8/31/2016 G.R.No.

75697

TodayisWednesday,August31,2016

RepublicofthePhilippines
SUPREMECOURT
Manila

ENBANC

G.R.No.L75697June18,1987

VALENTINTIOdoingbusinessunderthenameandstyleofOMIENTERPRISES,petitioner,
vs.
VIDEOGRAMREGULATORYBOARD,MINISTEROFFINANCE,METROMANILACOMMISSION,CITYMAYOR
andCITYTREASUREROFMANILA,respondents.

NelsonY.Ngforpetitioner.

TheCityLegalOfficerforrespondentsCityMayorandCityTreasurer.

MELENCIOHERRERA,J.:

ThispetitionwasfiledonSeptember1,1986bypetitioneronhisownbehalfandpurportedlyonbehalfofother
videogram operators adversely affected. It assails the constitutionality of Presidential Decree No. 1987 entitled
"AnActCreatingtheVideogramRegulatoryBoard"withbroadpowerstoregulateandsupervisethevideogram
industry (hereinafter briefly referred to as the BOARD). The Decree was promulgated on October 5, 1985 and
tookeffectonApril10,1986,fifteen(15)daysaftercompletionofitspublicationintheOfficialGazette.

OnNovember5,1985,amonthafterthepromulgationoftheabovementioneddecree,PresidentialDecreeNo.
1994amendedtheNationalInternalRevenueCodeproviding,interalia:

SEC.134.VideoTapes. There shall be collected on each processed videotape cassette, ready

forplayback,regardlessoflength,anannualtaxoffivepesosProvided,Thatlocallymanufactured
orimportedblankvideotapesshallbesubjecttosalestax.

On October 23, 1986, the Greater Manila Theaters Association, Integrated Movie Producers, Importers and
Distributors Association of the Philippines, and Philippine Motion Pictures Producers Association, hereinafter
collectivelyreferredtoastheIntervenors,werepermittedbytheCourttointerveneinthecase,overpetitioner's
opposition, upon the allegations that intervention was necessary for the complete protection of their rights and
that their "survival and very existence is threatened by the unregulated proliferation of film piracy." The
IntervenorswerethereafterallowedtofiletheirCommentinIntervention.

TherationalebehindtheenactmentoftheDECREE,issetoutinitspreambularclausesasfollows:

1. WHEREAS, the proliferation and unregulated circulation of videograms including, among others,
videotapes, discs, cassettes or any technical improvement or variation thereof, have greatly
prejudiced the operations of moviehouses and theaters, and have caused a sharp decline in
theatricalattendancebyatleastfortypercent(40%)andatremendousdropinthecollectionofsales,
contractor'sspecific,amusementandothertaxes,therebyresultinginsubstantiallossesestimatedat
P450Millionannuallyingovernmentrevenues

2. WHEREAS, videogram(s) establishments collectively earn around P600 Million per annum from
rentals, sales and disposition of videograms, and such earnings have not been subjected to tax,
therebydeprivingtheGovernmentofapproximatelyP180Millionintaxeseachyear

3.WHEREAS,theunregulatedactivitiesofvideogramestablishmentshavealsoaffectedtheviability
of the movie industry, particularly the more than 1,200 movie houses and theaters throughout the
country, and occasioned industrywide displacement and unemployment due to the shutdown of
numerousmoviehousesandtheaters

4."WHEREAS,inordertoensurenationaleconomicrecovery,itisimperativefortheGovernmentto
createanenvironmentconducivetogrowthanddevelopmentofallbusinessindustries,includingthe
movieindustrywhichhasanaccumulatedinvestmentofaboutP3Billion

5.WHEREAS,propertaxationoftheactivitiesofvideogramestablishmentswillnotonlyalleviatethe
dire financial condition of the movie industry upon which more than 75,000 families and 500,000
workers depend for their livelihood, but also provide an additional source of revenue for the
Government,andatthesametimerationalizetheheretoforeuncontrolleddistributionofvideograms

6. WHEREAS, the rampant and unregulated showing of obscene videogram features constitutes a
clearandpresentdangertothemoralandspiritualwellbeingoftheyouth,andimpairsthemandate
of the Constitution for the State to support the rearing of the youth for civic efficiency and the
developmentofmoralcharacterandpromotetheirphysical,intellectual,andsocialwellbeing

7. WHEREAS, civicminded citizens and groups have called for remedial measures to curb these
blatantmalpracticeswhichhaveflauntedourcensorshipandcopyrightlaws

8.WHEREAS,inthefaceofthesegraveemergenciescorrodingthemoralvaluesofthepeopleand
betrayingthenationaleconomicrecoveryprogram,boldemergencymeasuresmustbeadoptedwith
dispatch...(Numberingofparagraphssupplied).

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Petitioner'sattackontheconstitutionalityoftheDECREErestsonthefollowinggrounds:

1. Section 10 thereof, which imposes a tax of 30% on the gross receipts payable to the local
governmentisaRIDERandthesameisnotgermanetothesubjectmatterthereof

2.Thetaximposedisharsh,confiscatory,oppressiveand/orinunlawfulrestraintoftradeinviolation
ofthedueprocessclauseoftheConstitution

3.ThereisnofactualnorlegalbasisfortheexercisebythePresidentofthevastpowersconferred
uponhimbyAmendmentNo.6

4.Thereisunduedelegationofpowerandauthority

5.TheDecreeisanexpostfactolawand

6.Thereisoverregulationofthevideoindustryasifitwereanuisance,whichitisnot.

Weshallconsidertheforegoingobjectionsinseriatim.

1.TheConstitutionalrequirementthat"everybillshallembraceonlyonesubjectwhichshallbeexpressedinthe
titlethereof" 1issufficientlycompliedwithifthetitlebecomprehensiveenoughtoincludethegeneralpurposewhichastatuteseekstoachieve.Itis
notnecessarythatthetitleexpresseachandeveryendthatthestatutewishestoaccomplish.Therequirementissatisfiedifallthepartsofthestatuteare
related,andaregermanetothesubjectmatterexpressedinthetitle,oraslongastheyarenotinconsistentwithorforeigntothegeneralsubjectandtitle.
2Anacthavingasinglegeneralsubject,indicatedinthetitle,maycontainanynumberofprovisions,nomatterhowdiverse
they may be, so long as they are not inconsistent with or foreign to the general subject, and may be considered in
furtherance of such subject by providing for the method and means of carrying out the general object." 3 The rule also is
that the constitutional requirement as to the title of a bill should not be so narrowly construed as to cripple or impede the
poweroflegislation.4Itshouldbegivenpracticalratherthantechnicalconstruction.5

Testedbytheforegoingcriteria,petitioner'scontentionthatthetaxprovisionoftheDECREEisarideriswithout
merit.Thatsectionreads,interalia:

Section10.TaxonSale,LeaseorDispositionofVideograms.Notwithstandinganyprovisionoflaw
tothecontrary,theprovinceshallcollectataxofthirtypercent(30%)ofthepurchasepriceorrental
rate, as the case may be, for every sale, lease or disposition of a videogram containing a
reproductionofanymotionpictureoraudiovisualprogram.Fiftypercent(50%)oftheproceedsofthe
tax collected shall accrue to the province, and the other fifty percent (50%) shall acrrue to the
municipality where the tax is collected PROVIDED, That in Metropolitan Manila, the tax shall be
sharedequallybytheCity/MunicipalityandtheMetropolitanManilaCommission.

xxxxxxxxx

The foregoing provision is allied and germane to, and is reasonably necessary for the accomplishment of, the
general object of the DECREE, which is the regulation of the video industry through the Videogram Regulatory
Boardasexpressedinitstitle.Thetaxprovisionisnotinconsistentwith,norforeigntothatgeneralsubjectand
title. As a tool for regulation 6 it is simply one of the regulatory and control mechanisms scattered throughout the
DECREE.TheexpresspurposeoftheDECREEtoincludetaxationofthevideoindustryinordertoregulateandrationalize
the heretofore uncontrolled distribution of videograms is evident from Preambles 2 and 5, supra. Those preambles explain
the motives of the lawmaker in presenting the measure. The title of the DECREE, which is the creation of the Videogram
RegulatoryBoard,iscomprehensiveenoughtoincludethepurposesexpressedinitsPreambleandreasonablycoversallits
provisions. It is unnecessary to express all those objectives in the title or that the latter be an index to the body of the
DECREE.7

2.Petitioneralsosubmitsthatthethirtypercent(30%)taximposedisharshandoppressive,confiscatory,andin
restraintoftrade.However,itisbeyondseriousquestionthatataxdoesnotceasetobevalidmerelybecauseit
regulates,discourages,orevendefinitelydeterstheactivitiestaxed. 8Thepowertoimposetaxesisonesounlimited
inforceandsosearchinginextent,thatthecourtsscarcelyventuretodeclarethatitissubjecttoanyrestrictionswhatever,
except such as rest in the discretion of the authority which exercises it. 9 In imposing a tax, the legislature acts upon its
constituents.Thisis,ingeneral,asufficientsecurityagainsterroneousandoppressivetaxation.10

ThetaximposedbytheDECREEisnotonlyaregulatorybutalsoarevenuemeasurepromptedbytherealization
that earnings of videogram establishments of around P600 million per annum have not been subjected to tax,
therebydeprivingtheGovernmentofanadditionalsourceofrevenue.Itisanendusertax,imposedonretailers
for every videogram they make available for public viewing. It is similar to the 30% amusement tax imposed or
bornebythemovieindustrywhichthetheaterownerspaytothegovernment,butwhichispassedontotheentire
cost of the admission ticket, thus shifting the tax burden on the buying or the viewing public. It is a tax that is
imposeduniformlyonallvideogramoperators.

The levy of the 30% tax is for a public purpose. It was imposed primarily to answer the need for regulating the
videoindustry,particularlybecauseoftherampantfilmpiracy,theflagrantviolationofintellectualpropertyrights,
andtheproliferationofpornographicvideotapes.AndwhileitwasalsoanobjectiveoftheDECREEtoprotectthe
movieindustry,thetaxremainsavalidimposition.

The public purpose of a tax may legally exist even if the motive which impelled the legislature to
imposethetaxwastofavoroneindustryoveranother.11

Itisinherentinthepowertotaxthatastatebefreetoselectthesubjectsoftaxation,andithasbeen
repeatedlyheldthat"inequitieswhichresultfromasinglingoutofoneparticularclassfortaxationor
exemptioninfringenoconstitutionallimitation".12Taxationhasbeenmadetheimplementofthestate'spolicepower.13

Atbottom,therateoftaxisamatterbetteraddressedtothetaxinglegislature.

3.PetitionerarguesthattherewasnolegalnorfactualbasisforthepromulgationoftheDECREEbytheformer
President under Amendment No. 6 of the 1973 Constitution providing that "whenever in the judgment of the
President...,thereexistsagraveemergencyorathreatorimminencethereof,orwhenevertheinterimBatasang
PambansaortheregularNationalAssemblyfailsorisunabletoactadequatelyonanymatterforanyreasonthat

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inhisjudgmentrequiresimmediateaction,hemay,inordertomeettheexigency,issuethenecessarydecrees,
orders,orlettersofinstructions,whichshallformpartofthelawoftheland."

In refutation, the Intervenors and the Solicitor General's Office aver that the 8th "whereas" clause sufficiently
summarizesthejustificationinthatgraveemergenciescorrodingthemoralvaluesofthepeopleandbetrayingthe
national economic recovery program necessitated bold emergency measures to be adopted with dispatch.
Whatever the reasons "in the judgment" of the then President, considering that the issue of the validity of the
exerciseoflegislativepowerunderthesaidAmendmentstillpendsresolutioninseveralothercases,wereserve
resolutionofthequestionraisedatthepropertime.

4.NeithercanitbesuccessfullyarguedthattheDECREEcontainsanunduedelegationoflegislativepower.The
grant in Section 11 of the DECREE of authority to the BOARD to "solicit the direct assistance of other agencies
andunitsofthegovernmentanddeputize,forafixedandlimitedperiod,theheadsorpersonnelofsuchagencies
andunitstoperformenforcementfunctionsfortheBoard"isnotadelegationofthepowertolegislatebutmerely
aconfermentofauthorityordiscretionastoitsexecution,enforcement,andimplementation."Thetruedistinction
isbetweenthedelegationofpowertomakethelaw,whichnecessarilyinvolvesadiscretionastowhatitshallbe,
andconferringauthorityordiscretionastoitsexecutiontobeexercisedunderandinpursuanceofthelaw.The
firstcannotbedonetothelatter,novalidobjectioncanbemade."14Besides,intheverylanguageofthedecree,theauthorityof
theBOARDtosolicitsuchassistanceisfora"fixedandlimitedperiod"withthedeputizedagenciesconcernedbeing"subjecttothedirectionandcontrolof
theBOARD."ThatthegrantofsuchauthoritymightbethesourceofgraftandcorruptionwouldnotstigmatizetheDECREEasunconstitutional.Shouldthe
eventualityoccur,theaggrievedpartieswillnotbewithoutadequateremedyinlaw.

5.TheDECREEisnotviolativeoftheexpostfactoprinciple.Anexpostfactolawis,amongothercategories,one
which"altersthelegalrulesofevidence,andauthorizesconvictionuponlessordifferenttestimonythanthelaw
requiredatthetimeofthecommissionoftheoffense."Itispetitioner'spositionthatSection15oftheDECREEin
providingthat:

AllvideogramestablishmentsinthePhilippinesareherebygivenaperiodoffortyfive(45)daysafter
the effectivity of this Decree within which to register with and secure a permit from the BOARD to
engage in the videogram business and to register with the BOARD all their inventories of
videograms, including videotapes, discs, cassettes or other technical improvements or variations
thereof,beforetheycouldbesold,leased,orotherwisedisposedof.Thereafteranyvideogramfound
in the possession of any person engaged in the videogram business without the required proof of
registration by the BOARD, shall be prima facie evidence of violation of the Decree, whether the
possessionofsuchvideogrambeforprivateshowingand/orpublicexhibition.

raisesimmediatelyaprimafacieevidenceofviolationoftheDECREEwhentherequiredproofofregistrationof
anyvideogramcannotbepresentedandthuspartakesofthenatureofanexpostfactolaw.

Theargumentisuntenable.AsthisCourtheldintherecentcaseofVallartavs.CourtofAppeals,etal.15

...itisnowwellsettledthat"thereisnoconstitutionalobjectiontothepassageofalawprovidingthat
the presumption of innocence may be overcome by a contrary presumption founded upon the
experience of human conduct, and enacting what evidence shall be sufficient to overcome such
presumption of innocence" (People vs. Mingoa 92 Phil. 856 [1953] at 85859, citing 1 COOLEY, A
TREATISEONTHECONSTITUTIONALLIMITATIONS,639641).Andthe"legislaturemayenactthat
whencertainfactshavebeenprovedthattheyshallbeprimafacieevidenceoftheexistenceofthe
guilt of the accused and shift the burden of proof provided there be a rational connection between
thefactsprovedandtheultimatefactspresumedsothattheinferenceoftheonefromproofofthe
othersisnotunreasonableandarbitrarybecauseoflackofconnectionbetweenthetwoincommon
experience".16

Applied to the challenged provision, there is no question that there is a rational connection between the fact
proved,whichisnonregistration,andtheultimatefactpresumedwhichisviolationoftheDECREE,besidesthe
fact that the prima facie presumption of violation of the DECREE attaches only after a fortyfiveday period
countedfromitseffectivityandis,therefore,neitherretrospectiveincharacter.

6. We do not share petitioner's fears that the video industry is being overregulated and being eased out of
existenceasifitwereanuisance.Beingarelativelynewindustry,theneedforitsregulationwasapparent.While
theunderlyingobjectiveoftheDECREEistoprotectthemoribundmovieindustry,thereisnoquestionthatpublic
welfare is at bottom of its enactment, considering "the unfair competition posed by rampant film piracy the
erosion of the moral fiber of the viewing public brought about by the availability of unclassified and unreviewed
video tapes containing pornographic films and films with brutally violent sequences and losses in government
revenues due to the drop in theatrical attendance, not to mention the fact that the activities of video
establishments are virtually untaxed since mere payment of Mayor's permit and municipal license fees are
requiredtoengageinbusiness.17

TheenactmentoftheDecreesinceApril10,1986hasnotbroughtaboutthe"demise"ofthevideoindustry.On
the contrary, video establishments are seen to have proliferated in many places notwithstanding the 30% tax
imposed.

Inthelastanalysis,whatpetitionerbasicallyquestionsisthenecessity,wisdomandexpediencyoftheDECREE.
Theseconsiderations,however,areprimarilyandexclusivelyamatteroflegislativeconcern.

Onlycongressionalpowerorcompetence,notthewisdomoftheactiontaken,maybethebasisfor
declaringastatuteinvalid.Thisisasitoughttobe.Theprincipleofseparationofpowershasinthe
mainwiselyallocatedtherespectiveauthorityofeachdepartmentandconfineditsjurisdictiontosuch
asphere.TherewouldthenbeintrusionnotallowableundertheConstitutionifonamatterlefttothe
discretionofacoordinatebranch,thejudiciarywouldsubstituteitsown.Iftherebeadherencetothe
ruleoflaw,asthereoughttobe,thelastoffendershouldbecourtsofjustice,towhichrightlylitigants
submit their controversy precisely to maintain unimpaired the supremacy of legal norms and
prescriptions.Theattackonthevalidityofthechallengedprovisionlikewiseinsofarastheremaybe
objections,evenifvalidandcogentonitswisdomcannotbesustained.18

Infine,petitionerhasnotovercomethepresumptionofvaliditywhichattachestoachallengedstatute.Wefindno
clear violation of the Constitution which would justify us in pronouncing Presidential Decree No. 1987 as
unconstitutionalandvoid.

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WHEREFORE,theinstantPetitionisherebydismissed.

Nocosts.

SOORDERED.

Teehankee, (C.J.), Yap, Fernan, Narvasa, Gutierrez, Jr., Cruz, Paras, Feliciano, Gancayco, Padilla, Bidin,
SarmientoandCortes,JJ.,concur.

Footnotes

1Section19[1],ArticleVIII,1973ConstitutionSection26[l]ArticleVI,1987Constitution.

2Sumulongvs.COMELEC,No.48609,October10,1941,73Phil.288Corderovs.Hon.Jose
Cabatuando,etal.,L14542,Oct.31,1962,6SCRA418.

3PublicServiceCo.,Recktenwald,290III.314,8ALR466,470.

4Governmentvs.Hongkong&ShanghaiBankingCorporation,No.44257,November22,1938,66
Phil.483Corderovs.Cabatuando,etal.,supra.

5Sumulongvs.CommissiononElections,supra.

6UnitedStatesvs.Sanchez,340U.S.42,44,1950,citedinBernas,PhilippinesConstitutionalLaw,
p.594.

7Peoplevs.Carlos,L239,June30,1947,78Phil.535.

8U.S.vs.Sanchez,supra.

9IICooley,ATreatiseontheConstitutionalLimitations,p.986.

10ibid.,p.987.

11MagnanoCo.vs.Hamilton,292,U.S.40.

12Lutzvs.Araneta,L7859,December22,1955,98Phil.148,citingCarmichaelvs.SouthernCoal
andCokeCo.,301U.S.495,81L.Ed.1245.

13ibid.,citingGreatAtl.andPacificTeaCo.vs.Grosjean,301U.S.412,81L.Ed.1193U.S.vs.
Butler,297U.S.1,80L.Ed.477M'Cullochvs.Maryland,4Wheat,316,4L.Ed.579.

14Cincinnati,W&Z.R.Co.vs.ClintonCountyComrs(1852)1OhioSt.88.

15G.R.No.L40195,May29,1987.

16ibid.,citingPeoplevs.Mingoa,supra,SeealsoU.S.vs.LulingNo.11162,August12,1916,34
Phil.725.

17SolicitorGeneral'sComments,p.102,Rollo.

18Morfevs.Mutuc,L20387,January31,1968,22SCRA424,450451.

TheLawphilProjectArellanoLawFoundation

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