur to the countrys long awaited economic growth. For, as R.A. No. 7227
unequivocally declares, it is the governments policy to enhance the benefits to be
derived from the base areas in order to promote the economic and social development
of Central Luzon in particular and the country in general. [25] Like the Subic SEZ, the
John Hay SEZ should also be turned into a self-sustaining, industrial, commercial,
financial and investment center.[26]
More than the economic interests at stake, the development of Camp John Hay as well
as of the other base areas unquestionably has critical links to a host of environmental
and social concerns. Whatever use to which these lands will be devoted will set a chain
of events that can affect one way or another the social and economic way of life of the
communities where the bases are located, and ultimately the nation in general.
Underscoring the fragility of Baguio Citys ecology with its problem on the scarcity of its
water supply, petitioners point out that the local and national government are faced with
the challenge of how to provide for an ecologically sustainable, environmentally sound,
equitable transition for the city in the wake of Camp John Hays reversion to the mass of
government property.[27] But that is why R.A. No. 7227 emphasizes the sound and
balanced conversion of the Clark and Subic military reservations and their extensions
consistent with ecological andenvironmental standards. [28] It cannot thus be gainsaid

that the matter of conversion of the US bases into SEZs, in this case Camp John Hay,
assumes importance of a national magnitude.
Convinced then that the present petition embodies crucial issues, this Court assumes
jurisdiction over the petition.
As far as the questioned agreements between BCDA and TUNTEX and ASIAWORLD
are concerned, the legal questions being raised thereon by petitioners have indeed
been rendered moot and academic by the revocation of such agreements. There are,
however, other issues posed by the petition, those which center on the constitutionality
of Proclamation No. 420, which have not been mooted by the said supervening event
upon application of the rules for the judicial scrutiny of constitutional cases. The issues
boil down to:
(1) Whether the present petition complies with the requirements for this Courts exercise of
jurisdiction over constitutional issues;
(2) Whether Proclamation No. 420 is constitutional by providing for national and local tax
exemption within and granting other economic incentives to the John Hay Special Economic
Zone; and
(3) Whether Proclamation No. 420 is constitutional for limiting or interfering with the local
autonomy of Baguio City;

It is settled that when questions of constitutional significance are raised, the court can
exercise its power of judicial review only if the following requisites are present: (1) the
existence of an actual and appropriate case; (2) a personal and substantial interest of
the party raising the constitutional question; (3) the exercise of judicial review is pleaded
at the earliest opportunity; and (4) the constitutional question is the lis mota of the case.
[29]

An actual case or controversy refers to an existing case or controversy that is

appropriate or ripe for determination, not conjectural or anticipatory.[30] The controversy
needs to be definite and concrete, bearing upon the legal relations of parties who are
pitted against each other due to their adverse legal interests. [31] There is in the present
case a real clash of interests and rights between petitioners and respondents arising
from the issuance of a presidential proclamation that converts a portion of the area
covered by Camp John Hay into a SEZ, the former insisting that such proclamation
contains unconstitutional provisions, the latter claiming otherwise.
R.A. No. 7227 expressly requires the concurrence of the affected local government
units to the creation of SEZs out of all the base areas in the country. [32] The grant by the
law on local government units of the right of concurrence on the bases conversion is
equivalent to vesting a legal standing on them, for it is in effect a recognition of the real
interests that communities nearby or surrounding a particular base area have in its
utilization. Thus, the interest of petitioners, being inhabitants of Baguio, in assailing the
legality of Proclamation No. 420, is personal and substantial such that they have
sustained or will sustain direct injury as a result of the government act being challenged.
[33]
Theirs is a material interest, an interest in issue affected by the proclamation and not

merely an interest in the question involved or an incidental interest, [34] for what is at
stake in the enforcement of Proclamation No. 420 is the very economic and social
existence of the people of Baguio City.
Petitioners locus standi parallels that of the petitioner and other residents of Bataan,
specially of the town of Limay, in Garcia v. Board of Investments [35] where this Court
characterized their interest in the establishment of a petrochemical plant in their place
as actual, real, vital and legal, for it would affect not only their economic life but even the
air they breathe.
Moreover, petitioners Edilberto T. Claravall and Lilia G. Yaranon were duly elected
councilors of Baguio at the time, engaged in the local governance of Baguio City and
whose duties included deciding for and on behalf of their constituents the question of
whether to concur with the declaration of a portion of the area covered by Camp John
Hay as a SEZ. Certainly then, petitioners Claravall and Yaranon, as city officials who
voted against[36] the sanggunian Resolution No. 255 (Series of 1994) supporting the
issuance of the now challenged Proclamation No. 420, have legal standing to bring the
present petition.
That there is herein a dispute on legal rights and interests is thus beyond doubt. The
mootness of the issues concerning the questioned agreements between public and
private respondents is of no moment.
By the mere enactment of the questioned law or the approval of the challenged act, the
dispute is deemed to have ripened into a judicial controversy even without any other
overt act. Indeed, even a singular violation of the Constitution and/or the law is enough
to awaken judicial duty.[37]
As to the third and fourth requisites of a judicial inquiry, there is likewise no question that
they have been complied with in the case at bar. This is an action filed purposely to
bring forth constitutional issues, ruling on which this Court must take up. Besides,
respondents never raised issues with respect to these requisites, hence, they are
deemed waived.
Having cleared the way for judicial review, the constitutionality of Proclamation No. 420,
as framed in the second and third issues above, must now be addressed squarely.
The second issue refers to petitioners objection against the creation by Proclamation
No. 420 of a regime of tax exemption within the John Hay SEZ. Petitioners argue that
nowhere in R. A. No. 7227 is there a grant of tax exemption to SEZs yet to be
established in base areas, unlike the grant under Section 12 thereof of tax exemption
and investment incentives to the therein established Subic SEZ. The grant of tax
exemption to the John Hay SEZ, petitioners conclude, thus contravenes Article VI,
Section 28 (4) of the Constitution which provides that No law granting any tax
exemption shall be passed without the concurrence of a majority of all the members of
Congress.
Section 3 of Proclamation No. 420, the challenged provision, reads:

Sec. 3. Investment Climate in John Hay Special Economic Zone. Pursuant to Section
5(m) and Section 15 of Republic Act No. 7227, the John Hay Poro Point Development
Corporation shall implement all necessary policies, rules, and regulations governing the
zone, including investment incentives, in consultation with pertinent government
departments. Among others, the zone shall have all the applicable incentives of the
Special Economic Zone under Section 12 of Republic Act No. 7227 and those
applicable incentives granted in the Export Processing Zones, the Omnibus
Investment Code of 1987, the Foreign Investment Act of 1991, and new
investment laws that may hereinafter be enacted. (Emphasis and underscoring
supplied)
Upon the other hand, Section 12 of R.A. No. 7227 provides:
xxx
(a) Within the framework and subject to the mandate and limitations of the Constitution
and the pertinent provisions of the Local Government Code, the Subic Special
Economic Zone shall be developed into a self-sustaining, industrial, commercial,
financial and investment center to generate employment opportunities in and around the
zone and to attract and promote productive foreign investments;
b) The Subic Special Economic Zone shall be operated and managed as a separate
customs territory ensuring free flow or movement of goods and capital within, into and
exported out of the Subic Special Economic Zone, as well as provide incentives such as
tax and duty free importations of raw materials, capital and equipment. However,
exportation or removal of goods from the territory of the Subic Special Economic Zone
to the other parts of the Philippine territory shall be subject to customs duties and taxes
under the Customs and Tariff Code and other relevant tax laws of the Philippines;
(c) The provisions of existing laws, rules and regulations to the contrary
notwithstanding, no taxes, local and national, shall be imposed within the Subic Special
Economic Zone. In lieu of paying taxes, three percent (3%) of the gross income earned
by all businesses and enterprises within the Subic Special Economic Zone shall be
remitted to the National Government, one percent (1%) each to the local government
units affected by the declaration of the zone in proportion to their population area, and
other factors. In addition, there is hereby established a development fund of one percent
(1%) of the gross income earned by all businesses and enterprises within the Subic
Special Economic Zone to be utilized for the Municipality of Subic, and other
municipalities contiguous to be base areas. In case of conflict between national and
local laws with respect to tax exemption privileges in the Subic Special Economic Zone,
the same shall be resolved in favor of the latter;
(d) No exchange control policy shall be applied and free markets for foreign exchange,
gold, securities and futures shall be allowed and maintained in the Subic Special
Economic Zone;

(e) The Central Bank, through the Monetary Board, shall supervise and regulate the
operations of banks and other financial institutions within the Subic Special Economic
Zone;
(f) Banking and Finance shall be liberalized with the establishment of foreign currency
depository units of local commercial banks and offshore banking units of foreign banks
with minimum Central Bank regulation;
(g) Any investor within the Subic Special Economic Zone whose continuing
investment shall not be less than Two Hundred fifty thousand dollars ($250,000), his/her
spouse and dependent children under twenty-one (21) years of age, shall be granted
permanent resident status within the Subic Special Economic Zone. They shall have
freedom of ingress and egress to and from the Subic Special Economic Zone without
any need of special authorization from the Bureau of Immigration and Deportation. The
Subic Bay Metropolitan Authority referred to in Section 13 of this Act may also issue
working visas renewable every two (2) years to foreign executives and other aliens
possessing highly-technical skills which no Filipino within the Subic Special Economic
Zone possesses, as certified by the Department of Labor and Employment. The names
of aliens granted permanent residence status and working visas by the Subic Bay
Metropolitan Authority shall be reported to the Bureau of Immigration and Deportation
within thirty (30) days after issuance thereof;
x x x (Emphasis supplied)
It is clear that under Section 12 of R.A. No. 7227 it is only the Subic SEZ which was
granted by Congress with tax exemption, investment incentives and the like. There is no
express extension of the aforesaid benefits to other SEZs still to be created at the time
via presidential proclamation.
The deliberations of the Senate confirm the exclusivity to Subic SEZ of the tax and
investment privileges accorded it under the law, as the following exchanges between
our lawmakers show during the second reading of the precursor bill of R.A. No. 7227
with respect to the investment policies that would govern Subic SEZ which are now
embodied in the aforesaid Section 12 thereof:
xxx
Senator Maceda: This is what I was talking about. We get into problems here because
all of these following policies are centered around the concept of free port. And in the
main paragraph above, we have declared both Clark and Subic as special economic
zones, subject to these policies which are, in effect, a free-port arrangement.
Senator Angara: The Gentleman is absolutely correct, Mr. President. So we must
confine these policies only to Subic.
May I withdraw then my amendment, and instead provide that THE SPECIAL
ECONOMIC ZONE OF SUBIC SHALL BE ESTABLISHED IN ACCORDANCE WITH
THE FOLLOWING POLICIES. Subject to style, Mr. President.
Thus, it is very clear that these principles and policies are applicable only to Subic as a
free port.

Senator Paterno: Mr. President.

The President: Senator Paterno is recognized.
Senator Paterno: I take it that the amendment suggested by Senator Angara would
then prevent the establishment of other special economic zones observing these
policies.
Senator Angara: No, Mr. President, because during our short caucus, Senator Laurel
raised the point that if we give this delegation to the President to establish other
economic zones, that may be an unwarranted delegation.
So we agreed that we will simply limit the definition of powers and description of the
zone to Subic, but that does not exclude the possibility of creating other economic
zones within the baselands.
Senator Paterno: But if that amendment is followed, no other special economic zone
may be created under authority of this particular bill. Is that correct, Mr. President?
Senator Angara: Under this specific provision, yes, Mr. President. This provision now
will be confined only to Subic.[38]
x x x (Underscoring supplied).
As gathered from the earlier-quoted Section 12 of R.A. No. 7227, the privileges given to
Subic SEZ consist principally of exemption from tariff or customs duties, national and
local taxes of business entities therein (paragraphs (b) and (c)), free market and trade of
specified goods or properties (paragraph d), liberalized banking and finance (paragraph
f), and relaxed immigration rules for foreign investors (paragraph g). Yet, apart from
these, Proclamation No. 420 also makes available to the John Hay SEZ benefits
existing in other laws such as the privilege of export processing zone-based businesses
of importing capital equipment and raw materials free from taxes, duties and other
restrictions;[39] tax and duty exemptions, tax holiday, tax credit, and other incentives
under the Omnibus Investments Code of 1987; [40] and the applicability to the subject
zone of rules governing foreign investments in the Philippines. [41]
While the grant of economic incentives may be essential to the creation and success of
SEZs, free trade zones and the like, the grant thereof to the John Hay SEZ cannot be
sustained. The incentives under R.A. No. 7227 are exclusive only to the Subic SEZ,
hence, the extension of the same to the John Hay SEZ finds no support therein. Neither
does the same grant of privileges to the John Hay SEZ find support in the other laws
specified under Section 3 of Proclamation No. 420, which laws were already extant
before the issuance of the proclamation or the enactment of R.A. No. 7227.
More importantly, the nature of most of the assailed privileges is one of tax exemption. It
is the legislature, unless limited by a provision of the state constitution, that has full
power to exempt any person or corporation or class of property from taxation, its power
to exempt being as broad as its power to tax. [42] Other than Congress, the Constitution
may itself provide for specific tax exemptions,[43] or local governments may pass
ordinances on exemption only from local taxes.[44]

The challenged grant of tax exemption would circumvent the Constitutions imposition
that a law granting any tax exemption must have the concurrence of a majority of all the
members of Congress.[45] In the same vein, the other kinds of privileges extended to the
John Hay SEZ are by tradition and usage for Congress to legislate upon.
Contrary to public respondents suggestions, the claimed statutory exemption of the
John Hay SEZ from taxation should be manifest and unmistakable from the language of
the law on which it is based; it must be expressly granted in a statute stated in a
language too clear to be mistaken.[46] Tax exemption cannot be implied as it must be
categorically and unmistakably expressed.[47]
If it were the intent of the legislature to grant to the John Hay SEZ the same tax
exemption and incentives given to the Subic SEZ, it would have so expressly provided
in the R.A. No. 7227.
This Court no doubt can void an act or policy of the political departments of the
government on either of two groundsinfringement of the Constitution or grave abuse of
discretion.[48]
This Court then declares that the grant by Proclamation No. 420 of tax exemption and
other privileges to the John Hay SEZ is void for being violative of the Constitution. This
renders it unnecessary to still dwell on petitioners claim that the same grant violates the
equal protection guarantee.
With respect to the final issue raised by petitioners that Proclamation No. 420 is
unconstitutional for being in derogation of Baguio Citys local autonomy, objection is
specifically mounted against Section 2 thereof in which BCDA is set up as the governing
body of the John Hay SEZ.[49]
Petitioners argue that there is no authority of the President to subject the John Hay SEZ
to the governance of BCDA which has just oversight functions over SEZ; and that to do
so is to diminish the city governments power over an area within its jurisdiction, hence,
Proclamation No. 420 unlawfully gives the President power of control over the local
government instead of just mere supervision.
Petitioners arguments are bereft of merit. Under R.A. No. 7227, the BCDA is entrusted
with, among other things, the following purpose: [50]
xxx
(a) To own, hold and/or administer the military reservations of John Hay Air Station,
Wallace Air Station, ODonnell Transmitter Station, San Miguel Naval Communications
Station, Mt. Sta. Rita Station (Hermosa, Bataan) and those portions of Metro Manila
Camps which may be transferred to it by the President;
x x x (Underscoring supplied)
With such broad rights of ownership and administration vested in BCDA over Camp
John Hay, BCDA virtually has control over it, subject to certain limitations provided for
by law. By designating BCDA as the governing agency of the John Hay SEZ, the law
merely emphasizes or reiterates the statutory role or functions it has been granted.

The unconstitutionality of the grant of tax immunity and financial incentives as contained
in the second sentence of Section 3 of Proclamation No. 420 notwithstanding, the entire
assailed proclamation cannot be declared unconstitutional, the other parts thereof not
being repugnant to law or the Constitution. The delineation and declaration of a portion
of the area covered by Camp John Hay as a SEZ was well within the powers of the
President to do so by means of a proclamation. [51] The requisite prior concurrence by
the Baguio City government to such proclamation appears to have been given in the
form of a duly enacted resolution by the sanggunian. The other provisions of the
proclamation had been proven to be consistent with R.A. No. 7227.
Where part of a statute is void as contrary to the Constitution, while another part is valid,
the valid portion, if separable from the invalid, may stand and be enforced. [52] This Court
finds that the other provisions in Proclamation No. 420 converting a delineated portion
of Camp John Hay into the John Hay SEZ are separable from the invalid second
sentence of Section 3 thereof, hence they stand.
WHEREFORE, the second sentence of Section 3 of Proclamation No. 420 is hereby
declared NULL AND VOID and is accordingly declared of no legal force and effect.
Public respondents are hereby enjoined from implementing the aforesaid void provision.
Proclamation No. 420, without the invalidated portion, remains valid and effective.
SO ORDERED.
Davide, Jr., C.J., Bellosillo, Vitug, Panganiban, Sandoval-Gutierrez, Carpio, AustriaMartinez, Callejo, Sr., Azcuna, and Tinga, JJ., concur.
Puno, J., no part, due to relationship.
Quisumbing, J., due prior action, no part.
Ynares-Santiago, and Corona, JJ., on leave.

Lung Center v. Quezon City, G.R. No. 144104, 29 June 2004

LUNG CENTER OF THE PHILIPPINES, petitioner, vs. QUEZON CITY

and CONSTANTINO P. ROSAS, in his capacity as City Assessor of
Quezon City, respondents.
DECISION
CALLEJO, SR., J.:

This is a petition for review on certiorari under Rule 45 of the Rules of Court, as
[1]
amended, of the Decision dated July 17, 2000 of the Court of Appeals in CA-G.R. SP
No. 57014 which affirmed the decision of the Central Board of Assessment Appeals
holding that the lot owned by the petitioner and its hospital building constructed thereon
are subject to assessment for purposes of real property tax.
The Antecedents

The petitioner Lung Center of the Philippines is a non-stock and non-profit entity
[2]
established on January 16, 1981 by virtue of Presidential Decree No. 1823.
It is the
registered owner of a parcel of land, particularly described as Lot No. RP-3-B-3A-1-B-1,
SWO-04-000495, located at Quezon Avenue corner Elliptical Road, Central District,
Quezon City. The lot has an area of 121,463 square meters and is covered by Transfer
Certificate of Title (TCT) No. 261320 of the Registry of Deeds of Quezon City. Erected in
the middle of the aforesaid lot is a hospital known as the Lung Center of the Philippines.
A big space at the ground floor is being leased to private parties, for canteen and small
store spaces, and to medical or professional practitioners who use the same as their
private clinics for their patients whom they charge for their professional services. Almost
one-half of the entire area on the left side of the building along Quezon Avenueis vacant
and idle, while a big portion on the right side, at the corner of Quezon Avenue and
Elliptical Road, is being leased for commercial purposes to a private enterprise known
as the Elliptical Orchids and Garden Center.
The petitioner accepts paying and non-paying patients. It also renders medical services
to out-patients, both paying and non-paying. Aside from its income from paying patients,
the petitioner receives annual subsidies from the government.
On June 7, 1993, both the land and the hospital building of the petitioner were assessed
for real property taxes in the amount of P4,554,860 by the City Assessor of Quezon
[3]
City. Accordingly, Tax Declaration Nos. C-021-01226 (16-2518) and C-021-01231 (152518-A) were issued for the land and the hospital building, respectively.

[4]

On August

[5]
25, 1993, the petitioner filed a Claim for Exemption from real property taxes with the
City Assessor, predicated on its claim that it is a charitable institution. The petitioners
request was denied, and a petition was, thereafter, filed before the Local Board of
Assessment Appeals of Quezon City (QC-LBAA, for brevity) for the reversal of the
resolution of the City Assessor. The petitioner alleged that under Section 28, paragraph
3 of the 1987 Constitution, the property is exempt from real property taxes. It averred
that a minimum of 60% of its hospital beds are exclusively used for charity patients and
that the major thrust of its hospital operation is to serve charity patients. The petitioner
contends that it is a charitable institution and, as such, is exempt from real property
taxes.The QC-LBAA rendered judgment dismissing the petition and holding the
[6]
petitioner liable for real property taxes.

The QC-LBAAs decision was, likewise, affirmed on appeal by the Central Board of
[7]
Assessment Appeals of Quezon City (CBAA, for brevity)
which ruled that the
petitioner was not a charitable institution and that its real properties were not actually,
directly and exclusively used for charitable purposes; hence, it was not entitled to real

property tax exemption under the constitution and the law. The petitioner sought relief
from the Court of Appeals, which rendered judgment affirming the decision of the CBAA.
[8]
Undaunted, the petitioner filed its petition in this Court contending that:
A. THE COURT A QUO ERRED IN DECLARING PETITIONER AS NOT ENTITLED TO
REALTY TAX EXEMPTIONS ON THE GROUND THAT ITS LAND, BUILDING AND
IMPROVEMENTS, SUBJECT OF ASSESSMENT, ARE NOT ACTUALLY, DIRECTLY AND
EXCLUSIVELY DEVOTED FOR CHARITABLE PURPOSES.
B. WHILE PETITIONER IS NOT DECLARED AS REAL PROPERTY TAX EXEMPT UNDER ITS
CHARTER, PD 1823, SAID EXEMPTION MAY NEVERTHELESS BE EXTENDED UPON
PROPER APPLICATION.
The petitioner avers that it is a charitable institution within the context of Section 28(3), Article VI
of the 1987 Constitution. It asserts that its character as a charitable institution is not altered by
the fact that it admits paying patients and renders medical services to them, leases portions of
the land to private parties, and rents out portions of the hospital to private medical practitioners
from which it derives income to be used for operational expenses. The petitioner points out that
for the years 1995 to 1999, 100% of its out-patients were charity patients and of the hospitals
282-bed capacity, 60% thereof, or 170 beds, is allotted to charity patients. It asserts that the fact
that it receives subsidies from the government attests to its character as a charitable institution.
It contends that the exclusivity required in the Constitution does not necessarily mean solely.
Hence, even if a portion of its real estate is leased out to private individuals from whom it
derives income, it does not lose its character as a charitable institution, and its exemption from
the payment of real estate taxes on its real property. The petitioner cited our ruling in Herrera v.

[9]
QC-BAA to bolster its pose. The petitioner further contends that even if P.D. No. 1823
does not exempt it from the payment of real estate taxes, it is not precluded from
seeking tax exemption under the 1987 Constitution.
In their comment on the petition, the respondents aver that the petitioner is not a
charitable entity. The petitioners real property is not exempt from the payment of real
estate taxes under P.D. No. 1823 and even under the 1987 Constitution because it
failed to prove that it is a charitable institution and that the said property is actually,
directly and exclusively used for charitable purposes. The respondents noted that in a
newspaper report, it appears that graft charges were filed with the Sandiganbayan
against the director of the petitioner, its administrative officer, and Zenaida Rivera, the
proprietress of the Elliptical Orchids and Garden Center, for entering into a lease
contract over 7,663.13 square meters of the property in 1990 for only P20,000 a month,
when the monthly rental should be P357,000 a month as determined by the
Commission on Audit; and that instead of complying with the directive of the COA for the
cancellation of the contract for being grossly prejudicial to the government, the petitioner
renewed the same on March 13, 1995 for a monthly rental of only P24,000. They assert
that the petitioner uses the subsidies granted by the government for charity patients and
uses the rest of its income from the property for the benefit of paying patients, among

other purposes. They aver that the petitioner failed to adduce substantial evidence that
100% of its out-patients and 170 beds in the hospital are reserved for indigent patients.
The respondents further assert, thus:
13. That the claims/allegations of the Petitioner LCP do not speak well of its record of
service. That before a patient is admitted for treatment in the Center, first impression is
that it is pay-patient and required to pay a certain amount as deposit. That even if a
patient is living below the poverty line, he is charged with high hospital bills. And,
without these bills being first settled, the poor patient cannot be allowed to leave the
hospital or be discharged without first paying the hospital bills or issue a promissory
note guaranteed and indorsed by an influential agency or person known only to the
Center; that even the remains of deceased poor patients suffered the same fate.
Moreover, before a patient is admitted for treatment as free or charity patient, one must
undergo a series of interviews and must submit all the requirements needed by the
Center, usually accompanied by endorsement by an influential agency or person known
only to the Center. These facts were heard and admitted by the Petitioner LCP during
the hearings before the Honorable QC-BAA and Honorable CBAA. These are the
reasons of indigent patients, instead of seeking treatment with the Center, they prefer to
be treated at the Quezon Institute. Can such practice by the Center be called
charitable?

[10]

The Issues
The issues for resolution are the following: (a) whether the petitioner is a charitable
institution within the context of Presidential Decree No. 1823 and the 1973 and 1987
Constitutions and Section 234(b) of Republic Act No. 7160; and (b) whether the real
properties of the petitioner are exempt from real property taxes.
The Courts Ruling
The petition is partially granted.
On the first issue, we hold that the petitioner is a charitable institution within the context
of the 1973 and 1987 Constitutions. To determine whether an enterprise is a charitable
institution/entity or not, the elements which should be considered include the statute
creating the enterprise, its corporate purposes, its constitution and by-laws, the methods
of administration, the nature of the actual work performed, the character of the services
rendered, the indefiniteness of the beneficiaries, and the use and occupation of the
[11]
properties.
In the legal sense, a charity may be fully defined as a gift, to be applied consistently with
existing laws, for the benefit of an indefinite number of persons, either by bringing their
minds and hearts under the influence of education or religion, by assisting them to
[12]
establish themselves in life or otherwise lessening the burden of government.
It may
be applied to almost anything that tend to promote the well-doing and well-being of

social man. It embraces the improvement and promotion of the happiness of man.

[13]

[14]
The word charitable is not restricted to relief of the poor or sick.
The test of a charity
and a charitable organization are in law the same. The test whether an enterprise is
charitable or not is whether it exists to carry out a purpose reorganized in law as
charitable or whether it is maintained for gain, profit, or private advantage.
Under P.D. No. 1823, the petitioner is a non-profit and non-stock corporation which,
subject to the provisions of the decree, is to be administered by the Office of the
President of the Philippines with the Ministry of Health and the Ministry of Human
Settlements. It was organized for the welfare and benefit of the Filipino people
principally to help combat the high incidence of lung and pulmonary diseases in the
Philippines. The raison detre for the creation of the petitioner is stated in the decree, viz:
Whereas, for decades, respiratory diseases have been a priority concern, having been
the leading cause of illness and death in the Philippines, comprising more than 45% of
the total annual deaths from all causes, thus, exacting a tremendous toll on human
resources, which ailments are likely to increase and degenerate into serious lung
diseases on account of unabated pollution, industrialization and unchecked cigarette
smoking in the country;
Whereas, the more common lung diseases are, to a great extent, preventable, and
curable with early and adequate medical care, immunization and through prompt and
intensive prevention and health education programs;
Whereas, there is an urgent need to consolidate and reinforce existing programs,
strategies and efforts at preventing, treating and rehabilitating people affected by lung
diseases, and to undertake research and training on the cure and prevention of lung
diseases, through a Lung Center which will house and nurture the above and related
activities and provide tertiary-level care for more difficult and problematical cases;
Whereas, to achieve this purpose, the Government intends to provide material and
financial support towards the establishment and maintenance of a Lung Center for the

welfare and benefit of the Filipino people.

[15]

The purposes for which the petitioner was created are spelled out in its Articles of
Incorporation, thus:
SECOND: That the purposes for which such corporation is formed are as follows:
1. To construct, establish, equip, maintain, administer and conduct an integrated
medical institution which shall specialize in the treatment, care, rehabilitation and/or
relief of lung and allied diseases in line with the concern of the government to assist and
provide material and financial support in the establishment and maintenance of a lung
center primarily to benefit the people of the Philippines and in pursuance of the policy of
the State to secure the well-being of the people by providing them specialized health
and medical services and by minimizing the incidence of lung diseases in the country
and elsewhere.

2. To promote the noble undertaking of scientific research related to the prevention of

lung or pulmonary ailments and the care of lung patients, including the holding of a
series of relevant congresses, conventions, seminars and conferences;
3. To stimulate and, whenever possible, underwrite scientific researches on the
biological, demographic, social, economic, eugenic and physiological aspects of lung or
pulmonary diseases and their control; and to collect and publish the findings of such
research for public consumption;
4. To facilitate the dissemination of ideas and public acceptance of information on lung
consciousness or awareness, and the development of fact-finding, information and
reporting facilities for and in aid of the general purposes or objects aforesaid, especially
in human lung requirements, general health and physical fitness, and other relevant or
related fields;
5. To encourage the training of physicians, nurses, health officers, social workers and
medical and technical personnel in the practical and scientific implementation of
services to lung patients;
6. To assist universities and research institutions in their studies about lung diseases, to
encourage advanced training in matters of the lung and related fields and to support
educational programs of value to general health;
7. To encourage the formation of other organizations on the national, provincial and/or
city and local levels; and to coordinate their various efforts and activities for the purpose
of achieving a more effective programmatic approach on the common problems relative
to the objectives enumerated herein;
8. To seek and obtain assistance in any form from both international and local
foundations and organizations; and to administer grants and funds that may be given to
the organization;
9. To extend, whenever possible and expedient, medical services to the public and, in
general, to promote and protect the health of the masses of our people, which has long
been recognized as an economic asset and a social blessing;
10. To help prevent, relieve and alleviate the lung or pulmonary afflictions and maladies
of the people in any and all walks of life, including those who are poor and needy, all
without regard to or discrimination, because of race, creed, color or political belief of the
persons helped; and to enable them to obtain treatment when such disorders occur;
11. To participate, as circumstances may warrant, in any activity designed and carried
on to promote the general health of the community;
12. To acquire and/or borrow funds and to own all funds or equipment, educational
materials and supplies by purchase, donation, or otherwise and to dispose of and
distribute the same in such manner, and, on such basis as the Center shall, from time to
time, deem proper and best, under the particular circumstances, to serve its general
and non-profit purposes and objectives;
13. To buy, purchase, acquire, own, lease, hold, sell, exchange, transfer and dispose of
properties, whether real or personal, for purposes herein mentioned; and

14. To do everything necessary, proper, advisable or convenient for the accomplishment

of any of the powers herein set forth and to do every other act and thing incidental
thereto or connected therewith.

[16]

Hence, the medical services of the petitioner are to be rendered to the public in general
in any and all walks of life including those who are poor and the needy without
discrimination. After all, any person, the rich as well as the poor, may fall sick or be
[17]
injured or wounded and become a subject of charity.
As a general principle, a charitable institution does not lose its character as such and its
exemption from taxes simply because it derives income from paying patients, whether
out-patient, or confined in the hospital, or receives subsidies from the government, so
long as the money received is devoted or used altogether to the charitable object which
it is intended to achieve; and no money inures to the private benefit of the persons
[18]
managing or operating the institution.
In Congregational Sunday School, etc. v.
[19]
Board of Review,
the State Supreme Court of Illinois held, thus:

[A]n institution does not lose its charitable character, and consequent exemption from
taxation, by reason of the fact that those recipients of its benefits who are able to pay
are required to do so, where no profit is made by the institution and the amounts so
received are applied in furthering its charitable purposes, and those benefits are refused
to none on account of inability to pay therefor. The fundamental ground upon which all
exemptions in favor of charitable institutions are based is the benefit conferred upon the
public by them, and a consequent relief, to some extent, of the burden upon the state to
care for and advance the interests of its citizens.

[20]

As aptly stated by the State Supreme Court of South Dakota in Lutheran Hospital
[21]
Association of South Dakota v. Baker:
[T]he fact that paying patients are taken, the profits derived from attendance upon these
patients being exclusively devoted to the maintenance of the charity, seems rather to
enhance the usefulness of the institution to the poor; for it is a matter of common
observation amongst those who have gone about at all amongst the suffering classes,
that the deserving poor can with difficulty be persuaded to enter an asylum of any kind
confined to the reception of objects of charity; and that their honest pride is much less
wounded by being placed in an institution in which paying patients are also received.
The fact of receiving money from some of the patients does not, we think, at all impair
the character of the charity, so long as the money thus received is devoted altogether to
the charitable object which the institution is intended to further.

[22]

The money received by the petitioner becomes a part of the trust fund and must be
[23]
devoted to public trust purposes and cannot be diverted to private profit or benefit.
Under P.D. No. 1823, the petitioner is entitled to receive donations. The petitioner does
not lose its character as a charitable institution simply because the gift or donation is in
the form of subsidies granted by the government. As held by the State Supreme Court
[24]
of Utah in Yorgason v. County Board of Equalization of Salt Lake County:
Second, the government subsidy payments are provided to the project. Thus, those
payments are like a gift or donation of any other kind except they come from the
government. In both Intermountain Health Care and the present case, the crux is the
presence or absence of material reciprocity. It is entirely irrelevant to this analysis that
the government, rather than a private benefactor, chose to make up the deficit resulting
from the exchange between St. Marks Tower and the tenants by making a contribution
to the landlord, just as it would have been irrelevant in Intermountain Health Care if the
patients income supplements had come from private individuals rather than the
government.
Therefore, the fact that subsidization of part of the cost of furnishing such housing is by
the government rather than private charitable contributions does not dictate the denial of
a charitable exemption if the facts otherwise support such an exemption, as they do
here.

[25]

In this case, the petitioner adduced substantial evidence that it spent its income,
including the subsidies from the government for 1991 and 1992 for its patients and for
the operation of the hospital. It even incurred a net loss in 1991 and 1992 from its
operations.
Even as we find that the petitioner is a charitable institution, we hold, anent the second
issue, that those portions of its real property that are leased to private entities are not
exempt from real property taxes as these are not actually, directly and exclusively used
for charitable purposes.
The settled rule in this jurisdiction is that laws granting exemption from tax are
construed strictissimi juris against the taxpayer and liberally in favor of the taxing power.
Taxation is the rule and exemption is the exception. The effect of an exemption is
equivalent to an appropriation. Hence, a claim for exemption from tax payments must
[26]
be clearly shown and based on language in the law too plain to be mistaken.
As held
[27]
in Salvation Army v. Hoehn:

An intention on the part of the legislature to grant an exemption from the taxing power
of the state will never be implied from language which will admit of any other reasonable
construction. Such an intention must be expressed in clear and unmistakable terms, or
must appear by necessary implication from the language used, for it is a well settled

principle that, when a special privilege or exemption is claimed under a statute, charter
or act of incorporation, it is to be construed strictly against the property owner and in
favor of the public. This principle applies with peculiar force to a claim of exemption from
taxation .

[28]

Section 2 of Presidential Decree No. 1823, relied upon by the petitioner, specifically
provides that the petitioner shall enjoy the tax exemptions and privileges:
SEC. 2. TAX EXEMPTIONS AND PRIVILEGES. Being a non-profit, non-stock
corporation organized primarily to help combat the high incidence of lung and
pulmonary diseases in the Philippines, all donations, contributions, endowments and
equipment and supplies to be imported by authorized entities or persons and by the
Board of Trustees of the Lung Center of the Philippines, Inc., for the actual use and
benefit of the Lung Center, shall be exempt from income and gift taxes, the same further
deductible in full for the purpose of determining the maximum deductible amount under
Section 30, paragraph (h), of the National Internal Revenue Code, as amended.
The Lung Center of the Philippines shall be exempt from the payment of taxes, charges
and fees imposed by the Government or any political subdivision or instrumentality
[29]

thereof with respect to equipment purchases made by, or for the Lung Center.

It is plain as day that under the decree, the petitioner does not enjoy any property tax
exemption privileges for its real properties as well as the building constructed thereon. If
the intentions were otherwise, the same should have been among the enumeration of
tax exempt privileges under Section 2:
It is a settled rule of statutory construction that the express mention of one person,
thing, or consequence implies the exclusion of all others. The rule is expressed in the
familiar maxim, expressio unius est exclusio alterius.
The rule of expressio unius est exclusio alterius is formulated in a number of ways. One
variation of the rule is principle that what is expressed puts an end to that which is
implied. Expressium facit cessare tacitum. Thus, where a statute, by its terms, is
expressly limited to certain matters, it may not, by interpretation or construction, be
extended to other matters.
...
The rule of expressio unius est exclusio alterius and its variations are canons of
restrictive interpretation. They are based on the rules of logic and the natural workings
of the human mind. They are predicated upon ones own voluntary act and not upon that
of others. They proceed from the premise that the legislature would not have made
specified enumeration in a statute had the intention been not to restrict its meaning and
confine its terms to those expressly mentioned.

[30]

The exemption must not be so enlarged by construction since the reasonable

presumption is that the State has granted in express terms all it intended to grant at all,

and that unless the privilege is limited to the very terms of the statute the favor would be
[31]
intended beyond what was meant.
Section 28(3), Article VI of the 1987 Philippine Constitution provides, thus:
(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.

[32]

[33]
The tax exemption under this constitutional provision covers property taxes only.
As
Chief Justice Hilario G. Davide, Jr., then a member of the 1986 Constitutional
Commission, explained: . . . what is exempted is not the institution itself . . .; those
exempted from real estate taxes are lands, buildings and improvements actually,
[34]
directly and exclusively used for religious, charitable or educational purposes.

Consequently, the constitutional provision is implemented by Section 234(b) of Republic

Act No. 7160 (otherwise known as the Local Government Code of 1991) as follows:
SECTION 234. Exemptions from Real Property Tax. The following are exempted from
payment of the real property tax:
...
(b) Charitable institutions, churches, parsonages or convents appurtenant thereto,
mosques, non-profit or religious cemeteries and all lands, buildings, and improvements
actually, directly, and exclusively used for religious, charitable or educational purposes.
[35]

We note that under the 1935 Constitution, ... all lands, buildings, and improvements
[36]
used exclusively for charitable purposes shall be exempt from taxation.
However,
under the 1973 and the present Constitutions, for lands, buildings, and improvements of
the charitable institution to be considered exempt, the same should not only be
exclusively used for charitable purposes; it is required that such property be used
[37]
actually and directly for such purposes.
In light of the foregoing substantial changes in the Constitution, the petitioner cannot
rely on our ruling in Herrera v. Quezon City Board of Assessment Appeals which was
promulgated on September 30, 1961 before the 1973 and 1987 Constitutions took
[38]
[39]
effect.
As this Court held in Province of Abra v. Hernando:
Under the 1935 Constitution: Cemeteries, churches, and parsonages or convents
appurtenant thereto, and all lands, buildings, and improvements used exclusively for
religious, charitable, or educational purposes shall be exempt from taxation. The
present Constitution added charitable institutions, mosques, and non-profit cemeteries

and required that for the exemption of lands, buildings, and improvements, they should
not only be exclusively but also actually and directly used for religious or charitable
purposes. The Constitution is worded differently. The change should not be ignored. It
must be duly taken into consideration.Reliance on past decisions would have sufficed
were the words actually as well as directly not added. There must be proof therefore of
the actual and direct use of the lands, buildings, and improvements for religious or
charitable purposes to be exempt from taxation.
Under the 1973 and 1987 Constitutions and Rep. Act No. 7160 in order to be entitled to
the exemption, the petitioner is burdened to prove, by clear and unequivocal proof, that
(a) it is a charitable institution; and (b) its real properties are ACTUALLY, DIRECTLY
and EXCLUSIVELY used for charitable purposes. Exclusive is defined as possessed
and enjoyed to the exclusion of others; debarred from participation or enjoyment; and
[40]
exclusively is defined, in a manner to exclude; as enjoying a privilege exclusively.
If
real property is used for one or more commercial purposes, it is not exclusively used for
[41]
the exempted purposes but is subject to taxation.
The words dominant use or
principal use cannot be substituted for the words used exclusively without doing
[42]
[43]
violence to the Constitutions and the law.
Solely is synonymous with exclusively.
What is meant by actual, direct and exclusive use of the property for charitable
purposes is the direct and immediate and actual application of the property itself to the
purposes for which the charitable institution is organized. It is not the use of the income
from the real property that is determinative of whether the property is used for tax[44]
exempt purposes.
The petitioner failed to discharge its burden to prove that the entirety of its real property
is actually, directly and exclusively used for charitable purposes. While portions of the
hospital are used for the treatment of patients and the dispensation of medical services
to them, whether paying or non-paying, other portions thereof are being leased to
private individuals for their clinics and a canteen. Further, a portion of the land is being
leased to a private individual for her business enterprise under the business name
Elliptical Orchids and Garden Center. Indeed, the petitioners evidence shows that it
collected P1,136,483.45 as rentals in 1991 and P1,679,999.28 for 1992 from the said
lessees.
Accordingly, we hold that the portions of the land leased to private entities as well as
those parts of the hospital leased to private individuals are not exempt from such taxes.
[45]
On the other hand, the portions of the land occupied by the hospital and portions of
the hospital used for its patients, whether paying or non-paying, are exempt from real
property taxes.

IN LIGHT OF ALL THE FOREGOING, the petition is PARTIALLY GRANTED. The

respondent Quezon City Assessor is hereby DIRECTED to determine, after due
hearing, the precise portions of the land and the area thereof which are leased to
private persons, and to compute the real property taxes due thereon as provided for by
law.
SO ORDERED.

i. Procedure for Passage of Bills

Sec. 26 (2), Art. VI, 1987 Constitution
Tolentino v. Secretary of Finance, supra.
Gonzales v. Macaraig, G.R. No. 87636, 19 November 1990
This constitutional controversy between the legislative and executive departments of government stemmed
from Senate Resolution No. 381, adopted on 2 February 1989,
"Authorizing and Directing the Committee on Finance to Bring in the Name of the Senate of the Philippines
the Proper Suit with the Supreme Court of the Philippines contesting the Constitutionality of the Veto by the
President of Special and General Provisions, particularly Section 55, of the General Appropriation Bill of 1989
(H.B. No. 19186) and For Other Purposes."
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Petitioners are thus before us as members and ex-officio members of the Committee on Finance of the
Senate and as "substantial taxpayers whose vital interests may be affected by this case."
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Respondents are members of the Cabinet tasked with the implementation of the General Appropriations Act
of 1989 and 1990, some of them incumbents, while others have already been replaced, and include the
National Treasurer and the Commission on Audit Chairman, all of whom are being sued in their official
capacities.
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The Background Facts

On 16 December 1988, Congress passed House Bill No. 19186, or the General Appropriations Bill for the
Fiscal Year 1989. As passed, it eliminated or decreased certain items included in the proposed budget
submitted by the President.
Pursuant to the constitutional provision on the passage of bills, Congress presented the said Bill to the
President for consideration and approval.
On 29 December 1988, the President signed the Bill into law, and declared the same to have become Rep.
Act No. 6688. In the process, seven (7) Special Provisions and Section 55, a "General Provision," were
vetoed.
On 2 February 1989, the Senate, in the same Resolution No. 381 mentioned at the outset, further
expressed:
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"WHEREAS, Be it Resolved, as it is hereby Resolved, That the Senate express its sense that the veto by the
President of Section 55 of the GENERAL PROVISIONS of the General Appropriation Bill of 1989 (H.B. No.
19186) is unconstitutional and, therefore, void and without any force and effect; hence, the aforesaid
Section 55 remains;
"x

x"

Thus it is that, on 11 April 1989, this Petition for Prohibition/ Mandamus was filed, with a prayer for the
issuance of a Writ of Preliminary Injunction and Restraining Order, assailing mainly the constitutionality or
legality of the Presidential veto of Section 55, and seeking to enjoin respondents from implementing Rep.
Act No. 6688. No Restraining Order was issued by the Court.
The Comment, submitted by the Solicitor General on 25 August 1989 (after several extensions granted),
was considered as the Answer to the Petition and, on 7 September 1989, the Court Resolved to give due
course to the Petition and to require the parties to submit their respective Memoranda. Petitioners filed their
Memorandum on 12 December 1989. But, on 19 January 1990, they filed a Motion for Leave to File and to
Admit Supplemental Petition, which was granted, basically raising the same issue as in the original Petition,
this time questioning the Presidents veto of certain provisions, particularly Section 16, of House Bill 26934,
or the General Appropriations Bill for Fiscal Year 1990, which the President declared to have become Rep.
Act No. 6831.
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The Solicitor Generals Comment on the Supplemental Petition, on behalf of respondent public officials, was
submitted on 24 April 1990. On 15 May 1990, the Court required the parties to file simultaneously their
consolidated memoranda, to include the Supplemental Petition, within an inextendible period of thirty (30)
days from notice. However, because the original Resolution of 15 May 1990 merely required the filing of a
memorandum on the Supplemental Petition, a revised Resolution requiring consolidated memoranda, within
thirty (30) days from notice, was released on 28 June 1990.
The Consolidated Memoranda were respectively filed on 26 June 1990 by petitioners, and on 1 August 1990
by respondents. On 14 August 1990, both Memoranda were Noted and the case was deemed submitted for
deliberation.
On 11 September 1990, the Court heard the case on oral argument and required the submittal of
supplemental Memoranda, the last of which was filed on 26 September 1990.
The Vetoed Provisions and Reasons Therefor
Section 55 of the Appropriations Act of 1989 (Section 55 [FY 89] hereinafter), which was vetoed by the
President, reads:
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"SEC. 55.
Prohibition Against the Restoration or Increase of Recommended Appropriations
Disapproved and/or Reduced by Congress: No item of appropriation recommended by the President in the
Budget submitted to Congress pursuant to Article VII, Section 22 of the Constitution which has been
disapproved or reduced in this Act shall be restored or increased by the use of appropriations authorized for
other purposes by augmentation. An item of appropriation for any purpose recommended by the President in
the Budget shall be deemed to have been disapproved by Congress if no corresponding appropriation for the
specific purpose is provided in this Act."
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We quote below the reason for the Presidential veto:

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"The provision violates Section 25 (5) of Article VI of the Constitution. If allowed, this Section would nullify
not only the constitutional and statutory authority of the President, but also that of the President of the

Senate, the Speaker of the House of Representatives, the Chief Justice of the Supreme Court, and Heads of
Constitutional Commissions, to augment any item in the general appropriations law for their respective
offices from savings in other items of their respective appropriations. A careful review of the legislative
action on the budget as submitted shows that in almost all cases, the budgets of agencies as recommended
by the President, as well as those of the Senate, the House of Representatives, and the Constitutional
Commissions, have been reduced. An unwanted consequence of this provision is the inability of the
President, the President of the Senate, Speaker of the House of Representatives, the Chief Justice of the
Supreme Court, and the heads of Constitutional Commissions to augment any item of appropriation of their
respective offices from savings in other items of their respective appropriations even in cases of calamity or
in the event of urgent need to accelerate the implementation of essential public services and infrastructure
projects.
"Furthermore, this provision is inconsistent with Section 12 and other similar provisions of this General
Appropriations Act."
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A substantially similar provision as the vetoed Section 55 appears in the Appropriations Act of 1990, this
time crafted as follows:
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"B.

GENERAL PROVISIONS

"Sec. 16.
Use of Savings. The President of the Philippines, the President of the Senate, the
Speaker of the House of Representatives, the Chief Justice of the Supreme Court, the Heads of
Constitutional Commissions under Article IX of the Constitution and the Ombudsman are hereby authorized
to augment any item in this Act for their respective offices from savings in other items of their
appropriations: PROVIDED, THAT NO ITEM OF APPROPRIATION RECOMMENDED BY THE PRESIDENT IN THE
BUDGET SUBMITTED TO CONGRESS PURSUANT TO ARTICLE VII, SECTION 22 OF THE CONSTITUTION
WHICH HAS BEEN DISAPPROVED OR REDUCED BY CONGRESS SHALL BE RESTORED OR INCREASED BY THE
USE OF APPROPRIATIONS AUTHORIZED FOR OTHER PURPOSES IN THIS ACT BY AUGMENTATION. AN ITEM
OF APPROPRIATION FOR ANY PURPOSE RECOMMENDED BY THE PRESIDENT IN THE BUDGET SHALL BE
DEEMED TO HAVE BEEN DISAPPROVED BY CONGRESS IF NO CORRESPONDING APPROPRIATION FOR THE
SPECIFIC PURPOSE IS PROVIDED IN THIS ACT."
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It should be noted that in the 1989 Appropriations Act, the "Use of Savings" appears in Section 12, separate
and apart from Section 55; whereas in the 1990 Appropriations Act, the "Use of Savings" and the vetoed
provision have been commingled in Section 16 only, with the vetoed provision made to appear as a condition
or restriction.
Essentially the same reason was given for the veto of Section 16 (FY 90), thus:

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"I am vetoing this provision for the reason that it violates Section 25 (5) of Article VI of the Constitution in
relation to Sections 44 and 45 of P.D. No. 1177 as amended by R.A. No. 6670 which authorizes the President
to use savings to augment any item of appropriations in the Executive Branch of the Government.
"Parenthetically, there is a case pending in the Supreme Court relative to the validity of the Presidents veto
on Section 55 of the General Provisions of Republic Act No. 6688 upon which the amendment on this Section
was based. Inclusion, therefore, of the proviso in the last sentence of this section might prejudice the
Executive Branchs position in the case.
"Moreover, if allowed, this Section would nullify not only the constitutional and statutory authority of the
President, but also that of the officials enumerated under Section 25 (5) of Article VI of the Constitution, to
augment any item in the general appropriations law for their respective appropriations.

"An unwanted consequence of this provision would be the inability of the President, the President of the
Senate, Speaker of the House of Representatives, the Chief Justice of the Supreme Court, and heads of
Constitutional Commissions to augment any item of appropriation of their respective offices from savings in
other items of their respective appropriations even in cases of national emergency or in the event of urgent
need to accelerate the implementation of essential public services and infrastructure projects."
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The fundamental issue raised is whether or not the veto by the President of Section 55 of the 1989
Appropriations Bill (Section 55 FY 89), and subsequently of its counterpart Section 16 of the 1990
Appropriations Bill (Section 16 FY 90), is unconstitutional and without effect.
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The Contending Views

In essence, petitioners cause is anchored on the following grounds: (1) the Presidents line-veto power as
regards appropriation bills is limited to item/s and does not cover provision/s; therefore, she exceeded her
authority when she vetoed Section 55 (FY 89) and Section 16 (FY 90) which are provisions; (2) when the
President objects to a provision of an appropriation bill, she cannot exercise the item-veto power but should
veto the entire bill; (3) the item-veto power does not carry with it the power to strike out conditions or
restrictions for that would be legislation, in violation of the doctrine of separation of powers; and (4) the
power of augmentation in Article VI, Section 25 [5] of the 1987 Constitution, has to be provided for by law
and, therefore, Congress is also vested with the prerogative to impose restrictions on the exercise of that
power.
The Solicitor General, as counsel for public respondents, counters that the issue at bar is a political question
beyond the power of this Court to determine; that petitioners had a political remedy, which was to override
the veto; that Section 55 is a "rider" because it is extraneous to the Appropriations Act and, therefore,
merits the Presidents veto; that the power of the President to augment items in the appropriations for the
executive branches had already been provided for in the Budget Law, specifically Sections 44 and 45 of Pres.
Decree No. 1177, as amended by Rep. Act No. 6670 (4 August 1988); and that the President is empowered
by the Constitution to veto provisions or other "distinct and severable parts" of an Appropriations Bill.
Judicial Determination
With the Senate maintaining that the Presidents veto is unconstitutional, and that charge being
controverted, there is an actual case or justiciable controversy between the Upper House of Congress and
the executive department that may be taken cognizance of by this Court.
"Indeed, where the legislature or the executive branch is acting within the limits of its authority, the
judiciary cannot and ought not to interfere with the former. But where the legislature or the executive acts
beyond the scope of its constitutional powers, it becomes the duty of the judiciary to declare what the other
branches of the government had assumed to do as void. This is the essence of judicial power conferred by
the Constitution in one Supreme Court and in such lower courts as may be established by law [Art. VIII,
Section 1 of the 1935 Constitution; Art. X, Section 1 of the 1973 Constitution and which was adopted as part
of the Freedom Constitution, and Art. VIII, Section 1 of the 1987 Constitution] and which power this Court
has exercised in many instances" (Demetria v. Alba, G.R. No. 71977, 27 February 1987, 148 SCRA 209).
We take note as well of what petitioners stress as the "imperative need for a definitive ruling by this Court
as to the exact parameters of the exercise of the item-veto power of the President as regards appropriation
bills . . . in order to obviate the recurrence of a similar problem whenever a general appropriations bill is
passed by Congress." Indeed, the contextual reiteration of Section 55 (FY 89) in Section 16 (FY 90) and
again, its veto by the President, underscore the need for judicial arbitrament. The Court does not thereby
assert its superiority over or exhibit lack of respect due the other co-ordinate departments but discharges a

solemn and sacred duty to determine essentially the scope of intersecting powers in regard which the
Executive and the Senate are in dispute.
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Petitioners have also brought this suit as taxpayers. As ruled in Sanidad v. COMELEC (No. L-44640, 12
October 1976, 73 SCRA 333), this Court enjoys the open discretion to entertain taxpayers suits or not. In
Tolentino v. COMELEC (No. L-34150, 16 October 1961, 41 SCRA 702), it was also held that a member of the
Senate has the requisite personality to bring a suit where a constitutional issue is raised.
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The political question doctrine neither interposes an obstacle to judicial determination of the rival claims.
The jurisdiction to delimit constitutional boundaries has been given to this Court. It cannot abdicate that
obligation mandated by the 1987 Constitution, although said provision by no means does away with the
applicability of the principle in appropriate cases.
"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."
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Nor is this the first time that the constitutionality of a Presidential veto is raised to the Court. The two oftcited cases are Bengson v. Secretary of Justice (62 Phil. 912 [1936]), penned by Justice George A. Malcolm,
which upheld the veto questioned before it, but which decision was reversed by the U.S. Supreme Court in
the same entitled case in 292 U.S. 410, infra, essentially on the ground that an Appropriations Bill was not
involved. The second case is Bolinao Electronics v. Valencia (G.R. No. L-20740, 30 June 1964, 11 SCRA 486),
infra, which rejected the Presidents veto of a condition or restriction in an Appropriations Bill.
The Extent of the Presidents Item-veto Power
The focal issue for resolution is whether or not the President exceeded the item-veto power accorded by the
Constitution. Or differently put, has the President the power to veto "provisions" of an Appropriations Bill?
Petitioners contend that Section 55 (FY 89) and Section 16 (FY 90) are provisions and not items and are,
therefore, outside the scope of the item-veto power of the President.
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The veto power of the President is expressed in Article VI, Section 27 of the 1987 Constitution reading, in
full, as follows:
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"Sec. 27.
(1) Every bill passed by the Congress shall, before it becomes a law, be presented to the
President. If he approves the same, he shall sign it; otherwise, he shall veto it and return the same with his
objections to the House where it originated, which shall enter the objections at large in its Journal and
proceed to reconsider it. If, after such reconsideration, two-thirds of all the Members of such House shall
agree to pass the bill, it shall be sent, together with the objections, to the other House by which it shall
likewise be reconsidered, and if approved by two-thirds of all the Members of that House, it shall become a
law. In all such cases, the votes of each House shall be determined by yeas or nays, and the names of the
Members voting for or against shall be entered in its Journal. The President shall communicate his veto of
any bill to the House where it originated within thirty days after the date of receipt thereof; otherwise, it
shall become a law as if he had signed it.
"(2)
The President shall have the power to veto any particular item or items in an appropriation,
revenue, or tariff bill, but the veto shall not affect the item or items to which he does not object."
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Paragraph (1) refers to the general veto power of the President and if exercised would result in the veto of
the entire bill, as a general rule. Paragraph (2) is what is referred to as the item-veto power or the line-veto
power. It allows the exercise of the veto over a particular item or items in an appropriation, revenue, or tariff
bill. As specified, the President may not veto less than all of an item of an Appropriations Bill. In other
words, the power given the executive to disapprove any item or items in an Appropriations Bill does not
grant the authority to veto a part of an item and to approve the remaining portion of the same item.
Originally, item veto exclusively referred to veto of items of appropriation bills and first came into being in
the former Organic Act, the Act of Congress of 29 August 1916. This was followed by the 1935 Constitution,
which contained a similar provision in its Section 11(2), Article VI, except that the veto power was made
more expansive by the inclusion of this sentence:
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". . . When a provision of an appropriation bill affects one or more items of the same, the President can not
veto the provision without at the same time vetoing the particular item or items to which it relates . . ."
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The 1935 Constitution further broadened the Presidents veto power to include the veto of item or items of
revenue and tariff bills.
With the advent of the 1973 Constitution, the section took a more simple and compact form, thus:

jgc:chanrobles.com .ph

"Section 20 (2). The Prime Minister shall have the power to veto any particular item or items in an
appropriation, revenue, or tariff bill, but the veto shall not affect the item or items to which he does not
object."
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It is to be noted that the counterpart provision in the 1987 Constitution (Article VI, Section 27 [2], supra), is
a verbatim reproduction except for the public official concerned. In other words, also eliminated has been
any reference to the veto of a provision. The vital question is: should this exclusion be interpreted to mean
as a disallowance of the power to veto a provision, as petitioners urge?
The terms item and provision in budgetary legislation and practice are concededly different. An item in a bill
refers to the particulars, the details, the distinct and severable parts . . . of the bill (Bengzon, supra, at
916). It is an indivisible sum of money dedicated to a stated purpose (Commonwealth v. Dodson, 11 S.E., 2d
120, 124, 125, etc., 176 Va. 281). The United States Supreme Court, in the case of Bengzon v. Secretary of
Justice (299 U.S. 410, 414, 57 S.Ct 252, 81 L. Ed., 312) declared "that an item of an appropriation bill
obviously means an item which in itself is a specific appropriation of money, not some general provision of
law, which happens to be put into an appropriation bill."
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It is our considered opinion that, notwithstanding the elimination in Article VI, Section 27 (2) of the 1987
Constitution of any reference to the veto of a provision, the extent of the Presidents veto power as
previously defined by the 1935 Constitution has not changed. This is because the eliminated proviso merely
pronounces the basic principle that a distinct and severable part of a bill may be the subject of a separate
veto (Bengzon v. Secretary of Justice, 62 Phil., 912, 916 (1926); 2 BERNAS, Joaquin, S.J., The Constitution
of the Republic of the Philippines, 1st ed., 154-155, [1988]).
The restrictive interpretation urged by petitioners that the President may not veto a provision without
vetoing the entire bill not only disregards the basic principle that a distinct and severable part of a bill may
be the subject of a separate veto but also overlooks the Constitutional mandate that any provision in the
general appropriations bill shall relate specifically to some particular appropriation therein and that any such
provision shall be limited in its operation to the appropriation to which it relates (1987 Constitution, Article
VI, Section 25 [2]). In other words, in the true sense of the term, a provision in an Appropriations Bill is

limited in its operation to some particular appropriation to which it relates, and does not relate to the entire
bill.
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Petitioners further submission that, since the exercise of the veto power by the President partakes of the
nature of legislative powers it should be strictly construed, is negative by the following dictum in Bengzon,
supra, reading:
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"The Constitution is a limitation upon the power of the legislative department of the government, but in this
respect it is a grant of power to the executive department. The Legislature has the affirmative power to
enact laws; the Chief Executive has the negative power by the constitutional exercise of which he may
defeat the will of the Legislature. It follows that the Chief Executive must find his authority in the
Constitution. But in exercising that authority he may not be confined to rules of strict construction or
hampered by the unwise interference of the judiciary. The courts will indulge every intendment in favor of
the constitutionality of a veto the same as they will presume the constitutionality of an act as originally
passed by the Legislature" (Commonwealth v. Barnett [1901], 199 Pa., 161; 55 L.R.A., 882; People v. Board
of Councilmen [1892], 20 N.Y.S., 52; Fulmore v. Lane [1911], 104 Tex., 499; Texas Co. v. State [1927], 53
A.L.R., 258 [at 917]).
Inappropriateness of the so-called "Provisions"
But even assuming arguendo that provisions are beyond the executive power to veto, we are of the opinion
that Section 55 (FY 89) and Section 16 (FY 90) are not provisions in the budgetary sense of the term.
Article VI, Section 25 (2) of the 1987 Constitution provides:
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"Sec. 25 (2)
No provision or enactment shall be embraced in the general appropriations bill unless it
relates specifically to some particular appropriation therein. Any such provision or enactment shall be limited
in its operation to the appropriation to which it relates."
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Explicit is the requirement that a provision in the Appropriations Bill should relate specifically to some"
particular appropriation" therein. The challenged "provisions" fall short of this requirement. Firstly, the
vetoed "provisions" do not relate to any particular or distinctive appropriation. They apply generally to all
items disapproved or reduced by Congress in the Appropriations Bill. Secondly, the disapproved or reduced
items are nowhere to be found on the face of the Bill. To discover them, resort will have to be made to the
original recommendations made by the President and to the source indicated by petitioners themselves, i.e.,
the "Legislative Budget Research and Monitoring Office" (Annex B-1 and B-2, Petition). Thirdly, the vetoed
Sections are more of an expression of Congressional policy in respect of augmentation from savings rather
than a budgetary appropriation. Consequently, Section 55 (FY 89) and Section 16 (FY 90) although labelled
as "provisions," are actually inappropriate provisions that should be treated as items for the purpose of the
Presidents veto power. (Henry v. Edwards [1977] 346 S Rep. 2d, 157-158)
"Just as the President may not use his item-veto to usurp constitutional powers conferred on the legislature,
neither can the legislature deprive the Governor of the constitutional powers conferred on him as chief
executive officer of the state by including in a general appropriation bill matters more properly enacted in
separate legislation. The Governors constitutional power to veto bills of general legislation . . . cannot be
abridged by the careful placement of such measures in a general appropriation bill, thereby forcing the
Governor to choose between approving unacceptable substantive legislation or vetoing items of expenditure
essential to the operation of government. The legislature cannot by location of a bill give it immunity from
executive veto. Nor can it circumvent the Governors veto power over substantive legislation by artfully
drafting general law measures so that they appear to be true conditions or limitations on an item of
appropriation. Otherwise, the legislature would be permitted to impair the constitutional responsibilities and
functions of a co-equal branch of government in contravention of the separation of powers doctrine . . . We
are no more willing to allow the legislature to use its appropriation power to infringe on the Governors
constitutional right to veto matters of substantive legislation than we are to allow the Governor to encroach

on the constitutional powers of the legislature. In order to avoid this result, we hold that, when the
legislature inserts inappropriate provisions in a general appropriation bill, such provisions must be treated as
items for purposes of the Governors item veto power over general appropriation bills.
x

". . . Legislative control cannot be exercised in such a manner as to encumber the general appropriation bill
with veto-proof logrolling measure, special interest provisions which could not succeed if separately
enacted, or riders, substantive pieces of legislation incorporated in a bill to insure passage without
veto. . . ." (Emphasis supplied)
Inappropriateness of the so-called "Conditions/Restrictions"
Petitioners maintain, however, that Congress is free to impose conditions in an Appropriations Bill and where
conditions are attached, the veto power does not carry with it the power to strike them out, citing
Commonwealth v. Dodson (11 SE, 2d 130, supra) and Bolinao Electronics Corporation v. Valencia (No. L20740, June 30, 1964, 11 SCRA 486). In other words, their theory is that Section 55 (FY 89) and Section
16 (FY 90) are such conditions/restrictions and thus beyond the veto power.
chanrobles virtual lawlibrary

There can be no denying that inherent in the power of appropriation is the power to specify how money shall
be spent; and that in addition to distinct "items" of appropriation, the Legislature may include in
Appropriation Bills qualifications, conditions, limitations or restrictions on expenditure of funds. Settled also
is the rule that the Executive is not allowed to veto a condition or proviso of an appropriation while allowing
the appropriation itself to stand (Fairfield v. Foster, supra, at 320). That was also the ruling in Bolinao, supra,
which held that the veto of a condition in an Appropriations Bill which did not include a veto of the items to
which the condition related was deemed invalid and without effect whatsoever.
However, for the rule to apply, restrictions should be such in the real sense of the term, not some matters
which are more properly dealt with in a separate legislation (Henry v. Edwards, La, 346, So 2d 153).
Restrictions or conditions in an Appropriations Bill must exhibit a connection with money items in a
budgetary sense in the schedule of expenditures. Again, the test is appropriateness.
"It is not enough that a provision be related to the institution or agency to which funds are appropriated.
Conditions and limitations properly included in an appropriation bill must exhibit such a connexity with
money items of appropriation that they logically belong in a schedule of expenditures . . . the ultimate test is
one of appropriateness" (Henry v. Edwards, supra, at 158).
Tested by these criteria, Section 55 (FY 89) and Section 16 (FY 90) must also be held to be inappropriate
"conditions." While they, particularly, Section 16 (FY 90), have been "artfully drafted" to appear as true
conditions or limitations, they are actually general law measures more appropriate for substantive and,
therefore, separate legislation.
Further, neither of them shows the necessary connection with a schedule of expenditures. The reason, as
explained earlier, is that items reduced or disapproved by Congress would not appear on the face of the
enrolled bill or Appropriations Act itself. They can only be detected when compared with the original
budgetary submittals of the President. In fact, Sections 55 (FY 89) and 16 (FY 90) themselves provide that
an item "shall be deemed to have been disapproved by Congress if no corresponding appropriation for the
specific purpose is provided in this Act."
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Considering that the vetoed provisions are not, in the budgetary sense of the term, conditions or
restrictions, the case of Bolinao Electronics Corporation v. Valencia (supra), invoked by petitioners, becomes

inapplicable. In that case, a public works bill contained an item appropriating a certain sum for assistance to
television stations, subject to the condition that the amount would not be available to places where there
were commercial television stations. Then President Macapagal approved the appropriation but vetoed the
condition. When challenged before this Court, it was held that the veto was ineffectual and that the approval
of the item carried with it the approval of the condition attached to it. In contrast with the case at bar, there
is no condition, in the budgetary sense of the term, attached to an appropriation or item in the appropriation
bill which was struck out. For obviously, Sections 55 (FY 89) and 16 (FY 90) partake more of a curtailment
on the power to augment from savings; in other words, "a general provision of law, which happens to be put
in an appropriation bill" (Bengzon v. Secretary of Justice, supra).
The Power of Augmentation and The Validity of the Veto
The President promptly vetoed Section 55 (FY 89) and Section 16 (FY 90) because they nullify the authority
of the Chief Executive and heads of different branches of government to augment any item in the General
Appropriations Law for their respective offices from savings in other items of their respective appropriations,
as guaranteed by Article VI, Section 25 (5) of the Constitution. Said provision reads:
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"Sec. 25.
(5) No law shall be passed authorizing any transfer of appropriations; however, the
President, the President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the
Supreme Court, and the heads of Constitutional Commissions may, by law, be authorized to augment any
item in the general appropriations law for their respective offices from savings in other items of their
respective appropriations" (Emphasis ours).
Noteworthy is the fact that the power to augment from savings lies dormant until authorized by law.
This Court upheld the validity of the power of augmentation from savings in Demetria v. Alba, which
ruled:
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". . . to afford the heads of the different branches of the government and those of the constitutional
commissions considerable flexibility in the use of public funds and resources, the constitution allowed the
enactment of a law authorizing the transfer of funds for the purpose of augmenting an item from savings in
another item in the appropriation of the government branch or constitutional body concerned. The leeway
granted was thus limited. The purpose and conditions for which funds may be transferred were specified,
i.e., transfer may be allowed for the purpose of augmenting an item and such transfer may be made only if
there are savings from another item in the appropriation of the government branch or constitutional body"
(G.R. No. 71977, 27 February 1987, 148 SCRA 214).
The 1973 Constitution contained an identical authority to augment from savings in its Article VIII, Section 16
(5), except for mention of the Prime Minister among the officials vested with that power. 1
In 1977, the statutory authority of the President to augment any appropriation of the executive department
in the General Appropriations Act from savings was specifically provided for in Section 44 of Presidential
Decree No. 1177, as amended (RA 6670, 4 August 1988), otherwise known as the "Budget Reform Decree
of 1977." It reads:
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"Sec. 44. . . .
"The President shall, likewise, have the authority to augment any appropriation of the Executive Department
in the General Appropriations Act, from savings in the appropriations of another department, bureau, office
or agency within the Executive Branch, pursuant to the provisions of Art. VIII, Sec. 16 (5) of the
Constitution (now Sec. 25 (5), Art. VI)" (Emphasis ours), (N.B.: The first paragraph declared void in
Demetria v. Alba, supra, has been deleted).

Similarly, the use by the President of savings to cover deficits is specifically authorized in the same Decree.
Thus:
jgc:chanroble s.com.ph

"Sec. 45.
Authority to Use Savings in Appropriations to Cover Deficits. Except as otherwise provided
in the General Appropriations Act, any savings in the regular appropriations authorized in the General
Appropriations Act for programs and projects of any department, office or agency, may, with the approval of
the President be used to cover a deficit in any other item of the regular appropriations: ". . .
A more recent grant is found in Section 12 of the General Appropriations Act of 1989, the text of which is
repeated in the first paragraph of Section 16 (FY 90). Section 12 reads:
chanroble s virtual lawlibrary

"Sec. 12.
Use of Savings. The President, the President of the Senate, the Speaker of the House of
Representatives, the Chief Justice of the Supreme Court, the heads of the Constitutional Commissions, and
the Ombudsman are hereby authorized to augment any item in this Act for their respective offices from
savings in other items of their respective appropriations."
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There should be no question, therefore, that statutory authority has, in fact, been granted. And once given,
the heads of the different branches of the Government and those of the Constitutional Commissions are
afforded considerable flexibility in the use of public funds and resources (Demetria v. Alba, supra). The
doctrine of separation of powers is in no way endangered because the transfer is made within a department
(or branch of government) and not from one department (branch) to another (CRUZ, Isagani A., Philippine
Political Law [1989] p. 155).
When Sections 55 (FY 89) and 16 (FY 90), therefore, prohibit the restoration or increase by augmentation
of appropriations disapproved or reduced by Congress, they impair the constitutional and statutory authority
of the President and other key officials to augment any item or any appropriation from savings in the
interest of expediency and efficiency. The exercise of such authority in respect of disapproved or reduced
items by no means vests in the Executive the power to rewrite the entire budget, as petitioners contend, the
leeway granted being delimited to transfers within the department or branch concerned, the sourcing to
come only from savings.
More importantly, it strikes us, too, that for such a special power as that of augmentation from savings, the
same is merely incorporated in the General Appropriations Bill. An Appropriations Bill is "one the primary
and specific aim of which is to make appropriation of money from the public treasury" (Bengzon v. Secretary
of Justice, 292 U.S., 410, 57 S.Ct. 252). It is a legislative authorization of receipts and expenditures. The
power of augmentation from savings, on the other hand, can by no means be considered a specific
appropriation of money. It is a non-appropriation item inserted in an appropriation measure.
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The same thing must be said of Section 55 (FY 89), taken in conjunction with Section 12, and Section 16
(FY 90), which prohibit the restoration or increase by augmentation of appropriations disapproved and/or
reduced by Congress. They are non-appropriation items, an appropriation being a setting apart by law of a
certain sum from the public revenue for a specific purpose (Bengzon v. Secretary of Justice, 62 Phil. 912,
916 [1936]). It bears repeating that they are more of a substantive expression of a legislative objective to
restrict the power of augmentation granted to the President and other key officials. They are actually
matters of general law and more properly the subject of a separate legislation that will embody, define and
delimit the scope of the special power of augmentation from savings instead of being inappropriately
incorporated annually in the Appropriation Act. To sanction this practice would be to give the Legislature the
freedom to grant or withhold the power from the Executive and other officials, and thus put in yearly
jeopardy the exercise of that power.

If, indeed, by the later enactments of Section 55 (FY 89) and Section 16 (FY 90), Congress, as petitioners
argue, intended to amend or repeal Pres. Decree No. 1177, with all the more reason should it have so
provided in a separate enactment, it being basic that implied repeals are not favored. For the same reason,
we cannot subscribe to petitioners allegation that Pres. Decree No. 1177 has been revoked by the 1987
Constitution. The 1987 Constitution itself provides for the continuance of laws, decrees, executive orders,
proclamations, letters of instructions, and other executive issuances not inconsistent with the Constitution
until amended, repealed, or revoked (1987 Constitution, Article XVIII, Section 3).
If, indeed, the legislature believed that the exercise of the veto powers by the executive were
unconstitutional, the remedy laid down by the Constitution is crystal clear. A Presidential veto may be
overriden by the votes of two-thirds of members of Congress (1987 Constitution, Article VI, Section 27[1],
supra). But Congress made no attempt to override the Presidential veto. Petitioners argument that the veto
is ineffectual so that there is "nothing to override" (citing Bolinao) has lost force and effect with the
executive veto having been herein upheld.
As we see it, there need be no future conflict if the legislative and executive branches of government adhere
to the spirit of the Constitution, each exercising its respective powers with due deference to the
constitutional responsibilities and functions of the other. Thereby, the delicate equilibrium of governmental
powers remains on even keel.
WHEREFORE, the constitutionality of the assailed Presidential veto is UPHELD and this Petition is hereby
DISMISSED.
No costs.
SO ORDERED.

Farinas v. Executive Secretary, G.R. No. 147387, 10 December 2003

RODOLFO C. FARIAS, MANUEL M. GARCIA, FRANCIS G. ESCUDERO, and
AGAPITO A. AQUINO, AS MEMBERS OF THE HOUSE OF REPRESENTATIVES AND
ALSO AS TAXPAYERS, IN THEIR OWN BEHALF AND IN REPRESENTATION OF THE
MEMBERS OF THE MINORITY IN THE HOUSE OF REPRESENTATIVES, petitioners,
vs.
THE EXECUTIVE SECRETARY, COMMISSION ON ELECTIONS, HON. FELICIANO R.
BELMONTE, JR., SECRETARY OF THE INTERIOR AND LOCAL GOVERNMENT,
SECRETARY OF THE SENATE, AND SECRETARY GENERAL OF THE HOUSE OF
REPRESENTATIVES, respondents.
xx
G.R. No. 152161
CONG. GERRY A. SALAPUDDIN, petitioner,
vs.
COMMISSION ON ELECTIONS, respondent.

DECISION
CALLEJO, SR., J.:
Before the Court are two Petitions under Rule 65 of the Rules of Court, as amended,
seeking to declare as unconstitutional Section 14 of Republic Act No. 9006 (The Fair
Election Act), insofar as it expressly repeals Section 67 of Batas Pambansa Blg. 881 (The
Omnibus Election Code) which provides:
SEC. 67. Candidates holding elective office. Any elective official, whether national or local,
running for any office other than the one which he is holding in a permanent capacity,
except for President and Vice-President, shall be considered ipso facto resigned from his
office upon the filing of his certificate of candidacy.
The petition for certiorari and prohibition in G.R. No. 147387 was filed by Rodolfo C.
Farias, Manuel M. Garcia, Francis G. Escudero and Agapito A. Aquino. At the time of filing
of the petition, the petitioners were members of the minority bloc in the House of
Representatives. Impleaded as respondents are: the Executive Secretary, then Speaker of
the House of Representatives Feliciano R. Belmonte, Jr., the Commission on Elections, the
Secretary of the Department of the Interior and Local Government (DILG), the Secretary of
the Senate and the Secretary General of the House of Representatives.
The petition for prohibition in G.R. No. 152161 was filed by Gerry A. Salapuddin, then also a
member of the House of Representatives. Impleaded as respondent is the COMELEC.
Legislative History of Republic Act No. 9006
Rep. Act No. 9006, entitled An Act to Enhance the Holding of Free, Orderly, Honest,
Peaceful and Credible Elections through Fair Election Practices, is a consolidation of the
following bills originating from the House of Representatives and the Senate, respectively:
House Bill (HB) No. 9000 entitled AN ACT ALLOWING THE USE OF MASS MEDIA FOR
ELECTION PROPAGANDA, AMENDING FOR THE PURPOSE BATAS PAMBANSA
BILANG 881, OTHERWISE KNOWN AS THE OMNIBUS ELECTION CODE, AS
AMENDED, AND FOR OTHER PURPOSES;1

Senate Bill (SB) No. 1742 entitled AN ACT TO ENHANCE THE HOLDING OF FREE,
ORDERLY, HONEST, PEACEFUL, AND CREDIBLE ELECTIONS THROUGH FAIR
ELECTION PRACTICES.2
A Bicameral Conference Committee, composed of eight members of the Senate 3 and
sixteen (16) members of the House of Representatives, 4 was formed to reconcile the
conflicting provisions of the House and Senate versions of the bill.
On November 29, 2000, the Bicameral Conference Committee submitted its Report, 5
signed by its members, recommending the approval of the bill as reconciled and approved
by the conferees.
During the plenary session of the House of Representatives on February 5, 2001, Rep.
Jacinto V. Paras proposed an amendment to the Bicameral Conference Committee Report.
Rep. Didagen P. Dilangalen raised a point of order commenting that the House could no
longer submit an amendment thereto. Rep. Sergio A.F. Apostol thereupon moved that the
House return the report to the Bicameral Conference Committee in view of the proposed
amendment thereto. Rep. Dilangalen expressed his objection to the proposal. However,

upon viva voce voting, the majority of the House approved the return of the report to the
Bicameral Conference Committee for proper action. 6
In view of the proposed amendment, the House of Representatives elected anew its
conferees7 to the Bicameral Conference Committee. 8 Then again, for unclear reasons,
upon the motion of Rep. Ignacio R. Bunye, the House elected another set of conferees 9 to
the Bicameral Conference Committee.10
On February 7, 2001, during the plenary session of the House of Representatives, Rep.
Bunye moved that the House consider the Bicameral Conference Committee Report on the
contrasting provisions of HB No. 9000 and SB No. 1742. Rep. Dilangalen observed that the
report had been recommitted to the Bicameral Conference Committee. The Chair
responded that the Bicameral Conference Report was a new one, and was a result of the
reconvening of a new Bicameral Conference Committee. Rep. Dilangalen then asked that
he be given time to examine the new report. Upon motion of Rep. Apostol, the House
deferred the approval of the report until the other members were given a copy thereof. 11
After taking up other pending matters, the House proceeded to vote on the Bicameral
Conference Committee Report on the disagreeing provisions of HB No. 9000 and SB No.
1742. The House approved the report with 125 affirmative votes, 3 negative votes and no
abstention. In explaining their negative votes, Reps. Farias and Garcia expressed their
belief that Section 14 thereof was a rider. Even Rep. Escudero, who voted in the affirmative,
expressed his doubts on the constitutionality of Section 14. Prior to casting his vote, Rep.
Dilangalen observed that no senator signed the Bicameral Conference Committee Report
and asked if this procedure was regular.12
On the same day, the Senate likewise approved the Bicameral Conference Committee
Report on the contrasting provisions of SB No. 1742 and HB No. 9000.
Thereafter, Rep. Act No. 9006 was duly signed by then Senate President Aquilino Pimentel,
Jr. and then Speaker of the House of Representatives Feliciano R. Belmonte, Jr. and was
duly certified by the Secretary of the Senate Lutgardo B. Barbo and the Secretary General
of the House of Representatives Robert P. Nazareno as the consolidation of House Bill No.
9000 and Senate Bill No. 1742, and finally passed by both Houses on February 7, 2001.
President Gloria Macapagal-Arroyo signed Rep. Act No. 9006 into law on February 12,
2001.
The Petitioners Case
The petitioners now come to the Court alleging in the main that Section 14 of Rep. Act No.
9006, insofar as it repeals Section 67 of the Omnibus Election Code, is unconstitutional for
being in violation of Section 26(1), Article VI of the Constitution, requiring every law to have
only one subject which should be expressed in its title.
According to the petitioners, the inclusion of Section 14 repealing Section 67 of the
Omnibus Election Code in Rep. Act No. 9006 constitutes a proscribed rider. They point out
the dissimilarity in the subject matter of Rep. Act No. 9006, on the one hand, and Section 67
of the Omnibus Election Code, on the other. Rep. Act No. 9006 primarily deals with the
lifting of the ban on the use of media for election propaganda and the elimination of unfair
election practices, while Section 67 of the Omnibus Election Code imposes a limitation on
elective officials who run for an office other than the one they are holding in a permanent
capacity by considering them as ipso facto resigned therefrom upon filing of the certificate

of candidacy. The repeal of Section 67 of the Omnibus Election Code is thus not embraced
in the title, nor germane to the subject matter of Rep. Act No. 9006.
The petitioners also assert that Section 14 of Rep. Act No. 9006 violates the equal
protection clause of the Constitution because it repeals Section 67 only of the Omnibus
Election Code, leaving intact Section 66 thereof which imposes a similar limitation to
appointive officials, thus:
SEC. 66. Candidates holding appointive office or position. Any person holding a public
appointive office or position, including active members of the Armed Forces of the
Philippines, and officers and employees in government-owned or controlled corporations,
shall be considered ipso facto resigned from his office upon the filing of his certificate of
candidacy.
They contend that Section 14 of Rep. Act No. 9006 discriminates against appointive
officials. By the repeal of Section 67, an elective official who runs for office other than the
one which he is holding is no longer considered ipso facto resigned therefrom upon filing his
certificate of candidacy. Elective officials continue in public office even as they campaign for
reelection or election for another elective position. On the other hand, Section 66 has been
retained; thus, the limitation on appointive officials remains they are still considered ipso
facto resigned from their offices upon the filing of their certificates of candidacy.
The petitioners assert that Rep. Act No. 9006 is null and void in its entirety as irregularities
attended its enactment into law. The law, not only Section 14 thereof, should be declared
null and void. Even Section 16 of the law which provides that [t]his Act shall take effect
upon its approval is a violation of the due process clause of the Constitution, as well as
jurisprudence, which require publication of the law before it becomes effective.
Finally, the petitioners maintain that Section 67 of the Omnibus Election Code is a good law;
hence, should not have been repealed. The petitioners cited the ruling of the Court in
Dimaporo v. Mitra, Jr.,13 that Section 67 of the Omnibus Election Code is based on the
constitutional mandate on the Accountability of Public Officers: 14
Sec. 1. Public office is a public trust. Public officers and employees must at all times be
accountable to the people, serve them with utmost responsibility, integrity, loyalty and
efficiency, act with patriotism and justice, and lead modest lives.
Consequently, the respondents Speaker and Secretary General of the House of
Representatives acted with grave abuse of discretion amounting to excess or lack of
jurisdiction for not considering those members of the House who ran for a seat in the
Senate during the May 14, 2001 elections as ipso facto resigned therefrom, upon the filing
of their respective certificates of candidacy.
The Respondents Arguments
For their part, the respondents, through the Office of the Solicitor General, urge this Court to
dismiss the petitions contending, preliminarily, that the petitioners have no legal standing to
institute the present suit. Except for the fact that their negative votes were overruled by the
majority of the members of the House of Representatives, the petitioners have not shown
that they have suffered harm as a result of the passage of Rep. Act No. 9006. Neither do
petitioners have any interest as taxpayers since the assailed statute does not involve the
exercise by Congress of its taxing or spending power.

Invoking the enrolled bill doctrine, the respondents refute the petitioners allegations that
irregularities attended the enactment of Rep. Act No. 9006. The signatures of the Senate
President and the Speaker of the House, appearing on the bill and the certification signed
by the respective Secretaries of both houses of Congress, constitute proof beyond cavil that
the bill was duly enacted into law.
The respondents contend that Section 14 of Rep. Act No. 9006, as it repeals Section 67 of
the Omnibus Election Code, is not a proscribed rider nor does it violate Section 26(1) of
Article VI of the Constitution. The title of Rep. Act No. 9006, An Act to Enhance the Holding
of Free, Orderly, Honest, Peaceful and Credible Elections through Fair Election Practices,
is so broad that it encompasses all the processes involved in an election exercise, including
the filing of certificates of candidacy by elective officials.
They argue that the repeal of Section 67 is germane to the general subject of Rep. Act No.
9006 as expressed in its title as it eliminates the effect of prematurely terminating the term
of an elective official by his filing of a certificate of candidacy for an office other than the one
which he is permanently holding, such that he is no longer considered ipso facto resigned
therefrom. The legislature, by including the repeal of Section 67 of the Omnibus Election
Code in Rep. Act No. 9006, has deemed it fit to remove the unfairness of considering an
elective official ipso facto resigned from his office upon the filing of his certificate of
candidacy for another elective office. With the repeal of Section 67, all elective officials are
now placed on equal footing as they are allowed to finish their respective terms even if they
run for any office, whether the presidency, vice-presidency or other elective positions, other
than the one they are holding in a permanent capacity.
The respondents assert that the repeal of Section 67 of the Omnibus Election Code need
not be expressly stated in the title of Rep. Act No. 9006 as the legislature is not required to
make the title of the act a complete index of its contents. It must be deemed sufficient that
the title be comprehensive enough reasonably to include the general subject which the
statute seeks to effect without expressing each and every means necessary for its
accomplishment. Section 26(1) of Article VI of the Constitution merely calls for all the parts
of an act relating to its subject to find expression in its title. Mere details need not be set
forth.
According to the respondents, Section 14 of Rep. Act No. 9006, insofar as it repeals Section
67, leaving Section 66 of the Omnibus Election Code intact and effective, does not violate
the equal protection clause of the Constitution. Section 67 pertains to elective officials while
Section 66 pertains to appointive officials. A substantial distinction exists between these two
sets of officials; elective officials occupy their office by virtue of their mandate based upon
the popular will, while the appointive officials are not elected by popular will. The latter
cannot, therefore, be similarly treated as the former. Equal protection simply requires that all
persons or things similarly situated are treated alike, both as to rights conferred and
responsibilities imposed.
Further, Section 16, or the Effectivity clause, of Rep. Act No. 9006 does not run afoul of the
due process clause of the Constitution as it does not entail any arbitrary deprivation of life,
liberty and property. Specifically, the section providing for penalties in cases of violations
thereof presume that the formalities of the law would be observed, i.e., charges would first
be filed, and the accused would be entitled to a hearing before judgment is rendered by a
court having jurisdiction. In any case, the issue about lack of due process is premature as
no one has, as yet, been charged with violation of Rep. Act No. 9006.

Finally, the respondents submit that the respondents Speaker and Secretary General of the
House of Representatives did not commit grave abuse of discretion in not excluding from
the Rolls those members thereof who ran for the Senate during the May 14, 2001 elections.
These respondents merely complied with Rep. Act No. 9006, which enjoys the presumption
of validity until declared otherwise by the Court.
The Courts Ruling
Before resolving the petitions on their merits, the Court shall first rule on the procedural
issue raised by the respondents, i.e., whether the petitioners have the legal standing or
locus standi to file the petitions at bar.
The petitions were filed by the petitioners in their capacities as members of the House of
Representatives, and as taxpayers and registered voters.
Generally, a party who impugns the validity of a statute must have a personal and
substantial interest in the case such that he has sustained, or will sustain, direct injury as a
result of its enforcement.15 The rationale for requiring a party who challenges the
constitutionality of a statute to allege such a personal stake in the outcome of the
controversy is to assure that concrete adverseness which sharpens the presentation of
issues upon which the court so largely depends for illumination of difficult constitutional
questions.16
However, being merely a matter of procedure, this Court, in several cases involving issues
of overarching significance to our society, 17 had adopted a liberal stance on standing.
Thus, in Tatad v. Secretary of the Department of Energy,18 this Court brushed aside the
procedural requirement of standing, took cognizance of, and subsequently granted, the
petitions separately filed by then Senator Francisco Tatad and several members of the
House of Representatives assailing the constitutionality of Rep. Act No. 8180 (An Act
Deregulating the Downstream Oil Industry and For Other Purposes).
The Court likewise took cognizance of the petition filed by then members of the House of
Representatives which impugned as unconstitutional the validity of a provision of Rep. Act
No. 6734 (Organic Act for the Autonomous Region in Muslim Mindanao) in Chiongbian v.
Orbos.19 Similarly, the Court took cognizance of the petition filed by then members of the
Senate, joined by other petitioners, which challenged the validity of Rep. Act No. 7716
(Expanded Value Added Tax Law) in Tolentino v. Secretary of Finance.20
Members of Congress, such as the petitioners, were likewise allowed by this Court to
challenge the validity of acts, decisions, rulings, or orders of various government agencies
or instrumentalities in Del Mar v. Philippine Amusement and Gaming Corporation,21
Kilosbayan, Inc. v. Guingona, Jr.,22 Philippine Constitution Association v. Enriquez,23
Albano v. Reyes,24 and Bagatsing v. Committee on Privatization.25
Certainly, the principal issue posed by the petitions, i.e., whether Section 67 of the Omnibus
Election Code, which this Court had declared in Dimaporo 26 as deriving its existence from
the constitutional provision on accountability of public officers, has been validly repealed by
Section 14 of Rep. Act No. 9006, is one of overarching significance that justifies this
Courts adoption of a liberal stance vis--vis the procedural matter on standing. Moreover,
with the national elections barely seven months away, it behooves the Court to confront the
issue now and resolve the same forthrightly. The following pronouncement of the Court is
quite apropos:

 All await the decision of this Court on the constitutional question. Considering, therefore,
the importance which the instant case has assumed and to prevent multiplicity of suits,
strong reasons of public policy demand that [its] constitutionality . . . be now resolved. It
may likewise be added that the exceptional character of the situation that confronts us, the
paramount public interest, and the undeniable necessity for a ruling, the national elections
beings barely six months away, reinforce our stand. 27
Every statute is presumed valid. 28 The presumption is that the legislature intended to enact
a valid, sensible and just law and one which operates no further than may be necessary to
effectuate the specific purpose of the law.29
It is equally well-established, however, that the courts, as guardians of the Constitution,
have the inherent authority to determine whether a statute enacted by the legislature
transcends the limit imposed by the fundamental law.30 And where the acts of the other
branches of government run afoul of the Constitution, it is the judiciarys solemn and sacred
duty to nullify the same.31
Proceeding from these guideposts, the Court shall now resolve the substantial issues raised
by the petitions.
Section 14 of Rep. Act No. 9006 Is Not a Rider 32
At the core of the controversy is Section 14, the repealing clause of Rep. Act No. 9006,
which provides:
Sec. 14. Sections 67 and 85 of the Omnibus Election Code (Batas Pambansa Blg. 881) and
Sections 10 and 11 of Republic Act No. 6646 are hereby repealed. As a consequence, the
first proviso in the third paragraph of Section 11 of Republic Act No. 8436 is rendered
ineffective. All laws, presidential decrees, executive orders, rules and regulations, or any
part thereof inconsistent with the provisions of this Act are hereby repealed or modified or
amended accordingly.
The repealed provision, Section 67 of the Omnibus Election Code, quoted earlier, reads:
SEC. 67. Candidates holding elective office. Any elective official, whether national or local,
running for any office other than the one which he is holding in a permanent capacity,
except for President and Vice-President, shall be considered ipso facto resigned from his
office upon the filing of his certificate of candidacy.
Section 26(1), Article VI of the Constitution provides:
SEC. 26 (1). Every bill passed by the Congress shall embrace only one subject which shall
be expressed in the title thereof.
The proscription is aimed against the evils of the so-called omnibus bills and log-rolling
legislation as well as surreptitious and/or unconsidered encroaches. The provision merely
calls for all parts of an act relating to its subject finding expression in its title. 33
To determine whether there has been compliance with the constitutional requirement that
the subject of an act shall be expressed in its title, the Court laid down the rule that
Constitutional provisions relating to the subject matter and titles of statutes should not be so
narrowly construed as to cripple or impede the power of legislation. The requirement that
the subject of an act shall be expressed in its title should receive a reasonable and not a
technical construction. It is sufficient if the title be comprehensive enough reasonably to
include the general object which a statute seeks to effect, without expressing each and

every end and means necessary or convenient for the accomplishing of that object. Mere
details need not be set forth. The title need not be an abstract or index of the Act. 34
The title of Rep. Act No. 9006 reads: An Act to Enhance the Holding of Free, Orderly,
Honest, Peaceful and Credible Elections through Fair Election Practices. Section 2 of the
law provides not only the declaration of principles but also the objectives thereof:
Sec. 2. Declaration of Principles. The State shall, during the election period, supervise or
regulate the enjoyment or utilization of all franchises or permits for the operation of media of
communication or information to guarantee or ensure equal opportunity for public service,
including access to media time and space, and the equitable right to reply, for public
information campaigns and fora among candidates and assure free, orderly, honest,
peaceful and credible elections.
The State shall ensure that bona fide candidates for any public office shall be free from any
form of harassment and discrimination.35
The Court is convinced that the title and the objectives of Rep. Act No. 9006 are
comprehensive enough to include the repeal of Section 67 of the Omnibus Election Code
within its contemplation. To require that the said repeal of Section 67 of the Code be
expressed in the title is to insist that the title be a complete index of its content. 36
The purported dissimilarity of Section 67 of the Omnibus Election Code, which imposes a
limitation on elective officials who run for an office other than the one they are holding, to
the other provisions of Rep. Act No. 9006, which deal with the lifting of the ban on the use of
media for election propaganda, does not violate the one subject-one title rule. This Court
has held that an act having a single general subject, indicated in the title, may contain any
number of provisions, no matter how diverse they may be, so long as they are not
inconsistent with or foreign to the general subject, and may be considered in furtherance of
such subject by providing for the method and means of carrying out the general subject. 37
The deliberations of the Bicameral Conference Committee on the particular matter are
particularly instructive:
SEN. LEGARDA-LEVISTE:
Yes, Mr. Chairman, I just wanted to clarify.
So all were looking for now is an appropriate title to make it broader so that it would cover
this provision [referring to the repeal of Section 67 of the Omnibus Election Code], is that
correct? Thats all. Because I believe
THE CHAIRMAN (REP. SYJUCO):
We are looking for an appropriate coverage which will result in the nomenclature or title.
SEN. LEGARDA-LEVISTE:
Because I really do not believe that it is out of place. I think that even with the term fair
election practice, it really covers it, because as expressed by Senator Roco, those
conditions inserted earlier seemed unfair and it is an election practice and, therefore, I think,
Im very comfortable with the title Fair Election Practice so that we can get over with these
things so that we dont come back again until we find the title. I mean, its one provision
which I think is fair for everybody. It may seem like a limitation but this limitation actually
provides for fairness in election practices as the title implies.

THE CHAIRMAN (REP. SYJUCO):

Yes.
SEN. LEGARDA-LEVISTE:
So I would want to beg the House contingent, lets get it over with. To me, ha, its not a very
touchy issue. For me, its even a very correct provision. I feel very comfortable with it and it
was voted in the Senate, at least, so I would like to appeal to the para matapos na, then
we come back as a Bicam just for the title Is that what youre ?
THE CHAIRMAN (REP. SYJUCO):
Its not the title per se, its the coverage. So if you will just kindly bear with us. Im happy that
there is already one comfortable senator there among several of us were also
comfortable with it. But it would be well that when we rise from this Bicam that were all
comfortable with it.
THE CHAIRMAN (SEN. ROCO):
Yes. Anyway, lets listen to Congressman Marcos.
REP. MARCOS:
Mr. Chairman, may I just make the observation that although it is true that the bulk of
provisions deals with the area of propaganda and political advertising, the complete title is
actually one that indulge full coverage. It says An Act to enhance the holding of free,
orderly, honest elections through fair election practices. But as you said, we will put that
aside to discuss later one.
Secondly, I think the Declaration of Principles contained in Section 2, paragraph 2 is
perfectly adequate in that it says that it shall ensure candidates for public office that may be
free from any form of harassment and discrimination.
Surely this provision in Section 67 of the old Election Code of the existing Omnibus Election
Code is a form of harassment or discrimination. And so I think that in the effort at leveling
the playing field, we can cover this and it should not be considered a rider.
SEN. LEGARDA-LEVISTE:
I agree, Mr. Chairman. I think the Congresswoman from Ilocos had very clearly put it, that it
is covered in the Declaration of Principles and in the objective of this bill. And therefore, I
hope that the House contingent would agree to this so that we can finish it now. And it
expressly provides for fair election practices because
THE CHAIRMAN (SEN. ROCO):
Yeah, I think what is on the table is that we are not disputing this, but we are looking for a
title that is more generic so that then we have less of an objection on constitutionality. I think
thats the theory. So, there is acceptance of this.
Maybe we should not call it na limitation on elected officials. Maybe we should say the
special provision on elected officials. So how is that? Alam mo ito
REP. MARCOS:
I think we just change the Section 1, the short title.
THE CHAIRMAN (SEN. ROCO):

Also, Then we say on the short title of the Act, we say

REP. MARCOS:
What if we say fair election practices? Maybe that should be changed
THE CHAIRMAN (SEN. ROCO):
O, sige, fine, fine. Lets a brainstorm. Equal
REP. PADILLA:
Mr. Chairman, why dont we use An Act rationalizing the holding of free, orderly, honest,
peaceful and credible elections, amending for the purpose Batasang Pambansa known as
the Omnibus Election Code?
THE CHAIRMAN (SEN. ROCO):
Why dont we remove fair and then this shall be cited as Election Practices Act?
REP. PICHAY:
Thats not an election practice. Thats a limitation.
THE CHAIRMAN (SEN. ROCO):
Ah ayaw mo iyong practice. O, give me another noun.
REP. MARCOS:
The Fair Election.
THE CHAIRMAN (SEN. ROCO):
O, Fair Election Act.
REP. MACARAMBON:
Nagbi-brainstorm tayo dito, eh. How about if we change the title to enhance the holding of
free, orderly, honest, peaceful and ensure equal opportunity for public service through fair
election practices?
REP. PICHAY:
Fair election practices?
REP. MACARAMBON:
Yeah. To ensure equal opportunity for public service through fair
THE CHAIRMAN (SEN. ROCO):
Wala nang practices nga.
REP. PICHAY:
Wala nang practices.
THE CHAIRMAN (SEN. ROCO):
It shall be cited as Fair Election Act.
(Informal discussions)
REP. PICHAY:

Approve na iyan.
THE CHAIRMAN (SEN. ROCO):
Done. So, okay na iyon. The title will be Fair Election Act.
The rest wala nang problema ano?
VOICES:
Wala na.
REP. MACARAMBON:
Wala na iyong practices?
THE CHAIRMAN (SEN. ROCO):
Wala na, wala na. Mahina tayo sa practice, eh.
O, wala na? We will clean up.
REP. MARCOS:
Title?
THE CHAIRMAN (SEN. ROCO):
The short title, This Act
THE CHAIRMAN (REP. SYJUCO):
Youre back to your No. 21 already.
REP. MARCOS:
The full title, the same?
THE CHAIRMAN (SEN. ROCO):
Iyon na nga. The full title is An Act to enhance the holding Thats the House version, eh,
dahil pareho, hindi ba? Then the short title This Act shall be known as the Fair Election
Act.38
The legislators considered Section 67 of the Omnibus Election Code as a form of
harassment or discrimination that had to be done away with and repealed. The executive
department found cause with Congress when the President of the Philippines signed the
measure into law. For sure, some sectors of society and in government may believe that the
repeal of Section 67 is bad policy as it would encourage political adventurism. But policy
matters are not the concern of the Court. Government policy is within the exclusive
dominion of the political branches of the government. 39 It is not for this Court to look into the
wisdom or propriety of legislative determination. Indeed, whether an enactment is wise or
unwise, whether it is based on sound economic theory, whether it is the best means to
achieve the desired results, whether, in short, the legislative discretion within its prescribed
limits should be exercised in a particular manner are matters for the judgment of the
legislature, and the serious conflict of opinions does not suffice to bring them within the
range of judicial cognizance.40 Congress is not precluded from repealing Section 67 by the
ruling of the Court in Dimaporo v. Mitra41 upholding the validity of the provision and by its
pronouncement in the same case that the provision has a laudable purpose. Over time,
Congress may find it imperative to repeal the law on its belief that the election process is

thereby enhanced and the paramount objective of election laws the fair, honest and
orderly election of truly deserving members of Congress is achieved.
Moreover, the avowed purpose of the constitutional directive that the subject of a bill should
be embraced in its title is to apprise the legislators of the purposes, the nature and scope of
its provisions, and prevent the enactment into law of matters which have not received the
notice, action and study of the legislators and the public. 42 In this case, it cannot be claimed
that the legislators were not apprised of the repeal of Section 67 of the Omnibus Election
Code as the same was amply and comprehensively deliberated upon by the members of
the House. In fact, the petitioners, as members of the House of Representatives, expressed
their reservations regarding its validity prior to casting their votes. Undoubtedly, the
legislators were aware of the existence of the provision repealing Section 67 of the
Omnibus Election Code.
Section 14 of Rep. Act No. 9006 Is Not Violative of the Equal Protection Clause of the
Constitution43
The petitioners contention, that the repeal of Section 67 of the Omnibus Election Code
pertaining to elective officials gives undue benefit to such officials as against the appointive
ones and violates the equal protection clause of the constitution, is tenuous.
The equal protection of the law clause in the Constitution is not absolute, but is subject to
reasonable classification. If the groupings are characterized by substantial distinctions that
make real differences, one class may be treated and regulated differently from the other. 44
The Court has explained the nature of the equal protection guarantee in this manner:
The equal protection of the law clause is against undue favor and individual or class
privilege, as well as hostile discrimination or the oppression of inequality. It is not intended
to prohibit legislation which is limited either in the object to which it is directed or by territory
within which it is to operate. It does not demand absolute equality among residents; it
merely requires that all persons shall be treated alike, under like circumstances and
conditions both as to privileges conferred and liabilities enforced. The equal protection
clause is not infringed by legislation which applies only to those persons falling within a
specified class, if it applies alike to all persons within such class, and reasonable grounds
exist for making a distinction between those who fall within such class and those who do
not.45
Substantial distinctions clearly exist between elective officials and appointive officials. The
former occupy their office by virtue of the mandate of the electorate. They are elected to an
office for a definite term and may be removed therefrom only upon stringent conditions. 46
On the other hand, appointive officials hold their office by virtue of their designation thereto
by an appointing authority. Some appointive officials hold their office in a permanent
capacity and are entitled to security of tenure 47 while others serve at the pleasure of the
appointing authority.48
Another substantial distinction between the two sets of officials is that under Section 55,
Chapter 8, Title I, Subsection A. Civil Service Commission, Book V of the Administrative
Code of 1987 (Executive Order No. 292), appointive officials, as officers and employees in
the civil service, are strictly prohibited from engaging in any partisan political activity or take
part in any election except to vote. Under the same provision, elective officials, or officers or
employees holding political offices, are obviously expressly allowed to take part in political
and electoral activities.49

By repealing Section 67 but retaining Section 66 of the Omnibus Election Code, the
legislators deemed it proper to treat these two classes of officials differently with respect to
the effect on their tenure in the office of the filing of the certificates of candidacy for any
position other than those occupied by them. Again, it is not within the power of the Court to
pass upon or look into the wisdom of this classification.
Since the classification justifying Section 14 of Rep. Act No. 9006, i.e., elected officials visa-vis appointive officials, is anchored upon material and significant distinctions and all the
persons belonging under the same classification are similarly treated, the equal protection
clause of the Constitution is, thus, not infringed.
The Enrolled Bill Doctrine Is Applicable In this Case
Not content with their plea for the nullification of Section 14 of Rep. Act No. 9006, the
petitioners insist that the entire law should be nullified. They contend that irregularities
attended the passage of the said law particularly in the House of Representatives
catalogued thus:
a. Creation of two (2) sets of BCC (Bicameral Conference Committee) members by the
House during its session on February 5, 2001;
b. No communication from the Senate for a conference on the compromise bill submitted by
the BCC on November 29, 2000;
c. The new Report submitted by the 2nd/3rd BCC was presented for approval on the floor
without copies thereof being furnished the members;
d. The 2nd/3rd BCC has no record of its proceedings, and the Report submitted by it was
not signed by the Chairman (Sen. Roco) thereof as well as its senator-members at the time
it was presented to and rammed for approval by the House;
e. There was no meeting actually conducted by the 2nd/3rd BCC and that its alleged Report
was instantly made and passed around for the signature of the BCC members;
f. The Senate has no record of the creation of a 2nd BCC but only of the first one that
convened on November 23, 2000;
g. The Effectivity clauses of SB No. 1741 and HB No. 9000, as well as that of the
compromise bill submitted by the BCC that convened on November 20, 2000, were
couched in terms that comply with the publication required by the Civil Code and
jurisprudence, to wit:

However, it was surreptitiously replaced in its final form as it appears in 16, R.A. No. 9006,
with the provision that This Act shall take effect immediately upon its approval;
h. The copy of the compromise bill submitted by the 2nd/3rd BCC that was furnished the
members during its consideration on February 7, 2001, did not have the same 16 as it
now appears in RA No. 9006, but 16 of the compromise bill, HB 9000 and SB 1742,
reasons for which no objection thereto was made;
i. The alleged BCC Report presented to the House on February 7, 2001, did not contain a
detailed, sufficiently explicit statement of the changes in or amendments to the subject
measure; and

j. The disappearance of the Cayetano amendment, which is Section 12 of the compromise

bill submitted by the BCC. In fact, this was the subject of the purported proposed
amendment to the compromise bill of Member Paras as stated in paragraph 7 hereof. The
said provision states, thusly:
Sec. 12. Limitation on Elected Officials. Any elected official who runs for president and
vice-president shall be considered ipso facto resigned from his office upon the filing of the
certificate of candidacy.50
The petitioners, thus, urge the Court to go behind the enrolled copy of the bill. The Court is
not persuaded. Under the enrolled bill doctrine, the signing of a bill by the Speaker of the
House and the Senate President and the certification of the Secretaries of both Houses of
Congress that it was passed are conclusive of its due enactment. A review of cases 51
reveals the Courts consistent adherence to the rule. The Court finds no reason to deviate
from the salutary rule in this case where the irregularities alleged by the petitioners mostly
involved the internal rules of Congress, e.g., creation of the 2nd or 3rd Bicameral
Conference Committee by the House. This Court is not the proper forum for the
enforcement of these internal rules of Congress, whether House or Senate. Parliamentary
rules are merely procedural and with their observance the courts have no concern. 52
Whatever doubts there may be as to the formal validity of Rep. Act No. 9006 must be
resolved in its favor. The Court reiterates its ruling in Arroyo v. De Venecia,53 viz.:
But the cases, both here and abroad, in varying forms of expression, all deny to the courts
the power to inquire into allegations that, in enacting a law, a House of Congress failed to
comply with its own rules, in the absence of showing that there was a violation of a
constitutional provision or the rights of private individuals. In Osmea v. Pendatun, it was
held: At any rate, courts have declared that the rules adopted by deliberative bodies are
subject to revocation, modification or waiver at the pleasure of the body adopting them. And
it has been said that Parliamentary rules are merely procedural, and with their observance,
the courts have no concern. They may be waived or disregarded by the legislative body.
Consequently, mere failure to conform to parliamentary usage will not invalidate the action
(taken by a deliberative body) when the requisite number of members have agreed to a
particular measure.
The Effectivity Clause Is Defective
Finally, the Effectivity clause (Section 16) of Rep. Act No. 9006 which provides that it shall
take effect immediately upon its approval, is defective. However, the same does not render
the entire law invalid. In Taada v. Tuvera,54 this Court laid down the rule:
the clause unless it is otherwise provided refers to the date of effectivity and not to the
requirement of publication itself, which cannot in any event be omitted. This clause does not
mean that the legislator may make the law effective immediately upon approval, or on any
other date without its previous publication.
Publication is indispensable in every case, but the legislature may in its discretion provide
that the usual fifteen-period shall be shortened or extended. 55
Following Article 2 of the Civil Code 56 and the doctrine enunciated in Taada, Rep. Act No.
9006, notwithstanding its express statement, took effect fifteen days after its publication in
the Official Gazette or a newspaper of general circulation.
In conclusion, it bears reiterating that one of the firmly entrenched principles in constitutional
law is that the courts do not involve themselves with nor delve into the policy or wisdom of a

statute. That is the exclusive concern of the legislative branch of the government. When the
validity of a statute is challenged on constitutional grounds, the sole function of the court is
to determine whether it transcends constitutional limitations or the limits of legislative
power.57 No such transgression has been shown in this case.
WHEREFORE, the petitions are DISMISSED. No pronouncement as to costs.
SO ORDERED.
Davide, Jr., C.J., Puno, Vitug, Panganiban, Quisumbing, Ynares-Santiago, SandovalGutierrez, Carpio, Austria-Martinez, Corona, Carpio-Morales, Azcuna, and Tinga, JJ.,
concur.

i. Veto by President
Sec. 27, Art. VI, 1987 Constitution
Gonzales v. Macaraig, supra.
Bolinao Electronics v. Valencia, 11 SCRA 486
BOLINAO ELECTRONICS CORPORATION, CHRONICLE BROADCASTING NETWORK,
INC., and
MONSERRAT BROADCASTING SYSTEM, INC., petitioners,
vs.
BRIGIDO VALENCIA,
Communications and

Secretary

of

the

Department

of

Public

Works

and

ROBERT SAN ANDRES of the Radio Control Division, respondents.

V. J. Francisco, A. Almeda and San Juan, Africa Benedicto for petitioners.
Office of the Solicitor General for respondents.
Enrique Fernando as amicus curiae.
DECISION
BARRERA, J.:
This is an original petition for prohibition, mandatory injunction with preliminary injunction
filed by the Bolinao Electronics Corporation, Chronicle Broadcasting Network, Inc., and
Monserrat Broadcasting System, Inc., owners and operators of radio and television stations
enumerated therein, against respondents Secretary of Public Works and Communications
and Acting Chief of the Radio Control Division. Later the Republic of the Philippines, as
operator of the Philippine Broadcasting Service, sought and was allowed to intervene in this

case, said intervenor having been granted a construction permit to install and operate a
television station in Manila.
From the various pleadings presented by the parties including their written memoranda as
well as the oral arguments adduced during the hearing of this case, the issues presented to
the Court for resolution are: (1) whether the investigation being conducted by respondents,
in connection with petitioners applications for renewal of their station licenses, has any legal
basis; (2) whether or not there was abandonment or renunciation by the Chronicle
Broadcasting Network (CBN) of channel 9 in favor of PBS; and (3) whether or not Philippine
Broadcasting Service can legally operate Channel 9 and is entitled to damages, for CBNs
refusal to give up operations thereof.
Section 3 of Act 3846, as amended by Republic Act 584, on the powers and duties of the
Secretary of Public Works and Communications (formerly Commerce And
Communications), provides:
SEC. 3.
(1) He may approve or disapprove any application for renewal of station or operator license;
Provided, however, That no application for renewal shall be disapproved without giving the
licensee a hearing.
It is in the exercise of this power that the respondents allegedly are now conducting the
investigation in connection with the petitions for renewal.
The notices of hearing, sent by respondents to petitioners, in connection with the
applications involved herein, are uniformly worded, thus:
(Name of station operator)
____________________
(Address)
____________________
____________________
Gentlemen:
This has reference to your application for renewal of your radio station license No.
____________ authorizing you to operate (Name of station), a (broadcast or TV) station,
which expired on (Expiration date of previous license.)
It is noted that said application was received in this Office on (Date of receipt of application)
or (length of period delay) month after said license has expired which is a clear violation of
Section 12 and 14 of Department Order No. 11, which is hereunder quoted:
SEC. 12. License Required for Operation of Transmitter, Transceiver, or Station. No
radio transmitter or radio station shall be operated without first obtaining from the Secretary
of Public Works & Communications a radio station license.
SEC. 14. When to Apply for Renewal. If renewal of a station license is desired, the
licensee shall submit an application to the Secretary of Public Works and Communications
two (2) months before the expiration date of the license to be renewed. Application should
be made on prescribed forms furnished for the purpose.

Please take notice that on January 28, 1963, at 9:00 a.m., the matter will be heard before
the duly authorized representative of the Secretary of Public Works and Communications, at
the Conference Room, Office of the Secretary, Third Floor, Post Office Building, Plaza
Lawton, Manila (Commonwealth Act No. 3846, Sec. 3. subsection h). Your failure to appear
at the said hearing will be construed as a waiver on your part to be heard and this Office
shall forthwith act on said application in accordance with existing Radio Laws, Rules and
Regulations.
Very truly yours,
s/ Jose L. Lachica
t/ JOSE L. LACHICA
Acting Undersecretary
Also, passing upon petitioners motion for dismissal of the aforementioned investigation
conducted by respondents it was ruled, thus:
The present hearing, as the notices quoted above show, is precisely the hearing required by
Section 3 (1) of Act 3846, as amended. It is an indispensable step in the processing of
application of licenses when and if summary approval for one reason or another, real or
fancied, could not be given as in the instant case. Certainly, the respondents (movants)
themselves would be the first ones to raise their voice of protest if their application for
renewal were to be summarily disapproved, without benefit of any hearing. (Emphasis
supplied.)
Clearly, the intention of the investigation is to find out whether there is ground to disapprove
the applications for renewal.
But the only reason relied upon by the respondents to be the ground for the disapproval of
the applications, is the alleged late, filing of the petitions for renewal. The notices to
petitioners (which in effect take the place of complaint in civil or administrative cases or an
information in a criminal action) alleged only one supposed violation which would justify,
disapproval. But petitioners claim that this violation has ceased to exist when the act of late
filing was condoned or pardoned by respondents by the issuance of the circular dated July
24, 1962, which in its pertinent part, reads:
CIRCULAR TO:
ALL RADIO STATIONS, RADIO DEALERS,
MANUFACTURERS AND RADIO TRAINING
SCHOOLS
It has come to the attention of this Office that a great number of radio station operators have
been conducting their operations resorting to practices which are in violation of existing
radio laws and regulations, such as:
xxx

xxx

xxx

6. Late submission of applications for new and renewal licenses.

It is not the intention of this Office to correct whatever laxity which in the put has
encouraged this illegal practices, to strictly others the radio regulations and to take drastic
action against violators of these regulations.

You are, therefore, requested to examine closely your operating practices, permits and
licenses and take remedial measures as soon as possible but not later than August 10,
1962.
(SGD.) ROBERTO M. SAN ANDRES
Radio Regulation Chief
APPROVED:
(Sgd.) M. V. Feliciano
Undersecretary
It seems clear that the foregoing circular sustains petitioners contention that the previous
non-observance by station operators of radio laws and regulations of the Radio Control
Office regarding filing of petitions for renewal, among others, was condoned if the
necessary steps were taken to correct their records and practices before August 10, 1962. It
is not denied that herein subject applications for renewal were all made before said date, or
even before the issuance of the circular itself on July 24, 1962. The lone reason given for
the investigation of petitioners applications, i.e., late filing thereof, is therefore no longer
tenable. The violation, in legal effect, ceased to exist and, hence, there is no reason nor
need for the present investigation. The raison detre for it has disappeared. Its continuation
will serve no useful purpose in contemplation of the law authorizing investigations in
connection with applications for renewal of permit.
Respondents claim that they have no authority to condone or pardon violations of the radio
control regulations cannot be upheld. Firstly, by specific provision of law, 1 the respondent
Department Secretary is given the discretion either to bring criminal action against violators
of the radio laws or the regulations and confiscate the radio apparatus in case of illegal or
simply suspend or revoke the offenders station or operator licenses or refuse to renew such
licenses; or just reprimand and warn the offenders. The cited circular specifically approved
by the Undersecretary of Public Works and Communications (who has not been shown to
have acted beyond his powers as such in representation of the Secretary of the
Department) warning the offenders, is an act authorized under the law. Secondly, the
circular having been issued by respondents themselves, the latter cannot now claim its
illegality to evade the effect of its enforcement.
The next issue is whether there was abandonment or renunciation by petitioner CBN of its
right to operate on Channel 9. It is admitted that there was no express agreement to this
effect. The only basis of the contention of the respondents that there was such renunciation
is the statement Channel 10 assigned in lieu of Channel 9, appearing in the construction
permit to transfer television station DZXL-TV from Quezon City to Baguio City, issued to
petitioner. This statement alone, however, does not establish any agreement between the
radio control authority and the station operator, on the switch or change of operations of
CBN from Channel 9 to Channel 10. As explained by petitioner, it was made to understand
that the assignment of Channel 10, in connection with the planned transfer of its station to
Baguio, was to be effective upon the final transfer of the said station. This was necessary to
avoid interference of its broadcast with that of the Clark Air Force Base station in
Pampanga, which is operating on Channel 8. In other words, Channel 10 would be
assigned to petitioner only when the Baguio station starts to operate. When the plan to
transfer DZXL-TV to Baguio had to be abandoned, it did not mean abandonment by the
station of its right to operate and broadcast on Channel 9 in Quezon City.

Respondents also made reference to the remarks appearing in the construction permit No.
793, issued to the Philippine Broadcasting Service that construction of this station shall be
begun after DZXL-TV (Channel 9) Manila of Chronicle broadcasting Networks permit to
transfer is approved. It is claimed that upon the approval of the request to transfer, the
petitioner was deemed to have renounced or abandoned on Channel 9. This statement
cannot bind petitioner. In the first place, as admitted by respondents, the clause Chronicle
broadcasting Networks permit to transfer is approved was merely played by respondents
personnel after erasing the original words written therein. And, it does not appear what were
really written there before the erasure. In the second place, CBN had no participating in the
preparation of said permit. Insofar as petitioner is concerned, it is an inter alios acta which
can not bind it. And, finally, the fact that CBN was allowed to continue and did continue
operating on Channel 9 even after the approval of its proposed transfer, is proof that there
was no renunciation or abandonment of that channel upon the approval of its petition to
transfer. There being no proof that petitioner had really waived or renounced its right to
operate on Channel 9, respondents committed error in refusing to grant or approve
petitioners application for renewal of the license for station DZXL-TV Channel 9.
As regard intervenors claim for damages, it would have been sufficient to state that it
having failed to prove the alleged agreement between CBN and said intervenor on the
exchange of use of Channel 9 and 10, no right belonging to said intervenor had been
violated by petitioners refusal to give up its present operation of Channel 9. However, it
may also be added that as the records show, the appropriation to operate Philippine
Broadcasting Service as approved by Congress and incorporated in the 1962-1963 Budget
of the Republic of the Philippines, was provided as follows:
PHILIPPINE BROADCASTING SERVICE
GENERAL FUND
PART ONE CURRENT GENERAL EXPENSES
IV. SPECIAL PURPOSES
1. For contribution to the operation of the Philippine Broadcasting Service, including
promotion, programming, operations and general administration; Provided, That no portion
of this appropriation shall be used for the operation of television stations in Luzon or any
part of the Philippines where there are television stations. P300,000.00.
xxx

xxx

xxx

VI SPECIAL PROVISIONS
1.
xxx

xxx

xxx

5. No amount appropriated for televisions under Special Fund and General Fund shall be
used for the operation of television stations in Luzon or any part of the Philippines where
there are television stations. (Emphasis supplied).
Disallowing some of the items in the said Appropriations Act, the President included the
following in his veto message:
(e) PHILIPPINE BROADCASTING SERVICE
IV SPECIAL PURPOSE

1. For contribution to the operation of the Philippine Broadcasting Service, : Provided,

That no portion of this appropriation shall be used for the operation of television stations in
Luzon or any part of the Philippines where there are television stations.
5. No amount appropriated for televisions under Special Fund and General Fund shall be
used for the operation of television stations in Luzon or any part of the Philippines where
there are television stations.
These two provisions if approved will render inoperative the television stations currently
operated by the Philippine Broadcasting Service which started last September, 1961, in
Manila.
Under the Constitution, the President has the power to veto any particular item or items of
an appropriation bill. However, when a provision of an appropriation bill affects one or more
items of the same, the President cannot veto the provision without at the same time vetoing
the particular item or items to which it relates. (Art. VI, Sec. 20.)
It may be observed from the wordings of the Appropriations Act that the amount
appropriated for the operation of the Philippine Broadcasting Service was made subject to
the condition that the same shall not be used or expended for operation of television
stations in Luzon, where there are already existing commercial television stations. This
gives rise to the question of whether the President may legally veto a condition attached to
an appropriation or item in the appropriation bill. But this is not a novel question. A little
effort to research on the subject would have yielded enough authority to guide action on the
matter For, in the leading case of State v. Holder,2 it was already declared that such action
by the Chief Executive was illegal. This ruling, that the executives veto power does not
carry with it the power to strike out conditions or restrictions, has been adhered to in
subsequent cases.3 If the veto is unconstitutional, it follows that the same produced no
effect whatsoever,4 and the restriction imposed by the appropriation bill, therefore, remains.
Any expenditure made by the intervenor PBS, for the purpose of installing or operating a
television station in Manila, where there are already television stations in operation, would
be in violation of the express condition for the release of the appropriation and,
consequently, null and void. It is not difficult to see that even if it were able to prove its right
to operate on Channel 9, said intervenor would not have been entitled to reimbursement of
its illegal expenditures.
IN VIEW OF THE FOREGOING CONSIDERATIONS, the writ prayed for by petitioners is
hereby GRANTED. The writ of preliminary injunction heretofore issued by this Court is
made permanent. Without costs. SO ORDERED.
Bengzon, C.J., Padilla, Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Paredes,
Regala and Makalintal, JJ., concur.
Dizon, J., took no part.

PHILCONSA v. Enriquez, G.R. No. 113105, 19 August 1994

PHILIPPINE CONSTITUTION ASSOCIATION, EXEQUIEL B. GARCIA and A. GONZALES,
petitioners,
vs.

HON. SALVADOR ENRIQUEZ, as Secretary of Budget and Management; HON. VICENTE T.

TAN, as National Treasurer and COMMISSION ON AUDIT, respondents.
G.R. No. 113174
August 19, 1994
RAUL S. ROCO, as Member of the Philippine Senate, NEPTALI A. GONZALES, Chairman of
the Committee on Finance of the Philippine Senate, and EDGARDO J. ANGARA, as President
and Chief Executive of the Philippine Senate, all of whom also sue as taxpayers, in their own
behalf and in representation of Senators HEHERSON ALVAREZ, AGAPITO A. AQUINO,
RODOLFO G. BIAZON, JOSE D. LINA, JR., ERNESTO F. HERRERA, BLAS F. OPLE, JOHN H.
OSMENA, GLORIA MACAPAGAL- ARROYO, VICENTE C. SOTTO III, ARTURO M. TOLENTINO,
FRANCISCO S. TATAD, WIGBERTO E. TAADA and FREDDIE N. WEBB, petitioners,
vs.
THE EXECUTIVE SECRETARY, THE DEPARTMENT OF BUDGET AND MANAGEMENT, and THE
NATIONAL TREASURER, THE COMMISSION ON AUDIT, impleaded herein as an unwilling
co-petitioner, respondents.
G.R. No. 113766
August 19, 1994
WIGBERTO E. TAADA and ALBERTO G. ROMULO, as Members of the Senate and as
taxpayers, and FREEDOM FROM DEBT COALITION, petitioners,
vs.
HON. TEOFISTO T. GUINGONA, JR. in his capacity as Executive Secretary, HON. SALVADOR
ENRIQUEZ, JR., in his capacity as Secretary of the Department of Budget and Management,
HON. CARIDAD VALDEHUESA, in her capacity as National Treasurer, and THE COMMISSION
ON AUDIT, respondents.
G.R. No. 113888
August 19, 1994
WIGBERTO E. TAADA and ALBERTO G. ROMULO, as Members of the Senate and as
taxpayers, petitioners,
vs.
HON. TEOFISTO T. GUINGONA, JR., in his capacity as Executive Secretary, HON. SALVADOR
ENRIQUEZ, JR., in his capacity as Secretary of the Department of Budget and Management,
HON. CARIDAD VALDEHUESA, in her capacity as National Treasurer, and THE COMMISSION
ON AUDIT, respondents.
Ramon R. Gonzales for petitioners in G.R. No. 113105.
Eddie Tamondong for petitioners in G.R. Nos. 113766 & 113888.
Roco, Buag, Kapunan, Migallos & Jardeleza for petitioners Raul S. Roco, Neptali A. Gonzales and
Edgardo Angara.
Ceferino Padua Law Office fro intervenor Lawyers Against Monopoly and Poverty (Lamp).
QUIASON, J.:
Once again this Court is called upon to rule on the conflicting claims of authority between the
Legislative and the Executive in the clash of the powers of the purse and the sword. Providing the
focus for the contest between the President and the Congress over control of the national budget are
the four cases at bench. Judicial intervention is being sought by a group of concerned taxpayers on
the claim that Congress and the President have impermissibly exceeded their respective authorities,
and by several Senators on the claim that the President has committed grave abuse of discretion or
acted without jurisdiction in the exercise of his veto power.
I

House Bill No. 10900, the General Appropriation Bill of 1994 (GAB of 1994), was passed and
approved by both houses of Congress on December 17, 1993. As passed, it imposed conditions and
limitations on certain items of appropriations in the proposed budget previously submitted by the
President. It also authorized members of Congress to propose and identify projects in the "pork
barrels" allotted to them and to realign their respective operating budgets.
Pursuant to the procedure on the passage and enactment of bills as prescribed by the Constitution,
Congress presented the said bill to the President for consideration and approval.
On December 30, 1993, the President signed the bill into law, and declared the same to have
become Republic Act No. 7663, entitled "AN ACT APPROPRIATING FUNDS FOR THE OPERATION
OF THE GOVERNMENT OF THE PHILIPPINES FROM JANUARY ONE TO DECEMBER THIRTY
ONE, NINETEEN HUNDRED AND NINETY-FOUR, AND FOR OTHER PURPOSES" (GAA of 1994).
On the same day, the President delivered his Presidential Veto Message, specifying the provisions
of the bill he vetoed and on which he imposed certain conditions.
No step was taken in either House of Congress to override the vetoes.
In G.R. No. 113105, the Philippine Constitution Association, Exequiel B. Garcia and Ramon A.
Gonzales as taxpayers, prayed for a writ of prohibition to declare as unconstitutional and void: (a)
Article XLI on the Countrywide Development Fund, the special provision in Article I entitled
Realignment of Allocation for Operational Expenses, and Article XLVIII on the Appropriation for Debt
Service or the amount appropriated under said Article XLVIII in excess of the P37.9 Billion allocated
for the Department of Education, Culture and Sports; and (b) the veto of the President of the Special
Provision of
Article XLVIII of the GAA of 1994 (Rollo, pp. 88-90, 104-105)
In G.R. No. 113174, sixteen members of the Senate led by Senate President Edgardo J. Angara,
Senator Neptali A. Gonzales, the Chairman of the Committee on Finance, and Senator Raul S.
Roco, sought the issuance of the writs of certiorari, prohibition and mandamus against the Executive
Secretary, the Secretary of the Department of Budget and Management, and the National Treasurer.
Suing as members of the Senate and taxpayers, petitioners question: (1) the constitutionality of the
conditions imposed by the President in the items of the GAA of 1994: (a) for the Supreme Court, (b)
Commission on Audit (COA), (c) Ombudsman, (d) Commission on Human Rights (CHR), (e) Citizen
Armed Forces Geographical Units (CAFGU'S) and (f) State Universities and Colleges (SUC's); and
(2) the constitutionality of the veto of the special provision in the appropriation for debt service.
In G.R. No. 113766, Senators Alberto G. Romulo and Wigberto Taada (a co-petitioner in G.R. No.
113174), together with the Freedom from Debt Coalition, a non-stock domestic corporation, sought
the issuance of the writs of prohibition and mandamus against the Executive Secretary, the
Secretary of the Department of Budget and Management, the National Treasurer, and the COA.
Petitioners Taada and Romulo sued as members of the Philippine Senate and taxpayers, while
petitioner Freedom from Debt Coalition sued as a taxpayer. They challenge the constitutionality of
the Presidential veto of the special provision in the appropriations for debt service and the automatic
appropriation of funds therefor.
In G.R. No. 11388, Senators Taada and Romulo sought the issuance of the writs of prohibition and
mandamus against the same respondents in G.R. No. 113766. In this petition, petitioners contest the
constitutionality of: (1) the veto on four special provision added to items in the GAA of 1994 for the
Armed Forces of the Philippines (AFP) and the Department of Public Works and Highways (DPWH);
and (2) the conditions imposed by the President in the implementation of certain appropriations for
the CAFGU's, the DPWH, and the National Housing Authority (NHA).

Petitioners also sought the issuance of temporary restraining orders to enjoin respondents Secretary
of Budget and Management, National Treasurer and COA from enforcing the questioned provisions
of the GAA of 1994, but the Court declined to grant said provisional reliefs on the time- honored
principle of according the presumption of validity to statutes and the presumption of regularity to
official acts.
In view of the importance and novelty of most of the issues raised in the four petitions, the Court
invited former Chief Justice Enrique M. Fernando and former Associate Justice Irene Cortes to
submit their respective memoranda as Amicus curiae, which they graciously did.
II
Locus Standi
When issues of constitutionality are raised, the Court can exercise its power of judicial review only if
the following requisites are compresent: (1) the existence of an actual and appropriate case; (2) a
personal and substantial interest of the party raising the constitutional question; (3) the exercise of
judicial review is pleaded at the earliest opportunity; and (4) the constitutional question is the lis
mota of the case (Luz Farms v. Secretary of the Department of Agrarian Reform, 192 SCRA 51
[1990]; Dumlao v. Commission on Elections, 95 SCRA 392 [1980]; People v. Vera, 65 Phil. 56
[1937]).
While the Solicitor General did not question the locus standi of petitioners in G.R. No. 113105, he
claimed that the remedy of the Senators in the other petitions is political (i.e., to override the vetoes)
in effect saying that they do not have the requisite legal standing to bring the suits.
The legal standing of the Senate, as an institution, was recognized in Gonzales v. Macaraig, Jr., 191
SCRA 452 (1990). In said case, 23 Senators, comprising the entire membership of the Upper House
of Congress, filed a petition to nullify the presidential veto of Section 55 of the GAA of 1989. The
filing of the suit was authorized by Senate Resolution No. 381, adopted on February 2, 1989, and
which reads as follows:
Authorizing and Directing the Committee on Finance to Bring in the Name of the Senate of the
Philippines the Proper Suit with the Supreme Court of the Philippines contesting the Constitutionality
of the Veto by the President of Special and General Provisions, particularly Section 55, of the
General Appropriation Bill of 1989 (H.B. No. 19186) and For Other Purposes.
In the United States, the legal standing of a House of Congress to sue has been recognized (United
States v. American Tel. & Tel. Co., 551 F. 2d 384, 391 [1976]; Notes: Congressional Access To The
Federal Courts, 90 Harvard Law Review 1632 [1977]).
While the petition in G.R. No. 113174 was filed by 16 Senators, including the Senate President and
the Chairman of the Committee on Finance, the suit was not authorized by the Senate itself.
Likewise, the petitions in
G.R. Nos. 113766 and 113888 were filed without an enabling resolution for the purpose.
Therefore, the question of the legal standing of petitioners in the three cases becomes a preliminary
issue before this Court can inquire into the validity of the presidential veto and the conditions for the
implementation of some items in the GAA of 1994.
We rule that a member of the Senate, and of the House of Representatives for that matter, has the
legal standing to question the validity of a presidential veto or a condition imposed on an item in an
appropriation bill.
Where the veto is claimed to have been made without or in excess of the authority vested on the
President by the Constitution, the issue of an impermissible intrusion of the Executive into the
domain of the Legislature arises (Notes: Congressional Standing To Challenge Executive Action, 122
University of Pennsylvania Law Review 1366 [1974]).

To the extent the power of Congress are impaired, so is the power of each member thereof, since his
office confers a right to participate in the exercise of the powers of that institution (Coleman v. Miller,
307 U.S. 433 [1939]; Holtzman v. Schlesinger, 484 F. 2d 1307 [1973]).
An act of the Executive which injures the institution of Congress causes a derivative but nonetheless
substantial injury, which can be questioned by a member of Congress (Kennedy v. Jones, 412 F.
Supp. 353 [1976]). In such a case, any member of Congress can have a resort to the courts.
Former Chief Justice Enrique M. Fernando, as Amicus Curiae, noted:
This is, then, the clearest case of the Senate as a whole or individual Senators as such having a
substantial interest in the question at issue. It could likewise be said that there was the requisite
injury to their rights as Senators. It would then be futile to raise any locus standi issue. Any intrusion
into the domain appertaining to the Senate is to be resisted. Similarly, if the situation were reversed,
and it is the Executive Branch that could allege a transgression, its officials could likewise file the
corresponding action. What cannot be denied is that a Senator has standing to maintain inviolate the
prerogatives, powers and privileges vested by the Constitution in his office (Memorandum, p. 14).
It is true that the Constitution provides a mechanism for overriding a veto (Art. VI, Sec. 27 [1]). Said
remedy, however, is available only when the presidential veto is based on policy or political
considerations but not when the veto is claimed to be ultra vires. In the latter case, it becomes the
duty of the Court to draw the dividing line where the exercise of executive power ends and the
bounds of legislative jurisdiction begin.
III
G.R. No. 113105
1.
Countrywide Development Fund
Article XLI of the GAA of 1994 sets up a Countrywide Development Fund of P2,977,000,000.00 to
"be used for infrastructure, purchase of ambulances and computers and other priority projects and
activities and credit facilities to qualified beneficiaries." Said Article provides:
COUNTRYWIDE DEVELOPMENT FUND
For Fund requirements of countrywide
development projects P
2,977,000,000

New Appropriations, by Purpose

Current Operating Expenditures
A.
PURPOSE
Personal
Maintenance Capital Total
Services
and Other
Outlays
Operating
Expenses
1.
For Countrywide
Developments Projects
P250,000,000 P2,727,000,000
P2,977,000,000
TOTAL NEW
APPROPRIATIONS P250,000,000 P2,727,000,000
P2,977,000,000
Special Provisions
1.
Use and Release of Funds. The amount herein appropriated shall be used for infrastructure,
purchase of ambulances and computers and other priority projects and activities, and credit facilities
to qualified beneficiaries as proposed and identified by officials concerned according to the following
allocations: Representatives, P12,500,000 each; Senators, P18,000,000 each; Vice-President,

P20,000,000; PROVIDED, That, the said credit facilities shall be constituted as a revolving fund to
be administered by a government financial institution (GFI) as a trust fund for lending operations.
Prior years releases to local government units and national government agencies for this purpose
shall be turned over to the government financial institution which shall be the sole administrator of
credit facilities released from this fund.
The fund shall be automatically released quarterly by way of Advice of Allotments and Notice of
Cash Allocation directly to the assigned implementing agency not later than five (5) days after the
beginning of each quarter upon submission of the list of projects and activities by the officials
concerned.
2.
Submission of Quarterly Reports. The Department of Budget and Management shall submit
within thirty (30) days after the end of each quarter a report to the Senate Committee on Finance
and the House Committee on Appropriations on the releases made from this Fund. The report shall
include the listing of the projects, locations, implementing agencies and the endorsing officials (GAA
of 1994, p. 1245).
Petitioners claim that the power given to the members of Congress to propose and identify the
projects and activities to be funded by the Countrywide Development Fund is an encroachment by
the legislature on executive power, since said power in an appropriation act in implementation of a
law. They argue that the proposal and identification of the projects do not involve the making of laws
or the repeal and amendment thereof, the only function given to the Congress by the Constitution
(Rollo, pp. 78- 86).
Under the Constitution, the spending power called by James Madison as "the power of the purse,"
belongs to Congress, subject only to the veto power of the President. The President may propose
the budget, but still the final say on the matter of appropriations is lodged in the Congress.
The power of appropriation carries with it the power to specify the project or activity to be funded
under the appropriation law. It can be as detailed and as broad as Congress wants it to be.
The Countrywide Development Fund is explicit that it shall be used "for infrastructure, purchase of
ambulances and computers and other priority projects and activities and credit facilities to qualified
beneficiaries . . ." It was Congress itself that determined the purposes for the appropriation.
Executive function under the Countrywide Development Fund involves implementation of the priority
projects specified in the law.
The authority given to the members of Congress is only to propose and identify projects to be
implemented by the President. Under Article XLI of the GAA of 1994, the President must perforce
examine whether the proposals submitted by the members of Congress fall within the specific items
of expenditures for which the Fund was set up, and if qualified, he next determines whether they are
in line with other projects planned for the locality. Thereafter, if the proposed projects qualify for
funding under the Funds, it is the President who shall implement them. In short, the proposals and
identifications made by the members of Congress are merely recommendatory.
The procedure of proposing and identifying by members of Congress of particular projects or
activities under Article XLI of the GAA of 1994 is imaginative as it is innovative.
The Constitution is a framework of a workable government and its interpretation must take into
account the complexities, realities and politics attendant to the operation of the political branches of
government. Prior to the GAA of 1991, there was an uneven allocation of appropriations for the
constituents of the members of Congress, with the members close to the Congressional leadership
or who hold cards for "horse-trading," getting more than their less favored colleagues. The members
of Congress also had to reckon with an unsympathetic President, who could exercise his veto power
to cancel from the appropriation bill a pet project of a Representative or Senator.

The Countrywide Development Fund attempts to make equal the unequal. It is also a recognition
that individual members of Congress, far more than the President and their congressional
colleagues are likely to be knowledgeable about the needs of their respective constituents and the
priority to be given each project.
2.
Realignment of Operating Expenses
Under the GAA of 1994, the appropriation for the Senate is P472,000,000.00 of which
P464,447,000.00 is appropriated for current operating expenditures, while the appropriation for the
House of Representatives is P1,171,924,000.00 of which P1,165,297,000.00 is appropriated for
current operating expenditures (GAA of 1994, pp. 2, 4, 9, 12).
The 1994 operating expenditures for the Senate are as follows:
Personal Services
Salaries, Permanent 153,347
Salaries/Wage, Contractual/Emergency
6,870

Total Salaries and Wages

160,217
=======
Other Compensation
Step Increments
1,073
Honoraria and Commutable Allowances
3,731
Compensation Insurance Premiums 1,579
Pag-I.B.I.G. Contributions
1,184
Medicare Premiums 888
Bonus and Cash Gift 14,791
Terminal Leave Benefits
2,000
Personnel Economic Relief Allowance 10,266
Additional Compensation of P500 under A.O. 53
11,130
Others 57,173

Total Other Compensation

103,815

01 Total Personal Services

264,032
=======
Maintenance and Other Operating Expenses
02
Traveling Expenses
32,841
03
Communication Services
7,666
04
Repair and Maintenance of Government Facilities
1,220
05
Repair and Maintenance of Government Vehicles
318
06
Transportation Services
128
07
Supplies and Materials 20,189
08
Rents 24,584
14
Water/Illumination and Power 6,561
15
Social Security Benefits and Other Claims
3,270
17
Training and Seminars Expenses
2,225
18
Extraordinary and Miscellaneous Expenses 9,360
23
Advertising and Publication

24
Fidelity Bonds and Insurance Premiums
1,325
29
Other Services 89,778

Total Maintenance and Other Operating Expenditures 200,415

Total Current Operating Expenditures 464,447

=======
(GAA of 1994, pp. 3-4)
The 1994 operating expenditures for the House of Representatives are as follows:
Personal Services
Salaries, Permanent 261,557
Salaries/Wages, Contractual/Emergency
143,643

Total Salaries and Wages

405,200
=======
Other Compensation
Step Increments
4,312
Honoraria and Commutable
Allowances
4,764
Compensation Insurance
Premiums
1,159
Pag-I.B.I.G. Contributions
5,231
Medicare Premiums 2,281
Bonus and Cash Gift 35,669
Terminal Leave Benefits
29
Personnel Economic Relief
Allowance
21,150
Additional Compensation of P500 under A.O. 53
Others 106,140

Total Other Compensation

202,863

01 Total Personal Services

608,063
=======
Maintenance and Other Operating Expenses
02
Traveling Expenses
139,611
03
Communication Services
22,514
04
Repair and Maintenance of Government Facilities
5,116
05
Repair and Maintenance of Government Vehicles
1,863
06
Transportation Services
178
07
Supplies and Materials 55,248
10
Grants/Subsidies/Contributions
940
14
Water/Illumination and Power 14,458
15
Social Security Benefits and Other Claims
325
17
Training and Seminars Expenses
7,236

18
Extraordinary and Miscellaneous Expenses 14,474
20
Anti-Insurgency/Contingency Emergency Expenses 9,400
23
Advertising and Publication
242
24
Fidelity Bonds and Insurance Premiums
1,420
29
Other Services 284,209

Total Maintenance and Other Operating Expenditures 557,234

Total Current Operating Expenditures 1,165,297

=======
(GAA of 1994, pp. 11-12)
The Special Provision Applicable to the Congress of the Philippines provides:
4.
Realignment of Allocation for Operational Expenses. A member of Congress may realign his
allocation for operational expenses to any other expenses category provide the total of said
allocation is not exceeded. (GAA of 1994, p. 14).
The appropriation for operating expenditures for each House is further divided into expenditures for
salaries, personal services, other compensation benefits, maintenance expenses and other
operating expenses. In turn, each member of Congress is allotted for his own operating expenditure
a proportionate share of the appropriation for the House to which he belongs. If he does not spend
for one items of expense, the provision in question allows him to transfer his allocation in said item to
another item of expense.
Petitioners assail the special provision allowing a member of Congress to realign his allocation for
operational expenses to any other expense category (Rollo, pp. 82-92), claiming that this practice is
prohibited by Section 25(5), Article VI of the Constitution. Said section provides:
No law shall be passed authorizing any transfer of appropriations: however, the President, the
President of the Senate, the Speaker of the House of Representatives, the Chief Justice of the
Supreme Court, and the heads of Constitutional Commissions may, by law, be authorized to
augment any item in the general appropriations law for their respective offices from savings in other
items of their respective appropriations.
The proviso of said Article of the Constitution grants the President of the Senate and the Speaker of
the House of Representatives the power to augment items in an appropriation act for their respective
offices from savings in other items of their appropriations, whenever there is a law authorizing such
augmentation.
The special provision on realignment of the operating expenses of members of Congress is
authorized by Section 16 of the General Provisions of the GAA of 1994, which provides:
Expenditure Components. Except by act of the Congress of the Philippines, no change or
modification shall be made in the expenditure items authorized in this Act and other appropriation
laws unless in cases
of augmentations from savings in appropriations as authorized under Section 25(5) of Article VI of
the Constitution (GAA of 1994, p. 1273).
Petitioners argue that the Senate President and the Speaker of the House of Representatives, but
not the individual members of Congress are the ones authorized to realign the savings as
appropriated.
Under the Special Provisions applicable to the Congress of the Philippines, the members of
Congress only determine the necessity of the realignment of the savings in the allotments for their
operating expenses. They are in the best position to do so because they are the ones who know

whether there are savings available in some items and whether there are deficiencies in other items
of their operating expenses that need augmentation. However, it is the Senate President and the
Speaker of the House of Representatives, as the case may be, who shall approve the realignment.
Before giving their stamp of approval, these two officials will have to see to it that:
(1)
The funds to be realigned or transferred are actually savings in the items of expenditures
from which the same are to be taken; and
(2)
The transfer or realignment is for the purposes of augmenting the items of expenditure to
which said transfer or realignment is to be made.
3.
Highest Priority for Debt Service
While Congress appropriated P86,323,438,000.00 for debt service (Article XLVII of the GAA of
1994), it appropriated only P37,780,450,000.00 for the Department of Education Culture and Sports.
Petitioners urged that Congress cannot give debt service the highest priority in the GAA of 1994
(Rollo, pp. 93-94) because under the Constitution it should be education that is entitled to the
highest funding. They invoke Section 5(5), Article XIV thereof, which provides:
(5)
The State shall assign the highest budgetary priority to education and ensure that teaching
will attract and retain its rightful share of the best available talents through adequate remuneration
and other means of job satisfaction and fulfillment.
This issue was raised in Guingona, Jr. v. Carague, 196 SCRA 221 (1991), where this Court held that
Section 5(5), Article XIV of the Constitution, is merely directory, thus:
While it is true that under Section 5(5), Article XIV of the Constitution, Congress is mandated to
"assign the highest budgetary priority to education" in order to "insure that teaching will attract and
retain its rightful share of the best available talents through adequate remuneration and other means
of job satisfaction and fulfillment," it does not thereby follow that the hands of Congress are so
hamstrung as to deprive it the power to respond to the imperatives of the national interest and for the
attainment of other state policies or objectives.
As aptly observed by respondents, since 1985, the budget for education has tripled to upgrade and
improve the facility of the public school system. The compensation of teachers has been doubled.
The amount of P29,740,611,000.00 set aside for the Department of Education, Culture and Sports
under the General Appropriations Act (R.A. No. 6381), is the highest budgetary allocation among all
department budgets. This is a clear compliance with the aforesaid constitutional mandate according
highest priority to education.
Having faithfully complied therewith, Congress is certainly not without any power, guided only by its
good judgment, to provide an appropriation, that can reasonably service our enormous debt, the
greater portion of which was inherited from the previous administration. It is not only a matter of
honor and to protect the credit standing of the country. More especially, the very survival of our
economy is at stake. Thus, if in the process Congress appropriated an amount for debt service
bigger than the share allocated to education, the Court finds and so holds that said appropriation
cannot be thereby assailed as unconstitutional.
G.R. No. 113105
G.R. No. 113174
Veto of Provision on Debt Ceiling
The Congress added a Special Provision to Article XLVIII (Appropriations for Debt Service) of the
GAA of 1994 which provides:
Special Provisions
1.
Use of the Fund. The appropriation authorized herein shall be used for payment of principal
and interest of foreign and domestic indebtedness; PROVIDED, That any payment in excess of the

amount herein appropriated shall be subject to the approval of the President of the Philippines with
the concurrence of the Congress of the Philippines; PROVIDED, FURTHER, That in no case shall
this fund be used to pay for the liabilities of the Central Bank Board of Liquidators.
2.
Reporting Requirement. The Bangko Sentral ng Pilipinas and the Department of Finance
shall submit a quarterly report of actual foreign and domestic debt service payments to the House
Committee on Appropriations and Senate Finance Committee within one (1) month after each
quarter (GAA of 1944, pp. 1266).
The President vetoed the first Special Provision, without vetoing the P86,323,438,000.00
appropriation for debt service in said Article. According to the President's Veto Message:
IV.
APPROPRIATIONS FOR DEBT SERVICE
I would like to emphasize that I concur fully with the desire of Congress to reduce the debt burden by
decreasing the appropriation for debt service as well as the inclusion of the Special Provision quoted
below. Nevertheless, I believe that this debt reduction scheme cannot be validly done through the
1994 GAA. This must be addressed by revising our debt policy by way of innovative and
comprehensive debt reduction programs conceptualized within the ambit of the Medium-Term
Philippine Development Plan.
Appropriations for payment of public debt, whether foreign or domestic, are automatically
appropriated pursuant to the Foreign Borrowing Act and Section 31 of P.D. No. 1177 as reiterated
under Section 26, Chapter 4, Book VI of E.O. No. 292, the Administrative Code of 1987. I wish to
emphasize that the constitutionality of such automatic provisions on debt servicing has been upheld
by the Supreme Court in the case of "Teofisto T. Guingona, Jr., and Aquilino Q. Pimentel, Jr. v. Hon.
Guillermo N. Carague, in his capacity as Secretary of Budget and Management, et al.," G.R. No.
94571, dated April 22, 1991.
I am, therefore vetoing the following special provision for the reason that the GAA is not the
appropriate legislative measure to amend the provisions of the Foreign Borrowing Act, P.D. No. 1177
and E.O. No. 292:
Use of the Fund. The appropriation authorized herein shall be used for payment of principal and
interest of foreign and domestic indebtedness: PROVIDED, That any payment in excess of the
amount herein appropriated shall be subject to the approval of the President of the Philippines with
the concurrence of the Congress of the Philippines: PROVIDED, FURTHER, That in no case shall
this fund be used to pay for the liabilities of the Central Bank Board of Liquidators (GAA of 1994, p.
1290).
Petitioners claim that the President cannot veto the Special Provision on the appropriation for debt
service without vetoing the entire amount of P86,323,438.00 for said purpose (Rollo, G.R. No.
113105, pp. 93-98; Rollo, G.R. No. 113174, pp. 16-18). The Solicitor General counterposed that the
Special Provision did not relate to the item of appropriation for debt service and could therefore be
the subject of an item veto (Rollo, G.R. No. 113105, pp. 54-60; Rollo, G.R. No. 113174, pp. 72-82).
This issue is a mere rehash of the one put to rest in Gonzales v. Macaraig, Jr., 191 SCRA 452
(1990). In that case, the issue was stated by the Court, thus:
The fundamental issue raised is whether or not the veto by the President of Section 55 of the 1989
Appropriations Bill (Section 55
FY '89), and subsequently of its counterpart Section 16 of the 1990 Appropriations Bill (Section 16
FY '90), is unconstitutional and without effect.
The Court re-stated the issue, just so there would not be any misunderstanding about it, thus:

The focal issue for resolution is whether or not the President exceeded the item-veto power
accorded by the Constitution. Or differently put, has the President the power to veto "provisions" of
an Appropriations Bill?
The bases of the petition in Gonzales, which are similar to those invoked in the present case, are
stated as follows:
In essence, petitioners' cause is anchored on the following grounds: (1) the President's line-veto
power as regards appropriation bills is limited to item/s and does not cover provision/s; therefore,
she exceeded her authority when she vetoed Section 55 (FY '89) and Section 16 (FY '90) which are
provisions; (2) when the President objects to a provision of an appropriation bill, she cannot exercise
the item-veto power but should veto the entire bill; (3) the item-veto power does not carry with it the
power to strike out conditions or restrictions for that would be legislation, in violation of the doctrine
of separation of powers; and (4) the power of augmentation in Article VI, Section 25 [5] of the 1987
Constitution, has to be provided for by law and, therefore, Congress is also vested with the
prerogative to impose restrictions on the exercise of that power.
The restrictive interpretation urged by petitioners that the President may not veto a provision without
vetoing the entire bill not only disregards the basic principle that a distinct and severable part of a bill
may be the subject of a separate veto but also overlooks the Constitutional mandate that any
provision in the general appropriations bill shall relate specifically to some particular appropriation
therein and that any such provision shall be limited in its operation to the appropriation to which it
relates (1987 Constitution, Article VI, Section 25 [2]). In other words, in the true sense of the term, a
provision in an Appropriations Bill is limited in its operation to some particular appropriation to which
it relates, and does not relate to the entire bill.
The Court went one step further and ruled that even assuming arguendo that "provisions" are
beyond the executive power to veto, and Section 55
(FY '89) and Section 16 (FY '90) were not "provisions" in the budgetary sense of the term, they are
"inappropriate provisions" that should be treated as "items" for the purpose of the President's veto
power.
The Court, citing Henry v. Edwards, La., 346 So. 2d 153 (1977), said that Congress cannot include
in a general appropriations bill matters that should be more properly enacted in separate legislation,
and if it does that, the inappropriate provisions inserted by it must be treated as "item", which can be
vetoed by the President in the exercise of his item-veto power.
It is readily apparent that the Special Provision applicable to the appropriation for debt service
insofar as it refers to funds in excess of the amount appropriated in the bill, is an "inappropriate"
provision referring to funds other than the P86,323,438,000.00 appropriated in the General
Appropriations Act of 1991.
Likewise the vetoed provision is clearly an attempt to repeal Section 31 of P.D. No. 1177 (Foreign
Borrowing Act) and E.O. No. 292, and to reverse the debt payment policy. As held by the Court in
Gonzales, the repeal of these laws should be done in a separate law, not in the appropriations law.
The Court will indulge every intendment in favor of the constitutionality of a veto, the same as it will
presume the constitutionality of an act of Congress (Texas Co. v. State, 254 P. 1060; 31 Ariz, 485, 53
A.L.R. 258 [1927]).
The veto power, while exercisable by the President, is actually a part of the legislative process
(Memorandum of Justice Irene Cortes as Amicus Curiae, pp. 3-7). That is why it is found in Article VI
on the Legislative Department rather than in Article VII on the Executive Department in the
Constitution. There is, therefore, sound basis to indulge in the presumption of validity of a veto. The

burden shifts on those questioning the validity thereof to show that its use is a violation of the
Constitution.
Under his general veto power, the President has to veto the entire bill, not merely parts thereof (1987
Constitution, Art. VI, Sec. 27[1]). The exception to the general veto power is the power given to the
President to veto any particular item or items in a general appropriations bill (1987 Constitution, Art.
VI,
Sec. 27[2]). In so doing, the President must veto the entire item.
A general appropriations bill is a special type of legislation, whose content is limited to specified
sums of money dedicated to a specific purpose or a separate fiscal unit (Beckman, The Item Veto
Power of the Executive,
31 Temple Law Quarterly 27 [1957]).
The item veto was first introduced by the Organic Act of the Philippines passed by the U.S.
Congress on August 29, 1916. The concept was adopted from some State Constitutions.
Cognizant of the legislative practice of inserting provisions, including conditions, restrictions and
limitations, to items in appropriations bills, the Constitutional Convention added the following
sentence to Section 20(2), Article VI of the 1935 Constitution:
. . . When a provision of an appropriation bill affect one or more items of the same, the President
cannot veto the provision without at the same time vetoing the particular item or items to which it
relates . . . .
In short, under the 1935 Constitution, the President was empowered to veto separately not only
items in an appropriations bill but also "provisions".
While the 1987 Constitution did not retain the aforementioned sentence added to Section 11(2) of
Article VI of the 1935 Constitution, it included the following provision:
No provision or enactment shall be embraced in the general appropriations bill unless it relates
specifically to some particular appropriation therein. Any such provision or enactment shall be limited
in its operation to the appropriation to which it relates (Art. VI, Sec. 25[2]).
In Gonzales, we made it clear that the omission of that sentence of Section 16(2) of the 1935
Constitution in the 1987 Constitution should not be interpreted to mean the disallowance of the
power of the President to veto a "provision".
As the Constitution is explicit that the provision which Congress can include in an appropriations bill
must "relate specifically to some particular appropriation therein" and "be limited in its operation to
the appropriation to which it relates," it follows that any provision which does not relate to any
particular item, or which extends in its operation beyond an item of appropriation, is considered "an
inappropriate provision" which can be vetoed separately from an item. Also to be included in the
category of "inappropriate provisions" are unconstitutional provisions and provisions which are
intended to amend other laws, because clearly these kind of laws have no place in an appropriations
bill. These are matters of general legislation more appropriately dealt with in separate enactments.
Former Justice Irene Cortes, as Amicus Curiae, commented that Congress cannot by law establish
conditions for and regulate the exercise of powers of the President given by the Constitution for that
would be an unconstitutional intrusion into executive prerogative.
The doctrine of "inappropriate provision" was well elucidated in Henry v. Edwards, supra., thus:
Just as the President may not use his item-veto to usurp constitutional powers conferred on the
legislature, neither can the legislature deprive the Governor of the constitutional powers conferred on
him as chief executive officer of the state by including in a general appropriation bill matters more
properly enacted in separate legislation. The Governor's constitutional power to veto bills of general
legislation . . . cannot be abridged by the careful placement of such measures in a general

appropriation bill, thereby forcing the Governor to choose between approving unacceptable
substantive legislation or vetoing "items" of expenditures essential to the operation of government.
The legislature cannot by location of a bill give it immunity from executive veto. Nor can it circumvent
the Governor's veto power over substantive legislation by artfully drafting general law measures so
that they appear to be true conditions or limitations on an item of appropriation. Otherwise, the
legislature would be permitted to impair the constitutional responsibilities and functions of a co-equal
branch of government in contravention of the separation of powers doctrine . . . We are no more
willing to allow the legislature to use its appropriation power to infringe on the Governor's
constitutional right to veto matters of substantive legislation than we are to allow the Governor to
encroach on the Constitutional powers of the legislature. In order to avoid this result, we hold that,
when the legislature inserts inappropriate provisions in a general appropriation bill, such provisions
must be treated as "items" for purposes of the Governor's item veto power over general
appropriation bills.
xxx
xxx
xxx
. . . Legislative control cannot be exercised in such a manner as to encumber the general
appropriation bill with veto-proof "logrolling measures", special interest provisions which could not
succeed if separately enacted, or "riders", substantive pieces of legislation incorporated in a bill to
insure passage without veto . . . (Emphasis supplied).
Petitioners contend that granting arguendo that the veto of the Special Provision on the ceiling for
debt payment is valid, the President cannot automatically appropriate funds for debt payment without
complying with the conditions for automatic appropriation under the provisions of R.A. No. 4860 as
amended by P.D. No. 81 and the provisions of P.D. No. 1177 as amended by the Administrative
Code of 1987 and P.D. No. 1967 (Rollo, G.R. No. 113766, pp. 9-15).
Petitioners cannot anticipate that the President will not faithfully execute the laws. The writ of
prohibition will not issue on the fear that official actions will be done in contravention of the laws.
The President vetoed the entire paragraph one of the Special Provision of the item on debt service,
including the provisions that the appropriation authorized in said item "shall be used for payment of
the principal and interest of foreign and domestic indebtedness" and that "in no case shall this fund
be used to pay for the liabilities of the Central Bank Board of Liquidators." These provisions are
germane to and have a direct connection with the item on debt service. Inherent in the power of
appropriation is the power to specify how the money shall be spent (Henry v. Edwards, LA, 346 So.,
2d., 153). The said provisos, being appropriate provisions, cannot be vetoed separately. Hence the
item veto of said provisions is void.
We reiterate, in order to obviate any misunderstanding, that we are sustaining the veto of the Special
Provision of the item on debt service only with respect to the proviso therein requiring that "any
payment in excess of the amount herein, appropriated shall be subject to the approval of the
President of the Philippines with the concurrence of the Congress of the Philippines . . ."
G.R. NO. 113174
G.R. NO. 113766
G.R. NO. 11388
1.
Veto of provisions for revolving funds of SUC's.
In the appropriation for State Universities and Colleges (SUC's), the President vetoed special
provisions which authorize the use of income and the creation, operation and maintenance of
revolving funds. The Special Provisions vetoed are the following:
(H. 7) West Visayas State University

Equal Sharing of Income. Income earned by the University subject to Section 13 of the special
provisions applicable to all State Universities and Colleges shall be equally shared by the University
and the University Hospital (GAA of 1994, p. 395).
xxx
xxx
xxx
(J. 3) Leyte State College
Revolving Fund for the Operation of LSC House and Human Resources Development Center
(HRDC). The income of Leyte State College derived from the operation of its LSC House and HRDC
shall be constituted into a Revolving Fund to be deposited in an authorized government depository
bank for the operational expenses of these projects/services. The net income of the Revolving Fund
at the end of the year shall be remitted to the National Treasury and shall accrue to the General
Fund. The implementing guidelines shall be issued by the Department of Budget and Management
(GAA of 1994, p. 415).
The vetoed Special Provisions applicable to all SUC's are the following:
12.
Use of Income from Extension Services. State Universities and Colleges are authorized to
use their income from their extension services. Subject to the approval of the Board of Regents and
the approval of a special budget pursuant to Sec. 35, Chapter 5, Book VI of E.O.
No. 292, such income shall be utilized solely for faculty development, instructional materials and
work study program (GAA of 1994, p. 490).
xxx
xxx
xxx
13.
Income of State Universities and Colleges. The income of State Universities and Colleges
derived from tuition fees and other sources as may be imposed by governing boards other than
those accruing to revolving funds created under LOI Nos. 872 and 1026 and those authorized to be
recorded as trust receipts pursuant to Section 40, Chapter 5, Book VI of E.O. No. 292 shall be
deposited with the National Treasury and recorded as a Special Account in the General Fund
pursuant to P.D. No. 1234 and P.D. No. 1437 for the use of the institution, subject to Section 35,
Chapter 5, Book VI of E.O. No. 292L PROVIDED, That disbursements from the Special Account
shall not exceed the amount actually earned and deposited: PROVIDED, FURTHER, That a cash
advance on such income may be allowed State half of income actually realized during the preceding
year and this cash advance shall be charged against income actually earned during the budget year:
AND PROVIDED, FINALLY, That in no case shall such funds be used to create positions, nor for
payment of salaries, wages or allowances, except as may be specifically approved by the
Department of Budge and Management for income-producing activities, or to purchase equipment or
books, without the prior approval of the President of the Philippines pursuant to Letter of
Implementation No. 29.
All collections of the State Universities and Colleges for fees, charges and receipts intended for
private recipient units, including private foundations affiliated with these institutions shall be duly
acknowledged with official receipts and deposited as a trust receipt before said income shall be
subject to Section 35, Chapter 5, Book VI of E.O. No. 292
(GAA of 1994, p. 490).
The President gave his reason for the veto thus:
Pursuant to Section 65 of the Government Auditing Code of the Philippines, Section 44, Chapter 5,
Book VI of E.O. No. 292, s. 1987 and Section 22, Article VII of the Constitution, all income earned by
all Government offices and agencies shall accrue to the General Fund of the Government in line with
the One Fund Policy enunciated by Section 29 (1), Article VI and Section 22, Article VII of the
Constitution. Likewise, the creation and establishment of revolving funds shall be authorized by

substantive law pursuant to Section 66 of the Government Auditing Code of the Philippines and
Section 45, Chapter 5, Book VI of E.O. No. 292.
Notwithstanding the aforementioned provisions of the Constitution and existing law, I have noted the
proliferation of special provisions authorizing the use of agency income as well as the creation,
operation and maintenance of revolving funds.
I would like to underscore the facts that such income were already considered as integral part of the
revenue and financing sources of the National Expenditure Program which I previously submitted to
Congress. Hence, the grant of new special provisions authorizing the use of agency income and the
establishment of revolving funds over and above the agency appropriations authorized in this Act
shall effectively reduce the financing sources of the 1994 GAA and, at the same time, increase the
level of expenditures of some agencies beyond the well-coordinated, rationalized levels for such
agencies. This corresponding increases the overall deficit of the National Government (Veto
Message, p. 3).
Petitioners claim that the President acted with grave abuse of discretion when he disallowed by his
veto the "use of income" and the creation of "revolving fund" by the Western Visayas State
University and Leyte State Colleges when he allowed other government offices, like the National
Stud Farm, to use their income for their operating expenses (Rollo, G.R. No. 113174, pp. 15-16).
There was no undue discrimination when the President vetoed said special provisions while allowing
similar provisions in other government agencies. If some government agencies were allowed to use
their income and maintain a revolving fund for that purpose, it is because these agencies have been
enjoying such privilege before by virtue of the special laws authorizing such practices as exceptions
to the "one-fund policy" (e.g., R.A. No. 4618 for the National Stud Farm, P.D. No. 902-A for the
Securities and Exchange Commission; E.O. No. 359 for the Department of Budget and
Management's Procurement Service).
2.
Veto of provision on 70% (administrative)/30% (contract) ratio for road maintenance.
In the appropriation for the Department of Public Works and Highways, the President vetoed the
second paragraph of Special Provision No. 2, specifying the 30% maximum ration of works to be
contracted for the maintenance of national roads and bridges. The said paragraph reads as follows:
2.
Release and Use of Road Maintenance Funds. Funds allotted for the maintenance and
repair of roads which are provided in this Act for the Department of Public Works and Highways shall
be released to the respective Engineering District, subject to such rules and regulations as may be
prescribed by the Department of Budget and Management. Maintenance funds for roads and bridges
shall be exempt from budgetary reserve.
Of the amount herein appropriated for the maintenance of national roads and bridges, a maximum of
thirty percent (30%) shall be contracted out in accordance with guidelines to be issued by the
Department of Public Works and Highways. The balance shall be used for maintenance by force
account.
Five percent (5%) of the total road maintenance fund appropriated herein to be applied across the
board to the allocation of each region shall be set aside for the maintenance of roads which may be
converted to or taken over as national roads during the current year and the same shall be released
to the central office of the said department for eventual
sub-allotment to the concerned region and district: PROVIDED, That any balance of the said five
percent (5%) shall be restored to the regions on a pro-rata basis for the maintenance of existing
national roads.
No retention or deduction as reserves or overhead expenses shall be made, except as authorized by
law or upon direction of the President

(GAA of 1994, pp. 785-786; Emphasis supplied).

The President gave the following reason for the veto:
While I am cognizant of the well-intended desire of Congress to impose certain restrictions contained
in some special provisions, I am equally aware that many programs, projects and activities of
agencies would require some degree of flexibility to ensure their successful implementation and
therefore risk their completion. Furthermore, not only could these restrictions and limitations derail
and impede program implementation but they may also result in a breach of contractual obligations.
D.1.a. A study conducted by the Infrastructure Agencies show that for practical intent and purposes,
maintenance by contract could be undertaken to an optimum of seventy percent (70%) and the
remaining thirty percent (30%) by force account. Moreover, the policy of maximizing implementation
through contract maintenance is a covenant of the Road and Road Transport Program Loan from the
Asian Development Bank (ADB Loan No. 1047-PHI-1990) and Overseas Economic Cooperation
Fund (OECF Loan No. PH-C17-199). The same is a covenant under the World Bank (IBRD) Loan for
the Highway Management Project (IBRD Loan
No. PH-3430) obtained in 1992.
In the light of the foregoing and considering the policy of the government to encourage and
maximize private sector participation in the regular repair and maintenance of infrastructure facilities,
I am directly vetoing the underlined second paragraph of Special Provision No. 2 of the Department
of Public Works and Highways (Veto Message, p. 11).
The second paragraph of Special Provision No. 2 brings to fore the divergence in policy of Congress
and the President. While Congress expressly laid down the condition that only 30% of the total
appropriation for road maintenance should be contracted out, the President, on the basis of a
comprehensive study, believed that contracting out road maintenance projects at an option of 70%
would be more efficient, economical and practical.
The Special Provision in question is not an inappropriate provision which can be the subject of a
veto. It is not alien to the appropriation for road maintenance, and on the other hand, it specified how
the said item shall be expended 70% by administrative and 30% by contract.
The 1987 Constitution allows the addition by Congress of special provisions, conditions to items in
an expenditure bill, which cannot be vetoed separately from the items to which they relate so long as
they are "appropriate" in the budgetary sense (Art. VII, Sec. 25[2]).
The Solicitor General was hard put in justifying the veto of this special provision. He merely argued
that the provision is a complete turnabout from an entrenched practice of the government to
maximize contract maintenance (Rollo, G.R. No. 113888, pp. 85-86). That is not a ground to veto a
provision separate from the item to which it refers.
The veto of the second paragraph of Special Provision No. 2 of the item for the DPWH is therefore
unconstitutional.
3.
Veto of provision on purchase of medicines by AFP.
In the appropriation for the Armed Forces of the Philippines (AFP), the President vetoed the special
provision on the purchase by the AFP of medicines in compliance with the Generics Drugs Law (R.A.
No. 6675). The vetoed provision reads:
12.
Purchase of Medicines. The purchase of medicines by all Armed Forces of the Philippines
units, hospitals and clinics shall strictly comply with the formulary embodied in the National Drug
Policy of the Department of Health (GAA of 1994, p. 748).
According to the President, while it is desirable to subject the purchase of medicines to a standard
formulary, "it is believed more prudent to provide for a transition period for its adoption and smooth
implementation in the Armed Forces of the Philippines" (Veto Message, p. 12).

The Special Provision which requires that all purchases of medicines by the AFP should strictly
comply with the formulary embodied in the National Drug Policy of the Department of Health is an
"appropriate" provision. it is a mere advertence by Congress to the fact that there is an existing law,
the Generics Act of 1988, that requires "the extensive use of drugs with generic names through a
rational system of procurement and distribution." The President believes that it is more prudent to
provide for a transition period for the smooth implementation of the law in the case of purchases by
the Armed Forces of the Philippines, as implied by Section 11 (Education Drive) of the law itself. This
belief, however, cannot justify his veto of the provision on the purchase of medicines by the AFP.
Being directly related to and inseparable from the appropriation item on purchases of medicines by
the AFP, the special provision cannot be vetoed by the President without also vetoing the said item
(Bolinao Electronics Corporation v. Valencia, 11 SCRA 486 [1964]).
4.
Veto of provision on prior approval of Congress for purchase of military equipment.
In the appropriation for the modernization of the AFP, the President vetoed the underlined proviso of
Special Provision No. 2 on the "Use of Fund," which requires the prior approval of Congress for the
release of the corresponding modernization funds, as well as the entire Special Provisions
No. 3 on the "Specific Prohibition":
2.
Use of the Fund. Of the amount herein appropriated, priority shall be given for the acquisition
of AFP assets necessary for protecting marine, mineral, forest and other resources within Philippine
territorial borders and its economic zone, detection, prevention or deterrence of air or surface
intrusions and to support diplomatic moves aimed at preserving national dignity, sovereignty and
patrimony: PROVIDED, That the said modernization fund shall not be released until a Table of
Organization and Equipment for FY 1994-2000 is submitted to and approved by Congress.
3.
Specific Prohibition. The said Modernization Fund shall not be used for payment of six (6)
additional S-211 Trainer planes, 18 SF-260 Trainer planes and 150 armored personnel carriers (GAA
of 1994, p. 747).
As reason for the veto, the President stated that the said condition and prohibition violate the
Constitutional mandate of non-impairment of contractual obligations, and if allowed, "shall effectively
alter the original intent of the AFP Modernization Fund to cover all military equipment deemed
necessary to modernize the Armed Forces of the Philippines" (Veto Message, p. 12).
Petitioners claim that Special Provision No. 2 on the "Use of Fund" and Special Provision No. 3 are
conditions or limitations related to the item on the AFP modernization plan.
The requirement in Special Provision No. 2 on the "Use of Fund" for the AFP modernization program
that the President must submit all purchases of military equipment to Congress for its approval, is an
exercise of the "congressional or legislative veto." By way of definition, a congressional veto is a
means whereby the legislature can block or modify administrative action taken under a statute. It is a
form of legislative control in the implementation of particular executive actions. The form may be
either negative, that is requiring disapproval of the executive action, or affirmative, requiring approval
of the executive action. This device represents a significant attempt by Congress to move from
oversight of the executive to shared administration (Dixon, The Congressional Veto and Separation
of Powers: The Executive on a Leash,
56 North Carolina Law Review, 423 [1978]).
A congressional veto is subject to serious questions involving the principle of separation of powers.
However the case at bench is not the proper occasion to resolve the issues of the validity of the
legislative veto as provided in Special Provisions Nos. 2 and 3 because the issues at hand can be
disposed of on other grounds. Any provision blocking an administrative action in implementing a law
or requiring legislative approval of executive acts must be incorporated in a separate and

substantive bill. Therefore, being "inappropriate" provisions, Special Provisions Nos. 2 and 3 were
properly vetoed.
As commented by Justice Irene Cortes in her memorandum as Amicus Curiae: "What Congress
cannot do directly by law it cannot do indirectly by attaching conditions to the exercise of that power
(of the President as Commander-in-Chief) through provisions in the appropriation law."
Furthermore, Special Provision No. 3, prohibiting the use of the Modernization Funds for payment of
the trainer planes and armored personnel carriers, which have been contracted for by the AFP, is
violative of the Constitutional prohibition on the passage of laws that impair the obligation of
contracts (Art. III, Sec. 10), more so, contracts entered into by the Government itself.
The veto of said special provision is therefore valid.
5.
Veto of provision on use of savings to augment AFP pension funds.
In the appropriation for the AFP Pension and Gratuity Fund, the President vetoed the new provision
authorizing the Chief of Staff to use savings in the AFP to augment pension and gratuity funds. The
vetoed provision reads:
2. Use of Savings. The Chief of Staff, AFP, is authorized, subject to the approval of the Secretary of
National Defense, to use savings in the appropriations provided herein to augment the pension fund
being managed by the AFP Retirement and Separation Benefits System as provided under Sections
2(a) and 3 of P.D. No. 361 (GAA of 1994,
p. 746).
According to the President, the grant of retirement and separation benefits should be covered by
direct appropriations specifically approved for the purpose pursuant to Section 29(1) of Article VI of
the Constitution. Moreover, he stated that the authority to use savings is lodged in the officials
enumerated in Section 25(5) of Article VI of the Constitution (Veto Message, pp. 7-8).
Petitioners claim that the Special Provision on AFP Pension and Gratuity Fund is a condition or
limitation which is so intertwined with the item of appropriation that it could not be separated
therefrom.
The Special Provision, which allows the Chief of Staff to use savings to augment the pension fund
for the AFP being managed by the AFP Retirement and Separation Benefits System is violative of
Sections 25(5) and 29(1) of the Article VI of the Constitution.
Under Section 25(5), no law shall be passed authorizing any transfer of appropriations, and under
Section 29(1), no money shall be paid out of
the Treasury except in pursuance of an appropriation made by law. While Section 25(5) allows as an
exception the realignment of savings to augment items in the general appropriations law for the
executive branch, such right must and can be exercised only by the President pursuant to a specific
law.
6.
Condition on the deactivation of the CAFGU's.
Congress appropriated compensation for the CAFGU's, including the payment of separation benefits
but it added the following Special Provision:
1.
CAFGU Compensation and Separation Benefit. The appropriation authorized herein shall be
used for the compensation of CAFGU's including the payment of their separation benefit not
exceeding one (1) year subsistence allowance for the 11,000 members who will be deactivated in
1994. The Chief of Staff, AFP, shall, subject to the approval of the Secretary of National Defense,
promulgate policies and procedures for the payment of separation benefit (GAA of 1994, p. 740).
The President declared in his Veto Message that the implementation of this Special Provision to the
item on the CAFGU's shall be subject to prior Presidential approval pursuant to P.D. No. 1597 and
R.A.. No. 6758. He gave the following reasons for imposing the condition:

I am well cognizant of the laudable intention of Congress in proposing the amendment of Special
Provision No. 1 of the CAFGU. However, it is premature at this point in time of our peace process to
earmark and declare through special provision the actual number of CAFGU members to be
deactivated in CY 1994. I understand that the number to be deactivated would largely depend on the
result or degree of success of the on-going peace initiatives which are not yet precisely determinable
today. I have desisted, therefore, to directly veto said provisions because this would mean the loss of
the entire special provision to the prejudice of its beneficient provisions. I therefore declare that the
actual implementation of this special provision shall be subject to prior Presidential approval
pursuant to the provisions of P.D. No. 1597 and
R.A. No. 6758 (Veto Message, p. 13).
Petitioners claim that the Congress has required the deactivation of the CAFGU's when it
appropriated the money for payment of the separation pay of the members of thereof. The President,
however, directed that the deactivation should be done in accordance to his timetable, taking into
consideration the peace and order situation in the affected localities.
Petitioners complain that the directive of the President was tantamount to an administrative embargo
of the congressional will to implement the Constitution's command to dissolve the CAFGU's (Rollo,
G.R. No. 113174,
p. 14; G.R. No. 113888, pp. 9, 14-16). They argue that the President cannot impair or withhold
expenditures authorized and appropriated by Congress when neither the Appropriations Act nor
other legislation authorize such impounding (Rollo, G.R. No. 113888, pp. 15-16).
The Solicitor General contends that it is the President, as Commander-in-Chief of the Armed Forces
of the Philippines, who should determine when the services of the CAFGU's are no longer needed
(Rollo, G.R. No. 113888,
pp. 92-95.).
This is the first case before this Court where the power of the President to impound is put in issue.
Impoundment refers to a refusal by the President, for whatever reason, to spend funds made
available by Congress. It is the failure to spend or obligate budget authority of any type (Notes:
Impoundment of Funds, 86 Harvard Law Review 1505 [1973]).
Those who deny to the President the power to impound argue that once Congress has set aside the
fund for a specific purpose in an appropriations act, it becomes mandatory on the part of the
President to implement the project and to spend the money appropriated therefor. The President has
no discretion on the matter, for the Constitution imposes on him the duty to faithfully execute the
laws.
In refusing or deferring the implementation of an appropriation item, the President in effect exercises
a veto power that is not expressly granted by the Constitution. As a matter of fact, the Constitution
does not say anything about impounding. The source of the Executive authority must be found
elsewhere.
Proponents of impoundment have invoked at least three principal sources of the authority of the
President. Foremost is the authority to impound given to him either expressly or impliedly by
Congress. Second is the executive power drawn from the President's role as Commander-in-Chief.
Third is the Faithful Execution Clause which ironically is the same provision invoked by petitioners
herein.
The proponents insist that a faithful execution of the laws requires that the President desist from
implementing the law if doing so would prejudice public interest. An example given is when through
efficient and prudent management of a project, substantial savings are made. In such a case, it is
sheer folly to expect the President to spend the entire amount budgeted in the law (Notes:

Presidential Impoundment: Constitutional Theories and Political Realities, 61 Georgetown Law

Journal 1295 [1973]; Notes; Protecting the Fisc: Executive Impoundment and Congressional Power,
82 Yale Law Journal 1686 [1973).
We do not find anything in the language used in the challenged Special Provision that would imply
that Congress intended to deny to the President the right to defer or reduce the spending, much less
to deactivate 11,000 CAFGU members all at once in 1994. But even if such is the intention, the
appropriation law is not the proper vehicle for such purpose. Such intention must be embodied and
manifested in another law considering that it abrades the powers of the Commander-in-Chief and
there are existing laws on the creation of the CAFGU's to be amended. Again we state: a provision in
an appropriations act cannot
be used to repeal or amend other laws, in this case, P.D. No. 1597 and R.A. No. 6758.
7.
Condition on the appropriation for the Supreme Court, etc.
(a)
In the appropriations for the Supreme Court, Ombudsman, COA, and CHR, the Congress
added the following provisions:
The Judiciary
xxx
xxx
xxx
Special Provisions
1.
Augmentation of any Item in the Court's Appropriations. Any savings in the appropriations for
the Supreme Court and the Lower Courts may be utilized by the Chief Justice of the Supreme Court
to augment any item of the Court's appropriations for (a) printing of decisions and publication of
"Philippine Reports"; (b) Commutable terminal leaves of Justices and other personnel of the
Supreme Court and payment of adjusted pension rates to retired Justices entitled thereto pursuant
to Administrative Matter No. 91-8-225-C.A.; (c) repair, maintenance, improvement and other
operating expenses of the courts' libraries, including purchase of books and periodicals; (d)
purchase, maintenance and improvement of printing equipment; (e) necessary expenses for the
employment of temporary employees, contractual and casual employees, for judicial administration;
(f) maintenance and improvement of the Court's Electronic Data
Processing System; (g) extraordinary expenses of the Chief Justice, attendance in international
conferences and conduct of training programs; (h) commutable transportation and representation
allowances and fringe benefits for Justices, Clerks of Court, Court Administrator, Chiefs of Offices
and other Court personnel in accordance with the rates prescribed by law; and (i) compensation of
attorney-de-officio: PROVIDED, That as mandated by LOI No. 489 any increase in salary and
allowances shall be subject to the usual procedures and policies as provided for under
P.D. No. 985 and other pertinent laws (GAA of 1994, p. 1128; Emphasis supplied).
xxx
xxx
xxx
Commission on Audit
xxx
xxx
xxx
5.
Use of Savings. The Chairman of the Commission on Audit is hereby authorized, subject to
appropriate accounting and auditing rules and regulations, to use savings for the payment of fringe
benefits as may be authorized by law for officials and personnel of the Commission (GAA of 1994, p.
1161; Emphasis supplied).
xxx
xxx
xxx
Office of the Ombudsman
xxx
xxx
xxx
6.
Augmentation of Items in the appropriation of the Office of the Ombudsman. The
Ombudsman is hereby authorized, subject to appropriate accounting and auditing rules and

regulations to augment items of appropriation in the Office of the Ombudsman from savings in other
items of appropriation actually released, for: (a) printing and/or publication of decisions, resolutions,
training and information materials; (b) repair, maintenance and improvement of OMB Central and
Area/Sectoral facilities; (c) purchase of books, journals, periodicals and equipment;
(d) payment of commutable representation and transportation allowances of officials and employees
who by reason of their positions are entitled thereto and fringe benefits as may be authorized
specifically by law for officials and personnel of OMB pursuant to Section 8 of Article IX-B of the
Constitution; and (e) for other official purposes subject to accounting and auditing rules and
regulations (GAA of 1994, p. 1174; Emphasis supplied).
xxx
xxx
xxx
Commission on Human Rights
xxx
xxx
xxx
1.
Use of Savings. The Chairman of the Commission on Human Rights (CHR) is hereby
authorized, subject to appropriate accounting and auditing rules and regulations, to augment any
item of appropriation in the office of the CHR from savings in other items of appropriations actually
released, for: (a) printing and/or publication of decisions, resolutions, training materials and
educational publications; (b) repair, maintenance and improvement of Commission's central and
regional facilities; (c) purchase of books, journals, periodicals and equipment, (d) payment of
commutable representation and transportation allowances of officials and employees who by reason
of their positions are entitled thereto and fringe benefits, as may be authorized by law for officials
and personnel of CHR, subject to accounting and auditing rules and regulations (GAA of 1994, p.
1178; Emphasis supplied).
In his Veto Message, the President expressed his approval of the conditions included in the GAA of
1994. He noted that:
The said condition is consistent with the Constitutional injunction prescribed under Section 8, Article
IX-B of the Constitution which states that "no elective or appointive public officer or employee shall
receive additional, double, or indirect compensation unless specifically authorized by law." I am,
therefore, confident that the heads of the said offices shall maintain fidelity to the law and faithfully
adhere to the well-established principle on compensation standardization (Veto Message, p. 10).
Petitioners claim that the conditions imposed by the President violated the independence and fiscal
autonomy of the Supreme Court, the Ombudsman, the COA and the CHR.
In the first place, the conditions questioned by petitioners were placed in the GAB by Congress itself,
not by the President. The Veto Message merely highlighted the Constitutional mandate that
additional or indirect compensation can only be given pursuant to law.
In the second place, such statements are mere reminders that the disbursements of appropriations
must be made in accordance with law. Such statements may, at worse, be treated as superfluities.
(b)
In the appropriation for the COA, the President imposed the condition that the
implementation of the budget of the COA be subject to "the guidelines to be issued by the
President."
The provisions subject to said condition reads:
xxx
xxx
xxx
3.
Revolving Fund. The income of the Commission on Audit derived from sources authorized by
the Government Auditing Code of the Philippines (P.D. No. 1445) not exceeding Ten Million Pesos
(P10,000,000) shall be constituted into a revolving fund which shall be used for maintenance,
operating and other incidental expenses to enhance audit services and audit-related activities. The
fund shall be deposited in an authorized government depository ban, and withdrawals therefrom

shall be made in accordance with the procedure prescribed by law and implementing rules and
regulations: PROVIDED,That any interests earned on such deposit shall be remitted at the end of
each quarter to the national Treasury and shall accrue to the General Fund: PROVIDED FURTHER,
That the Commission on Audit shall submit to the Department of Budget and Management a
quarterly report of income and expenditures of said revolving fund (GAA of 1994, pp. 1160-1161).
The President cited the "imperative need to rationalize" the implementation, applicability and
operation of use of income and revolving funds. The Veto Message stated:
. . . I have observed that there are old and long existing special provisions authorizing the use of
income and the creation of revolving funds. As a rule, such authorizations should be discouraged.
However, I take it that these authorizations have legal/statutory basis aside from being already a
vested right to the agencies concerned which should not be jeopardized through the Veto Message.
There is, however, imperative need to rationalize their implementation, applicability and operation.
Thus, in order to substantiate the purpose and intention of said provisions, I hereby declare that the
operationalization of the following provisions during budget implementation shall be subject to the
guidelines to be issued by the President pursuant to Section 35, Chapter 5, Book VI of E.O. No. 292
and Sections 65 and 66 of P.D. No. 1445 in relation to Sections 2 and 3 of the General Provisions of
this Act (Veto Message, p. 6; Emphasis Supplied.)
(c)
In the appropriation for the DPWH, the President imposed the condition that in the
implementation of DPWH projects, the administrative and engineering overhead of 5% and 3% "shall
be subject to the necessary administrative guidelines to be formulated by the Executive pursuant to
existing laws." The condition was imposed because the provision "needs further study" according to
the President.
The following provision was made subject to said condition:
9.
Engineering and Administrative Overhead. Not more than five percent (5%) of the amount for
infrastructure project released by the Department of Budget and Management shall be deducted by
DPWH for administrative overhead, detailed engineering and construction supervision, testing and
quality control, and the like, thus insuring that at least ninety-five percent (95%) of the released fund
is available for direct implementation of the project. PROVIDED, HOWEVER, That for school
buildings, health centers, day-care centers and barangay halls, the deductible amount shall not
exceed three percent (3%).
Violation of, or non-compliance with, this provision shall subject the government official or employee
concerned to administrative, civil and/or criminal sanction under Sections 43 and 80, Book VI of E.O.
No. 292 (GAA of 1994, p. 786).
(d)
In the appropriation for the National Housing Authority (NHA), the President imposed the
condition that allocations for specific projects shall be released and disbursed "in accordance with
the housing program of the government, subject to prior Executive approval."
The provision subject to the said condition reads:
3.
Allocations for Specified Projects. The following allocations for the specified projects shall be
set aside for corollary works and used exclusively for the repair, rehabilitation and construction of
buildings, roads, pathwalks, drainage, waterworks systems, facilities and amenities in the area:
PROVIDED, That any road to be constructed or rehabilitated shall conform with the specifications
and standards set by the Department of Public Works and Highways for such kind of road:
PROVIDED, FURTHER, That savings that may be available in the future shall be used for road
repair, rehabilitation and construction:
(1)
Maharlika Village Road Not less than P5,000,000
(2)
Tenement Housing Project (Taguig) Not less than P3,000,000

(3)
Bagong Lipunan Condominium Project (Taguig) Not less than P2,000,000
4.
Allocation of Funds. Out of the amount appropriated for the implementation of various
projects in resettlement areas, Seven Million Five Hundred Thousand Pesos (P7,500,000) shall be
allocated to the Dasmarias Bagong Bayan resettlement area, Eighteen Million Pesos
(P18,000,000) to the Carmona Relocation Center Area (Gen. Mariano Alvarez) and Three Million
Pesos (P3,000,000) to the Bulihan Sites and Services, all of which will be for the cementing of roads
in accordance with DPWH standards.
5.
Allocation for Sapang Palay. An allocation of Eight Million Pesos (P8,000,000) shall be set
aside for the asphalting of seven (7) kilometer main road of Sapang Palay, San Jose Del Monte,
Bulacan
(GAA of 1994, p. 1216).
The President imposed the conditions: (a) that the "operationalization" of the special provision on
revolving funds of the COA "shall be subject to guidelines to be issued by the President pursuant to
Section 35, Chapter 5,
Book VI of E.O. 292 and Sections 65 and 66 of P.D. No. 1445 in relation to Sections 2 and 3 of the
General Provisions of this Act" (Rollo, G.R.
No. 113174, pp. 5,7-8); (b) that the implementation of Special Provision No. 9 of the DPWH on the
mandatory retention of 5% and 3% of the amounts released by said Department "be subject to the
necessary administrative guidelines to be formulated by the Executive pursuant to existing law"
(Rollo, G.R. No. 113888; pp. 10, 14-16); and (c) that the appropriations authorized for the NHA can
be released only "in accordance with the housing program of the government subject to prior
Executive approval" (Rollo, G.R. No. 113888, pp. 10-11;
14-16).
The conditions objected to by petitioners are mere reminders that the implementation of the items on
which the said conditions were imposed, should be done in accordance with existing laws,
regulations or policies. They did not add anything to what was already in place at the time of the
approval of the GAA of 1994.
There is less basis to complain when the President said that the expenditures shall be subject to
guidelines he will issue. Until the guidelines are issued, it cannot be determined whether they are
proper or inappropriate. The issuance of administrative guidelines on the use of public funds
authorized by Congress is simply an exercise by the President of his constitutional duty to see that
the laws are faithfully executed (1987 Constitution, Art. VII, Sec. 17; Planas v. Gil 67 Phil. 62 [1939]).
Under the Faithful Execution Clause, the President has the power to take "necessary and proper
steps" to carry into execution the law (Schwartz, On Constitutional Law, p. 147 [1977]). These steps
are the ones to be embodied in the guidelines.
IV
Petitioners chose to avail of the special civil actions but those remedies can be used only when
respondents have acted "without or in excess" of jurisdiction, or "with grave abuse of discretion,"
(Revised Rules of Court,
Rule 65, Section 2). How can we begrudge the President for vetoing the Special Provision on the
appropriation for debt payment when he merely followed our decision in Gonzales? How can we say
that Congress has abused its discretion when it appropriated a bigger sum for debt payment than
the amount appropriated for education, when it merely followed our dictum in Guingona?
Article 8 of the Civil Code of Philippines, provides:
Judicial decisions applying or interpreting the laws or the constitution shall from a part of the legal
system of the Philippines.

The Court's interpretation of the law is part of that law as of the date of its enactment since the
court's interpretation merely establishes the contemporary legislative intent that the construed law
purports to carry into effect (People v. Licera, 65 SCRA 270 [1975]). Decisions of the Supreme Court
assume the same authority as statutes (Floresca v. Philex Mining Corporation, 136 SCRA 141
[1985]).
Even if Guingona and Gonzales are considered hard cases that make bad laws and should be
reversed, such reversal cannot nullify prior acts done in reliance thereof.
WHEREFORE, the petitions are DISMISSED, except with respect to
(1) G.R. Nos. 113105 and 113766 only insofar as they pray for the annulment of the veto of the
special provision on debt service specifying that the fund therein appropriated "shall be used for
payment of the principal and interest of foreign and domestic indebtedness" prohibiting the use of
the said funds "to pay for the liabilities of the Central Bank Board of Liquidators", and (2) G.R. No.
113888 only insofar as it prays for the annulment of the veto of: (a) the second paragraph of Special
Provision No. 2 of the item of appropriation for the Department of Public Works and Highways (GAA
of 1994, pp. 785-786); and (b) Special Provision No. 12 on the purchase of medicines by the Armed
Forces of the Philippines (GAA of 1994, p. 748), which is GRANTED.
SO ORDERED.

i. Effectivity of Laws
Tanada v. Tuvera, 136 SCRA 27
LORENZO M. TAADA, ABRAHAM F. SARMIENTO, and MOVEMENT OF
ATTORNEYS FOR BROTHERHOOD, INTEGRITY AND NATIONALISM, INC.
[MABINI], petitioners,
vs.
HON. JUAN C. TUVERA, in his capacity as Executive Assistant to the President,
HON. JOAQUIN VENUS, in his capacity as Deputy Executive Assistant to the
President , MELQUIADES P. DE LA CRUZ, in his capacity as Director, Malacaang
Records Office, and FLORENDO S. PABLO, in his capacity as Director, Bureau of
Printing, respondents.
ESCOLIN, J.:
Invoking the people's right to be informed on matters of public concern, a right
1

recognized in Section 6, Article IV of the 1973 Philippine Constitution, as well as the

principle that laws to be valid and enforceable must be published in the Official Gazette or
otherwise effectively promulgated, petitioners seek a writ of mandamus to compel respondent
public officials to publish, and/or cause the publication in the Official Gazette of various
presidential decrees, letters of instructions, general orders, proclamations, executive orders,
letter of implementation and administrative orders.
Specifically, the publication of the following presidential issuances is sought:
a] Presidential Decrees Nos. 12, 22, 37, 38, 59, 64, 103, 171, 179, 184, 197, 200, 234,
265, 286, 298, 303, 312, 324, 325, 326, 337, 355, 358, 359, 360, 361, 368, 404, 406,
415, 427, 429, 445, 447, 473, 486, 491, 503, 504, 521, 528, 551, 566, 573, 574, 594,
599, 644, 658, 661, 718, 731, 733, 793, 800, 802, 835, 836, 923, 935, 961, 1017-1030,

1050, 1060-1061, 1085, 1143, 1165, 1166, 1242, 1246, 1250, 1278, 1279, 1300, 1644,
1772, 1808, 1810, 1813-1817, 1819-1826, 1829-1840, 1842-1847.
b] Letter of Instructions Nos.: 10, 39, 49, 72, 107, 108, 116, 130, 136, 141, 150, 153,
155, 161, 173, 180, 187, 188, 192, 193, 199, 202, 204, 205, 209, 211-213, 215-224, 226228, 231-239, 241-245, 248, 251, 253-261, 263-269, 271-273, 275-283, 285-289, 291,
293, 297-299, 301-303, 309, 312-315, 325, 327, 343, 346, 349, 357, 358, 362, 367, 370,
382, 385, 386, 396-397, 405, 438-440, 444- 445, 473, 486, 488, 498, 501, 399, 527, 561,
576, 587, 594, 599, 600, 602, 609, 610, 611, 612, 615, 641, 642, 665, 702, 712-713,
726, 837-839, 878-879, 881, 882, 939-940, 964,997,1149-1178,1180-1278.
c] General Orders Nos.: 14, 52, 58, 59, 60, 62, 63, 64 & 65.
d] Proclamation Nos.: 1126, 1144, 1147, 1151, 1196, 1270, 1281, 1319-1526, 1529,
1532, 1535, 1538, 1540-1547, 1550-1558, 1561-1588, 1590-1595, 1594-1600, 16061609, 1612-1628, 1630-1649, 1694-1695, 1697-1701, 1705-1723, 1731-1734, 17371742, 1744, 1746-1751, 1752, 1754, 1762, 1764-1787, 1789-1795, 1797, 1800, 18021804, 1806-1807, 1812-1814, 1816, 1825-1826, 1829, 1831-1832, 1835-1836, 18391840, 1843-1844, 1846-1847, 1849, 1853-1858, 1860, 1866, 1868, 1870, 1876-1889,
1892, 1900, 1918, 1923, 1933, 1952, 1963, 1965-1966, 1968-1984, 1986-2028, 20302044, 2046-2145, 2147-2161, 2163-2244.
e] Executive Orders Nos.: 411, 413, 414, 427, 429-454, 457- 471, 474-492, 494-507,
509-510, 522, 524-528, 531-532, 536, 538, 543-544, 549, 551-553, 560, 563, 567-568,
570, 574, 593, 594, 598-604, 609, 611- 647, 649-677, 679-703, 705-707, 712-786, 788852, 854-857.
f] Letters of Implementation Nos.: 7, 8, 9, 10, 11-22, 25-27, 39, 50, 51, 59, 76, 80-81,
92, 94, 95, 107, 120, 122, 123.
g] Administrative Orders Nos.: 347, 348, 352-354, 360- 378, 380-433, 436-439.
The respondents, through the Solicitor General, would have this case dismissed outright
on the ground that petitioners have no legal personality or standing to bring the instant
petition. The view is submitted that in the absence of any showing that petitioners are
personally and directly affected or prejudiced by the alleged non-publication of the
2

presidential issuances in question

said petitioners are without the requisite legal
personality to institute this mandamus proceeding, they are not being "aggrieved parties"
within the meaning of Section 3, Rule 65 of the Rules of Court, which we quote:
SEC. 3.
Petition for Mandamus.When any tribunal, corporation, board or person
unlawfully neglects the performance of an act which the law specifically enjoins as a duty
resulting from an office, trust, or station, or unlawfully excludes another from the use a rd
enjoyment of a right or office to which such other is entitled, and there is no other plain,
speedy and adequate remedy in the ordinary course of law, the person aggrieved
thereby may file a verified petition in the proper court alleging the facts with certainty and
praying that judgment be rendered commanding the defendant, immediately or at some
other specified time, to do the act required to be done to Protect the rights of the
petitioner, and to pay the damages sustained by the petitioner by reason of the wrongful
acts of the defendant.
Upon the other hand, petitioners maintain that since the subject of the petition concerns
a public right and its object is to compel the performance of a public duty, they need not
show any specific interest for their petition to be given due course.

The issue posed is not one of first impression. As early as the 1910 case of Severino vs.
3

Governor General, this Court held that while the general rule is that "a writ of mandamus
would be granted to a private individual only in those cases where he has some private or
particular interest to be subserved, or some particular right to be protected, independent of
that which he holds with the public at large," and "it is for the public officers exclusively to
apply for the writ when public rights are to be subserved [Mithchell vs. Boardmen, 79 M.e.,
469]," nevertheless, "when the question is one of public right and the object of the mandamus
is to procure the enforcement of a public duty, the people are regarded as the real party in
interest and the relator at whose instigation the proceedings are instituted need not show that
he has any legal or special interest in the result, it being sufficient to show that he is a citizen
and as such interested in the execution of the laws [High, Extraordinary Legal Remedies, 3rd
ed., sec. 431].
Thus, in said case, this Court recognized the relator Lope Severino, a private individual,
as a proper party to the mandamus proceedings brought to compel the Governor
General to call a special election for the position of municipal president in the town of
Silay, Negros Occidental. Speaking for this Court, Mr. Justice Grant T. Trent said:
We are therefore of the opinion that the weight of authority supports the proposition that
the relator is a proper party to proceedings of this character when a public right is sought
to be enforced. If the general rule in America were otherwise, we think that it would not
be applicable to the case at bar for the reason 'that it is always dangerous to apply a
general rule to a particular case without keeping in mind the reason for the rule, because,
if under the particular circumstances the reason for the rule does not exist, the rule itself
is not applicable and reliance upon the rule may well lead to error'
No reason exists in the case at bar for applying the general rule insisted upon by counsel
for the respondent. The circumstances which surround this case are different from those
in the United States, inasmuch as if the relator is not a proper party to these proceedings
no other person could be, as we have seen that it is not the duty of the law officer of the
Government to appear and represent the people in cases of this character.
The reasons given by the Court in recognizing a private citizen's legal personality in the
aforementioned case apply squarely to the present petition. Clearly, the right sought to
be enforced by petitioners herein is a public right recognized by no less than the
fundamental law of the land. If petitioners were not allowed to institute this proceeding, it
would indeed be difficult to conceive of any other person to initiate the same, considering
that the Solicitor General, the government officer generally empowered to represent the
people, has entered his appearance for respondents in this case.
Respondents further contend that publication in the Official Gazette is not a sine qua non
requirement for the effectivity of laws where the laws themselves provide for their own
effectivity dates. It is thus submitted that since the presidential issuances in question
contain special provisions as to the date they are to take effect, publication in the Official
Gazette is not indispensable for their effectivity. The point stressed is anchored on Article
2 of the Civil Code:
Art. 2.
Laws shall take effect after fifteen days following the completion of their
publication in the Official Gazette, unless it is otherwise provided, ...
The interpretation given by respondent is in accord with this Court's construction of said
4

article. In a long line of decisions, this Court has ruled that publication in the Official
Gazette is necessary in those cases where the legislation itself does not provide for its

effectivity date-for then the date of publication is material for determining its date of effectivity,
which is the fifteenth day following its publication-but not when the law itself provides for the
date when it goes into effect.

Respondents' argument, however, is logically correct only insofar as it equates the

effectivity of laws with the fact of publication. Considered in the light of other statutes
applicable to the issue at hand, the conclusion is easily reached that said Article 2 does
not preclude the requirement of publication in the Official Gazette, even if the law itself
provides for the date of its effectivity. Thus, Section 1 of Commonwealth Act 638 provides
as follows:
Section 1. There shall be published in the Official Gazette [1] all important legisiative
acts and resolutions of a public nature of the, Congress of the Philippines; [2] all
executive and administrative orders and proclamations, except such as have no general
applicability; [3] decisions or abstracts of decisions of the Supreme Court and the Court
of Appeals as may be deemed by said courts of sufficient importance to be so published;
[4] such documents or classes of documents as may be required so to be published by
law; and [5] such documents or classes of documents as the President of the Philippines
shall determine from time to time to have general applicability and legal effect, or which
he may authorize so to be published. ...
The clear object of the above-quoted provision is to give the general public adequate
notice of the various laws which are to regulate their actions and conduct as citizens.
Without such notice and publication, there would be no basis for the application of the
maxim "ignorantia legis non excusat." It would be the height of injustice to punish or
otherwise burden a citizen for the transgression of a law of which he had no notice
whatsoever, not even a constructive one.
Perhaps at no time since the establishment of the Philippine Republic has the publication
of laws taken so vital significance that at this time when the people have bestowed upon
the President a power heretofore enjoyed solely by the legislature. While the people are
kept abreast by the mass media of the debates and deliberations in the Batasan
Pambansaand for the diligent ones, ready access to the legislative recordsno such
publicity accompanies the law-making process of the President. Thus, without
publication, the people have no means of knowing what presidential decrees have
actually been promulgated, much less a definite way of informing themselves of the
specific contents and texts of such decrees. As the Supreme Court of Spain ruled: "Bajo
la denominacion generica de leyes, se comprenden tambien los reglamentos, Reales
decretos, Instrucciones, Circulares y Reales ordines dictadas de conformidad con las
5

mismas por el Gobierno en uso de su potestad.

The very first clause of Section I of Commonwealth Act 638 reads: "There shall be
published in the Official Gazette ... ." The word "shall" used therein imposes upon
respondent officials an imperative duty. That duty must be enforced if the Constitutional
right of the people to be informed on matters of public concern is to be given substance
and reality. The law itself makes a list of what should be published in the Official Gazette.
Such listing, to our mind, leaves respondents with no discretion whatsoever as to what
must be included or excluded from such publication.
The publication of all presidential issuances "of a public nature" or "of general
applicability" is mandated by law. Obviously, presidential decrees that provide for fines,
forfeitures or penalties for their violation or otherwise impose a burden or. the people,

such as tax and revenue measures, fall within this category. Other presidential issuances
which apply only to particular persons or class of persons such as administrative and
executive orders need not be published on the assumption that they have been
6

circularized to all concerned.

It is needless to add that the publication of presidential issuances "of a public nature" or
"of general applicability" is a requirement of due process. It is a rule of law that before a
person may be bound by law, he must first be officially and specifically informed of its
7

contents. As Justice Claudio Teehankee said in Peralta vs. COMELEC :

In a time of proliferating decrees, orders and letters of instructions which all form part of
the law of the land, the requirement of due process and the Rule of Law demand that the
Official Gazette as the official government repository promulgate and publish the texts of
all such decrees, orders and instructions so that the people may know where to obtain
their official and specific contents.
The Court therefore declares that presidential issuances of general application, which
have not been published, shall have no force and effect. Some members of the Court,
quite apprehensive about the possible unsettling effect this decision might have on acts
done in reliance of the validity of those presidential decrees which were published only
during the pendency of this petition, have put the question as to whether the Court's
declaration of invalidity apply to P.D.s which had been enforced or implemented prior to
their publication. The answer is all too familiar. In similar situations in the past this Court
had taken the pragmatic and realistic course set forth in Chicot County Drainage District
8

vs. Baxter Bank to wit:

The courts below have proceeded on the theory that the Act of Congress, having been
found to be unconstitutional, was not a law; that it was inoperative, conferring no rights
and imposing no duties, and hence affording no basis for the challenged decree. Norton
v. Shelby County, 118 U.S. 425, 442; Chicago, 1. & L. Ry. Co. v. Hackett, 228 U.S. 559,
566. It is quite clear, however, that such broad statements as to the effect of a
determination of unconstitutionality must be taken with qualifications. The actual
existence of a statute, prior to such a determination, is an operative fact and may have
consequences which cannot justly be ignored. The past cannot always be erased by a
new judicial declaration. The effect of the subsequent ruling as to invalidity may have to
be considered in various aspects-with respect to particular conduct, private and official.
Questions of rights claimed to have become vested, of status, of prior determinations
deemed to have finality and acted upon accordingly, of public policy in the light of the
nature both of the statute and of its previous application, demand examination. These
questions are among the most difficult of those which have engaged the attention of
courts, state and federal and it is manifest from numerous decisions that an all-inclusive
statement of a principle of absolute retroactive invalidity cannot be justified.
9

Consistently with the above principle, this Court in Rutter vs. Esteban sustained the right
of a party under the Moratorium Law, albeit said right had accrued in his favor before said law
was declared unconstitutional by this Court.
Similarly, the implementation/enforcement of presidential decrees prior to their
publication in the Official Gazette is "an operative fact which may have consequences
which cannot be justly ignored. The past cannot always be erased by a new judicial

declaration ... that an all-inclusive statement of a principle of absolute retroactive

invalidity cannot be justified."
From the report submitted to the Court by the Clerk of Court, it appears that of the
presidential decrees sought by petitioners to be published in the Official Gazette, only
Presidential Decrees Nos. 1019 to 1030, inclusive, 1278, and 1937 to 1939, inclusive,
10

have not been so published.

Neither the subject matters nor the texts of these PDs can
be ascertained since no copies thereof are available. But whatever their subject matter may
be, it is undisputed that none of these unpublished PDs has ever been implemented or
11

enforced by the government. In Pesigan vs. Angeles,

the Court, through Justice Ramon
Aquino, ruled that "publication is necessary to apprise the public of the contents of [penal]
regulations and make the said penalties binding on the persons affected thereby. " The
cogency of this holding is apparently recognized by respondent officials considering the
manifestation in their comment that "the government, as a matter of policy, refrains from
prosecuting violations of criminal laws until the same shall have been published in the Official
Gazette or in some other publication, even though some criminal laws provide that they shall
take effect immediately.

WHEREFORE, the Court hereby orders respondents to publish in the Official Gazette all
unpublished presidential issuances which are of general application, and unless so
published, they shall have no binding force and effect.
SO ORDERED.
Relova, J., concurs.
Aquino, J., took no part.
Concepcion, Jr., J., is on leave.

E.O. 200, 18 June 1987

EXECUTIVE ORDER NO. 200
PROVIDING FOR THE PUBLICATION OF LAWS EITHER IN THE
OFFICIAL GAZETTE OR

IN A NEWSPAPER

OF GENERAL

CIRCULATION IN THE PHILIPPINES AS A REQUIREMENT FOR

THEIR EFFECTIVITY.
WHEREAS, Article 2 of the Civil Code partly provides that laws shall
take effect after fifteen days following the completion of their
publication in the Official Gazette, unless it is otherwise provided x x
x;
WHEREAS, the requirement that for laws to be effective only a
publication thereof in the Official Gazette will suffice has entailed

some problems, a point recognized by the Supreme Court in Taada,

et al. vs. Tuvera, et al. (G.R. No. 63915, December 29, 1986), when
it observed that [t]here is much to be said of the view that the
publication need not be made in the Official Gazette, considering its
erratic release and limited readership;
WHEREAS,

it

was

likewise

observed

that

[u]ndoubtedly,

newspapers of general circulation could better perform the function

of communicating the laws to the people as such periodicals are
more easily available, have a wider readership, and come out
regularly; and
WHEREAS, in view of the foregoing premises Article 2 of the Civil
Code should accordingly be amended so the laws to be effective
must be published either in the Official Gazette or in a newspaper of
general circulation in the country;
NOW, THEREFORE, I, CORAZON C. AQUINO, President of the
Philippines, by virtue of the powers vested in me by the
Constitution, do hereby order:
SECTION 1. Laws shall take effect after fifteen days following the
completion of their publication either in the Official Gazette or in a
newspaper of general circulation in the Philippines, unless it is
otherwise provided.
SEC. 2. Article 2 of Republic Act No. 386, otherwise known as the
Civil Code of the Philippines, and all other laws inconsistent with
this Executive Order are hereby repealed or modified accordingly.
SEC. 3. This Executive Order shall take effect immediately after its
publication in the Official Gazette.

Done in the City of Manila, this 18th day of June, in the year of Our
Lord, nineteen hundred and eighty-seven.

PVB Employees v. Hon. Vera, G.R. No. 105364, 28 June 2001

PHILIPPINE VETERANS BANK EMPLOYEES UNION-N.U.B.E. and PERFECTO V. FERNANDEZ,
petitioners,
vs.
HONORABLE BENJAMIN VEGA, Presiding Judge of Branch 39 of the REGIONAL TRIAL
COURT of Manila, the CENTRAL BANK OF THE PHILIPPINES and THE LIQUIDATOR OF THE
PHILIPPINE VETERANS BANK,respondents
KAPUNAN, J.:
May a liquidation court continue with liquidation proceedings of the Philippine Veterans Bank (PVB)
when Congress had mandated its rehabilitation and reopening?
This is the sole issue raised in the instant Petition for Prohibition with Petition for Preliminary
Injunction and application for Ex Parte Temporary Restraining Order.
The antecedent facts of the case are as follows:
Sometime in 1985, the Central Bank of the Philippines (Central Bank, for brevity) filed with Branch
39 of the Regional Trial Court of Manila a Petition for Assistance in the Liquidation of the Philippine
Veterans Bank, the same docketed as Case No. SP-32311. Thereafter, the Philipppine Veterans
Bank Employees Union-N.U.B.E., herein petitioner, represented by petitioner Perfecto V. Fernandez,
1

filed claims for accrued and unpaid employee wages and benefits with said court in SP-32311.
After lengthy proceedings, partial payment of the sums due to the employees were made. However,
2

due to the piecemeal hearings on the benefits, many remain unpaid.

On March 8, 1991, petitioners moved to disqualify the respondent judge from hearing the above
3

case on grounds of bias and hostility towards petitioners.

On January 2, 1992, the Congress enacted Republic Act No. 7169 providing for the rehabilitation of
4

the Philippine Veterans Bank.

Thereafter, petitioners filed with the labor tribunals their residual claims for benefits and for
5

reinstatement upon reopening of the bank.

Sometime in May 1992, the Central Bank issued a certificate of authority allowing the PVB to
6

reopen.
Despite the legislative mandate for rehabilitation and reopening of PVB, respondent judge continued
with the liquidation proceedings of the bank. Moreover, petitioners learned that respondents were set
to order the payment and release of employee benefits upon motion of another lawyer, while
petitioners claims have been frozen to their prejudice.
Hence, the instant petition.
Petitioners argue that with the passage of R.A. 7169, the liquidation court became functus officio,
and no longer had the authority to continue with liquidation proceedings.

In a Resolution, dated June 8, 1992, the Supreme Court resolved to issue a Temporary Restraining
Order enjoining the trial court from further proceeding with the case.
On June 22, 1992, VOP Security & Detective Agency (VOPSDA) and its 162 security guards filed a
Motion for Intervention with prayer that they be excluded from the operation of the Temporary
Restraining Order issued by the Court. They alleged that they had filed a motion before Branch 39 of
the RTC of Manila, in SP-No. 32311, praying that said court order PVB to pay their backwages and
salary differentials by authority of R.A. No 6727, Wage Orders No. NCR-01 and NCR-01-Ad and
Wage Orders No. NCR-02 and NCR-02-A; and, that said court, in an Order dated June 5, 1992,
approved therein movants case and directed the bank liquidator or PVB itself to pay the backwages
and differentials in accordance with the computation incorporated in the order. Said intervenors
likewise manifested that there was an error in the computation of the monetary benefits due them.
On August 18, 1992, petitioners, pursuant to the Resolution of this Court, dated July 6, 1992, filed
their Comment opposing the Motion for Leave to File Intervention and for exclusion from the
operation of the T.R.O. on the grounds that the movants have no legal interest in the subject matter
of the pending action; that allowing intervention would only cause delay in the proceedings; and that
the motion to exclude the movants from the T.R.O. is without legal basis and would render moot the
relief sought in the petition.
On September 3, 1992, the PVB filed a Petition-In-Intervention praying for the issuance of the writs
of certiorari and prohibition under Rule 65 of the Rules of Court in connection with the issuance by
respondent judge of several orders involving acts of liquidation of PVB even after the effectivity of
R.A. No. 7169. PVB further alleges that respondent judge clearly acted in excess of or without
jurisdiction when he issued the questioned orders.
We find for the petitioners.
Republic Act No. 7169 entitled "An Act To Rehabilitate The Philippine Veterans Bank Created Under
Republic Act No. 3518, Providing The Mechanisms Therefor, And For Other Purposes", which was
signed into law by President Corazon C. Aquino on January 2, 1992 and which was published in the
Official Gazette on February 24, 1992, provides in part for the reopening of the Philippine Veterans
Bank together with all its branches within the period of three (3) years from the date of the reopening
7

of the head office. The law likewise provides for the creation of a rehabilitation committee in order to
8

facilitate the implementation of the provisions of the same.

Pursuant to said R.A. No. 7169, the Rehabilitation Committee submitted the proposed Rehabilitation
Plan of the PVB to the Monetary Board for its approval. Meanwhile, PVB filed a Motion to Terminate
Liquidation of Philippine Veterans Bank dated March 13, 1992 with the respondent judge praying
that the liquidation proceedings be immediately terminated in view of the passage of R.A. No. 7169.
On April 10, 1992, the Monetary Board issued Monetary Board Resolution No. 348 which approved
the Rehabilitation Plan submitted by the Rehabilitaion Committee.
Thereafter, the Monetary Board issued a Certificate of Authority allowing PVB to reopen.
On June 3, 1992, the liquidator filed A Motion for the Termination of the Liquidation Proceedings of
the Philippine Veterans Bank with the respondent judge.
As stated above, the Court, in a Resolution dated June 8, 1992, issued a temporary restraining order
in the instant case restraining respondent judge from further proceeding with the liquidation of PVB.
On August 3, 1992, the Philippine Veterans Bank opened its doors to the public and started regular
banking operations.

Clearly, the enactment of Republic Act No. 7169, as well as the subsequent developments has
rendered the liquidation court functus officio. Consequently, respondent judge has been stripped of
the authority to issue orders involving acts of liquidation.
9

Liquidation, in corporation law, connotes a winding up or settling with creditors and debtors. It is the
winding up of a corporation so that assets are distributed to those entitled to receive them. It is the
process of reducing assets to cash, discharging liabilities and dividing surplus or loss.
On the opposite end of the spectrum is rehabilitation which connotes a reopening or reorganization.
Rehabilitation contemplates a continuance of corporate life and activities in an effort to restore and
10

reinstate the corporation to its former position of successful operation and solvency.
It is crystal clear that the concept of liquidation is diametrically opposed or contrary to the concept of
rehabilitation, such that both cannot be undertaken at the same time. To allow the liquidation
proceedings to continue would seriously hinder the rehabilitation of the subject bank.
Anent the claim of respondents Central Bank and Liquidator of PVB that R.A. No. 7169 became
effective only on March 10, 1992 or fifteen (15) days after its publication in the Official Gazette; and,
the contention of intervenors VOP Security, et. al. that the effectivity of said law is conditioned on the
approval of a rehabilitation plan by the Monetary Board, among others, the Court is of the view that
both contentions are bereft of merit.
While as a rule, laws take effect after fifteen (15) days following the completion of their publication in
the Official Gazette or in a newspaper of general circulation in the Philippines, the legislature has the
authority to provide for exceptions, as indicated in the clause "unless otherwise provided."
In the case at bar, Section 10 of R.A. No. 7169 provides:
Sec. 10. Effectivity. - This Act shall take effect upon its approval.
Hence, it is clear that the legislature intended to make the law effective immediately upon its
approval. It is undisputed that R.A. No. 7169 was signed into law by President Corazon C. Aquino on
January 2, 1992. Therefore, said law became effective on said date.
Assuming for the sake of argument that publication is necessary for the effectivity of R.A. No. 7169,
then it became legally effective on February 24, 1992, the date when the same was published in the
Official Gazette, and not on March 10, 1992, as erroneously claimed by respondents Central Bank
and Liquidator.
WHEREFORE, in view of the foregoing, the instant petition is hereby GIVEN DUE COURSE and
GRANTED. Respondent Judge is hereby PERMANENTLY ENJOINED from further proceeding with
Civil Case No. SP- 32311.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Puno, Pardo, and Ynares-Santiago, JJ., concur.