ABRA VALLEY COLLEGE, INC.,vs. HON. JUAN P.

AQUINO
This is a petition for review on certiorari of the decision * of the defunct Court of First Instance of Abra, Branch I, dated June 14,
1974, rendered in Civil Case No. 656, entitled "Abra Valley Junior College, Inc., represented by Pedro V. Borgonia, plaintiff vs.
Armin M. Cariaga as Provincial Treasurer of Abra, Gaspar V. Bosque as Municipal Treasurer of Bangued, Abra and Paterno
Millare, defendants," the decretal portion of which reads:
IN VIEW OF ALL THE FOREGOING, the Court hereby declares:
That the distraint seizure and sale by the Municipal Treasurer of Bangued, Abra, the Provincial Treasurer of said province
against the lot and building of the Abra Valley Junior College, Inc., represented by Director Pedro Borgonia located at Bangued,
Abra, is valid;That since the school is not exempt from paying taxes, it should therefore pay all back taxes in the amount of P5,140.31 and
back taxes and penalties from the promulgation of this decision;
That the amount deposited by the plaintaff him the sum of P60,000.00 before the trial, be confiscated to apply for the payment
of the back taxes and for the redemption of the property in question, if the amount is less than P6,000.00, the remainder must
be returned to the Director of Pedro Borgonia, who represents the plaintiff herein;
That the deposit of the Municipal Treasurer in the amount of P6,000.00 also before the trial must be returned to said Municipal
Treasurer of Bangued, Abra;
And finally the case is hereby ordered dismissed with costs against the plaintiff.
SO ORDERED. (Rollo, pp. 22-23)
Petitioner, an educational corporation and institution of higher learning duly incorporated with the Securities and Exchange
Commission in 1948, filed a complaint (Annex "1" of Answer by the respondents Heirs of Paterno Millare; Rollo, pp. 95-97) on
July 10, 1972 in the court a quo to annul and declare void the "Notice of Seizure' and the "Notice of Sale" of its lot and building
located at Bangued, Abra, for non-payment of real estate taxes and penalties amounting to P5,140.31. Said "Notice of Seizure"
of the college lot and building covered by Original Certificate of Title No. Q-83 duly registered in the name of petitioner, plaintiff
below, on July 6, 1972, by respondents Municipal Treasurer and Provincial Treasurer, defendants below, was issued for the
satisfaction of the said taxes thereon. The "Notice of Sale" was caused to be served upon the petitioner by the respondent
treasurers on July 8, 1972 for the sale at public auction of said college lot and building, which sale was held on the same date.
Dr. Paterno Millare, then Municipal Mayor of Bangued, Abra, offered the highest bid of P6,000.00 which was duly accepted.
The certificate of sale was correspondingly issued to him.
On August 10, 1972, the respondent Paterno Millare (now deceased) filed through counstel a motion to dismiss the complaint.
On August 23, 1972, the respondent Provincial Treasurer and Municipal Treasurer, through then Provincial Fiscal Loreto C.
Roldan, filed their answer (Annex "2" of Answer by the respondents Heirs of Patemo Millare; Rollo, pp. 98-100) to the
complaint. This was followed by an amended answer (Annex "3," ibid, Rollo, pp. 101-103) on August 31, 1972.
On September 1, 1972 the respondent Paterno Millare filed his answer (Annex "5," ibid; Rollo, pp. 106-108).
On October 12, 1972, with the aforesaid sale of the school premises at public auction, the respondent Judge, Hon. Juan P.
Aquino of the Court of First Instance of Abra, Branch I, ordered (Annex "6," ibid; Rollo, pp. 109-110) the respondents provincial
and municipal treasurers to deliver to the Clerk of Court the proceeds of the auction sale. Hence, on December 14, 1972,
petitioner, through Director Borgonia, deposited with the trial court the sum of P6,000.00 evidenced by PNB Check No. 904369.
On April 12, 1973, the parties entered into a stipulation of facts adopted and embodied by the trial court in its questioned
decision. Said Stipulations reads:
STIPULATION OF FACTS
COME NOW the parties, assisted by counsels, and to this Honorable Court respectfully enter into the following agreed
stipulation of facts:
1. That the personal circumstances of the parties as stated in paragraph 1 of the complaint is admitted; but the particular
person of Mr. Armin M. Cariaga is to be substituted, however, by anyone who is actually holding the position of Provincial
Treasurer of the Province of Abra;
2. That the plaintiff Abra Valley Junior College, Inc. is the owner of the lot and buildings thereon located in Bangued, Abra under
Original Certificate of Title No. 0-83;
3. That the defendant Gaspar V. Bosque, as Municipal treasurer of Bangued, Abra caused to be served upon the Abra Valley
Junior College, Inc. a Notice of Seizure on the property of said school under Original Certificate of Title No. 0-83 for the
satisfaction of real property taxes thereon, amounting to P5,140.31; the Notice of Seizure being the one attached to the
complaint as Exhibit A;
4. That on June 8, 1972 the above properties of the Abra Valley Junior College, Inc. was sold at public auction for the
satisfaction of the unpaid real property taxes thereon and the same was sold to defendant Paterno Millare who offered the
highest bid of P6,000.00 and a Certificate of Sale in his favor was issued by the defendant Municipal Treasurer.
5. That all other matters not particularly and specially covered by this stipulation of facts will be the subject of evdence by the
parties.
WHEREFORE, it is respectfully prayed of the Honorable Court to consider and admit this stipulation of facts on the point
agreed upon by the parties.
Bangued, Abra, April 12, 1973.
Sgd. Agripino Brillantes
Typ AGRIPINO BRILLANTES
Attorney for Plaintiff
Sgd. Loreto Roldan
Typ LORETO ROLDAN
Provincial Fiscal
Counsel for Defendants
Provincial Treasurer of
Abra and the Municipal
Treasurer of Bangued, Abra
Sgd. Demetrio V. Pre
Typ. DEMETRIO V. PRE
Attorney for Defendant
Paterno Millare (Rollo, pp. 17-18)
Aside from the Stipulation of Facts, the trial court among others, found the following: (a) that the school is recognized by the
government and is offering Primary, High School and College Courses, and has a school population of more than one
thousand students all in all; (b) that it is located right in the heart of the town of Bangued, a few meters from the plaza and

about 120 meters from the Court of First Instance building; (c) that the elementary pupils are housed in a two-storey building
across the street; (d) that the high school and college students are housed in the main building; (e) that the Director with his
family is in the second floor of the main building; and (f) that the annual gross income of the school reaches more than one
hundred thousand pesos.
From all the foregoing, the only issue left for the Court to determine and as agreed by the parties, is whether or not the lot and
building in question are used exclusively for educational purposes. (Rollo, p. 20)
The succeeding Provincial Fiscal, Hon. Jose A. Solomon and his Assistant, Hon. Eustaquio Z. Montero, filed a Memorandum
for the Government on March 25, 1974, and a Supplemental Memorandum on May 7, 1974, wherein they opined "that based
on the evidence, the laws applicable, court decisions and jurisprudence, the school building and school lot used for educational
purposes of the Abra Valley College, Inc., are exempted from the payment of taxes." (Annexes "B," "B-1" of Petition; Rollo, pp.
24-49; 44 and 49).
Nonetheless, the trial court disagreed because of the use of the second floor by the Director of petitioner school for residential
purposes. He thus ruled for the government and rendered the assailed decision.
After having been granted by the trial court ten (10) days from August 6, 1974 within which to perfect its appeal (Per Order
dated August 6, 1974; Annex "G" of Petition; Rollo, p. 57) petitioner instead availed of the instant petition for review
on certiorari with prayer for preliminary injunction before this Court, which petition was filed on August 17, 1974 (Rollo, p.2).
In the resolution dated August 16, 1974, this Court resolved to give DUE COURSE to the petition (Rollo, p. 58). Respondents
were required to answer said petition (Rollo, p. 74).
Petitioner raised the following assignments of error:
THE COURT A QUO ERRED IN SUSTAINING AS VALID THE SEIZURE AND SALE OF THE COLLEGE LOT AND BUILDING
USED FOR EDUCATIONAL PURPOSES OF THE PETITIONER.
THE COURT A QUO ERRED IN DECLARING THAT THE COLLEGE LOT AND BUILDING OF THE PETITIONER ARE NOT
USED EXCLUSIVELY FOR EDUCATIONAL PURPOSES MERELY BECAUSE THE COLLEGE PRESIDENT RESIDES IN
ONE ROOM OF THE COLLEGE BUILDING.
THE COURT A QUO ERRED IN DECLARING THAT THE COLLEGE LOT AND BUILDING OF THE PETITIONER ARE NOT
EXEMPT FROM PROPERTY TAXES AND IN ORDERING PETITIONER TO PAY P5,140.31 AS REALTY TAXES.
THE COURT A QUO ERRED IN ORDERING THE CONFISCATION OF THE P6,000.00 DEPOSIT MADE IN THE COURT BY
PETITIONER AS PAYMENT OF THE P5,140.31 REALTY TAXES. (See Brief for the Petitioner, pp. 1-2)
The main issue in this case is the proper interpretation of the phrase "used exclusively for educational purposes."
Petitioner contends that the primary use of the lot and building for educational purposes, and not the incidental use thereof,
determines and exemption from property taxes under Section 22 (3), Article VI of the 1935 Constitution. Hence, the seizure and
sale of subject college lot and building, which are contrary thereto as well as to the provision of Commonwealth Act No. 470,
otherwise known as the Assessment Law, are without legal basis and therefore void.
On the other hand, private respondents maintain that the college lot and building in question which were subjected to seizure
and sale to answer for the unpaid tax are used: (1) for the educational purposes of the college; (2) as the permanent residence
of the President and Director thereof, Mr. Pedro V. Borgonia, and his family including the in-laws and grandchildren; and (3) for
commercial purposes because the ground floor of the college building is being used and rented by a commercial
establishment, the Northern Marketing Corporation (See photograph attached as Annex "8" (Comment; Rollo, p. 90]).
Due to its time frame, the constitutional provision which finds application in the case at bar is Section 22, paragraph 3, Article
VI, of the then 1935 Philippine Constitution, which expressly grants exemption from realty taxes for "Cemeteries, churches and
parsonages or convents appurtenant thereto, and all lands, buildings, and improvements used exclusively for religious,
charitable or educational purposes ...
Relative thereto, Section 54, paragraph c, Commonwealth Act No. 470 as amended by Republic Act No. 409, otherwise known
as the Assessment Law, provides:
The following are exempted from real property tax under the Assessment Law:
(c) churches and parsonages or convents appurtenant thereto, and all lands, buildings, and improvements used exclusively for
religious, charitable, scientific or
In this regard petitioner argues that the primary use of the school lot and building is the basic and controlling guide, norm and
standard to determine tax exemption, and not the mere incidental use thereof.
As early as 1916 in YMCA of Manila vs. Collector of lnternal Revenue, 33 Phil. 217 [1916], this Court ruled that while it may be
true that the YMCA keeps a lodging and a boarding house and maintains a restaurant for its members, still these do not
constitute business in the ordinary acceptance of the word, but an institution used exclusively for religious, charitable and
educational purposes, and as such, it is entitled to be exempted from taxation.
In the case of Bishop of Nueva Segovia v. Provincial Board of Ilocos Norte, 51 Phil. 352 [1972], this Court included in the
exemption a vegetable garden in an adjacent lot and another lot formerly used as a cemetery. It was clarified that the term
"used exclusively" considers incidental use also. Thus, the exemption from payment of land tax in favor of the convent
includes, not only the land actually occupied by the building but also the adjacent garden devoted to the incidental use of the
parish priest. The lot which is not used for commercial purposes but serves solely as a sort of lodging place, also qualifies for
exemption because this constitutes incidental use in religious functions.
The phrase "exclusively used for educational purposes" was further clarified by this Court in the cases of Herrera vs. Quezon
City Board of assessment Appeals, 3 SCRA 186 [1961] and Commissioner of Internal Revenue vs. Bishop of the Missionary
District, 14 SCRA 991 [1965], thus
Moreover, the exemption in favor of property used exclusively for charitable or educational purposes is 'not limited to property
actually indispensable' therefor (Cooley on Taxation, Vol. 2, p. 1430), but extends to facilities which are incidental to and
reasonably necessary for the accomplishment of said purposes, such as in the case of hospitals, "a school for training nurses,
a nurses' home, property use to provide housing facilities for interns, resident doctors, superintendents, and other members of
the hospital staff, and recreational facilities for student nurses, interns, and residents' (84 CJS 6621), such as "Athletic fields"
including "a firm used for the inmates of the institution. (Cooley on Taxation, Vol. 2, p. 1430).
The test of exemption from taxation is the use of the property for purposes mentioned in the Constitution (Apostolic Prefect v.
City Treasurer of Baguio, 71 Phil, 547 [1941]).
It must be stressed however, that while this Court allows a more liberal and non-restrictive interpretation of the phrase
"exclusively used for educational purposes" as provided for in Article VI, Section 22, paragraph 3 of the 1935 Philippine
Constitution, reasonable emphasis has always been made that exemption extends to facilities which are incidental to and
reasonably necessary for the accomplishment of the main purposes. Otherwise stated, the use of the school building or lot for
commercial purposes is neither contemplated by law, nor by jurisprudence. Thus, while the use of the second floor of the main
building in the case at bar for residential purposes of the Director and his family, may find justification under the concept of

incidental use, which is complimentary to the main or primary purposeeducational, the lease of the first floor thereof to the
Northern Marketing Corporation cannot by any stretch of the imagination be considered incidental to the purpose of education.
It will be noted however that the aforementioned lease appears to have been raised for the first time in this Court. That the
matter was not taken up in the to court is really apparent in the decision of respondent Judge. No mention thereof was made in
the stipulation of facts, not even in the description of the school building by the trial judge, both embodied in the decision nor as
one of the issues to resolve in order to determine whether or not said properly may be exempted from payment of real estate
taxes (Rollo, pp. 17-23). On the other hand, it is noteworthy that such fact was not disputed even after it was raised in this
Court.
Indeed, it is axiomatic that facts not raised in the lower court cannot be taken up for the first time on appeal. Nonetheless, as an
exception to the rule, this Court has held that although a factual issue is not squarely raised below, still in the interest of
substantial justice, this Court is not prevented from considering a pivotal factual matter. "The Supreme Court is clothed with
ample authority to review palpable errors not assigned as such if it finds that their consideration is necessary in arriving at a
just decision." (Perez vs. Court of Appeals, 127 SCRA 645 [1984]).
Under the 1935 Constitution, the trial court correctly arrived at the conclusion that the school building as well as the lot where it
is built, should be taxed, not because the second floor of the same is being used by the Director and his family for residential
purposes, but because the first floor thereof is being used for commercial purposes. However, since only a portion is used for
purposes of commerce, it is only fair that half of the assessed tax be returned to the school involved.
PREMISES CONSIDERED, the decision of the Court of First Instance of Abra, Branch I, is hereby AFFIRMED subject to the
modification that half of the assessed tax be returned to the petitioner.
ORMOC SUGAR COMPANY, INC., vs.THE TREASURER OF ORMOC CITY
On January 29, 1964, the Municipal Board of Ormoc City passed 1 Ordinance No. 4, Series of 1964, imposing "on any
and all productions of centrifugal sugar milled at the Ormoc Sugar Company, Inc., in Ormoc City a municipal tax equivalent to
one per centum (1%) per export sale to the United States of America and other foreign countries." 2
Payments for said tax were made, under protest, by Ormoc Sugar Company, Inc. on March 20, 1964 for P7,087.50 and
on April 20, 1964 for P5,000, or a total of P12,087.50.
On June 1, 1964, Ormoc Sugar Company, Inc. filed before the Court of First Instance of Leyte, with service of a copy
upon the Solicitor General, a complaint 3 against the City of Ormoc as well as its Treasurer, Municipal Board and Mayor,
alleging that the afore-stated ordinance is unconstitutional for being violative of the equal protection clause (Sec. 1[1], Art. III,
Constitution) and the rule of uniformity of taxation (Sec. 22[1]), Art. VI, Constitution), aside from being an export tax forbidden
under Section 2287 of the Revised Administrative Code. It further alleged that the tax is neither a production nor a license tax
which Ormoc City under Section 15-kk of its charter and under Section 2 of Republic Act 2264, otherwise known as the Local
Autonomy Act, is authorized to impose; and that the tax amounts to a customs duty, fee or charge in violation of paragraph 1 of
Section 2 of Republic Act 2264 because the tax is on both the sale and export of sugar.
Answering, the defendants asserted that the tax ordinance was within defendant city's power to enact under the Local
Autonomy Act and that the same did not violate the afore-cited constitutional limitations. After pre-trial and submission of the
case on memoranda, the Court of First Instance, on August 6, 1964, rendered a decision that upheld the constitutionality of the
ordinance and declared the taxing power of defendant chartered city broadened by the Local Autonomy Act to include all other
forms of taxes, licenses or fees not excluded in its charter.
Appeal therefrom was directly taken to Us by plaintiff Ormoc Sugar Company, Inc. Appellant alleges the same statutory
and constitutional violations in the aforesaid taxing ordinance mentioned earlier.
Section 1 of the ordinance states: "There shall be paid to the City Treasurer on any and all productions of centrifugal
sugar milled at the Ormoc Sugar Company, Incorporated, in Ormoc City, a municipal tax equivalent to one per centum (1%) per
export sale to the United States of America and other foreign countries." Though referred to as a tax on the export of centrifugal
sugar produced at Ormoc Sugar Company, Inc. For production of sugar alone is not taxable; the only time the tax applies is
when the sugar produced is exported.
Appellant questions the authority of the defendant Municipal Board to levy such an export tax, in view of Section 2287 of
the Revised Administrative Code which denies from municipal councils the power to impose an export tax. Section 2287 in part
states: "It shall not be in the power of the municipal council to impose a tax in any form whatever, upon goods and merchandise
carried into the municipality, or out of the same, and any attempt to impose an import or export tax upon such goods in the
guise of an unreasonable charge for wharfage use of bridges or otherwise, shall be void."
Subsequently, however, Section 2 of Republic Act 2264 effective June 19, 1959, gave chartered cities, municipalities and
municipal districts authority to levy for public purposes just and uniform taxes, licenses or fees. Anent the inconsistency
between Section 2287 of the Revised Administrative Code and Section 2 of Republic Act 2264, this Court, in Nin Bay Mining
Co. v. Municipality of Roxas 4 held the former to have been repealed by the latter. And expressing Our awareness of the
transcendental effects that municipal export or import taxes or licenses will have on the national economy, due to Section 2 of
Republic Act 2264, We stated that there was no other alternative until Congress acts to provide remedial measures to forestall
any unfavorable results.
The point remains to be determined, however, whether constitutional limits on the power of taxation, specifically the
equal protection clause and rule of uniformity of taxation, were infringed.
The Constitution in the bill of rights provides: ". . . nor shall any person be denied the equal protection of the laws." (Sec.
1 [1], Art. III) In Felwa vs. Salas, 5 We ruled that the equal protection clause applies only to persons or things identically situated
and does not bar a reasonable classification of the subject of legislation, and a classification is reasonable where (1) it is based
on substantial distinctions which make real differences; (2) these are germane to the purpose of the law; (3) the classification
applies not only to present conditions but also to future conditions which are substantially identical to those of the present; (4)
the classification applies only to those who belong to the same class.
A perusal of the requisites instantly shows that the questioned ordinance does not meet them, for it taxes only centrifugal
sugar produced and exported by the Ormoc Sugar Company, Inc. and none other. At the time of the taxing ordinance's
enactment, Ormoc Sugar Company, Inc., it is true, was the only sugar central in the city of Ormoc. Still, the classification, to be
reasonable, should be in terms applicable to future conditions as well. The taxing ordinance should not be singular and
exclusive as to exclude any subsequently established sugar central, of the same class as plaintiff, for the coverage of the tax.
As it is now, even if later a similar company is set up, it cannot be subject to the tax because the ordinance expressly points
only to Ormoc City Sugar Company, Inc. as the entity to be levied upon.
Appellant, however, is not entitled to interest; on the refund because the taxes were not arbitrarily collected (Collector of
Internal Revenue v. Binalbagan). 6 At the time of collection, the ordinance provided a sufficient basis to preclude arbitrariness,
the same being then presumed constitutional until declared otherwise.

WHEREFORE, the decision appealed from is hereby reversed, the challenged ordinance is declared unconstitutional
and the defendants-appellees are hereby ordered to refund the P12,087.50 plaintiff-appellant paid under protest. No costs. So
ordered.
Villegas v Hiu Chiong Tsai Pao Ho GR No L-29646, November 10, 1978
FACTS: The Municipal Board of Manila enacted Ordinance 6537 requiring aliens (except those employed in the diplomatic and
consular missions of foreign countries, in technical assistance programs of the government and another country, and members
of religious orders or congregations) to procure the requisite mayors permit so as to be employed or engage in trade in the
City of Manila. Thus, a case was filed with CFI-Manila to stop enforcement of the ordinance. CFI-Manila declared the ordinance
void. Thus, the present petition for certiorari.
ISSUES:
(1) Is the ordinance violative of the cardinal rule of uniformity of taxation?
(2) Does it violate the principle against undue designation of legislative power?
(3) Does it violate the due process and equal protection clauses of the Constitution?
RULING:
(1) Yes. The P50 fee is unreasonable not only because it is excessive but because it fails to consider valid
substantial differences in situation among individual aliens who are required to pay it. The same amount of P50 is being
collected from every employed alien whether he is casual or permanent, part time or full time or whether he is a lowly employee
or a highly paid executive.
(2) Yes. It does not lay down any criterion or standard to guide the Mayor in the exercise of his discretion. It has been held that
where an ordinance of a municipality fails to state any policy or to set up any standard to guide or limit the action, thus
conferring upon the Mayor arbitrary and unrestricted power, such ordinance is invalid.
(3) Yes. Requiring a person before he can be employed to get a permit from the City Mayor of Manila who may withhold or
refuse it at will is tantamount to denying him the basic right of the people in the Philippines to engage in a means of livelihood.
The shelter of protection under the due process and equal protection clause is given to all persons, both aliens and citizens.
Thus, the ordinance is invalid.
MAYOR ANTONIO J. VILLEGAS, vs .HIU CHIONG TSAI PAO HO and JUDGE FRANCISCO ARCA, respondents.
This is a petition for certiorari to review tile decision dated September 17, 1968 of respondent Judge Francisco Arca of
the Court of First Instance of Manila, Branch I, in Civil Case No. 72797, the dispositive portion of winch reads.
Wherefore, judgment is hereby rendered in favor of the petitioner and against the respondents, declaring Ordinance No. 6 37 of
the City of Manila null and void. The preliminary injunction is made permanent. No pronouncement as to cost.
SO ORDERED.
Manila, Philippines, September 17, 1968.
(SGD.) FRANCISCO ARCA
Judge 1
The controverted Ordinance No. 6537 was passed by the Municipal Board of Manila on February 22, 1968 and signed by the
herein petitioner Mayor Antonio J. Villegas of Manila on March 27, 1968. 2
City Ordinance No. 6537 is entitled:
AN ORDINANCE MAKING IT UNLAWFUL FOR ANY PERSON NOT A CITIZEN OF THE PHILIPPINES TO BE EMPLOYED IN
ANY PLACE OF EMPLOYMENT OR TO BE ENGAGED IN ANY KIND OF TRADE, BUSINESS OR OCCUPATION WITHIN
THE CITY OF MANILA WITHOUT FIRST SECURING AN EMPLOYMENT PERMIT FROM THE MAYOR OF MANILA; AND
FOR OTHER PURPOSES. 3
Section 1 of said Ordinance No. 6537 4 prohibits aliens from being employed or to engage or participate in any position or
occupation or business enumerated therein, whether permanent, temporary or casual, without first securing an employment
permit from the Mayor of Manila and paying the permit fee of P50.00 except persons employed in the diplomatic or consular
missions of foreign countries, or in the technical assistance programs of both the Philippine Government and any foreign
government, and those working in their respective households, and members of religious orders or congregations, sect or
denomination, who are not paid monetarily or in kind.
Violations of this ordinance is punishable by an imprisonment of not less than three (3) months to six (6) months or fine of not
less than P100.00 but not more than P200.00 or both such fine and imprisonment, upon conviction. 5
On May 4, 1968, private respondent Hiu Chiong Tsai Pao Ho who was employed in Manila, filed a petition with the Court of
First Instance of Manila, Branch I, denominated as Civil Case No. 72797, praying for the issuance of the writ of preliminary
injunction and restraining order to stop the enforcement of Ordinance No. 6537 as well as for a judgment declaring said
Ordinance No. 6537 null and void. 6
In this petition, Hiu Chiong Tsai Pao Ho assigned the following as his grounds for wanting the ordinance declared null and void:
1) As a revenue measure imposed on aliens employed in the City of Manila, Ordinance No. 6537 is discriminatory and violative
of the rule of the uniformity in taxation;
2) As a police power measure, it makes no distinction between useful and non-useful occupations, imposing a fixed P50.00
employment permit, which is out of proportion to the cost of registration and that it fails to prescribe any standard to guide
and/or limit the action of the Mayor, thus, violating the fundamental principle on illegal delegation of legislative powers:
3) It is arbitrary, oppressive and unreasonable, being applied only to aliens who are thus, deprived of their rights to life, liberty
and property and therefore, violates the due process and equal protection clauses of the Constitution. 7
On May 24, 1968, respondent Judge issued the writ of preliminary injunction and on September 17, 1968 rendered judgment
declaring Ordinance No. 6537 null and void and making permanent the writ of preliminary injunction. 8
Contesting the aforecited decision of respondent Judge, then Mayor Antonio J. Villegas filed the present petition on March 27,
1969. Petitioner assigned the following as errors allegedly committed by respondent Judge in the latter's decision of September
17,1968: 9
I THE RESPONDENT JUDGE COMMITTED A SERIOUS AND PATENT ERROR OF LAW IN RULING THAT ORDINANCE NO.
6537 VIOLATED THE CARDINAL RULE OF UNIFORMITY OF TAXATION.
II RESPONDENT JUDGE LIKEWISE COMMITTED A GRAVE AND PATENT ERROR OF LAW IN RULING THAT ORDINANCE
NO. 6537 VIOLATED THE PRINCIPLE AGAINST UNDUE DESIGNATION OF LEGISLATIVE POWER.
III RESPONDENT JUDGE FURTHER COMMITTED A SERIOUS AND PATENT ERROR OF LAW IN RULING THAT
ORDINANCE NO. 6537 VIOLATED THE DUE PROCESS AND EQUAL PROTECTION CLAUSES OF THE CONSTITUTION.
Petitioner Mayor Villegas argues that Ordinance No. 6537 cannot be declared null and void on the ground that it violated the
rule on uniformity of taxation because the rule on uniformity of taxation applies only to purely tax or revenue measures and that

Ordinance No. 6537 is not a tax or revenue measure but is an exercise of the police power of the state, it being principally a
regulatory measure in nature.
The contention that Ordinance No. 6537 is not a purely tax or revenue measure because its principal purpose is regulatory in
nature has no merit. While it is true that the first part which requires that the alien shall secure an employment permit from the
Mayor involves the exercise of discretion and judgment in the processing and approval or disapproval of applications for
employment permits and therefore is regulatory in character the second part which requires the payment of P50.00 as
employee's fee is not regulatory but a revenue measure. There is no logic or justification in exacting P50.00 from aliens who
have been cleared for employment. It is obvious that the purpose of the ordinance is to raise money under the guise of
regulation.
The P50.00 fee is unreasonable not only because it is excessive but because it fails to consider valid substantial differences in
situation among individual aliens who are required to pay it. Although the equal protection clause of the Constitution does not
forbid classification, it is imperative that the classification should be based on real and substantial differences having a
reasonable relation to the subject of the particular legislation. The same amount of P50.00 is being collected from every
employed alien whether he is casual or permanent, part time or full time or whether he is a lowly employee or a highly paid
executive
Ordinance No. 6537 does not lay down any criterion or standard to guide the Mayor in the exercise of his discretion. It has
been held that where an ordinance of a municipality fails to state any policy or to set up any standard to guide or limit the
mayor's action, expresses no purpose to be attained by requiring a permit, enumerates no conditions for its grant or refusal,
and entirely lacks standard, thus conferring upon the Mayor arbitrary and unrestricted power to grant or deny the issuance of
building permits, such ordinance is invalid, being an undefined and unlimited delegation of power to allow or prevent an
activity per se lawful. 10
In Chinese Flour Importers Association vs. Price Stabilization Board, 11 where a law granted a government agency power to
determine the allocation of wheat flour among importers, the Supreme Court ruled against the interpretation of uncontrolled
power as it vested in the administrative officer an arbitrary discretion to be exercised without a policy, rule, or standard from
which it can be measured or controlled.
It was also held in Primicias vs. Fugoso 12 that the authority and discretion to grant and refuse permits of all classes conferred
upon the Mayor of Manila by the Revised Charter of Manila is not uncontrolled discretion but legal discretion to be exercised
within the limits of the law.
Ordinance No. 6537 is void because it does not contain or suggest any standard or criterion to guide the mayor in the exercise
of the power which has been granted to him by the ordinance.
The ordinance in question violates the due process of law and equal protection rule of the Constitution.
Requiring a person before he can be employed to get a permit from the City Mayor of Manila who may withhold or refuse it at
will is tantamount to denying him the basic right of the people in the Philippines to engage in a means of livelihood. While it is
true that the Philippines as a State is not obliged to admit aliens within its territory, once an alien is admitted, he cannot be
deprived of life without due process of law. This guarantee includes the means of livelihood. The shelter of protection under the
due process and equal protection clause is given to all persons, both aliens and citizens. 13
The trial court did not commit the errors assigned.
WHEREFORE, the decision appealed from is hereby affirmed, without pronouncement as to costs.
Tolentino vs sec of finance
Arturo Tolentino et al are questioning the constitutionality of RA 7716 otherwise known as the Expanded Value Added Tax
(EVAT) Law. Tolentino averred that this revenue bill did not exclusively originate from the House of Representatives as required
by Section 24, Article 6 of the Constitution. Even though RA 7716 originated as HB 11197 and that it passed the 3 readings in
the HoR, the same did not complete the 3 readings in Senate for after the 1 st reading it was referred to the Senate Ways &
Means Committee thereafter Senate passed its own version known as Senate Bill 1630. Tolentino averred that what Senate
could have done is amend HB 11197 by striking out its text and substituting it with the text of SB 1630 in that way the bill
remains a House Bill and the Senate version just becomes the text (only the text) of the HB. (Its ironic however to note that
Tolentino and co-petitioner Raul Roco even signed the said Senate Bill.)
ISSUE: Whether or not the EVAT law is procedurally infirm.
HELD: No. By a 9-6 vote, the Supreme Court rejected the challenge, holding that such consolidation was consistent with the
power of the Senate to propose or concur with amendments to the version originated in the HoR. What the Constitution simply
means, according to the 9 justices, is that the initiative must come from the HoR. Note also that there were several instances
before where Senate passed its own version rather than having the HoR version as far as revenue and other such bills are
concerned. This practice of amendment by substitution has always been accepted. The proposition of Tolentino concerns a
mere matter of form. There is no showing that it would make a significant difference if Senate were to adopt his over what has
been done.
ARTURO M. TOLENTINO vs. THE SECRETARY OF FINANCE and CIR
These are motions seeking reconsideration of our decision dismissing the petitions filed in these cases for the declaration of
unconstitutionality of R.A. No. 7716, otherwise known as the Expanded Value-Added Tax Law. The motions, of which there are
10 in all, have been filed by the several petitioners in these cases, with the exception of the Philippine Educational Publishers
Association, Inc. and the Association of Philippine Booksellers, petitioners in G.R. No. 115931.
The Solicitor General, representing the respondents, filed a consolidated comment, to which the Philippine Airlines, Inc.,
petitioner in G.R. No. 115852, and the Philippine Press Institute, Inc., petitioner in G.R. No. 115544, and Juan T. David,
petitioner in G.R. No. 115525, each filed a reply. In turn the Solicitor General filed on June 1, 1995 a rejoinder to the PPI's reply.
On June 27, 1995 the matter was submitted for resolution.
I. Power of the Senate to propose amendments to revenue bills. Some of the petitioners (Tolentino, Kilosbayan, Inc., Philippine
Airlines (PAL), Roco, and Chamber of Real Estate and Builders Association (CREBA)) reiterate previous claims made by them
that R.A. No. 7716 did not "originate exclusively" in the House of Representatives as required by Art. VI, 24 of the
Constitution. Although they admit that H. No. 11197 was filed in the House of Representatives where it passed three readings
and that afterward it was sent to the Senate where after first reading it was referred to the Senate Ways and Means
Committee, they complain that the Senate did not pass it on second and third readings. Instead what the Senate did was to
pass its own version (S. No. 1630) which it approved on May 24, 1994. Petitioner Tolentino adds that what the Senate
committee should have done was to amend H. No. 11197 by striking out the text of the bill and substituting it with the text of S.
No. 1630. That way, it is said, "the bill remains a House bill and the Senate version just becomes the text (only the text) of the
House bill."

The contention has no merit.

The enactment of S. No. 1630 is not the only instance in which the Senate proposed an amendment to a House revenue bill by
enacting its own version of a revenue bill. On at least two occasions during the Eighth Congress, the Senate passed its own
version of revenue bills, which, in consolidation with House bills earlier passed, became the enrolled bills. These were:
R.A. No. 7369 (AN ACT TO AMEND THE OMNIBUS INVESTMENTS CODE OF 1987 BY EXTENDING FROM FIVE (5)
YEARS TO TEN YEARS THE PERIOD FOR TAX AND DUTY EXEMPTION AND TAX CREDIT ON CAPITAL EQUIPMENT)
which was approved by the President on April 10, 1992. This Act is actually a consolidation of H. No. 34254, which was
approved by the House on January 29, 1992, and S. No. 1920, which was approved by the Senate on February 3, 1992.
R.A. No. 7549 (AN ACT GRANTING TAX EXEMPTIONS TO WHOEVER SHALL GIVE REWARD TO ANY FILIPINO ATHLETE
WINNING A MEDAL IN OLYMPIC GAMES) which was approved by the President on May 22, 1992. This Act is a consolidation
of H. No. 22232, which was approved by the House of Representatives on August 2, 1989, and S. No. 807, which was
approved by the Senate on October 21, 1991.
On the other hand, the Ninth Congress passed revenue laws which were also the result of the consolidation of House and
Senate bills. These are the following, with indications of the dates on which the laws were approved by the President and dates
the separate bills of the two chambers of Congress were respectively passed:
1. R.A. NO. 7642
AN ACT INCREASING THE PENALTIES FOR TAX EVASION, AMENDING FOR THIS PURPOSE THE PERTINENT
SECTIONS OF THE NATIONAL INTERNAL REVENUE CODE (December 28, 1992).
House Bill No. 2165, October 5, 1992
Senate Bill No. 32, December 7, 1992
2. R.A. NO. 7643
AN ACT TO EMPOWER THE COMMISSIONER OF INTERNAL REVENUE TO REQUIRE THE PAYMENT OF THE VALUEADDED TAX EVERY MONTH AND TO ALLOW LOCAL GOVERNMENT UNITS TO SHARE IN VAT REVENUE, AMENDING
FOR THIS PURPOSE CERTAIN SECTIONS OF THE NATIONAL INTERNAL REVENUE CODE (December 28, 1992)
House Bill No. 1503, September 3, 1992
Senate Bill No. 968, December 7, 1992
3. R.A. NO. 7646
AN ACT AUTHORIZING THE COMMISSIONER OF INTERNAL REVENUE TO PRESCRIBE THE PLACE FOR PAYMENT OF
INTERNAL REVENUE TAXES BY LARGE TAXPAYERS, AMENDING FOR THIS PURPOSE CERTAIN PROVISIONS OF THE
NATIONAL INTERNAL REVENUE CODE, AS AMENDED (February 24, 1993)
House Bill No. 1470, October 20, 1992
Senate Bill No. 35, November 19, 1992
4. R.A. NO. 7649
AN ACT REQUIRING THE GOVERNMENT OR ANY OF ITS POLITICAL SUBDIVISIONS, INSTRUMENTALITIES OR
AGENCIES INCLUDING GOVERNMENT-OWNED OR CONTROLLED CORPORATIONS (GOCCS) TO DEDUCT AND
WITHHOLD THE VALUE-ADDED TAX DUE AT THE RATE OF THREE PERCENT (3%) ON GROSS PAYMENT FOR THE
PURCHASE OF GOODS AND SIX PERCENT (6%) ON GROSS RECEIPTS FOR SERVICES RENDERED BY
CONTRACTORS (April 6, 1993)
House Bill No. 5260, January 26, 1993
Senate Bill No. 1141, March 30, 1993
5. R.A. NO. 7656
AN ACT REQUIRING GOVERNMENT-OWNED OR CONTROLLED CORPORATIONS TO DECLARE DIVIDENDS UNDER
CERTAIN CONDITIONS TO THE NATIONAL GOVERNMENT, AND FOR OTHER PURPOSES (November 9, 1993)
House Bill No. 11024, November 3, 1993
Senate Bill No. 1168, November 3, 1993
6. R.A. NO. 7660
AN ACT RATIONALIZING FURTHER THE STRUCTURE AND ADMINISTRATION OF THE DOCUMENTARY STAMP TAX,
AMENDING FOR THE PURPOSE CERTAIN PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED,
ALLOCATING FUNDS FOR SPECIFIC PROGRAMS, AND FOR OTHER PURPOSES (December 23, 1993)
House Bill No. 7789, May 31, 1993
Senate Bill No. 1330, November 18, 1993
7. R.A. NO. 7717
AN ACT IMPOSING A TAX ON THE SALE, BARTER OR EXCHANGE OF SHARES OF STOCK LISTED AND TRADED
THROUGH THE LOCAL STOCK EXCHANGE OR THROUGH INITIAL PUBLIC OFFERING, AMENDING FOR THE PURPOSE
THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, BY INSERTING A NEW SECTION AND REPEALING
CERTAIN SUBSECTIONS THEREOF (May 5, 1994)
House Bill No. 9187, November 3, 1993
Senate Bill No. 1127, March 23, 1994
Thus, the enactment of S. No. 1630 is not the only instance in which the Senate, in the exercise of its power to propose
amendments to bills required to originate in the House, passed its own version of a House revenue measure. It is noteworthy
that, in the particular case of S. No. 1630, petitioners Tolentino and Roco, as members of the Senate, voted to approve it on
second and third readings.
On the other hand, amendment by substitution, in the manner urged by petitioner Tolentino, concerns a mere matter of form.
Petitioner has not shown what substantial difference it would make if, as the Senate actually did in this case, a separate bill like
S. No. 1630 is instead enacted as a substitute measure, "taking into Consideration . . . H.B. 11197."
Indeed, so far as pertinent, the Rules of the Senate only provide:
RULE XXIX
AMENDMENTS
xxx xxx xxx
68. Not more than one amendment to the original amendment shall be considered.
No amendment by substitution shall be entertained unless the text thereof is submitted in writing.
Any of said amendments may be withdrawn before a vote is taken thereon.
69. No amendment which seeks the inclusion of a legislative provision foreign to the subject matter of a bill (rider) shall be
entertained.
xxx xxx xxx

70-A. A bill or resolution shall not be amended by substituting it with another which covers a subject distinct from that
proposed in the original bill or resolution. (emphasis added).
Nor is there merit in petitioners' contention that, with regard to revenue bills, the Philippine Senate possesses less power than
the U.S. Senate because of textual differences between constitutional provisions giving them the power to propose or concur
with amendments.
Art. I, 7, cl. 1 of the U.S. Constitution reads:
All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with
amendments as on other Bills.
Art. VI, 24 of our Constitution reads:
All appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application, and private bills
shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments.
The addition of the word "exclusively" in the Philippine Constitution and the decision to drop the phrase "as on other Bills" in the
American version, according to petitioners, shows the intention of the framers of our Constitution to restrict the Senate's power
to propose amendments to revenue bills. Petitioner Tolentino contends that the word "exclusively" was inserted to modify
"originate" and "the words 'as in any other bills' (sic) were eliminated so as to show that these bills were not to be like other bills
but must be treated as a special kind."
The history of this provision does not support this contention. The supposed indicia of constitutional intent are nothing but the
relics of an unsuccessful attempt to limit the power of the Senate. It will be recalled that the 1935 Constitution originally
provided for a unicameral National Assembly. When it was decided in 1939 to change to a bicameral legislature, it became
necessary to provide for the procedure for lawmaking by the Senate and the House of Representatives. The work of proposing
amendments to the Constitution was done by the National Assembly, acting as a constituent assembly, some of whose
members, jealous of preserving the Assembly's lawmaking powers, sought to curtail the powers of the proposed Senate.
Accordingly they proposed the following provision:
All bills appropriating public funds, revenue or tariff bills, bills of local application, and private bills shall originate exclusively in
the Assembly, but the Senate may propose or concur with amendments. In case of disapproval by the Senate of any such bills,
the Assembly may repass the same by a 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:
The power of the Senate to propose or concur with amendments is apparently without restriction. It would seem that by virtue
of this power, the Senate can practically re-write a bill required to come from the House and leave only a trace of the original
bill. For example, a general revenue bill passed by the lower house of the United States Congress contained provisions for the
imposition of an inheritance tax . This was changed by the Senate into a corporation tax. The amending authority of the Senate
was declared by the United States Supreme Court to be sufficiently broad to enable it to make the alteration. [Flint v. Stone
Tracy Company, 220 U.S. 107, 55 L. ed. 389].
(L. TAADA AND F. CARREON, POLITICAL LAW OF THE PHILIPPINES 247 (1961))
The above-mentioned bills are supposed to be initiated by the House of Representatives because it is more numerous in
membership and therefore also more representative of the people. Moreover, its members are presumed to be more familiar
with the needs of the country in regard to the enactment of the legislation involved.
The Senate is, however, allowed much leeway in the exercise of its power to propose or concur with amendments to the bills
initiated by the House of Representatives. Thus, in one case, a bill introduced in the U.S. House of Representatives was
changed by the Senate to make a proposed inheritance tax a corporation tax. It is also accepted practice for the Senate to
introduce what is known as an amendment by substitution, which may entirely replace the bill initiated in the House of
Representatives.
(I. CRUZ, PHILIPPINE POLITICAL LAW 144-145 (1993)).
In sum, while Art. VI, 24 provides that all appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills
of local application, and private bills must "originate exclusively in the House of Representatives," it also adds, "but the Senate
may propose or concur with amendments." In the exercise of this power, the Senate may propose an entirely new bill as a
substitute measure. As petitioner Tolentino states in a high school text, a committee to which a bill is referred may do any of the
following:
(1) to endorse the bill without changes; (2) to make changes in the bill omitting or adding sections or altering its language; (3) to
make and endorse an entirely new bill as a substitute, in which case it will be known as a committee bill; or (4) to make no
report at all.
(A. TOLENTINO, THE GOVERNMENT OF THE PHILIPPINES 258 (1950))
To except from this procedure the amendment of bills which are required to originate in the House by prescribing that the
number of the House bill and its other parts up to the enacting clause must be preserved although the text of the Senate
amendment may be incorporated in place of the original body of the bill is to insist on a mere technicality. At any rate there is
no rule prescribing this form. S. No. 1630, as a substitute measure, is therefore as much an amendment of H. No. 11197 as
any which the Senate could have made.
II. S. No. 1630 a mere amendment of H. No. 11197. Petitioners' basic error is that they assume that S. No. 1630 is
an independent and distinct bill. Hence their repeated references to its certification that it was passed by the Senate
"in substitution of S.B. No. 1129, taking into consideration P.S. Res. No. 734 and H.B. No. 11197," implying that there is

something substantially different between the reference to S. No. 1129 and the reference to H. No. 11197. From this premise,
they conclude that R.A. No. 7716 originated both in the House and in the Senate and that it is the product of two "half-baked
bills because neither H. No. 11197 nor S. No. 1630 was passed by both houses of Congress."
In point of fact, in several instances the provisions of S. No. 1630, clearly appear to be mere amendments of the corresponding
provisions of H. No. 11197. The very tabular comparison of the provisions of H. No. 11197 and S. No. 1630 attached as
Supplement A to the basic petition of petitioner Tolentino, while showing differences between the two bills, at the same time
indicates that the provisions of the Senate bill were precisely intended to be amendments to the House bill.
Without H. No. 11197, the Senate could not have enacted S. No. 1630. Because the Senate bill was a mere amendment of the
House bill, H. No. 11197 in its original form did not have to pass the Senate on second and three readings. It was enough that
after it was passed on first reading it was referred to the Senate Committee on Ways and Means. Neither was it required that
S. No. 1630 be passed by the House of Representatives before the two bills could be referred to the Conference Committee.
There is legislative precedent for what was done in the case of H. No. 11197 and S. No. 1630. When the House bill and Senate
bill, which became R.A. No. 1405 (Act prohibiting the disclosure of bank deposits), were referred to a conference committee,
the question was raised whether the two bills could be the subject of such conference, considering that the bill from one house
had not been passed by the other and vice versa. As Congressman Duran put the question:
MR. DURAN. Therefore, I raise this question of order as to procedure: If a House bill is passed by the House but not passed by
the Senate, and a Senate bill of a similar nature is passed in the Senate but never passed in the House, can the two bills be
the subject of a conference, and can a law be enacted from these two bills? I understand that the Senate bill in this particular
instance does not refer to investments in government securities, whereas the bill in the House, which was introduced by the
Speaker, covers two subject matters: not only investigation of deposits in banks but also investigation of investments in
government securities. Now, since the two bills differ in their subject matter, I believe that no law can be enacted.
Ruling on the point of order raised, the chair (Speaker Jose B. Laurel, Jr.) said:
THE SPEAKER. The report of the conference committee is in order. It is precisely in cases like this where a conference should
be had. If the House bill had been approved by the Senate, there would have been no need of a conference; but precisely
because the Senate passed another bill on the same subject matter, the conference committee had to be created, and we are
now considering the report of that committee.
(2 CONG. REC. NO. 13, July 27, 1955, pp. 3841-42 (emphasis added))
III. The President's certification. The fallacy in thinking that H. No. 11197 and S. No. 1630 are distinct and unrelated measures
also accounts for the petitioners' (Kilosbayan's and PAL's) contention that because the President separately certified to the
need for the immediate enactment of these measures, his certification was ineffectual and void. The certification had to be
made of the version of the same revenue bill which at the momentwas being considered. Otherwise, to follow petitioners'
theory, it would be necessary for the President to certify as many bills as are presented in a house of Congress even though
the bills are merely versions of the bill he has already certified. It is enough that he certifies the bill which, at the time he makes
the certification, is under consideration. Since on March 22, 1994 the Senate was considering S. No. 1630, it was that bill which
had to be certified. For that matter on June 1, 1993 the President had earlier certified H. No. 9210 for immediate enactment
because it was the one which at that time was being considered by the House. This bill was later substituted, together with
other bills, by H. No. 11197.
As to what Presidential certification can accomplish, we have already explained in the main decision that the phrase "except
when the President certifies to the necessity of its immediate enactment, etc." in Art. VI, 26 (2) qualifies not only the
requirement that "printed copies [of a bill] in its final form [must be] distributed to the members three days before its passage"
but also the requirement that before a bill can become a law it must have passed "three readings on separate days." There is
not only textual support for such construction but historical basis as well.
Art. VI, 21 (2) of the 1935 Constitution originally provided:
(2) No bill shall be passed by either House unless it shall have been printed and copies thereof in its final form furnished its
Members at least three calendar days prior to its passage, except when the President shall have certified to the necessity of its
immediate enactment. Upon the last reading of a bill, no amendment thereof shall be allowed and the question upon its
passage shall be taken immediately thereafter, and the yeas and nays entered on the Journal.
When the 1973 Constitution was adopted, it was provided in Art. VIII, 19 (2):
(2) No bill shall become a law unless it has passed three readings on separate days, and printed copies thereof in its final form
have been distributed to the Members three days before its passage, except when the Prime Minister certifies to the necessity
of its immediate enactment to meet a public calamity or emergency. Upon the last reading of a bill, no amendment thereto shall
be allowed, and the vote thereon shall be taken immediately thereafter, and the yeas and nays entered in the Journal.
This provision of the 1973 document, with slight modification, was adopted in Art. VI, 26 (2) of the present Constitution, thus:
(2) No bill passed by either House shall become a law unless it has passed three readings on separate days, and printed
copies thereof in its final form have been distributed to its Members three days before its passage, except when the President
certifies to the necessity of its immediate enactment to meet a public calamity or emergency. Upon the last reading of a bill, no
amendment thereto shall be allowed, and the vote thereon shall be taken immediately thereafter, and
the yeasand nays entered in the Journal.
The exception is based on the prudential consideration that if in all cases three readings on separate days are required and a
bill has to be printed in final form before it can be passed, the need for a law may be rendered academic by the occurrence of
the very emergency or public calamity which it is meant to address.
Petitioners further contend that a "growing budget deficit" is not an emergency, especially in a country like the Philippines
where budget deficit is a chronic condition. Even if this were the case, an enormous budget deficit does not make the need for
R.A. No. 7716 any less urgent or the situation calling for its enactment any less an emergency.
Apparently, the members of the Senate (including some of the petitioners in these cases) believed that there was an urgent
need for consideration of S. No. 1630, because they responded to the call of the President by voting on the bill on second and
third readings on the same day. While the judicial department is not bound by the Senate's acceptance of the President's
certification, the respect due coequal departments of the government in matters committed to them by the Constitution and the
absence of a clear showing of grave abuse of discretion caution a stay of the judicial hand.
At any rate, we are satisfied that S. No. 1630 received thorough consideration in the Senate where it was discussed for six
days. Only its distribution in advance in its final printed form was actually dispensed with by holding the voting on second and
third readings on the same day (March 24, 1994). Otherwise, sufficient time between the submission of the bill on February 8,
1994 on second reading and its approval on March 24, 1994 elapsed before it was finally voted on by the Senate on third
reading.
The purpose for which three readings on separate days is required is said to be two-fold: (1) to inform the members of
Congress of what they must vote on and (2) to give them notice that a measure is progressing through the enacting process,

thus enabling them and others interested in the measure to prepare their positions with reference to it. (1 J. G. SUTHERLAND,
STATUTES AND STATUTORY CONSTRUCTION 10.04, p. 282 (1972)). These purposes were substantially achieved in the
case of R.A. No. 7716.
IV. Power of Conference Committee. It is contended (principally by Kilosbayan, Inc. and the Movement of Attorneys for
Brotherhood, Integrity and Nationalism, Inc. (MABINI)) that in violation of the constitutional policy of full public disclosure and
the people's right to know (Art. II, 28 and Art. III, 7) the Conference Committee met for two days in executive session with
only the conferees present.
As pointed out in our main decision, even in the United States it was customary to hold such sessions with only the conferees
and their staffs in attendance and it was only in 1975 when a new rule was adopted requiring open sessions. Unlike its
American counterpart, the Philippine Congress has not adopted a rule prescribing open hearings for conference committees.
It is nevertheless claimed that in the United States, before the adoption of the rule in 1975, at least staff members were
present. These were staff members of the Senators and Congressmen, however, who may be presumed to be their confidential
men, not stenographers as in this case who on the last two days of the conference were excluded. There is no showing that the
conferees themselves did not take notes of their proceedings so as to give petitioner Kilosbayan basis for claiming that even in
secret diplomatic negotiations involving state interests, conferees keep notes of their meetings. Above all, the public's right to
know was fully served because the Conference Committee in this case submitted a report showing the changes made on the
differing versions of the House and the Senate.
Petitioners cite the rules of both houses which provide that conference committee reports must contain "a detailed, sufficiently
explicit statement of the changes in or other amendments." These changes are shown in the bill attached to the Conference
Committee Report. The members of both houses could thus ascertain what changes had been made in the original bills without
the need of a statement detailing the changes.
The same question now presented was raised when the bill which became R.A. No. 1400 (Land Reform Act of 1955) was
reported by the Conference Committee. Congressman Bengzon raised a point of order. He said:
MR. BENGZON. My point of order is that it is out of order to consider the report of the conference committee regarding House
Bill No. 2557 by reason of the provision of Section 11, Article XII, of the Rules of this House which provides specifically that the
conference report must be accompanied by a detailed statement of the effects of the amendment on the bill of the House. This
conference committee report is not accompanied by that detailed statement, Mr. Speaker. Therefore it is out of order to
consider it.
Petitioner Tolentino, then the Majority Floor Leader, answered:
MR. TOLENTINO. Mr. Speaker, I should just like to say a few words in connection with the point of order raised by the
gentleman from Pangasinan.
There is no question about the provision of the Rule cited by the gentleman from Pangasinan, butthis 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 copiesthereof in its final form were not distributed among the
members of each House. Both the enrolled bill and the legislative journals certify that the measure was duly enacted i.e., in
accordance with Article VI, Sec. 26 (2) of the Constitution. We are bound by such official assurances from a coordinate
department of the government, to which we owe, at the very least, a becoming courtesy.
(Id. at 710. (emphasis added))
It is interesting to note the following description of conference committees in the Philippines in a 1979 study:
Conference committees may be of two types: free or instructed. These committees may be given instructions by their parent
bodies or they may be left without instructions. Normally the conference committees are without instructions, and this is why
they are often critically referred to as "the little legislatures." Once bills have been sent to them, the conferees have almost
unlimited authority to change the clauses of the bills and in fact sometimes introduce new measures that were not in the
original legislation. No minutes are kept, and members' activities on conference committees are difficult to determine. One
congressman known for his idealism put it this way: "I killed a bill on export incentives for my interest group [copra] in the
conference committee but I could not have done so anywhere else." The conference committee submits a report to both
houses, and usually it is accepted. If the report is not accepted, then the committee is discharged and new members are
appointed.
(R. Jackson, Committees in the Philippine Congress, in COMMITTEES AND LEGISLATURES: A COMPARATIVE ANALYSIS
163 (J. D. LEES AND M. SHAW, eds.)).
In citing this study, we pass no judgment on the methods of conference committees. We cite it only to say that conference
committees here are no different from their counterparts in the United States whose vast powers we noted in Philippine Judges
Association v. Prado, supra. At all events, under Art. VI, 16(3) each house has the power "to determine the rules of its
proceedings," including those of its committees. Any meaningful change in the method and procedures of Congress or its
committees must therefore be sought in that body itself.

V. The titles of S. No. 1630 and H. No. 11197. PAL maintains that R.A. No. 7716 violates Art. VI, 26 (1) of the Constitution
which provides that "Every bill passed by Congress shall embrace only one subject which shall be expressed in the title
thereof." PAL contends that the amendment of its franchise by the withdrawal of its exemption from the VAT is not expressed in
the title of the law.
Pursuant to 13 of P.D. No. 1590, PAL pays a franchise tax of 2% on its gross revenue "in lieu of all other taxes, duties,
royalties, registration, license and other fees and charges of any kind, nature, or description, imposed, levied, established,
assessed or collected by any municipal, city, provincial or national authority or government agency, now or in the future."
PAL was exempted from the payment of the VAT along with other entities by 103 of the National Internal Revenue Code,
which provides as follows:
103. Exempt transactions. The following shall be exempt from the value-added tax:
xxx xxx xxx
(q) Transactions which are exempt under special laws or international agreements to which the Philippines is a signatory.
R.A. No. 7716 seeks to withdraw certain exemptions, including that granted to PAL, by amending 103, as follows:
103. Exempt transactions. The following shall be exempt from the value-added tax:
xxx xxx xxx
(q) Transactions which are exempt under special laws, except those granted under Presidential Decree Nos. 66, 529, 972,
1491, 1590. . . .
The amendment of 103 is expressed in the title of R.A. No. 7716 which reads:
AN ACT RESTRUCTURING THE VALUE-ADDED TAX (VAT) SYSTEM, WIDENING ITS TAX BASE AND ENHANCING ITS
ADMINISTRATION, AND FOR THESE PURPOSES AMENDING AND REPEALING THE RELEVANT PROVISIONS OF THE
NATIONAL INTERNAL REVENUE CODE, AS AMENDED, AND FOR OTHER PURPOSES.
By stating that R.A. No. 7716 seeks to "[RESTRUCTURE] THE VALUE-ADDED TAX (VAT) SYSTEM [BY] WIDENING ITS TAX
BASE AND ENHANCING ITS ADMINISTRATION, AND FOR THESE PURPOSES AMENDING AND REPEALING THE
RELEVANT PROVISIONS OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED AND FOR OTHER
PURPOSES," Congress thereby clearly expresses its intention to amend any provision of the NIRC which stands in the way of
accomplishing the purpose of the law.
PAL asserts that the amendment of its franchise must be reflected in the title of the law by specific reference to P.D. No. 1590.
It is unnecessary to do this in order to comply with the constitutional requirement, since it is already stated in the title that the
law seeks to amend the pertinent provisions of the NIRC, among which is 103(q), in order to widen the base of the VAT.
Actually, it is the bill which becomes a law that is required to express in its title the subject of legislation. The titles of H. No.
11197 and S. No. 1630 in fact specifically referred to 103 of the NIRC as among the provisions sought to be amended. We are
satisfied that sufficient notice had been given of the pendency of these bills in Congress before they were enacted into what is
now R.A.
No. 7716.
In Philippine Judges Association v. Prado, supra, a similar argument as that now made by PAL was rejected. R.A. No. 7354 is
entitled AN ACT CREATING THE PHILIPPINE POSTAL CORPORATION, DEFINING ITS POWERS, FUNCTIONS AND
RESPONSIBILITIES, PROVIDING FOR REGULATION OF THE INDUSTRY AND FOR OTHER PURPOSES CONNECTED
THEREWITH. It contained a provision repealing all franking privileges. It was contended that the withdrawal of franking
privileges was not expressed in the title of the law. In holding that there was sufficient description of the subject of the law in its
title, including the repeal of franking privileges, this Court held:
To require every end and means necessary for the accomplishment of the general objectives of the statute to be expressed in
its title would not only be unreasonable but would actually render legislation impossible. [Cooley, Constitutional Limitations, 8th
Ed., p. 297] As has been correctly explained:
The details of a legislative act need not be specifically stated in its title, but matter germane to the subject as expressed in the
title, and adopted to the accomplishment of the object in view, may properly be included in the act. Thus, it is proper to create in
the same act the machinery by which the act is to be enforced, to prescribe the penalties for its infraction, and to remove
obstacles in the way of its execution. If such matters are properly connected with the subject as expressed in the title, it is
unnecessary that they should also have special mention in the title. (Southern Pac. Co. v. Bartine, 170 Fed. 725)
(227 SCRA at 707-708)
VI. Claims of press freedom and religious liberty. We have held that, as a general proposition, the press is not exempt from the
taxing power of the State and that what the constitutional guarantee of free press prohibits are laws which single out the press
or target a group belonging to the press for special treatment or which in any way discriminate against the press on the basis of
the content of the publication, and R.A. No. 7716 is none of these.
Now it is contended by the PPI that by removing the exemption of the press from the VAT while maintaining those granted to
others, the law discriminates against the press. At any rate, it is averred, "even nondiscriminatory taxation of constitutionally
guaranteed freedom is unconstitutional."
With respect to the first contention, it would suffice to say that since the law granted the press a privilege, the law could take
back the privilege anytime without offense to the Constitution. The reason is simple: by granting exemptions, the State does not
forever waive the exercise of its sovereign prerogative.
Indeed, in withdrawing the exemption, the law merely subjects the press to the same tax burden to which other businesses
have long ago been subject. It is thus different from the tax involved in the cases invoked by the PPI. The license tax
in Grosjean v. American Press Co., 297 U.S. 233, 80 L. Ed. 660 (1936) was found to be discriminatory because it was laid on
the gross advertising receipts only of newspapers whose weekly circulation was over 20,000, with the result that the tax applied
only to 13 out of 124 publishers in Louisiana. These large papers were critical of Senator Huey Long who controlled the state
legislature which enacted the license tax. The censorial motivation for the law was thus evident.
On the other hand, in Minneapolis Star & Tribune Co. v. Minnesota Comm'r of Revenue, 460 U.S. 575, 75 L. Ed. 2d 295
(1983), the tax was found to be discriminatory because although it could have been made liable for the sales tax or, in lieu
thereof, for the use tax on the privilege of using, storing or consuming tangible goods, the press was not. Instead, the press
was exempted from both taxes. It was, however, later made to pay a specialuse tax on the cost of paper and ink which made
these items "the only items subject to the use tax that were component of goods to be sold at retail." The U.S. Supreme Court
held that the differential treatment of the press "suggests that the goal of regulation is not related to suppression of expression,
and such goal is presumptively unconstitutional." It would therefore appear that even a law that favors the press is
constitutionally suspect. (See the dissent of Rehnquist, J. in that case)
Nor is it true that only two exemptions previously granted by E.O. No. 273 are withdrawn "absolutely and unqualifiedly" by R.A.
No. 7716. Other exemptions from the VAT, such as those previously granted to PAL, petroleum concessionaires, enterprises

registered with the Export Processing Zone Authority, and many more are likewise totally withdrawn, in addition to exemptions
which are partially withdrawn, in an effort to broaden the base of the tax.
The PPI says that the discriminatory treatment of the press is highlighted by the fact that transactions, which are profit oriented,
continue to enjoy exemption under R.A. No. 7716. An enumeration of some of these transactions will suffice to show that by
and large this is not so and that the exemptions are granted for a purpose. As the Solicitor General says, such exemptions are
granted, in some cases, to encourage agricultural production and, in other cases, for the personal benefit of the end-user rather
than for profit. The exempt transactions are:
(a) Goods for consumption or use which are in their original state (agricultural, marine and forest products, cotton seeds in their
original state, fertilizers, seeds, seedlings, fingerlings, fish, prawn livestock and poultry feeds) and goods or services to
enhance agriculture (milling of palay, corn, sugar cane and raw sugar, livestock, poultry feeds, fertilizer, ingredients used for the
manufacture of feeds).
(b) Goods used for personal consumption or use (household and personal effects of citizens returning to the Philippines) or for
professional use, like professional instruments and implements, by persons coming to the Philippines to settle here.
(c) Goods subject to excise tax such as petroleum products or to be used for manufacture of petroleum products subject to
excise tax and services subject to percentage tax.
(d) Educational services, medical, dental, hospital and veterinary services, and services rendered under employer-employee
relationship.
(e) Works of art and similar creations sold by the artist himself.
(f) Transactions exempted under special laws, or international agreements.
(g) Export-sales by persons not VAT-registered.
(h) Goods or services with gross annual sale or receipt not exceeding P500,000.00.
(Respondents' Consolidated Comment on the Motions for Reconsideration, pp. 58-60)
The PPI asserts that it does not really matter that the law does not discriminate against the press because "even
nondiscriminatory taxation on constitutionally guaranteed freedom is unconstitutional." PPI cites in support of this assertion the
following statement in Murdock v. Pennsylvania, 319 U.S. 105, 87 L. Ed. 1292 (1943):
The fact that the ordinance is "nondiscriminatory" is immaterial. The protection afforded by the First Amendment is not so
restricted. A license tax certainly does not acquire constitutional validity because it classifies the privileges protected by the
First Amendment along with the wares and merchandise of hucksters and peddlers and treats them all alike. Such equality in
treatment does not save the ordinance. Freedom of press, freedom of speech, freedom of religion are in preferred position.
The Court was speaking in that case of a license tax, which, unlike an ordinary tax, is mainly for regulation. Its imposition on
the press is unconstitutional because it lays a prior restraint on the exercise of its right. Hence, although its application to
others, such those selling goods, is valid, its application to the press or to religious groups, such as the Jehovah's Witnesses,
in connection with the latter's sale of religious books and pamphlets, is unconstitutional. As the U.S. Supreme Court put it, "it is
one thing to impose a tax on income or property of a preacher. It is quite another thing to exact a tax on him for delivering a
sermon."
A similar ruling was made by this Court in American Bible Society v. City of Manila, 101 Phil. 386 (1957) which invalidated a
city ordinance requiring a business license fee on those engaged in the sale of general merchandise. It was held that the tax
could not be imposed on the sale of bibles by the American Bible Society without restraining the free exercise of its right to
propagate.
The VAT is, however, different. It is not a license tax. It is not a tax on the exercise of a privilege, much less a constitutional
right. It is imposed on the sale, barter, lease or exchange of goods or properties or the sale or exchange of services and the
lease of properties purely for revenue purposes. To subject the press to its payment is not to burden the exercise of its right any
more than to make the press pay income tax or subject it to general regulation is not to violate its freedom under the
Constitution.
Additionally, the Philippine Bible Society, Inc. claims that although it sells bibles, the proceeds derived from the sales are used
to subsidize the cost of printing copies which are given free to those who cannot afford to pay so that to tax the sales would be
to increase the price, while reducing the volume of sale. Granting that to be the case, the resulting burden on the exercise of
religious freedom is so incidental as to make it difficult to differentiate it from any other economic imposition that might make
the right to disseminate religious doctrines costly. Otherwise, to follow the petitioner's argument, to increase the tax on the sale
of vestments would be to lay an impermissible burden on the right of the preacher to make a sermon.
On the other hand the registration fee of P1,000.00 imposed by 107 of the NIRC, as amended by 7 of R.A. No. 7716,
although fixed in amount, is really just to pay for the expenses of registration and enforcement of provisions such as those
relating to accounting in 108 of the NIRC. That the PBS distributes free bibles and therefore is not liable to pay the VAT does
not excuse it from the payment of this fee because it also sells some copies. At any rate whether the PBS is liable for the VAT
must be decided in concrete cases, in the event it is assessed this tax by the Commissioner of Internal Revenue.
VII. Alleged violations of the due process, equal protection and contract clauses and the rule on taxation. CREBA asserts that
R.A. No. 7716 (1) impairs the obligations of contracts, (2) classifies transactions as covered or exempt without reasonable
basis and (3) violates the rule that taxes should be uniform and equitable and that Congress shall "evolve a progressive system
of taxation."
With respect to the first contention, it is claimed that the application of the tax to existing contracts of the sale of real property
by installment or on deferred payment basis would result in substantial increases in the monthly amortizations to be paid
because of the 10% VAT. The additional amount, it is pointed out, is something that the buyer did not anticipate at the time he
entered into the contract.
The short answer to this is the one given by this Court in an early case: "Authorities from numerous sources are cited by the
plaintiffs, but none of them show that a lawful tax on a new subject, or an increased tax on an old one, interferes with a contract
or impairs its obligation, within the meaning of the Constitution. Even though such taxation may affect particular contracts, as it
may increase the debt of one person and lessen the security of another, or may impose additional burdens upon one class and
release the burdens of another, still the tax must be paid unless prohibited by the Constitution, nor can it be said that it impairs
the obligation of any existing contract in its true legal sense." (La Insular v. Machuca Go-Tauco and Nubla Co-Siong, 39 Phil.
567, 574 (1919)). Indeed not only existing laws but also "the reservation of the essential attributes of sovereignty, is . . . read
into contracts as a postulate of the legal order." (Philippine-American Life Ins. Co. v. Auditor General, 22 SCRA 135, 147
(1968)) Contracts must be understood as having been made in reference to the possible exercise of the rightful authority of the
government and no obligation of contract can extend to the defeat of that authority. (Norman v. Baltimore and Ohio R.R., 79 L.
Ed. 885 (1935)).
It is next pointed out that while 4 of R.A. No. 7716 exempts such transactions as the sale of agricultural products, food items,
petroleum, and medical and veterinary services, it grants no exemption on the sale of real property which is equally essential.

The sale of real property for socialized and low-cost housing is exempted from the tax, but CREBA claims that real estate
transactions of "the less poor," i.e., the middle class, who are equally homeless, should likewise be exempted.
The sale of food items, petroleum, medical and veterinary services, etc., which are essential goods and services was already
exempt under 103, pars. (b) (d) (1) of the NIRC before the enactment of R.A. No. 7716. Petitioner is in error in claiming that
R.A. No. 7716 granted exemption to these transactions, while subjecting those of petitioner to the payment of the VAT.
Moreover, there is a difference between the "homeless poor" and the "homeless less poor" in the example given by petitioner,
because the second group or middle class can afford to rent houses in the meantime that they cannot yet buy their own homes.
The two social classes are thus differently situated in life. "It is inherent in the power to tax that the State be free to select the
subjects of taxation, and it has been repeatedly held that 'inequalities which result from a singling out of one particular class for
taxation, or exemption infringe no constitutional limitation.'" (Lutz v. Araneta, 98 Phil. 148, 153 (1955). Accord, City of Baguio v.
De Leon, 134 Phil. 912 (1968); Sison, Jr. v. Ancheta, 130 SCRA 654, 663 (1984); Kapatiran ng mga Naglilingkod sa
Pamahalaan ng Pilipinas, Inc. v. Tan, 163 SCRA 371 (1988)).
Finally, it is contended, for the reasons already noted, that R.A. No. 7716 also violates Art. VI, 28(1) which provides that "The
rule of taxation shall be uniform and equitable. The Congress shall evolve a progressive system of taxation."
Equality and uniformity of taxation means that all taxable articles or kinds of property of the same class be taxed at the same
rate. The taxing power has the authority to make reasonable and natural classifications for purposes of taxation. To satisfy this
requirement it is enough that the statute or ordinance applies equally to all persons, forms and corporations placed in similar
situation. (City of Baguio v. De Leon, supra; Sison, Jr. v. Ancheta, supra)
Indeed, the VAT was already provided in E.O. No. 273 long before R.A. No. 7716 was enacted. R.A. No. 7716 merely expands
the base of the tax. The validity of the original VAT Law was questioned in Kapatiran ng Naglilingkod sa Pamahalaan ng
Pilipinas, Inc. v. Tan, 163 SCRA 383 (1988) on grounds similar to those made in these cases, namely, that the law was
"oppressive, discriminatory, unjust and regressive in violation of Art. VI, 28(1) of the Constitution." (At 382) Rejecting the
challenge to the law, this Court held:
As the Court sees it, EO 273 satisfies all the requirements of a valid tax. It is uniform. . . .
The sales tax adopted in EO 273 is applied similarly on all goods and services sold to the public, which are not exempt, at the
constant rate of 0% or 10%.
The disputed sales tax is also equitable. It is imposed only on sales of goods or services by persons engaged in business with
an aggregate gross annual sales exceeding P200,000.00. Small corner sari-sari stores are consequently exempt from its
application. Likewise exempt from the tax are sales of farm and marine products, so that the costs of basic food and other
necessities, spared as they are from the incidence of the VAT, are expected to be relatively lower and within the reach of the
general public.
(At 382-383)
The CREBA claims that the VAT is regressive. A similar claim is made by the Cooperative Union of the Philippines, Inc. (CUP),
while petitioner Juan T. David argues that the law contravenes the mandate of Congress to provide for a progressive system of
taxation because the law imposes a flat rate of 10% and thus places the tax burden on all taxpayers without regard to their
ability to pay.
The Constitution does not really prohibit the imposition of indirect taxes which, like the VAT, are regressive. What it simply
provides is that Congress shall "evolve a progressive system of taxation." The constitutional provision has been interpreted to
mean simply that "direct taxes are . . . to be preferred [and] as much as possible, indirect taxes should be minimized." (E.
FERNANDO, THE CONSTITUTION OF THE PHILIPPINES 221 (Second ed. (1977)). Indeed, the mandate to Congress is not
to prescribe, but to evolve, a progressive tax system. Otherwise, sales taxes, which perhaps are the oldest form of indirect
taxes, would have been prohibited with the proclamation of Art. VIII, 17(1) of the 1973 Constitution from which the present Art.
VI, 28(1) was taken. Sales taxes are also regressive.
Resort to indirect taxes should be minimized but not avoided entirely because it is difficult, if not impossible, to avoid them by
imposing such taxes according to the taxpayers' ability to pay. In the case of the VAT, the law minimizes the regressive effects
of this imposition by providing for zero rating of certain transactions (R.A. No. 7716, 3, amending 102 (b) of the NIRC), while
granting exemptions to other transactions. (R.A. No. 7716, 4, amending 103 of the NIRC).
Thus, the following transactions involving basic and essential goods and services are exempted from the VAT:
(a) Goods for consumption or use which are in their original state (agricultural, marine and forest products, cotton seeds in their
original state, fertilizers, seeds, seedlings, fingerlings, fish, prawn livestock and poultry feeds) and goods or services to
enhance agriculture (milling of palay, corn sugar cane and raw sugar, livestock, poultry feeds, fertilizer, ingredients used for the
manufacture of feeds).
(b) Goods used for personal consumption or use (household and personal effects of citizens returning to the Philippines) and or
professional use, like professional instruments and implements, by persons coming to the Philippines to settle here.
(c) Goods subject to excise tax such as petroleum products or to be used for manufacture of petroleum products subject to
excise tax and services subject to percentage tax.
(d) Educational services, medical, dental, hospital and veterinary services, and services rendered under employer-employee
relationship.
(e) Works of art and similar creations sold by the artist himself.
(f) Transactions exempted under special laws, or international agreements.
(g) Export-sales by persons not VAT-registered.
(h) Goods or services with gross annual sale or receipt not exceeding P500,000.00.
(Respondents' Consolidated Comment on the Motions for Reconsideration, pp. 58-60)
On the other hand, the transactions which are subject to the VAT are those which involve goods and services which are used or
availed of mainly by higher income groups. These include real properties held primarily for sale to customers or for lease in the
ordinary course of trade or business, the right or privilege to use patent, copyright, and other similar property or right, the right
or privilege to use industrial, commercial or scientific equipment, motion picture films, tapes and discs, radio, television, satellite
transmission and cable television time, hotels, restaurants and similar places, securities, lending investments, taxicabs, utility
cars for rent, tourist buses, and other common carriers, services of franchise grantees of telephone and telegraph.
The problem with CREBA's petition is that it presents broad claims of constitutional violations by tendering issues not at retail
but at wholesale and in the abstract. There is no fully developed record which can impart to adjudication the impact of actuality.
There is no factual foundation to show in the concrete the application of the law to actual contracts and exemplify its effect on
property rights. For the fact is that petitioner's members have not even been assessed the VAT. Petitioner's case is not made
concrete by a series of hypothetical questions asked which are no different from those dealt with in advisory opinions.
The difficulty confronting petitioner is thus apparent. He alleges arbitrariness. A mere allegation, as here, does not suffice.
There must be a factual foundation of such unconstitutional taint. Considering that petitioner here would condemn such a

provision as void on its face, he has not made out a case. This is merely to adhere to the authoritative doctrine that where the
due process and equal protection clauses are invoked, considering that they are not fixed rules but rather broad standards,
there is a need for proof of such persuasive character as would lead to such a conclusion. Absent such a showing, the
presumption of validity must prevail.
(Sison, Jr. v. Ancheta, 130 SCRA at 661)
Adjudication of these broad claims must await the development of a concrete case. It may be that postponement of
adjudication would result in a multiplicity of suits. This need not be the case, however. Enforcement of the law may give rise to
such a case. A test case, provided it is an actual case and not an abstract or hypothetical one, may thus be presented.
Nor is hardship to taxpayers alone an adequate justification for adjudicating abstract issues. Otherwise, adjudication would be
no different from the giving of advisory opinion that does not really settle legal issues.
We are told that it is our duty under Art. VIII, 1, 2 to decide whenever a claim is made that "there has been a grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of any branch or instrumentality of the government." This duty
can only arise if an actual case or controversy is before us. Under Art . VIII, 5 our jurisdiction is defined in terms of "cases"
and all that Art. VIII, 1, 2 can plausibly mean is that in the exercise of that jurisdiction we have the judicial power to determine
questions of grave abuse of discretion by any branch or instrumentality of the government.
Put in another way, what is granted in Art. VIII, 1, 2 is "judicial power," which is "the power of a court to hear and decide
cases pending between parties who have the right to sue and be sued in the courts of law and equity" (Lamb v. Phipps, 22 Phil.
456, 559 (1912)), as distinguished from legislative and executive power. This power cannot be directly appropriated until it is
apportioned among several courts either by the Constitution, as in the case of Art. VIII, 5, or by statute, as in the case of the
Judiciary Act of 1948 (R.A. No. 296) and the Judiciary Reorganization Act of 1980 (B.P. Blg. 129). The power thus apportioned
constitutes the court's "jurisdiction," defined as "the power conferred by law upon a court or judge to take cognizance of a case,
to the exclusion of all others." (United States v. Arceo, 6 Phil. 29 (1906)) Without an actual case coming within its jurisdiction,
this Court cannot inquire into any allegation of grave abuse of discretion by the other departments of the government.
VIII. Alleged violation of policy towards cooperatives. On the other hand, the Cooperative Union of the Philippines (CUP), after
briefly surveying the course of legislation, argues that it was to adopt a definite policy of granting tax exemption to cooperatives
that the present Constitution embodies provisions on cooperatives. To subject cooperatives to the VAT would therefore be to
infringe a constitutional policy. Petitioner claims that in 1973, P.D. No. 175 was promulgated exempting cooperatives from the
payment of income taxes and sales taxes but in 1984, because of the crisis which menaced the national economy, this
exemption was withdrawn by P.D. No. 1955; that in 1986, P.D. No. 2008 again granted cooperatives exemption from income
and sales taxes until December 31, 1991, but, in the same year, E.O. No. 93 revoked the exemption; and that finally in 1987
the framers of the Constitution "repudiated the previous actions of the government adverse to the interests of the
cooperatives, that is, the repeated revocation of the tax exemption to cooperatives and instead upheld the policy of
strengthening the cooperatives by way of the grant of tax exemptions," by providing the following in Art. XII:
1. The goals of the national economy are a more equitable distribution of opportunities, income, and wealth; a sustained
increase in the amount of goods and services produced by the nation for the benefit of the people; and an expanding
productivity as the key to raising the quality of life for all, especially the underprivileged.
The State shall promote industrialization and full employment based on sound agricultural development and agrarian reform,
through industries that make full and efficient use of human and natural resources, and which are competitive in both domestic
and foreign markets. However, the State shall protect Filipino enterprises against unfair foreign competition and trade practices.
In the pursuit of these goals, all sectors of the economy and all regions of the country shall be given optimum opportunity to
develop. Private enterprises, including corporations, cooperatives, and similar collective organizations, shall be encouraged to
broaden the base of their ownership.
15. The Congress shall create an agency to promote the viability and growth of cooperatives as instruments for social justice
and economic development.
Petitioner's contention has no merit. In the first place, it is not true that P.D. No. 1955 singled out cooperatives by withdrawing
their exemption from income and sales taxes under P.D. No. 175, 5. What P.D. No. 1955, 1 did was to withdraw the
exemptions and preferential treatments theretofore granted to private business enterprises in general, in view of the economic
crisis which then beset the nation. It is true that after P.D. No. 2008, 2 had restored the tax exemptions of cooperatives in
1986, the exemption was again repealed by E.O. No. 93, 1, but then again cooperatives were not the only ones whose
exemptions were withdrawn. The withdrawal of tax incentives applied to all, including government and private entities. In the
second place, the Constitution does not really require that cooperatives be granted tax exemptions in order to promote their
growth and viability. Hence, there is no basis for petitioner's assertion that the government's policy toward cooperatives had
been one of vacillation, as far as the grant of tax privileges was concerned, and that it was to put an end to this indecision that
the constitutional provisions cited were adopted. Perhaps as a matter of policy cooperatives should be granted tax exemptions,
but that is left to the discretion of Congress. If Congress does not grant exemption and there is no discrimination to
cooperatives, no violation of any constitutional policy can be charged.
Indeed, petitioner's theory amounts to saying that under the Constitution cooperatives are exempt from taxation. Such theory is
contrary to the Constitution under which only the following are exempt from taxation: charitable institutions, churches and
parsonages, by reason of Art. VI, 28 (3), and non-stock, non-profit educational institutions by reason of Art. XIV, 4 (3).
CUP's further ground for seeking the invalidation of R.A. No. 7716 is that it denies cooperatives the equal protection of the law
because electric cooperatives are exempted from the VAT. The classification between electric and other cooperatives (farmers
cooperatives, producers cooperatives, marketing cooperatives, etc.) apparently rests on a congressional determination that
there is greater need to provide cheaper electric power to as many people as possible, especially those living in the rural areas,
than there is to provide them with other necessities in life. We cannot say that such classification is unreasonable.
We have carefully read the various arguments raised against the constitutional validity of R.A. No. 7716. We have in fact taken
the extraordinary step of enjoining its enforcement pending resolution of these cases. We have now come to the conclusion
that the law suffers from none of the infirmities attributed to it by petitioners and that its enactment by the other branches of the
government does not constitute a grave abuse of discretion. Any question as to its necessity, desirability or expediency must be
addressed to Congress as the body which is electorally responsible, remembering that, as Justice Holmes has said,
"legislators are the ultimate guardians of the liberties and welfare of the people in quite as great a degree as are the courts."
(Missouri, Kansas & Texas Ry. Co. v. May, 194 U.S. 267, 270, 48 L. Ed. 971, 973 (1904)). It is not right, as petitioner in G.R.
No. 115543 does in arguing that we should enforce the public accountability of legislators, that those who took part in passing
the law in question by voting for it in Congress should later thrust to the courts the burden of reviewing measures in the flush of
enactment. This Court does not sit as a third branch of the legislature, much less exercise a veto power over legislation.
WHEREFORE, the motions for reconsideration are denied with finality and the temporary restraining order previously issued is
hereby lifted.