1

FREEDOM OF RELIGION declaring the said Municipal Ordinance No. 3000, as amended, and
Ordinances Nos. 2529, 3028 and 3364 illegal and unconstitutional, and that
the defendant be ordered to refund to the plaintiff the sum of P5,891.45 paid
under protest, together with legal interest thereon, and the costs, plaintiff
further praying for such other relief and remedy as the court may deem just
G.R. No. L-9637 April 30, 1957 equitable.

AMERICAN BIBLE SOCIETY, plaintiff-appellant, Defendant answered the complaint, maintaining in turn that said ordinances
vs. were enacted by the Municipal Board of the City of Manila by virtue of the
CITY OF MANILA, defendant-appellee. power granted to it by section 2444, subsection (m-2) of the Revised
Administrative Code, superseded on June 18, 1949, by section 18,
City Fiscal Eugenio Angeles and Juan Nabong for appellant. subsection (1) of Republic Act No. 409, known as the Revised Charter of the
Assistant City Fiscal Arsenio Nañawa for appellee. City of Manila, and praying that the complaint be dismissed, with costs
against plaintiff. This answer was replied by the plaintiff reiterating the
FELIX, J.: unconstitutionality of the often-repeated ordinances.

Plaintiff-appellant is a foreign, non-stock, non-profit, religious, missionary Before trial the parties submitted the following stipulation of facts:
corporation duly registered and doing business in the Philippines through its
Philippine agency established in Manila in November, 1898, with its principal COME NOW the parties in the above-entitled case, thru their
office at 636 Isaac Peral in said City. The defendant appellee is a municipal undersigned attorneys and respectfully submit the following
corporation with powers that are to be exercised in conformity with the stipulation of facts:
provisions of Republic Act No. 409, known as the Revised Charter of the City
of Manila. 1. That the plaintiff sold for the use of the purchasers at its principal
office at 636 Isaac Peral, Manila, Bibles, New Testaments, bible
In the course of its ministry, plaintiff's Philippine agency has been portions and bible concordance in English and other foreign
distributing and selling bibles and/or gospel portions thereof (except during languages imported by it from the United States as well as Bibles,
the Japanese occupation) throughout the Philippines and translating the New Testaments and bible portions in the local dialects imported
same into several Philippine dialects. On May 29 1953, the acting City and/or purchased locally; that from the fourth quarter of 1945 to the
Treasurer of the City of Manila informed plaintiff that it was conducting the first quarter of 1953 inclusive the sales made by the plaintiff were as
business of general merchandise since November, 1945, without providing follows:
itself with the necessary Mayor's permit and municipal license, in violation of
Ordinance No. 3000, as amended, and Ordinances Nos. 2529, 3028 and
3364, and required plaintiff to secure, within three days, the corresponding Quarter Amount of Sales
permit and license fees, together with compromise covering the period from
the 4th quarter of 1945 to the 2nd quarter of 1953, in the total sum of 4th quarter 1945 P1,244.21
P5,821.45 (Annex A).
1st quarter 1946 2,206.85
Plaintiff protested against this requirement, but the City Treasurer demanded
2nd quarter 1946 1,950.38
that plaintiff deposit and pay under protest the sum of P5,891.45, if suit was
to be taken in court regarding the same (Annex B). To avoid the closing of its
3rd quarter 1946 2,235.99
business as well as further fines and penalties in the premises on October
24, 1953, plaintiff paid to the defendant under protest the said permit and
4th quarter 1946 3,256.04
license fees in the aforementioned amount, giving at the same time notice to
the City Treasurer that suit would be taken in court to question the legality
1st quarter 1947 13,241.07
of the ordinances under which, the said fees were being collected (Annex C),
which was done on the same date by filing the complaint that gave rise to
2nd quarter 1947 15,774.55
this action. In its complaint plaintiff prays that judgment be rendered
 2

2. That the parties hereby reserve the right to present evidence of

3rd quarter 1947 14,654.13
other facts not herein stipulated.
4th quarter 1947 12,590.94
WHEREFORE, it is respectfully prayed that this case be set for
1st quarter 1948 11,143.90 hearing so that the parties may present further evidence on their
behalf. (Record on Appeal, pp. 15-16).
2nd quarter 1948 14,715.26
When the case was set for hearing, plaintiff proved, among other things, that
3rd quarter 1948 38,333.83 it has been in existence in the Philippines since 1899, and that its parent
society is in New York, United States of America; that its, contiguous real
4th quarter 1948 16,179.90 properties located at Isaac Peral are exempt from real estate taxes; and that it
was never required to pay any municipal license fee or tax before the war, nor
1st quarter 1949 23,975.10 does the American Bible Society in the United States pay any license fee or
sales tax for the sale of bible therein. Plaintiff further tried to establish that it
2nd quarter 1949 17,802.08 never made any profit from the sale of its bibles, which are disposed of for as
low as one third of the cost, and that in order to maintain its operating cost it
3rd quarter 1949 16,640.79 obtains substantial remittances from its New York office and voluntary
contributions and gifts from certain churches, both in the United States and
4th quarter 1949 15,961.38 in the Philippines, which are interested in its missionary work. Regarding
plaintiff's contention of lack of profit in the sale of bibles, defendant retorts
1st quarter 1950 18,562.46 that the admissions of plaintiff-appellant's lone witness who testified on
cross-examination that bibles bearing the price of 70 cents each from
2nd quarter 1950 21,816.32 plaintiff-appellant's New York office are sold here by plaintiff-appellant at
P1.30 each; those bearing the price of $4.50 each are sold here at P10 each;
3rd quarter 1950 25,004.55 those bearing the price of $7 each are sold here at P15 each; and those
bearing the price of $11 each are sold here at P22 each, clearly show that
4th quarter 1950 45,287.92 plaintiff's contention that it never makes any profit from the sale of its bible,
is evidently untenable.
1st quarter 1951 37,841.21
After hearing the Court rendered judgment, the last part of which is as
2nd quarter 1951 29,103.98
follows:
3rd quarter 1951 20,181.10
As may be seen from the repealed section (m-2) of the Revised
4th quarter 1951 22,968.91 Administrative Code and the repealing portions (o) of section 18 of
Republic Act No. 409, although they seemingly differ in the way the
1st quarter 1952 23,002.65 legislative intent is expressed, yet their meaning is practically the
same for the purpose of taxing the merchandise mentioned in said
2nd quarter 1952 17,626.96 legal provisions, and that the taxes to be levied by said ordinances is
in the nature of percentage graduated taxes (Sec. 3 of Ordinance No.
3rd quarter 1952 17,921.01 3000, as amended, and Sec. 1, Group 2, of Ordinance No. 2529, as
amended by Ordinance No. 3364).
4th quarter 1952 24,180.72
IN VIEW OF THE FOREGOING CONSIDERATIONS, this Court is of
1st quarter 1953 29,516.21 the opinion and so holds that this case should be dismissed, as it is
hereby dismissed, for lack of merits, with costs against the plaintiff.

Not satisfied with this verdict plaintiff took up the matter to the Court of
Appeals which certified the case to Us for the reason that the errors assigned
to the lower Court involved only questions of law.
Appellant contends that the lower Court erred:
1. In holding that Ordinances Nos. 2529 and 3000, as respectively
amended, are not unconstitutional;
2. In holding that subsection m-2 of Section 2444 of the Revised
Administrative Code under which Ordinances Nos. 2592 and 3000
were promulgated, was not repealed by Section 18 of Republic Act
No. 409;
3. In not holding that an ordinance providing for taxes based on
gross sales or receipts, in order to be valid under the new Charter of
the City of Manila, must first be approved by the President of the
Philippines; and
4. In holding that, as the sales made by the plaintiff-appellant have
assumed commercial proportions, it cannot escape from the
operation of said municipal ordinances under the cloak of religious
privilege.
The issues. — As may be seen from the proceeding statement of the case, the
issues involved in the present controversy may be reduced to the following:
(1) whether or not the ordinances of the City of Manila, Nos. 3000, as
amended, and 2529, 3028 and 3364, are constitutional and valid; and (2)
whether the provisions of said ordinances are applicable or not to the case at
bar.
Section 1, subsection (7) of Article III of the Constitution of the Republic of
the Philippines, provides that:
(7) No law shall be made respecting an establishment of religion, or
prohibiting the free exercise thereof, and the free exercise and
enjoyment of religious profession and worship, without
discrimination or preference, shall forever be allowed. No religion test
shall be required for the exercise of civil or political rights.
Predicated on this constitutional mandate, plaintiff-appellant contends that
Ordinances Nos. 2529 and 3000, as respectively amended, are
unconstitutional and illegal in so far as its society is concerned, because they
provide for religious censorship and restrain the free exercise and enjoyment
3
of its religious profession, to wit: the distribution and sale of bibles and other
religious literature to the people of the Philippines.
Before entering into a discussion of the constitutional aspect of the case, We
shall first consider the provisions of the questioned ordinances in relation to
their application to the sale of bibles, etc. by appellant. The records, show
that by letter of May 29, 1953 (Annex A), the City Treasurer required plaintiff
to secure a Mayor's permit in connection with the society's alleged business
of distributing and selling bibles, etc. and to pay permit dues in the sum of
P35 for the period covered in this litigation, plus the sum of P35 for
compromise on account of plaintiff's failure to secure the permit required by
Ordinance No. 3000 of the City of Manila, as amended. This Ordinance is of
general application and not particularly directed against institutions like the
plaintiff, and it does not contain any provisions whatever prescribing
religious censorship nor restraining the free exercise and enjoyment of any
religious profession. Section 1 of Ordinance No. 3000 reads as follows:
SEC. 1. PERMITS NECESSARY. — It shall be unlawful for any
person or entity to conduct or engage in any of the businesses,
trades, or occupations enumerated in Section 3 of this Ordinance or
other businesses, trades, or occupations for which a permit is required
for the proper supervision and enforcement of existing laws and
ordinances governing the sanitation, security, and welfare of the
public and the health of the employees engaged in the business
specified in said section 3 hereof, WITHOUT FIRST HAVING
OBTAINED A PERMIT THEREFOR FROM THE MAYOR AND THE
NECESSARY LICENSE FROM THE CITY TREASURER.
The business, trade or occupation of the plaintiff involved in this case is not
particularly mentioned in Section 3 of the Ordinance, and the record does
not show that a permit is required therefor under existing laws and
ordinances for the proper supervision and enforcement of their provisions
governing the sanitation, security and welfare of the public and the health of
the employees engaged in the business of the plaintiff. However, sections 3 of
Ordinance 3000 contains item No. 79, which reads as follows:
79. All other businesses, trades or occupations not
mentioned in this Ordinance, except those upon which the
City is not empowered to license or to tax P5.00
Therefore, the necessity of the permit is made to depend upon the power of
the City to license or tax said business, trade or occupation.
As to the license fees that the Treasurer of the City of Manila required the
society to pay from the 4th quarter of 1945 to the 1st quarter of 1953 in the
sum of P5,821.45, including the sum of P50 as compromise, Ordinance No.

2529, as amended by Ordinances Nos. 2779, 2821 and 3028 prescribes the
following:
SEC. 1. FEES. — Subject to the provisions of section 578 of the
Revised Ordinances of the City of Manila, as amended, there shall be
paid to the City Treasurer for engaging in any of the businesses or
occupations below enumerated, quarterly, license fees based on
gross sales or receipts realized during the preceding quarter in
accordance with the rates herein prescribed: PROVIDED, HOWEVER,
That a person engaged in any businesses or occupation for the first
time shall pay the initial license fee based on the probable gross
sales or receipts for the first quarter beginning from the date of the
opening of the business as indicated herein for the corresponding
business or occupation.
xxx xxx xxx
GROUP 2. — Retail dealers in new (not yet used) merchandise, which
dealers are not yet subject to the payment of any municipal tax, such
as (1) retail dealers in general merchandise; (2) retail dealers
exclusively engaged in the sale of . . . books, including stationery.
xxx xxx xxx
As may be seen, the license fees required to be paid quarterly in Section 1 of
said Ordinance No. 2529, as amended, are not imposed directly upon any
religious institution but upon those engaged in any of the business or
occupations therein enumerated, such as retail "dealers in general
merchandise" which, it is alleged, cover the business or occupation of selling
bibles, books, etc.
Chapter 60 of the Revised Administrative Code which includes section 2444,
subsection (m-2) of said legal body, as amended by Act No. 3659, approved
on December 8, 1929, empowers the Municipal Board of the City of Manila:
(M-2) To tax and fix the license fee on (a) dealers in new automobiles
or accessories or both, and (b) retail dealers in new (not yet used)
merchandise, which dealers are not yet subject to the payment of
any municipal tax.
For the purpose of taxation, these retail dealers shall be classified as
(1) retail dealers in general merchandise, and (2) retail dealers
exclusively engaged in the sale of (a) textiles . . . (e) books, including
stationery, paper and office supplies, . . .: PROVIDED,
HOWEVER, That the combined total tax of any debtor or
manufacturer, or both, enumerated under these subsections (m-1) and
4
(m-2), whether dealing in one or all of the articles mentioned herein,
SHALL NOT BE IN EXCESS OF FIVE HUNDRED PESOS PER ANNUM.
and appellee's counsel maintains that City Ordinances Nos. 2529 and 3000,
as amended, were enacted in virtue of the power that said Act No. 3669
conferred upon the City of Manila. Appellant, however, contends that said
ordinances are longer in force and effect as the law under which they were
promulgated has been expressly repealed by Section 102 of Republic Act No.
409 passed on June 18, 1949, known as the Revised Manila Charter.
Passing upon this point the lower Court categorically stated that Republic
Act No. 409 expressly repealed the provisions of Chapter 60 of the Revised
Administrative Code but in the opinion of the trial Judge, although Section
2444 (m-2) of the former Manila Charter and section 18 (o) of the new
seemingly differ in the way the legislative intent was expressed, yet their
meaning is practically the same for the purpose of taxing the merchandise
mentioned in both legal provisions and, consequently, Ordinances Nos. 2529
and 3000, as amended, are to be considered as still in full force and effect
uninterruptedly up to the present.
Often the legislature, instead of simply amending the pre-existing
statute, will repeal the old statute in its entirety and by the same
enactment re-enact all or certain portions of the preexisting law. Of
course, the problem created by this sort of legislative action involves
mainly the effect of the repeal upon rights and liabilities which
accrued under the original statute. Are those rights and liabilities
destroyed or preserved? The authorities are divided as to the effect of
simultaneous repeals and re-enactments. Some adhere to the view
that the rights and liabilities accrued under the repealed act are
destroyed, since the statutes from which they sprang are actually
terminated, even though for only a very short period of time. Others,
and they seem to be in the majority, refuse to accept this view of the
situation, and consequently maintain that all rights an liabilities which
have accrued under the original statute are preserved and may be
enforced, since the re-enactment neutralizes the repeal, therefore,
continuing the law in force without interruption. (Crawford-Statutory
Construction, Sec. 322).
Appellant's counsel states that section 18 (o) of Republic Act No, 409
introduces a new and wider concept of taxation and is different from the
provisions of Section 2444(m-2) that the former cannot be considered as a
substantial re-enactment of the provisions of the latter. We have quoted
above the provisions of section 2444(m-2) of the Revised Administrative Code
and We shall now copy hereunder the provisions of Section 18, subdivision
(o) of Republic Act No. 409, which reads as follows:

(o) To tax and fix the license fee on dealers in general merchandise,
including importers and indentors, except those dealers who may be
expressly subject to the payment of some other municipal tax under
the provisions of this section.
Dealers in general merchandise shall be classified as (a) wholesale
dealers and (b) retail dealers. For purposes of the tax on retail
dealers, general merchandise shall be classified into four main
classes: namely (1) luxury articles, (2) semi-luxury articles, (3)
essential commodities, and (4) miscellaneous articles. A separate
license shall be prescribed for each class but where commodities of
different classes are sold in the same establishment, it shall not be
compulsory for the owner to secure more than one license if he pays
the higher or highest rate of tax prescribed by ordinance. Wholesale
dealers shall pay the license tax as such, as may be provided by
ordinance.
For purposes of this section, the term "General merchandise" shall
include poultry and livestock, agricultural products, fish and other
allied products.
The only essential difference that We find between these two provisions that
may have any bearing on the case at bar, is that, while subsection (m-2)
prescribes that the combined total tax of any dealer or manufacturer, or
both, enumerated under subsections (m-1) and (m-2), whether dealing in one
or all of the articles mentioned therein, shall not be in excess of P500 per
annum, the corresponding section 18, subsection (o) of Republic Act No. 409,
does not contain any limitation as to the amount of tax or license fee that the
retail dealer has to pay per annum. Hence, and in accordance with the
weight of the authorities above referred to that maintain that "all rights and
liabilities which have accrued under the original statute are preserved and
may be enforced, since the reenactment neutralizes the repeal, therefore
continuing the law in force without interruption", We hold that the
questioned ordinances of the City of Manila are still in force and effect.
Plaintiff, however, argues that the questioned ordinances, to be valid, must
first be approved by the President of the Philippines as per section 18,
subsection (ii) of Republic Act No. 409, which reads as follows:
(ii) To tax, license and regulate any business, trade or occupation
being conducted within the City of Manila, not otherwise enumerated
in the preceding subsections, including percentage taxes based on
gross sales or receipts, subject to the approval of the PRESIDENT,
except amusement taxes.
5
but this requirement of the President's approval was not contained in section
2444 of the former Charter of the City of Manila under which Ordinance No.
2529 was promulgated. Anyway, as stated by appellee's counsel, the
business of "retail dealers in general merchandise" is expressly enumerated
in subsection (o), section 18 of Republic Act No. 409; hence, an ordinance
prescribing a municipal tax on said business does not have to be approved
by the President to be effective, as it is not among those referred to in said
subsection (ii). Moreover, the questioned ordinances are still in force, having
been promulgated by the Municipal Board of the City of Manila under the
authority granted to it by law.
The question that now remains to be determined is whether said ordinances
are inapplicable, invalid or unconstitutional if applied to the alleged business
of distribution and sale of bibles to the people of the Philippines by a
religious corporation like the American Bible Society, plaintiff herein.
With regard to Ordinance No. 2529, as amended by Ordinances Nos. 2779,
2821 and 3028, appellant contends that it is unconstitutional and illegal
because it restrains the free exercise and enjoyment of the religious
profession and worship of appellant.
Article III, section 1, clause (7) of the Constitution of the Philippines
aforequoted, guarantees the freedom of religious profession and worship.
"Religion has been spoken of as a profession of faith to an active power that
binds and elevates man to its Creator" (Aglipay vs. Ruiz, 64 Phil., 201).It has
reference to one's views of his relations to His Creator and to the obligations
they impose of reverence to His being and character, and obedience to His
Will (Davis vs. Beason, 133 U.S., 342). The constitutional guaranty of the free
exercise and enjoyment of religious profession and worship carries with it the
right to disseminate religious information. Any restraints of such right can
only be justified like other restraints of freedom of expression on the grounds
that there is a clear and present danger of any substantive evil which the
State has the right to prevent". (Tañada and Fernando on the Constitution of
the Philippines, Vol. 1, 4th ed., p. 297). In the case at bar the license fee
herein involved is imposed upon appellant for its distribution and sale of
bibles and other religious literature:
In the case of Murdock vs. Pennsylvania, it was held that an
ordinance requiring that a license be obtained before a person could
canvass or solicit orders for goods, paintings, pictures, wares or
merchandise cannot be made to apply to members of Jehovah's
Witnesses who went about from door to door distributing literature
and soliciting people to "purchase" certain religious books and
pamphlets, all published by the Watch Tower Bible & Tract Society.
The "price" of the books was twenty-five cents each, the "price" of the
pamphlets five cents each. It was shown that in making the
solicitations there was a request for additional "contribution" of

twenty-five cents each for the books and five cents each for the
pamphlets. Lesser sum were accepted, however, and books were even
donated in case interested persons were without funds.
On the above facts the Supreme Court held that it could not be said
that petitioners were engaged in commercial rather than a religious
venture. Their activities could not be described as embraced in the
occupation of selling books and pamphlets. Then the Court
continued:
"We do not mean to say that religious groups and the press are free
from all financial burdens of government. See Grosjean vs. American
Press Co., 297 U.S., 233, 250, 80 L. ed. 660, 668, 56 S. Ct. 444. We
have here something quite different, for example, from a tax on the
income of one who engages in religious activities or a tax on property
used or employed in connection with activities. It is one thing to
impose a tax on the income or property of a preacher. It is quite
another to exact a tax from him for the privilege of delivering a
sermon. The tax imposed by the City of Jeannette is a flat license
tax, payment of which is a condition of the exercise of these
constitutional privileges. The power to tax the exercise of a privilege
is the power to control or suppress its enjoyment. . . . Those who can
tax the exercise of this religious practice can make its exercise so
costly as to deprive it of the resources necessary for its maintenance.
Those who can tax the privilege of engaging in this form of
missionary evangelism can close all its doors to all those who do not
have a full purse. Spreading religious beliefs in this ancient and
honorable manner would thus be denied the needy. . . .
It is contended however that the fact that the license tax can
suppress or control this activity is unimportant if it does not do so.
But that is to disregard the nature of this tax. It is a license tax — a
flat tax imposed on the exercise of a privilege granted by the Bill of
Rights . . . The power to impose a license tax on the exercise of these
freedom is indeed as potent as the power of censorship which this
Court has repeatedly struck down. . . . It is not a nominal fee
imposed as a regulatory measure to defray the expenses of policing
the activities in question. It is in no way apportioned. It is flat license
tax levied and collected as a condition to the pursuit of activities
whose enjoyment is guaranteed by the constitutional liberties of
press and religion and inevitably tends to suppress their exercise.
That is almost uniformly recognized as the inherent vice and evil of
this flat license tax."
Nor could dissemination of religious information be conditioned upon
the approval of an official or manager even if the town were owned by
a corporation as held in the case of Marsh vs. State of Alabama (326
6
U.S. 501), or by the United States itself as held in the case of Tucker
vs. Texas (326 U.S. 517). In the former case the Supreme Court
expressed the opinion that the right to enjoy freedom of the press
and religion occupies a preferred position as against the
constitutional right of property owners.
"When we balance the constitutional rights of owners of property
against those of the people to enjoy freedom of press and religion, as
we must here, we remain mindful of the fact that the latter occupy a
preferred position. . . . In our view the circumstance that the
property rights to the premises where the deprivation of property
here involved, took place, were held by others than the public, is not
sufficient to justify the State's permitting a corporation to govern a
community of citizens so as to restrict their fundamental liberties
and the enforcement of such restraint by the application of a State
statute." (Tañada and Fernando on the Constitution of the
Philippines, Vol. 1, 4th ed., p. 304-306).
Section 27 of Commonwealth Act No. 466, otherwise known as the National
Internal Revenue Code, provides:
SEC. 27. EXEMPTIONS FROM TAX ON CORPORATIONS. — The
following organizations shall not be taxed under this Title in respect
to income received by them as such —
(e) Corporations or associations organized and operated exclusively
for religious, charitable, . . . or educational purposes, . . .: Provided,
however, That the income of whatever kind and character from any
of its properties, real or personal, or from any activity conducted for
profit, regardless of the disposition made of such income, shall be
liable to the tax imposed under this Code;
Appellant's counsel claims that the Collector of Internal Revenue has
exempted the plaintiff from this tax and says that such exemption clearly
indicates that the act of distributing and selling bibles, etc. is purely religious
and does not fall under the above legal provisions.
It may be true that in the case at bar the price asked for the bibles and other
religious pamphlets was in some instances a little bit higher than the actual
cost of the same but this cannot mean that appellant was engaged in the
business or occupation of selling said "merchandise" for profit. For this
reason We believe that the provisions of City of Manila Ordinance No. 2529,
as amended, cannot be applied to appellant, for in doing so it would impair
its free exercise and enjoyment of its religious profession and worship as well
as its rights of dissemination of religious beliefs.
 7

With respect to Ordinance No. 3000, as amended, which requires the JUAN T. DAVID, petitioner,
obtention the Mayor's permit before any person can engage in any of the vs.
businesses, trades or occupations enumerated therein, We do not find that it TEOFISTO T. GUINGONA, JR., as Executive Secretary; ROBERTO DE
imposes any charge upon the enjoyment of a right granted by the OCAMPO, as Secretary of Finance; LIWAYWAY VINZONS-CHATO, as
Constitution, nor tax the exercise of religious practices. In the case Commissioner of Internal Revenue; and their AUTHORIZED AGENTS OR
of Coleman vs. City of Griffin, 189 S.E. 427, this point was elucidated as REPRESENTATIVES, respondents.
follows:
G.R. No. 115543 October 30, 1995
An ordinance by the City of Griffin, declaring that the practice of
distributing either by hand or otherwise, circulars, handbooks, RAUL S. ROCO and the INTEGRATED BAR OF THE
advertising, or literature of any kind, whether said articles are being PHILIPPINES, petitioners,
delivered free, or whether same are being sold within the city limits of vs.
the City of Griffin, without first obtaining written permission from the THE SECRETARY OF THE DEPARTMENT OF FINANCE; THE
city manager of the City of Griffin, shall be deemed a nuisance and COMMISSIONERS OF THE BUREAU OF INTERNAL REVENUE AND
punishable as an offense against the City of Griffin, does not deprive BUREAU OF CUSTOMS, respondents.
defendant of his constitutional right of the free exercise and enjoyment
of religious profession and worship, even though it prohibits him from
introducing and carrying out a scheme or purpose which he sees fit to G.R. No. 115544 October 30, 1995
claim as a part of his religious system.
PHILIPPINE PRESS INSTITUTE, INC.; EGP PUBLISHING CO., INC.;
It seems clear, therefore, that Ordinance No. 3000 cannot be considered KAMAHALAN PUBLISHING CORPORATION; PHILIPPINE JOURNALISTS,
unconstitutional, even if applied to plaintiff Society. But as Ordinance No. INC.; JOSE L. PAVIA; and OFELIA L. DIMALANTA, petitioners,
2529 of the City of Manila, as amended, is not applicable to plaintiff- vs.
appellant and defendant-appellee is powerless to license or tax the business HON. LIWAYWAY V. CHATO, in her capacity as Commissioner of Internal
of plaintiff Society involved herein for, as stated before, it would impair Revenue; HON. TEOFISTO T. GUINGONA, JR., in his capacity as
plaintiff's right to the free exercise and enjoyment of its religious profession Executive Secretary; and HON. ROBERTO B. DE OCAMPO, in his
and worship, as well as its rights of dissemination of religious beliefs, We find capacity as Secretary of Finance, respondents.
that Ordinance No. 3000, as amended is also inapplicable to said business,
trade or occupation of the plaintiff. G.R. No. 115754 October 30, 1995

Wherefore, and on the strength of the foregoing considerations, We hereby CHAMBER OF REAL ESTATE AND BUILDERS ASSOCIATIONS, INC.,
reverse the decision appealed from, sentencing defendant return to plaintiff (CREBA), petitioner,
the sum of P5,891.45 unduly collected from it. Without pronouncement as to vs.
costs. It is so ordered. THE COMMISSIONER OF INTERNAL REVENUE, respondent.

G.R. No. 115781 October 30, 1995

G.R. No. 115455 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,
ARTURO M. TOLENTINO, petitioner, FELIPE L. GOZON, RAFAEL G. FERNANDO, RAOUL V. VICTORINO, JOSE
vs. CUNANAN, QUINTIN S. DOROMAL, MOVEMENT OF ATTORNEYS FOR
THE SECRETARY OF FINANCE and THE COMMISSIONER OF INTERNAL BROTHERHOOD, INTEGRITY AND NATIONALISM, INC. ("MABINI"),
REVENUE, respondents. FREEDOM FROM DEBT COALITION, INC., and PHILIPPINE BIBLE
SOCIETY, INC. and WIGBERTO TAÑADA, petitioners,
G.R. No. 115525 October 30, 1995 vs.
THE EXECUTIVE SECRETARY, THE SECRETARY OF FINANCE, THE
 8

COMMISSIONER OF INTERNAL REVENUE and THE COMMISSIONER OF 115852, and the Philippine Press Institute, Inc., petitioner in G.R. No.
CUSTOMS, respondents. 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
G.R. No. 115852 October 30, 1995 reply.

PHILIPPINE AIRLINES, INC., petitioner, On June 27, 1995 the matter was submitted for resolution.
vs.
THE SECRETARY OF FINANCE and COMMISSIONER OF INTERNAL I. Power of the Senate to propose amendments to revenue bills. Some of the
REVENUE, respondents. petitioners (Tolentino, Kilosbayan, Inc., Philippine Airlines (PAL), Roco, and
Chamber of Real Estate and Builders Association (CREBA)) reiterate previous
G.R. No. 115873 October 30, 1995 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
COOPERATIVE UNION OF THE PHILIPPINES, petitioner, Representatives where it passed three readings and that afterward it was
vs. sent to the Senate where after first reading it was referred to the Senate Ways
HON. LIWAYWAY V. CHATO, in her capacity as the Commissioner of and Means Committee, they complain that the Senate did not pass it on
Internal Revenue, HON. TEOFISTO T. GUINGONA, JR., in his capacity as second and third readings. Instead what the Senate did was to pass its own
Executive Secretary, and HON. ROBERTO B. DE OCAMPO, in his version (S. No. 1630) which it approved on May 24, 1994. Petitioner Tolentino
capacity as Secretary of Finance, respondents. 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.
G.R. No. 115931 October 30, 1995 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."
PHILIPPINE EDUCATIONAL PUBLISHERS ASSOCIATION, INC. and
ASSOCIATION OF PHILIPPINE BOOK SELLERS, petitioners, The contention has no merit.
vs.
HON. ROBERTO B. DE OCAMPO, as the Secretary of Finance; HON. The enactment of S. No. 1630 is not the only instance in which the Senate
LIWAYWAY V. CHATO, as the Commissioner of Internal Revenue; and proposed an amendment to a House revenue bill by enacting its own version
HON. GUILLERMO PARAYNO, JR., in his capacity as the Commissioner of a revenue bill. On at least two occasions during the Eighth Congress, the
of Customs, respondents. Senate passed its own version of revenue bills, which, in consolidation with
House bills earlier passed, became the enrolled bills. These were:
RESOLUTION
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
MENDOZA, J.: 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
These are motions seeking reconsideration of our decision dismissing the Senate on February 3, 1992.
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 R.A. No. 7549 (AN ACT GRANTING TAX EXEMPTIONS TO WHOEVER SHALL
petitioners in these cases, with the exception of the Philippine Educational GIVE REWARD TO ANY FILIPINO ATHLETE WINNING A MEDAL IN OLYMPIC
Publishers Association, Inc. and the Association of Philippine Booksellers, GAMES) which was approved by the President on May 22, 1992. This Act is a
petitioners in G.R. No. 115931. 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.
The Solicitor General, representing the respondents, filed a consolidated
comment, to which the Philippine Airlines, Inc., petitioner in G.R. No.

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
9
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.
10
§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 two-thirds vote of all its members, and thereupon, the
bill so repassed shall be deemed enacted and may be
submitted to the President for corresponding action. In the
event that the Senate should fail to finally act on any such
bills, the Assembly may, after thirty days from the opening of
the next regular 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:
11
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. TAÑADA 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
12
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,
13
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.
14
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.
15
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
16
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.
17
(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
18
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.
19
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
20
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,
21
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.
A.M. No. 10-4-19-SC
RE: LETTER OF TONY Q. V ALENCIANO, HOLDING OF RELIGIOUS
RITUALS AT THE HALL OF JUSTICE BUILDING IN QUEZON CITY
RESOLUTION
MENDOZA, J.:
One of our fundamental differences lies in our chosen religion. Some put their
faith in a god different from ours, while some may not believe in a god at all.
Nevertheless, despite the inconveniences this difference may cause us, we
must accept it unconditionally for only upon acceptance of the fact that we are
different from each other will we learn to respect one another.
This controversy originated from a series of letters, written by Tony Q.
Valenciano (Valenciano) and addressed to then Chief Justice Reynato S.
Puno (Chief Justice Puno).
In his first Letter,1 dated January 6, 2009, Valenciano reported that the
basement of the Hall of Justice of Quezon City (QC) had been converted into a
Roman Catholic Chapel, complete with offertory table, images of Catholic
religious icons, a canopy, an electric organ, and a projector. He believed that
such practice violated the constitutional provision on the separation of
Church and State and the constitutional prohibition against the
appropriation of public money or property for the benefit of a sect, church,
denomination, or any other system of religion.
Valenciano further averred that the holding of masses at the basement of the
QC Hall of Justice showed that it tended to favor Catholic litigants; that the
rehearsals of the choir caused great disturbance to other employees; that the
public could no longer use the basement as resting place; that the employees
and litigants of the Public Attorney's Office (PAO), Branches 82 and 83 of the
Regional Trial Court (RTC), Legal Library, Philippine Mediation Center, and
22
Records Section of the Office of the Clerk of Court (OCC) could not attend to
their personal necessities such as going to the lavatories because they could
not traverse the basement between 12:00 o'clock noontime and 1: 15 o'clock
in the afternoon; that the court employees became hostile toward each other
as they vied for the right to read the epistle; and that the water supply in the
entire building was cut off during the mass because the generator was
turned off to ensure silence.
In his 1st Indorsement,2 dated February 6, 2009, Chief Justice Puno referred
Valenciano 's letter to then Deputy Court Administrator (DCA) and Officer-in-
Charge of the Office on Halls of Justice, Antonio H. Dujua (DCA Dujua).
In turn, DCA Dujua, in his 1st Indorsement,3 dated February 11, 2009,
referred the letter to Executive Judge Teodoro A. Bay (Judge Bay) of the RTC
and to Executive Judge Luis Zenon Q. Maceren (Judge Maceren) of the
Metropolitan Trial Court (MeTC) for their respective comments.
In his March 6, 2009 Letter,4 addressed to DCA Dujua, Judge Maceren
clarified that the basement of the QC Hall of Justice was known as the prayer
corner. He opined that the use of the said area for holding masses did not
violate the constitutional prohibition against the use of public property for
religious purposes because the religious character of such use was merely
incidental to a temporary use.
In his Memorandum,5 dated March 10, 2009, Judge Bay manifested that he
was due to compulsorily retire on April 29, 2009, and he was taking a leave
of absence prior to such date to concentrate in resolving cases submitted for
decision before his sala and requested that then Vice-Executive Judge Jaime
N. Salazar (Judge Salazar) be assigned to further investigate, study, and
make recommendations on the matter raised by Valenciana.
In the meantime, Judge Bay recommended that, pending the final resolution
of the case, daily masses be permitted to continue, provided that: (1) the
mass be limited to thirty (30) minutes; (2) no loud singing be allowed so as
not to disturb others; and (3) the inconveniences caused by the mass be
addressed.
In his 1st Indorsement,6 dated May 27, 2009, Chief Justice Puno referred
another letter of Valenciano, dated May 13, 2009, to DCA Dujua for
appropriate action, as he complained that masses continued to be held at the
basement of the QC Hall of Justice.
On March 23, 2010, Valenciano wrote another letter,7 praying that rules be
promulgated by the Court to put a stop to the holding of Catholic masses, or
any other religious rituals, at the QC Hall of Justice and in all other halls of
justice in the country.

In its June 22, 2010 Resolution,8 the Court noted the March 23, 2010 letter
of Valenciano and referred the matter to the Office of the Court
Administrator (OCA) for evaluation, report and recommendation.
Thus, in its 1st Indorsement,9 dated September 6, 2010, the OCA, through
then Assistant Court Administrator (ACA) Jenny Lind R. AldecoaDelorino
(now Deputy Court Administrator), referred the letters of Valenciano to the
incumbent RTC Executive Judge Fernando T. Sagun, Jr. (Judge Sagun,
Jr.) and incumbent MeTC Executive Judge Caridad M. WalseLutero (Judge
Lutero).
In his Letter-Comment,10 dated September 9, 2010, Judge Sagun, Jr.
informed the Court that his office had already implemented measures to
address Valenciano's complaints. He reported that masses were shortened to
a little over thirty (30) minutes; that it was only during special holy days of
obligation when the celebration of mass went beyond one (1) o'clock in the
afternoon; that the pathways leading to the lavatories were open and could
be used without obstruction; that there was never an instance where the
actions of court personnel, who were vying to read the epistle during mass,
caused back-biting and irritation among themselves; that the water generator
had been broken beyond repair and decommissioned since December 2009;
and that the court employees prepared for the mass before the day officially
started, so that the performance of their official duties in court was not
hampered.
In her letter,11 Judge Lutero reported that Catholic masses were being held
only during lunch breaks and did not disturb court proceedings; that the
basement of the QC Hall of Justice could still be used as waiting area for the
public; that court personnel and the public were never physically prevented
from reaching the lavatories during mass as there was a clear path from the
public offices leading to the comfort rooms; that water service interruptions
were caused by maintenance problems and not because the water pump was
being shut off during mass; and that the elevators could not be used during
mass because elevator attendants took their lunch break from twelve (12)
o'clock to one (1) o'clock in the afternoon.
Judge Lutero opined that it is not the conduct of masses in public places
which the Constitution prohibited, but the passage of laws or the use of
public funds for the purpose of establishing a religion or prohibiting the free
exercise thereof. She conveyed the fact that no law or rule had been passed
and that no public funds had been appropriated or used to support the
celebration of masses. She added that the holding of Catholic masses did not
mean that Catholics had better chances of obtaining favorable resolutions
from the court.
23
Accordingly, Judge Lutero recommended that the holding of masses at the
basement of the QC Hall of Justice be allowed to continue considering that it
was not inimical to the interests of the court employees and the public.
The OCA Report
and Recommendation
In its Memorandum,12 dated August 7, 2014, the OCA believed that the
practical inconveniences cited by Valenciano were unfounded. It, thus,
recommended that his letter-complaints, dated January 6, 2009, May 13,
2009 and March 23, 2010, be dismissed for lack of merit and that the RTC
and MeTC Executive Judges of QC be directed to closely regulate and
monitor the holding of masses and other religious practices within the
premises of the QC Hall of Justice.1âwphi1
The OCA opined that the principle of separation of Church and State,
particularly with reference to the Establishment Clause, ought not to be
interpreted according to the rigid standards of separation; that the neutrality
of the State on religion should be benevolent because religion was an
ingrained part of society and played an important role in it; and that the
State, therefore, instead of being belligerent (in the case of Strict Separation)
or being aloof (in the case of Strict Neutrality) towards religion should instead
interact and forbear.13
The OCA advanced the view that the standard of Benevolent
Neutrality/Accommodation was espoused because the principal religion
clauses in our Constitution were not limited to the Establishment Clause,
which created a wall between the Church and the State, but was quickly
followed by the declaration of the Free Exercise Clause, which protected the
right of the people to practice their religion. In effect, the standard of
Benevolent Neutrality/Accommodation balanced the interest of the State
through the Establishment Clause, and the interest and right of the
individual to freely exercise his religion as guaranteed by the Free Exercise
Clause.14
The OCA observed that the present controversy did not involve a national or
local law or regulation in conflict with the Free Exercise Clause. On the
contrary, Valenciano was merely questioning the propriety of holding
religious masses at the basement of the QC Hall of Justice, which was
nothing more than an issue of whether the said religious practice could be
accommodated or not. It ended up concluding that based on prevailing
jurisprudence, as well as the interpretations given to the religion clauses of
the 1987 Constitution, there was nothing constitutionally abhorrent in
allowing the continuation of the masses.15

The OCA added that by allowing or accommodating the celebration of
Catholic masses within the premises of the QC Hall of Justice, the Court
could not be said to have established Roman Catholicism as an official
religion or to have endorsed the said religion, for the reason that it also
allowed other religious denominations to practice their religion within the
courthouses.16
ISSUE
WHETHER THE HOLDING OF MASSES AT THE BASEMENT OF THE
QUEZON CITY HALL OF JUSTICE VIOLATES THE CONSTITUTIONAL
PRINCIPLE OF SEPARATION OF CHURCH AND STATE AS WELL AS THE
CONSTITUTIONAL PROHIBITION AGAINST APPROPRIATION OF PUBLIC
MONEY OR PROPERTY FOR THE BENEFIT OF ANY SECT, CHURCH,
DENOMINATION, SECTARIAN INSTITUTION, OR SYSTEM OF RELIGION.
The Court's Ruling
The Court agrees with the findings and recommendation of the OCA and
denies the prayer of Valenciano that the holding of religious rituals of any of
the world's religions in the QC Hall of Justice or any halls of justice all over
the country be prohibited.
The Holding of Religious
Rituals in the Halls of Justice
does not Amount to a Union of
Church and State
As earlier stated, Valenciano is against the holding of religious rituals in the
halls of justice on the ground that it violates the constitutional provision on
the separation of Church and State and the constitutional prohibition
against the appropriation of public money or property for the benefit of a
sect, church, denomination, or any other system of religion. Indeed, Section
6, Article II of the 1987 Constitution provides:
The separation of Church and State shall be inviolable.17
The Court once pronounced that "our history, not to speak of the history of
mankind, has taught us that the union of church and state is prejudicial to
both, for occasions might arise when the state will use the church, and the
church the state, as a weapon in the furtherance of their respective ends and
aims."18
Justice Isagani Cruz expounded on this doctrine, viz.:
24
The rationale of the rule is summed up in the familiar saying, "Strong fences
make good neighbors." The idea is to delineate the boundaries between the
two institutions and, thus, avoid encroachments by one against the other
because of a misunderstanding of the limits of their respective exclusive
jurisdictions. The demarcation line calls on the entities to "render therefore
unto Caesar the things that are Caesar's and unto God the things that are
God's."19
This, notwithstanding, the State still recognizes the inherent right of the
people to have some form of belief system, whether such may be belief in a
Supreme Being, a certain way of life, or even an outright rejection of religion.
Our very own Constitution recognizes the heterogeneity and religiosity of our
people as reflected in lmbong v. Ochoa,20as follows:
At the outset, it cannot be denied that we all live in a heterogeneous society.
It is made up of people of diverse ethnic, cultural and religious beliefs and
backgrounds. History has shown us that our government, in law and in
practice, has allowed these various religious, cultural, social and racial
groups to thrive in a single society together. It has embraced minority groups
and is tolerant towards all - the religious people of different sects and the
non-believers. The undisputed fact is that our people generally believe in a
deity, whatever they conceived Him to be, and to Whom they called for
guidance and enlightenment in crafting our fundamental law. Thus, the
preamble of the present Constitution reads:
We, the sovereign Filipino people, imploring the aid of Almighty God, in order
to build a just and humane society, and establish a Government that shall
embody our ideals and aspirations, promote the common good, conserve and
develop our patrimony, and secure to ourselves and our posterity, the
blessings of independence and democracy under the rule of law and a regime
of truth, justice, freedom, love, equality, and peace, do ordain and
promulgate this Constitution.
The Filipino people in "imploring the aid of Almighty God" manifested their
spirituality innate in our nature and consciousness as a people, shaped by
tradition and historical experience. As this is embodied in the preamble, it
means that the State recognizes with respect the influence of religion in so
far as it instills into the mind the purest principles of morality. Moreover, in
recognition of the contributions of religion to society, the 1935, 1973 and
1987 Constitutions contain benevolent and accommodating provisions
towards religions such as tax exemption of church property, salary of
religious officers in government institutions, and optional religious
instructions in public schools. [Emphases supplied]
In Aglipay v. Ruiz21 (Aglipay), the Court acknowledged how religion could
serve as a motivating force behind each person's actions:

Religious freedom, however, as a constitutional mandate is not inhibition of
profound reverence for religion and is not a denial of its influence in human
affairs. Religion as a profession of faith to an active power that binds and
elevates man to his Creator is recognized. And, in so far as it instills into the
minds the purest principles of morality, its influence is deeply felt and highly
appreciated. When the Filipino people, in the preamble of their Constitution,
implored "the aid of Divine Providence, in order to establish a government
that shall embody their ideals, conserve and develop the patrimony of the
nation, promote the general welfare, and secure to themselves and their
posterity the blessings of independence under a regime of justice, liberty and
democracy," they thereby manifested their intense religious nature and
placed unfaltering reliance upon Him who guides the destinies of men and
nations. The elevating influence of religion in human society is recognized
here as elsewhere. In fact, certain general concessions are indiscriminately
accorded to religious sects and denominations. Our Constitution and laws
exempt from taxation properties devoted exclusively to religious purposes
(sec. 14, subsec. 3, Art. VI, Constitution of the Philippines and sec. 1,
subsec. Ordinance appended thereto; Assessment Law, sec. 344, par [c],
Adm. Code) sectarian aid is not prohibited when a priest, preacher, minister
or other religious teacher or dignitary as such is assigned to the armed forces
or to any penal institution, orphanage or leprosarium xxx. Optional religious
instruction in the public schools is by constitutional mandate allowed xxx.
Thursday and Friday of Holy Week, Thanksgiving Day, Christmas Day, and
Sundays are made legal holidays (sec. 29, Adm. Code) because of the secular
idea that their observance is conducive to beneficial moral results. The law
allows divorce but punishes polygamy and bigamy; and certain crimes
against religious worship are considered crimes against the fundamental
laws of the state xxx.22 [Emphasis supplied]
Thus, the right to believe or not to believe has again been enshrined in
Section 5, Article III of the 1987 Constitution:
Section 5. xxx. The free exercise and enjoyment of religious profession and
worship, without discrimination or preference, shall forever be allowed. xxx.
Free Exercise Clause
Freedom of religion was accorded preferred status by the framers of our
fundamental law. And this Court has consistently affirmed this preferred
status, well aware that it is "designed to protect the broadest possible liberty
of conscience, to allow each man to believe as his conscience directs, to
profess his beliefs, and to live as he believes he ought to live, consistent with
the liberty of others and with the common good."23
"The right to religious profession and worship has a two-fold aspect - freedom
to believe and freedom to act on one's beliefs. The first is absolute as long as
the belief is confined within the realm of thought. The second is subject to
25
regulation where the belief is translated into external acts that affect the
public welfare."24 Justice Isagani A. Cruz explained these two (2) concepts in
this wise:
(1) Freedom to Believe
The individual is free to believe (or disbelieve) as he pleases concerning the
hereafter. He may indulge his own theories about life and death; worship any
god he chooses, or none at all; embrace or reject any religion; acknowledge
the divinity of God or of any being that appeals to his reverence; recognize or
deny the immortality of his soul - in fact, cherish any religious conviction as
he and he alone sees fit. However absurd his beliefs may be to others, even if
they be hostile and heretical to the majority, he has full freedom to believe as
he pleases. He may not be required to prove his beliefs. He may not be
punished for his inability to do so. Religion, after all, is a matter of faith.
"Men may believe what they cannot prove." Every one has a right to his
beliefs and he may not be called to account because he cannot prove what he
believes.
(2) Freedom to Act on One's Beliefs
But where the individual externalizes his beliefs in acts or omissions that
affect the public, his freedom to do so becomes subject to the authority of the
State. As great as this liberty may be, religious freedom, like all other rights
guaranteed in the Constitution, can be enjoyed only with a proper regard for
the rights of others.
It is error to think that the mere invocation of religious freedom will
stalemate the State and render it impotent in protecting the general welfare.
The inherent police power can be exercised to prevent religious practices
inimical to society. And this is true even if such practices are pursued out of
sincere religious conviction and not merely for the purpose of evading the
reasonable requirements or prohibitions of the law.
Justice Frankfurter put it succinctly: "The constitutional provision on
religious freedom terminated disabilities, it did not create new privileges. It
gave religious liberty, not civil immunity. Its essence is freedom from
conformity to religious dogma, not freedom from conformity to law because of
religious dogma."25
Allowing religion to flourish is not contrary to the principle of separation of
Church and State. In fact, these two principles are in perfect harmony with
each other.
The State is aware of the existence of religious movements whose members
believe in the divinity of Jose Rizal. Yet, it does not implement measures to

suppress the said religious sects. Such inaction or indifference on the part of
the State gives meaning to the separation of Church and State, and at the
same time, recognizes the religious freedom of the members of these sects to
worship their own Supreme Being.
As pointed out by Judge Lutero, "the Roman Catholics express their worship
through the holy mass and to stop these would be tantamount to repressing
the right to the free exercise of their religion. Our Muslim brethren, who are
government employees, are allowed to worship their Allah even during office
hours inside their own offices. The Seventh Day Adventists are exempted
from rendering Saturday duty because their religion prohibits them from
working on a Saturday. Even Christians have been allowed to conduct their
own bible studies in their own offices. All these have been allowed in respect
of the workers' right to the free exercise of their religion. xxx"26
Clearly, allowing the citizens to practice their religion is not equivalent to a
fusion of Church and State.
No Compelling State Interest
Religious freedom, however, is not absolute. It cannot have its way if there is
a compelling state interest. To successfully invoke compelling state interest,
it must be demonstrated that the masses in the QC Hall of Justice unduly
disrupt the delivery of public services or affect the judges and employees in
the performance of their official functions. In Estrada v. Escritor,27 the Court
expounded on the test as follows:
The "compelling state interest" test is proper where conduct is involved for
the whole gamut of human conduct has different effects on the state's
interests: some effects may be immediate and short-term while others
delayed and far-reaching. A test that would protect the interests of the state
in preventing a substantive evil, whether immediate or delayed, is therefore
necessary. However, not any interest of the state would suffice to prevail over
the right to religious freedom as this is a fundamental .right that enjoys a
preferred position in the hierarchy of rights - "the most inalienable and
sacred of all human rights", in the words of Jefferson. This right is sacred for
an invocation of the Free Exercise Clause is an appeal to a higher
sovereignty. The entire constitutional order of limited government is premised
upon an acknowledgment of such higher sovereignty, thus the Filipinos
implore the "aid of Almighty God in order to build a just and humane society
and establish a government." As held in Sherbert, only the gravest abuses,
endangering paramount interests can limit this fundamental right. A mere
balancing of interests which balances a right with just a colorable state
interest is therefore not appropriate. Instead, only a compelling interest of the
state can prevail over the fundamental right to religious liberty. The test
requires the state to carry a heavy burden, a compelling one, for to do
otherwise would allow the state to batter religion, especially the less powerful
26
ones until they are destroyed. In determining which shall prevail between the
state's interest and religious liberty, reasonableness shall be the guide. The
"compelling state interest" serves the purpose of revering religious liberty
while at the same time affording protection to the paramount interests of the
state. This was the test used in Sherbert which involved conduct, i.e. refusal
to work on Saturdays. In the end, the "compelling state interest" test, by
upholding the paramount interests of the state, seeks to protect the very
state, without which, religious liberty will not be preserved.137 [Citations
omitted] [Emphases supplied]
As reported by the Executive Judges of Quezon City, the masses were being
conducted only during noon breaks and were not disruptive of public
services. The court proceedings were not being distracted or interrupted and
that the performance of the judiciary employees were not being adversely
affected. Moreover, no Civil Service rules were being violated. As there has
been no detrimental effect on the public service or prejudice to the State,
there is simply no state interest compelling enough to prohibit the exercise of
religious freedom in the halls of justice.
In fact, the Civil Service Commission (CSC) was more lenient or tolerant. On
November 13, 1981, the CSC came out with Resolution No. 81-1277, which
provided, among others, that "during Friday, the Muslim pray day, Muslims
are excused from work from 10:00 o'clock in the morning to 2:00 o'clock in
the afternoon." The Court struck this down28 as not sanctioned by the law. It
wrote:
To allow the Muslim employees in the Judiciary to be excused from work
from 10:00 a.m. to 2:00 p.m. every Friday (Muslim Prayer Day) during the
entire calendar year would mean a diminution of the prescribed government
working hours. For then, they would be rendering service twelve (12) hours
less than that required by the civil service rules for each month. Further, this
would encourage other religious denominations to request for similar
treatment.
The performance of religious practices, whether by the Muslim employees or
those belonging to other religious denominations, should not prejudice the
courts and the public. Indeed, the exercise of religious freedom does not
exempt anyone from compliance with reasonable requirements of the law,
including civil service laws.
Accommodation, Not Establishment of Religion
In order to give life to the constitutional right of freedom of religion, the State
adopts a policy of accommodation. Accommodation is a recognition of the
reality that some governmental measures may not be imposed on a certain
portion of the population for the reason that these measures are contrary to

their religious beliefs. As long as it can be shown that the exercise of the right
does not impair the public welfare, the attempt of the State to regulate or
prohibit such right would be an unconstitutional encroachment.29
In Estrada v. Escritor,30 the Court adopted a policy of benevolent neutrality:
With religion looked upon with benevolence and not hostility, benevolent
neutrality allows accommodation of religion under certain circumstances.
Accommodations are government policies that take religion specifically into
account not to promote the government's favored form of religion, but to
allow individuals and groups to exercise their religion without hindrance.
Their purpose or effect therefore is to remove a burden on, or facilitate the
exercise of, a person's or institution's religion. As Justice Brennan explained,
the "government [may] take religion into account ... to exempt, when
possible, from generally applicable governmental regulation individuals
whose religious beliefs and practices would otherwise thereby be infringed, or
to create without state involvement an atmosphere in which voluntary
religious exercise may flourish." [Emphases supplied]
In Victoriano v. Elizalde Rope Workers Union,31 the Court upheld the
exemption of members of Iglesia ni Cristo from the coverage of a closed shop
agreement between their employer and a union, because it would violate the
teaching of their church not to affiliate with a labor organization.
In Ebralinag v. Division Superintendent of Schools of Cebu,32 the petitioners,
who were members of the Jehovah 's Witnesses, refused to salute the flag,
sing the national anthem, and recite the patriotic pledge for it is their belief
that those were acts of worship or religious devotion, which they could not
conscientiously give to anyone or anything except God. The Court
accommodated them and granted them an exemption from observing the flag
ceremony out of respect for their religious beliefs.
Further, several laws have been enacted to accommodate religion. The
Revised Administrative Code of 1987 has declared Maundy Thursday, Good
Friday, and Christmas Day as regular holidays. Republic Act (R.A.) No. 9177
proclaimed the FIRST Day of Shawwal, the tenth month of the Islamic
Calendar, a national holiday for the observance of Eidul Fitr (the end of
Ramadan). R.A. No. 9849 declared the tenth day of Zhu/ Hijja, the twelfth
month of the Islamic Calendar, a national holiday for the observance of Eidul
Adha. Presidential Decree (P.D.) No. 1083, otherwise known as the Code of
Muslim Personal Laws of the Philippines, expressly allows a Filipino Muslim
to have more than one (1) wife and exempts him from the crime of bigamy
punishable under Revised Penal Code (RPC). The same Code allows Muslims
to have divorce.33
27
As to Muslims in government offices, Section 3 of P.D. No. 291, as amended
by P.D. No. 322, provides:
Sec. 3. (a) During the fasting season on the month of Ramadan, all Muslim
employees in the national government, government-owned or controlled
corporations, provinces, cities, municipalities and other instrumentalities
shall observe office hours from seven-thirty in the morning (7:30 a.m.) to
three-thirty in the afternoon (3:30 p.m.) without lunch break or coffee
breaks, and that there shall be no diminution of salary or wages, provided,
that the employee who is not fasting is not entitled to the benefit of this
provision.
Pursuant thereto, the CSC promulgated Resolution No. 81-1277, dated
November 13, 1981, which reads in part:
2. During "Ramadan" the Fasting month (30 days) of the Muslims, the Civil
Service official time of 8 o'clock to 12 o'clock and 1 o'clock to 5 o'clock is
hereby modified to 7:30 AM. to 3:30 P.M. without noon break and the
difference of 2 hours is not counted as undertime.
Following the decree, in Re: Request of Muslim Employees in the Different
Courts in Iligan City (Re: Office Hours),34the Court recognized that the
observance of Ramadan as integral to the Islamic faith and
allowed Muslim employees in the Judiciary to hold flexible office hours from
7:30 o'clock in the morning to 3:30 o'clock in the afternoon without any
break during the period. This is a clear case of accommodation because
Section 5, Rule XVII of the Omnibus Rules Implementing Book V of E.0. No.
292, enjoins all civil servants, of whatever religious denomination, to render
public service of no less than eight (8) hours a day or forty (40) hours a week.
Non-Establishment Clause
On the opposite side of the spectrum is the constitutional mandate that "no
law shall be made respecting an establishment of religion,"35 otherwise known
as the non-establishment clause. Indeed, there is a thin line between
accommodation and establishment, which makes it even more imperative to
understand each of these concepts by placing them in the Filipino society's
perspective.
The non-establishment clause reinforces the wall of separation between
Church and State. It simply means that the State cannot set up a Church;
nor pass laws which aid one religion, aid all religion, or prefer one religion
over another nor force nor influence a person to go to or remain away from
church against his will or force him to profess a belief or disbelief in any
religion; that the state cannot punish a person for entertaining or professing
religious beliefs or disbeliefs, for church attendance or nonattendance; that

no tax in any amount, large or small, can be levied to support any religious
activity or institution whatever they may be called or whatever form they may
adopt or teach or practice religion; that the state cannot openly or secretly
participate in the affairs of any religious organization or group and vice
versa.36 Its minimal sense is that the state cannot establish or sponsor an
official religion.37
In the same breath that the establishment clause restricts what the
government can do with religion, it also limits what religious sects can or
cannot do. They can neither cause the government to adopt their particular
doctrines as policy for everyone, nor can they cause the government to
restrict other groups. To do so, in simple terms, would cause the State to
adhere to a particular religion and, thus, establish a state religion.38
Father Bernas further elaborated on this matter, as follows:
"In effect, what non-establishment calls for is government neutrality in
religious matters. Such government neutrality may be summarized in four
general propositions: (1) Government must not prefer one religion over
another or religion over irreligion because such preference would violate
voluntarism and breed dissension; (2) Government funds must not be applied
to religious purposes because this too would violate voluntarism and breed
interfaith dissension; (3) Government action must not aid religion because
this too can violate voluntarism and breed interfaith dissension; [and] (4)
Government action must not result in excessive entanglement with religion
because this too can violate voluntarism and breed interfaith dissension."39
Establishment entails a positive action on the part of the State.
Accommodation, on the other hand, is passive. In the former, the State
becomes involved through the use of government resources with the primary
intention of setting up a state religion. In the latter, the State, without being
entangled, merely gives consideration to its citizens who want to freely
exercise their religion.
In a September 12, 2003 Memorandum for Chief Justice Hilario G. Davide,
Jr., the Office of the Chief Attorney recommended to deny, on constitutional
grounds, the request of Rev. Fr. Carlo M. Ilagan to hold a oneday vigil in
honor of the Our Lady of Caysasay within the premises of the Court. Such
controversy must be distinguished from the present issue in that with
respect to the former, a Catholic priest was the one who requested for the
vigil. Moreover, in that case, the vigil would take one (1) whole working day;
whereas in this case, the masses are held at the initiative of Catholic
employees and only during the thirty-minute lunch break.
Guided by the foregoing, it is our considered view that the holding of Catholic
masses at the basement of the QC Hall of Justice is not a case of
28
establishment, but merely accommodation. First, there is no law, ordinance or
circular issued by any duly constitutive authorities expressly mandating that
judiciary employees attend the Catholic masses at the
basement. Second, when judiciary employees attend the masses to profess
their faith, it is at their own initiative as they are there on their own free will
and volition, without any coercion from the judges or administrative
officers. Third, no government funds are being spent because the lightings
and airconditioning continue to be operational even if there are no religious
rituals there. Fourth, the basement has neither been converted into a Roman
Catholic chapel nor has it been permanently appropriated for the exclusive
use of its faithful. Fifth, the allowance of the masses has not prejudiced other
religions.
No Appropriation of Public
Money or Property for the
Benefit of any Church
Section 29 (2), Article VI of the 1987 Constitution provides, "No public money
or property shall be appropriated, applied, paid, or employed, directly or
indirectly, for the use, benefit, or support of any sect, church, denomination,
sectarian institution, or system of religion, or of any priest, preacher,
minister, or other religious teacher, or dignitary as such, except when such
priest, preacher, minister, or dignitary is assigned to the armed forces, or to
any penal institution, or government orphanage or leprosarium."
The word "apply" means "to use or employ for a particular
purpose."40 "Appropriate" means "to prescribe a particular use for particular
moneys or to designate or destine a fund or property for a distinct use, or for
the payment of a particular demand."41
Under the principle of noscitur a sociis, where a particular word or phrase is
ambiguous in itself or is equally susceptible of various meanings, its correct
construction may be made clear and specific by considering the company of
words in which it is found or with which it is associated. This is because a
word or phrase in a statute is always used in association with other words or
phrases, and its meaning may, thus, be modified or restricted by the latter.
The particular words, clauses and phrases should not be studied as detached
and isolated expressions, but the whole and every part of the statute must be
considered in fixing the meaning of any of its parts and in order to produce a
harmonious whole. A statute must be so construed as to harmonize and give
effect to all its provisions whenever possible.42
Thus, the words "pay" and "employ" should be understood to mean that what
is prohibited is the use of public money or property for the sole purpose of
benefiting or supporting any church. The prohibition contemplates a scenario

where the appropriation is primarily intended for the furtherance of a
particular church.
It has also been held that the aforecited constitutional provision "does not
inhibit the use of public property for religious purposes when the religious
character of such use is merely incidental to a temporary use which is
available indiscriminately to the public in general." Hence, a public street
may be used for a religious procession even as it is available for a civic
parade, in the same way that a public plaza is not barred to a religious rally
if it may also be used for a political assemblage.43
In relation thereto, the phrase "directly or indirectly" refers to the manner of
appropriation of public money or property, not as to whether a particular act
involves a direct or a mere incidental benefit to any church. Otherwise, the
framers of the Constitution would have placed it before "use, benefit or
support" to describe the same. Even the exception to the same provision
bolsters this interpretation. The exception contemplates a situation wherein
public funds are paid to a priest, preacher, minister, or other religious
teacher, or dignitary because they rendered service in the armed forces, or to
any penal institution, or government orphanage or leprosarium. That a priest
belongs to a particular church and the latter may have benefited from the
money he received is of no moment, for the purpose of the payment of public
funds is merely to compensate the priest for services rendered and for which
other persons, who will perform the same services will also be compensated
in the same manner.
Ut magis valeat quam pereat. The Constitution is to be interpreted as a
whole.44 As such, the foregoing interpretation finds support in the
Establishment Clause, which is as clear as daylight in stating that what is
proscribed is the passage of any law which tends to establish a religion, not
merely to accommodate the free exercise thereof.
The Constitution even grants tax exemption to properties actually, directly
and exclusively devoted to religious purposes.45 Certainly, this benefits the
religious sects for a portion of what could have been collected for the benefit
of the public is surrendered in their favor.
In Manosca v. CA,46 a parcel of land located in Taguig was determined by the
National Historical Institute to be the birthsite of Felix Y. Manalo, the founder
of Iglesia ni Cristo. The Republic then sought to expropriate the said property.
The exercise of the power of eminent domain was questioned on the ground
that it would only benefit members of Iglesia ni Cristo. The Court upheld the
legality of the expropriation, viz.:
29
The practical reality that greater benefit may be derived by members of
the Iglesia ni Cristo than by most others could well be true but such a
peculiar advantage still remains to be merely incidental and secondary in
nature.47 [Emphasis supplied]
Again, in Aglipay, the issuing and selling of postage stamps commemorative
of the Thirty-third International Eucharistic Congress was assailed on the
ground that it violated the constitutional prohibition against the
appropriation of public money or property for the benefit of any church. In
ruling that there was no such violation, the Court held:
It is obvious that while the issuance and sale of the stamps in question may
be said to be inseparably linked with an event of a religious character, the
resulting propaganda, if any, received by the Roman Catholic Church, was
not the aim and purpose of the Government. We are of the opinion that the
Government should not be embarrassed in its activities simply because of
incidental results, more or less religious in character, if the purpose had in
view is one which could legitimately be undertaken by appropriate legislation.
The main purpose should not be frustrated by its subordination to mere
incidental results not contemplated.48 [Emphasis supplied]
Here, the basement of the QC Hall of Justice is not appropriated, applied or
employed for the sole purpose of supporting the Roman Catholics.
Further, it has not been converted into a Roman Catholic chapel for the
exclusive use of its faithful contrary to the claim of Valenciana. Judge
Maceren reported that the basement is also being used as a public waiting
area for most of the day and a meeting place for different employee
organizations. The use of the area for holding masses is limited to lunch
break period from twelve (12) o'clock to one (1) o'clock in the afternoon.
Further, Judge Sagun, Jr. related that masses run for just a little over thirty
(30) minutes. It is, therefore, clear that no undue religious bias is being
committed when the subject basement is allowed to be temporarily used by
the Catholics to celebrate mass, as the same area can be used by other
groups of people and for other purposes.49 Thus, the basement of the QC Hall
of Justice has remained to be a public property devoted for public use
because the holding of Catholic masses therein is a mere incidental
consequence of its primary purpose.
Conclusion
Directing the Executive Judges of the RTC and MeTC to regulate and closely
monitor the holding of masses and other religious practices within the courts
does not promote excessive collaboration between courts and various

religions. On the contrary, this is necessary to ensure that there would be no
excessive entanglement.
To disallow the holding of religious rituals within halls of justice would set a
dangerous precedent and commence a domino effect. Strict separation,
rather than benevolent neutrality/accommodation, would be the norm. Thus,
the establishment of Shari'a courts, the National Commission for Muslim
Filipinos, and the exception of Muslims from the provisions of the RPC
relative to the crime of bigamy would all be rendered nugatory because of
strict separation. The exception of members of Iglesia ni Cristo from joining a
union or the non-compulsion recognized in favor of members of the
Jehovah's Witnesses from doing certain gestures during the flag ceremony,
will all go down the drain simply because we insist on strict separation.
That the holding of masses at the basement of the QC Hall of Justice may
offend non-Catholics is no reason to proscribe it. Our Constitution ensures
and mandates an unconditional tolerance, without regard to whether those
who seek to profess their faith belong to the majority or to the minority. It is
emphatic in saying that "the free exercise and enjoyment of religious
profession and worship shall be without discrimination or preference."
Otherwise, accommodation or tolerance would just be mere lip service.
One cannot espouse that the constitutional freedom of religion ensures
tolerance, but, in reality, refuses to practice what he preaches. One cannot
ask for tolerance when he refuses to do the same for others.
In fine, the Court denies the plea that the holding of Catholic masses at the
basement of the QC Hall of Justice be prohibited because the said practice
does not violate the constitutional principle of separation of Church and
State and the constitutional prohibition against appropriation of public
money or property for the benefit of a sect, church, denomination, or any
other system of religion.
WHEREFORE, the Court resolves to:
1. NOTE the letter-complaints of Mr. Tony Q. Valenciano, dated January 6,
2009, May 13, 2009, and March 23, 2010;
2. NOTE the 1st Indorsement, dated September 21, 2010, by the Office on
Halls of Justice, containing photocopies and certified photocopies of previous
actions made relative to the complaint;
3. NOTE the Letter-Comment, dated September 9, 2010, of Quezon City
Regional Trial Court Executive Judge Fernando T. Sagun, Jr.;
30
4. NOTE the undated Letter-Comment of Quezon City Metropolitan Trial
Court Executive Judge Caridad M. Walse-Lutero;
5. DENY the prayer of Tony Q. Valenciano to prohibit the holding of religious
rituals in the QC Hall of Justice and in all halls of justice in the country; and
6. DIRECT the Executive Judges of Quezon City
to REGULATE and CLOSELY MONITOR the holding of masses and other
religious practices within the Quezon City Hall of Justice by ensuring, among
others, that:
(a) it does not disturb or interrupt court proceedings;
(b) it does not adversely affect and interrupt the delivery of public service;
and
(c) it does not unduly inconvenience the public.
In no case shall a particular part of a public building be a permanent place
for worship for the benefit of any and all religious groups. There shall also be
no permanent display of religious icons in all halls of justice in the country.
In case of religious rituals, religious icons and images may be displayed but
their presentation is limited only during the celebration of such activities so
as not to offend the sensibilities of members of other religious denominations
or the non-religious public. After any religious affair, the icons and images
shall be hidden or concealed from public view.
The disposition in this administrative matter shall apply to all halls of justice
in the country. Other churches, religious denominations or sects are entitled
to the same rights, privileges, and practices in every hall of justice. In other
buildings not owned or controlled by the Judiciary, the Executive Judges
should coordinate and seek approval of the building owners/administrators
accommodating their courts.
SO ORDERED.