I. 2. Legislative Power Commissioner of Internal Rev v. Santos, GR No.
GENERAL PRINCIPLES 119252, August 18, 1997
A. Definition of Taxation
B. Nature of the Taxing Power of the State
1. Inherent power of the State Commissioner of Internal Revenue vs.
Eastern Telecommunications Philippines, Inc. 624 SCRA 340, G.R. No.
163835 July 7, 2010
Taxation; Value-Added Tax (VAT);Appeals;Tax Refunds; Statutory
Construction; Another exemption from the rule against raising new
issues on appeal is when the question involves matters of public
importance; Claims for tax refunds, when based on statutes granting
tax exemption or tax refund, partake of the nature of an exemption—
thus, the rule of strict interpretation against the taxpayer-claimant
similarly applies.—Another exemption from the rule against raising new
issues on appeal is when the question involves matters of public
importance. The power of taxation is an inherent attribute of
sovereignty; the government chiefly relies on taxation to obtain the
means to carry on its operations. Taxes are essential to its very existence;
hence, the dictum that “taxes are the lifeblood of the government.” For
this reason, the right of taxation cannot easily be surrendered; statutes
granting tax exemptions are considered as a derogation of the sovereign
authority and are strictly construed against the person or entity claiming
the exemption. Claims for tax refunds, when based on statutes granting
tax exemption or tax refund, partake of the nature of an exemption; thus,
the rule of strict interpretation against the taxpayer-claimant similarly
applies. The taxpayer is charged with the heavy burden of proving that
he has complied with and satisfied all the statutory and administrative
requirements to be entitled to the tax refund. This burden cannot be
offset by the non-observance of procedural technicalities by the
government’s tax agents when the non-observance of the remedial
measure addressing it does not in any manner prejudice the taxpayer’s
due process rights, as in the present case.
Regional Trial Courts; Jurisdiction; Constitutional Law; 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.—The respondents presented an exhaustive
study on the tax rates on jewelry levied by different Asian countries. This
is meant to convince us that compared to other countries, the tax rates
imposed on said industry in the Philippines is oppressive and
confiscatory. This Court, however, cannot subscribe to the theory that
the tax rates of other countries should be used as a yardstick in
determining what may be the proper subjects of taxation in our own
country. It should be pointed out that in imposing the aforementioned
taxes and duties, the State, acting through the legislative and executive
branches, is exercising its sovereign prerogative. 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.”
3. Scope of Taxing Power
Tan v. Del Rosario Jr., GR No. 109289, October 3, 1994
Taxation; Simplified Net Income Taxation (“SNIT”); Republic Act No.
7496 did not adopt a gross income, but have retained the net income,
taxation scheme.—On the basis of the above language of the law, it
would be difficult to accept petitioner’s view that the amendatory law
should be considered as having now adopted a gross income, instead of
as having still retained the net income, taxation scheme. The allowance
for deductible items, it is true, may have significantly been reduced by
the questioned law in comparison with that which has prevailed prior to
the amendment; limiting, however, allowable deductions from gross
income is neither discordant with, nor opposed to, the net income tax
concept. The fact of the matter is still that various deductions, which are
by no means inconsequential, continue to be well provided under the
new law.
Same; Same; Constitutional Law; Titles of Bills; Objectives of the
constitutional provision on titles of bills.—Article VI, Section 26(1), of
the Constitution has been envisioned so as (a) to prevent log-rolling
legislation intended to unite the members of the legislature who favor
any one of unrelated subjects in support of the whole act, (b) to avoid
surprises or even fraud upon the legislature, and (c) to fairly apprise the
people, through such publications of its proceedings as are usually made,
of the subjects of legislation. The above objectives of the fundamental
law appear to us to have been sufficiently met. Anything else would be
to require a virtual compendium of the law which could not have been
the intendment of the constitutional mandate.
Same; Same; Same; Uniformity of taxation merely requires that all
subjects or objects of taxation, similarly situated, are to be treated alike
both in privileges and liabilities.—Uniformity of taxation, like the kindred
concept of equal protection, merely requires that all subjects or objects
of taxation, similarly situated, are to be treated alike both in privileges
and liabilities (Juan Luna Subdivision vs. Sarmiento, 91 Phil. 371).
Uniformity does not forfend classification as long as: (1) the standards
that are used therefor are substantial and not arbitrary, (2) the
categorization is germane to achieve the legislative purpose, (3) the law
applies, all things being equal, to both present and future conditions, and
(4) the classification applies equally well to all those belonging to the
same class (Pepsi Cola vs. City of Butuan, 24 SCRA 3; Basco vs. PAGCOR,
197 SCRA 52).
Same; Same; Same; The legislative intent is to increasingly shift the
income tax system towards the schedular approach in the income
taxation of individual taxpayers and to maintain, by and large, the
present global treatment on taxable corporations.—What may instead
be perceived to be apparent from the amendatory law is the legislative
intent to increasingly shift the income tax system towards the schedular
approach in the income taxation of individual taxpayers and to maintain,
by and large, the present global treatment on taxable corporations.
Same; Same; Same; Words and Phrases; Schedular Approach,
Defined.—Schedular approach is a system employed where the income
tax treatment varies and made to depend on the kind or category of
taxable income of the taxpayer.
Same; Same; Same; Same; Global Treatment, Defined.—Global
treatment is a system where the tax treatment views indifferently the tax
base and generally treats in common all categories of taxable income of
the taxpayer.
Same; Same; Same; Separation of Powers; With the legislature
primarily lies the discretion to determine the nature (kind), object
(purpose), extent (rate), coverage (subjects) and situs (place) of
taxation, and the Supreme Court cannot freely delve into those
matters.—Petitioner gives a fairly extensive discussion on the merits of
the law, illustrating, in the process, what he believes to be an imbalance
between the tax liabilities of those covered by the amendatory law and
those who are not. With the legislature primarily lies the discretion to
determine the nature (kind), object (purpose), extent (rate), coverage
(subjects) and situs (place) of taxation. This court cannot freely delve into
those matters which, by constitutional fiat, rightly rest on legislative
judgment. Of course, where a tax measure becomes so unconscionable
and unjust as to amount to confiscation of property, courts will not
hesitate to strike it down, for, despite all its plenitude, the power to tax
cannot override constitutional proscriptions. This stage, however, has not
been demonstrated to have been reached within any appreciable
distance in this controversy before us.
Same; Same; Same; Due Process; The due process clause may correctly
be invoked only when there is a clear contravention of inherent or
constitutional limitations in the exercise of the tax power.—Having
arrived at this conclusion, the plea of petitioner to have the law declared
unconstitutional for being violative of due process must perforce fail. The
due process clause may correctly be invoked only when there is a clear
contravention of inherent or constitutional limitations in the exercise of
the tax power. No such transgression is so evident to us.
Same; Same; Same; Partnerships; A general professional partnership,
unlike an ordinary business partnership, is not itself an income
taxpayer, as the income tax is imposed not on the professional
partnership but on the partners themselves in their individual
capacity.—The Court, first of all, should like to correct the apparent
misconception that general professional partnerships are subject to the
payment of income tax or that there is a difference in the tax treatment
between individuals engaged in business or in the practice of their
respective professions and partners in general professional partnerships.
The fact of the matter is that a general professional partnership, unlike
an ordinary business partnership (which is treated as a corporation for
income tax purposes and so subject to the corporate income tax), is not
itself an income taxpayer. The income tax is imposed not on the
professional partnership, which is tax exempt, but on the partners
themselves in their individual capacity computed on their distributive
shares of partnership profits.
Same; Same; Same; Same; Words and Phrases; “Income Tax-payers,”
Defined; The Tax Code, in levying the tax, adopts the most
comprehensive tax situs of nationality and residence of the taxpayer
and of the generally accepted and internationally recognized income
taxable base.—We can well appreciate the concern taken by petitioners
if perhaps we were to consider Republic Act No. 7496 as an entirely
independent, not merely as an amendatory, piece of legislation. The view
can easily become myopic, however, when the law is understood, as it
should be, as only forming part of, and subject to, the whole income tax
concept and precepts long obtaining under the National Internal Revenue
Code. To elaborate a little, the phrase “income taxpayers” is an all
embracing term used in the Tax Code, and it practically covers all persons
who derive taxable income. The law, in levying the tax, adopts the most
comprehensive tax situs of nationality and residence of the taxpayer (that
renders citizens, regardless of residence, and resident aliens subject to
income tax liability on their income from all sources) and of the generally
accepted and internationally recognized income taxable base (that can
subject non-resident aliens and foreign corporations to income tax on
their income from Philippine sources). In the process, the Code classifies
taxpayers into four main groups, namely: (1) Individuals, (2)
Corporations, (3) Estates under Judicial Settlement and (4) Irrevocable
Trusts (irrevocable both as to corpus and as to income).
Same; Same; Same; Same; Partnerships under the Tax Code, Classified;
Ordinarily, partnerships are subject to income tax which are by law
assimilated to be within the context of, and so legally contemplated as,
corporations.—Partnerships are, under the Code, either “taxable
partnerships” or “exempt partnerships.” Ordinarily, partnerships, no
matter how created or organized, are subject to income tax (and thus
alluded to as “taxable partnerships”) which, for purposes of the above
categorization, are by law assimilated to be within the context of, and so
legally contemplated as, corporations. Except for few variances, such as
in the application of the “constructive receipt rule” in the derivation of
income, the income tax approach is alike to both juridical persons.
Same; Same; Same; Same; SNIT is not intended or envisioned to cover
corporations and partnerships which are independently subject to the
payment of income tax.—Obviously, SNIT is not intended or envisioned,
as so correctly pointed out in the discussions in Congress during its
deliberations on Republic Act 7496, aforequoted, to cover corporations
and partnerships which are independently subject to the payment of
income tax.
Same; Same; Same; Same; “Exempt partnerships” are not similarly
identified as corporations nor even considered as independent taxable
entities for income tax purposes.—“Exempt partnerships,” upon the
other hand, are not similarly identified as corporations nor even
considered as independent taxable entities for income tax purposes. A
general professional partnership is such an example. Here, the partners
themselves, not the partnership (although it is still obligated to file an
income tax return [mainly for administration and data]), are liable for the
payment of income tax in their individual capacity computed on their
respective and distributive shares of profits. In the determination of the
tax liability, a partner does so as an individual, and there is no choice on
the matter. In fine, under the Tax Code on income taxation, the general
professional partnership is deemed to be no more than a mere
mechanism or a flow-through entity in the generation of income by, and
the ultimate distribution of such income to, respectively, each of the
individual partners.
Same; Same; Same; Same; Section 6 of Revenue Regulation No. 2-93
consistent with the Tax Code as modified by Republic Act No. 7496.—
Section 6 of Revenue Regulation No. 2-93 did not alter, but merely
confirmed, the above standing rule as now so modified by Republic Act
No. 7496 on basically the extent of allowable deductions applicable to all
individual income taxpayers on their non-compensation income. There is
no evident intention of the law, either before or after the amendatory
legislation, to place in an unequal footing or in significant variance the
income tax treatment of professionals who practice their respective
professions individually and of those who do it through a general
professional partnership.

C. Theory and Basis of Taxation
1. The Lifeblood Theory Gerochi v. DOE, GR No. 159796, July 17, 2007
Police Power; Taxation; Police power is the power of the state to
promote public welfare by restraining and regulating the use of liberty
and property—it is the most pervasive, the least limitable, and the most
demanding of the three fundamental powers of the State and the
justification is found in the Latin maxims salus populi est suprema lex
(the welfare of the people is the supreme law) and sic utere tuo ut
alienum non laedas (so use your property as not to injure the property
of others); The theory behind the exercise of the power to tax emanates
from necessity, without taxes, government cannot fulfill its mandate of
promoting the general welfare and well-being of the people; That the
power to “regulate” means the power to protect, foster, promote,
preserve, and control, with due regard for the interests, first and
foremost, of the public, then of the utility and of its patrons.—The
power to tax is an incident of sovereignty and is unlimited in its range,
acknowledging in its very nature no limits, so that security against its
abuse is to be found only in the responsibility of the legislature which
imposes the tax on the constituency that is to pay it. It is based on the
principle that taxes are the lifeblood of the government, and their prompt
and certain availability is an imperious need. Thus, the theory behind the
exercise of the power to tax emanates from necessity; without taxes,
government cannot fulfill its mandate of promoting the general welfare
and well-being of the people. On the other hand, police power is the
power of the state to promote public welfare by restraining and
regulating the use of liberty and property. It is the most pervasive, the
least limitable, and the most demanding of the three fundamental
powers of the State. The justification is found in the Latin maxims salus
populi est suprema lex (the welfare of the people is the supreme law) and
sic utere tuo ut alienum non laedas (so use your property as not to injure
the property of others). As an inherent attribute of sovereignty which
virtually extends to all public needs, police power grants a wide panoply
of instruments through which the State, as parens patriae, gives effect to
a host of its regulatory powers. We have held that the power to
“regulate” means the power to protect, foster, promote, preserve, and
control, with due regard for the interests, first and foremost, of the
public, then of the utility and of its patrons.
Same; Same; Electric Power Industry Reform Act of 2001 (EPIRA); If
generation of revenue is the primary purpose and regulation is merely
incidental, the imposition is a tax; but if regulation is the primary
purpose, the fact that revenue is incidentally raised does not make the
imposition a tax; In exacting the assailed Universal Charge through Sec.
34 of the Electric Power Industry Reform Act of 2001 (EPIRA), the State’s
police power, particularly its regulatory dimension, is invoked.—The
conservative and pivotal distinction between these two powers rests in
the purpose for which the charge is made. If generation of revenue is the
primary purpose and regulation is merely incidental, the imposition is a
tax; but if regulation is the primary purpose, the fact that revenue is
incidentally raised does not make the imposition a tax. In exacting the
assailed Universal Charge through Sec. 34 of the EPIRA, the State’s police
power, particularly its regulatory dimension, is invoked. Such can be
deduced from Sec. 34 which enumerates the purposes for which the
Universal Charge is imposed and which can be amply discerned as
regulatory in character.
Same; Same; Same; It is a well-established doctrine that the taxing
power may be used as an implement of police power.—It is a well-
established doctrine that the taxing power may be used as an implement
of police power. In Valmonte v. Energy Regulatory Board, et al., 162 SCRA
521 (1988), and in Gaston v. Republic Planters Bank, 158 SCRA 626 (1988),
this Court held that the Oil Price Stabilization Fund (OPSF) and the Sugar
Stabilization Fund (SSF) were exactions made in the exercise of the police
power. The doctrine was reiterated in Osmeña v. Orbos, 220 SCRA 703
(1993), with respect to the OPSF. Thus, we disagree with petitioners that
the instant case is different from the aforementioned cases. With the
Universal Charge, a Special Trust Fund (STF) is also created under the
administration of PSALM.
2. The Benefits Protection Theory CIR v. Algue, Inc., GR No. L-28896,
February 17, 1988
Taxation; Nature of taxes; Purpose of taxation; Collection of taxes should
be made in accordance with law.—Taxes are the lifeblood of the
government and so should be collected without unnecessary hindrance.
On the other hand, such collection should be made in accordance with
law as any arbitrariness will negate the very reason for government itself.
It is therefore necessary to reconcile the apparently conflicting interests
of the authorities and the taxpayers so that the real purpose of taxation,
which is the promotion of the common good, may be achieved.
Same; Appeal; Appeal from a decision of the Commissioner of Internal
Revenue with the Court of Tax Appeals is 30 days from receipt
thereof.—The above chronology shows that the petition was filed
seasonably. According to Rep. Act No. 1125, the appeal may be made
within thirty days after receipt of the decision or ruling challenged.
Same; Warrant of distraint and levy; Rule that the warrant of distraint
and levy is proof of the finality of the assessment; Exception is where
there is a letter of protest after receipt of notice of assessment.— It is
true that as a rule the warrant of distraint and levy is "proof of the finality
of the assessment" and "renders hopeless a request for reconsideration,"
being "tantamount to an outright denial thereof and makes the said
request deemed rejected." But there is a special circumstance in the case
at bar that prevents application of this accepted doctrine. The proven fact
is that four days after the private respondent received the petitioner's
notice of assessment, it filed its letter of protest. This was apparently not
taken into account before the warrant of distraint and levy was issued;
indeed, such protest could not be located in the office of the petitioner.
It was only after Atty. Guevara gave the BIR a copy of the protest that it
was, if at all, considered by the tax authorities. During the intervening
period, the warrant was premature and could therefore not be served.
Same; Same; Same; Same; Protest filed, not pro forma, and was based
on strong legal considerations; Case at bar.—As the Court of Tax Appeals
correctly noted, the protest filed by private respondent was not pro
forma and was based on strong legal considerations. It thus had the effect
of suspending on January 18, 1965, when it was filed, the reglementary
period which started on the date the assessment was received, viz.,
January 14, 1965. The period started running again only on April 7, 1965,
when the private respondent was definitely informed of the implied
rejection of the said protest and the warrant was finally served on it.
Hence, when the appeal was filed on April 23, 1965, only 20 days of the
reglementary period had been consumed.
Same; Income Tax; Payments in promotional fees, not fictitious;
Claimed deduction of P75,000 proper; Strict business procedures not
applied in a family corporation.—We find that these suspicions were
adequately met by the private respondent when its President, Alberto
Guevara, and the accountant, Cecilia V. de Jesus, testified that the
payments were not made in one lump sum but periodically and in
different amounts as each payee's need arose. It should be remembered
that this was a family corporation where strict business procedures were
not applied and immediate issuance of receipts was not required. Even
so, at the end of the year, when the books were to be closed, each payee
made an accounting of all of the fees received by him or her, to make up
the total of P75,000.00. Admittedly, everything seemed to be informal.
This arrangement was understandable, however, in view of the close
relationship among the persons in the family corporation.
Same; Same; Same; Same; Amount of promotional fees, not
excessive.—We agree with the respondent court that the amount of the
promotional fees was not excessive. The total commission paid by the
Philippine Sugar Estate Development Co. to the private respondent was
P1 25,000.00. After deducting the said fees, Algue still had a balance of
P50,000.00 as clear profit from the transaction. The amount of
P75,000.00 was 60% of the total commission. This was a reasonable
proportion, considering that it was the payees who did practically
everything, from the formation of the Vegetable Oil Investment
Corporation to the actual purchase by it of the Sugar Estate properties.
Same; Same; Same; Same; Burden on taxpayer to prove validity of the
claimed deduction, successfully discharged; Payment of the fees was
necessary and reasonable.—The Solicitor General is correct when he says
that the burden is on the taxpayer to prove the validity of the claimed
deduction. In the present case, however, we find that the onus has been
discharged satisfactorily. The private respondent has proved that the
payment of the fees was necessary and reasonable in the light of the
efforts exerted by the payees in inducing investors and prominent
businessmen to venture in an experimental enterprise and involve
themselves in a new business requiring millions of pesos. This was no
mean feat and should be, as it was, sufficiently recompensed.
Same; Same; Rationale of taxation.—It is said that taxes are what we pay
for civilized society. Without taxes, the government would be paralyzed
for lack of the motive power to activate and operate it. Hence, despite
the natural reluctance to surrender part of one's hard-earned income to
the taxing authorities, every person who is able to must contribute his
share in the running of the government. The government, for its part, is
expected to respond in the form of tangible and intangible benefits
intended to improve the lives of the people and enhance their moral and
material values, This symbiotic relationship is the rationale of taxation
and should dispel the erroneous notion that it is an arbitrary method of
exaction by those in the seat of power. Commissioner of lnternal Revenue
vs. Algue, Inc., 158 SCRA 9, No. L-28896 February 17, 1988
3. Contrast with the Power to Destroy Roxas v. CTA, GR No. L-25043,
April 26, 1968
Taxation; Nature of taxes; Purpose of taxation; Collection of taxes
should be made in accordance with law.—Taxes are the lifeblood of the
government and so should be collected without unnecessary hindrance.
On the other hand, such collection should be made in accordance with
law as any arbitrariness will negate the very reason for government itself.
It is therefore necessary to reconcile the apparently conflicting interests
of the authorities and the taxpayers so that the real purpose of taxation,
which is the promotion of the common good, may be achieved.
Same; Appeal; Appeal from a decision of the Commissioner of Internal
Revenue with the Court of Tax Appeals is 30 days from receipt
thereof.—The above chronology shows that the petition was filed
seasonably. According to Rep. Act No. 1125, the appeal may be made
within thirty days after receipt of the decision or ruling challenged.
Same; Warrant of distraint and levy; Rule that the warrant of distraint
and levy is proof of the finality of the assessment; Exception is where
there is a letter of protest after receipt of notice of assessment.—It is
true that as a rule the warrant of distraint and levy is "proof of the finality
of the assessment" and "renders hopeless a request for reconsideration,"
being "tantamount to an outright denial thereof and makes the said
request deemed rejected." But there is a special circumstance in the case
at bar that prevents application of this accepted doctrine. The proven fact
is that four days after the private respondent received the petitioner's
notice of assessment, it filed its letter of protest. This was apparently not
taken into account before the warrant of distraint and levy was issued;
indeed, such protest could not be located in the office of the petitioner.
It was only after Atty. Guevara gave the BIR a copy of the protest that it
was, if at all, considered by the tax authorities. During the intervening
period, the warrant was premature and could therefore not be served.
Same; Same; Same; Same; Protest filed, not pro forma, and was based
on strong legal considerations; Case at bar.—As the Court of Tax Appeals
correctly noted, the protest filed by private respondent was not pro
forma and was based on strong legal considerations. It thus had the effect
of suspending on January 18, 1965, when it was filed, the reglementary
period which started on the date the assessment was received, viz.,
January 14, 1965. The period started running again only on April 7, 1965,
when the private respondent was definitely informed of the implied
rejection of the said protest and the warrant was finally served on it.
Hence, when the appeal was filed on April 23, 1965, only 20 days of the
reglementary period had been consumed.
Same; Income Tax; Payments in promotional fees, not fictitious;
Claimed deduction of P75,000 proper; Strict business procedures not
applied in a family corporation.—We find that these suspicions were
adequately met by the private respondent when its President, Alberto
Guevara, and the accountant, Cecilia V. de Jesus, testified that the
payments were not made in one lump sum but periodically and in
different amounts as each payee's need arose. It should be remembered
that this was a family corporation where strict business procedures were
not applied and immediate issuance of receipts was not required. Even
so, at the end of the year, when the books were to be closed, each payee
made an accounting of all of the fees received by him or her, to make up
the total of P75,000.00. Admittedly, everything seemed to be informal.
This arrangement was understandable, however, in view of the close
relationship among the persons in the family corporation.
Same; Same; Same; Same; Amount of promotional fees, not
excessive.—We agree with the respondent court that the amount of the
promotional fees was not excessive. The total commission paid by the
Philippine Sugar Estate Development Co. to the private respondent was
P1 25,000.00. After deducting the said fees, Algue still had a balance of
P50,000.00 as clear profit from the transaction. The amount of
P75,000.00 was 60% of the total commission. This was a reasonable
proportion, considering that it was the payees who did practically
everything, from the formation of the Vegetable Oil Investment
Corporation to the actual purchase by it of the Sugar Estate properties.
Same; Same; Same; Same; Burden on taxpayer to prove validity of the
claimed deduction, successfully discharged; Payment of the fees was
necessary and reasonable.—The Solicitor General is correct when he
says that the burden is on the taxpayer to prove the validity of the
claimed deduction. In the present case, however, we find that the onus
has been discharged satisfactorily. The private respondent has proved
that the payment of the fees was necessary and reasonable in the light of
the efforts exerted by the payees in inducing investors and prominent
businessmen to venture in an experimental enterprise and involve
themselves in a new business requiring millions of pesos. This was no
mean feat and should be, as it was, sufficiently recompensed.
Same; Same; Rationale of taxation.—It is said that taxes are what we pay
for civilized society. Without taxes, the government would be paralyzed
for lack of the motive power to activate and operate it. Hence, despite
the natural reluctance to surrender part of one's hard-earned income to
the taxing authorities, every person who is able to must contribute his
share in the running of the government. The government, for its part, is
expected to respond in the form of tangible and intangible benefits
intended to improve the lives of the people and enhance their moral and
material values, This symbiotic relationship is the rationale of taxation
and should dispel the erroneous notion that it is an arbitrary method of
exaction by those in the seat of power.
D. Purposes of Taxation
1. Regulatory and/or revenue purposes Tio v. Videogram Regulatory
Board, G.R. No. L-75697, June 18, 1987
Constitutional Law; Constitutional requirement that “every bill shall
embrace only one subject which shall be expressed in the title thereof’
is sufficiently complied with if the title be comprehensive enough to
include the general purpose it seeks to achieve and if all the parts of the
statute are related and germane to the subject matter expressed in the
title or as long as they are not inconsistent with or foreign to the general
subject and title.—The Constitutional requirement that “every bill shall
embrace only one subject which shall be expressed in the title thereof” is
sufficiently complied with if the title be comprehensive enough to include
the general purpose which a statute seeks to achieve. It is not necessary
that the title express each and every end that the statute wishes to
accomplish. The requirement is satisfied if all the parts of the statute are
related, and are germane to the subject matter expressed in the title, or
as long as they are not inconsistent with or foreign to the general subject
and title. An act having a single general subject, indicated in the title, may
contain any number of provisions, no matter how diverse they may be,
so long as they are not inconsistent with or foreign to the general subject,
and may be considered in furtherance of such subject by providing for
the method and means of carrying out the general object.” 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 power of legislation.
It should be given a practical rather than technical construction.
Same; Same; Section 10 PD 1987 otherwise known as Videogram
Regulatory Board is not a Rider.—Section 10. Tax on Sale, Lease or
Disposition of Videograms. Notwithstanding any provision of law to the
contrary, the province shall collect a tax of thirty percent (30%) of the
purchase price or rental rate, as the case may be, for every sale, lease or
disposition of a videogram containing a reproduction of any motion
picture or audiovisual program. Fifty percent (50%) of the proceeds of the
tax collected shall accrue to the province, and the other fifty percent
(50%) shall accrue to the municipality where the tax is collected;
PROVIDED, That in Metropolitan Manila, the tax shall be shared equally
by the City/Municipality and the Metropolitan Manila Commission. x x x
x” 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 Board as expressed in its title. The tax provision is not
inconsistent with, nor foreign to that general subject and title. As a tool
for regulation it is simply one of the regulatory and control mechanisms
scattered throughout the DECREE. The express purpose of the DECREE to
include taxation of the video industry in order to regulate and rationalize
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 Regulatory Board, is comprehensive
enough to include the purposes expressed in its Preamble and reasonably
covers all its 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,
Same; Same; Same; Tax imposed under the Decree is not harsh;
oppressive, confiscatory and in restraint of trade but regulatory and a
revenue measure; The levy is for a public purpose.—Petitioner also
submits that the thirty percent (30%) tax imposed is harsh and
oppressive, confiscatory, and in restraint of trade. However, it is beyond
serious question that a tax does not cease to be valid merely because it
regulates, discourages, or even definitely deters the activities taxed. The
power to impose taxes is one so unlimited in force and so searching in
extent, that the courts scarcely venture to declare that it is subject to any
restrictions whatever, except such as rest in the discretion of the
authority which exercises it. In imposing a tax, the legislature acts upon
its constituents. This is, in general, a sufficient security against erroneous
and oppressive taxation. The tax imposed by the DECREE is not only a
regulatory but also a revenue measure prompted by the realization that
earnings of videogram establishments of around P600 million per annum
have not been subjected to tax, thereby depriving the Government of an
additional source of revenue. It is an end-user tax, imposed on retailers
for every videogram they make available for public viewing, It is similar
to the 30% amusement tax imposed or borne by the movie industry
which the theater-owners pay to the government, but which is passed on
to the entire cost of the admission ticket, thus shifting the tax burden on
the buying or the viewing public. It is a tax that is imposed uniformly on
all videogram operators. The levy of the 30% tax is for a public purpose.
It was imposed primarily to answer the need for regulating the video
industry, particularly because of the rampant film piracy, the flagrant
violation of intellectual property rights, and the proliferation of
pornographic video tapes. And while it was also an objective of the
DECREE to protect the movie industry, the tax remains a valid imposition.
Same; Same; Same; Same; PD 1987 not an undue delegation of
legislative power.—Neither can it be successfully argued that the
DECREE contains an undue delegation of legislative power. The grant in
Section 11 of the DECREE of authority to the BOARD to “solicit the direct
assistance of other agencies and Units of the government and deputize,
for a fixed and limited period, the heads or personnel of such agencies
and units to perform enforcement functions for the Board” is not a
delegation of the power to legislate but merely a conferment of authority
or discretion as to its execution, enforcement, and implementation. “The
true distinction is between the delegation of power to make the law,
which necessarily involves a discretion as to what it shall be, and
conferring authority or discretion as to its execution to be exercised
under and in pursuance of the law. The first cannot be done; to the latter,
no valid objection can be made.” Besides, in the very language of the
decree, the authority of the BOARD to solicit such assistance is for a “fixed
and limited period” with the deputized agencies concerned being
“subject to the direction and control of the BOARD.” That the grant of
such authority might be the source of graft and corruption would not
stigmatize the DECREE as unconstitutional. Should the eventuality occur,
the aggrieved parties will not be without adequate remedy in law.
2. Promotion of General Welfare Caltex Phils Inc. v. COA, G.R. No. 92585,
May 8, 1992
Administrative Law; Commission on Audit; The audit power of the
Auditor General under the 1935 Constitution and the Commission on
Audit under the 1973 Constitution authorized them to disallow illegal
expenditures of funds or uses of funds and property.—There can be no
doubt, however, that the audit power of the Auditor General under the
1935 Constitution and the Commission on Audit under the 1973
Constitution authorized them to disallow illegal expenditures of funds or
uses of funds and property. Our present Constitution retains that same
power and authority, further strengthened by the definition of the COA’s
general jurisdiction in Section 26 of the Government Auditing Code of the
Philippines and Administrative Code of 1987. Pursuant to its power to
promulgate accounting and auditing rules and regulations for the
prevention of irregular, unnecessary, excessive or extravagant
expenditures or uses of funds, the COA promulgated on 29 March 1977
COA Circular No. 77-55. Since the COA is responsible for the enforcement
of the rules and regulations, it goes without saying that failure to comply
with them is a ground for disapproving the payment of the proposed
expenditure.
Civil Law; Taxation; LOI 1416 has no binding force or effect as it was
never published in the Official Gazette after its issuance or at anytime
after the decision in the above-mentioned cases.—LOI 1416 has,
therefore, no binding force or effect as it was never published in the
Official Gazette after its issuance or at any time after the decision in the
abovementioned cases.
Same; Same; Tax exemptions as a general rule are construed strictly
against the grantee and liberally in favor of the taxing authority.—
Furthermore, even granting arguendo that LOI 1416 has force and effect,
petitioner’s claim must still fail. Tax exemptions as a general rule are
construed strictly against the grantee and liberally in favor of the taxing
authority. The burden of proof rests upon the party claiming exemption
to prove that it is in fact covered by the exemption so claimed. The party
claiming exemption must therefore be expressly mentioned in the
exempting law or at least be within its purview by clear legislative intent.
Same; Same; Though LOI 1416 may suspend the payment of taxes by
copper mining companies it does not give petitioner the same privilege
with respect to the payment of OPSF dues.—In the case at bar,
petitioner failed to prove that it is entitled, as a consequence of its sales
to ATLAS and MARCOPPER, to claim reimbursement from the OPSF under
LOI 1416. Though LOI 1416 may suspend the payment of taxes by copper
mining companies, it does not give petitioner the same privilege with
respect to the payment of OPSF dues.
Same; Same; It is settled that a taxpayer may not affect taxes due from
the claims that he may have against the government.—It is settled that
a taxpayer may not offset taxes due from the claims that he may have
against the government. Taxes cannot be the subject of compensation
because the government and taxpayer are not mutually creditors and
debtors of each other and a claim for taxes is not such a debt, demand,
contract or judgment as is allowed to be set-off. Caltex Philippines, Inc.
vs. Commission on Audit, 208 SCRA 726, G.R. No. 92585 May 8, 1992
3. Reduction of Social Inequity through Progressive System of Taxation
Tolentino v. SOF, G.R. No. 115455, August 25, 1994
Constitutional Law; Statutes; Taxation; Origin of revenue bills; A bill
originating in the House of Representatives may undergo such
extensive changes in the Senate that the result may be a rewriting of
the whole; As a result of the Senate action, a distinct bill may be
produced and to insist that a revenue statute must substantially be the
same as the House bill would be to deny the Senate’s power not only to
“concur with amendments” but also to “propose amendments.”—
Petitioners’ contention is that Republic Act No. 7716 did not “originate
exclusively” in the House of Representatives as required by Art. VI, § 24
of the Constitution, because it is in fact the result of the consolidation of
two distinct bills, H. No. 11197 and S. No. 1630. In this connection,
petitioners point out that although Art. VI, § 24 was adopted from the
American Federal Constitution, it is notable in two respects: the verb
“shall originate” is qualified in the Philippine Constitution by the word
“exclusively” and the phrase “as on other bills” in the American version is
omitted. This means, according to them, that to be considered as having
originated in the House, Republic Act No. 7716 must retain the essence
of H. No. 11197. This argument will not bear analysis. To begin with, it is
not the law—but the revenue bill—which is required by the Constitution
to “originate exclusively” in the House of Representatives. It is important
to emphasize this, because a bill originating in the House may undergo
such extensive changes in the Senate that the result may be a rewriting
of the whole. The possibility of a third version by the conference
committee will be discussed later. At this point, what is important to note
is that, as a result of the Senate action, a distinct bill may be produced.
To insist that a revenue statute—and not only the bill which initiated the
legislative process culminating in the enactment of the law—must
substantially be the same as the House bill would be to deny the Senate’s
power not only to “concur with amendments” but also to “propose
amendments.” It would be to violate the coequality of legislative power
of the two houses of Congress and in fact make the House superior to the
Senate.
Same; Same; Same; Same; Legislative power is vested in the Congress
of the Philippines, consisting of “a Senate and a House of
Representatives,” not in any particular chamber.—The contention that
the constitutional design is to limit the Senate’s power in respect of
revenue bills in order to compensate for the grant to the Senate of the
treaty-ratifying power and thereby equalize its powers and those of the
House overlooks the fact that the powers being compared are different.
We are dealing here with the legislative power which under the
Constitution is vested not in any particular chamber but in the Congress
of the Philippines, consisting of “a Senate and a House of Represen-
tatives.” The exercise of the treaty-ratifying power is not the exercise of
legislative power. It is the exercise of a check on the executive power.
There is, therefore, no justification for comparing the legislative powers
of the House and of the Senate on the basis of the possession of such
nonlegislative power by the Senate. The possession of a similar power by
the U.S. Senate has never been thought of as giving it more legislative
powers than the House of Representatives.
Same; Same; Same; Same; There is really no difference between the
Senate preserving the House Bill up to the enacting clause and then
writing its own version following the enacting clause and, on the other
hand, separately presenting a bill of its own on the same subject
matter.—It is insisted, however, that S. No. 1630 was passed not in
substitution of H. No. 11197 but of another Senate bill (S. No. 1129)
earlier filed and that what the Senate did was merely to “take [H. No.
11197] into consideration” in enacting S. No. 1630. There is really no
difference between the Senate preserving H. No. 11197 up to the
enacting clause and then writing its own version following the enacting
clause (which, it would seem, petitioners admit is an amendment by
substitution), and, on the other hand, separately presenting a bill of its
own on the same subject matter. In either case the result are two bills on
the same subject.
Same; Same; Same; Same; The Constitution simply means that the
initiative for filing revenue, tariff, or tax bills, bills authorizing an
increase of the public debt, private bills and bills of local application
must come from the House of Representatives and that it does not
prohibit the filing in the Senate of a substitute bill in anticipation of its
receipt of the bill from the House.—Indeed, what the Constitution simply
means is that the initiative for filing revenue, tariff, or tax bills, bills
authorizing an increase of the public debt, private bills and bills of local
application must come from the House of Representatives on the theory
that, elected as they are from the districts, the members of the House
can be expected to be more sensitive to the local needs and problems.
On the other hand, the senators, who are elected at large, are expected
to approach the same problems from the national perspective. Both
views are thereby made to bear on the enactment of such laws. Nor does
the Constitution prohibit the filing in the Senate of a substitute bill in
anticipation of its receipt of the bill from the House, so long as action by
the Senate as a body is withheld pending receipt of the House bill.
Same; Same; Presidential certification on urgency of a bill dispenses
with the requirement not only of printing but also that of reading the
bill on separate days.—The presidential certification dispensed with the
requirement not only of printing but also that of reading the bill on
separate days. The phrase “except when the President certifies to the
necessity of its immediate enactment, etc.” in Art. VI, § 26(2) qualifies the
two stated conditions before a bill can become a law: (i) the bill has
passed three readings on separate days and (ii) it has been printed in its
final form and distributed three days before it is finally approved. In other
words, the “unless” clause must be read in relation to the “except”
clause, because the two are really coordinate clauses of the same
sentence. To construe the “except” clause as simply dispensing with the
second requirement in the “unless” clause (i.e., printing and distribution
three days before final approval) would not only violate the rules of
grammar. It would also negate the very premise of the “except” clause:
the necessity of securing the immediate enactment of a bill which is
certified in order to meet a public calamity or emergency. For if it is only
the printing that is dispensed with by presidential certification, the time
saved would be so negligible as to be of any use in insuring immediate
enactment. It may well be doubted whether doing away with the
necessity of printing and distributing copies of the bill three days before
the third reading would insure speedy enactment of a law in the face of
an emergency requiring the calling of a special election for President and
Vice-President. Under the Constitution such a law is required to be made
within seven days of the convening of Congress in emergency session.
Same; Same; Judicial Review; While the sufficiency of the factual basis
of the suspension of the writ of habeas corpus or declaration of martial
law is subject to judicial review because basic rights of individuals may
be at hazard, the factual basis of presidential certification of bills, which
involves doing away with procedural requirements designed to insure
that bills are duly considered by members of Congress, certainly should
elicit a different standard of review.—It is nonetheless urged that the
certification of the bill in this case was invalid because there was no
emergency, the condition stated in the certification of a “growing budget
deficit” not being an unusual condition in this country. It is noteworthy
that no member of the Senate saw fit to controvert the reality of the
factual basis of the certification. To the contrary, by passing S. No. 1630
on second and third readings on March 24, 1994, the Senate accepted
the President’s certification. Should such certifi-cation be now reviewed
by this Court, especially when no evidence has been shown that, because
S. No. 1630 was taken up on second and third readings on the same day,
the members of the Senate were deprived of the time needed for the
study of a vital piece of legislation? The sufficiency of the factual basis of
the suspension of the writ of habeas corpus or declaration of martial law
under Art. VII, § 18, or the existence of a national emergency justifying
the delegation of extraordinary powers to the President under Art. VI, §
23(2), is subject to judicial review because basic rights of individuals may
be at hazard. But the factual basis of presidential certification of bills,
which involves doing away with procedural requirements designed to
insure that bills are duly considered by members of Congress, certainly
should elicit a different standard of review.
Same; Same; Bicameral Conference Committee; A third version of the
bill may result from the conference committee, which is considered an
“amendment in the nature of a substitute,” the only requirement being
that the third version be germane to the subject of the House and
Senate bills.—As to the possibility of an entirely new bill emerging out of
a Conference Committee, it has been explained: Under congressional
rules of procedure, conference committees are not expected to make any
material change in the measure at issue, either by deleting provisions to
which both houses have already agreed or by inserting new provisions.
But this is a difficult provision to enforce. Note the problem when one
house amends a proposal originating in either house by striking out
everything following the enacting clause and substituting provisions
which make it an entirely new bill. The versions are now altogether
different, permitting a conference committee to draft essentially a new
bill . . . . The result is a third version, which is considered an “amendment
in the nature of a substitute,” the only requirement for which being that
the third version be germane to the subject of the House and Senate bills.
Same; Same; Same; The report of the conference committee needs the
approval of both houses of Congress to become valid as an act of the
legislative department.—Indeed, this Court recently held that it is within
the power of a conference committee to include in its report an entirely
new provision that is not found either in the House bill or in the Senate
bill. If the committee can propose an amendment consisting of one or
two provisions, there is no reason why it cannot propose several
provisions, collectively considered as an “amendment in the nature of a
substitute,” so long as such amendment is germane to the subject of the
bills before the committee. After all, its report was not final but needed
the approval of both houses of Congress to become valid as an act of the
legislative department. The charge that in this case the Conference
Committee acted as a third legislative chamber is thus without any basis.
Same; Same; Same; Separation of Powers; It is common place in
Congress that conference committee reports include new matters
which, though germane, have not been committed to the committee,
and if a change is desired in the practice, it must be sought in Congress
since this question is not covered by any constitutional provision but is
only an internal rule of each house.—To be sure, nothing in the Rules
limits a conference committee to a consideration of conflicting
provisions. But Rule XLIV, § 112 of the Rules of the Senate is cited to the
effect that “If there is no Rule applicable to a specific case the precedents
of the Legislative Department of the Philippines shall be resorted to, and
as a supplement of these, the Rules contained in Jefferson’s Manual.” The
following is then quoted from the Jefferson’s Manual: The managers of a
conference must confine themselves to the differences committed to
them . . . and may not include subjects not within disagreements, even
though germane to a question in issue. Note that, according to Rule XLIX,
§ 112, in case there is no specific rule applicable, resort must be to the
legislative practice. The Jefferson’s Manual is resorted to only as
supplement. It is common place in Congress that conference committee
reports include new matters which, though germane, have not been
committed to the committee. This practice was admitted by Senator Raul
S. Roco, petitioner in G.R. No. 115543, during the oral argument in these
cases. Whatever, then, may be provided in the Jefferson’s Manual must
be considered to have been modified by the legislative practice. If a
change is desired in the practice it must be sought in Congress since this
question is not covered by any constitutional provision but is only an
internal rule of each house. Thus, Art. VI, § 16(3) of the Constitution
provides that “Each House may determine the rules of its proceedings . .
. .”
Same; Same; Same; Same; Bill-Drafting; The use of brackets and capital
letters to indicate changes is a standard practice in bill-drafting; The
Supreme Court’s concern is with the procedural requirements of the
Constitution for the enactment of laws, not the enforcement of internal
Rules of Congress since “parliamentary rules are merely procedural and
with their observance the courts have no concern.”—This observation
applies to the other contention that the Rules of the two chambers were
likewise disregarded in the preparation of the Conference Committee
Report because the Report did not contain a “detailed and sufficiently
explicit statement of changes in, or amendments to, the subject
measure.” The Report used brackets and capital letters to indicate the
changes. This is a standard practice in bill-drafting. We cannot say that in
using these marks and symbols the Committee violated the Rules of the
Senate and the House. Moreover, this Court is not the proper forum for
the enforcement of these internal Rules. To the contrary, as we have
already ruled, “parliamentary rules are merely procedural and with their
observance the courts have no concern.” Our concern is with the
procedural requirements of the Constitution for the enactment of laws.
As far as these requirements are concerned, we are satisfied that they
have been faithfully observed in these cases.
Same; Same; Same; Same; The three-reading requirement refers only to
bills introduced for the first time in either house of Congress, not to the
conference committee report.—Art. VI, § 26(2) must, therefore, be
construed as referring only to bills introduced for the first time in either
house of Congress, not to the conference committee report. For if the
purpose of requiring three readings is to give members of Congress time
to study bills, it cannot be gainsaid that H. No. 11197 was passed in the
House after three readings; that in the Senate it was considered on first
reading and then referred to a committee of that body; that although the
Senate committee did not report out the House bill, it submitted a
version (S. No. 1630) which it had prepared by “taking into consideration”
the House bill; that for its part the Conference Committee consolidated
the two bills and prepared a compromise version; that the Conference
Committee Report was thereafter approved by the House and the
Senate, presumably after appropriate study by their members. We
cannot say that, as a matter of fact, the members of Congress were not
fully informed of the provisions of the bill. The allegation that the
Conference Committee usurped the legislative power of Congress is, in
our view, without warrant in fact and in law.
Same; Same; Same; Same; Enrolled Bill Doctrine; An enrolled copy of a
bill is conclusive not only of its provisions but also of its due
enactment.—Whatever doubts there may be as to the formal validity of
Republic Act No. 7716 must be resolved in its favor. Our cases manifest
firm adherence to the rule that an enrolled copy of a bill is conclusive not
only of its provisions but also of its due enactment. Not even claims that
a proposed constitutional amendment was invalid because the requisite
votes for its approval had not been obtained or that certain provisions of
a statute had been “smuggled” in the printing of the bill have moved or
persuaded us to look behind the proceedings of a coequal branch of the
government. There is no reason now to depart from this rule.
Same; Same; Same; Same; Same; While the “enrolled bill” rule is not
absolute, the Supreme Court should decline the invitation to go behind
the enrolled copy of the bill where allegations that the constitutional
procedures for the passage of bills have not been observed have no
more basis than another allegation that the Conference Committee
“surreptitiously” inserted provisions into a bill which it had prepared.—
No claim is here made that the “enrolled bill” rule is absolute. In fact in
one case we “went behind” an enrolled bill and consulted the Journal to
determine whether certain provisions of a statute had been approved by
the Senate in view of the fact that the President of the Senate himself,
who had signed the enrolled bill, admitted a mistake and withdrew his
signature, so that in effect there was no longer an enrolled bill to
consider. But where allegations that the constitutional procedures for the
passage of bills have not been observed have no more basis than another
allegation that the Conference Committee “surreptitiously” inserted
provisions into a bill which it had prepared, we should decline the
invitation to go behind the enrolled copy of the bill. To disregard the
“enrolled bill” rule in such cases would be to disregard the respect due
the other two departments of our government.
Same; Same; Titles of Bills; The constitutional requirement that every
bill passed by Congress shall embrace only one subject which shall be
expressed in its title is intended to prevent surprise upon the members
of Congress and to inform the people of pending legislation so that, if
they wish to, they can be heard regarding it.—The question is whether
this amendment of § 103 of the NIRC is fairly embraced in the title of
Republic Act No. 7716, although no mention is made therein of P.D. No.
1590 as among those which the statute amends. We think it is, since the
title states that the purpose of the statute is to expand the VAT system,
and one way of doing this is to widen its base by withdrawing some of
the exemptions granted before. To insist that P.D. No. 1590 be
mentioned in the title of the law, in addition to § 103 of the NIRC, in which
it is specifically referred to, would be to insist that the title of a bill should
be a complete index of its content. The constitutional requirement that
every bill passed by Congress shall embrace only one subject which shall
be expressed in its title is intended to prevent surprise upon the members
of Congress and to inform the people of pending legislation so that, if
they wish to, they can be heard regarding it. If, in the case at bar,
petitioner did not know before that its exemption had been withdrawn,
it is not because of any defect in the title but perhaps for the same reason
other statutes, although published, pass unnoticed until some event
somehow calls attention to their existence. Indeed, the title of Republic
Act No. 7716 is not any more general than the title of PAL’s own franchise
under P.D. No. 1590, and yet no mention is made of its tax exemption.
Same; Same; Same; The trend is to construe the constitutional
requirement in such a manner that courts do not unduly interfere with
the enactment of necessary legislation.—The trend in our cases is to
construe the constitutional requirement in such a manner that courts do
not unduly interfere with the enactment of necessary legislation and to
consider it sufficient if the title expresses the general subject of the
statute and all its provisions are germane to the general subject thus
expressed.
Same; Same; Public Utilities; Franchises; The grant of a franchise for the
operation of a public utility is subject to amendment, alteration or
repeal by Congress when the common good so requires.—In contrast, in
the case at bar, Republic Act No. 7716 expressly amends PAL’s franchise
(P.D. No. 1590) by specifically excepting from the grant of exemptions
from the VAT PAL’s exemption under P.D. No. 1590. This is within the
power of Congress to do under Art. XII, § 11 of the Constitution, which
provides that the grant of a franchise for the operation of a public utility
is subject to amendment, alteration or repeal by Congress when the
common good so requires.
Same; Taxation; Expanded Value Added Tax Law; Bill of Rights; Freedom
of Expression; Even with due recognition of its high estate and its
importance in a democratic society, the press is not immune from
general regulation by the State.—To be sure, we are not dealing here
with a statute that on its face operates in the area of press freedom. The
PPI’s claim is simply that, as applied to newspapers, the law abridges
press freedom. Even with due recognition of its high estate and its
importance in a democratic society, however, the press is not immune
from general regulation by the State.
Same; Same; Same; Same; Same; Equal Protection Clause; The VAT law
would perhaps be open to the charge of discriminatory treatment if the
only privilege withdrawn had been that granted to the press.—What it
contends is that by withdrawing the exemption previously granted to
print media transactions involving printing, publication, importation or
sale of newspapers, Republic Act No. 7716 has singled out the press for
discriminatory treatment and that within the class of mass media the law
discriminates against print media by giving broadcast media favored
treatment. We have carefully examined this argument, but we are unable
to find a differential treatment of the press by the law, much less any
censorial motivation for its enactment. If the press is now required to pay
a value-added tax on its transactions, it is not because it is being singled
out, much less targeted, for special treatment but only because of the
removal of the exemption previously granted to it by law. The withdrawal
of exemption is all that is involved in these cases. Other transactions,
likewise previously granted exemption, have been delisted as part of the
scheme to expand the base and the scope of the VAT system. The law
would perhaps be open to the charge of discriminatory treatment if the
only privilege withdrawn had been that granted to the press. But that is
not the case.
Same; Same; Same; Same; Same; Same; There is a reasonable basis for
the classification and different treatment between print media and
broadcast media.—Nor is impermissible motive shown by the fact that
print media and broadcast media are treated differently. The press is
taxed on its transactions involving printing and publication, which are
different from the transactions of broadcast media. There is thus a
reasonable basis for the classification.
Same; Same; Same; Same; Freedom of Religion; The Free Exercise of
Religion Clause does not prohibit imposing a generally applicable sales
and use tax on the sale of religious materials by a religious
organization.—What has been said above also disposes of the allegations
of the PBS that the removal of the exemption of printing, publication or
importation of books and religious articles, as well as their printing and
publication, likewise violates freedom of thought and of conscience. For
as the U.S. Supreme Court unanimously held in Jimmy Swaggart
Ministries v. Board of Equalization, the Free Exercise of Religion Clause
does not prohibit imposing a generally applicable sales and use tax on the
sale of religious materials by a religious organization.
Same; Same; Same; Same; The VAT registration fee is a mere
administrative fee, one not imposed on the exercise of a privilege, much
less a constitutional right.—In this case, the fee in § 107, although a fixed
amount (P1,000), is not imposed for the exercise of a privilege but only
for the purpose of defraying part of the cost of registration. The
registration requirement is a central feature of the VAT system. It is
designed to provide a record of tax credits because any person who is
subject to the payment of the VAT pays an input tax, even as he collects
an output tax on sales made or services rendered. The registration fee is
thus a mere administrative fee, one not imposed on the exercise of a
privilege, much less a constitutional right.
Same; Same; Same; Same; Due Process; Hierarchy of Values; When
freedom of the mind is imperiled by law, it is freedom that commands
a momentum of respect and when property is imperiled, it is the
lawmakers’ judgment that commands respect.—There is basis for
passing upon claims that on its face the statute violates the guarantees
of freedom of speech, press and religion. The possible “chilling effect”
which it may have on the essential freedom of the mind and conscience
and the need to assure that the channels of communication are open and
operating importunately demand the exercise of this Court’s power of
review. There is, however, no justification for passing upon the claims
that the law also violates the rule that taxation must be progressive and
that it denies petitioners’ right to due process and the equal protection
of the laws. The reason for this different treatment has been cogently
stated by an eminent authority on constitutional law thus: “[W]hen
freedom of the mind is imperiled by law, it is freedom that commands a
momentum of respect; when property is imperiled it is the lawmakers’
judgment that commands respect. This dual standard may not precisely
reverse the presumption of constitutionality in civil liberties cases, but
obviously it does set up a hierarchy of values within the due process
clause.”
Same; Same; Same; The legislature is not required to adhere to a policy
of “all or none” in choosing the subject of taxation.—On the other hand,
the CUP’s contention that Congress’ withdrawal of exemption of
producers cooperatives, marketing cooperatives, and service
cooperatives, while maintaining that granted to electric cooperatives, not
only goes against the constitutional policy to promote cooperatives as
instruments of social justice (Art. XII, § 15) but also denies such
cooperatives the equal protection of the law is actually a policy
argument. The legislature is not required to adhere to a policy of “all or
none” in choosing the subject of taxation.
Same; Same; Same; Regressivity is not a negative standard for courts to
enforce since what Congress is required by the Constitution to do is to
“evolve a progressive system of taxation.”—Indeed, regressivity is not a
negative standard for courts to enforce. What Congress is required by the
Constitution to do is to “evolve a progressive system of taxation.” This is
a directive to Congress, just like the directive to it to give priority to the
enactment of laws for the enhancement of human dignity and the
reduction of social, economic and political inequalities (Art. XIII, § 1), or
for the promotion of the right to “quality education” (Art. XIV, § 1). These
provisions are put in the Constitution as moral incentives to legislation,
not as judicially enforceable rights.
Same; Same; Same; Contract Clause; Contracts; Not only are existing
laws read into contracts in order to fix obligations as between parties,
but the reservation of essential attributes of sovereign power is also
read into contracts as a basic postulate of the legal order.—Only slightly
less abstract but nonetheless hypothetical is the contention of CREBA
that the imposition of the VAT on the sales and leases of real estate by
virtue of contracts entered into prior to the effectivity of the law would
violate the constitutional provision that “No law impairing the obligation
of contracts shall be passed.” It is enough to say that the parties to a
contract cannot, through the exercise of prophetic discernment, fetter
the exercise of the taxing power of the State. For not only are existing
laws read into contracts in order to fix obligations as between parties, but
the reservation of essential attributes of sovereign power is also read into
contracts as a basic postulate of the legal order. The policy of protecting
contracts against impairment presupposes the maintenance of a
government which retains adequate authority to secure the peace and
good order of society.
Same; Same; Same; Same; Same; Contract Clause is not a limitation on
the power of taxation save only where a tax exemption was granted for
a valid consideration.—In truth, the Contract Clause has never been
thought as a limitation on the exercise of the State’s power of taxation
save only where a tax exemption has been granted for a valid
consideration. Such is not the case of PAL in G.R. No. 115852, and we do
not understand it to make this claim. Rather, its position, as discussed
above, is that the removal of its tax exemption cannot be made by a
general, but only by a specific, law.
Same; Judicial Review; Public actions by “non-Hohfeldian” or
ideological plaintiffs are now cognizable provided they meet the
standing requirement of the Constitution; There must be before the
Court a fully developed factual record that alone can impart to its
adjudication the impact of actuality to insure that decision-making is
informed and well-grounded.—The substantive issues raised in some of
the cases are presented in abstract, hypothetical form because of the lack
of a concrete record. We accept that this Court does not only adjudicate
private cases; that public actions by “non-Hohfeldian” or ideological
plaintiffs are now cognizable provided they meet the standing
requirement of the Constitution; that under Art. VIII, § 1, ¶ 2 the Court
has a “special function” of vindicating constitutional rights. Nonetheless
the feeling cannot be escaped that we do not have before us in these
cases a fully developed factual record that alone can impart to our
adjudication the impact of actuality to insure that decision-making is
informed and well grounded. Needless to say, we do not have power to
render advisory opinions or even jurisdiction over petitions for
declaratory judgment. In effect we are being asked to do what the
Conference Committee is precisely accused of having done in these
cases—to sit as a third legislative chamber to review legislation.
Same; Same; The duty of the Court to exercise its power of judicial
review must still be performed in the context of a concrete case or
controversy; That the other departments of the government may have
committed a grave abuse of discretion is not an independent ground for
exercising the Court’s power.—It does not add anything, therefore, to
invoke this “duty” to justify this Court’s intervention in what is essentially
a case that at best is not ripe for adjudication. That duty must still be
performed in the context of a concrete case or controversy, as Art. VIII, §
5(2) clearly defines our jurisdiction in terms of “cases,” and nothing but
“cases.” That the other departments of the government may have
committed a grave abuse of discretion is not an independent ground for
exercising our power. Disregard of the essential limits imposed by the
case and controversy requirement can in the long run only result in
undermining our authority as a court of law. For, as judges, what we are
called upon to render is judgment according to law, not according to what
may appear to be the opinion of the day.
British American Tobacco v. Camacho, G.R. No. 163583, April 15, 2009
Court of Tax Appeals; Jurisdiction; Where what is assailed is the validity
or constitutionality of a law, or a rule or regulation issued by the
administrative agency in the performance of its quasi-legislative
function, the regular courts have jurisdiction to pass upon the same.—
The jurisdiction of the Court of Tax Appeals is defined in Republic Act No.
1125, as amended by Republic Act No. 9282. Section 7 thereof states, in
pertinent part: x x x While the above statute confers on the CTA
jurisdiction to resolve tax disputes in general, this does not include cases
where the constitutionality of a law or rule is challenged. Where what is
assailed is the validity or constitutionality of a law, or a rule or regulation
issued by the administrative agency in the performance of its quasi-
legislative function, the regular courts have jurisdiction to pass upon the
same. The determination of whether a specific rule or set of rules issued
by an administrative agency contravenes the law or the constitution is
within the jurisdiction of the regular courts. Indeed, the Constitution
vests the power of judicial review or the power to declare a law, treaty,
international or executive agreement, presidential decree, order,
instruction, ordinance, or regulation in the courts, including the regional
trial courts. This is within the scope of judicial power, which includes the
authority of the courts to determine in an appropriate action the validity
of the acts of the political departments. Judicial power includes the duty
of the courts of justice to settle actual controversies involving rights
which are legally demandable and enforceable, and to determine
whether or not there has been a grave abuse of discretion amounting to
lack or excess of jurisdiction on the part of any branch or instrumentality
of the Government. British American Tobacco vs. Camacho, 562 SCRA
511, G.R. No. 163583 August 20, 2008
4. Encouragement of Economic Growth Phil. Coconut Producers
Federation Inc. v. PCGG, G.R. No. 75713, October 2, 1989
Constitutional Law; Presidential Commission on Good Government; The
question of the validity of PCGG sequestration and freeze orders as
provisional measures to collect and conserve the assets believed to be
ill-gotten wealth has been laid to rest in BASECO vs. PCGG.—The
question of the validity of PCGG sequestration and freeze orders as
provisional measures to collect and conserve the assets believed to be ill-
gotten wealth has been laid to rest in BASECO vs. PCGG (150 SCRA 181)
where this Court held that such orders are not confiscatory but only
preservative in character, not designed to effect a confiscation of, but
only to conserve properties believed to be ill-gotten wealth of the ex-
president, his family and associates, and to prevent their concealment,
dissipation, or transfer, pending the determination of their true
ownership.
Same; Same; Utilization and proper management of the coconut levy
funds raised as they were by the State’s police and taxing powers are
certainly the concern of the government; The coconut levy funds are
clearly affected with public interest.—The utilization and proper
management of the coconut levy funds, raised as they were by the State’s
police and taxing powers, are certainly the concern of the Government.
It cannot be denied that it was the welfare of the entire nation that
provided the prime moving factor for the imposition of the levy. It cannot
be denied that the coconut industry is one of the major industries
supporting the national economy. It is, therefore, the State’s concern to
make it a strong and secure source not only of the livelihood of a
significant segment of the population but also of export earnings the
sustained growth of which is one of the imperatives of economic stability.
The coconut levy funds are clearly affected with public interest. Until it is
demonstrated satisfactorily that they have legitimately become private
funds, they must prima facie and by reason of the circumstances in which
they were raised and accumulated be accounted subject to the measures
prescribed in E.O. Nos. 1, 2, and 14 to prevent their concealment,
dissipation, etc., which measures include the sequestration and other
orders of the PCGG complained of.
5. Promotion of Protectionism Gaston v. Republic Planters Bank, G.R.
No. L-77194, March 15, 1988
Taxation; Levy; The stabilization fees collected are in the nature of a tax
which is within the power of the state to impose for the promotion of
the sugar industry; The levy is primarily in the exercise of the police
power of the state.—The stabilization fees collected are in the nature of
a tax, which is within the power of the State to impose for the promotion
of the sugar industry (Lutz vs. Araneta, 98 Phil. 148). They constitute
sugar liens (Sec. 7[b], P.D, No. 388). The collections made accrue to a
"Special Fund," a "Development and Stabilization Fund," almost identical
to the "Sugar Adjustment and Stabilization Fund" created under Section
6 of Commonwealth Act 567, The tax collected is not in a pure exercise
of the taxing power. It is levied with a regulatory purpose, to provide
means for the stabilization of the sugar industry. The levy is primarily in
the exercise of the police power of the State (Lutz vs. Araneta, supra).
including the foreign market; Revenues collected treated as special fund
to be administered in trust for the purpose intended.—The stabilization
fees in question are levied by the State upon sugar millers, planters and
producers for a special purpose—that of "financing the growth and
development of the sugar industry and all its components, stabilization
of the domestic market including the foreign market." The fact that the
State has taken possession of moneys pursuant to law is sufficient to
constitute them state funds, even though they are held for a special
purpose (Lawrence vs. American Surety Co,, 263 Mich 586, 249 ALR 535,
cited in 42 Am. Jur. Sec. 2, p. 718), Having been levied for a special
purpose, the revenues collected are to be treated as a special fund, to be,
in the language of the statute, "administered in trust" for the purpose
intended. Once the purpose has been fulfilled or abandoned, the balance,
if any, is to be transferred to the general funds of the Government. That
is the essence of the trust intended.
Same; Same; Same; Revenues derived from tax cannot be used for
purely private purposes or for the exclusive benefit of private
persons.—To rule in petitioners' favor would contravene the general
principle that revenues derived from taxes cannot be used for purely
private purposes or for the exclusive benefit of private persons. The
Stabilization Fund is to be utilized for the benefit of the entire sugar
industry, "and all its components, stabilization of the domestic market
including the foreign market," the industry being of vital importance to
the country's economy and to national interest.

Same; Same; Same; The stabilization fees are levied by the state for the
special purpose of financing the growth and development of the sugar
industry and all its components, stabilization of the domestic market